Annual report - £18.7 million loss

[Linz]

Not read the report yet but the headline figures are on the OS:

http://www.sufc.co.uk/page/PLC/0,,10418~2228971,00.html

The Sheffield United Group today announced it has reshaped some of its business activities to address the impact of the severity of the economic downturn.

The changes, which leave the football club's stadium, academy and junior development centre free and clear of debt, are outlined in the annual report and accounts released today (Wed Nov 24).

The moves taken by the Championship club are expected to leave it totally free from external debt by 2013.

Chairman Kevin McCabe said: "Some tough decisions have been taken to totally reshape the group. The time is right to ensure the club is positioned to avoid the type of damage that is currently afflicting or set to affect so many other football clubs.

"Our aim is still to generate revenue and profits from our business to fund all football activities with the clear objective of getting United back to the Premier League at the earliest opportunity," added Mr McCabe.

The headline figure of retained loss at £18.6m reflects the following:

- Player wages significantly over budget as a result of costly additions and loan signings during the year in a major commitment to return to the premier league.

- The loss of the £13m parachute payment enjoyed in the previous two seasons

- Economic conditions generally affecting both corporate hospitality and non-football activities off the field leading to substantially reduced income

- Property asset write downs necessary to effect the re-organisation and leave our other property assets free and unencumbered from bank debt.


The previous year's retained profit of £6m included settlement payment from West Ham in respect of the Carlos Tevez Affair. Without this one-off item the comparable retained loss figure would have been £12.1m.

Mr McCabe said: "Since relegation no-one could say we have not given it one hell of a go on the pitch. I have personally invested substantial funds during the last three seasons and last season alone we put £2.5m into acquiring a large number of loan players, a figure we had not budgeted for. It showed the efforts we made last season - the first without parachute payments - to reach the play-offs again.

"We have long pursued a strategy of creative diversification to broaden income streams and reduce risk. However, the length and depth of today's economic conditions, coupled with the introduction of four year parachute payments, has led us to challenging previous assumptions on how best to structure Sheffield United."

"I firmly believe that the Blades are now in the right position to progress. In Trevor Birch, Gary Speed and John Pemberton, I believe we have the team in place to drive the Blades on as we return to a back to basics approach at the football club.

"The manager will teem and ladle with players and the squad will be shortly boosted by the return from long term injury of Darius Henderson and Lee Williamson. There may be opportunities to manoeuvre if investment comes forward," added Mr McCabe.

The Group continues to seek new investment and recently has been in discussions with a number of interested parties.

"Our aims remain the same in bringing growth and success on and off the field of play. Every single action we have taken is about making this a better football club," said Mr McCabe.


The details of the reshaping and off-field performance are:


Performance:

- After accounting for interest, exceptional items and tax, Sheffield United plc made a retained loss for the year ended 30th June 2010 of £18.7 million (2009: profit of £6.0 million). The profit in 2009 included the £18.1m settlement payment from West Ham in respect of the "Carlos Tevez Affair". Without this one-off item the comparable retained loss figure would have been £12.1m.

- Turnover fell to £20.5m (2009: £32.1m). The largest element being television income, which decreased to £4.4m (2009: £14.4m) as Sheffield United did not receive a Premier League parachute payment.

- Gate receipts fell to £4.9m (2009: £6.9m). The 2009 income was boosted by the Club's run to the Wembley play-off final, otherwise average attendances of 25,120 (26,018 previous season) held up well, representing 77% stadium occupancy.

- Whilst reductions were achieved in the overall cost of the playing squad, Premier League seeking United continued to maintain one of the largest Championship wage bills. Also, significant injury problems meant 14 loan players were brought in at a substantial cost.

- Profit on disposal of player registrations of £10.6m (2009: £3.8m) was a significant contribution to the club's working capital requirements in maintaining a competitive wages structure.

- Property assets have been written down by £10m as a result of the restructuring.


Reshaping:

- United, through arrangements with new banker - Santander UK plc - become clear of any bank debt other than funds from Santander secured against the residue "Tevez monies" due from West Ham United FC between now and 2013.

- Interests in Chengdu Blades have been disposed to a Chinese investor. However, a co-operation agreement between the Blades of China and Sheffield remains in place to assist in the overall management of the Club.

- Given the massive downturn in commercial property values, United have disposed of a 50% interest in Blades Realty Ltd and written down the value of its stake.

- To aid the reduction of bank debt - United's interest in the Copthorne Hotel has been sold to Scarborough Partnership Ltd at market value. However, an option to re-purchase the Hotel as and when economic conditions improve is retained.


The overall impact will strengthen United particularly as the Bramall Lane stadium, the Academy at Shirecliffe and Junior Development Centre at Crookes become "free and clear" assets.

The reshaping allows the management team to run the club on a self-sufficient basis, positioning it to seek further finance, if required, once the capital markets return to 'normality'.

Chief executive Trevor Birch said: "These are comprehensive measures in line with the harsh economic conditions in which we now operate. Going forward we now have to live within our means.

"We have re-structured the Club and continue to re-organise so that the cost of the player wage bill is one that can be supported by the club's football and commercial income streams. It is back to basics and we have to think longer term in our objectives but we are well placed to ride out the economic downturn and compete strongly in the Championship.

"We all need to realise it has been a difficult trading year for Sheffield United but the board has taken decisive steps off and on the field, where we have, in Gary Speed, an excellent new manager. At the academy, which remains central to our strategy, John Pemberton is laying down the foundations which will stand us in good stead for the future.

"Gary and John are fully aware of the changes and are determined like everyone else at the club to bring playing success but it may not be a quick fix and they need time to produce a winning formula."


The club's annual general meeting will be held on 18th December.

 

[SteelCity Blade]

Not read the report yet but the headline figures are on the OS:

http://www.sufc.co.uk/page/PLC/0,,10418~2228971,00.html

Thanks Linz, interesting stuff.

 

[Micalijo]

I am LOVIN this!! Could be a busy day.

Some truly classic examples of corporate speak nonsense. Love the property write down bit - cannot wait for details. Sounds like the properties have been removed somehow from the football side of things which is good obviously.

Has Macca had a big fall out with his pals at HBoS?

---------- Post added at 10:42 AM ---------- Previous post was at 10:40 AM ----------

When he says the time is right to position the club to avoid the damage afflicting other clubs wasn't the property rubbish meant to do that in the first place? Creative diversification and all that?

 

[super_pig]

>during the last three seasons and last season alone we put £2.5m into acquiring a large number of loan players, a figure we had not budgeted for
hoisted by his own petard?

 

[Wapping Blade]

To your last point, yes but then the property market went TU and we're still suffering from that IMHO.

 

[JohnDenver]

Where's Robert Peston when you need him?

 

[SotonBlade]

I like this bit:

"The manager will teem and ladle with players and the squad will be shortly boosted by the return from long term injury of Darius Henderson and Lee Williamson. There may be opportunities to manoeuvre if investment comes forward," added Mr McCabe.

That basically says, unless we get investment in January, then you're getting sod all to spend Mr Speed!

 

[Worksop_Blade]

Got rid of Chengdu
Got rid of the Hotel

Two good points to come out of that.

I know for a fact 140 executive season tickets were not renewed for this season @ £1000 each you can understand how much that is a decent kick in the balls for the club, before you take in to consideration the regular St not being renewed.

Things needed rearranging as the way the club was set up was not the best in a recession.

It sounds like its gonna be a long term rebuild with no play offs for a couple of seasons.

Still get Reid til May and everyone's happy!

 

[Deleted member 2102]

Has Macca had a big fall out with his pals at HBoS?QUOTE]

HBOS doesnt exist anymore so I doubt he has anyone to fall out with.

 

[yorkshirecoast]

I like this bit:



That basically says, unless we get investment in January, then you're getting sod all to spend Mr Speed!

Yep, but we've all known for a while that McCabe prefers selling players to buying them. Still disappointing though - keep hoping he's going to show more commitment and ambition but it seems not.

 

[Deleted member 2102]

Yep, but we've all known for a while that McCabe prefers selling players to buying them. Still disappointing though - keep hoping he's going to show more commitment and ambition but it seems not.

How much more commitment would you like him to show? I am not sure how he structured his sale of his business to Valad but at some point he reinvested the proceeds into Valad stock (he currently owns 2,972,617 shares in Valad) which are now worthless. He made a mistake appointing Robson but life is like that you take risk to gain reward. There is a downside. The downside for us is that absent of a new owner we will be run like a midranking 2nd division team which is what we are. The risk of spending loads now will be insolvency I guess he figures that the risk of such a trade would outweigh any possible gain.

 

[parisblade]

I guess we all knew this was coming and I'm glad it's been stated publicly at last. Am I naive in thinking that freeing the football club of off-the-field activity debt is a good thing? Does this not make us a more attractive proposition for investment?

 

[raul]

So basically, despite much singing from the rooftops to the contrary, we're as fucked as the rest of them?

 

[Oreyt]

How much more commitment would you like him to show? I am not sure how he structured his sale of his business to Valad but at some point he reinvested the proceeds into Valad stock (he currently owns 2,972,617 shares in Valad) which are now worthless. He made a mistake appointing Robson but life is like that you take risk to gain reward. There is a downside. The downside for us is that absent of a new owner we will be run like a midranking 2nd division team which is what we are. The risk of spending loads now will be insolvency I guess he figures that the risk of such a trade would outweigh any possible gain.

Nah mate, the ONLY way to go is to spunk shit loads of money on players. It's obvious. If McCabe does anything else he's a secret Pig loving turncoat.

 

[parisblade]

So basically, despite much singing from the rooftops to the contrary, we're as fucked as the rest of them?

Isn't it the Scarborough Group that are taking on most of the debt?

 

[Micalijo]

Has Macca had a big fall out with his pals at HBoS?QUOTE]

HBOS doesnt exist anymore so I doubt he has anyone to fall out with.

Chill out man, Lloyds Group then - good luck today defending the indefensible. Old Macca has got it horribly wrong and we'll be suffering for years to come in terms of the quality on show - will we ever own a fit centre half again? Who knows but Trevor and his pals have it all covered.

---------- Post added at 11:18 AM ---------- Previous post was at 11:17 AM ----------

So basically, despite much singing from the rooftops to the contrary, we're as fucked as the rest of them?

Back to basics Raul!! Wonder what was wrong with basic in the first place - ie owning your own players on wages you could afford with a half decent manager and no ridiculous property links where McCabe held all the upsides, imo.

---------- Post added at 11:20 AM ---------- Previous post was at 11:18 AM ----------

How much more commitment would you like him to show? I am not sure how he structured his sale of his business to Valad but at some point he reinvested the proceeds into Valad stock (he currently owns 2,972,617 shares in Valad) which are now worthless. He made a mistake appointing Robson but life is like that you take risk to gain reward. There is a downside. The downside for us is that absent of a new owner we will be run like a midranking 2nd division team which is what we are. The risk of spending loads now will be insolvency I guess he figures that the risk of such a trade would outweigh any possible gain.

Where were you when I was being ridiculed by Foxy, Duncs etc for suggesting he still had an interest in Valad?

 

[Linz]

Where were you when I was being ridiculed by Foxy, Duncs etc for suggesting he still had an interest in Valad?

Them pointing to an article in the Australian press contradicting you does not amount to ridicule...

 

[Micalijo]

May I most humbly and profusely apologise for any offence caused. Maybe it was Bob then. I don't mind being ridiculed by the way - well used to it - just needed a bit of help that day.

 

[Deleted member 2102]

Chill out man, Lloyds Group then - good luck today defending the indefensible. Old Macca has got it horribly wrong and we'll be suffering for years to come in terms of the quality on show - will we ever own a fit centre half again? Who knows but Trevor and his pals have it all covered.

---------- Post added at 11:18 AM ---------- Previous post was at 11:17 AM ----------



Back to basics Raul!! Wonder what was wrong with basic in the first place - ie owning your own players on wages you could afford with a half decent manager and know greedy property links.

---------- Post added at 11:20 AM ---------- Previous post was at 11:18 AM ----------



Where were you when I was being ridiculed by Foxy, Duncs etc for suggesting he still had an interest in Valad?

Probably busy. Its hardly a secret that he owns (or did own. His holdings were 3 million stocks as of 30th November 2009) stock in Valad. He net worth has taken a bath since 2007. He made a mistake appointing Robson. Mistakes happen I do not see what he could do now to improve our financial situation absent a new investor. Fortunately I would have thought that wages for Championship player will plummit as their real economic value is now so much reduced to the clubs. Given our relatively large fan base we should still be able to compete for players going foward.

 

[SteelCity Blade]

Wondered how long it would take you mic

Joking aside this doesnt read very well by anybody's reckoning but at least it would appear that the powers have been busy trying to keep aspects of the football club debt free and that has to be the one plus to come out of this (if any).

Highlighting player loans as a significant impact on the loss is neither here nor there IMO, as all clubs who lose players through injury have to do this. If you budget for a tiny but expensive squad then what do you expect when players start to get injured?!

I'm no expert on the property market but that seems to be where we've been hit hardest. Without the parachute payments and Tevez money I dread to think of the position we would have found ourselves in.

 

[SotonBlade]

I think the main positive is the getting rid of the hotel and Chengdu in terms of links to the football club, the less liability on the club the better, and as someone said above, the less debt in the club, the more attractive it looks to any possible investors!

 

[Micalijo]

SE10 - totally agree that SUFC have the fanbase and potential to be a competitive second tier club running at a break even level - said that before and in that sense we are in a half decent position compared with clubs running with bank overdrafts and huge loans to owners. I also think McCabe really went for it post relegation - fair play and he is perfectly entitled to take some wedge back but not imo re property losses/chengdu - that is what sticks in the throat. He just makes very bad football decisions but I have hindsight. Was Hindsight needed though with Robson and allowing Naysmith, Beattie and Hendrie etc?

The property links though were diabolical - people on here said that no problem wait for the upturn well they have gone, never to be seen again. Knowing McCabe's luck in 20 years time Realty will be worth a bit but I assume our bank wanted money back and somehow it appears Santander have leant money to us to pay off bank debts with a charge over the rest of the Tevez money.

 

[Sensiblade]

Well, no one can use the Hotel as a point to have a go at United anymore.
Looks like Scarborough (McCabe) has bought it off the club so it isn't a debt anymore.
and Chengdu has gone too.

 

[SotonBlade]

Well, no one can use the Hotel as a point to have a go at United anymore.
Looks like Scarborough (McCabe) has bought it off the club so it isn't a debt anymore.
and Chengdu has gone too.

Like the notion though that we have the option to buy back once times are better!

 

[Jim Chimmerney]

Tevez settled in full as well by the looks. Didn't we have a clause for an extra £5M if they were taken over ? Presumably if we've 'settled in full' this no longer applies.

Who's going to mention the 'Kyle money' ?

 

[Linz]

Tevez settled in full as well by the looks. Didn't we have a clause for an extra £5M if they were taken over ? Presumably if we've 'settled in full' this no longer applies.

Who's going to mention the 'Kyle money' ?

The Tevez and Kyles money were included in the 2009 accounts.

 

[JohnDenver]

The Tevez and Kyles money were included in the 2009 accounts.

That's not the same as being settled in full though is it? My wonderful employer used to pull forward the future value of contracts to make one year's accounts look healthier. It didn't mean that the money was in the bank yet.

 

[beightonblade]

Its like reading the Beano !

 

[Micalijo]

The Tevez and Kyles money were included in the 2009 accounts.

The Tevez income was recognised in the 2009 accounts hence the profit.

The Tevez cash was recognised as a debtor in the balance sheet to be paid over the next few years ending in 2013 by the looks of it with Santander getting it in return for the money they appear to have loaned us when taking on the banking side of things.

The Kyle transfers were after June 2009 weren't they? Sure they weren't included - they are in 2010 profit on disposal I think.

 

[Jim Chimmerney]

The Tevez and Kyles money were included in the 2009 accounts.

Doesn't mean to say it won't get a mention