Profits are soaring for the Seagulls

While it’s no time to start popping champagne corks just yet, the figures add to a renewed sense of optimism gathering at the Amex as Neil Vowles reports.

ALBION has seen its operating profits soar by 76% over the past 12 months but the club has still posted a multimillion-pound loss.

The Seagulls have published their annual accounts showing that operating profit rose to £11.9 million by the end of last season allowing finance bosses to increase the football budget by just under £1 million to £20.7 million.

The improved financial performance overseen by chief executive Paul Barber has seen an increase in turnover by £600,000 to £24 million and operational costs dropping by just under a third to £12.1 million.

The positive figures means the club’s overall annual net loss has reduced from £15.3 million to £10.6 million.

Albion chief executive Paul Barber said the figures were a “significant improvement” on last year but said the club still relied on the “generosity” of chairman Tony Bloom whose interest-free loans to the club now amount to £130 million.

The latest accounts reveal that Brighton and Hove Albion Holdings now has trading losses of £89 million – up from £75 million in 2013.

The club’s improved financial performance means the Seagulls have complied with the Football League’s Financial Fair Play requirements and won’t have to face a transfer embargo.

Last month Championship rivals Leeds United, Nottingham Forest and Blackburn Rovers were told they would be placed under a transfer embargo for the rest of the season after they incurred losses in excess of £8 million.

Albion’s accounts for the 12 months up to June 2014 have now been filed with Companies House and the Football League and the club have taken what they describe as “the unique step” of making the accounts available to all supporters via their website.

The accounts indicate the level of generosity from the club’s chairman who helped cover the costs of the club’s £32 million American Express Elite Football Performance Centre in Lancing and 2013/14 annual losses through interest free loans and equity conversion.

The accounts state that the amount owed to Mr Bloom now totals £130.5 million – up from £102.2 million in 2013.

In a statement, Mr Bloom said: “As our latest financial results demonstrate, our management team and staff have adjusted well in recent seasons to the demands of operating at a higher level.

“We believe that the increase in allowable annual losses and a reduction in the Premier League parachute payments will help to address some of the current disparity between those clubs benefitting parachute payments and clubs like ourselves which do not.

“However, while we do want to operate at the highest level, we simply cannot open our cheque book and start spending without care or attention.

“We must continue to run the football club as prudently as possible.”

Chief executive Paul Barber said: “This set of results shows a significant improvement on the previous year's annual accounts, and that is thanks to a lot of hard work by our staff to reduce our costs and boost revenues.

“The board is delighted with the reduction in our operating costs and the increase in turnover of more than £24 million – thanks in no small part to the support of the fans, as we once again enjoyed the highest average attendance – but we continue to rely on the generosity of our chairman Tony Bloom.

“In addition to Tony's interest-free funding to build the American Express Community Stadium and American Express Elite Football Performance Centre, he continues to cover the club's on-going losses and is committed to funding future losses.

“Once again, on behalf of all fans, the board would like to place on record its sincere thanks to Tony for his incredibly generous personal support that continues to take the club forward.”

The Details

•Turnover increased by 3% including commercial revenues which rose by 15% to £4.9 million thanks to new and improved sponsorship agreements with American Express, Heineken, Harveys, new commercial initiatives and an increase in 1901 Club members in the South Lounge.

• A 4% increase in average attendance to 27,283 helped to see a 9.5% increase in ticket sales to £10.4 million.

•The club saw a small drop in income from retail from £1.369 million in 2013 to £1.322 million last year and a more significant drop of 27% in catering with income dropping from £1.29 million from £1.78 million.

• The 27% reduction in admin and operational costs was achieved through job losses as part of a staff redundancy programme and the renegotiation of supplier contracts.

• The club saved almost £1 million on salaries in the past year with the wage bill dropping to just above £18 million.

• The club’s full-time staffing levels actually increased in 2014 from 239 to 243 with football operations employees increasing from 75 to 82 and players up from 59 to 65 although the number of management and administration staff dropped from 105 to 96.

•The number of part-time match day staff dropped from 572 in 2013 to 524 in 2014.

•As part of the depreciation losses, the American Express Community Stadium reduced in value by £2.1 million in 12 months.

• The club made a profit on their dealings in last year’s January transfer window of £1.7 million, up £600, 000 on the previous year, thanks to the sales of Liam Bridcutt to Sunderland for £2.5 million and Ashley Barnes to Burnley for £750,000.

•The club said that the principal risk it faced was relegation and the impact it would have on revenue streams and the ability to attract and retain high-quality staff.

The Expert's View

Aaron Gourley, deputy editor of football industry business magazine fcbusiness It seems to be a fairly reasonable position when you consider that turnover is increasing, even though it’s not huge, and reducing operating losses, it’s looking pretty positive.

If you look at some of the other clubs in the Championship, clubs like Blackburn Rovers who have a lot of debt and Bolton Wanderers who are not recovering from huge losses accrued since being in the Premier League, then they are in a good position.

The key things are that turnover is increasing and operating losses are going down and with the new stadium, Albion have the ability to increase revenues and if they move up to the Premier League they have got a stadium which would be able to keep up with that demand.

Paul Barber is one of those guys who has a lot of respect in the football industry for what he does, he won CEO of the year at the Football Business Awards for the Championship which was voted for by other CEOs, and a lot of people were surprised when he went to Brighton but he saw it as a good project and one he could work with.

He is doing a good job but he will be judged on his success if he can get Albion into the Premier League and keep them there but he has got everything to do that with a chairman willing to back him and the new ground so it’s a brilliant opportunity.

If you look at the Championship, the clubs’ have a combined debt of £1 billion, the sponsorship isn’t as high and there isn’t the global pull of the Premier League but most clubs are moving in the right direction.

A lot of the losses are historical losses where they spent excessively and were allowed to spend because they were clubs that had been around 100 years and the banks didn’t say you can’t service that debt.

The changes with financial fair play has made people realise you can’t spend beyond your means and Paul Barber is hugely aware of the restrictions that he has to work under.

What the fans think of rules Liz Costa, from the Brighton and Hove Albion supporters’ club Everyone was aware that Paul Barber had a job to do to ensure that the club complied with these regulations which nobody seems to understand.

He was brought in to comply with financial fair play and nobody liked what he was doing and he probably didn’t like doing it himself but it has proved it has worked.

He has kept us within the limits and now we have a bit of leeway with which to work with.

Some clubs like Leicester and QPR seem to think that these rules don’t apply to them and I think we went through some uncertainty with financial fair play but now it seems like penalties will be applied as it was first drawn up right at the start.

Of course prices have gone up but that’s a fact of life these days, the only thing that seems to be going down at the moment is the petrol prices.

People are beginning to smile again when earlier in the season people were saying ‘Sami has got to go’ and ‘I’m never coming back’.

Everything is starting to look upwards and hopefully from now it will be up and up.

If things are going right on the pitch then no one will take a blind bit of notice what’s going on in the boardroom.

Financial Fair Play Rules Explained Under the complicated financial fair play, Championship clubs are allowed an annual maximum loss of £8 million.

Clubs can choose to exempt investment in youth development, community schemes, promotion related bonuses and the impact of depreciation in value of fixed assets.

Albion’s depreciation losses totalled almost £3.5 million in 2013/14 allowing it to fall below £8 million in accepted losses.

Clubs with losses between £3 million and £8 million can still face a transfer embargo if a team’s owner is not willing to inject equity to cover the losses in excess of £3 million.

Late last year Championship clubs agreed to increase the permitted levels of losses under financial fair play to £13 million starting from next season.