This morning it came to our attention that figures and accounts of Burnden Leisure Limited (aka Bolton Wanderers FC) for the financial year up until 30th June 2014 have been publicly released by Companies House - shedding light on the true financial mire the club finds itself embroiled in and suggestions that the club is on the hunt for new owners.
The headline news is that the club's net debt rose to £183.1m in June 2014, an increase of £17.3m from £163.8m in June 2013. This is despite an increase in revenue on football matters (up to £30.6m from £28.5m) and 'other' income (up to £7.7m from £6.2m), and a £7m saving on staff costs, which were reduced to £30.8m from £37.4m in 2013. Part of the problem is related to on-field decline of the club, with average attendances dropping from 18,093 in 2013 to 16,139 in 2014.
Indeed, the summary of the report revealed that turnover between June 2013 and June 2014 increased by £3.3m to £38.4m as a result of parachute payments from the Premier League, while cost of sales were almost halved from £64.5m to £33.2m due to reduced player wages and amortisation costs (reduced worth of assets), and administration costs were reduced by £1m to £13.2m.
However, and this is where it gets a little complicated, the report also shows an impairment charge of £11.2m against the value of Bolton's playing squad. The net value of the squad on June 2014 was £3.5m - which is interesting given that we are on the verge of selling Tim Ream for exactly half that value. The report shows that the club spent £2m on investing the playing squad and £1m in 'fixed assets' and incrued an overall £6.4m retained loss 'as a consqeuence of continued investment in the playing squad, while trying to maintain the infrastructure of the business to try to secure promotion.
So simply put, we lost nearly £6.5m by trying to get promoted in the season before last under Dougie Freedman.
A couple of other interesting points on numbers are that net current liabilities reduced over the year by £8.1m to £31m, while £1.9m of convertible debt has been converted and £1m has been waived by De Vere Venues Properties Limited as part of their exit from the joint venture of Bolton Whites Hotel Limited.
However, the headline act is that credit owed increased by £18.6m to £179.2m as a result of the increase in funding from Moonshift Investments Limited - the company owned by Eddie Davies. The Wanderers board goes on to acknowledge their dependence on Eddie Davies, which is where this gets very interesting:
The primary risk at Group level is around funding and ongoing reliance on the Group's ultimate beneficial owner Eddie Davies. This risk is mitigated through continual and regular provision of information and dialogue with Eddie Davies. To reduce the reliance on the Groups ulimate beneficial owner, the Board are seeking new investment in the form of a long term funding partner or, alternatively, a new ultimate beneficial owner for the Group. In the core activity of football, the primary risk is related to the uncertainty of on-the-field results. Ongoing investment in the playing squad aims to reduce this performance risk but the Board acknowledges that the level of this investment must be managed within the Club's financial constraints.
The Directors' Report sheds further light on Wanderers' dependence on Eddie Davies, revealing the club only survives thanks to the combination of a £170m long-term loan and a £4m bridging loan from Moonshift Investments Limited, in addition to a £5m overdraft from Barclays Bank, which is expected to be paid off within 12 months of the signing of the report (30th June 2016). There goes the Tim Ream money then...
This is where the report gets somewhat worrying. The Directors' Report section is aimed at 'considering whether the Company can continue in operational existence for the foreseeable future,' and it states:
After having taken into account a range of possible outcomes arising from on-pitch performances, the forecasts and projections adopted as a basis for going concern show a further funding requirement in excess of the current level of funding facilities immediately available to the Directors. Therefore, the Directors acknowledge a material uncertainty in the event that the Group's ultimate beneficial owner becomes unwilling at any time to continue funding support to the business to its historical levels.
So basically, the club is massively broke, needs more funding, and the Board doesn't seem confident Eddie Davies wants to continue funding it. Ouch.
The directors outline methods for arresting these concerns including player sales (we've sold Ream and no-one wants any other players until Josh Vela and Zach Clough improve a little), securing future season ticket sales (which are on the decline) 'deferral of discretionary capital expenditure and, no surprise here, the sale of the club. They also reveal they are 'in advanced discussions in regard to a number of additional funding options' which are not represented within the financial statements' and make the claim that potential new owners are aware of the ongoing funding requirements for the next 12 months.
Another area of interest to many will be the Directors' Remuneration section. This reveals that the club's highest paid Director - should we assume Phil Gartside? - is paid a basic salary of £330,000 per year, with taxable benefits of £30,000 and pension contributions £50,000. In total he was paid £410,000 in 2014, up from £408,000 in 2013. The other directors on the board were paid a total of £444,000 in 2014, up from £384,000 in the previous year.
These financial documents make for fascinating reading and really shine the light on the mess our club finds itself in. While I won't pretend to be an expert on this topic - a lot of the information went right over my head - it's clearly confirmed that we are in massive arrears to Eddie Davies and the statements make it fairly clear he has lost interest in being involved in the club. It seems the only logical option is for a sale of the club, but that is heavily dependent on our on-pitch performances, which at the moment are just as bleak as our financial outlook.
The club's financial statement as of June 2014, which goes into much further detail and includes full details of incomings and outgoings that we thought may bore our readers to tears, is available online here, while full details of Burnden Leisure Limited are on Companies House.