Further Analysis of Bolton Wanderers' Accounts

It's that time of year again, brace yourselves...

The good people at Companies House have just made Burnden Leisure Limited's (Bolton Wanderers, to you and me) most recent set of accounts available online, allowing us to once again gaze in awe upon the terrifyingly large numbers that outline in black and white exactly how financially screwed we are. We already knew - from the figures announced by the club - that the debt had increased yet again, to just north of £183 million but, once you get into the detailed accounts, something quite surprising begins to emerge: we're not actually doing that badly.

Before you rush to the comments to question my ability to count, let me explain what I mean. If you take the accumulated debt out of the equation (an ‘if' big enough to blot out the sun, I admit), the year-on-year outlook isn't too catastrophic. Not great, by any stretch of the imagination, but nowhere near as eye-wateringly bad as we've become used to over the last few years.

The reason I feel comfortable ignoring the debt for the purposes of assessing these accounts is that the club is up for sale. All logic and financial sense suggests that any sale of the club would involve a write off of the debt owed to Eddie Davies in return for the cash paid for the club by the new owners (it makes far more sense for him to take, for example, £40m cash today rather than sitting on a non-interest-paying £180m debt that he stands no realistic chance of getting back anytime this millennium). Prospective new owners will, therefore, be looking purely at the club's year-on-year financial performance to tell them whether the club is worth their investment.

Let's start with the headline figure - overall losses fell from £50.7m last year to £6.4m this year, mainly due to a £3m increase in parachute payments, a £7m fall in interest payments (since kindly Uncle Eddie finally decided to stop charging us interest on his loans) and a £31.3m fall in operating costs (wages and transfer fees). A very impressive improvement, at first glance, but both loss figures are deceptive due to the impact of Financial Fair Play regulations. Since this year's accounts were the first to be subjected to the new FFP rules restricting losses, it was in the club's interest to load as many costs as possible onto the previous year's accounts by, for example, paying up player contracts early and manipulating amortisation of transfer fees. This led to last year's artificially huge loss and, subsequently, this year's artificially low one. However, even taking into account the impact of FFP-dodging accounting methods, our losses are looking a lot more sustainable than they have for a long time - even the loss of our parachute payments will hopefully be largely offset by the ongoing reduction of the wage bill and reluctance to pay transfer fees.

The club has also managed to reduce its net current liabilities (current assets minus creditors falling due within one year) from £39m to £31m. While it is certainly a step in the right direction, this figure is still far from ideal and would be a cause for major concern in most businesses, since it implies that, were the debts to be called in, the company would be unable to repay its creditors by selling its liquid (easily saleable) assets. However, in the case of Bolton Wanderers, this hypothetical situation would almost certainly result in a further cash injection from the owner rather than bankruptcy.

Without wishing to dive too deeply into the minutiae of the accounts (you can do that yourself here, if you're so inclined), there are other reasons to be, if not cheerful, then certainly less depressed. The club has £48m of tangible fixed assets (stadium, hotel, training ground etc), these are the ‘family silver' and always serve as an important bellwether for the financial health of a club. Once these assets begin to be sold or loans secured against them, that is the time to be truly concerned. For all our debt troubles, we're unlikely to find ourselves being locked out of our own ground anytime soon.

I may be being overly positive, but this is the first time in years that I've looked at a set of Burnden Leisure accounts and thought that there could be some light at the end of the tunnel for the club. FFP has finally forced us to get our financial house in some sort of order and any prospective new owners are no longer looking at the prospect of losing thirty, forty or fifty million pounds a year to support the  club. The future is hardly bright (we still don't have the proverbial pot to piss in, after all) but at least we should still have a club to support in 5 years' time.

PS: Away from the accounting side of things, one other interesting figure emerges from the accounts. It seems the sale of the stadium naming rights to Macron is worth £298,000 a year - this is substantially less than I would have expected and compares poorly to the likes of Derby County, who secured a 10 year, £7 million deal to rename pride Park. They have done us a couple of nice kits though, so what's a few hundred thousand between friends?