Shrewsbury Town Football Club’s accounts for the 2022/23 financial year have been released and shared with Town’s shareholders.
THERE WILL BE NO COMMENT FROM THE CLUB UNTIL AFTER OUR ANNUAL GENERAL MEETING (AGM) ON THURSDAY, APRIL 18.
As with previous seasons, Salop supporter Ant Thomas has prepared a full and detailed report to help explain the accounts to all of our supporters.
Review of the financial statements of Shrewsbury Town Football Club Limited for the year ended 30 June 2023.
The purpose of this review is to make the content of the most recent set of Shrewsbury Town Football Club Limited’s accounts understandable to all Salop supporters, regardless of your level of accounting knowledge or the complete meaninglessness of the terms “profit and loss”!
Before you begin reading, keep the following points in mind:
These reports span the 2022–2023 season, which saw STFC play in League One, which ran from July 1, 2022, to June 30, 2023.
Since there is currently no publicly available financial information for the period ending June 30, 2023, unless otherwise indicated in the text accompanying the accounts, the period since that date is not covered by this review.
These accounts will be made accessible to the general publicn via the Companies House website.
Unless otherwise indicated, I have not made any assumptions, conclusions, or estimations. This is significant because it implies that anyone reading these testimonies could come to the same conclusions as I have.
While it is not a comprehensive analysis, I have emphasised the most important details from the reports.
WR Partners, an accounting firm located in Shrewsbury, is auditing these accounts. An audit is a review of the accounts to ensure that there are no “material” errors, meaning that there are no significant flaws that could cause readers to have a different opinion of them.
If you have any queries or feedback, please send me an email at ant.d.thomas83@gmail.com.
The Statement of Comprehensive Income, sometimes known as the “Profit and Loss (“P&L”) Account,”
The accounts display this as the first important financial statement.
An organization’s “financial performance” is displayed in the profit and loss statement, which is:
The amount of money the club made over the year, such as from player sales, ticket sales, and prize money, less the expenses it incurred during that time.
A profit is achieved when revenue exceeds expenses. When the contrary is true, it is referred to as a loss.
Keep in mind that a £100 increase in profit does not equate to a £100 gain in cash. This is due to the nature of accounting, where certain expenses don’t affect the amount of money you have in the bank (for an example
Below is a discussion of each component of this statement.
Turnover: The amount of money the club has made over the course of the year. This will have an impact on a football team in terms of ticket and merchandising sales, prize money, television revenue, etc. This is referred to as “sales” or “revenue” at times.
The club offers the following breakdown of account turnover:
The football league, ticket sales, and sundry income (no further information provided on the last item) are the club’s three main revenue sources.
During the 2022–2023 season, turnover was rather stable; nonetheless, there were a few transactions in many regions totaling £50k or more:
- Income from the Premier League reduced to nil following a £500k balance in the prior season
- Food and beverage sales increased by £260k
- Football league income increased by £94k
- Ticket sales decreased by £55k
- Television/internet portal income reduced by £92k
Other operating income: In the year this reduced to nearly nil from £0.8m. In the prior year this related to COVID-related grants/ schemes and insurance receipts which did not recur in the 2022/23 season.
Cost of sales: This is the first cost we see in the P&L account and it is the cost required to deliver the services provided for a company. For example – for a company that sells cars, their turnover is the amount received per car, and the cost of sale is the cost to manufacture that car and any other costs needed to be able to sell that car. For a football club, the key cost of sale is salaries.
The accounts give details of the total amount spent on salaries/ wages – this covers all club staff including players. The amount spent on salaries in the 2022/23 season was £5.7m, almost £1m higher than the prior season.
Administrative expenses: These are other costs of the club and are likely to include utilities (such as water, electricity etc.) and repairs/ maintenance needed on the stadium. These costs have increased by £530k year on year.
The accounts do not give a detailed breakdown of these costs line by line, however, it is possible to see that included in the prior year was a profit on sale of a player of £250k, with no profit on sale in the current season. Excluding this, administrative expenses have increased by £280k year on year which is still substantial and is likely in part to relate to inflationary pressures felt by individuals and businesses during this period.
Other things to note: The club made no salary, dividend or interest payments to directors or the chairman, consistent with the prior year. Such payments must be stated in the club accounts had they been made.
The “Balance Sheet” or “Statement of Financial Position”
This shows the “financial position” of a company and is shown for the year-end date only – in this case 30th June 2023. It shows how many “assets” a company has, and how many “liabilities” – the difference between these two figures is called the “net assets”. The balance sheet also shows a company’s “capital and reserves” – this is the amount that has been paid for the shares in the company and the historical profits/ losses made by the company since it was formed.
Assets
An asset is a resource owned by a company which has some economic benefit to the company – either short-term or longer-term. Each sub-category is discussed below. The most obvious asset for any business is cash – the “economic benefit” being that it can be used to buy other assets, or pay bills etc.
Fixed assets – tangible
These are assets that are used by the company to generate economic benefit/ are used in the running of the business. Tangible means they physically exist. For STFC these mostly relate to the stadium. The balance has increased marginally in the year.
Fixed assets – intangible
Intangible assets are ones that cannot be physically held like a tangible asset can. For some businesses, this may mean an online platform/ website which will result in revenue for the business going forward.
For football clubs, these primarily relate to players’ contracts when a transfer fee is paid. This “asset” is then reduced each year of the contract. This reduction is called “amortisation” in accounting terms and is recorded as an expense to the business and so is included in the P&L account. The balance may also be “impaired” if there is a reason to believe the asset no longer holds value. For example, if a player suffered a career-ending injury.
The intangibles balance has increased marginally from £43k to £70k. This has been driven by additions of £100k, offset by amortisation of £73k.
It is worth noting that transfer fees agreed after 30 June 2023 (i.e., pre-season for the 2023/24 season would not be included in this set of accounts).
Current assets
These are called “current” because they are easier/ quicker to turn into cash than fixed assets (generally within twelve months). Each sub-section is discussed below.
Stocks
Stocks are either club-shop merchandise or items used by the club in its day-to-day running (e.g., food). The balance has decreased from £111k to £59k.
Debtors
These are amounts owed to a company by other companies or individual. For a football club they can relate to amounts owed by other football clubs (e.g., for transfer fees), from other organisations (e.g., the FA) or “prepayments” – this is where a company pays for a future service in advance. For example, if you paid for the whole of next year’s car insurance now for £300, you would have a £300 prepayment – as that is not a cost that relates to your current year and hence doesn’t impact the P&L for this year.
Overall debtors have decreased from £872k to £613k year on year albeit the accounts do include further detail of who these amounts are owed by.
You may notice that debtors are either shown as “due within one year” or “due after more than one year” – this means when the cash is contractually due to the club. When, for example, a player sale is made, the buying and selling clubs may agree that the transfer fee is paid over a period of years, rather than immediately.
Cash
This is just what it sounds like – what is in the club’s bank account. Ever heard of the expression “cash is king”? It is because without it a business can’t operate – because it wouldn’t be able to pay its staff or suppliers. For a football club that is so reliant on its staff, it is therefore vital to ensure you have a means to pay salaries and other costs.
The cash balance has decreased from £1.6m to £0.08m. The club includes a “cash flow statement” in its accounts which gives the main reasons for movements in its cash balances. The main reason for the reduction in the balance is the loss incurred in the year.
As noted further below in the “creditors” section, the directors have loaned money to the club, interest free, to support it.
Liabilities
A liability is an amount owed by a company that will lead to the outflow of economic benefits – for example, a payment in cash for a debt owed – either in the short term (in the next twelve months) or long term. Each sub-category is discussed below.
Current liabilities
This description is given to amounts the club owes to individuals or other clubs/ organisations. They are called “current” because they are repayable in less than 12 months. The key items for STFC are:
- Payments received on account (largely season tickets paid for in advance): When you buy a season ticket for next season, and pay for it in advance, the club cannot recognise it as “turnover” until the season in which it relates to. So advanced season ticket sales for the 23/24 season are not included in the turnover figure in the P&L. Instead, they are shown as a current liability. Why? Because theoretically the club have not provided the service to the customer yet (giving them access to the matches) and the customer could ask for their money back if they changed their mind.
- Trade creditors: Amounts owed relating to the day-to-day business – this could be transfer fees, payments to suppliers to the club etc. The balance has decreased marginally year on year.
- Other current liabilities (taxation and social security, other creditors, accruals, and deferred income): This relates to items such as payroll tax, one-off bills or where invoices have not yet been received by the club. The term “accrual” is used in the accounts. This is the opposite to a “prepayment” and it means a company have used a service but not paid for it yet. A good example would be if you pay £20 a month for broadband but pay for the current month’s usage next month. This would lead to an accrual in the balance sheet of £20.
Long-term liabilities
These are liabilities which are payable more than 12 months from the date of the accounts i.e. they are due to be paid after 30 June 2024.
The balance has increased c. £0.5m since the prior year. The accounts note that £0.5m relates to loans made by directors to support the club. The loans do not incur interest. At the date of the accounts (i.e. March 2024) loans made by the directors now sit at £1.3m.
Capital and reserves
This shows:
- The only change in the year is the loss for the year after tax of £3.0m.
- The P&L reserve stands at £7.7m – this is the total cumulative profits the club has recorded since it was founded as a company.
- Share capital has remained stable at £2.5m.
- This means total equity stands at £10.9m. This is equal to the amount the club’s assets are higher than its liabilities.
