Cardiff City made a loss of nearly £29 million as it emerged from the COVID pandemic, official new figures show.
The club's financial situation has been laid bare after it recorded its most recent set of accounts, which show the Bluebirds' total debt stood at £123.4m for the year ending May 31, 2022, with the majority of this owed to owner Vincent Tan and his family.
The accounts show an operating loss for the year of £28.9m - up from £12.1m the previous year - with the club's balance sheet deficit soaring from £36m to £56m over the course of 12 months.
Cardiff City Supporters' Trust chair Keith Morgan, a football finance expert, has analysed the accounts for fans on behalf of the Trust, with the key points detailed below.
While there was a significant £3.5m increase in ticket sales as fans were once again allowed to return to matches, the figures also show that Cardiff were hit hard by the loss of parachute payments, awarded to sides relegated from the Premier League, with the club's turnover plummeting from £55.2m in 2020-21 to just £20m.
There were efforts to reduce operating and administration costs at the club, with player salaries also being reduced by £4 million as higher-earning stars left the capital and those with lower wages were brought in. However, the impact of these saving measures are not reflected in the latest balance sheet with most of this activity taking place during last summer's transfer window.
The balance sheet also reveals that nearly £100m of the club's debt is owed to either Tan and his family (£73m) or Tormen Finance, a company in which chairman Mehmet Dalman has a significant interest (£25.8m). Cardiff, meanwhile, are owed just £7.7m, the majority of which is transfer fees.
Tan lent the Bluebirds a further £19.8m during the year, and has converted over £25m of debt due to him into shares, although most of this was done after the year's end. Another loan of £24.4m was also made to the club by an unnamed party.
Over £20m has been put aside in regard to the Emiliano Sala dispute with FC Nantes as legal action continues, while plans for the construction of a new first team training centre have also been put forward.
In a statement accompanying the latest accounts, Dalman said the club's finances continued to be impacted by external pressures and were therefore still "heavily reliant" on Tan. He added that, without the owner's support, the club's future "would look much more precarious" while he also thanked staff and fans for their support "throughout periods of turmoil" over the last two seasons.
"The pressures created by the pandemic followed by the significant increase in our operational costs and supply chain issues and the massive increase in our energy costs caused by worldwide events and conflict within Europe continue to impact football finances," he wrote. "And this has obviously meant that we have remained heavily reliant upon the continued financial support of our owner [Vincent Tan] throughout this period.
"As a Board and a Club we are extremely grateful for the continued support of our owner and without this the future of the Club would look much more precarious. I must take this opportunity to thank every person at the Club for their unwavering commitment and support throughout these periods of turmoil and what has been an immensely challenging environment and period for all those involved."
Total loss
The club's accounts show an operating loss for the year of £28.9m (up from £12.1m in 2021) and a loss after tax of £26.6m (up from £12.0m). Parly as a result of those losses, the balance sheet deficit rose from £36m as of May 2021 to £56m 12 months later.
Turnover
Turnover fell dramatically in the year from £55.2m in 2020-21 to £20.0m the following year, with income largely being lost from parachute payments. These payments, given to teams relegated from the Premier League to compensate for the loss of revenue, ceased in the summer of 2021.
This fall in turnover came despite a £3.5m increase in gate receipts as football moved out of the COVID pandemic and fans returned to the stadium.
Costs and salaries
With a significant loss of income, some efforts were made at the club to offset this by reducing operating costs. Player salaries fell by around £4m, but the majority of these savings occurred after the balance sheet date, with 11 players whose contracts were up leaving the payroll last summer.
While 14 players were brought in on permanent deals to replace those who left the club, along with three other loan signings, these acquisitions came at a significantly lower salary cost. In total, there was a £4.2m profit on player sales (compared to £2.9m in 2021)
Administration costs fell by more than a third, dropping from £30.9m to £19.5m, while interest payable in the year was £2.4m, slightly up on the figure of £1.9m in 2021.
Directors
Directors remuneration fell significantly to £143,000, having stood at £550,000 in 2021. The highest-paid director was paid £121k as of May 2022, compared to £413k just 12 months earlier.
While the accounts do not disclose which other director(s) received remuneration in the two years, Cardiff City Supporters Trust chairman Morgan notes that the reduction is "almost certainly" as a result of CEO Ken Choo moving to a part-time role at the club.
Squad value and stadium
The value of the playing squad fell significantly between May 2021 and May 2022. While it had been £10.5m at year's end in 2021, it had been written down to £2.5m 12 months later.
Player addition costs over the course of the year were just £1m, with players that originally cost the club a combined £14m leaving the club for a total profit of £4.2m.
Meanwhile, the club's stadium asset stood at £77.6m as of May 2022.
Debts
As of May 31 2022, a total of £7.7m was due to the club. This included £4.6m of transfer fee installments.
The latest balance sheet shows amounts of £73m are due to Vincent Tan and his family while £25.8m is due to Tormen Finance, a company in which Mehmet Dalman has a significant interest. This loan to Tormen carries interest at 9 per cent.
These amounts make up £98.8m of the total amount of debt due from the club, £123.4m (up from £113.4m in 2021). The balance of debts due included £12m of accruals, £2.6m in transfer fee installments and the remaining balance of a £5.5m pandemic support loan from the EFL.
Tan made new loans of £19.8m during the year, with repayments to him and his family of only £1.1m. He also converted £6.6m of the debt due to him into shares during the year, while just after the year end, in June 2022, he converted a further £19m of debt into shares.
Of the total due to Tan, £51.2m carries interest at 7 per cent as well as rights to convert into shares. However, the rest carries no interest and has no conversion rights.
Emiliano Sala
As has been the case since 2019, there is full provision - totalling £20.7m - in the club's accounts for the Emiliano Sala dispute with FC Nantes.
Legal actions are ongoing, with Cardiff currently awaiting a ruling from the Swiss Federal Court in respect to its appeal against the ruling from the Court of Arbitration for Sport, which subsequently led to the club's transfer embargo being imposed.
In Dalman's statement accompanying the accounts, he said: "The outcome of this ruling will determine the next steps that we as a board will take over the matter of the remaining transfer fee and action(s) against Nantes and their agents and our insurers at that time.
"As a Board we are determined to do what is in the best and long-term interest of the Club to protect our position especially in a situation where as a Club we were the innocent party in the handling of the actual flight arrangements involving Emiliano."
Consultancy fees
During the year, consultancy fees were paid to WMG Group in respect of the services of Mehmet Dalman. A total of £1.7m was paid in loan interest to Tormen Finance.
Later events
While the latest accounts reflect what happened during the year, some significant events have taken place between the balance sheet date (May 31 2022) and the date that the accounts were signed off by the directors (February 24 2023). These include Tan converting a further £19m of debt into shares, as explained above.
As well as this, further loans of £24.4m were made to the club by an unnamed party at 9 per cent interest, while new players were acquired at a cost of £5.4m.
Other projects
The club is continuing to invest in its infrastructure as it looks to win promotion back to the Premier League and stay up for "the foreseeable future". Dalman added that the Bluebirds must "break away from the vicious cycle of promotion and relegation" with two huge projects aimed to help them with this ambition.
Firstly, there is the development of the new academy training complex in Llanrumney, which is set to be completed in time for the 2023/24 season.
But secondly, a new first team training facility near to the club's current base is currently in the prelimenary stages of development. Due to be held under a 150-year-lease, it is hoped that it will be finished in time for the 2025/26 season.
"These two projects are integral to the ongoing investment in the club's infrastructure and developments to secure the future of the club," added Dalman.
READ NEXT:
