Trust chair Keith Morgan
Keith has spoken to the club to ensure that there are no factual errors in his commentary but the statement represents his own review opinions, totally independent of the club.
Cardiff City Football Club (Holdings) Limited is the parent company of its main trading subsidiary Cardiff City Football Club Limited and also Cardiff City Stadium Limited and Cardiff City Premier Seating Limited (all 100% owned). Therefore, references in this commentary are to the group.
The Headlines
The accounts were approved by the club directors on December 21, 2024 and signed off by the independent external auditors on December 23, 2024.
The group made an operating loss in the year of £10m (down from £11.1m in previous year) and a net loss of just under £11.7m (previous year £11.4m). As a consequence the balance sheet deficit at May 31, 2024 rose to £30.8m.
The directors’ report for the year again stresses that the business is heavily reliant on substantial financial support from its principal shareholder Vincent Tan who has confirmed in writing to the directors that such support will be forthcoming for not less than 12 months from the date the accounts were approved (ie until at least December 2025). This confirmation , although not strictly legally binding, gives the directors a high degree of comfort as to the business’ viability going forward and has also enabled the auditors to conclude that the club remains a going concern financially.
The level of losses incurred, particularly after allowable adjustments under the rules, indicates that the football club was compliant with the EFL Profitability and Sustainability requirements. The published minutes of meetings between club officials and elected fan representative groups confirmed this to be the case.
Statement of Comprehensive Income (the Profit and Loss account)-key figures
Turnover for the year was £23.2m, down £3.4m from the previous year. Gate receipts and match day income plus income from broadcasting actually rose slightly but sponsorship, advertising and commercial income fell by £4.3m compared to 2022-23.
Cost of sales rose significantly in the year by £9.5m to £39m.A large proportion of this was down to an increase of £5.7m in player wage payments to £19.9m. Other elements of the increase appear to relate to an increase in the accounting write down (amortisation) of the playing squad value – a normal annual cost charged over the period of players’ contracts. In addition, there was a substantial further increase in investment in running costs of the club’s Academy.
Administration expenses went up £4.4m to £12.7m. However, I understand that the 2022-23 figure benefited from some one-off exceptional credits so the true increase was only in the order of £1m.
Exceptional items – £18.4m
This has been a major financial benefit to the club in the year, offsetting all of the increased cost referred to above. It consisted of three main elements
- Settlement of a contractual dispute arising in a previous year which generated £5.8m.
- Release of a provision in previous accounts no longer considered required – £0.7m and (most importantly).
- Sale of a share of the proceeds in a litigation case.
The only matter that I believe this can relate to is the club’s long running legal claim for damages against FC Nantes arising from the tragic death of Emiliano Salah in 2019.
There are enterprises that will buy the rights to all or parts of legal claims, but only if they believe that the claim has a very good chance of success. Therefore, it seems that it is just not the club and its legal advisors that continue to believe they will eventually succeed in their claim against Nantes but an independent third party who are willing to advance £12m – non refundable no matter what the outcome of the case.
To “an outsider looking in” this gives me increased confidence that the club will win the case. On a prudent basis , and in line with accounting requirements , the club has not included the potential future financial benefit from this source in these accounts as it is what is referred to as a “contingent asset” rather than an actual realised asset.
Profit on player sales – £760K compared to £1.7m in 2023.Players sold in the year (ie the Summer 2023 and January 2024 transfer windows) had an initial cost to the club of £6m but had been depreciated down to just £285k at the time of their disposal.
Interest payable was £2.6m (2023 £2.0m). Of this , a note to the accounts reveals that £2.1m of this interest was payable to Tormen Finance Inc. in which club Chair Mehmet Dalman has a significant involvement. This interest is stated to be at a rate of 6% per annum.
Directors Emoluments
In respect of WMG Funds the figures are not directly comparable , there is no charge for the Chairman’s time in either year but the charge is for “ other services provided by third parties “ engaged by WMG on behalf of the Club . Just happens that they were significantly reduced in 23/24 compared with 22/23. The services provided in themselves may not necessarily be “the same”. The highest paid director was paid £60k and was the only board director to receive a salary.
Statement of Financial Position – the Balance Sheet key figures
As stated above , the club had net liabilities as at 31 May 2024 of £30.8m.
Player values– the playing squad had a totalaccounts carrying value of £7.5m at cost less amortisation. The accounts also disclose that the club spent a further £10.5m on players between 31 May 2024 and 21 December 2024 when the accounts were formally signed off (i.ethe Summer 2004 transfer window, but excluding the January 2025 window). In the same period the club sold players for netproceeds of £5.6m
Stadium value– £84.5m.The stadium is on a 150 year lease from 2009 with the landlord being Cardiff City Council. The value of the stadium is supported by an independent professional valuation undertaken by Savills in 2023.
Debtors (money due to club)– the total of £13.6m includes prepayments, accrued income of £10.7m receivable in 2024/25 and football receivables of £2m.
Debts due within one year of balance sheet date – £137.7m
£68m of this total was due to Vincent Tan who injected a further net sum of £11.8m into the club during the year. £47.5m of this was technically interest bearing at 7% but the owner has never charged or drawn down any such interest. All of the £68m is secured by legal charges over the club’s assets.
The other major debt due is £40.3m due to directors and connected parties. £37.3m was due to Tormen Finance Inc in which Mehmet Dalman has significant interest – Tormen put new finance of £11m into the club during the year and interest on this loan was charged at 6%.
The accounts also reveal a “directors loan” of £3m from one of Vincent Tan’s sons U-Peng Tan. He is not a director of the group but had previously been a director of one of the group subsidiaries, hence the description used in this and previous year accounts.
Most of the rest of the group debt concerns accruals and deferred income. Deferred income is season ticket money received before the year end but which relates to the right to attend matches in the following season and therefore the following financial year.
After the year end in 2024 the club received further unsecured funding of £14.9m to assist with operational funding needs.
Overall Summary
The group continued to make losses in the year and there must therefore be an ongoing focus on the means to reduce and eventually eliminate such losses, including the means of replacing the benefit of the 2023-24 exceptional item, to be achieved by a combination of additional income generation and tight cost control.
However, the level of losses was such that the group did not trigger any penalties or restrictions under the Profitability and Sustainability rules. In addition, the group operational cash flow needs continued to be met by its owner (with a written commitment to continue this support) and through the group chair.
Keith Morgan, FCA,
Trust Chair
