TRFC financials year ended June ‘23

[O4anotherplayoff]

I see they’ve now been filed at Companies House: https://find-and-update.company-information.service.gov.uk/company/00118587/filing-history

A tough year, obviously. But, given what we’ve already been told over the last year or so, there are no great surprises in either financial performance or business commentary - including the active search for new investment - but an interesting read all the same. Summarised in the Strategic Report, here:

 

[Am on mobile]

Probably one of the reasons we are having a quiet month not to good

 

[drwhoman]

I cannot imagine that Nigel would want too many squad changes this month in order to maintain team spirit.

 

[dollar'sbloke]

I cannot imagine that Nigel would want too many squad changes this month in order to maintain team spirit.

Can't see the harm in losing the 10th string midfielder and bringing in a centre forward. Any move now will probably be loans with a view to a move, either direction.

 

[Keith Hill (Bolton)]

On the 'A Trip to the Moon' podcast, the southern SWA, the chairman said, has donated some of the finance to bring Rob Apter back on loan.

 

[O4anotherplayoff]

Speaking of trips to the moon, it’s on the public record that our last one left us in hock to PJ to the tune of almost £6m by the time he sold up. At least he made sure we ended up back on planet earth - a lengthy, nervous and bumpy landing for sure, but, ultimately, a safe one.

These days, £6m wouldn’t even get us into orbit. So I can’t see those days ever coming close to returning, whoever the owner.

But we are still safely on planet earth, and the financials suggest we’re gradually getting ourselves into good enough shape for a decent trip to somewhere. Just need to tempt someone into putting a bit more fuel in the tank now.

 

[Ian]

Yes, all that reckless spending got us so so close.. a risky strategy but they were good times for the supporters. Now we operate a steady ship just drifting waiting for the fuel supply. Will it ever come?

 

[dollar'sbloke]

Pretty sure it was higher than that at one stage, pushing £10 million. Sales kept knocking it back down. PJ agreed to the late Dave Patterson's request for £500k to save the ship. He originally agreed to loan money at market interest rates but slowly got sucked into the whole thing. He clearly enjoyed the Wembley trip after the first six months showed no progress, later dropping the interest charges.
IMO the problem came when we went from not much over 1,000 gates to nearly 10,000 in seven year and two promotions. But PJ had unrealistic views on local support, he concluded it wasn't there and left. In fact it was, just it lagged events as each school year saw more fans coming on board.
Controversy, problems and eventually yet more generosity featured the rest of the era. In real terms PJ put in about £20 million by the time he left. My own knowledge fades in detail from the time he fled. But I am of the strong opinion, even today support is strongly bolstered by his efforts. We take as many to nearby matches as we used to get at home whilst occupying the same lowly position.
Still curious about the current ownership and intentions. Palios owns a majority holding but the Indonesian owns a big stake. Pretty sure legally or contractually Palios cannot sell without offering the Indonesian first go or a new owner must buy the Indonesian out. Makes no sense to own about a quarter and gain no control under a new owner?
So am I right in concluding to buy in you would need many millions just to get through the door and before investing for an upward effect. We are no £1, absorb the losses and improve by investment deal like PJ had?

 

[O4anotherplayoff]

Yes, all that reckless spending got us so so close.. a risky strategy but they were good times for the supporters.

Yes, I don’t think any of us who went on that trip to the moon would feel it wasn’t worth the cost. But then we didn’t bear the cost! And we might have felt very differently about it if we hadn’t ended up in safe hands.

I also sometimes wonder if those days helped foster an overblown sense of entitlement amongst the later generations who weren’t around at the time, although that’s probably more a society thing than just a Tranmere thing or even a football thing.

Now we operate a steady ship just drifting waiting for the fuel supply. Will it ever come?

A few bits and pieces give me a sense of cautious optimism but who knows. The owners have at least given the club as good a chance as anyone of attracting it.

 

[Rockford's Love Child]

Yes, all that reckless spending got us so so close.. a risky strategy but they were good times for the supporters. Now we operate a steady ship just drifting waiting for the fuel supply. Will it ever come?

We are still recording an operating loss of £500,000 to £1,000,000 per annum, and have done every year under Palios if exceptional items are excluded. So we are ultimately no closer to being a self-sustaining football club - Palios's stated ambition - than we were in 2014.

Those losses are not anything out of the ordinary for a League Two club, nor is a failure to become self-sustaining. However, it does make me question if that ambition was ever realistic in the first place, certainly without sector-specific experience of running concerts, hotels, investing overseas etc, none of which seem to have earned us a profit in the medium term.

I think we could help ourselves by spending money more wisely, particularly in relation to recruitment. Palios himself has admitted that 30% of the player budget is wasted each season, and an examination of our 31-man squad - far too large for this level, and too many of whom don't contribute anything on a matchday - would suggest we have done the same again this year.

 

[O4anotherplayoff]

To suggest self-sustainability isn’t realistic really does hammer home the self-entitlement point, especially prevalent in football. Although, to be fair, in the face of a global pandemic, an economic crisis and an energy crisis, self-sustainability does become a tad more difficult and, perhaps, temporarily unrealistic.

The current balance sheet is in rude health compared to the technically insolvent one MP bought from PJ, even after ignoring the current revaluation reserve. While PJ‘s loan write off is a significant factor in that, so too, of course, is the work done by a business turnaround specialist in building value into the balance sheet, and therefore into the club. Not there yet, but the direction of travel is encouraging.

The owners‘ interference into footballing matters, including in particular recruitment, is probably acknowledged by everyone, including, as the evidence would suggest, himself to some degree. In Adkins, who he often makes a point of telling us he trusts, he may have finally landed on a much better solution. Time will tell.

But the ‘30% waste’ point is an interesting one as, however he calculated it, it‘s only really meaningful if considered against whatever the ‘industry norm’ and ‘industry best‘ are - figures I don’t know we’ve ever been told or where to find. By that, I mean there will always be an inherent level of ‘waste’, including the cost of paying players who are injured and squad members who aren’t needed when the rest are fully fit, for example. So he can never eliminate that 30% - far from it - but it’d be interesting to know what % he‘s aiming for and how that stacks up with others in the industry.

 

[dollar'sbloke]

We are still recording an operating loss of £500,000 to £1,000,000 per annum, and have done every year under Palios if exceptional items are excluded. So we are ultimately no closer to being a self-sustaining football club - Palios's stated ambition - than we were in 2014.

Those losses are not anything out of the ordinary for a League Two club, nor is a failure to become self-sustaining. However, it does make me question if that ambition was ever realistic in the first place, certainly without sector-specific experience of running concerts, hotels, investing overseas etc, none of which seem to have earned us a profit in the medium term.

I think we could help ourselves by spending money more wisely, particularly in relation to recruitment. Palios himself has admitted that 30% of the player budget is wasted each season, and an examination of our 31-man squad - far too large for this level, and too many of whom don't contribute anything on a matchday - would suggest we have done the same again this year.

I am reliably told your valuation of the operating loss is inaccurate. It is of course the day to day running outcome. However cup ties and transfers tend to get slipped in. Last season it was £500k the one before £300k, the one we are in will have zilch extra income so will be the real litmus test.
Your valuation was true a decade ago which inflation has meant we have progressed somewhat.
My worry is our prospects for selling have never seen poorer, which is mainly a culture change in the game as down to us.
Sustainability is a bit of a grey term. Palios clearly sees it over the longer term, so over a few seasons it all balances up and it is not an annual event. For me he tends to wing it hoping the next bonanza hits soon!

 

[Rockford's Love Child]

The loss before taxation in 2023 was £1,373,246, £672,121 excluding depreciation.

The 2022 loss before tax was £342,584, but that included a stadium grant release of £1,006,941 which went back decades and had no cash impact, so an effective loss in excess of £1.3 million.

 

[drwhoman]

I suppose we can debate the numbers but at what level in the pyramids would we have to be to be fully self sustaining? I think it is a mirage to make us all, including the owners, feel sort of comfortable. Football is a complex and high risk business. Will Rovers ever make a trading profit? That said, how many clubs do, particularly at L2 level? Most clubs seem to need a big daddy if they are to have upward momentum. As we did with PJ.

 

[O4anotherplayoff]

We’re at a point where we can break even and maintain a competitive budget but, to move up, we need investment. It’s good that we’re looking for investment into longer term revenue-generating infrastructure, rather than just aiming to spunk any new money straight away onto wages. That should also go some way to weeding out any chancers amongst potential investors who may be interested in coming on board.

 

[drwhoman]

We’re at a point where we can break even and maintain a competitive budget but, to move up, we need investment. It’s good that we’re looking for investment into longer term revenue-generating infrastructure, rather than just aiming to spunk any new money straight away onto wages. That should also go some way to weeding out any chancers amongst potential investors who may be interested in coming on board.

I take your point, and I hope you are right, but I think you would agree that it is an awkward balancing act. It does not need much for this ambition to go pear shaped. A poor season, lower crowds, money needed to maintain aged infrastructure etc. see how we go!

 

[Ian]

What makes us attractive to investors? I don't think we have a line of them knocking at the door. We could be in limbo for many years and MP is not getting any younger.

 

[O4anotherplayoff]

The strategic report tells us what we are and where we’re at. The balance sheet also has more value in it than it had ten years ago, and the club obviously still sees further possibilities with, say, the new stadium and the campus. Besides that, I suppose the main pull for any investor is the kudos of owning a club, a shot at some degree of glory along the way, and, with a bit of luck, a sense that they‘re not walking into a black hole and, later, might get some of their money back when they move on! I very much doubt any investor into a lower division club expects to walk away with a profit, unless they're buying a club that’s way beneath its natural level, so to speak, or has the potential to break into the Championship or EPL.

Championship is where the serious money starts to kick in. Potential big rewards, but big costs too. Frankly I don‘t think this club will ever be big enough to compete regularly at that level again (and I see, for example, that only one club in that division has an average crowd of less than 15,000 this season). Instead, I feel our ceiling - with investment - may be similar to that one club, which is Rotherham, namely a good L1 club that might occasionally knock on the door of the Championship but, if it gets there, doesn’t last long there. So that alone would put us in a certain bracket that won’t appeal to certain brackets of money men who may be looking to buy a football club right now.

So yes, I too would be astonished if MP was fighting off a queue of potential investors. Alarmed too, as any queue would likely include any number of charlatans! But he seemed quite optimistic when he last spoke that a suitable new investor could be on board within a year (after which, perhaps curiously, a long contract for Adkins soon followed). I’m not aware of anything with which to contradict him, so we‘ll see.

 

[ADD]

The big concern is the cashflow. Cashflow was positive by £316k but that is only after a £1.2m increase in "Other Creditors" during the year. Without that cashflow would have been negative £884k. I am at a loss as to what it is TBH.

I have always suspected it might be PJ putting money back in the form of soft loans - it can't be MP himself or the Indonesians as if it were either of them then it would have to be disclosed in the accounts since they are directors. Not sure if anyone knows anything more?

Be it him or something else it is very curious as the total amount of such creditors is now £4.7m which is a massive number given the total Balance Sheet is only £17.5m. Also to have gone up by £1m in one year when turnover is only £5.5m is very strange.

 

[O4anotherplayoff]

The big concern is the cashflow. Cashflow was positive by £316k but that is only after a £1.2m increase in "Other Creditors" during the year. Without that cashflow would have been negative £884k. I am at a loss as to what it is TBH.

I have always suspected it might be PJ putting money back in the form of soft loans - it can't be MP himself or the Indonesians as if it were either of them then it would have to be disclosed in the accounts since they are directors. Not sure if anyone knows anything more?

Be it him or something else it is very curious as the total amount of such creditors is now £4.7m which is a massive number given the total Balance Sheet is only £17.5m. Also to have gone up by £1m in one year when turnover is only £5.5m is very strange.

As a medium sized group I don’t think such directors loan disclosures would be necessary in the accounts filed at Companies House. If anyone on here is a shareholder maybe they could tell us if there’s more detail in the accounts that were presented to the shareholders? Equally, I suppose any shareholder would be entitled to just ask the club what the £4.7m comprises.

A partial answer does, however, emerge from looking back over the filed accounts:

- The equivalent figure as at June 2018 was £2.7m, which represented long term, interest-free directors’ loans. So, it was owed to the Paliosi (note: both Johnson and his £2.1m loan had gone by then).

- In 2019 the figure went up to £3.6m and stayed more or less around that level until it went up to £4.7m in 2023. The accounts don’t explain why, or who it’s owed to, although I assume it’s mostly, if not entirely, still the Paliosi. But the 2020 filed accounts do give a partial clue, explaining that the Paliosi planned to sell the Riverhill (which they owned themselves) and use the proceeds to replace some of the club’s interesting-bearing debt with non-interest bearing debt from themselves. I don’t know when it was eventually sold or for how much, but its guide price at one point was £800-900k.

Re the possibility of any further borrowings from Johnson after he left, I’ve heard the occasional rumour from time to time that he did lend money but I’ve never heard anything remotely official. He may have done, or he may have even lent money to the Paliosi to help them finance their involvement, but, from the above, I’d be surprised if he was a major creditor, if one at all.