AFC Bournemouth have announced a loss of in-excess of £60million for the financial year ending June 2020.
With the world in the grip of the Coronavirus pandemic, the Cherries accounting year ended with the country still in lockdown. The Premier League had been suspended since March and with the countries top flight in dispute with television companies over payments, “project restart” to conclude the 2019/20 Premier League campaign had begun with games being played behind closed doors.
At the end of June 2020, AFC Bournemouth’s 2019/20 season still had seven games remaining, with their eventual fate of relegation yet to be determined.
The club would also go on to refund all supporters for their tickets of the remaining home fixtures, plus all associated match-day sponsorships.
This resulted in AFC Bournemouth releasing figures of a recorded loss after tax, for the period, of £60.1 million, compared to a loss of £32.4 million the previous year.
This of course is an unprecedented scenario, in which laying out a companies accounts side-by-side for analysis and comparison would be folly. As to will be looking at next seasons accounts considering those will not only include relegation from the Premier League, a scenario which always sees a huge shift in football clubs finances, but also an entire campaign played behind closed doors with the coronavirus pandemic continuing throughout the entire 2020/21 campaign, with almost complete loss of all match day revenue and many sponsorships.
Turnover was down by £35.7 million, from £131.1 million in 2019 to £95.4 million in 2020.
AFC Bournemouth’s parent company A.FC.B. Enterprises Limited, a company registered in The British Virgin Islands and controlled by Maxim Demin, holds a non-interest bearing loan with a book and fair value of £126,295,000.
To view the accounts, click here.
All football clubs will have been dealt the same hand, so looking at how the impact has affected other clubs on this occasion does bring some clarity. Leicester City and Brighton & Hove Albion both recorded similar loses to AFC Bournemouth, whilst Everton announced annual losses of nearly £140million.
LISTEN- "Covid & the way accounts are put together have impacted many clubs' finances." Former #afcb Chairman & International Sport business advisor @PMsportlaw reacts to AFC Bournemouth's £60m net loss for year to June 2020.https://t.co/dreTuq0Iap pic.twitter.com/jD5a7bY5fr
— BBC Radio Solent Sport (@solentsport) March 29, 2021
AFC Bournemouth chief executive Neill Blake said in a statement released on afcb.co.uk…
“The financial statements cover a year in which the club competed in the Premier League for a fifth consecutive season, finishing in 18th place with 34 points. That unfortunately resulted in relegation from the Premier League into the EFL Championship.
“During the financial year, the club’s focus was to consolidate its position in the Premier League through targeted expenditure on assets and expertise in the playing squad and supporting infrastructure. Contrary to the hopes and expectations of all the club, the goal of retaining Premier League status was not achieved.
“The directors continue to maintain close control over cash flow and continue to develop and maintain policies with the aim of ensuring the club is run in a sustainable and successful manner.
“These policies are seen as vital in order to keep control over all expenditure that the club commits to in order to go some way to mitigating the risks arising from the inherent uncertainty over league status in the following season.
“The club sees retention of staff as a key ingredient to success. During the year there were no changes to key personnel in first team management or senior executive positions. The directors considers the financial position of the company to be satisfactory.
“After the year end, the club sold three players for a profit of £50.8 million. Clearly, if these sales had been made before 30th June 2020, this would have removed a large portion of the loss for the year, and in an ordinary year such sales would have been possible prior to the year end.”
Waz afcb wrote…
Not a lot of new info there to be honest. Huge level of debt but owed virtually all to the owner. I don’t think that’s too much of a worry to be honest. We obviously can’t pay that back unless we get to the Premier League. If he decides one day that he wants his money back then what can we do? Doesn’t grow on trees. He can asset strip us and let the club die to recoup a bit I suppose but wouldn’t come close to covering the entire figure, he’d lose money if that were the case. The only way he recoups his money is if we are successful on the pitch.
If Denim wants to call in his debt, the only way to do so is to get us back the Prem. Either that or you call it in at the start of this season once relegation is confirmed and you sell all the player assets as soon as you can.
Clearly, debt-free is preferable, but otherwise, the only way the debt can realistically be called in is if we are successful on the pitch.
The two concerns I would have is A) whether Denim can afford to continue the bankrolling of the club at current levels (or even slightly reduced levels) in 2-3 years should we stay in the Championship. B) will we be breaking EFL financial fair play rules that could result in points deductions?
Bottom line is
Is Max worried that he is owed an awful lot of money and hasn’t a hope in hell of getting it all back? My guess is No.
Should we as fans worry – possibly but I would rather “owe” Max £160,000,000 or whatever it is than owe the taxman £160,000.
On the plus side, this whole COVID malarky will ensure that we are not the only club operating in the red. See, I knew I could find a positive in there somewhere!
But seriously, Max seems happy enough with the debt/asset ratio right now so no reason why we shouldn’t be. We’ve known for a long time that Max is bankrolling everything because he sees AFCB as a hobby. As long as that doesn’t change and his personal circumstances do not change dramatically, I would imagine that we will jog along as we are. The wage bill is gradually being reduced and maybe soon the match day income will return. He has reason to believe that the losses are likely to become less in the future I would have thought and can afford to ride it out.
The summer’s sales bought the club breathing space, both in terms of fees in and also wages off the book. We said as much at the time and it still holds true. Others may not like people relying on that for comfort, and we can’t forever, because you can’t sell the same player twice. But the fact is a sell-off was always going to be part of the club’s ability to recover cash in the event of relegation.
The more troubling bit for me is – I imagine the working assumption from Max was that any failure to get promoted this year, could be followed by a similar round of sales to get another round of fees in and wages down, to further recover the situation.
Then you think about the assets (as Max will see them) we have to facilitate that, and suddenly it’s not as obvious that we’ll manage it.
Lewis Cook – perhaps our most saleable player on good form – injured long term.
David Brooks – had a shocking season
Jeff Lerma – hit and miss
Lloyd Kelly – hit and miss
Diego Rico – more miss than hit
Danjuma is probably the most likely.
Covid will obviously hit the fees we can command from buying clubs also.
Potential failure to get promoted followed by a failure to secure the kind of fees we’d have hoped from the second round of sales, would compound the situation and mean that debt isn’t coming down any. Then chunks of money Max thought were tied up in the club via saleable assets then evaporate before his eyes.
What is his view/attitude to that issue? Will be the question.
Max (Blake/Hughes) is playing with his own money, and for as long as 100% or near enough of all debt is owing to Max, then whatever that amount is, at least we know where we stand. I said it the other day – whether that amount is £16m or £160m, it near as makes no difference to AFCB’s ability to pay it back organically. It all comes back to Max’s attitude towards the club.
That’s my 2 pennies worth. Long story short none of us really know. – Join the conversation, click here.