£13m loss as Blades count relegation cost

Kevin McCabe of Sheffield United Football club ' 'See Story  Ian Appleyard   Picture Chris Lawton '09 May   2011
Kevin McCabe of Sheffield United Football club ' 'See Story Ian Appleyard Picture Chris Lawton '09 May 2011

Sheffield United are counting the cost of relegation as the club’s annual report and accounts showed an overall loss of £13.6m for the 12 months to June of this year.

As the Blades embark on taking the necessary steps to bring it back to the point where it’s financially self-sustaining, plc chairman Kevin McCabe said operating costs, including players wages, fell by £4.1m to £18.2m.

McCabe also apologised to the shareholders and supporters for sanctioning expensive loan signings in what culminated in a ‘wretched’ season.

Impending relegation from the second tier saw turnover drop by £4.3m to £16.2m while gate receipts fell by £0.7m due to a drop in attendances.

Despite the ‘painful’ decisions taken by McCabe, United’s net debt still stands at £32m.

Kevin McCabe, Chairman of Sheffield United plc, said: “The financial year and the football season were wretched for everyone connected with Sheffield United. But, rather than wallow in self-pity, we have used these difficult experiences to reassess the whole way the Blades are run. It has meant taking some painful decisions from which we hope to emerge stronger and, as a result, more successful in years ahead.

“Our immediate target is promotion. Beyond that, the medium term objective remains to establish Sheffield United as a financially self-sufficient Premier League club, with a regular core of young players built around the successful 2011 FA Youth Cup final squad.

“On a personal note, I apologise to all shareholders and supporters of the Blades. So much time, effort and financial resource has been invested by the McCabes to make Sheffield United a club with a top-class football infrastructure, well admired in English football. It really did seem that fate was against us last season. No amount of further substantial investment or change of football management could save us from relegation. One thing is for sure, throwing money at too many loan players does not work for Sheffield United and so, in future seasons, more thorough diligence will be applied to select additional squad members who can genuinely help the cause and bring success,” added Mr McCabe.

Chief executive Julian Winter said: “No club could have tried harder to immediately reclaim top flight status. Strong support from the parent company meant Sheffield United long maintained a wage bill far in excess of the revenues generated.

“Unfortunately, that approach has not worked and it has coincided with a decline in our league status. The club is no longer in a position to fund the higher player wages at the levels of the previous years. We are now taking all necessary steps to bring the club back to the point where it is financially self-sustaining.

“It is essential that we bring our income and costs into kilter so that we can capitalise on our strong and loyal supporter base, successful Academy and the Bramall Lane stadium assets. We will continue to consider external investment into the club provided it is in the best long term interest of the club.”

Relegation from the Championship impacted on football revenues for the period.

Turnover fell by £4.3m to £16.2m.

Gate receipts were reduced by £0.7m to £4.2m with average attendances falling to 20,632.

Commercial, retail and catering revenues were also lower.

To underpin the finances of the club, where net debt stands at £32m (down from £57m), considerable steps have been taken including the commitment of sufficient working capital from Kevin McCabe and his family to ensure funding for the current season is assured.

Other steps have included: A reduction in operating costs, including players’ wages, down £4.1m to £18.2m.

A reduction in administration costs, down by £3.3m to £12.5m.

A freeing of bank debt following disposal of interests in the Copthorne Hotel – although the club has an option to repurchase the hotel.

Conversion of more than £17m worth of loan notes (provided by the McCabe family) into equity.