Financial results announced.

City today released their financial results for the year ending 31st May 2005.
A very positive outlook was painted by John Wardle in the chairman's statement, which covered onfield, off-field and financial performance.
So, just how well are we doing then? Looking at the results, Wardle paints a very rosy picture of current proceedings and although the full statement and results are available at the link above, Bitter and Blue casts it's eye over the announcement to see exactly what state the club is in.

Chairman's Statement:
Wardle reflects on the narrow miss of qualifying for the UEFA Cup, which "was beyond our expectations and inconsistent with the indifferent form we displayed over parts of the season". He identifies the reason for this as the appointment of Pearce to replace Kevin Keegan as manager - "His passion and vigour perfectly complements the enthusiasm and ambition of our proud football club", before stating that we are now entering the next phase of our development.
All in all, a fairly standard opening, with the focus on the appointment of Pearce no doubt one designed to earn the board plaudits for the 'brave' decision to give Pearce the job on a full-time basis.

Football:
This section opened with the fact that the board see the "baseline objective remains the retention, consolidation and development of our Premiership status". He thanked Keegan for his role in re-establishing the club in the Premier league whilst many of our "peer group have fallen away". However, he lamented the fact that again early Cup exits cost the club financial opportunities. Again, the appointment of Pearce was applauded and praised him for the style of play, embracing the youth academy, the discipline introduced and his interest in all facets of the club, whilst also commenting on the 'further improvements' to the training facilities (sadly not detailed). The departure of Keegan was somewhat glossed over, the statement explaining that "With the club sat in twelfth place.....the board agreed with Kevin Keegan that his tenure as manager should come to an end".
The SWP issue was raised and here the statement placed the reason for his departure very much at SWP's door - "the transaction was only sanctioned after, to my great surprise, Shaun contradicted personal assurances that he wanted to remain", and that it was "clearly felt by Shaun, and his advisers, that this was too good an oppprtunity to miss".
So where has the money from the sale of SWP gone? Well to clear matters up, it was stated that it has provided funds "to reinvest in the first team squad, academy, to pay off outstanding instalments on players purchased, and monies to reduce borrowings". All very crystal clear then. The club "hoped to add further to the squad....it was pleasing to see our new manager prudent and considered", perhaps a dig at Keegan's performance in the transfer market during his last eighteen months in charge? Wardle did promise we would be well prepared for the January and Summer transfer windows, but generally a very non-committed explanation as to exactly what funds are available or what amount of the SWP money did indeed pay off the clubs debts. I would also have liked to see Keegan perhaps given more praise and recognition for his role in resurrecting the club, as without his appointment and time as manager we surely wouldn't have the platform that Pearce is now building on.
Wardle also highlighted the successes of the reserve and Academy sides over the past season, which only serves to highlight the resources we have coming through the ranks and, according to those more in the know than myself, there could be some production line of talent over the next five years.

Financial Performance:
Perhaps the most important part of the statement, given the usual (tabloid) reports of our 'unserviceable' £60 million debt which is supposed to have forced the sale of SWP to Chelsea, contrary to the fact that the player himself may have wanted to leave.
Total turnover was actually down by £1 million to £60.9 million compared to the previous season - a figure which should see us cement our standing in the top twenty clubs in the world - with Deloitte stating we were "an example of a club capturing, and then capitalising on a new stadiums potential, and transforming its revenue as a result". Growth areas were gate receipts, TV and sponsorship monies but we lost out on our early Cup exits and our non-participation in European competition. The wage bill remained static at a figure of £37.7 million. To break that down though - that is a total of around £750,000 a week. Is it me or does that seem an extremely high figure? Surely we can't still be paying off previous managers going back to Mel Machin can we?
A big positive reported was the reduction in total debt to £57.7 million, down from £62.2 million, with the net external debt down to £38.5 million from £50 million - of which 93% was not repayable within the next five years.
Apart from the wages, when broken down the figures certainly do not paint the doom and gloom that most experts seem to enjoy when focusing on the debt. The debt we have is patently manageable and the utilisation of the stadium to generate finance will surely only help in the future. Another plus point is the fact that the figures do not even take into account the transfer fee received for SWP so unless Wardle has called in his loan to the club, the debt should reduce even further in next years results.

Outlook:
Wardle again re-iterated that the primary objective "must be the retention, consolidation and development of our Premier League status", which translates as the fact that if the unthinkable did happen and we were relegated it would pretty much be financial disaster for the club, given the current debt levels, wage bill etc. He did acknowledge that the "light of ambition shines strongly and we enter a period.....excited, enthused and positive". Again, not rocket science from Wardle and the board obviously realise that we are in a position of stability not seen at the club for some years. There is also a platform in place for the club to kick-on both on and off the pitch and move onto the next level - constant European qualification and regular annual profits with the total debt reducing.
From a fans perspective, perhaps the one thing that people will have an eye is just how much of the SWP transfer fee will Pearce be allowed to plough back into improving the squad.
My guess is not as much as we would hope, and it will be a critical time come January as if we are still hovering around the top six it will be imperative that we strengthen the squad to capitalise on the progress made.
The full statement and balance sheet is at the following link.