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Blackburn Rovers tackling £54.5m debt
BLACKBURN Rovers are £54.5m in debt after posting a pre-tax loss of £36.5m for last season.
Managing director Derek Shaw insisted the club was working hard to put its ‘house in order’ after a disastrous first year in the Championship.
Owners Venky’s state in Rovers’ latest annual accounts that they are willing to provide additional funds should the club’s overdraft with the State Bank of India not be renewed – and should the club fail to win promotion.
But the accounts, for the year ending June 30, 2013 and which cover the 2012-13 season, reveal:
- Rovers posted a pre-tax loss of £36.5m after losing £11.7m on player trading – more than the £30m predicted by supporters’ group The Rovers Trust last month. The previous year – the club’s last in the Premier League – Rovers posted a pre-tax profit of £4.3m after making £14.1m profit on player trading;
- Net debt has shot up from £24.5m to £54.5m – £36.1m of which is owed to Venky’s;
- Turnover was down £27.3m from £54.2m to £26.9m after a drop of £23.2m in TV money;
- Wages were down from £50m to £36m. However the wage-to-turnover ratio rose from 92.2 per cent to 136.1 per cent;
- The club lost £1.1m in ticket sales and £3m in commercial income as average attendance fell 33.5 per cent from 22,551 to 14,997.
Mr Shaw said the club faced a ‘challenging task’ of meeting the new Financial Fair Play regulations which come into play next season.
Blackburn MP Jack Straw said: “These figures are what happens when a highly geared club drops into the Championship. Professional football is a ruthless business, but a wages to business ratio on that scale for a club like Rovers is unsustainable.”
Rovers Trust co-chairman Wayne Wild said: “We predicted losses of around that magnitude.
“It is our job to highlight these issues and, at the time, we got a bit of criticism for it. On the flipside, this shows the owners are putting their own money in to try to win promotion.”
Blackburn Rovers Fans’ Forum secretary John Wareing said: “There have been some bad decisions over the past couple of years and the club is paying for that.”
FFP rules state that Championship clubs can make a maximum loss of £8m for the 2013-14 season. Anything higher will result in a transfer embargo which would come into force on January 1, 2015.
Clubs failing to comply with FFP will not escape punishment if they are promoted to the Premier League this season.
They will be required to pay a Fair Play Tax, which scales from one per cent on the first £100,000 overspent to 100 per cent on anything above £10m.
Rovers paid off high earners such as Danny Murphy and Nuno Gomes in summer. The full costs associated with the high-profile duo’s departures are accrued in the latest accounts.
Mr Shaw added: “We still have some big wage earners and are working to put our house in order.”
The accounts reveal the club is financed through a bank overdraft facility, forward finance arrangements and shareholder loans.
The £36.1m owed to Venky’s is interest free, with no fixed date for repayment. The £13.7m owed to the State Bank of India must be paid in one year.
The overdraft – which the accounts state is not secured over any of the club’s assets – expired on September 30.
But the bank has not withdrawn the overdraft, states the accounts, and the Rovers directors believe ‘the facility will be renewed on acceptable terms and conditions’.
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