Thursday, December 28, 2006

Big losses as Addicks spend more on wages

Charlton recorded operating losses of £4.6m and an overall net loss of £8.9m in 2005-6 which were offset by a share issue to directors and the sale of players. After a conscious decision to invest in the playing squad, the club’s salaries and wages costs increased by 18 per cent to £30.5m, representing 72 per cent of turnover, up from 63 per cent the year before and well above the 50 per cent level recommended by accountants Deloitte.

Overall turnover was up from £40.7m to £41.9m with a particularly good performance in conference and banqueting revenues which increased by 43 per cent. However, sponsorship revenues were affected by the premature termination of the all:sports agreement with the loss of nearly all the year’s income. This had knock on effects elsewhere. Retail sales rely on a strong Christmas period and the inability to sell any goods branded with the all:sports logo during that period reduced sales, while further significant costs due to the write of all:sports retail stock, changes to the electronic advertising system and branding throughout the business.

The number of fans buying season tickets fell by almost 10 per cent. Charlton chairman Richard Murray commented, ‘The fall in season ticket holders to 18,700 is due to a number of factors, the more important we feel being the varied kick-off times spread across weekends during the season and the more negative approach taken to clubs because of the fear of relegation and its serious financial impact.’ Survey evidence which we have reproduced earlier on our sister blog at football economy does not suggest that kick off times are a decisive factor for most fans.

The commercial mortgages taken out to develop the north and west stands have been repaid by a new loan repayable over eight years which was also used to fund the year's capital programme of £623,000. It is not known what the annual repayments on the new loan are.

Referring to the forthcoming EU white paper on sport, Charlton chief executive Peter Varney states in the club’s programme: ‘As with the interference by the European Commission in the tendering process for the Premier League’s broadcasting rights, I am against European involvement in the way we run the professional game in this country.’ ‘Interference’ is an evaluative word and the European Commission used its competition policy powers in a way that was never subject to any legal challenge. By becoming more like a business, football can hardly complain if it is treated in a similar way to other businesses by the European authorities.


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