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Financial background
Financial background

Financing of the Club

York City has released some additional comments about the financing of the Club, to help supporters better understand the situation.


 


Club Director and Trust Chairman Steve Beck commented: The Trust and the Club Boards have had to deal with many challenges over the past three years to sustain and improve our Football Club.  We are now working to resolve the current situation to help maintain the stability and financing that provides the team with a better chance of on-pitch success to reward our loyal supporters.


 


The Club Directors have been working hard to run the Football Club on a properly cost structured basis, on behalf of the Trust and all York City supporters, since their appointment in March 2003.  When the Football Club came out of administration with the help and support of all City supporters, whilst there were just sufficient funds to complete the Rescue Package, the business was effectively under funded by around 200,000.  This figure is represented by the figure of goodwill shown in the Clubs published statutory accounts.  This was because the new Football Club company inherited certain liabilities (e.g. amounts due to players, the tax authorities, the PFA) and onerous contracts from the old company, that have had to be settled over the following period. 


 


Citys Finance Director Terry Doyle explains: In addition to the challenge of restructuring the cost base we inherited, the initial under funding of around 200,000 means that managing the finances of the Football Club has always been even more difficult.  It has been apparent to all City fans that the Club has had to lead a hand to mouth existence compared to the extravagance of the past.


 


Doyle added: The Clubs relegation to the Conference at the end of the 2003/04 season has, inevitably, made the financial situation even more challenging.  Overall, since relegation from the Football League, income has reduced by over 30% and operational costs have also been reduced at a similar level.  In addition, our supporters will not need reminding that the team has not been successful in Cup competitions over recent seasons, unable to generate even a small Cup windfall, never mind the riches that the likes of Exeter City and Burton Albion have recently reaped.


 


One of the major successes of the Club Board was clinching the deal to gain ownership of Bootham Crescent.  However, as reported at the time, there was a shortfall of around 100,000 to be funded by the Club.  That is, the loan of 2m from the FSIF was around 100,000 less than the amount to be paid out to various parties on completion of the deal.


 


Terry Doyle explains: Whilst prior to this season the Club had been managed successfully on a trading basis with broadly a breakeven figure over the last two years, given the initial under funding and the shortfall in respect of gaining ownership of the ground, additional funding was required.  In Autumn 2004, the Football Club approached the Trust to indicate that some kind of additional financing was required.  As a result, with the Trusts full support, Jason McGill introduced a new 300,000 loan into the Football Club through his company J M Packaging Limited.  This funding effectively secured the short term financial basis of the Football Club at that point.


 


At the beginning of this season the Club Board presented to the Trust Board a breakeven budget, including a level of playing wages now at a realistic level for a club of York Citys status, to hopefully provide our loyal supporters with a considerably more successful season than last year.


 


Steve Beck, the Club Director responsible for Youth Development, explained: One fundamental aspect of the breakeven budget was to strive to maintain the excellent infrastructure that the Club has, by continuing its proven centre of excellence and youth system and its training ground.  We were faced at the beginning of this season with no parachute payment from the Football League and a reduction in our youth grants.  With the support of the Trust Board, the Football Club Board has maintained a policy of striving to work for maintenance of the existing structure, ready for a return to the Football League.


 


Throughout the course of the season, monthly management accounts and forecasts are prepared by the Club Board with assistance from the Trust, for information and consideration by both Boards.  As the season has progressed, the Club has faced a large number of unexpected costs.   For instance, whilst ownership of Bootham Crescent was something that all supporters wanted, it has brought with it increased repairs and maintenance costs.  The extensive problems with the ground and the pitch have been well documented, as has the shortfall in income from lack of pre season friendlies at the beginning of the year. Other extraordinary costs include the postponement of fixtures and medical operations for players.  Unfortunately, the level of income generated by the Club from gate receipts and commercial operations, plus the donations from supporters, have not been sufficient to cover other losses. Recent gates, bearing in mind the increased success the team is achieving, have been somewhat disappointing with only 2,153 attending last Tuesday nights game against Tamworth.


 


Steve Beck commented: It has become evident that if the Club are to continue to maintain the current infrastructure then changes need to be made to provide money to allow the Club to prosper and develop on the significant progress made both on the field and off the field this season. It is for this reason financial discussions, seeking solutions on funding, have been ongoing for some time, although it is only recently that the possibility of a change to the Clubs ownership structure has started to be more actively considered.

 
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