Motherwell Football Club posted a record profit of £3,575,615 in the year ending 31 May 2021.
This figure is a significant lift on the £435,970 profit recorded in 2020, with a total increase of £3,139,645.
Included in the figure is a £1,518,471 accounting profit attributed to a Scottish Government interest-free loan, which is further detailed in the financial review below.
The financial year in review by our chairman, Jim McMahon
The financial results for the 2020/21 season are difficult to compare and contrast to earlier years.
But despite the financial challenges created by Covid-19, I can report that the profit for the financial year is a club record £3,575,615.
The pandemic caused a major reduction in our operating income. For example, revenue in the prior year included £1.35m of gate receipts. With matches being played behind closed doors, no such income was generated in 2020/21.
The restrictions also reduced our commercial income by almost £350,000. There were various other smaller reductions in funding from the football bodies, who had front-loaded awards at the start of the pandemic.
The club had put measures in place to reduce the impact of the pandemic on its finances. These were very successful and resulted in £4.1m of Other Operating Income being recorded in the financial year. This includes monies from the HMRC Job Retention (furlough) scheme, a business interruption insurance claim and an SPFL Trust Covid-19 grant.
We also borrowed £2,959,000 from the Scottish Government to further strengthen our position should the pandemic, and the associated restriction to our normal trading conditions, continue for an extended period. The borrowings are to be repaid between September 2022 and August 2042 and are unsecured and interest-free.
Accounting standards require such debt transactions to reflect normal commercial arrangements, i.e., the interest rate an arms-length lender could be expected to charge on an unsecured 20-year loan. Therefore, the financial results recognise the “benefit” of having such a loan interest-free. The total of that computed over the loan’s full term is shown as a credit to Other Operating Income in year one of the borrowing. This has been calculated at £1.518m. This amount will subsequently be charged as a finance cost in the club’s future financial results spread over the total period of the borrowing.
The biggest factor in the profit for the financial year is generated in player registration gains, made up almost entirely of our initial fee from Celtic for David Turnbull. That transfer deal, a total that will most probably end as being at least double our previous record sale, also contains several add-ons, one of which has already been achieved during the 2021/22 season. It also includes the opportunity to retain future economic rights, should the player’s career continue to blossom.
Over the last five financial years, the player registration gains generated by the club have been £6.2m. Whilst player registration gains are not incorporated within the club’s operating revenue, they form an integral part of the financial results and strategy, and influence budget decisions such as setting the staff budget. The two-pronged approach of generating income through player recruitment and development, together with academy promotion, will continue to form the spine of our model for the future.
At the end of the financial year at 31 May 2021, and despite all the challenges created by the pandemic, the balance sheet shows we are in a strong financial position with significant net assets and over £4m of bank funds.
This backdrop enabled us to reward and acknowledge the loyalty and support of our fans throughout the pandemic. We were able to renew season tickets to existing season ticket holders free of charge. We froze gate prices for non-season ticket holders at pre-pandemic levels, including juvenile entry at £3. And in conjunction with our fans, we provided free gate entry to those otherwise unable to afford to attend games due to unemployment and/or low income. As a result, our season ticket numbers sit at nearly 5,600, our highest ever total, and an improvement of 50% on the Covid-19 impacted 2020/21 total.
The club’s financial position is healthy in the short to medium term. But we are acutely aware of the potential threats we face. We hope that this is the final spin of the Covid-19 roulette wheel, but it would be imprudent to plan solely on that basis.
We continue to examine new ways of generating additional revenue streams and look at ways to streamline costs and make the club more efficient. This needs to be done whilst remaining competitive in what is probably the most challenging top league in Scotland for the last two decades. It is not an easy balance to get right, but it is essential that we do.
The club only works properly and with a chance of success when all the component parts – fans, owners, playing and coaching staff, the management team and the Board – work in unison. They have, and I give my thanks to everyone for making that happen during 2020/21.
The 116th annual general meeting of the club will be held on Monday 21 February 2022.
We anticipate the meeting will be held in person, but if for any reason Covid-19 restrictions are tightened between now and the 21st, we will revert to an online Zoom meeting.
Any shareholder who would wish to receive either a printed or emailed copy of the audited accounts should email email@example.com before the close of business on 15 February 2022.