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Trust chair comments on Cardiff City’s accounts

IMG_2268Trust chair Keith Morgan, aa accountant and football finance expert, gives his analysis of the latest audited accounts for the year ended May 31, 2017 submitted by Cardiff City Football Club (Holdings) Limited.

The following is my commentary on the recently filed audited accounts, which were signed off as approved by the board of directors onFebruary 21, 2018.

Key findings

  1. There was a net loss for the year of £21.1m, which is up substantially from the loss of £8.7m in the previous year.
  2. As a result of the above losses , despite a new share capital injection of £8m created by a conversion of debt into shares by the owner, the net deficit on the balance sheet increased by £13.1m to £80.9m.
  3. The club remains critically dependent upon its owner Tan Sri Vincent Tan, who is by far its largest creditor, for its ongoing financial viability.
  4. The club are confident that, because of all the work to date that has been done to date on the club`s finances, it will be compliant with the Profitability and Sustainability (previously Financial Fair Play) requirements for the period covered by the accounts under review.

Main reasons for increased losses

These can be summarised as follows                                                  £m

Decrease in revenue                                                                         (4.4)

Decrease in wages                                                                           4.5

Decrease in exceptional income                                                       (8.3)

Increase in finance costs                                                                 (6.1)

Increase in profit on player sales                                                      3.0

Decrease in administration expenses                                                3.9

Increase in other costs of sales                                                       (4.1)

Other reasons                                                                                (0.9)

Total                                                                                              (12.4)


This fell in the year by £4.4m, primarily as a result of lower income from centralised broadcasting and commercial distributions (which include “parachute payments”) which fell by £4.3m. Gate receipts and match day income also fell by £0.6m, while sponsorship and other commercial income rose by £0.5m.


The club`s policy of making efforts to reduce its wage bill continued during the year, leading to the substantial fall summarised above. Players` wages and salaries at £20.6m fell to 71.6% of total income compared to the figure of £25.4m in 2015-16 which represented 76.6% of total income.

Lack of exceptional income

In the year to May 31, 2016 the club benefited from a debt write-off of £10m by its owner Tan Sri Vincent Tan. It also benefited from a one-off business rates rebate of £0.4m. Neither of these benefits were repeated in the year to May 31, 2017.

In 2015-16 the club had a cost of £2.2m arising from the termination of certain employee contracts. This cost was not repeated in 2016-17.

The net effect of the above exceptional items not occurring in season 2016-17 was to increase losses by the £8.2m referred to in the above summary.

Increase in finance costs

There are three main elements of this increase in the year

  1. The loan discounting charge on the long term loans provided by the owner increased from £1.2m to £5.8m as a result of a technical accounting treatment required by accounting standards rather than a “trading” cost.
  2. Interest payable on loans provided to the club by Tormen Finance Inc. , in which the club`s Chairman Mehmet Dalman has a significant interest, went up by £1.0m. This was due to the fact that Tormen made further loans of £6m to the club in the year taking the amount owed to it up to £11m as at May 31, 2017. Interest on these loans was charged at a rate of 8% p.a. and the loans were secured over assets of the football group companies.
  3. Other interest payable increased by £0.5m

It should be noted that no interest was paid on the debt due to the club`s owner in the year, all interest accruing (at a stated rate of 7% p.a. on part of the debt) being waived by him and therefore becoming non-payable. This resulted in a saving to the club of approximately £2m in interest charges for the year ended May 31, 2017.

Increase in profit on sale of players

In season 2016-17 the club made a profit of £5.5m from the sale of players (comparing realised sales values with the players` net book value at the date of disposal) compared to a smaller profit of £2.5m in the previous season.

Decrease in administrative costs

This is principally as a result of a reduction of £3.0m in an item “impairment of intangible assets”.

A player`s cost to the club is written off over the length of the contract given to him. So a £3m signing on a three year contract is shown as a cost of £1m in the first year after he is signed, reducing his value in the books to £2m after a year. Every year the club is obliged to compare the total written down cost of the whole squad against their likely real value (sometimes a sale after the season end establishes that value with certainty). At the end of season 2015/16 the club considered the true value to be £3.8m less than the written down value in the books, so made a further charge of that amount in the audited accounts. At the end of season 2016-17 the comparative further write down considered necessary was only £0.8m , so an improvement of £3.0m in this annual cost.

Increase in other costs of sales

Having discussed the matter with the club (as the breakdown is not available in published accounts), the increase in other costs of sale (i.e. excluding player wage costs) results from increased spending on loan players and agents fees, plus some costs associated with early termination of player contracts and some amendments to non-playing staff contracts. The loan costs and some agents fees are instead of expenditure on permanent player contracts, and the contract termination costs will reduce future wages costs for the players involved.

I have no knowledge of who benefitted from improved contracts but, as a fan, if it relates to retaining the management team who have done so well to improve the team on the pitch , then my opinion is that it is money well spent.

The balance sheet

As stated in the key findings near the start of this report, the club had net liabilities of £80.8m as at May 31, 2017. This comprised of £71.2m of assets and £151.9m of liabilities. The various main assets and liabilities are commented on below.


The total recorded value of the playing squad as at May 31, 2017 was £3.4m. A note to the accounts records the fact that the contracts relating to those players over which that value would be written off was of an average 16 months duration. The club added £5.9m of player registrations and released players with an original cost of £9.1m in the year. In season 2015/16 it had added £2.4m of players and released players of cost £2.0m.

The stadium and its contents

This had a value of £51.8m, down from £54.8m in the previous year due to a normal depreciation charge.

Other assets

The club had £9.3m of cash at the balance sheet date.

It had £6.4m due to it, including £1.3m due in respect of football receivables (balance of transfer fees etc.).

Stocks (club shop etc.) were just under £0.2m.

Current liabilities

These were liabilities as at  May 31, 2017 payable by May 31, 2018. They totalled £36.1m, of which £11m was due to Tormen Finance (see above) and £8.8m was normal business cost accruals and deferred income (season ticket money for season 2017/18 already received in 2016-17).

Other borrowings of £11.2m represent 3rd party funding (identities unknown) received against the guaranteed future income stream from broadcast revenues (parachute payments).

Non-current liabilities

These fall due for payment sometime afterMay 31, 2018 i.e. more than 12 months after the balance sheet date.

By far the biggest debt due in this category is a debt of £115.1m (of a total of £115.8m) mainly due to the club`s owner Tan Sri Vincent Tan. This amount is £14.3m higher than a year earlier, despite £8m of the earlier debt having been converted into shares during the year indicating that substantial further loans were made by the owner to the club during the 2016/17 season.

Of the above total of £115.1m, £80.5m is non-interest bearing and does not carry an option to convert into shares. The remaining £34.6m is interest bearing at 7% p.a. (but the owner waived his right to interest for the full year) and carries the right to convert into shares at the owner`s option.

After the year end, in June 2017, the owner converted a further £12.7m of debt due to him into shares to improve the balance sheet position.

Summary and conclusions

  1. The club made a net loss of £21.1m in season 2016-17, up £12.4m compared to the loss of £8.7m in the previous season. This was largely as a result of a lack of the benefit of a £10m debt write-off which happened in 2015-16 but was not repeated in 2016-17, coupled with some technical accounting adjustments needed to be made to comply with Accounting Standards (the cost of which was up £4.6m compared to the previous year).
  2. The club are confident, after adjusting for the above technical accounting matter and other costs allowed for under the Profitability and Sustainability regulations, that it will remain compliant with those regulations for the period covered by these reviewed accounts.
  1. The work required to maintain the club`s financial viability remains great , with even more work being required going into season 2018-19 when the club will no longer be in receipt of its parachute payments. This income will need to be replaced by alternative income streams, by further cost reductions or probably by a combination of both.

Police Ban Warning Over Flares

kieran-jonesTrust board member Kieran Jones reports from the latest Supporter Liaison Officer (SLO) meeting.

The Police have had some major problems with Cardiff City fans over the past three games with pyrotechnics/flares.

It is the first time in over 20 years that for three games in succession there have been cautions and arrests for pyrotechnics/flares.

The club will now be updating its fans’ charter in the next coming weeks.

Cardiff City and South Wales Police have decided the following:

  • Any fan found in possession or lighting a flare or pyrotechnic will be banned for THREE Years
  • South Wales Police will caution/arrest that individual as it is a criminal offence to enter a football stadium with a pyrotechnic/flare. There will now be a ZERO policy on this.
  • If a flare is dropped on the floor near you, under NO circumstances pick it up.If you pick it up even to move it for safety reasons you will be arrested and banned for 3 years. Easiest action is either kick it away safely or best still move away from it.
  • The club will not issue cautions, this will be an immediate ban.


Supporters Direct: The Future


We wanted to make members aware that following a request from its principal funder, The Fans Fund, Supporters Direct (SD) has agreed to consider the potential impact of joining forces with the Football Supporters Federation (FSF), which is the umbrella organisation for supporters clubs.

This could lead to a new, single national supporter organisation representing all football supporters and fans of others sports, such as Rugby League.

However, one of the key issues as far as we are concerned is that if the proposed merger proceeds there must be a strong voice in any new organisation for Trust movements.

Our position is that we are providing information to support SD in their next steps, either to allow it to remain as a separate organisation or to influence the formation of a new organisation to ensure that Trusts are given a strong voice.

In the meantime, the Trust continues to liaise with the club in respect of Financial Fair Play (FFP) and the conversion of debt to equity.

We will keep members informed as this matters develops over the coming months.

Keith Morgan


New Year’s Message to Trust members


With the first home game of  2018 on Saturday, Trust chair Keith Morgan has a message for members.

A Happy New Year to all members. I hope that everyone had a good Christmas break.

On the field, we are all aware that results have not gone well at all, with four consecutive defeats. However, we still remain in third place in the Championship which I think most of us would have been more than happy with at the beginning of the season. Perhaps we were spoiled by the far better than expected start we had, where the team outperformed expectations.

With the current short break from Championship games, hopefully, this will provide the opportunity for the squad to regroup, get more of the current squad back to full match fitness and also supplement our playing strength with a few good signings in the January transfer window. The Championship has been a notoriously difficult division to do well in and this season is not likely to prove any different. However, I personally remain confident (if the January transfer window goes well for us) that we can still challenge for at least a play-off spot at the end of the season.

Off the field, match attendances remain disappointing, which doesn`t help the club`s financial position or give much leeway for investment in new players, and this is unlikely to improve with the Mansfield cup tie. However, you never know we might just win that game then draw a big club at home to attract back the missing fans for one game at least.

Some of you may have read my commentary on the issue of Financial Fair Play (Profitability and Sustainability) before Christmas, following the most recent of the Trust`s regular meetings with the senior management of the club. This remains on ongoing issue and we will continue to monitor the position and discuss it with club officials as appropriate. The next key date is the beginning of March this year when the club has to submit financial information to the football authorities to get agreement to its ongoing compliance with the FFP rules. In addition, the continuation of the owner’s debt to shares also remains on the agenda in discussions.

The Trust remains highly supportive of the efforts being made by the club to remain financially stable with the ongoing support of its owner, particularly in light of the difficulties which the loss of “parachute payments” of up to £15m will bring from next season onwards.

Here`s hoping for CCFC success both on and off the field, plus a happy, healthy and prosperous 2018 for Trust members and all other Cardiff City fans.

Cardiff City Supporters’ Trust Statement on Cardiff City FC


As many supporters are aware, the Trust has regular meetings with the directors and senior management of Cardiff City Football Club to discuss major issues which impact on fans, both on and off the field. These issues have included FFP (Financial Fair Play or Profitability and Sustainability as it is now called) and the conversion of the club`s debt due to Tan Sri Vincent Tan into shares with the aim of making the club debt free. Following recent meetings on these issues, the Trust is issuing the following updates.


This is a topic which has recently received extensive media coverage because of the case of QPR who face a potential fine of in excess of £50m for breaching the rules which were in place during their promotion season to the Premier League in 2013-14. There was a formula in place , known to QPR as well as all other Championship clubs limiting allowed financial losses in that season. QPR exceeded the allowed level of losses to an extremely large extent, but the calculated fine could not be levied by the League until their subsequent relegation back to the Championship. QPR appealed against the level of fine, but were recently unsuccessful in their appeal and now face a level of fine which will have a major impact on their finances.

Some fans may argue that such a high financial penalty is harsh. However, the counterargument is that, unless blatant breaches are subject to severe sanctions, there is no incentive for other clubs to adhere to the rules either.

In the case of our own club, Cardiff City has continued to work extremely hard to ensure that the club is compliant and so not face the very real risk of such fines and other sanctions. This is not an easy task if it is noted that in season 2015-16 (the most recent publicly filed accounts) CCFC had the third highest wages bill of all clubs in the Championship (behind only QPR and Fulham). As fans, we would all like to see major new signings and the best players attracted to the club but this is only really feasible if increased revenue streams and favourable financial conditions are in place and the club`s management should therefore be congratulated in the work they have carried out to date in significantly reducing the wage bill whilst still retaining a playing squad proving itself to be more than competitive in the Championship.

We know that CCFC was compliant with the FFP/P&S rules as at March 2017 because as at that date the club had to submit three year financial information to the League to be vetted for compliance. This information comprised audited accounts for two years (2014-15 and 2015-16) plus projected results for 2016-17. In March 2018, the club will have to submit the 2016-17 audited figures plus an estimate for 2017-18. The Trust is not privy to the 2016-17 figures but our discussions with the club lead us to believe that there is every chance that the work done to further reduce costs will also result in an ongoing compliance position.

A word of caution, which is meant to be realistic, not pessimistic. Fans should remember that there will be no parachute payments available to the club after July 2018.This will result in a reduction of income for somewhere between £10m and £15m for next season and this loss of income has to be compensated for by other means – either additional income from other sources or by further cost reductions. Fans can help in this regard of course by making efforts to turn up for home games in greater numbers!

Conversion of debt to equity

The current position is that periodic conversions of debt into shares have continued since the commitment to do so was made in early 2016. Since the latest published accounts date of 31 May 2016 another £20.7m of debt has been converted into shares, the most recent conversion being in June 2017.

The Trust`s understanding is that Tan Sri Vincent Tan is committed to  make the club debt free by further debt to equity conversions in the near future, subject to compliance with the regulations controlling such transactions.


The club continues to make strenuous efforts to make sure that it is not at risk of the type of problems facing QPR and perhaps other clubs currently in the Championship when they submit their results to the E.F.L in March 2018.

As fans, we need to be patient and understanding (as hard as that is as fans) when the club no longer spends fortunes on players transfer fees and wages. We need to get behind the team in as great a number as possible to help them on the road to footballing success and also assist on the financial front at the same time.

Keith Morgan, Chair

Memories from more long distance City fans

Thanks very much to a couple more Trust members who have told us about their long distance support for the Bluebirds.

IMG_0686 Nick Burnell from London talks about his memories and the journey from his London home

I’m a season ticket holder at CCFC, Grandstand Block 206. I live in SW London and get to, I would guess, 90 per cent of home games and London aways. Midweeks can be tough, but not impossible.

On a good day I can do it in 2.5 hours, but there ARE bad days. In fact, there’s a bloke
who sits near me and travels in from Ebbw Vale on public transport. He gets home at 7.00pm, whereas I can be home for 7.30. So, it’s Danny Baker on the way down then Call Rob on the way home (until Bath, when the signal fades and Sav takes over on 606). I’ll usually
check in to a cheeky local bistro I’ve discovered (Asda) for a bite with my brother before we head over to the game.

Neil Warnock said recently that he hoped Fulham would get promotion last season, but I’m glad they didn’t because it’s an easy 10 minute stroll from mine – and a nice place to watch football. It would be a neasy option on a more permanent basis, but you can’t chose your team.

I was taken to my first game at Estadio Ninian in the 68/69 season against Fulham. It was midweek and under lights. The dye was cast. City>were going well at the time in the old Second Division and it was that team that started “Davies, Carver, Bell, Sutton……” that people of a certain vintage can rattle off in their sleep. Inevitably, and as if to prepare me for the next 40 odd years (and there have been some ODD years), City lost 2 nil. It was Fulham’s only away win of the season as they finished rock bottom (their second relegation on the bounce).

Up top that evening were Toshack & Clark, still my favourite combination. I remember the morning my father showed me the back page of the Western Mail detailing Tosh’s transfer to Liverpool. I burst into tears.

We’ve had some fine teams since then. I fondly remember Jimmy Andrews’ team that came up from the 3rd in some style and Dave Jones’ side tha twas tearing up the second tier at the start of the ’06-07 season. Players? I’ve mentioned the big lad from Canton, but there was Ian Gibson then Alan Campbell in midfield. Willie Anderson could do it when >the mood took him. Phil Stant and Joe Dwyer would run through brick walls and Blakey had all the ability. As did Tony Evans and Adrian Alston, Bothroyd & Chops. I also think Kav would have got in to any of the teams I’ve seen at Cardiff.

Highlights? The draw against Palace in ’74 to keep us in the Second Tier and the win against Hereford in front of 35,000 a couple of years later to (virtually) take us back there. I also recall a 4-1 victory over Sunderland just after Xmas of ’73. City were already 1 down when we arrived but turned it around. All but the very young will remember that bizarre period when going to Wembley became almost boring, given that previous reasons to visit north London involved fixtures at Barnet.

The promotion night against Charlton was a catharsis, I suppose, but, let’s face it, the football (and other things) that year wasn’t brilliant. And, yes, I missed the Madrid game. Lowlights? Well, after a long mental editing process, I remember losing 2 nil to Leeds in the rain in the 5th round of the Cup (in front of50,000). Relegations seemed to come more regularly than promotions did
for a time and Alan Durban took the blame. The Durban years will probably come to be regarded as Cardiff’s Dark Ages, but the guy had nothing to work with. The club was in meltdown. I actually enjoyed the period when City were a fixture in the dungeon far more than I enjoyed some of the performances under Uncle Russ, which were just awful.

Controversially, perhaps, but I also didn’t enjoy our one season sojourn in the promised land of The Premiership. We weren’t wanted there and the club became something of a laughing stock. I remember being in a pub in Chelsea after the game there and some local fans were pointing at the then club crest in the match day programme and wetting themselves with laughter. The worst thing was, I agreed with them.

So, here we are in 2017/18 and Warnock’s City have gone off like a train. I doubt it will last (hey, I’m a City supporter) but you never know. City and Fulham to go up?

Richard HartshornRichard Hartshorn, pictured with one of his prized cows he shows, is another Trust member clocking up the miles to follow the Bluebirds.

He said: “I live in Shropshire. I’ve been a Bluebird all my life even when I lived in Scotland and have been going there from the days of Ninian Park being over-full to queing to seeing them play Hereford United.

“I missed the whole of the first half of the Hereford game in the queue. I finally got in at half time and was lucky to be by the goal where City scored the goals to win the game.”

If you’re a Trust member and a long distance fan we’d be delighted to hear from you. Email