Part two of the January update from chief executive Nigel Clibbens covers another wide range of subjects.
Cash:
I said in my last update, up to the end of November 2021, our cash position had continued to improve. The balance at 30 June 2021 was already significantly increased on the £500k balance at 30 June 2020, and has grown since, as was detailed HERE.
- By the end of 2021, the cash reserves we hold now are the biggest for nearly 20 years. Of course, this is to be judged in the context of some difficult previous years, and recent Football Fortune, but it is critical we have it now. Maintaining reserves is essential given our funding model; self-funding ongoing annual trading losses and the absence of a benefactor to subsidise the club or cover emergencies, or unplanned events both on and off-the-field.
- The forecast trading loss in the second half of the year (as detailed above) means from the end of January 2022 until the year end in June 2022, we will now see cash payments each month being far in excess of our receipts. Extra football spending from January window increases this. Our cash reserves will reduce accordingly. This cycle is expected and normal every year (see page 36 of the document HERE).
- By continuing to be in a sound financial position, with cash reserves in the bank, it means the club can also still support the manager without any day-to-day money troubles. This includes the current window. The Holdings Board has reiterated its commitment to Keith, to make available whatever finance is needed to help him move the team up the division.
- Of course, on top of this spending, any debt repayments reduce our cash reserves for the future, and impact on the future spending we can afford, and the risks we then face.
- In football, with high fixed costs each month, cash can very quickly flow out and is very difficult to replace as we have seen in the past. Just because you have good year, there is no guarantee on future player sales and cup runs next year, or that new cash will come in when you need it.
- While we have cash now, we must all remember the underlying risks our funding model carries, and remember the lessons from the recent past. Without the comfort of a benefactor to help provide financial cover for ‘rainy days’ we need to keep cash in reserve and replenish it, to avoid running out.
- No debt repayments have been made in the financial year 2021/22 so far, except £40k to the EFL:
- We have received no additional debt funding this half year. No new funding is planned from PurePay (last funding was May 2019) or externally from any other third parties in the rest of the year.
- We have no plans to make any other debt repayments at this time, including to PurePay (but interest continues to accrue on the PurePay loan).
- However, as detailed in the Holdings Board statement and in this update, the club is discussing the loan arrangements with PurePay. It cannot be ruled out that it will require cash repayments in the rest of 2022, and beyond.
- We have now settled all deferred VAT under the Government scheme to help businesses through Covid.
- Our trade creditors position remains good and continues to be with the liabilities being lowest in my time here.
- All our PAYE and VAT liabilities continue to be paid up in full and on time.
Stadium:
- Further painting of the west stand is ongoing. Next is the Sunset Suite.
- West stand upper floor electrical rewiring is continuing with the second phase of four (Sunset Suite) now complete. The next phase is the Sporting Inn, then Legends.
- Capital spending on the stadium is increased on safety works and critical renewals. This, however, is just to stand still. The Stadium remains the biggest off-the-field operational issue.
- In the New Year, I participated on behalf of the club, in further consultations with KKP Consultants over the Carlisle Playing Pitch Strategy, as the Carlisle City Council continues to develop its plans alongside the FA and Football Foundation over facilities in the area. Again, we championed the vision of a new Community Stadium as a focal point for a community football and sports hub.
- New fibre sheets to help improve frost protection, funded by CUSG, are being trialled at the Warwick Road End.
Academy:
- Our latest independent audit focused on being ‘Safe to Operate’ including safeguarding. This was successfully passed with very creditable feedback. Scholarships have been offered to U16’s for the 2022 intake.
Fan Led Review ('FLR'):
Our thoughts on the possible implications for CUFC arising from the FLR were detailed HERE in early December.
- We continue to make representations through ‘Fair Game’ and the EFL.
- The EFL has outlined its position to clubs, and the key themes are as follows:
- Regulation of the game cannot come without redistribution of income.
- Redistribution is not about handouts and seeking charity, the aim must be to make pyramid sustainable to benefit all including the PL. The EFL is not going to PL with a begging bowl. We value the pyramid and its role in making the game and PL a success.
- EFL is engaging positively, collaborating with the FLR, taking a different approach to PL and FA.
- Boundaries of the independent regulator IREF are to be debated. It needs to encourage good owners and not discourage them.
- Clubs and fans and the pyramid must make voices heard with the politicians to counter those against change.
- We fully back the EFL on implementation of the FLR. We cannot let it be watered down or put on the shelf.
Fan safety:
- A full Safety Advisory Group inspection took place at Walsall game. Its findings were complimentary towards the club and its safety and crowd control.
- We suffered disruption at the Shrewsbury home match, including some throwing of objects, stopping the game. Four teenagers were identified by police and club safety staff as throwing balls, and they were ejected.
- These issues can carry consequences for all concerned. No action was taken against the club by football authorities this time, given how we managed the incidents. Some of the throwers have been subject to separate police action.
Ownership:
In its statement in December, read that HERE, the Holdings Board said: “We will give regular updates as and when there is something substantive to report.”
- The end of talks attracted widespread media interest and publicity, as expected – nationally as well as locally.
- No expressions of interest in taking over or investing in the club have been received since then.
- We have also not been contacted by potential investor requesting information as a first-step to doing that.
- The door remains open.
At the same time, the Holdings Board said it had “also entered into discussions with PurePay Retail over the repayment of the loan facility.” Of course, the outcome of the discussions on the PurePay loan will have vital consequences for any future investment or takeover of the club as it impacts on the funding required by anyone new. Regarding the loan:
- The Holdings Board first put a proposal to PurePay Retail (PPR) over the repayment in June 2020, in parallel with the separate ongoing takeover talks.
- In late November that was rejected by PPR, and a line was also drawn under takeover talks at the same time.
- Since then further suggestions were made by the club to PPR before Christmas. The club is awaiting a response.
Following the conclusion of the takeover talks it was also appropriate to undertake some simple routine legal housekeeping including filings at Companies House. These allow normal Holdings Board operations in accordance with the Companies Act. This formality is just part of the club complying with company law. The filings are public.