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LUFC Board Pack

Meeting 18th September 2013

Leeds United Main Club Sponsor Proposal

LUFC Board Meeting Agenda


1. Welcome, Apologies and approval of the agenda
2. Financials
a)
b)
c)
d)

Review of Year End June 2012 actual


Review and Approval of 2013 / 14 Budget
Update on Liquidity Position
Debt Provided to date

3. Operational Issues
a)
b)
c)
d)

Update on new management structure


Staff Optimisation
New Revenue Generation Strategy
Cost Cutting Strategy

4. Football
a) New Manager
b) Changes to Football Squad
c) New Players

5. Shareholders
a) New Shareholding structure

6. AOB
Leeds United Main Club Sponsor Proposal

Welcome, apologies, approval of agenda

Leeds United Main Club Sponsor Proposal

Financials

Leeds United Main Club Sponsor Proposal

Key Statistics 12/13


Average home league attendance 21,572
Full season tickets sold - 11,156
Half season tickets sold 345
Average corporate attendance - 839
Total Player Expenditure - 13.2 million

Net revenue player sales - 3.9 million


Exceptional items:
Police refund - 1.2 million
Pension - 401,000
Preference shares redemption - 907,000
Leeds United Main Club Sponsor Proposal

Summary of actual results 2012/13

Loss after tax 15% smaller than budgeted


Revenue 6% lower than budget, but gross margin of 78.9%
better than budget (73.5%)
Wages & salaries 10% more then budget mainly due to first
team salaries & change of control bonus

Administration costs 2% lower than budget

Leeds United Main Club Sponsor Proposal

Profit & loss for the 12 months ending 30th


June 2013 - LUFC
Year to date
Actual
Turnover

Budget

Prior Year
Variance

Actual

Variance

000's

000's

000's

000's

000's

27,717

29,665

(1,948)

31,081

(3,364)

Cost of sales

5,844

7,858

2,014

5,582

(262)

Gross profit

21,873

21,806

67

25,499

(3,626)

Gross margin

78.9%

73.5%

5.4%

82.0%

(3.1%)

20,004

18,101

(1,904)

17,828

(2,176)

8,647

8,818

171

8,536

(111)

Wages and salaries


Administrative expenses
Total expenses

28,652

26,919

(1,733)

26,364

(2,288)

Operating profit/(loss)

(6,779)

(5,113)

(1,666)

(865)

(5,914)

3,907

3,907

3,698

209

Profit/(loss) on sale of fixed assets

Interest received

11

(11)

Depreciation - Fixed Assets

1,431

1,665

234

1,188

(243)

Depreciation - Trademarks

1,817

1,104

(713)

1,174

(643)

120

120

120

1,244

62

(1,182)

90

(1,154)

401

(401)

(401)

1,152

1,152

1,152

Profit/(loss) before tax

(6,731)

(8,064)

1,333

272

(7,003)

Deferred tax movement

104

(104)

(45)

(149)

Main Club Sponsor (6,836)


Proposal(8,064)

1,229

317

(7,152)

Profit/(loss) on sale of players

Financing costs

Amortisation - Players
Amortisation - COA
Interest paid
Exceptional items
Non trading expenses
Non trading income

Leeds United
Profit/(loss)
after tax

Profit & loss for the 12 months ending 30th


June 2013 - LCH
Year to date
Actual
000's

Prior Year
Actual
000's

29,623

33,097

(3,474)

6,190

6,559

369

Gross profit

23,433

26,538

3,105

Gross margin

79.1%

80.2%

(3.1%)

Wages and salaries

20,298

18,741

(1,557)

9,254

9,004

(250)

Total expenses

29,552

27,745

(1,807)

Operating profit/(loss)

(6,119)

(1,207)

(4,912)

3,907
2
0

3,699
0
11

208
2
(11)

1,431
278
24
1
1,817
194
50
1,249

940
604
24
1
1,173
194
50
98

(491)
326
0
0
(644)
0
0
(1,151)

(7,254)

(581)

(2,427)

104

(45)

(149)

(7,358)

(536)

(2,278)

Turnover
Cost of sales

Administrative expenses

Profit/(loss) on sale of players


Profit/(loss) on sale of fixed assets
Interest received
Financing costs
Depreciation - Fixed Assets
Depreciation - Pavilion
Depreciation - Yorkshire Radio
Depreciation - Trademarks
Amortisation - Players
Amortisation - COA
Amortisation - Carriage Agreement
Interest paid
Profit/(loss) before tax
Deferred tax movement
Profit/(loss) after tax

Leeds United Main Club Sponsor Proposal

Variance
000's

Key assumptions Budget 13/14


2013 / 14 (budget)

2012/13 (actual)

Av Home League
Attendance

26,500

21,572

Season tickets

12,500

11,156

Corporate sales

889

839

Match Categories

6 As
11 Bs
6 Cs

10 As
11 Bs
2 Cs

Player Wages

10m (currently 14m)

GBP 13.2m

Exceptional Items

Further police refund - Police refund - 1.2m


400,000
Pension - 401,000
Rates rebate - 250,000 Pref shares - 907,000

Leeds United Main Club Sponsor Proposal

Budget 13/14 - LUFC


2013/14

Turnover
Cost of sales
Gross profit

Prior Year

Budget

Actual

Variance

000's

000's

000's

29,520

28,869

651

5,862

5,844

18

23,658

23,025

633

Gross margin

80.1%

79.8%

0.4%

Wages and salaries

15,574

20,004

(4,430)

7,886

9,048

(1,162)

23,460

29,052

(5,592)

198

(6,027)

6,225

Profit/(loss) on sale of players

3,907

(3,907)

Profit/(loss) on sale of fixed assets

(2)

1,400

1,431

31

2,189

1,817

(372)

Administrative expenses
Total expenses
Operating profit/(loss)

Financing costs
Depreciation - Fixed Assets
Depreciation - Trademarks
Amortisation - Players
Amortisation - COA

120

120

Interest paid

178

1,244

1,066

(3,690)

(6,731)

3,041

104

(104)

(3,690)

(6,835)

3,145

Profit/(loss) before tax


Deferred tax movement
Profit/(loss) after tax

Leeds United Main Club Sponsor Proposal

Needs updating from Fay

Budget 13/14 - Consolidated


2013/14
Budget

Prior Year
Actual

Variance

000's

000's

000's

30,077

29,623

454

6,190

6,190

Gross profit

23,887

23,433

454

Gross margin

79.4%

79.1%

0.3%

Wages and salaries

15,771

20,298

(4,527)

8,031

9,254

(1,223)

23,802

29,552

(5,750)

85

(6,119)

6,204

Profit/(loss) on sale of players

3,907

(3,907)

Profit/(loss) on sale of fixed assets

(2)

1,400

1,431

31

278

278

24

22

Turnover
Cost of sales

Administrative expenses
Total expenses
Operating profit/(loss)

Financing costs

Depreciation - Fixed Assets


Depreciation - Trademarks
Depreciation - Pavilion
Depreciation - Yorkshire Radio
Amortisation - Players

2,189

1,817

(372)

Amortisation - COA
Amortisation - carriage licence

120
4

194
50

74
46

Interest paid

178

1,249

1,071

(4,087)

(7,254)

3,167

104

(104)

(4,087)

(7,358)

3,271

Profit/(loss) before tax


Deferred tax movement

Leeds United Main Club Sponsor Proposal

Profit/(loss) after tax

Needs updating from Fay

Variance analysis

Ticket office, Retail and Compass catering have a favourable variance all
due to an increase in attendance to 26,500 from 21,572
Central and First team both have favourable variances due to a decrease
in salaries

Cup matches has an adverse variance based on a conservative budget


more could be achieved depending on performance
Revenue and gross profit are approximately the same from 2012/13
actual to 2013/14 budget
Wages & salaries are down by 29% from 2012/13 actual to 2013/14
budget
Administration costs have been decreased by 16% for the 2013/14 budget
Leeds United Main Club Sponsor Proposal

2013/14 Projected cash flow requirement

Projected cash flow based on three material


assumption:
Attendance at 26,500 per game
Players wages at 14.5 million
No external funding included

Total cumulative cash flow required c4 million


Average attendance will be challenging
Cash requirement may increase to c 5 to 7m
Leeds United Main Club Sponsor Proposal

Cash flow overview


Jul13 - Jun14 (000)

Needs updating from Fay


Jul-13
Total inflows

3,213.1
Jul-13

Aug-13
4,559.1
Aug-13

Sep-13
1,965.5
Sep-13

Oct-13
1,599.8
Oct-13

Nov-13
2,593.4
Nov-13

Dec-13
2,880.7
Dec-13

Jan-14
3,163.3
Jan-14

Feb-14
1,877.7
Feb-14

Mar-14
3,578.3
Mar-14

Apr-14
2,871.3
Apr-14

May-14
3,462.4
May-14

Jun-14
3,702.0
Jun-14

Total
35,466.4
Total

Total outflows

(5,712.6) (3,658.1) (3,639.2) (2,406.0) (3,178.1) (3,245.2) (2,529.3) (2,796.7) (2,879.4) (2,401.1) (4,177.0) (2,836.0) (39,458.6)

Net cash inflow/ (outflow)

(2,499.5)

Opening Balance (actual cash)

Closing Cash Balance

901.0 (1,673.6)

(806.3)

(584.7)

(364.5)

634.0

(919.0)

698.9

470.2

(714.7)

866.0

229.0 (2,270.5) (1,369.5) (3,043.1) (3,849.4) (4,434.1) (4,798.7) (4,164.6) (5,083.6) (4,384.8) (3,914.6) (4,629.2)

(2,270.5) (1,369.5) (3,043.1) (3,849.4) (4,434.1) (4,798.7) (4,164.6) (5,083.6) (4,384.8) (3,914.6) (4,629.2) (3,763.2)

Leeds United Main Club Sponsor Proposal

(3,992.2)

Summary of loan monies

To date, the owners have provided GBP 17.5m of loans to LUFC to


support the clubs cash flow position
Distribution of existing debt
GFH Capital
IIB
Envest
Al Khal

% stake
53.50%
10.00%
36.00%
0.50%
100.00%

Debt
9.38
1.75
6.31
0.09
17.54

The amount of support provided has been in excess of what was


anticipated and reflects the fact that the wage bill was increased and
turnover was less than expected.
Seeking Board approval to meet future cash flow shortfall on pro-rata
basis
Distribution of future requirement
GFH Capital
IIB
Envest
Al Khal

Leeds United Main Club Sponsor Proposal

% stake
53.50%
10.00%
36.00%
0.50%
100.00%

Debt
2.14
0.4
1.44
0.02
4

Operational Issues

Leeds United Main Club Sponsor Proposal

Update on Management Structure


Ken Bates

Shaun Harvey

Gwyn Williams

KB resigned as chairman on 30th June and become president


Termination of KB as president due to breach of his services contract
Retrospective Board ratification requested
SH resigned.
Placed on Garden Leave
Outstanding financial and employment issues with SH

GW was made redundant from this position as Academy head and technical
director
On review of his conduct GW was then dismissed on notice for gross misconduct (
pornography and breach of confidentiality)

Seek
board Main
ratification
on Proposal
changes
Leeds United
Club Sponsor

Update on Management Structure


Salah Nooruddin

David Haigh

Paul Hunt

Initially Salah Nooruddin made Vice Chairman of LUFC


Following 30th June 2013 made Chairman
Following placing of SH on garden leave DH allocated as interim MD
DH has good relationships with staff and SH to smooth transition
Following appointment of acting CEO DH to focus on litigation and investment
DH focusing on Flowers deal
Paul hunt, former deputy CEO of Blackburn rovers appointed as acting CEO
Temporary contract to move permanent on basis of success
To focus on operational matters
Has been known to GFH since summer 2012
Has been advising as a consultant since 1st July

Seek
board Main
ratification
on Proposal
changes
Leeds United
Club Sponsor

Staff Optimisation
Aim is to reduce staff cost by 40% which will be broadly
achieved once settlement costs are paid
Senior management staff have been let go GW, NP, YA, SH
Junior staff Redundancy program complete
Re-training for Safety Officer position to replace incumbent

Leeds United Main Club Sponsor Proposal

New Revenue Generation Strategy


Increase match day sales

Outbound sales
Positive PR
Group Sales
Dynamic pricing

Enhance commercial revenue


Outbound sales
Increase marketing
Improve match day experience

Increase retail revenues


Partnership with JD Sports
Pop up shop in Trinity
Increase product range

Leeds United Main Club Sponsor Proposal

Cost Cutting Strategy

Closure of Yorkshire radio to save up to 350k per


annum in cash
Squeeze Suppliers obtain better terms from key
suppliers
Cost Committee
Individual departmental meetings
Biggest cost is player wage bill
Key is to ensure club is meeting FFP requirements
Leeds United Main Club Sponsor Proposal

Football

Leeds United Main Club Sponsor Proposal

New Manager

Brian Mcdermott appointed in April and steered club away from relegation
Well-liked by the fans, media and peers
Presents a positive image
Engages well with staff
Thorp Arch appears to be a positive environment

Leeds United Main Club Sponsor Proposal

Football Squad
Since the end of last season, 7 players have not had their contracts renewed
as they were not in the plans of the new manager.
Furthermore, Steve Morison was allowed to go on loan and 60% of his
wages are being recovered.
Four new players have arrived (Matt Smith, Noel Hunts, Luke Murphy and
Scott Wootton)
The arrivals have increased the wage bill to over GP 14.5m (budget is 10m)
The manager believes the squad is unbalanced and requires further
changes:
Too many left backs
Too many midfielders
No pace or width up front

Leeds United Main Club Sponsor Proposal

New Player Terms


Matt Smith

Luke Murphy Noel Hunt

Scott
Wootton

Age

24

23

30

22

Position

Forward

Midfield

Forward

Defender

Contract
Term (years)

Salary
Sign On Fee
Sell On
Needs updating from David

Seek
board Main
ratification
on Proposal
changes
Leeds United
Club Sponsor

Shareholders

Leeds United Main Club Sponsor Proposal

New Shareholding Structure

Shareholder Structure

LUFC Holding

100%

Leeds City Holdings


Limited

Leeds United
Financial
Services Limited

Leeds United
Media Limited

Leeds United Main Club Sponsor Proposal

Leeds United
Football Club
Limited

Leeds United
Centenary
Pavilion Limited

GFH

49.8

IIB

10

Envest

39.7

Other

0.5

Total

100

AOB

Leeds United Main Club Sponsor Proposal