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.
FFP/P&S
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.
Summary
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"