Making Sense of the Cardiff City Numbers

A home defeat at the hands of West Ham United has pushed Cardiff City into the Premier League’s relegation places. This was hardly the plan for new manager Ole Gunnar Solskjaer’s first league match at the Cardiff City Stadium, especially against an opponent in poor form themselves. For the supporters looking at the league table this morning, however, the on-pitch symbolism is matched by the alarming figures in the club’s latest annual accounts.

The headline figure is a total debt now standing at £118m.

A Debt Reshuffled

That number is, on its own, unsustainable, but context is everything. Of that total, £66m is owed directly to the club’s owner, Vincent Tan. This changes the complexion of the debt, but it doesn’t erase it. Rather than resolving the club’s historic financial issues, the owner appears to have simply shifted them. The money is still owed; the creditor is just now the man in charge. It is a different reading of the takeover from the one that paints Tan as the club’s saviour, rescuing it from certain administration.

There is some positive news buried in the report. The long-running saga involving Sam Hammam’s Langston corporation seems to be over. A payment of £22m, split between a £15m lump sum and £7m over seven years, has settled what was a £34m liability. This looks like a reasonable piece of business, though it came with the curious price of a life presidency for Hammam, a man many hold responsible for the financial position that required a rescue in the first place.

Another legacy issue, a £2.5m debt owed to the Cayman Island-based Player Finance fund, was also cleared in June 2013. Settling these historic and complex debts is undoubtedly good for the club’s long-term stability.

Costs Up, Revenue Down

Other figures are harder to interpret positively. Club revenue actually fell, from £20m in 2012 to just over £17m in 2013. For a season in which the club was more successful on the pitch, winning promotion, a decrease in revenue is puzzling. These accounts cover the first full season since the controversial rebranding from blue to red. The numbers offer little evidence that the change delivered any financial benefit.

What did increase dramatically was the wage bill, which shot up from £18.5m to almost £30m. The club explains this partly by citing “significant bonus payments in relation to its promotion to the Premier League”. This spending clearly worked, but it makes Tan’s very public anger over a reported £15m transfer overspend, which contributed to the departures of Iain Moody and manager Malky Mackay, seem somewhat odd.

Most eyebrow-raising is an £8m rise in administration costs. This is a vague term that can hide many things, but the sum is four times the television money Cardiff would have received from the Football League during that period. Supporters are entitled to ask why these costs rose so sharply, but an answer is not likely to be forthcoming.

The Premier League Gamble

With such a precarious financial base, Cardiff City’s future appears entirely dependent on staying in the Premier League. The team’s most obvious failing this season has been a lack of goals, managing just 15 in 21 matches. Only Crystal Palace have scored fewer. With just four goals since the end of November, the January transfer window would be the logical time to find a solution.

Attacking players are expensive, however, particularly for a club whose desperation for goals is public knowledge. Can Cardiff afford the £25m transfer kitty that Solskjaer was reportedly promised upon his arrival? Perhaps the more pertinent question is whether they can afford not to spend it.

The club’s financial health may be better with £66m of its debt owed to its owner, but it would be altogether healthier if that debt simply did not exist. Tan could convert his loans into shares, securing the club’s future. Until he does, the £118m figure will follow Cardiff City around, raising existential questions about who might act to solve the problem, what they might do, and when.