Keyte Responds To 'Wild Speculation' About Finances

Hereford United chairman David Keyte has responded to 'wild speculation' about the club's finances.

Last Friday BN published an article which suggested that the club might owe £1M which would include loans from directors and others.

In his article, which gives a lot of detail about the finances at Edgar Street, Keyte says that the club doesn't need £1M to survive (Ed - which is not the same as owing £1M)

"This is simply untrue and potentially damaging in the extreme when we attempt to attract investment into the club," he said.

The full article can be read at: http://www.herefordunited.co.uk/news/article/keyte-on-finances-january-2014-1304404.aspx

This is simply not true and potentially damaging in the extreme when we attempt to attract investment into the club."
Read more at http://www.herefordunited.co.uk/news/article/keyte-on-finances-january-2014-1304404.aspx#TQzupEqBgCzQL65v.99

David Keyte offers a financial update amidst wild speculation which he believes could be potentially damaging as the club seek fresh investment.

In the past few days unofficial websites and forums have continued to speculate about the football club’s finances and what it would take to keep the football afloat. 

The figure bandied about most recently is that the club needs to find £1million to survive. "This is simply not true and potentially damaging in the extreme when we attempt to attract investment into the club." Chairman David Keyte tells the official club website.

To answer that speculation, Keyte has given the following update: 

"Since taking over the football club in 2010, the current Board of directors has adopted a different strategy to the previous regime by taking back the ground leases in order to give the club the opportunity to develop the stadium and improve the match day experience for the fan base in what is an era with high expectations for entertainment and facilities. 

"This has taken a long time to resolve but thanks to the efforts of my colleague Bob Pritchard we have at last agreed revised leases that will now allow us to get to the next stage, namely discussing plans with potential developers.

"Although the Balance Sheet is ultimately the key measure for any business, all football clubs, not just lower league clubs, are trading via daily, weekly, monthly cash flow. 

"Only the major players have daily concerns about their Balance Sheet – share price; loans owed etc.

"Week to week lower league clubs wrestle with such matters as paying the wages; paying the tax man; counting the gate money and paying the overheads for operating your football stadium.

"Hereford United is no different in that respect but where we do differ from the majority is that we have recently suffered relegation from the Football League. 

"This change of status, whether you are Hereford United, Lincoln City, Stockport County or any other club, brings huge added difficulties in addition to those encountered when you remain, year on year, in the same league.

"Throughout this second season we have openly said we are losing around £30,000 per month. That actually represents great strides since our relegation when the task before us was how to cope with £60,000 per month less income (Football League/Premiership funding) a total difference in funding of £720,000 every season in the Conference compared to League 2.

"We realised that it was impossible to address this deficit overnight and considered it to be a minimum of a three year turnaround. We took out in excess of £300,000 from the running costs in the period July 2012 to May 2013. 

"We also had the benefit of a ‘parachute payment’ (£215,000) in the first season after relegation and for the most part the Directors funded the remaining gap in Year 1.

"For this second season back in the Conference there is no parachute payment. We made further cuts in our cost base, including the playing budget, in an attempt to address the reduction in income through the ending of the parachute payments.

"We identified a shortfall of £360,000 even allowing for further reductions in our costs. We were determined to maintain a playing budget to retain our status in the Conference Premier and so launched other initiatives to attract income (Debentures/Shares). 

"Some of the initiatives have been more successful than others but we have generated in excess of £50,000 from them.

"Six months in to the season (31st December) - and acknowledging that we were running at a £30,000 per month loss - we therefore expected to be short by £180,000.

"We budgeted for average crowds of 1,950 this season. Presently we are running 300 down on that so we are approx. £40,000 down on our predicted gate receipts up to this point. The lower than budgeted gates has moved the shortfall to £220,000 after six months.

"As a result of this the Directors, who remain fully committed to the club, have put in a further £40,000 whilst supporters rallied around to raise a fantastic £20,000 before Christmas. This was an incredible effort in such a short space of time and we are extremely grateful for their great support.

"When juggling all the balls, we made a decision to pay the wages as far as we could each month before the tax man but the loss of the Kidderminster Harriers match on New Year’s Day with a budgeted gate of 2,500 and takings to be banked of £20,000, has left us short of completing the December payroll by £17,000.

"The current position is that all the players have been paid every month this season, the management and footballing staff are owed £6,000, office/supporters club staff are owed £7,000 and the youth section are owed £4,000.

"The outstanding HMRC debt has risen to £60,000 at the end of December whilst the immediate priority is the winding up order for £36,500 which relates to October/November PAYE.

"The remaining shortfall of approximately £80,000 represents a large number of trade creditors as in any business that allow the club to function, from the brewery to power, light and heat, rent and rates, programme printers; etc. The majority of the trade debts fall within the 30 day payment terms.

"Last month we announced further cutbacks in the non-football departments and this will save £8,000 per month moving forward. The Manager is fully aware of the situation and that we may have to look at the football department as we attempt to reduce the £30,000 per month shortfall still further.

"The future budgeted shortfall for the five months (Feb-May) originally of £150,000 will therefore be reduced to £110,000 or £22,000 per month.

"We continue to seek the right balance, particularly regards the football department, in order to maintain our position in the Conference Premier division. We deem this essential to our immediate future plans.

"The immediate task then is working together to tick off those relatively small and hopefully manageable sums that have accumulated to date and to take further cost reducing actions (within the stated wish not to ruin our prospects on the pitch) going forward. We repeat our intention as a Board to produce a break-even budget for the Year 2014-15.

"It is important to state that we could not be more grateful to the hard-core supporters for the financial support they have given to the club and the willingness to help that they have shown.

"However, what we would ask of supporters now is for them to try to encourage their friends and colleagues to come back to Edgar Street and ensure we reach the budgeted figure of 1,950 each match.

“Better still crowds in excess of 2,000 would reduce the shortfall still further.

“We acknowledge that watching Hereford United has been a pretty thankless task for several seasons – with two relegations in five years – but the key point to make moving forward is that the bigger the Hereford United fan base we can muster, the more competitive we can be.

"Hopefully the recent improvements in our performances at Edgar Street will make it a little easier for our regular supporters to convince other people to come back. The excitement created by a game like yesterdays certainly takes some beating, and I thought the atmosphere on the terraces and in the stands was superb.

“Finally I would like to take this opportunity to thank you all for your continued support. It really is greatly appreciated by everyone in the Boardroom, in the dressing room and in the offices and although this is clearly a very difficult and worrying time, we have certainly not given up yet.”

Read more at http://www.herefordunited.co.uk/news/article/keyte-on-finances-january-2014-1304404.aspx#6QFy32AoTv5FciuV.99

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