Hereford FC's latest accounts which will probably not be made public until later this year are expected to show a six-figure loss, the first made by the 'new' club.
20 years ago the Hereford United accounts for the year to May 31st 2000 showed a £70K profit.
A look back at an article from June 2001 which originally appeared on www.hu-fc.co.uk
In the year to
May 31st, 2000, the club made a profit of £70,254 compared with a loss
of £162,074 in the previous year. Much of this profit came from the
successful FA Cup run which included a visit from Leicester City.
Improved receipts from advertising, broadcasting, programme sales and
the club shop all helped. Total wages and salaries increased by 10%,
hidden within the figures is a 35% increase in directors emoluments.
However, there was a downwards adjustment in the company motor vehicle
schedule which may explain the increase in director's pay (better pay,
no car!).
The directors, between them, have just over 30% of the shares, HUISA is believed to own around 7%, most of which were purchased from Mike Hancocks, a former director, in 1999 at about £1.75 per share. On the basis of these accounts, the value of the shares is minimal as the club's deficit is stated as £1,261,291 but there may be some future hope value should redevelopment take place at Edgar Street assuming the club can continue within its credit limits until that time.
In fairness to the directors, they have used the profit to reduce the club's overall borrowing by £70,000. The club, however, remains virtually insolvent; its total assets less current liabilities being just over £21,000. Only the loans by the development companies are allowing Hereford United to trade but these so-called loans could, in theory, be called in at any time.
In practice, this is unlikely to happen as the developers would not want to alienate the city council who have the power to give planning permission on this site. If no planning permission is forthcoming, the developers could ask for their money back and United, being unable to pay them, would cease to exist. The developers appear to have been quite clever in taking over the lease of the Edgar Street ground from the club and inserting a clause that states that there is no right of assignment (of the leases) back to Hereford United FC in the event of repayment of the loan advance. So, if a new backer did come forward with, for example, £1,000,000 to clear the loans, the developers will still be able to keep the lease on the ground. This would surely put off most potential investors.
Why this agreement over the lease of the ground was agreed is debatable? If the lease could be assigned to a third party, surely it would have made more sense to assign it to a person/group connected with Hereford United. In this way, the football ground would have been protected and even if the club had gone bust, it could have reformed in another guise almost instantly, and in a much stronger financial position. As it is, although football continues in the city, the directors are most unlikely to put any money into the club given the agreements made in 1997 and 1998. The future of the club appears to lie with the council. If they approve plans for the redevelopment of the whole area, including the cattle market (which really is a waste of space where it is!), the club may survive provided the council insist on a new ground on the present site, but how strong Hereford United finances will be by then is unknown.
The directors originally agreed in 1997 a deal that would share the proceeds of any agreed sale of the land in Edgar Street, 75% to the club and 25% to (at that time), the BS Group PLC. However, in 1998 a new agreement was made with Formsole Ltd. (which is owned 50% by the BS Group PLC. and 50% by Chelverton Properties Ltd.) and the proceeds, should a sale be made, split 50% to Hereford United and 50% to Formsole. Formsole is now know as Edgar Street Properties Ltd. It appears that in 1997, Hereford United needed £500,000 to continue, but by 1998 they required £1,000,000. The directors at that time really have a lot to answer for, how any club could have been so badly run beggars belief, but that is the position that Hereford United finds itself in today. When Graham Turner says there is no money for players, he is correct! He and his current directors are to be congratulated on keeping the club in business. Supporters who want to see new players at Edgar Street must accept that they have either be youngsters looking to improve or more established players who come on free transfers, and terms offered to players cannot be that good as the money is simply not there. Stripping out the director's pay, the average salary for players and administrative staff is little more than £10,000 per annum, but this may be down to the employment of some part-time staff.
It is a hard balancing act that Turner has to follow. If the club has a good run, up go the gate receipts and the money taken will cover most expenses. But as happened this spring, if gates drop below a certain level, loses are inevitable. Last season's sales of Chris Lane and Michael McIndoe brought in £37,500, but as the average gate fell by about five hundred people for the ten or so games towards the end of the season, the takings would have decreased by about the same amount as the transfers brought in.
The directors, between them, have just over 30% of the shares, HUISA is believed to own around 7%, most of which were purchased from Mike Hancocks, a former director, in 1999 at about £1.75 per share. On the basis of these accounts, the value of the shares is minimal as the club's deficit is stated as £1,261,291 but there may be some future hope value should redevelopment take place at Edgar Street assuming the club can continue within its credit limits until that time.
In fairness to the directors, they have used the profit to reduce the club's overall borrowing by £70,000. The club, however, remains virtually insolvent; its total assets less current liabilities being just over £21,000. Only the loans by the development companies are allowing Hereford United to trade but these so-called loans could, in theory, be called in at any time.
In practice, this is unlikely to happen as the developers would not want to alienate the city council who have the power to give planning permission on this site. If no planning permission is forthcoming, the developers could ask for their money back and United, being unable to pay them, would cease to exist. The developers appear to have been quite clever in taking over the lease of the Edgar Street ground from the club and inserting a clause that states that there is no right of assignment (of the leases) back to Hereford United FC in the event of repayment of the loan advance. So, if a new backer did come forward with, for example, £1,000,000 to clear the loans, the developers will still be able to keep the lease on the ground. This would surely put off most potential investors.
Why this agreement over the lease of the ground was agreed is debatable? If the lease could be assigned to a third party, surely it would have made more sense to assign it to a person/group connected with Hereford United. In this way, the football ground would have been protected and even if the club had gone bust, it could have reformed in another guise almost instantly, and in a much stronger financial position. As it is, although football continues in the city, the directors are most unlikely to put any money into the club given the agreements made in 1997 and 1998. The future of the club appears to lie with the council. If they approve plans for the redevelopment of the whole area, including the cattle market (which really is a waste of space where it is!), the club may survive provided the council insist on a new ground on the present site, but how strong Hereford United finances will be by then is unknown.
The directors originally agreed in 1997 a deal that would share the proceeds of any agreed sale of the land in Edgar Street, 75% to the club and 25% to (at that time), the BS Group PLC. However, in 1998 a new agreement was made with Formsole Ltd. (which is owned 50% by the BS Group PLC. and 50% by Chelverton Properties Ltd.) and the proceeds, should a sale be made, split 50% to Hereford United and 50% to Formsole. Formsole is now know as Edgar Street Properties Ltd. It appears that in 1997, Hereford United needed £500,000 to continue, but by 1998 they required £1,000,000. The directors at that time really have a lot to answer for, how any club could have been so badly run beggars belief, but that is the position that Hereford United finds itself in today. When Graham Turner says there is no money for players, he is correct! He and his current directors are to be congratulated on keeping the club in business. Supporters who want to see new players at Edgar Street must accept that they have either be youngsters looking to improve or more established players who come on free transfers, and terms offered to players cannot be that good as the money is simply not there. Stripping out the director's pay, the average salary for players and administrative staff is little more than £10,000 per annum, but this may be down to the employment of some part-time staff.
It is a hard balancing act that Turner has to follow. If the club has a good run, up go the gate receipts and the money taken will cover most expenses. But as happened this spring, if gates drop below a certain level, loses are inevitable. Last season's sales of Chris Lane and Michael McIndoe brought in £37,500, but as the average gate fell by about five hundred people for the ten or so games towards the end of the season, the takings would have decreased by about the same amount as the transfers brought in.