It's some years since Hereford played at Southend but even then it had financial difficulties.
Today it's no different. The National League club has a £2M 'funding gap'.
Tom Lawrence, Southend's CEO explains.
There is no denying that things have been tough and we have had to navigate tricky waters in recent times. However, we continue to implement a recovery plan (following the pandemic and back to back relegations) and we are almost out the other side. However, the fact is that there is currently a funding gap of around £2m per year that needs to be plugged. The medium term solution to plug this gap is Fossetts Farm, the short term answer is bridging finance.
Finances - despite Ron’s support, generous donations, loans from the Shrimpers Trust and our main sponsor, money has been tight, and we have had to make difficult decisions on how to apply resources. However, the donation, loan from the Shrimpers Trust and matched loan from PG Site Services were all used (exclusively) to pay salaries. We are grateful for the support.
Ron’s contribution this calendar year equates to about £1.5m, and since he purchased the Club 24 years ago (paying off the Club’s debt of £4.5m (at that time) in the process) Ron has put in well over £20m... with no rent ever being charged to the Club under the lease. This level of funding is unsustainable, and Ron isn’t going to be around forever - that is why it is important that the infrastructure to support a sustainable future is built.
Roots Hall is tired and in need of constant upkeep – it is a money pit with inadequate facilities to service our fans and to generate income. There is close to zero opportunity, at Roots Hall, to generate non matchday income. This will all change when Fossetts Farm is built, complete with its significant conferencing and banqueting space, seven day-a-week bar and other revenue streams. We will move to a (close to) 365 day a year business. The projections show we will break even with a very healthy player budget enabling us to compete at the top end of League One.
With the help of the Council, who recognise Roots Hall requires constant costly works to maintain our Safety Certificate, we are getting there, and completion of the new pitches is a major start. The £2m to create the initial works for the new ground comes from a different funding pot. In time we shall be able to capitalise the Club to bring more success – promotion back to the EFL is our goal. Promotion to League Two alone would swing the turnover in our favour by at least £1.4m, reducing the current loss to a manageable number.
Significant steps have been taken to move the bridging finance towards completion. That finance will provide the club with the money to operate pending the start of construction works at Boots & Laces - which is targeted to commence before the end of the second quarter next year.
Our incredible staff, some of whom have been paid late on more than one occasion, have been patient, loyal and understanding - we have apologised to the affected back of house staff, and we are grateful to them - they will be rewarded. November salaries have been paid in full and the vast majority of December salaries have been paid. We will be working hard to clear the balance in the coming days, we are sorry for the delay.
HMRC - we speak regularly to HMRC, to keep them updated as to the progression of our financial recovery. We will use some of the bridging finance to pay off the HMRC debt. This will result in the winding up petition being dismissed.
The recent reference to strike off (on Companies House) relates to non-filing of accounts. Our July 20 accounts are nearing completion and once filed will result in the Companies House strike off application falling away. Our July 21 audit can then be immediately commenced. Ron met with the senior partner of the Club’s auditors yesterday to accelerate the process.