15 Jan Club Finance Update

An update from the club’s Head of Finance, Rob McGreavey:

Dear supporter,

Ahead of the forthcoming fans forum I wanted to give you an update on where our finances sit currently and what it means for the rest of this season and beyond.

December was an incredibly frustrating month, on paper it should have been a great period for us with 3 scheduled Saturday home matches and the New Years Day fixture as well, unfortunately the weather had other ideas and we lost 3 of these 4 fixtures. There is a huge impact for us as a club of swapping Saturday fixtures for rearranged Tuesday night fixtures, typically we see a lower average attendance midweek than we do on a Saturday and the opportunity for people to spend in the bar pre and post match is vastly reduced, there is then the impact on hospitality sales as well with Tuesday night being a much harder proposition to sell.

Taking these factors into consideration we estimate that there is a net £4k – £5k impact each time a Saturday match is lost and replaced with a midweek date. Of course the short term impact is much higher as we lose all income until the match is replayed, so our planned cashflow has taken a considerable short term hit over recent weeks. Additionally there is a longer term indirect impact of playing more matches midweek as we know attendance of children and families is vastly reduced, notably with the lack of team mascot parties all of which are key to building long term growth in our fanbase and securing our future as a sustainable club.

Looking now at our wider financial position there are a few key points that I think it important are known and understood amongst our fans:

The club is on course to make a loss this season – we are working on mitigation plans to ensure this is a manageable loss, however, the club cannot continue to record losses as ultimately (in the absence of a benefactor) this will result in severe financial issues.

Our biggest revenue contribution comes from the Club House bar which is 28% of total income. Conversely it is also our biggest opportunity to drive revenue growth as it is basically unutilised for the majority of the week currently. We would absolutely love to offer live Premier League / Championship football in the bar to attract people to come earlier and stay later but the commercial license cost is currently prohibitive, last season we benefited from ‘free’ BT sports (now TNT sports) as the National League had a deal in place to allow clubs access.

We will continue to trial new initiatives to attract customers and as such we are introducing a ‘happy hour’ on a trial basis for this Saturday’s home match with Stamford between the hours of 12noon and 1pm during which a 50p discount will be applied to any pints sold.

Gate revenue (match tickets and season ticket) contributes 22% but is a much harder figure to grow. We appreciate our ticket prices are high for our current place in the pyramid but since last season we have had to start paying VAT on these fees and therefore the club has seen a 17% reduction in the money it retains (£2.50 of the £15 for adult entry), any reduction would be a further erosion on this as we do not believe that a price cut would directly link to increased attendances. For transparency a £2 cut in adult / concession entry fees would require a 15% jump in pay on the gate attendance numbers to break even overall. We did offer a very compelling season ticket price point this season as a way of reducing match day entry for our fans.
We are going to trial a ‘bundle offer’ for our three home league matches during February where ticket prices will be reduced to £12.50 per match if purchased as a three match bundle (£8.33 for concessions).

The other 50% of our revenue comes from a variety of sponsorships, donations, education offering, other match day activities such as hospitality, food sales, shop sales etc and then crucially this season in particular prize money from FA competitions (7% of total revenue)
Without our prize money from the FA Cup run this season our projected loss would be far greater but we cannot assume this income will repeat every season.

Looking ahead to next season we are going to have to make some difficult but important decisions in the coming months but firstly we have to ensure that we have a budget that gives us a realistic chance to break even and protect the long term future of the club. Our playing budget accounts for 45% of our total cost to run the club and therefore this is the easiest place to look to balance this budget, of course we are always looking to remove and reduce costs elsewhere but inflationary pressure is hurting the club in the same way it is for many people generally. To protect the playing budget (and ultimately allow us to grow it) we have to become better at generating revenue as a club in the short term and therefore please consider the following and show support / participation where possible.

– Support events that are run by the club, this could be direct support by attending or indirect by promoting via word of mouth and / or social media channels.

– Get involved with planning and running events, it is a draining activity for one person (or indeed a small group) but if people have ideas it would be great for them to step forward and run different events, this will help drive a varied set of events with a diverse audience group thereby hopefully removing the dynamic of always only asking our fans to attend and support.

– Consider donating to the club, all advance match day tickets sold online have the option to make a voluntary donation and we have set up online channels to make standalone donations – for instance if a Saturday match is cancelled perhaps you might consider still donating the entry fee to help support the club in difficult times or likewise if the match is played but you can’t make it a donation of the ticket value would be gratefully received. We will shortly share details on how to set up a direct debit donation also.

A ‘hospitality raffle’ will be introduced shortly giving fans the chance to win hospitality tickets each time a draw is held, this is thought to be a good way of utilising our hospitality facilities whilst also making it financially accessible to a greater proportion of the fanbase. Look out for further details on this to be released shortly.

There are a number of commercial opportunities that exist for next season (and indeed some remain for this season), we ask everyone to consider your own network of friends and business associates for potential leads to pursue for commercial opportunities, these contacts can be directed to any of the management committee especially Silvano Geranio and Phil Wade. Opportunities are as follows and cover a full range of price points so there should be a suitable option for all who want to support the club.

– Shirt sponsor for next season
– Matchday sponsorship packages
– Hospitality sales
– Perimeter board sales
– We can also look at bespoke packages and deals for any company / individual that is interested in supporting the club / academy / community trust in any way

Regards

Rob McGreavey (KTFC Head of Finance)