Morecambe FC directors call for urgent sale of club as 800k loss revealed

Morecambe FC’s directors have publicly urged the club’s owner to sell up, as it was revealed the Shrimps made a loss of more than three quarters of a million pounds last season.

The stark reality of the club’s current financial situation, and circumstances, has been laid bare in a lengthy statement released today.

In the statement, the board say the "state of uncertainty" over the sale of the Shrimps - who were recently relegated to League Two - was hampering efforts to plan for next season.

The directors said that significant loan repayments to Morecambe FC owner Bond Group Investments, among other factors, meant that despite making a profit in excess of £1m in 2021/22 (the Shrimps' first season in League One) the club would post a loss of around £800,000 for the 2022/23 season.

‘’Firstly, we would like to sincerely thank our staff, players, sponsors, supporters and the wider community for the endeavour, effort and resilience shown over the past season,’’ reads the statement.

‘’On the pitch, the team battled bravely, falling narrowly short of avoiding relegation in our second season in League One, which would have been a magnificent achievement. Off the pitch, our staff have continued to work in a professional and positive manner throughout the season, leaving many aspects of the club in a much better position once again than which we started.’’

Following a profit in 2020/21, the year of the club’s promotion, they posted a pre-tax profit of more than £725,000, followed by a precited profit of more than a million pounds, in the latest set of accounts, which are due to be published later this month.

Much of that profit came from factors such as Morecambe’s FA Cup run last season, which saw the Shrimps play Premier League giants Tottenham Hotspur in the third round, and sales of players including Carlos Mendes Gomes to Luton Town, and Sam Lavelle to Charlton Athletic.

Other ‘one off’ factors such as grants, insurance claims also added to the increased turnover, with an extra £2.4m of income received into the club.

During the period between June 2020 and May 2022, it’s been revealed that the club repaid almost £2.5m in loans to Bond Group Investments, at their request.

Graham Howse, co-chairman of Morecambe Football Club

It was these loan repayments that meant that although left the club almost debt free, also meant that the club were left with only a small amount of working capital for the season just ended.

Furthermore, the inability to offload squad players on two year contracts, and not having those same ‘one off’ revenue streams of the season before, has all contributed to the significant operating losses incurred last season.

‘’We will shortly be publishing our 2022 accounts, which will show a profit just over £1m,’’ the statement continues.

‘’This income was derived over those periods from on pitch success, cup runs and associated TV & sponsorship income, significant player sales, Premier League and EFL grants, insurance claims and prudent cost management through the pandemic and improved commercial performance across the club.

‘’This was particularly prevalent in 2022, with over £2.4m income received from the ‘one-off’ streams. During year end 2022, almost all the remaining loan and interest owed to the owners, Bond Group Investments, was repaid at their request and within their rights. It made sense to clear this debt which had attached a high rate of interest agreed before the current owners secured a majority share. In the 2021 accounting year, around £647,000 was also repaid. We would all have wanted this money to stay within the club to allow investment and growth, but the clearing of the debt served to strengthen the balance sheet in advance of a sale.

‘’The result of this left limited cash reserves coming into this season. In our 2023 accounts, which will be published in due course, we will be reporting a significant loss in the region of £750,000 to £800,000. Our playing budget, which is a significant proportion of our annual expenditure, was set in the summer of 2021 upon promotion, for a two-year period due to the number of contracts of this length we were required to hand out. This represented a doubling of our 2020-21 League Two playing budget. Over the first year of those contracts, around £1.8m was repaid to Bond Group against the aforementioned loans, leaving us virtually debt free but with limited cash at bank.

‘’We were unable to make any adjustments or reductions to the playing budget in summer 2022, as the majority of contracts still had 12 months remaining, and we wished to remain as competitive as possible in League One. Whilst we have continued to grow revenues across the club this season, we have only been able to repeat a fraction of the ‘one off’ income streams in 2023, resulting in an operating loss which the owner has underwritten with a mixture of loans and equity investment, as well as a mixture of loans and equity investment from Sarb Capital, as has previously been communicated.’’

The club’s financial situation comes against the backdrop of the long and protracted sale process, which has dogged the club for many months.

Morecambe Football Club was put up for sale in September 2022 by Bond Group, which is owned by Jason Whittingham.

Bond Group's preferred bidder is 20-year-old entrepreneur, Sarbjot Johal, who has been in protracted negotiations hoping to complete a proposed takeover with his company Sarb Capital Ltd.

The English Football League (EFL) has to approve any prospective new owner of any club. To date, Mr Johal has been unable to complete the takeover.

Mr Johal’s company has also invested funds into the club twice in recent weeks, after player and staff wages were delayed in March, and then again last month, when the Shrimps announced Sarb Capital had made a ‘further significant contribution’ into the club.

Sarbjot Jojal

Back in February, the EFL released a statement, confirming that the situation with Mr Johal remained ongoing, and further information was required to be provided to them before any approval could be given regarding any purchase of the Shrimps.

Last week, the club announced that fourteen out of contract players would leave the Mazuma Stadium, with no new deals offered to any player. A position, the board say, is as a result of the ongoing budget constraints.

The statement continues: ‘’The club was publicly placed for sale in September 2022, and since then there has been a lot of noise externally in the media, which has been somewhat destabilising for players, staff and supporters. Wages were paid late in March 2023 by a matter of days, which was devastating for everyone concerned at a critical point in the season and a totally unacceptable situation.

‘’We are now here, eight months after the club went up for sale, and we remain in a state of uncertainty as to when a sale is going to be completed, which severely hampers future planning on and off the pitch, until this is resolved and stability ensured. We have been informed by Bond Group that we need to work to a breakeven budget at the moment, resulting in a very much reduced playing budget and leading to the release of all our out of contract players earlier this week.

‘’Having seen such marked progress on and off the pitch since the beginning of 2020, through the collective effort of every single person associated with the club, we urge Bond Group, who remain solely and completely in control of the sale process, to complete a suitable sale of the club as quickly as possible to ensure we have the best possible opportunity to continue to grow as a football club and focal point for the community in the Morecambe and wider North Lancashire area.

‘’Thank you once again to our staff, players, supporters & sponsors who continue to fight every day to keep us moving forwards.’’

Morecambe manager, Derek Adams

The Shrimps Trust is the official Morecambe supporter’s organisation, set up by a group of fans in 2016, with a vision being the voice of the fan base, and helping, maintaining and supporting the presence of the club in the town of Morecambe, and strengthening the bonds between the club, the fans and the communities it serves.

Last week, they issued an open letter to Sarbjot Johal, urging him to ‘accelerate’ the process or ‘terminate the takeover’.

The Trust are holding an open meeting to discuss the current situation, on Thursday (May 18) at The Exchange in Morecambe, for members and all Morecambe FC supporters, at 7.30pm.

The meeting will take place in the upstairs function room, entered by using the side entrance on East Street. All are welcome and the venue is wheelchair accessible.