Morecambe FC announces £1.2 million loss in last financial year

Morecambe FC posted a loss of £1.27 million during their second season in League One, the club has announced.

The accounts published to the financial year ending May 31, 2023, show a pre-tax loss for the year of £1,269,916.

By contrast, the 2021/22 financial year ended with the Shrimps posting a profit of almost £1.3 million.

The 2022/23 season ended with the club narrowly missing out on survival in League One, by two points, and represented its sixth year operating a Category 3 Academy.

Football revenues – which would include matters such as tickets sales – dropped from £4.16m to £3.33m, while revenue from the club shop, corporate sources and hospitality increased by around a quarter of a million pounds.

The total wage bill of the club - which includes all employees, playing staff as well as management and non playing staff - increased by around £200,000, rising from £3.8 million, to just over £4 million pounds.

Morecambe also didn’t benefit from revenue generated through the run in the FA Cup which saw the Shrimps play Premier League side Tottenham Hotspur in January 2022 in the third round.

To mitigate the loss in revenue, the club borrowed around a million pounds, while share issues gave a cash injection of around £433,000.

During the season, the company Sarb Capital invested funds into the club twice, after player and staff wages were delayed , and then again the following month, when the Shrimps announced that the company headed by Sarbjot Johal had made a ‘further significant contribution’ into the club.

The accounts also show just over £2m is owed to creditors, including loans and overdrafts of £1.17m, a figure which includes £189,000 secured by a ‘fixed and floating charge’ over the assets of the club, while £40,000 is owed to the English Football League to repay an interest free loan, with the final payment due on 1 April 2024.

Overall, total turnover dropped from £6.4m to £5.2m.

Morecambe ended the 2022/23 season with only have six first team contracted players in their squad, after 14 out of contract players were all released.

Overall, the accounts show Morecambe FC with ‘tangible fixed assets’ of just over £8m, with the Club’s Net Equity valued at around £5m.

Player sales netted the club £241,000, a drop from £775,000 the previous year.

Bond Group Investments Limited own the majority of the company's share capital and are the ultimate controlling party of the business.

Writing in the Club’s Strategic Report, Co-Chairman, Graham Howse, said: ‘’ The Club's status in League One helped to continue to enhance awareness of the brand both locally and nationally. The continued strategy of ensuring that the club is run on equitable and fair grounds in dealings with both its own employees, supporters and the wider footballing community ensured that its existing reputation was only enhanced by such strong endeavour on the field.

‘’Increased coverage of the club in League One had raised awareness and publicity of the brand and with that comes both opportunity and risk, with the Board conscious that the club needs to seek out the former but not at the risk of damaging the club's deserved reputation for fair play and dealings.

‘’The Club's presence in League One resulted in increased commercial and hospitality contracts as well as Matchday income. As the accounts show, commercial income was at its highest level ever, with a number of improved multi-year agreements signed which stand the Club in good stead for years to come. Likewise, the Club hosted its first ever outdoor stadium concert which brought a new audience to the stadium, as well as diversifying income streams and offering a great community event.

‘’At the end of the 2022/23 season the club was relegated into League Two of the English Football League. This has impacted the club's ability to generate revenue at levels seen when the club was in League One, and the directors have adjusted the operational and playing budgets to reflect this.

‘’The directors had prepared projections up to 31 May 2024 for the club to be run on a break-even basis, although at the request of the majority shareholder, Bond Group Investments Limited, a budgeted loss was agreed and is therefore what the Club is working towards in 2023-24.

At the date of approval of these financial statements, the majority shareholders continue to explore the sale of their shares in the company.

‘’The Board are confident that additional funding will be made available if required for the company to continue to operate and meet its obligations as they become due over the next 12 months, whether this be from the current majority shareholders, or by way of new investment following the conclusion of the sale process.

‘’Whilst the directors believe that the company will be able to continue to operate and meet its obligations over the next 12 months, the impact of the ongoing sales process naturally brings uncertainty as to future ownership, financing and investment.’’

You can read the accounts in full here