Saints have posted their accounts for their last tax year ending June 2019 and are showing a loss, but there are issues behind this and it does answer a lot of questions that have been the cause of speculation among supporters.
On the face of it a £34 million pound loss as the accounts are showing is a concern for supporters, but that has to be counter balanced by the fact that the previous year the club showed a £29 million profit, therefore counterbalancing and producing a near break even figure over the past two seasons.
This suggests that the club have been very prudent in managing their money and in the previous tax year were aware of the fact that they could be needing to balance the books for 2018/19.
So why the big turnaround from a £29 million profit to £34 million loss ?
Perhaps the biggest factor is transfers, the previous tax year included the sale of Virgil Van Dijk for £75 million and we have had no sales of this nature in these accounts.
Indeed we currently have 5 players out on loan for whom we paid a combined transfer fee of £80 million, none of these have played for the club for almost a year and they have a combined wage bill of around £15 million a year, possibly half of this is being covered by their loan clubs and we are taking up the slack. This is not in the tax period the latest accounts cover, but gives an indication of the issues surrounding the club at present.
The reality is that in this tax period we had to try and bring in new players to replace these failing, in 2018/19 we spent around £45 million on transfers and brought in only around £22 million.
In an ideal World the 5 aforementioned players out on loan at present even if we had raked in only half of the outlay would have more than covered the loss and still left money in the kitty for more.
But transfers are not the only issue here, a drop in TV revenue from the previous season when we reached the FA Cup semi finals accounted for some loss in profit, also we spent on items not directly connected to the first team, including improvements to St Mary's , investment in the Academy infrastructure and Women's football team as well as severance pay owing to both Les Reed & Ralph Krueger.
Another key indicator is wages and player salaries increased by 3% of turnover which in real terms is probably around £5 million, as mentioned earlier the drain on the club's income from wages for players who are out on loan this season is significant and will play a big part in the accounts ending June 2020 due this time next year as was the fact that we are also paying top dollar to players not first team regulars.
So this years accounts reveal the problems Saints have at present and that although next years accounts might be just as awkward reading it does at least show that when we get this burden off the books, we can start to move forward again.
Outside of the big six few clubs could take the strain of wasting so much money on both transfers and wages for players who are not in the first team plans anymore and still be able to spend the required amount to replace them.
The good news is that hopefully this summer we will be able to get at least some off the books, Yoshida and Cedric are gone and if you consider that this season they would cost us around £4-5 million in wages for an entire year getting that amount off the books is crucial going forward.
In this respect the accounts are a picture of the issues of the last couple of years, but they offer hope for the future.
So in summary.
Gao Jisheng hasn’t invested any money into the club but also hasn’t taken any out - I get stick for defending our Chairman, but this again showed that he is not here to asset strip, if he had done then the losses being taken would have meant he would have taken his money out and run. He hasn't perhaps he is not the man to take the club forward as we might have hoped, but he has run it as a business meaning that when we come through this tough period and get rid of the dead wood then we can move forward, so he isn't the sugar daddy some were demanding, but he has done us no harm either.
Money owed in player transfers has increased from £74m to £90m- We have continued to invest during a difficult period and again did so in this season, but we are burdened by the dead wood and they have to go to generate both income and to reduce the wage bill.
Les Reed received a £365,000 pay off and Ralph Krueger also left the club
Matchday revenue took a hit and stands at £17m compared to £19.2m- This highlights the importance supporters play in generating income from the club, when times are bad supporters stop coming and this is a vicious circle in that it reduces down matchday revenue both in tickets, but impacts on other areas like merchandise, advertising rates etc and in turn the club then has to try and improve the team on the field with less money.
Commercial income grew to £18.4m from £14.9m - this is good news that this increased when it really should have been decreasing and shows the hard work the club are doing in trying to turn things around off the field.
Things are not perfect at Southampton FC, it is a difficult time, the underlying lesson we can learn from these accounts is that we know as a club we are run as a business and have to balance the books, our financial difficulties have been caused by poor signings and the legacy of that in transfer fees wasted, wages still having to be paid for players not even at the club and still having to try and replace those players somehow.
It shows that Gao is being a good custodian if not a sugar daddy, it shows that those who oversaw the poor purchases etc are gone and that there is a new regime in place.
That being the case we have to give those people a chance to right the wrongs and get us back on track both on and off the pitch, the gree shoots of recovery are already there, we have a manager who seems to be in for the long haul and committed, we have the foundations of a squad who with a little investment in the summer can go on and push into the top half again.
Indeed when you look at the circumstances beyond our control of the last few years regarding poor signings it is a wonder how we have managed to stay up.
This is not a PR article for the club, it is a rallying call for Saints supporters everywhere, we have had some good times over the past decade, top six finishes, Cup finals, Europe and we have had some bad times, essentially 1 1/2 seasons under Pellegrino & Hughes as well as a brief period back in October/November this season.
But we are moving forward, the club are burdened with the legacy of poor transfer decisions, it is looking to the future so do we, the people who are here running the club now are not those who got us in this mess so lets not blame them for it.
I am a supporter of Saints through thick and thin, I have seen good times and I have seen bad, it has taught me that football is a very fickle industry, that you never know what is around the corner and that spending money is no guarantee of success, unless you are a Man City or the like where you have limitless pots and even then nothing is certain.
All I care about is that the club is there and continues to flourish, if you want that to then you have to be part of the solution and not part of the problem, the shoots of recovery are there in the stands as well, the atmosphere against Newcastle was as good as I can remember at St Mary's, the majority of our supporters want the club to do well and not be dragged down.
It is never the fans fault what happens at football clubs, they are always the victims of poor owners etc, when I thought this club was poorly run and had issues I stood up and was counted rather than just sit back and whinge, I respect everyone's right to an opinion, so if you disagree with me that is fine, form a supporters group, paint the banners, let the club know where they will listen with protests outside the ground as West Ham have been doing, just don't sit back and do nothing.