As spoken briefly about at the 2020 agm, the club has now repaid the trust loan, an amount of £830,058.
In addition to this, we have suspended payment of the monthly instalment of our £100k pa donation to the club and have done so since the autumn of 2020.
Because of the income generated from transfers and other windfalls, the club will incur an increased liability for Corporation Tax. Naturally, we wish to minimise this and since the Trust £100k is Club income, by placing a pause on it we reduce that liability.
We have assured the Club, and wish to assure all Trust members, that these funds are being withheld with a view to paying them in full once the tax implications are maximised to the benefit of the Club. The £100k plays an important part in our budgetary planning and so this is a temporary measure and done at the Club’s request.
In the past this payment has been a loan but was changed to a donation in order that it was not detrimental to the Club around the Financial Fair Play rules - the Salary Cost Management Protocol.
Just recently however, the EFL has switched to a salary cap (in League Two this is £1.5m for players over the age of 21), and therefore it might be possible, should the members decide, to switch the current donation back to a loan.
We do intend polling our members around this shortly but in the meantime, the salary cap has been subject to a legal challenge and has been overturned and so we are awaiting the implications that arise from that.
In 2019 the Trust and Club formed a joint committee to look at the financial challenges that the club would face in the coming years. As funds from previous windfalls dwindled, we wanted to safeguard the club and ensure its sustainability.
At the same time, we also recognised that our members and supporters need to see the Trust and Club grow and enjoy success. We have both developed strategies that inter-lock and we have moved forward on that basis.
Part of the clubs ongoing plan, quite naturally, recognises the need to increase income on an ongoing basis and we hope that funds can be made available to help us toward that target. There is so much we can do, and would like to do, but of course, these things take time and as always, require a great deal of thought and due diligence.
As always, I am more than happy to answer your queries, so if you have any questions relating to this, or indeed, anything else, just e-mail me via: enquiries@weownexetercityfc.co.uk
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