Trust Newsletter | February 2021
Updated: Mar 6
Welcome to the online version of our February newsletter, which begins with some updates from the chairman of the Trust, Nick Hawker...
"I thought it would be useful, at this time, to update you on Trust/Club matters. Especially around the social media comments on a ground move and of our finances.
Of course, I am aware of comments on social media regarding a potential ground move and I can say with certainty that no further progress has been made on this since our joint Club/Trust press release last September. As with any responsible business, we will continue to consider all options and most recently, we have discussed the application for St James Park (SJP) to be considered an Asset of Community Value (ACV), which we mentioned at the Trust Annual General Meeting and in the press release. In the last month, and after consulting with lawyers and with Exeter City Council (ECC), we have decided not to move forward with this option. We have a 25-year lease on SJP which in fact, provides considerably more security than an ACV. An ACV would require the owner of the asset (in this case ECC) to provide 6-months’ notice of an intent to sell whilst they also require renewal every 5-years and so clearly, our lease is more than sufficient.
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 donation to the Club and have done so since the autumn of 2020.
I’ll speak on the £100k donation first. 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 withholding it we reduce that liability. We have assured the Club, and wish to assure our 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.
However, this does raise an opportunity! In the past the nature of the monies paid over had changed; it started as a loan and 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 (SCMP – you can find out more about this here). Just recently, the EFL has switched to a salary cap (in League 2 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 from the PFA. The PFA have succeeded in overturning the salary cap and so at present, we are waiting to understand the implications that arise from that.
Now I’ll speak on the repayment of the loan! In 2019 the Trust and Club formed a joint group to look at the financial challenges that the club would have to face. There have been times, in the past, when our position has been dire and as funds from previous windfalls dwindled, we wanted to safeguard the club and ensure its sustainability. However, at the same time we also jointly recognised that our members and supporters need to see the Trust and Club develop and enjoy success. We have both developed strategies that interlock and envisage Exeter City Football Club as a sustainable League One side, and we have moved forward on that basis.
The bulk of this work commenced prior to the sale of Ollie Watkins from Brentford to Aston Villa which of course, was something of a game changer. However, we have not considered this in our work as we deemed it important that the Club could run efficiently without such windfalls. You might imagine, this is a significant task, but the Club has a plan in place, executable over the next 2 years (through to 2022/23 season), to give ourselves the best chance. There will be more on this later once we have fully absorbed and understood the effects of COVID.
In the meantime, of course, we cannot ignore the Ollie Watkins scenario. Part of the ongoing plan, quite naturally, recognises the need to increase income on an ongoing basis and we hope that funds made available because of this windfall can help us toward that target. It’s not hard to identify the nature of things that might help. We know, for example, that the quality of our training facilities and indeed, our playing surface and stadium, can attract players and of course, this can help improve the quality of the team which in turn can help results and therefore gate income; we could also invest in making the matchday experience for our supporters, both home and away fans more satisfying which in turn can increase match-day yields. There is so much we can do, would like to do, but of course, these things take time and as always, we need to be prudent but unafraid, when we make the decisions that affect our future.
Aside from all of this we intend a reserve equivalent of 2 months’ salary costs – this is approximately £500k and in fact, may be held by the Trust as opposed to the Club. Again, another decision is in the waiting.
Welcome to our latest Trust Corporate Member
Finally, I am delighted to welcome Sands consultants as our latest Corporate Trust Member. Sands carry out all aspects of structural and civil engineering design to a broad client base which includes, but is not limited to, retail, education, industrial, and health & leisure sectors. They also carry out a significant amount of work in the residential sector working for housing developers, associations, and the ‘local’ house builder.
As always, I’m more than happy to answer your queries so if you have any questions relating to this newsletter, or indeed, anything else, just e-mail me at: email@example.com."
Nick Hawker, Trust Chair
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