Blackburn Rovers face potential £40m losses

Blackburn Rovers could face losses of more than £40m at the end of this financial year, claims a new report.

Finance officer Dan Grabko and corporate finance expert Richard Speak built a financial model to develop some 'forecast scenarios' and an analysis of the financial situation at Rovers, which is currently owned and controlled by the Venky’s.

Dan Grabko said: “With the huge gulf in revenues between the Championship and the Premier League, albeit managed somewhat through parachute payments, and the owners’ decision to maintain a Premier League spending policy to try and achieve an immediate return, we expect huge losses for the club.

“Given the acquisition costs of a number of players, we believe that the net cash outflow before financing for the club could be well in excess of £40m for the year. We are therefore highly concerned about the owners’ willingness to fund these shortfalls not just for 2013, but for yet another year in the Championship in 2014.”

“We estimate that the impact of these losses, combined with the unwinding of certain balance sheet positions in 2012 will lead to a net operating cash outflow (decrease in cash) of around £30m to £35m for 2013, raising to up to £43.5m once player trading to date is taken into account.”

Summing up the analysis, Richard Speak sais: “For 2013, we believe that commercial revenues will have collapsed, with substantially lower merchandise sales, the empty boxes around Ewood evidencing lower hospitality and catering, and the prevalence of Venky’s adverts and lack of a serious shirt sponsor leading to advertising and sponsorship being much lower.” However, he added: “One positive from the 2012 accounts is the switch of financing from Barclays to the Indian banks of the owners, releasing the clubs assets from any and all security arrangements. Should this continue, it would mean that individual assets of the club could not be taken over by the banks, rather the entire club would change hands via a transfer of the owners shares.”