Blackburn Rovers will continue to get Venkys support
VLL owns a 99.99 per cent stake in Blackburn Rovers and its latest accounts for the year ending March 31, 2015 show a slight improvement on the loss of £36m a year earlier.
But the losses remain sizeable and £28.7m was put in during the year by Venkateshwara Hatcheries Pvt Ltd, the Indian-based parent company of VLL.
Rovers are currently under a transfer embargo after failing Football League Financial Fair Play (FFP) regulations and, while that is related to club accounts rather than those of VLL, the latest figures reinforce recent indications from inside Ewood Park that the transfer restrictions are unlikely to be lifted in the near future.
Under FFP regulations, clubs are only allowed to lose £6m for the year ending June 30, 2015.
The permitted figure was £8m for the year ending June 30, 2014 but Rovers posted a loss of £42.1m - resulting in an embargo coming into force on January
Rovers’ Indian owners have however made it clear that they are still willing to provide the finances to fund the business and allow it to continue to trade.
“The group may continue to make operating losses and incur net cash outflows depending on a number of variables, including the success of the football club in league and cup competitions and the level of transfer activity,” said directors Anuradha Desai, Venkatesh Rao, Balaji Rao and Jitendra Desai.
Adding that VLL was currently funded through a bank facility and shareholder loans, and that the company had prepared cash flow forecasts until the end of March 2016, they said: “These forecasts indicate that the group will require significant funding in addition to the current facilities available to the group.
“The amount of additional funding required will be dependent on the net proceeds of any player trading and availability of bank facilities.
“In view of this the directors have received confirmation from the ultimate parent company (Venkateshwara Hatcheries Pvt. Ltd) that it has sufficient funds and is willing to provide such additional financing as may be required to fund the group to the extent necessary for the group to continue to trade and to pay its liabilities as and when they become due, for the next 12 months and thereafter for the foreseeable future.”
No interest is chargeable on the £28.7m received from Venkateshwara Hatcheries Pvt Ltd and ‘there is no intention for these funds to be repaid’.
The directors say that the club’s aim remains to return to the Premier League but that ‘mitigating actions’ have been identified to manage cash flow requirements if Rovers are unable to secure promotion.
Turnover fell for the year from £28.6m to £24m, which was attributed to a reduction in Premier League parachute payments for their third season in the Championship. Matchday turnover increased from £4.3m to £5.4m.
Rovers received around £16m a year in parachute payments for their first two seasons following relegation from the Premier League, but were due only £8m a year for the two seasons after that.
“Compliance with Championship FFP regulations will challenge all football clubs as they try to manage finances, such that they operate within their income levels,” said the Venky’s London directors.
“The focus for Blackburn Rovers has to be on striving for promotion back to the Premier League, but also working to increase revenue streams back up to a level that will allow them to achieve this.”
Wages and salaries were reduced to £31.3m from £34.6m, with a focus on reducing the average age of Rovers’ playing squad to increase potential resale values, but the wage to turnover ratio increased from 120 per cent to 130 per cent.
Average staff numbers reduced from 275 to 262, while a net loss on transfer fees and associated costs was £5.4m – compared to £4.7m in the previous year.
Venky’s London currently operates with a bank facility with the State Bank of India. That facility is due for renewal in March and the Venky’s directors say they believe there are no events or conditions that will cause the withdrawal of those facilities in the near future.
They added: “The directors have a reasonable expectation that the group will have adequate resources to continue in operational existence for the foreseeable future.”