Dons warn of 'unsustainable' financial position after loss of nearly £3m

Aberdeen FC are warning that their current financial position is "unsustainable" - if fans are not allowed back into Pittodrie this season.

The club have published their annual accounts for the year ended June 30 2020, and projections for the coming year.

They show a decrease in turnover of £1.59 million, from £15.928m to £14.335m, with an operating loss of £2.92m compared to £1.03m the previous year.

Wages rose from £9.24m to £9.77m during the period, increasing the wages-to-turnover ratio from 58% to 68%.

But the club are predicting that ratio will go up to 90% this year, with turnover expected to drop by £10m, resulting in an operating loss of £5m.

Chairman Dave Cormack said: "We were planning for an operating loss of around £2min the June 30 2020 accounts due to our strategy of continued investment in a competitive team on the pitch and in fan engagement to increase support in the future.

"This was with a view to building a long-term, more sustainable future based on investing in young talent and developing players through our academy to sell on at the right time to balance the books.

"The unforeseen but devastating impact of the coronavirus crisis on the latter part of the 2019/20 season increased that planned loss to £2.9m with projections for the current financial year showing an even more significant loss of £5m due to the effect of Covid-19 on the full season."

Without fans returning to Pittodrie this season, the club say they face losing £5m of revenues from matchday gate receipts, hospitality, advertising, sponsorship and retail - a position which Cormack says is unsustainable.

He said: "Despite a further £1.1m cash injection from our investors last month and a record player sale, our financial gap, due to the ongoing pandemic crisis, is widening.

"We are sustaining losses for every home game we play without fans and may be forced to take further, painful measures to ensure the club’s future.

"The knock-on impact of no clear plan for the return of fans to our national sport, as we enter the second half of this season, will be catastrophic for many Scottish clubs as they look to generate significant cash from season ticket sales for next season, starting in March 2021.

"At Aberdeen Football Club this could require us being forced to scale back our operations, which would have an impact on the supply chain which depends on our matchday operations."

However, Cormack says redundancies would be a last resort.

Meanwhile he has defended the decision to invest in the playing squad.

He said: "There may be a perception that Premiership clubs are coping because we recruited new players. The reality is that clubs which fail to invest in the product on the pitch become less competitive, jeopardising vital prize money and undermining revenues due to a drop in support.

"Our dilemma is maintaining our ability to compete and secure at least £2m of prize money each season, while facing a total collapse in income from gate receipts, corporate hospitality and sponsorship on matchdays.

"Investing in players is crucial to ensure a solid succession plan to get ahead of changes to the squad. We’ve achieved that during both the recent transfer windows. We must continue to invest in young talent, including through our academy, with a view to monetising players, like we have done with Scott McKenna."

Cormack now says urgent action is needed to address the funding gap brought on by the pandemic.

He added: "The only way to do this is by getting fans back into Pittodrie safely, sooner rather than later, so that we can plan for critical matchday income and cash from season ticket sales.

"We are doing everything asked of us by the Scottish Government and the footballing authorities. We had a very successful test game with 300 fans, where we demonstrated we could easily have accommodated significantly more, safely.

"Scottish clubs and our footballing authorities must have urgent, constructive and meaningful discussions with government that acknowledge our socio-economic impact, recognise our plight and deliver a clear plan and roadmap towards a return of fans."

Events with fans are not allowed for any area under level two, three or four restrictions - with Aberdeen currently in the lowest of those.

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