Chairman says further 'drastic' cuts are neccessary as Scunthorpe United announce record loss
Outgoing chairman Steve Wharton has warned Scunthorpe United must make 'drastic' reductions to their current operating costs after seeing the club report a record loss for the last financial year.
Figures released today show the Iron recorded a deficit just shy of £2million for the year ending June 30, 2012, as the true cost of relegation from the Championship becomes clear.
The figures cover the whole of last season, when United were back in League One.
They show that the club's wage bill came down by £1.6 million - having topped the £5 million mark for the first-time ever during 2011 - but turnover dipped dramatically, by almost £4.5million, more than three quarters of which can be put down to the drop in Football League funding for being in the third tier rather than the second.
In his annual report to shareholders, Wharton, who will step down and quit the club's board at the end of the current financial year, admitted the shortfall in income had been greater than he had predicted.
And he warned of the need to be more conservative with cash to preserve the Iron's long-term future.
"Adjusting to life in League One proved to be rather more difficult than was anticipated and we finished the season much too close to the drop zone," wrote the chairman.
"Inevitably the poor performances on the pitch, particularly at home, led to a decline in attendances and consequently, gate income was well below budget.
"The drop in total income which I predicted in my last year's report at £4 million in fact became £4.5 million and we were only able to reduce our costs by circa £2 million.
"It is stating the obvious when I say that further drastic reductions in our operating costs are essential to ensure our ultimate survival."
Speaking exlcusively to the Scunthorpe Telegraph, general manager David Beeby said while cost-cutting will continue, United will also look to do more to try to increase revenue, like they have done with the club restaurant, where turnover was up more than £30,000 on the previous year.
"Of course we're trying to increase revenue in all different areas," he explained.
"But a lot of that is affected by the division we're in.
"Most of the decreases (in turnover) are affected by the crowd, the reduced number of away fans we get and the reduced number of home fans we're currently experiencing due to results on the pitch.
"One area of the club where we did see an increase in turnover was the hospitality area on the back of extending the exec lounge which enabled us to open up a new market on non matchdays.
"We have to utilise that to try to generate extra revenue.
"Ultimately though it's about reducing costs to a level we can afford while trying to maximise revenues where possible."
In addition to his comments on finance and the decision to dispense with the services of manager Alan Knill just over a fortnight ago, Wharton welcomed the formation of the Iron Trust, who aim to give supporters a greater say in the way the club is run.
"A Supporters' Trust has recently been formed by a number of dedicated supporters and the club is doing all it can to assist the trust to develop, with the ultimate aim of a direct involvement in the running of the football club," he included in his report.
"I would urge all our fans to support the trust in any way they can.
"Whilst I think it would be an impossible task for the trust to have total control of the company, I do think it is important that our fans can have as close a relationship as possible with the Board of Directors.
"I have always said, and still believe, "The club belongs to the fans, the directors are merely custodians"."
The Iron's Annual General Meeting will take place on Monday, December 10, from 7pm, in the executive lounge at Glanford Park.
For an in-depth analysis and breakdown of the Iron's finances, including further comments from Steve Wharton and David Beeby, see this week's Scunthorpe Telegraph, out Thursday, November 15.