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Monday 30 November 2009
Our Cup Runneth Over

We may have taken part in only two rounds of the venerable competition this year, but it’s given a healthy boost to our bank balance. This article describes how the receipts from FA Cup games are divvied out.

From time to time we report in the programme on our financial position - either overall, as with the club’s accounts for the year, or on specific projects, for example the report to the Dons Trust board on the costs of the extension to the Paul Strank Stand last season.

It is some time since we reported on cup finances. Although we played only three FA Cup games this season, the financial benefits were fairly substantial, so we thought we should provide some figures. First, let’s look at how our share of a 'shared gate' is calculated.

To calculate the profit to be divided up between the two teams, the home team first deducts VAT from the total gate money and then subtracts the allowable match costs. There are rules for almost everything in the calculation. For example, once they have agreed the ticket prices for the game, each team is allowed up to 30 free complimentary tickets. If a team has more than 30 'comps', then it must pay the going rate for the extra tickets it uses. On the other hand, if we sell a match sponsorship we don’t have to share all the sponsorship income with the opposition - but the gate money must include the going rate for the seats occupied by the sponsors, in our case £16 per seat.

The allowable costs that can be deducted include the costs of match officials, opposition travel and accommodation, floodlighting, first aid provision, and police and stewards. Again, there are specific rules. For example, we wouldn’t be reimbursed for the full cost of the team coach to Millwall (in effect making them pay half the cost) because clubs are limited to claiming £3 per mile for a coach. Similarly, if we had decided on an overnight hotel stay for the Crawley away game, the costs wouldn’t be allowable - the rule is that you can deduct hotel costs only if you need to set off before 8.00 am on the day of the game to get there.

So what does a profit share calculation look like? Here is a summary of the calculation for the Crawley replay, i.e. our home game, using the actual figures for the game:

Total gate money   £26,113
Less VAT   -3,406
Net gate money   22,707
Less expenses:
Police and stewards  2,489 
Match officials  458 
Coach travel  192 
Other  160 
Total expenses   -3,299
Net profit to share   £19,408
Profit for each club, 50%   £9,704

Of course, we also make profits from, for example, the bars, programmes, the club shop, and so on. But the amount shown in the table is what we share with the opposition - and our guess is that it isn’t as much as fans may assume it to be.

There are couple of things to point out about the figures in this table. First, the average amount paid per person in the stadium (i.e. £26,113 divided by 2,467, the attendance) was £10.58, which reflects the range of prices paid by adults, concessions and under-16s, for the terraces and seats. Free complimentary tickets are reflected in that average. Second, VAT is included in the price of each ticket and has to be deducted and paid to HM Customs & Revenue; as you can see, it’s a hefty chunk of the proceeds.

So, how much money did we make from the three FA Cup games in total? There are three parts to this:

* Our share of the gate money, less expenses, from each game, as illustrated in the table.
* The prize money for winning a round (although we pay a chunk of this money as win bonuses to the players).
* A variable payment for reaching the First Round Proper.

A word on the last of these. For replays in each of the FA Cup Third, Fourth, Fifth and Sixth Rounds (there are no semi-final replays), 5% of the takings is paid to the FA, and the grand total of these 5%s is spread equally between all the non-League clubs that reached the First Round Proper. When we reached the First Round for the first time, last year, our share was just over £9,500. So, every time you see a replay in rounds Three to Six, remember that we are benefitting from it.

Ignoring the profits from the bars, programmes, shop and so on, our profits come out as follows:

Share of profit from Crawley home and away, plus Millwall  £60,273
Prize money for winning Crawley game  12,500
A guess of our share of the FA 'replays fund'  7,500
Total profit  £80,273

From this, we paid the players’ bonuses for beating Crawley, but how much they get is confidential, so they’ve been omitted from the calculation. And we are funding the free fans’ coaches from this profit.

Now for the big question: what will we spend the profits on?

In the short term, the answer is that we’ll wait and see. The club’s finances for this season are holding up well, thanks largely to the surge in attendances following our promotion. However, the results for some parts of the business are some way short of what we budgeted for, and we need to keep an eye on them. And let's not forget that we didn't get any money from Setanta, and that cost us about £100,000.

With the economy still in recession, and many experts predicting that things will get worse again after a brief improvement, we are not going to commit substantial unbudgeted expenditure until we have a much better feeling for how the entire financial year will turn out.

Terry already has a large squad, and he continues to look at how to get the best out of every player on our books. Unless he comes to the conclusion that there are areas where we definitely don’t have the strength we need, or he spots a player who is too good to miss, we won’t be bringing in new players in a hurry, and perhaps the money is best spent underwriting a further step towards a full-time squad next season.

We’ll be giving all these issues more thought in the coming months. One thing is for sure, however: we are financially stable, and we plan to keep it that way.