WARNING SHOT
Dundee face ‘tough choices’ due to ‘unsustainable’ costs
DUNDEE last night warned that ‘tough choices’ must be made after revealing the financial implications of the coronavirus crisis have resulted in an ‘unsustainable operating cost structure’ at the Championship club.
The latest SPFL side to announce worrying financial forecasts, the Dens Park outfit have already lost out on £500,000 in revenue since the start of the pandemic, with further blows to the budget looming on the horizon.
With a shortened Championship season due to start behind closed doors, cuts look inevitable, with Dundee now set to have ‘difficult conversations’ during a period of consultation with staff.
The Dark Blues did have business interruption insurance in place and while they are hoping that will soften some of the financial pain, they are anxiously awaiting a ruling from the High Court regarding the full extent of any potential pay-out.
Club managing director John Nelms said: ‘Since the start of the Covid-19 pandemic we have lost out on revenues equating to over a half-a-million pounds.
‘Although we have a start date for the 2020/21 season, there is no clear indication of when we will be able to have supporters, the lifeblood of Dundee Football Club, back.
‘Some optimists think the stands can be filled in October. Others say it is likely to be in 2021. Either way there has been, and there will continue to be, a significant and unsustainable stress on the club’s finances.
‘Our latest budgets show that in addition to the half-million-pound loss for the shortened 2019/20 season, our revenues for the upcoming season will be more than halved as a result of the measures taken to contain coronavirus.’
Dundee did appear to be in a better position than most clubs, with Dens owner John Bennett waiving rent on the stadium and the insurance also in place. However, there is a large question mark on the full extent of insurers’ liability. Nelms added: ‘While we have the strongest possible bespoke resilience wording in our insurance policy, we do not expect to see any initial payment on our current insurance quantum until the Financial Conduct Authority obtains a ruling from the High Court. ‘This hearing will determine the extent of liability the individual insurers have and is scheduled for late July/early August.
‘It is our sincere hope that the insurance comes through, and for the full amount claimed, but unfortunately there are no guarantees for any of it.
‘In the event that our claim is successful, we will be in a stronger financial position. However, it will be months before we recover our loss of revenue from the past financial year and it is likely we will not be able to collect on this financial year’s losses until well into the 1920/21 season.’ The combination of extraordinary factors have now left Dundee with little option other than to make difficult decisions.
‘This is the grim reality of what we are facing,’ said Nelms.
‘The continued uncertainty, coupled with the restrictions on the club (and on our other means of resource that bolster the club) has resulted in an unsustainable operating cost structure.
‘We now have tough choices that must be considered to reduce these costs in order to protect the future of Dundee FC.
‘With less than half our revenues anticipated to be received in the 2020/21 season, our club’s operations are under review.
‘The club may need to pause several functions until it is financially prudent to resume. Thus starts the difficult conversations, the results of which will have an impact on our people, those whom we have always tried to take care of over the past seven years.
‘We will be entering into a period of consultation with them to discuss the consequences as the club braces for the future.’
Dundee had also been looking to move from Dens to a new purpose-built stadium but those plans could now be put on hold.