The Role Model or the Exception that proves the rule?
Background
Dundalk are one of the newer legal entities out there with their latest trading company (Dundalk Town FC Ltd 519313) only formed in October'12 and since then they have had a stellar rise. Dundalk avoided relegation at the end of the 2012 season via a playoff win. At the end of that season they appointed Stephen Kenny as manager and since then they have finished either first or second in the league. At the end of 2012 they were in financial difficulties and were rescued by Paul Brown and Andrew Connolly who owned 50% of the club each until they sold to Peak 6 in 2018. http://www.the42.ie/dundalk-peak6-american-takeover-3805254-Jan2018/ It was a fantastic 5 years for the club and its owners and I will cover the 2014 to 2016 results below. Like some other clubs Dundalk should publish their 2017 accounts soon.
For the 3 years 2014 to 2016 Dundalk made accumulated profits of +€3.36m with all 3 years being profitable (2014 €53k, 2015 €116k and 2016 +€3.2m). In each of the 3 seasons Dundalk won the league while being profitable which by Irish standards is quiet an achievement. There is nothing disclosed in the accounts that would indicate there is anything exceptional in terms of income in any of the 3 years in terms of directors donations etc.
In 2014 Dundalk were in the Europe league and were knocked out in round 2 by Hadjuk Split but they would have earned circa €400k for the 2 games in Europe. Also the league winning team and set up at Dundalk came at a modest payroll cost of (€644k). By Irish standards this was a low cost team.
In 2015 Dundalk had qualified for Champions League but were knocked out in round 2 by Bate but made €550k from this one game. Payroll increased this year to (€988k) but again they won the league and qualified for the champions league the following season.
In 2016 Dundalk made the often dreamed about European breakthrough. Shamrock Rovers had done so in 2011/12 but the prize money 5 years later was worth far more. Rovers made €1.1m from their group stage participation from Uefa versus Dundalk making €3.7m for the same stage 5 years later. Dundalk generated circa €4.3m alone from Europe (€3.7m from the EL group stages) https://www.uefa.com/MultimediaFiles/Download/competitions/General/02/51/12/27/2511227_DOWNLOAD.pdf and €580k from being eliminated in the champions league https://www.uefa.com/uefachampionsleague/news/newsid=2398575.html Obviously on top of the Uefa monies, gates, commercial income etc would also have been given a boost. However given the success the costs also increased with the Dundalk payroll increasing from (€988k) in 2016 to (€2.7m) and increase of (€1.7m) year on year. Obviously this was well worth it given the increase in revenue.
Dundalk had one of their Europa league group stages in early December'16 post their year end so some prize money from Uefa could have been recognised in the 2017 accounts but this is not visible from the accounts.
Obviously the 3 year story at Dundalk is fantastic, even without the bumper 2016 year they were making money and winning the league.
The balance sheet of Dundalk is obviously very strong, firstly the company is only 4 years old so does not have any legacy losses or debt and secondly it had the great success in 2016. At Nov'16 Dundalk had accumulated assets of €3.3m. Dundalk had current assets of circa €3.5m which I would assume was largely monies due by Uefa to them. This asset had increased by nearly €3.1m year on year. Secondly Dundalk had €1.2m in the bank up from (€23k) the season beforehand. The joys of success!! Dundalk also spent €400k on the ground and increased their fixed assets accordingly that year.
In terms of liabilities Dundalk owed Corporation tax of (€0.5M) which is probably a first for an Irish club and a welcome bonus to the revenue commissioners, and also owed (€0.5m) in PAYE/PRSI on what I assumed are accrued bonuses for the Euro run. These 2 liabilities are up (€0.95m) so you can see the taxman was a big winner from the success. The other liability of (€0.8m) is not broken out but I would assumed it mainly bonuses earned not yet paid in line with the big increase in players costs in the year.
Clearly the Dundalk balance sheet at Nov'16 looks great and it was a great 4 seasons for them from 2013 to 2016.
Clearly unlike the first 3 posts I did this shows that profits and success can go hand in hand. The club seems well run over its 4 years of ownership by the 2 directors but success has obviously had a big impact. In the first 2 years Europe contributed circa €1m to Dundalk and in 2016 it contributed €4.3m and in fairness to Dundalk while costs went up they banked most of the extra income.
The question we need to ask is can this be replicated and can it be replicated by a few clubs. It costs lot of money to challenge as the Derry/Pats and Rovers post show and interestingly none of these clubs came even close to challenging Dundalk in that time. In 2017 Dundalk went out of Europe after 1 game and in 2018 they went out after 2 games so prize money will be well down. It will be interesting to see how much of their profits have then eaten in to or have the continued to trade profitability since then.
Time will tell if Dundalk are a model that more clubs can replicate and progress or they are the exception that proves the rule that you can't be successful and profitable. There are 100's of old league of Ireland clubs on the CRO that are now dissolved and bankrupt that shows we can all follow the rule, only Dundalk has been an exception to date.
Profit & Loss
For the 3 years 2014 to 2016 Dundalk made accumulated profits of +€3.36m with all 3 years being profitable (2014 €53k, 2015 €116k and 2016 +€3.2m). In each of the 3 seasons Dundalk won the league while being profitable which by Irish standards is quiet an achievement. There is nothing disclosed in the accounts that would indicate there is anything exceptional in terms of income in any of the 3 years in terms of directors donations etc.
In 2014 Dundalk were in the Europe league and were knocked out in round 2 by Hadjuk Split but they would have earned circa €400k for the 2 games in Europe. Also the league winning team and set up at Dundalk came at a modest payroll cost of (€644k). By Irish standards this was a low cost team.
In 2015 Dundalk had qualified for Champions League but were knocked out in round 2 by Bate but made €550k from this one game. Payroll increased this year to (€988k) but again they won the league and qualified for the champions league the following season.
In 2016 Dundalk made the often dreamed about European breakthrough. Shamrock Rovers had done so in 2011/12 but the prize money 5 years later was worth far more. Rovers made €1.1m from their group stage participation from Uefa versus Dundalk making €3.7m for the same stage 5 years later. Dundalk generated circa €4.3m alone from Europe (€3.7m from the EL group stages) https://www.uefa.com/MultimediaFiles/Download/competitions/General/02/51/12/27/2511227_DOWNLOAD.pdf and €580k from being eliminated in the champions league https://www.uefa.com/uefachampionsleague/news/newsid=2398575.html Obviously on top of the Uefa monies, gates, commercial income etc would also have been given a boost. However given the success the costs also increased with the Dundalk payroll increasing from (€988k) in 2016 to (€2.7m) and increase of (€1.7m) year on year. Obviously this was well worth it given the increase in revenue.
Dundalk had one of their Europa league group stages in early December'16 post their year end so some prize money from Uefa could have been recognised in the 2017 accounts but this is not visible from the accounts.
Obviously the 3 year story at Dundalk is fantastic, even without the bumper 2016 year they were making money and winning the league.
Balance Sheet
The balance sheet of Dundalk is obviously very strong, firstly the company is only 4 years old so does not have any legacy losses or debt and secondly it had the great success in 2016. At Nov'16 Dundalk had accumulated assets of €3.3m. Dundalk had current assets of circa €3.5m which I would assume was largely monies due by Uefa to them. This asset had increased by nearly €3.1m year on year. Secondly Dundalk had €1.2m in the bank up from (€23k) the season beforehand. The joys of success!! Dundalk also spent €400k on the ground and increased their fixed assets accordingly that year.
In terms of liabilities Dundalk owed Corporation tax of (€0.5M) which is probably a first for an Irish club and a welcome bonus to the revenue commissioners, and also owed (€0.5m) in PAYE/PRSI on what I assumed are accrued bonuses for the Euro run. These 2 liabilities are up (€0.95m) so you can see the taxman was a big winner from the success. The other liability of (€0.8m) is not broken out but I would assumed it mainly bonuses earned not yet paid in line with the big increase in players costs in the year.
Clearly the Dundalk balance sheet at Nov'16 looks great and it was a great 4 seasons for them from 2013 to 2016.
Summary
Clearly unlike the first 3 posts I did this shows that profits and success can go hand in hand. The club seems well run over its 4 years of ownership by the 2 directors but success has obviously had a big impact. In the first 2 years Europe contributed circa €1m to Dundalk and in 2016 it contributed €4.3m and in fairness to Dundalk while costs went up they banked most of the extra income.
The question we need to ask is can this be replicated and can it be replicated by a few clubs. It costs lot of money to challenge as the Derry/Pats and Rovers post show and interestingly none of these clubs came even close to challenging Dundalk in that time. In 2017 Dundalk went out of Europe after 1 game and in 2018 they went out after 2 games so prize money will be well down. It will be interesting to see how much of their profits have then eaten in to or have the continued to trade profitability since then.
Time will tell if Dundalk are a model that more clubs can replicate and progress or they are the exception that proves the rule that you can't be successful and profitable. There are 100's of old league of Ireland clubs on the CRO that are now dissolved and bankrupt that shows we can all follow the rule, only Dundalk has been an exception to date.
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