The Dons Trust AFC Wimbledon Club OwnersBudget overview from the DTB

The Dons Trust Board has produced an overview of how the current season’s playing budget was achieved.

Now that the transfer window has closed until the New Year, the Dons Trust Board wants to give members and fans an overview on how budgeting for the season works at AFC Wimbledon – and in particular how the playing budget is arrived at.

The process starts in earnest early in the calendar year. For the last few seasons, while we were struggling in League One, the club was charged with preparing two draft budgets – one for League One and one for League Two. During the season, clubs are given a list by the EFL of playing budgets. Each club name is hidden but we obviously know where we are placed. While the EFL doesn’t allow us to share details of all the other clubs’ budgets, as we announced back in June 2021, in League One terms, we had a budget that placed us 21st out of the 24 clubs in 2020-21. We also had a budget that ranked in the bottom four last year.

When relegation was confirmed, the Dons Trust Board and PLC board wanted the club to provide a playing budget that was competitive enough to challenge at the top of the table, and push for an immediate return to League One, while of course living within our means.

Budget data from the EFL for the 21/22 season showed that in order to be in the second quartile of League Two (i.e. to rank between 7th and 12th), the club would need to match the same playing budget as we had in League One.

This presented several challenges. First, we had set a high attendance budgeted figure of approximately 7,500 for League One. Thanks to fantastic support in our first season back at Plough Lane in front of fans we achieved this. However, when preparing assumptions for a League Two budget, it wouldn’t have been prudent to do the same due to the loss of some very big away attendances. We have therefore budgeted for an average attendance of approximately 6,500 this season. We have been encouraged by the high uptake of season tickets, and consider the 6,500 figure achievable. Nonetheless, this attendance figure would see about £400,000 less available to spend on the team compared to last season. This is not just lower gate money, but also reduced income from bars and catering.

Additionally, as a League Two club, the club gets much less central funding from the EFL – this equates to a drop of approximately £500,000. This means the club had to find around £900,000 in additional income, just to keep our playing budget at the same level as we had last season in League One.

To bridge the majority of this gap, the boards agreed to have a high assumption in the budgeted line for player sales, knowing there was interest in and would be bids for some of our players. This is what enabled us to be confident and publicly state a plan to have a competitive League Two budget. To be crystal clear, if we hadn’t included this player sales budget line, we would likely have had a below-average budget for League Two.

Things aren’t always that straightforward however when it comes to budgeting revenue from player sales. For instance, the selling club will often not receive all the money from the transfer upfront. In fact, the transfer fee is often staggered over the course of the player’s contract. This means that the club must be careful with its cash flow.

Similarly, there will be different parts to players’ contracts that could significantly affect the budget. This could be clean-sheet or goal bonuses or incremental increases in salary for the lifetime of the contract based on a number of benchmarks being hit – such as appearances.

For this season, based on the payments received this summer, we have exceeded our initial line item assumption for income from player sales. This allowed us to make several signings where we paid a cash sum for players. This includes the likes of Josh Davison who became our record signing of the AFC Wimbledon era and, more recently, Harry Pell.

In short, this strategy has allowed us to produce a playing budget for this season in League Two that is slightly bigger than the playing budget we started last season (in League One) with. Based on the EFL 21-22 figures this should probably place us in the second quartile – of course, we do not yet know how other clubs set their budgets but it is a reasonable assumption.

So the answer to the question which we’ve seen, quite fairly, from members and fans in many forums of “Where has the money gone from player sales?” is that it has been used to support the playing budget this season:

  • to bridge the gap caused by the loss of central funding
  • to compensate for an anticipated reduction in attendances
  • to make player signings where we paid a fee.

Given all the above, there’s a reasonable question to be asked about the future profitability of the club. For next season, we expect a similar position financial position, and a need for the club to supplement the playing budget with additional income, the most likely area being player sales. But it’s not just about next season, of course.

We all want to make the most money possible available for the playing budget, every year. But it’s important the club is sustainable and prudent with its spending. We’ll always want (and sometimes need) to invest in maintaining and then improving our stadium. And we may need external finance in the future to do that, so a track record of financial success is vital.

There are other potential upsides for the club’s budget. A good cup run, especially one with a home televised game, could add significant funds. And the club always seeks to include potential “add-ons” when selling a player, be that based on appearances or success for the new side, or a sell-on fee whereby we benefit from the player’s next move.

The Plough Lane Bonds enabled us to complete phase one of the Plough Lane build, and to ensure we have no debt secured on our new stadium. If we are to have debt, unsecured friendly debt at relatively low-interest rates is the best kind to have. But this season we will pay out nearly £400,000 in interest to bondholders, and in 2025 around £3.4m of that debt will mature (with another £3.5m by 2027). The PLC board continues to direct work on how to reduce the interest costs and how best to manage the bond repayment schedule, and will keep members and fans updated on progress. Of course, if that £400,000 were available annually for the playing budget, we’d all be much happier.

For the longer term, strides have been, and continue to be made by the club in getting our stadium to work for us outside matchdays. But there is a lot more to do, and once we have a Managing Director in place they will be concentrating on extending those efforts, alongside the current staff. This will include corporate and private hires of stadium facilities and other ventures such as the Education Hub.

We will keep members updated on the short and medium-term financial planning as the season develops. If you have any further questions, we are holding an interactive, online Meet the DTB event this evening (Wednesday 7 September) from 20:00 BST, hosted by Luke Mackenzie and Graham Stacey. There is also a Dons Trust SGM scheduled to take place on Thursday 13 October, which will be held at The Cherry Red Records Stadium and streamed online.

As mentioned at the outset, we have produced this update to coincide with the closing of the summer transfer window – we didn’t feel it would be prudent to share too much information with agents or rival clubs while active in the recruitment market. But we hope that this overview has provided answers to many of the questions we have seen or received over the close season.

Please do keep asking questions and challenging us, your Dons Trust Board – whether in person, via email, on the ProBoards forum, or at an official event – and we will do our best to continue to be as open and transparent with our members as possible.

The Dons Trust Board 07.09.22