Cardiff City debt rises to £109m as full extent of Vincent Tan’s support for the club comes to light in new accounts
The extent of Vincent Tan’s financial support for Cardiff City during the Covid crisis has been revealed in new official figures which have just been released.
Accounts show the Welsh capital club’s debt stood at £109.5million for the year ending May 31, 2021.
With fans banned from attending games due to the pandemic, and therefore revenue streams drastically reduced, Cardiff relied heavily on the support of its Malaysian owner who loaned the Bluebirds a further £16million over the course of of the year.
As the majority shareholder, the debt owed to Tan is £61million, but he has given assurances over the club’s foreseeable future. Of this £61m debt, Tan converted £6.5m into shares through a new share offering.
A further £16million is due to Tormen Finance Inc, a company in which Cardiff Chairman Mehmet Dalman has a majority stake. This money was lent at 9% interest.
Other trustee loans totaling £5m, plus a £6.2m loan from the Football League fund to bail out clubs during the Covid crisis, are also on record.
Notes in the accounts show that further loans of £22million have also been taken out since the end of the recorded financial year, that is, for this season, to help with the day-to-day running of the club.
Over time, this can also be shown to be additional money lent by Tan and Dalman, but as things stand, that’s unclear.
Dalman previously said Tan dipped into his own pocket to the tune of almost £3million a month to help pay wages.
In its chairman’s statement, Dalman speaks of the turbulent period Cardiff has just been through and how ‘the pressures on football’s finances have obviously meant that we have been heavily dependent on Vincent’s continued financial support throughout this period’ .
He continued: “As a board and a club, we are extremely grateful for the continued support of our owner and without it the future of the club would be much more precarious.”
Dalman also stressed that Cardiff felt a structure was in place “to ensure we can achieve our goal of returning to the Premier League”.
Significantly, he continued: “We must then ensure that we maintain our status for the foreseeable future and break the vicious cycle of promotion and relegation.”
Dalman was referring to the fact that Cardiff have only lasted one season in each of their Premier League campaigns under Tan’s watch, first under Malky Mackay and Ole Gunnar Solskjaer and more recently with Neil Warnock as manager.
Dalman feels the emergence of a generation of talented young players, Isaak Davies, Rubin Colwill and Joel Bagan among them, can help create the kind of stability he talks about as Cardiff looks to the future.
Accounts show a net loss for the year of £11.2m, with player wages costing £26m.
The payroll was subsequently reduced significantly, with the Bluebirds cutting costs this season.
Accounts show Cardiff have set aside more than £20m on the balance sheet if they lose the Court of Arbitration case with Nantes over Emiliano Sala’s transfer fee.
However, if the decision went against the Bluebirds, Tan and Dalman would still need to find that money in real terms.
They say, however, that they are “of the opinion that the appeal has a good chance of success and that it will be settled favourably”.
The first day of the CAS hearing took place today in Lausanne, but it is taking place behind closed doors as Cardiff and Nantes present their cases.
Cardiff have another legal battle on their hands with former owner Sam Hammam over the terms of the chairmanship given to him.
However, they appear to refer to this case as saying that no provision is made in the accounts as they “are advised that the claim is ill-conceived”.
Hammam fell out with Tan and the role created for him is believed to have been part of the deal to end Langston’s historic loan note debt.
Giving his expert opinion on the accounts, Cardiff City Supporters Trust chairman Keith Morgan said: “In terms of liabilities, the club owed £109.5 million which was technically repayable as of 31 May 2022.
“However, this total included £61m in loans from Vincent Tan and £20.8m in loans from directors and other related parties.
“During the year, Vincent Tan made further loans to the club of £16m and was repaid £1m. As a result, the debt owed to him increased by £15m. Of the total £61m due, £38.7m was interest, bearing at 7% per annum and £22.3m interest free.
“Since the end of the year, he has converted £6.6million of that debt into equity.
“The club has committed (not legally binding) to continue its financial support of the club for at least 12 months after the balance sheet date – that is until at least the end of February 2023.”
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