League Two: Newport County 'stable' despite £1.2m loss

The Exiles’ last audited accounts for the year ending June 30, 2021 stated that they had net assets of £837,859, build up largely through lucrative cup runs under Michael Flynn.

The next figure filed at Companies House will show a balance sheet with a deficit of £393,000 for the period up to June 30, 2022.

County are dealing with creditors – the Dragons are the main one and are owed just shy of £500,000, the Argus understands – to tackle that figure.

The Trust-owned club’s management accounts for this year are set to be close to the traditional structural loss of around £250,000.

They are far from the only club in the Football League to operate at a loss but the board, who held a meeting with Trust members and shareholders on Tuesday, are working hard to improve a worrying situation.

Newport County flags at Rodney Parade (Image: Huw Evans Agency)

“My view is that the club's finances at the moment are stable. Parlous, but stable,” said director Peter Madigan.

“We have been operating to a budget that we have been tracking against for a number of months. There is a lot of work to do but it is still almost ‘business as usual’.

“We have got to grips with the creditors, we have got to grips with the cash flow, we have got to grips with the numbers.

“We are fundamentally confident in the numbers that Nick [Igoe, an experienced sports financial consultant who works with Supporters Direct] has put together. They are right. Full stop.

“Because of a negative balance sheet, the question of going concern always comes up but if you look at it via audited accounts up against management accounts, there has been an improvement and stability.”

County are working on a new long-term lease for Rodney Parade after the expiry of their 10-year agreement and, with both parties remaining it could be signed in the coming days.

They are also looking to address the structural losses but Madigan warns there is no silver bullet.

“We need to work harder commercially – I am not saying we can sell our way out of the problem but there is a bit of me that thinks we could do a lot more – and have better cost controls,” he said.

“I think a break-even budget is achievable personally but there isn’t one thing that is going to fix it. If you have five things that deliver £50,000 then that is achievable.

“Trust members could do more, we could sell more season tickets and shirts, sponsors could do a little bit more, we can focus on more local lads and Graham [Coughlan, manager] is on board with that.

“I think we need to work harder on making the academy more effective and we are working on fixing that with [academy manager] Luke Hussey.

TALENT: County youngster Kiban Rai made his first team breakthrough last season (Image: Huw Evans Agency)

“I know that will not plug the gap in the short or even the medium term but the alignment of the academy and getting them working closely with the first team is part of the long-term plan.

“There is a mindset thing here – if we think that we can’t sort it out then we won’t sort it out.”

County have instructed former director Colin Everett to explore the options for the club’s ownership model, assessing the pros and cons of staying fully Trust-owned, the hybrid model and putting the club up for sale.

That brings into focus the role of Jon Pratt after the Newport-born, Miami-based businessman was co-opted onto the board earlier in the year.

“A number of people asked about Jon Pratt and there were a number of reasons why we invited him onto the board,” said Madigan.

“One was so he could see under the covers, secondly it is really important that if somebody is going to join the board that we get to know each other and how to work with each other.

“Part of it was a getting to know each other exercise while this also gives Jon the opportunity to work with Colin about his thoughts and ideas for a future ownership model.

“There were a number of things we needed to do to get the club on a stable footing [at the start of the year]. That was the most important thing to do.

“To divert attention onto what different ownership models would have been would have been incorrect priorities of the activities of the board.

“Now Colin can talk to Jon about what his thoughts are and we can also look at different options as well. If anyone wants to come in with their ideas about ownership then we are all ears.

“We will look at any option in depth and encourage people to come forward, then we will go through the right processes.

“People might be interested in the hybrid model or the fans might say that, with better controls, they want to still own the club while appreciating the need to dig a bit deeper to plug the game.

“In the meantime we are going to get on with things.”

County are also keen to tap into the expertise of supporters and provide a path to possible board involvement.

“There was a bit of talk on Tuesday about whether the club is a closed shop and that couldn’t be further from the truth,” said Madigan.

“What we want to do is establish some working groups to allow people to join in if they want to get involved, working alongside a director to increase their bandwidth.

“We will actively involve people and then if they feel that putting themselves forward for the board is something they would like to do after getting their hands dirty it is an easier transition.

“That is a positive step forward because I think it can be quite difficult to put yourself up for the board unless you know what you are getting yourself in for.”

County boss Graham Coughlan (Image: Huw Evans Agency)

County’s financial situation means that manager Coughlan will operate with one of the Football League’s smallest budgets, going up against big spenders such as Wrexham, Bradford and Stockport.

Madigan is confident that the boss, who helped steer the club away from relegation to finish in mid-table, can repeat the trick.

“Graham is a fighter and he is definitely up for the challenge. He knows his way around League Two and so does Chris Finn,” said the director.

“To me, the names that they are looking at seem spot-on and they have good relationships with plenty of clubs. I am certain that we will punch above our weight.”