by Stuart Weir
This piece was posted on December 6, just after its embargo ended. Stuart Weir, in a briefing with UK Athletics writers, spoked with Chairman Ian Beattie on the problematic situations with UK Athletics.
UKA Accounts
UK Athletics is about to release its annual accounts for the year to 31st of March 2023 and is reporting a loss of £3.7 million ($4.6m) for the year. Briefing the UK athletics writers on the accounts, chairman Ian Beattie explained: “That means that accounts on 31 March will show a net liability position of £3.2 million. And clearly that’s not sustainable going forward”.
He attributed the loss to a number of reasons: “The biggest of these was the loss in events, which was almost £2 million ($2.5m). The biggest loss was the Birmingham Diamond League 2022, which was the test event for the Commonwealth Games, where we lost nearly £800,000 ($ 1 million). The World Indoor Tour Final in Birmingham lost around half a million pounds ($600,000), and the balance was made up of subsidies to other events”
He added that for the first time UKA had had to make a contribution of about £250,000 ($315,000) to the World Class Program [funding for elite athletes which comes from UK Sport]. In addition, there had been disciplinary and legal costs of around £150,000 ($190,000), and the balance was due to the shortfall in the ongoing operating costs of the business, net of commercial income: “To put that simply, there simply wasn’t enough commercial income to cover the costs we needed, to operate as a governing body. I’m not underestimating these numbers at all, and it’s clearly a tough time”.
He explained further that “the only income that UKA has at the moment is commercial income and UK Sport funding. Both of these are under pressure, and UK Sport funding can only be used for very specific purposes, on the performance side, with UKA also now expected to contribute to the world-class program costs as well”.
In the follow-up, Beattie who is a chartered accountant by background, was asked the blunt question: did that mean that UKA was bankrupt? He answered that with a “No” and explained: “It’s important to highlight that our accounts will show a cash position at 31 March 2023, improved by £1.2 million ($1.5m) compared to the previous year and that we closed the year at that date at 31 March 2023 with cash in the bank of £6.5 million ($8m), so that’s going in quite the opposite direction from the accounting loss. And that was due really exclusively to the excellent ongoing relationship with Nike. During the year, we renegotiated our agreement, and they made a significant cash payment to us”
He added that under UK accounting principles, “we’ve not been able or allowed under accounting principles to take any of that cash into the profit and loss account. We’ve got to treat that as part of the contract, spread over the full length of the contract”.
The income from Nike, he said, was absolutely crucial and “also, again really importantly, gives us the time to restructure the business, and in the knowledge that we’re not going to run out of cash in the foreseeable future, we as a board can have confidence, that the organization will continue”.
He outlined some of the steps that UKA was taking to re-structure: “We’ve had a significant reduction in our staff, and we’ve reduced staff pension costs. That’s reduced our annual costs by around £1.3 million ($1.6m)a year, which has been quite significant. That does have an effect on what we’re able to deliver, but we are looking at a much leaner organization going forward. We’ve made significant efforts to reduce event-related costs. And that started to come through this summer. But that’s not yet in the results. And we’ve also made some savings with the reduced footprint in the Alexander Stadium, which again will come through over time”.
Non-British readers need to understand why the UK is called the UK! While the UKA is the governing body for track and field athletics in Great Britain and Northern Ireland, there are separate country federations in England, Scotland, Wales, and Northern Ireland. While there is one GB team at the Olympics and the World and European Championships, the four countries compete separately at the Commonwealth Games and organize local and regional events. In that context, another aspect of the cost-cutting was to delegate some currently centralized (UKA) functions to the four nations.
There will be no overnight transformation with the following projections made:
2023-24 (the current financial year ending 31 March 2024) – loss of £1.6 million ($2m)
2024-25 – loss of £400,000 ($500,000)
2025-26 – break even
Beattie summed up the position and strategy: “The important point is to note that the cash flow profile of the organization means we have the time to turn the organization around. On that basis, the Board and I are confident that UKA will survive. We are very aware that these losses are big numbers, but I think it’s important to make that point. Going forward, The organization will be smaller, and events will be done differently. But we will be able to operate effectively as a strong governing body, working closely with our home country partners. I should add here the assumptions that we’ve been working off are fairly conservative. We’re not assuming new sponsors -that we’ve not yet secured – will be great sources of income. And we hope we can do better than that [the projections]”.
In a second article, we will outline how a new approach to event management will be crucial in the years ahead.
