League One side Leyton Orient have announced huge operating losses in their latest accounts, distributed to Shareholders today as part of the club's Annual General Meeting. The East London side recorded an operating loss for the 2008-09 season of £1,077,687, meaning that they have overspent to the tune of £1,834,256 over the past two seasons.
The club attribute the losses to "declining match receipts and commercial income due to the economic recession, coupled with an increase in salaries following changes in managerial staff and high levels of loan players."
Despite the heavy losses, the overall Orient balance sheet remains in the black. Just over a year ago, they sold Brisbane Road to Matchroom Sport - Chairman and owner Barry Hearn's sport event promotions company. The fee that passed between the two company balance sheets was £6.0m, but in practice Orient received just £2.6m as Hearn also used the transaction as an opportunity to wipe out the £3.4m worth of accumulative loans that Matchroom Sport had given the Londoners since Hearn took over the ownership of the club.
A cash injection of £2.6m initially sounds attractive for a smallish lower league club to get into its bank account. But at the rate that Orient are going, it will only be a couple of years before that diminishes down to zero. Hearn claims that the 2009-10 figures when published "will show a considerable improvement" and with their crowds up by 3.4 percent that will help them a touch. But certainly Leyton Orient need to consider what will happen when that £2.6m is exhausted, particularly as their biggest asset will no longer be regarded as their own and so will no longer be securable against any future financial liabilities.
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