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Rotherham FC’s 2019 Finances – Yo-Yo-ing

Rotherham FC's 2019 Finances

Rotherham returned to the Championship after a one-year hiatus ahead of the 2018/19 season, bouncing back immediately from League One. However, it was another brave but ultimately unsuccessful season in which they were once again unable to retain their Championship status following promotion, being condemned to relegation in the penultimate game of the season.

Rotherham had no more luck in the FA Cup or League Cup, exiting at the third and second round respectively.

Off the pitch, promotion had a healthy impact on their finances, turning a £0.5m loss into a £2.7m profit following a big increase in EFL distributions, showing the differences between the Championship and League One.

Let’s delve into the numbers.

Rotherham 2019 Profit

Revenue Analysis

Rotherham 2019 Revenue

Rotherham saw their revenue increase significantly following promotion back to the Championship, rising from £9.9m to £13.9m (40%), a new Rotherham record.

Matchday revenue

Matchday revenue rose from £2.2m to £2.6m (18%) as a return to the Championship saw increased attendances.

Rotherham saw average league attendance rise from 8,514 to 9,880 (16%), suggesting rising attendance was the main reason for the jump.

Following relegation, attendance is likely to drop down again and matchday revenue will hence likely fall.

Broadcast revenue

Rotherham’s broadcast revenue more than tripled from £2.3m to £7.7m (235%), as Rotherham benefitted from a return to the Championship and the increased prize money this brings.

Relegation back to League One will unfortunately however see this situation reverse, with broadcast revenue unlikely to be greater than £3m.

Commercial revenue

Despite gaining promotion, Rotherham saw commercial revenue fall from £5.3m to £3.5m (34%), as their commercial revenue from main sponsor and related party AESSEAL was reduced on the back of a lesser need for what appears an inflated figure.

With relegation to League one likely to see a fall in revenue again, this figure may be bumped back up, although this may be met with scrutiny from the EFL if that is the case.

What does the future hold?

It is undoubted that Rotherham will see a sizeable drop in revenue following relegation from the Championship, with revenue unlikely to exceed £10-11m, being a similar level to 2018.

Costs Analysis 

Rotherham 2019 Costs

Rotherham managed to increase revenue at a faster rate than operating costs, improving profitability significantly.

Operating costs rose from £11.3m to £12.9m (14%) following promotion as Rotherham were conservative in their approach following promotion and this may have led to their demise, although it has left them in a fairly comfortable financial position.

Please note that Rotherham have fairly low costs and do not provide much details of the amounts spent, therefore this section is much shorter than it is usually for clubs!

Amortisation 

Amortisation remained stable at £0.5m following no signings for a transfer fee in 2018/19 as the club remained tight with their purse strings.

Rotherham have spent in 2019/20, however such is the low level of spending that amortisation is unlikely to increase, and if so it will be minimal.

Wages

Rotherham 2019 Wages

Rotherham’s wages increased from £6.3m to £7.8m (24%) after promotion following free transfer arrivals and new contracts for key players.

The additional wages saw an extra £29k a week being spent on wages in 2019, a fairly small amount given promotion and the club were one of the lowest wage spenders in the Championship.

What does the future hold?

Given Rotherham were relegated last season, various high-earners will depart while relegation wage drop clauses will come into effect, meaning wages and operating costs in general is likely to fall, probably to around £10-11m.

This however costs are likely be higher than revenue (following revenue drop caused by relegation) and hence Rotherham are likely to see profitability decline.

Transfers Analysis 

Rotherham 2019 Transfers

Another short section here as Rotherham did not spend, nor sell any players for transfer fees in 2018/19 as the club relied on free transfers and their existing squad in an attempt to remain in the Championship.

The club valiantly failed to do so despite putting up a good effort and are well placed to return given the low squad turnover and high squad cohesion.

Rotherham did manage to record a profit on player sales of £1.7m. This was owing to the sale of Will Vaulks in the final days of June 2019 and hence it was included in their 2018/19 results despite being more of a 2019/20 sale.

This helped the club record their £2.7m profit, which would have been £1m without it.

The sale of Semi Ajayi will be recorded in 2019/20 and will boost their profits slightly however it is likely to be smaller than the sale of Vaulks given he was sold for a lower amount.

Transfer debts 

In debt terms, Rotherham are owed £2.2m in transfer fees, a healthy sum for the club that will help following relegation.

In contrast, Rotherham owe only £0.6m in transfer fees, meaning they are owed a net £1.6m in transfer fees which is not a bad position for the club.

Debt Analysis 

Rotherham 2019 Debt

Rotherham have traditionally run on zero debt however that has begun to change.

Cash levels rose from nil to £0.8m as the club’s promotion to the Championship and the additional finances helped them improve their cash position. This may be challenged by relegation.

Debt levels also fell slightly with Rotherham not requiring any owner cash injections in the year as debt levels fell from £3.5m to £3.4m (21%).

However, with Rotherham being relegated in 2019, the owner’s wallet may once again be needed if the club fail to control costs. The sale of Semi Ajayi will be helpful in this regards, while the club’s conservative approach following promotion has led them to a financially healthy position which must be commended given the recklessness of many of their Championship and League One peers.

At the time of writing, Rotherham look like once again bouncing back from their relegation set back as they find themselves top of League One and in a great position to regain their Championship status. It will be interesting if the club change their financial approach this time around in a bid for survival.

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Brighton & Hove Albion’s 2019 Finances – Seagulls Surviving

Brighton & Hove Albion's 2019 Finances

Brighton enjoyed their second successive season in the Premier League and it nearly proved their last as they narrowly staved off the threat of relegation, finishing in 17th place.

The threat of relegation was made slightly easier to take by a run to the FA Cup Semi-Final, narrowly losing to Premier League champions Manchester City 1-0 to end their hopes in the competition.

Despite securing survival (the aim of the club), a poor run of form towards the end of the season saw Chris Hughton sacked at the day after the season finished after five years at the club, and was replaced by Graham Potter, bringing a new energy to the club.

Off the pitch, increased transfer spending and player investment saw Brighton turn a profit of £11m into a loss of £22m, a significant £33m swing in their financial health.

Let’s delve into the numbers.

Brighton & Hove Albion 2019 Profit

Revenue Analysis

Brighton 2019 Revenue

Brighton saw their revenue increase ever so slightly, rising from £139m to £143m (3%), largely owing to their fantastic FA Cup run.

Matchday revenue

Brighton’s matchday revenue remained stable at £19m, despite having one extra home game (23) in 2018/19 then in 2017/18.

Average league attendance remained stable, increasing minimally from 30,405 to 30,426, showcasing why matchday revenue remained at the same level.

With Brighton out early in both domestic cups, Brighton are likely to see a small dip in matchday revenue owing to less matches.

Broadcast revenue

Premier League Payments

Brighton saw a slight increase in broadcast revenue, rising from £110m to £114m (4%), largely owing to their FA Cup semi-final appearance.

Premier League payments fell from £108m to £106m (2%) after finishing two places lower in the Premier League.

With the FA Cup prize money fund doubling ahead of the 2018/19 season, it was great timing for Brighton to reach the FA Cup semi-final after exiting at the quarter-final stage in 2018.

With the club exiting both domestic cups early, Brighton are likely to see a similar level of broadcast revenue with the final amount dependant on their final league position.

Commercial revenue

Commercial revenue increased from £9m to £10m (11%) after a similar season to as in 2018. Brighton retained the same key sponsors and saw a few new partners that helped Brighton increase commercial revenue.

Brighton still have one of the lowest commercial revenues in the Premier League. Retaining their Premier League this season would give the club even greater pulling power for potential sponsors and should aid an increase in commercial revenue if safety is secured.

Other revenue

Other revenue remained at around £2m.

What does the future hold?

Brighton are likely to see a similar level of revenue in 2020 with performance on the pitch remaining similar to 2019. Brighton may see revenue growth if they can maximise commercial opportunities and improve commercial revenue.

Costs Analysis

Brighton 2019 Costs

Brighton saw operating costs rise significantly despite fairly low revenue growth, meaning profitability deteriorated.

Operating costs rose from £130m to £168m (29%) as the club invested significantly in their playing squad as the costs of competing in the Premier League (and surviving) continue to increase.

Amortisation

Amortisation charges rose from £19m to £33m (74%), signifying the huge player investment after the second year of relatively large spending (compared to their Championship levels) following their promotion.

With Brighton once again spending significant sums in 2020, amortisation charges are likely to rise further.

Net interest expense

Brighton saw their net interest expenses rise from £1m to £2.6m (160%) after an increase in debt levels and the usage of an overdraft in the 2018/19 season.

See debt analysis section for more details.

Wages

Brighton 2019 Wages

Brighton saw their wage costs balloon after an influx of new signings. Wages rose from £78m to £102m (31%), breaking the £100m barrier for the first time in their history.

The signing of 14 new players of varying wages contributed to adding an extra £461k a week to their wages, a huge sum for a club whose wage bill in 2015 was less (£20m) than the rise recorded this year.

Brighton’s wage to revenue ratio was 71%, a fairly healthy figure for a Premier League club and far from the worst in the division. However, with wages continuing to grow at a faster rate than their revenue, this may change going forward.

Directors’ remuneration remained fairly stable at £1.9m (three directors).

What does the future hold?

Looking ahead, Brighton are likely to see costs rise again after another busy year of transfer activity which will see their two largest costs, amortisation and wages, rise significantly, and probably by similar levels (£20m+) as this year, meaning losses are likely to rise further.

Transfer Analysis 

Brighton 2019 Transfers

Brighton were busy in the 2019 season from a transfers perspective, bringing in a total of 14 new players for transfer fees and minimal departures.

In came Jahanbakhsh (£17m), Bissouma (£15m), Bernardo (£9m), Mac Allister (£7m), Montoya (£6m), Andone (£5m), Button (£4m), Burn (£3m), Tau (£3m), Mlakar (£3m), Baluta (£3m), Dreyer (£2m), Gwargis (£1.4m) and Arce (£0.8m) for a combined £80m.

Departing the Amex Stadium were Baldock (£4m), Goldson (£3m), Norwood (£2m), Normann (£1.5m), Jamie Murphy (£1m) and Skalak (£0.9m) for a combined £12m.

This led Brighton to a net spend of £68m, their largest ever.

The signings were a mixed bag and the sheer number of them led to problems jelling. Club-record signing Jahanbakhsh failed to settle while the remaining signings were more quantity over quality with the hope that some will develop in the coming season (such as Bissouma who has looked better). It didn’t help that Mac Allister signed without a work permit (which has now been obtained).

The sale of a few of their bring players helped Brighton record a profit on player sales of £5m, not nearly enough to stop the club recording a large loss.

Brighton once again sold few players in 2020 which will not aid their finances.

Cash

In cash terms, Brighton spent cash of £76m on transfers and received only £5m, a net cash outlay of £71m which needed funding by a combination of their owners’ cash and an overdraft.

With another year of big spending, Mr Bloom is likely to see a bigger hole burned in his pocket in 2020.

Transfer Debts

In debt terms Brighton are owed £6m in transfers fees, of which £5m is owed in 2020.

However, Brighton owe a much larger £22m in transfer fees, of which £14m is owed in 2020.

This however isn’t a huge issue, with a net transfer debt of £16m, this shouldn’t, and hasn’ts, affected transfer plans. It may be that in future Brighton should look at negotiating more favourable terms on their transfers that allows them to be spread further. This has both negative and positive implications as although it makes their current cash go further, it may lead to financial disaster if not managed correctly.

Debt Analysis

Brighton 2019 Debt

Brighton maintained a sizeable £9m in cash reserves in their first season in the Premier League, however increased spending and losses has led to their cash levels falling to £1m (88%).

Rising costs and increased transfer spending led to cash levels dropping despite a cash injection of £49m by their owners.

This cash injection took their debt levels from £223m to £280m (26%), with the remaining rise due to an £8m overdraft facility that was necessary for the club to operate smoothly.

With costs continuing to rise, it is paramount that Brighton either manage these or increase revenue in order for their financial health to not deteriorate. 

Survival is now paramount to their finances with relegation having the potential to really damage the club long term given their current finances.

Brighton may also need to sell players in the future given their mounting losses (should 2020 play out as predicted) which would potentially damage the quality of their first team.

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West Ham United’s 2019 Finances – Hammer Blow

West Ham United's 2019 Finances

After significant investment, West Ham had a steady 2018/19 season, finishing 10th in the Premier League. The introduction of Manuel Pellegrini and some significant signings saw renewed optimism at West Ham.

However, it was another disappointing season in the domestic cups, exiting both competitions in the Fourth Round.

Despite a slight improvement in performances on the pitch, performance of it deteriorated with a profit of £17m turning into a loss of £27m, a huge swing in finances following significant investment into the playing squad.

Let’s delve into the numbers.

West Ham 2019 Profit

Revenue Analysis

West Ham’s improved performances on the pitch in the league contributed to a rise in revenue from £175m to £191m (9%).

Matchday revenue

Matchday revenue rose from £25m to £27m (8%) as the club saw average league attendance rise from 56,923 to 58,325 (2%) after the club won a legal dispute allowing them to sale tickets in all 60,000 seats in the stadium, after the presence of a slight restriction previously.

With the club already close to capacity, any additional matchday can only come from increased home games, or via ticket price rises, with the latter not really an option given current fan sentiment for their owners.

Therefore, matchday revenue is likely to remain at a similar level to its current levels.

Broadcast revenue

Premier League Payments

West Ham saw broadcast revenue increase from £119m to £127m (7%), after finishing three places higher in the Premier League than the prior season.

West Ham’s Premier League prize money increased from £116m to £123m (6%), accounting for almost the entire gain in broadcast revenue, with the remainder from an increased FA Cup prize money fund.

Commercial revenue

Commercial revenue increased from £32m to £36m (13%) after the club extended its Betway deal on more favourable terms and signed a sleeve sponsorship deal with Basset&Gold.

West Ham continue to attempt to increase commercial revenue, looking to build out their corporate hospitality offerings at the London Stadium and also attract new lucrative corporate partnerships.

West Ham are likely to see a continuing positive trend in commercial revenue as long as the club remain in the Premier League.

What does the future hold?

Looking ahead, West Ham are likely to see revenue remain at similar levels to this year with the club likely to stay between the £185-£195m bracket depending on their final Premier League position.

Cost Analysis

West Ham 2019 Costs

West Ham saw their operating costs rise from £184m to £229m (24%). This large increase owed to significant investment into the playing squad and the management staff and was the reason for the large loss incurred in 2019.

Amortisation

West Ham saw amortisation charges rise from £41m to £57m (39%) signifying significant player investment after the club spent the most they have ever done so in a single season at that point.

With West Ham once again spending significantly this season, West Ham are likely to see amortisation rise.

Stadium lease

West Ham saw a slight increase in their lease costs of the stadium and other infrastructure, rising from £2.9m to £3.1m (7%).

Net interest expense

West Ham’s net interest expenses rose from £3.7m to £4.2m (14%) after an increase in secured loans (see debt analysis) and their associated costs.

Wages

West Ham 2019 Wages

West Ham saw wages rise significantly from £107m to £136m (27%) after significant player investment.

The high profile signings of Felipe Andersen, Yarmelenko and Wilshere among others on considerable wages. 

These players contributed to West Ham adding over half a million (£562k) a week on their wage bill, a huge sum for a mid table Premier League side, showing their aspirations to challenge in the top half.

The highest paid director saw their wages rise from £898k to £1,136k (27%).

What does the future hold?

After another couple of transfer windows of huge activity in the 2019/20 season, West Ham are likely to see another substantial rise in their operating costs, with wages and amortisation to increase significantly.

With revenue unlikely to rise significantly, this will only lead to West Ham recording larger losses next year. However, losses next will be in part offset by the sales of Arnautovic as well as the sale of a few fringe players.

Transfer Analysis

West Ham 2019 Transfers

It was a busy season for West Ham in a transfer window, recording their highest transfer spend in history (exceeded in 2020) at the time.

In came Felipe Andersen (£28m), Diop (£23m), Yarmelenko (£18m), Fabianski (£7m), Perez (£4m), Balbuena (£4m) and Xande Silva (£1.4m) for a combined £85m.

Departing the Olympic Stadium were Kouyate (£10m), Burke (£1.5m), Quina (£1m), Edmilson Fernandes (£0.8m) and Oxford (£0.5m) for a combined £13m.

This led West Ham to a net transfer spend of £72m.

West Ham’s signings were a mixture of brilliance and frustration, performing well at various points of the season but failing to be consistent. Felipe Andersen and Fabianski were the highlights, while Diop showed huge potential. Yarmelenko found himself injured unfortunately for the majority of the season.

The sales of Kouyate and other fringe players contributed to West Ham recording a profit on player sales of £13m, down from £29m in 2018 and this contributed to the rising losses.

As mentioned in the previous section, the sale of Arnautovic and other fringe players in 2019/20 will help West Ham potentially return to profitability in 2020, subject to the level of rising costs.

Cash

In cash terms, West Ham spent cash of £72m on players and only received cash of £23m, a net cash outlay on transfers of £49m which required additional funding to support.

Debt

In debt terms, West Ham are owed £18m in transfer fees, of which £15m is owed in 2020.

However, West Ham owe a much larger £87m, of which £44m is owed in 2020.

This is a net transfer debt of £69m, of which £29m is owed in 2020. This transfer debt appears not to have altered transfer plans in 2019/20, however if performances on the pitch don’t improve, West Ham’s finances may deteriorate and transfer activity may be constrained.

Debt Analysis

West Ham 2019 Debt

West Ham typically operate with a healthy sum of cash reserves of between £20-30m. In 2019, West Ham saw their cash levels fall from £31m to £13m (138%). This was driven by larger operating losses and increased transfer spending in 2018/19. This was partly offset by net new loans of £13m, which without West Ham would have zero cash reserves.

Debt levels hence rose from £65m to £78m (20%) as West Ham obtained new secured loans (against future Premier League payments) of £13m to help with the running of the club. With West Ham already having a large transfer bill to pay, before even taking into account 2019/20 spending, West Ham are likely to need further funding in 2020.

West Ham have struggled in 2020, costing Manuel Pellegrini his job, being replaced by David Moyes, showing the importance of Premier League survival. However, given the spending levels of the club, it is quite clear that is not the objective. 

Going forward, West Ham must improve on the pitch in both the league and cup competitions to ensure their finances do not deteriorate or the club may find themselves in difficulties that could lead to more problems in the future, on and off the pitch.

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Bristol City FC’s 2019 Finances – Bristol’s Bobby Profits

Bristol City FC's 2019 Finances

Bristol City enjoyed a good 2018/19 in what was their fourth consecutive year back in the Championship. It was nearly there last after they agonisingly missed out on the playoff places by four points in 8th.

A good Championship campaign was combined with a decent run to the FA Cup Fifth Round, eventually being knocked out by Premier League side Wolves.

Off the pitch, finances also began improving, with a loss of £25.2m in 2018 turned into a £9.8m profit, largely owing to high-profile player sales.

Let’s delve into the numbers.

Bristol City 2019 Profit

Revenue Analysis

Bristol City 2019 Revenue

Bristol City saw their revenue increase from £26.2m to £30m (16%) after improving the commercial side of the club off the pitch to match their improved Championship performances.

Matchday revenue

Matchday revenue surprisingly fell from £6.6m to £6m (9%) despite performances on the pitch. 

Average league attendance increased from 21,080 to 21,595 (2%). Bristol City’s run to the Carabao Cup in 2018 saw the club attract huge crowds for blockbuster ties against Manchester United and Manchester City, which clearly boosted matchday revenue, hence the fall this season.

Bristol City have maintained on-pitch performance in the Championship this season. However, they have been knocked out in the first round they entered both domestic cups in, ending a two year spell on successful cup campaigns. Therefore, Bristol City will have less marquee games this year and hence matchday revenue may once again fall towards the £5m mark.

Broadcast revenue

Bristol City saw broadcast revenue rise from £7.8m to £8.1m (4%) as they moved three places higher in the Championship to 8th and reached the FA Cup Fifth Round, this offset the fall in revenue from the lack of Carabao Cup run in 2019.

Bristol City are once again around the playoff places and hence are likely to see similar level of Championship revenue next year. However, exiting at the FA Cup Third Round compared to the Fifth Round in 2018 will likely see a small dip in broadcast revenue.

Commercial revenue

Commercial revenue increased significantly for Bristol City, rising from £10.4m to £14.5m (39%), their highest ever commercial revenue which was driven by further expansion of their non-matchday events as Ashton Gate becomes a leading events venue in the South West of England.

Bristol City positioning themselves as a leading events space on non matchdays has proven a huge success and the commercial team should be commended for this strategy.

Looking ahead, commercial revenue is likely to increase slightly should current trends continue as they push toward the £20m mark which would be a huge win for the club.

Other revenue

Other revenue increased from £1.2m to £1.6m (33%).

What does the future hold?

Bristol City are likely to see a similar level of revenue next year depending on their on pitch performance in the second half of the Championship season and the continuation of their commercial success.

A playoff place isn’t far off and if Bristol City can secure an incredible promotion, revenue should be boosted in the long term when in the Premier League as is the hope of every Bristol City fan.

Costs Analysis

Bristol City 2019 Costs

Bristol City saw their revenue gains swallowed by rising costs as the costs of competing in the Championship continue to grow.

Operating costs rose from £51.2m to £56.6m (11%), driven largely by rising wages.

Amortisation

Bristol City saw amortisation charges remained stable, increasing from £7.8m to £7.9m (1%) despite a significant transfer activity, owing to a couple of large profile departures.

Net interest expense

Net interest expenses remained stable at £1.3m, as the club’s loan profile remained relatively similar with the club not taking out any significant loans in the year, relying on cash injections from their owners.

Wages

Bristol City 2019 Wages

Total staff costs rose from £27.3m to £30.6m (12%) as the costs of competing in the Championship and signing quality players continues to rise.

Bristol city brought in an influx of new signings to replace significant departures which saw their wages rise by roughly £63k a week, which in the grand scheme of things is not a huge amount given the wage rises of many of their Championship peers.

Director remuneration rose from £109k to £145k (33%) after another decent season.

What does the future hold?

Bristol City once again have had a busy transfer season with an influx of new arrivals and high-profile departures. This is likely to see another wage rise and potentially an increase in amortisation, with total costs likely to rise to close to the £60m barrier.

Transfer Analysis

Bristol City 2019 Transfers

Bristol City had significant transfer activity in 2018/19, with five incoming signings and five departures for transfer fees with three departures in excess of £6m.

In came Webster (£3.6m), Weimann (£2m), Hunt (£1.5m), Eisa (£1m) and Watkins (£1m) for a combined £9.1m.

Departing Bristol City were Reid (£10.2m), Flint (£7.2m), Bryan (£6m), Magnusson (£2.5m) and Djuric (£0.6m) for a combined £26.6m.

This led to Bristol City having a net transfer income of £17.5m, after a net transfer spend of £9.1m in 2018.

Bristol City coped well with the departures of key players Reid, Flint and Bryan, replacing Flint with Webster proved a master stroke, with the player signing for Brighton in the summer for around £20m, a huge profit in just one season.

The departures of the above three players helped Bristol City record a profit on player sales of £38.2m, without these sales, Bristol city would have recorded a loss of nearly £30m, showing the importance of player sales to their profitability.

The profit on player sales of £30.4m suggests that Bristol also benefitted from the activation of some transfer clauses from previous sales, given that transfer outgoings amounted to £26.6m, the board noted further clauses have been met following the sale of Kodija to Aston Villa in 2016/17.

Further high-profile sales in 2019/20 (Webster, Kelly and Brownhill) should see another profitable year for Bristol City.

Cash

In cash terms, Bristol City spent cash of £10.9m, while they received cash of £17.1m, a net transfer cash in flow of £6.2m, which the day to day operations of running the club.

Debts

In debt terms, Bristol City owe transfer fees of £5.5m, all of which is owed in 2020.

Bristol city in contrast are owed £27.2m in transfer fees. No breakdown of when these amounts are due is provided. Nevertheless, Bristol City are in a comfortable position, being owed net transfer fees of £21.7m, which will help the club run financially soundly over the next couple of seasons, given that they also received significant transfer fees in 2019/20.

Debt Analysis

Bristol City 2019 Debt

Bristol City traditionally run on very little cash reserves, having to rely on all the cash they receive to run the club, this is not unusual for a Championship club or many business in general.

This year was no different with cash levels increasing from a lowly £0.3m to £0.8m (plus an overdraft of £1.3m). The net £6.2m received in transfer fees assisted with the running of the club, however the owners still had to inject cash of £10.1m (2018: £18.7m) to cover the underlying lack of profitability outside of transfer activity.

The cash injection also contributed to a £1.4m (2018: £1.1m) on stadia and training facility improvements.

Debt levels did fall slightly however, falling from £72m to £69.9m (3%) as owner cash injection and transfer proceeds allowed the club to pay down their overdraft to £1.3m.

This is the first time debt levels have fallen since 2013 and show a slight improvement in their finances, driven by a number of transfer sales as the club benefit from good scouting.

Going forward, Bristol City are going to have to continue finding new gems to remain competitive and push for promotion, but also to help manage their finances, with the club loss making without transfer sales in 2019. This becomes even more important with plans in place to redevelop their training facility at Failands. 

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Birmingham City FC’s 2019 Finances – Financial Limbo

Birmingham City FC's 2019 Finances

Birmingham endured their eighth successive season in the Championship in the 2018/19 season and found themselves no closer to a Premier League return after another bottom half finish (17th) following a nine point deduction (for Financial Fair Play breaches) at the beginning of the season made a play-off push a tough ask.

Despite the points deduction, Gary Monk comfortably led Birmingham to safety and a strong second half to the season had renewed optimism at the Midlands club. However, a falling out with the board led to Monk’s exit despite seemingly leading Birmingham in the right direction.

Off the pitch, Birmingham are beginning to get their finances in order and start moving forward. Birmingham’s losses fell from £37m to £8m as they managed to reduce costs while improving revenue, a winning combination.

Birmingham were one of a few Championship clubs to sell their Stadium to their owners and lease it back in an attempt to improve their finances. The EFL have recently sanctioned Derby for a similar approach and Birmingham may well be worried that they will find themselves in similar water. Derby are due to appeal the decision, something Birmingham’s board will be keeping a watchful eye on.

Birmingham sale of their stadium saw them record a profit on the sale of £17.2m, meaning their losses would have been £25m without it, a number that would have potentially led to further EFL sanctions that they can ill afford.

Let’s delve into the numbers.

Birmingham 2019 Profit

Revenue Analysis

Birmingham 2019 Revenue

Birmingham saw their revenue increase from £19.2m to £23.3m (21%) after a sizeable boost to their commercial revenue. Birmingham’s revenue in 2019 was their highest since 2013, showing the club are beginning to improve their financial health.

Matchday revenue

Matchday revenue was relatively stable, increasing from £5.1m to £5.2m (2%) despite average league attendance increased from 21,042 to 22,483 (7%). Matchday revenue didn’t increase by as much as the attendance figures would suggest due to Birmingham having four fewer home games in 2019 than in 2018 as they played away and exited in their first matches in both domestic cups.

Matchday revenue is likely to remain at a similar level in 2020 unless Birmingham have a successful FA Cup run. At the time of writing, Birmingham are due to play away at Coventry in the Fourth Round, giving the club a good chance of progressing further in the FA Cup and boosting matchday revenue.

Broadcast revenue 

Birmingham saw their broadcast revenue increase from £7m to £7.6m (5%) after finishing two places higher in the Championship. The lack of success in the domestic cups was similar to last season, and with the FA Cup prize money increasing in 2019, not much difference was felt.

Birmingham find themselves in a similar league position to last season (currently sat in 18th), meaning that broadcast revenue is unlikely to increase significantly unless form improves.

As with matchday revenue, a successful FA Cup run will boost broadcast revenue significantly.

Commercial revenue

Commercial revenue increased significantly, rising from £6.5m to £10.1m (55%). The reason for the growth is unclear with the club retaining the same shirt (888 Sport) and kit sponsorship (Adidas) as in 2018, meaning that Birmingham have placed a renewed ambition to grow commercial revenue outside of these main routes, improving their ability to obtain lucrative premium sponsors elsewhere.

It is also possible that some revenue from their new shirt sponsorship deal with Boyles Sport for the 2019/20 season was recognised this year, perhaps due to a signing on bonus.

Commercial revenue is likely to remain at a similar level next year with growth to around £12m a possibility.

What does the future hold?

Birmingham will be hoping to grow revenue once again and will be targeting breaking the £25m barrier. Growth next year is likely to be dependant on on-pitch performance, with a push towards the top half of the Championship and a FA Cup run likely to drive revenue growth.

Costs Analysis

Birmingham 2019 Costs

Birmingham managed to reduce their costs as they looked to meet their financial fair play obligations. Operating costs fell from £58.4m to £53.5m (8%) while their revenue simultaneously increased, improving profitability significantly.

Amortisation

Amortisation remained stable at £7.6m, despite a decrease in the level of player investment in year, spending significantly less than in recent seasons.

With Birmingham once again spending in 2019/20, amortisation is likely to begin increasing again in 2020.

Net interest expense

Birmingham saw their net interest costs fall from £0.9m to £0.5m (44%) as the interest due on transfer fees owed fell after clubs were paid any instalments due.

With Birmingham once again spending in 2019/20, the figure may increase if transfer fee arrangements involved payments in instalments rather than up front.

Wages

Birmingham 2019 Wages

Wages fell significantly as the club looked to manage their wage bill, falling from £38.6m to £32.8m (15%) as Birmingham managed to offload some of their higher earnings.

This wage drop saved the club roughly £112k a week, a much needed saving as Birmingham look to better manage their finances.

Wages are still way too high for the club’s current revenue levels with a wage/revenue ratio of 141%, meaning the club are already losing money before taking into account all other expenses the club must pay. This means Birmingham rely significantly on player sales, something that until last year were not forthcoming, hence the large losses and Financial Fair Play points deduction.

Directors saw their pay increase from £0.7m to £0.9m (29%).

What does the future hold?

Birmingham reinvested the majority of the proceeds from the sale of Che Adams and hence are likely to see a rise in wages and amortisation in 2020, meaning their finances may once again deteriorate.

If this is the case, unless Birmingham managed to improve revenue or sell other players, the club may once again find themselves in Financial Fair Play trouble.

Transfers Analysis

Birmingham 2019 Transfers

Birmingham had a quiet 2018/19 from a transfer perspective, with only one incoming signing for a transfer fee and technically no departures (more on this later).

The only incoming signing for a fee was Kristian Pedersen for £2.4m, meaning the club had a net transfer spend of £2.3m, down significantly on a net spend of £11.7m in 2018.

Neither Pedersen nor any of the free signings pulled up any trees with the club being mid table for much of the season (ignoring the nine point deduction). A strong second half of the season did however renew optimism ahead of the 2019/20 season.

Despite Jota departing for Aston Villa at the end of the 2018/19 season, Birmingham seem to have recorded his sale the 2019 accounts rather than next years’, perhaps due to the need to show improved finances this year.

The sale of Jota helped Birmingham record a profit on player sales of £4.1m boosting their finances considerably.

The sale of Che Adams to Southampton for £15m will help Birmingham record low losses once again in 2020, as they continue to attempt to improve their finances.

Transfer debts

In debt terms, Birmingham are owed £2.9m in transfer fees, all of which is due in 2020.

In contrast, Birmingham owe £4.6m in transfer fees, of which £3.7m is due in 2020.

Therefore, Birmingham owe net transfer fees of £1.7m, of which £0.8m is due in 2020, a manageable amount which shouldn’t (and hasn’t) affected their transfer plans, especially given the Che Adams sale.

Cash

In cash terms, Birmingham spent a huge £14m on transfer fees in 2019, largely owing to instalments due on historic transfers and partly from 2019/20 transfers that may have gone through before the year end.

Birmingham in contrast only received £7.2m in transfer fees, a net cash outflow of £6.8m. This should be reversed in 2019/20 with the sale of Adams.

Debt Analysis

Birmingham 2019 Debt

Birmingham saw their cash reserves remain at around the £3m mark in 2019, falling slightly from £3.6m to £2.9m (19%).

Another loss and the net transfer fee outflow as mentioned above put further strain on their cash reserves and meant the owners had to inject a further £23m into the club, taking their debt levels up to £96.9m, a 33% interest in debt.

Hence net debt increased from £69.5m to £94m (35%) as the club’s finances continue to burn a hole in their owners’ pockets.

Birmingham are finding it difficult to manage their finances and move forward from their Financial Fair Play issues. In May 2019, the EFL have once again said Birmingham are in breach of the rules and the club are currently in discussion about further sanctions the club may now face.

Birmingham must resolve these issues as soon as possible to once again move forward as a club as it is currently impacting their future plans and their ability to compete.

Birmingham will be hoping to continue their journey to financial sustainability this year through an improvement in on-pitch performance and move towards a top half league position from which they can build a promotion push over the next few seasons.

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Everton FC’s 2019 Finances – Troubled Toffees

Everton FC's 2019 Finances

Everton had a mediocre 2018/19 season, struggling for consistency in the Premier League, eventually finishing 8th once again, and hence missing out on the lucrative Europa League qualification.

Everton’s performance in the domestic cup was also underwhelming as they exited the FA Cup and Carabao Cup at the Fourth and Third rounds respectively.

Off the pitch it was an even drearier picture, with the club recording record losses of £112m, putting them at serious risk of breaching Financial Fair Play.

Let’s delve into the numbers.

Everton 2019 Profit

Revenue Analysis

Everton 2019 Revenue

Everton’s revenue remained relatively stable in 2019, falling from £189m to £188m, which wouldn’t be too much of an issue if their costs didn’t rise so much (see costs analysis).

Matchday Revenue

Everton saw their matchday revenue fall from £16m to £14m (13%), driven by their lack of Europa League games after their failure to qualify in 2018.

Average league attendance remained relatively stable, falling slightly from 38,797 to 38,780. 

With Everton once again failing to qualify for the Europa League in 2019, matchday revenue is likely to remain at a similar level this year.

Everton’s new stadium plans will see the capacity rocket which will hopefully see the club’s matchday revenue increase significantly. However, unless performances on the pitch improve, there is the risk that attendances will not increase significantly and the new stadium will be an unprofitable investment.

Broadcast Revenue

Premier League Payments

Everton saw their broadcast revenue increase slightly from £130m to £133m (2%) despite no material change in performance and the lack of Europa League.

Premier League payments rose from £128m to £129m (1%) as the Toffees remained in 8th place for the second season in a row. Featuring live on TV in one less game meant that Everton didn’t get the full benefit of a 2% rise in overall Premier League distributions.

Everton are mid-table after a revival in fortunes following a poor start to the season that saw Marco Silva sacked at the end of 2019, being replaced by serial winner Carlo Ancelotti. If Everton can push towards the top eight, broadcast revenue may remain stable. The failure to progress in the FA Cup past the Third Round means that Everton are likely see a decline in broadcast revenue should they finish lower than 8th in 2020.

Commercial Revenue

Commercial revenue fell from £43m to £41m (5%) after another mediocre season meant Everton were unable to secure any new lucrative commercial contracts and also missed out on performance related sponsorship bonuses.

Everton are likely to see a significant rise in commercial revenue next year on the back of the news that Usmanov has paid £30m for the option to name the club’s new stadium. It is our understanding this revenue will hence be recorded in Everton’s accounts next year despite the stadium not yet being ready, something that will help with Financial Fair Play but is reportedly to be investigated by the Premier League.

What does the future hold?

Everton are likely to see revenue remain at a similar level outside of the stadium rights deal, with no major changes expected to matchday or commercial revenue. A lower league finish than last year will potentially see a drop in revenue depending on the final position.

The Usmanov deal will boost revenue significantly and paint a healthier picture of their finances in 2020.

Costs Analysis

Everton 2019 Costs

Everton saw their costs increase significantly, rising from £287m to £315m (10%) hurting profitability considerably and creating huge losses.

Amortisation 

After significant spending in the 2018 summer transfer window, Everton saw their amortisation charge increase from £75m to £102m (36%) showing the huge level investment Everton put into their playing squad, indicating the ambitions of their owners.

This ambition was commendable, however has yet to pay off with performances yet to improve on the pitch.

Stadium Costs

Everton incurred professional fees on their new stadium development of £7m, down from £11m as the costs of the new stadium project continues to rack up.

Net Interest Costs

Net interest costs rose from £3m to £5m (67%) as loan costs related to stadium loans increased as part of the banking arrangements Everton have agreed. 

Everton are reportedly looking at a strategic partner to help fund the stadium, something that Usmanov may currently be discussing with the club, among others.

Wages

Everton 2019 Wages

Everton saw a sizeable rise in their wages in 2019, increasing from £145m to £160m (10%) after the purchase of their new players on higher wage than the players that were sold. 

The extra wages works out at an extra £274k a week, which is fairly standard for a club the size of Everton despite how ridiculous that may sound.

Everton paid their directors more in 2019 despite results stagnating, increasing director renumeration from £2.5m to £3.6m (44%).

Wages are likely to remain at similar level despite the need for the club are to improve their finances. The sacking of Marco Silva may however prove to be costly depending on the size of his severance pay.

What does the future hold?

Everton are likely to see a similar level of costs next year with not much changing strategically despite the situation they find themselves in. It was another expensive summer transfer window which means wages and amortisation (the two largest expenses) are unlikely to fall.

Transfers Analysis

Everton 2019 Transfers

Everton had a busy transfer season in 2018/19 with five players arriving and five players departing Goodison Park.

In came Richarlison (£35m), Mina (£27m), Digne (£18m), Zouma (Loan – £7m) and Gomes (Loan – £2m) for a combined £90m.

Out went Klaasen (£12m), Funes Mori (£7m), Browning (£4m), Onyekuru (Loan – £0.7m) and Mirallas (£0.7m) for a combined £26m.

This led Everton to a net transfer spend of £64m, down £5m from 2018.

It was another ambitious spending spree by the club as they looked to close the gap on the top six. 

The signings were actually okay, with Digne, Gomes and Richarlison showing glimpses of quality at various stages of the season, with only Mina disappointing largely. It hence seems the problem may have been the tactics employed and the fact that although they are all good players, they weren’t of the required quality to bridge the gap to the top six.

The sales of Klaasen, Funes Mori and Browning saw Everton record a profit on player sales of £20m, down from £88m following the Lukaku sale (77%), explaining a major reason for their large losses. Everton recorded a loss of £13m despite that huge profit on player sales showing that the Lukaku sale masked fairly poor finances.

Cash

In cash terms, Everton spent cash of £135m on players due to instalments due on previous signings. In contrast, Everton only brought in cash from the sale of players of £67m, a net cash outflow of £68m, a significant sum for a club that need cash for their new stadium.

Transfer debts

In debt terms, Everton owe transfer fees of £108m, of which £74m is due in 2020, another cash drain on their resources.

Everton are though owed £81m, of which £52m is due in 2020, which will go a long way to easing this financial burden.

Additionally, Everton could owe a further £40m should certain transfer clauses be met by their players. Everton could also have to pay £38m on loyalty bonuses and signing-on fees if certain conditions are met in player contracts. It is unlikely this will all become payable, especially at one go.

Debt Analysis

Everton 2019 Debt

Despite otherwise troubling finances, Everton saw their cash levels hit their highest levels in recent years, rising from £10m to £27m (170%) as their owners injected a net £109m into the club to help fund the club while it sorts out its finances.

The owners of Everton plunged £185m of cash as equity, meaning it isn’t included as debt and will not be repaid to the owner, burning a huge hole in his pockets. 

Everton have traditionally not run on high levels of debt. This changed slightly in recent years as the stadium project ramped up, and meant further funding was required.

Everton however reduced debt levels in 2019. Debt fell from £75 to £37m (51%). The fall in debt is owing to the repayment of a short term loan against the Premier League payments the club were due to receive which is now no longer required.

Everton also repaid debt to their owner which was simultaneously given back to the club but as equity as described above, helping to paint a rosier picture of the club’s finances.

Everton are in a spot of bother financially currently and will be investigated by both the Premier League and UEFA concerning their poor finances. UEFA isn’t too much of a problem currently, given the unlikelihood of the club qualifying for Europe, however with that being an ongoing aspiration they will be worried about the possibility of being banned from competing if they do eventually qualify, similar to the situation AC Milan have found themselves in.

Everton will be looking to improve their finances ASAP and have looked at innovative ways to do so such as the Usmanov deal. Further revenue growth is necessary, while costs must be managed  which will difficult if the club wish to remain competitive in the league.

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Chelsea FC’s 2019 Finances – Sarri-Ball, Sorry Losses

Chelsea FC's 2019 Finances

Chelsea had a mixed 2019, with many fans unsure what to make of what in the end, was a successful season. After missing out on the top four in 2018, Conte was sacked (a very expensive sacking) and Chelsea were condemned to the Europa League. 

Maurizio Sarri took over from Conte at Stamford Bridge as fans gained renewed optimism following a strong start to the season that saw them neck and neck with title rivals Manchester City and Liverpool.

However, things soured, with Sarri-ball deemed ‘boring’ and Chelsea began to drop points, leaving Chelsea in a top four battle and calls for Sarri out. Sarri miraculously managed to turn things around following an eventful League Cup final loss where Kepa refused to be subbed off, with Chelsea going on to lift the Europa League and finish 3rd in the Premier League, a good season by anyone’s standards.

Despite this, Sarri sought pastures new and landed the Juventus job, leading to club legend Frank Lampard taking the reins ahead of the 2019/20 season, under the constraints of a transfer ban.

The failure to qualify for the Champions League in 2018 has had significant consequences for Chelsea’s finances, with Chelsea recording a huge loss of £110m, down to revenue not increasing significantly and costs sky-rocketing, which included a £27m payout to former boss Conte. 

Let’s delve into the numbers.

Chelsea 2019 Profit

Revenue Analysis

Chelsea 2019 Revenue

Chelsea were without Champions League football in 2019, having to settle for a Europa League trophy, not a bad alternative. Despite winning this trophy, Chelsea were unable to secure meaningful revenue growth due to the vast financial differences between Champions League qualification and the Europa League.

Chelsea saw their revenue increase slightly from £448m to £452m (1%), a new club record and their fourth successive year of revenue growth.

Matchday revenue

Matchday revenue dropped sharply from £74m to £67m (9%) as Chelsea competed in the less lucrative Europa League, meaning ticket were priced lower for these games than their Champions League equivalent.

Average league attendance fell from 41,282 to 40,437 (2%) despite domestic performance improving under Sarri, showing perhaps the disenchantment fans felt watching Sarri’s team.

With Lampard rejuvenating the team so far, attendances are likely to rise, while their return to the Champions League in 2019/20 means that matchday revenue should rise to around 2018 levels.

Broadcast revenue

Premier League Payments

Chelsea saw their broadcast revenue fall slightly from £204m to £200m (2%) after the club dropped from Europe’s top competition to the Europa League. Despite winning the Europa League, Chelsea would have been far better off financially by exiting the Champions League at the Round of 16 trophy-less. Roma received the least out of all Round of 16 participants and still received €57m, while Chelsea only received €46m for winning the Europa League.

Inter Milan (€48m), Napoli (€50m), Benfica (€50m), Shakhtar Donetsk (€47m) and Roma (€48m) all received more despite not qualifying from their Champions League groups.

Chelsea saw their Premier League distributions increase from £142m to £146m (3%) after they moved up two places in the league table.

Broadcast revenue should rise significantly next year as Chelsea benefit from their Champions League qualification, and having reached the knockout phases of the Champions League, Chelsea are likely to see their UEFA prize money increase significantly on the €46m received in 2019, even if they fail to progress any further.

Commercial revenue

Commercial revenue increased from £170m to £185m (9%) as Chelsea saw good commercial growth after focussing on partnering with premium brands in the year.

With their main shirt sponsorship deal due to expire at the end of the 2020/21 season, Chelsea will be hopeful of a further spike in commercial revenue. With no deal currently believed to be in place (possibly due to restrictions in their current contract with regards to negotiating a new deal), there may be worries that the club will struggle to find a more lucrative new deal than their current one.

What does the future hold?

Chelsea are likely to see significant revenue growth on their return to Champions League football, with a push past the £500m barrier possible if commercial revenue growth as its current rate or Chelsea progress to the latter rounds of the Champions League.

Chelsea will be hopeful of progressing further in the Champions League, which could lead to huge revenue growth in the coming year, however retaining their top four place in the Premier League is the most important objective.

Expenses Analysis

Chelsea 2019 Costs

Chelsea saw their costs sky rocket in 2019 as the costs of competing in the Premier League and Europe continue to rise. The sacking of Conte did not help matters, costing the club are large amount in severance pay.

Amortisation 

Chelsea’s amortisation costs increased from £127m to £170m (34%) after substantial player investment in 2018/19 in a season that saw Chelsea spend nearly £200m on transfers (see transfer analysis) ahead of their transfer ban.

With Chelsea banned from signing players in the 2019 summer transfer window, amortisation is unlikely to increase in the coming season, unless there is significant spending in January 2020.

Conte’s severance package

Chelsea sacked Conte at the end of the 2017/18 season after failure to qualify for the Champions League. Conte had signed an improved two year contract until the end of the 2018/19 season in 2017, a move that has proved costly for the Blues. 

Chelsea had to pay off the last year of Conte’s contact and those of some of his key staff which has cost them £27m, making it the latest in a long list of large severance packages paid by Roman Abramovich under his Chelsea ownership.

Wages

Chelsea 2019 Wages

Chelsea saw their staff costs rise from £246m to £288m (17%) on the back of significant incoming signings, including new contracts for Giroud, Pedro and Christensen.

These extra wages work out a huge £810k a week, an eye-watering sum that shows the increasing costs of doing business at the top end of European football.

What does the future hold?

Chelsea are likely to see costs remain at similar levels as this year, perhaps even decreasing. Sarri’s contact may also include a severance payout, however it is likely to be significantly smaller than Conte’s and hence Chelsea will naturally see a reduction in costs in this area. A less busy summer is likely to see wages stagnate, especially with the departure of their highest earner in Hazard.

Transfers Analysis

Chelsea 2019 Transfers

Chelsea had a busy 2018/19 transfer season, spending close to £200m on players.

In came Kepa (£72m – a world record for a goalkeeper), Pulisic (£58m), Jorginho (£51m) and Higuain (Loan – £7m) for a combined £188m.

Departing Stamford Bridge were Courtois (£32m), Fabregas (£8m), Zouma (Loan – £7m), Morata (Loan – £6m), Bakayoko (Loan – £5m), Batshuayi (Loan – £3m), Pasalic (Loan – £2m), Omeruo (Loan – £0.7m), Aina (Loan – £0.5m) and Miazga (Loan – £0.3m) for a combined £65m.

This led Chelsea to a net transfer spend of £123m, up from £54m in 2018, a 128% rise. This showed huge backing for Sarri, spending substantially to replace Courtois, whilst also backing their former manager in signing one of his Napoli favourites in Jorginho.

It is worth noting that Pulisic was signed in anticipation of the Hazard sale at the end of the season and their impending transfer ban so skews their spending significantly.

Kepa has proven a good signing despite a few troubles while the quality of Jorginho cannot be denied, fans are still adapting to his playing style and main qualities. Neither Fabregas nor Courtois were particularly missed.

With sales in the year much lower than in 2018, Chelsea recorded a profit on player sales of £60m, significantly down on the £113m recorded in 2018, explaining a large part of their huge loss in 2019.

With the record sale of Hazard to be accounted for in their 2020 accounts, Chelsea are likely to see a huge rise in their profit on player sales, and hence a large improvement on their profitability this year.

Transfer debts

In debt terms, Chelsea are owed a huge £156m in transfer fees, of which £124m is due in 2020. Whilst that sounds fantastic, Chelsea also owe £154m in transfer fees (of which £116m is due in 2020) and therefore are essentially break even. This means that future transfer plans shouldn’t be affected significantly by past transfer windows.

Chelsea may also have to pay another £10m in contingent transfer fees should certain clauses be met, something that will not worry their executives much.

Cash

In cash terms, Chelsea spent a huge £282m in cash on player transfers in 2019, only recouping £120m, a substantial £162m outlay.

Such a large outlay required further funding from their Russian owner (see debt analysis).

Net Debt Analysis

Chelsea 2019 Debt

Chelsea Usually maintain a cash reserve of around £30m and this was consistent with their 2019 balance which increased from £32m to £37m (16%). The huge cash outlay on transfers and the large loss recorded were funded by a net cash inject from Roman Abramovich of £266m, showing that he still has an interest in the club despite his visa issues and newspaper reports.

This £266m injection took the amount owed by Chelsea to Roman Abramovich to nearly £1.4bn (£19m of the cash was input as a capital contribution and hence is excluded from debt), showing the huge sums the Russian has invested into the club over the years.

The cash injection of £266m was the largest by Roman Abramovich in many years, showing a renewed ambition of the owner and the difficult financial year Chelsea endured without Champions League football.

Net debt hence increased from £1,155m to £1,383m (20%) as their reliance on Roman Abramovich once again ramped up after debt levels had remained at around £1.1bn for the last few years.

Chelsea remain unconcerned by UEFA Financial Fair Play issues knowing that the losses incurred are highly likely to be reversed next year after the sale of Hazard and their return to the Champions League, making any sanctions unlikely at this stage.

Should Chelsea fail to retain their Champions League status in 2020, Chelsea may find themselves in a spot of both with UEFA in the future.

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Stoke City’s 2019 Finances – Cold, Wet and Windy

Stoke City's 2019 Finances

Stoke City have endured a tumultuous couple of seasons, firstly being relegated from the Premier League in 2018 which ended a ten-year stay in the division. Hopes were high of gaining promotion straight back to the top flight, however Gary Rowett (replacing Paul Lambert) was unable to deliver despite large spending, and was replaced by Nathan Jones in January 2019 who has also been unable to revive fortunes.

This led to Stoke finishing in a disappointing 16th position with the club staring mid-table obscurity (or worse) this season once again leading to Nathan Jones being sacked during the 2019/20 season.

Off the pitch, Stoke have begun acclimatising to being back in the Championship, recording a loss of £16m, which is an improvement on the record £32m loss recorded in 2017/18. Stoke successfully managed to control costs knowing that revenue was due to plummet following relegation.

Let’s delve into the numbers.

Stoke 2019 Profit

Revenue Analysis

Stoke 2019 Revenue

Stoke saw their revenue nearly halve from £127m to £71m (45%) on the back of relegation, showcasing the huge costs of relegation and why Stoke and their peers fight so hard (and sack so many managers) in a bid to survive in the Premier League.

Matchday revenue 

Stoke saw their matchday revenue fall from £7.7m to £6.4m (17%) following relegation due to falling attendances and ticket prices.

Average league attendance fell from 29,280 to 25,200 (14%) as fans, unhappy with performance and their new Championship status, chose to stay at home more often.

With performances arguably even poorer this season and the club in the midst of what appears to be a relegation battle, it is likely that matchday revenue will fall even further as attendances decline.

Broadcast revenue 

Broadcast revenue was the big mover, plummeting from £101m to £51m (49%) showing the huge financial gap between the Premier League and Championship.

The figure is only this high because of parachute payments, which will fall over the next two seasons before ending. Therefore, Stoke are going to see another large (but smaller than this year) drop in revenue during the 2019/20 season as parachute payments fall.

Commercial revenue

Stoke’s commercial revenue also nearly halved, falling from £14.3m to £7.8m (45%) after relegation meant they lost lucrative commercial partnerships while others likely had relegation related clauses which saw their payments fall in the case of relegation.

It is unlikely that Stoke will see another major drop in commercial revenue at this point, however it is likely to fall slightly again with Stoke unlikely to challenge for promotion and hence have little to bargain with when it comes to securing new commercial deals.

Other revenue

Stoke City’s other revenue increased from £4.4m to £5.1m (16%). No further details was disclosed by the club on what this consists of.

What does the future hold?

Stoke are looking very likely to remain a Championship side at best next season with the club languishing in 21st at the time of writing.

This therefore means that all three revenue streams are once again likely to deteriorate with revenue likely to drop below the £50m mark. With revenue once again dropping, Stoke will need to be frugal with their costs in order to avoid large losses accumulating which will cause significant financial fair play issues and possible financial difficulties.

Expenses Analysis

Stoke 2019 Costs

Stoke knew their revenue was going to plummet following relegation and took the necessary steps to reduce their costs. This was successfully done and operating costs fell from £180m to £104m (42%), largely in line with revenue and hence profitability was largely unaffected.

Amortisation 

Amortisation fell from £56m to £31m (45%) after a smaller number of impairment adjustment than following their relegation. With players underperforming and hence their value depleted after relegation, Stoke impaired the value of their players to the tune of £29m following relegation, a figure that was only £2m this year, explaining the large drop.

Interestingly, following an expensive summer, actual amortisation charges increased from £27m to £29m, which is unusual for a club following relegation.

Net interest income/expense

Stoke City have no interest bearing debt and hence no interest expense. The club does however earn a small amount of interest from the bank of £0.2m on their cash reserves.

Wages

Stoke 2019 Wages

The biggest drop in costs for Stoke is their wages, which fell from £96m to £58m (40%) as relegation wage drop clauses kicked in and high-earners departed for new pastures.

This wage drop saved Stoke roughly £735k a week in wages, a huge sum, showcasing the vast difference in the costs of competing in the Premier League and Championship.

These costs are likely to fall further in 2019/20 as more high earners depart with the club unlikely to gain promotion.

What does the future hold?

Stoke will have to reduce costs once again with revenue likely to drop significantly following their second phase of parachute payments.

This means the club will have to offload players who are straining the wage budget, which may lead to further struggles on the pitch if not adequately replaced.

Transfers Analysis

Stoke 2019 Transfers

Stoke had a busy transfer season, interestingly spending more this season than in their final Premier League season.

In came Afobe (£12.2m), Ince (£10.1m), Vokes (£7.2m), Woods (£6.5m), Etebo (£6.5m), Clucas (£6m), McClean (£5m) and Batth (£3.1m) for a combined £56.6m.

Departing Stoke were Shaqiri (£13.2m), Sobhi (£5.9m), Muniesa (£4.5m), Grant (£1.5m), Wimmer (Loan – £1.4m) and Ndiaye (Loan – £0.7m) for a combined £27.1m.

This meant their net transfer spend actually increased significantly from £20.3m to £29.5m (45%) despite relegation, showing a renewed ambition to return to where they believe they belong.

Things did not pan out, with the new signings failing to settle and perform despite all seeming to be sound signings at the time of purchase. It was judged that the problem lay with the manager Gary Rowett who was replaced with Nathan Jones. However, things have not improved under his tutelage and he has promptly been sacked himself.

The sale of of the likes of Shaqiri and Sobhi led to Stoke recording a profit on player sales of £18m which contributed to their losses halving to £16m. With no notable departures to date this season, losses are likely to be significantly larger in 2020.

Transfer debts

In debt terms, Stoke are owed £13m in transfer fees. However Stoke owe an alarming £44m in transfer fees, a net creditor position of £31m which will limit future transfer plans and put further stress on their finances going forward.

Stoke also have contingent transfer fees of £3m which may become payable if certain conditions are met, although this amount isn’t a big concern due to its size.

Cash

In cash terms, Stoke spent actual cash of £51m on transfers during 2018/19, while only receiving £27m, a net cash outlay of £24m, a significant outlay that required funding from their owners (see net debt analysis).

Net Debt Analysis 

Stoke 2019 Debt

Stoke have in recent history required significant owner funding to operate and compete, an amount that has steadily increased over their ten years in the Premier League.

Cash levels have traditionally been relatively healthy, with cash reserves averaging £16m over the previous seven seasons. This changed in 2018/19 with cash levels falling to £6m after significant transfer spending and the club’s falling revenue levels following relegation.

This meant that once again the Coates family had to inject Stoke with cash to avoid further stress on their finances. The owners plunged another £19m into the club, following a £47m injection in 2018.

This led to debt levels rising from £161m to £180m (12%). All of the debt is from the owners and is interest free so should be more of a worry for the Coates family then it should be to Stoke fans despite its unpleasant reading.

With a Premier League return seemingly far away currently, Stoke are likely to continue to require cash injections which will burn a further hole in their owner’s pockets and may make them question their continued involvement in the club. 

As a result of the above, Stoke saw their net debt increase from £139m to £174m (25%), painting a picture of the worsening financial state of Stoke which looks likely to get worse before things improve.

Stoke need to return to the Premier League swiftly, something which isn’t looking likely currently. With promotion out of the question this season, Stoke only have next season before their parachute payments cease and they return to the revenue levels of a normal Championship side (£20-30m). At this revenue level it will be increasingly hard for Stoke to gain promotion, while i Financial Fair Play issues may arise with the club already above the £39m three-year, cumulative  losses allowed. Their relegation means they have a grace period to resolve their finances, however as time goes on, they will come under increasing scrutiny if their finances fail to improve.

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Millwall FC’s 2019 Finances – Record Sale

Millwall FC's 2019 Finances

Millwall were back to reality in 2019 after two very successful seasons which saw the club gain promotion back to the Championship (2017) and then finish just outside the play-off places in 8th placed on their return to the Championship (2018).

2019 saw Millwall come close to returning to League One after a relegation battle saw the club narrowly survive in 21st place, securing their Championship status with two games to spare. Millwall fans would have felt optimistic going into the season of avoiding such a relegation battle given their 2018 exploits.

The FA Cup was an enjoyable distraction from their Championship troubles as Millwall managed to reach the Quarter-Finals stage, beating Everton along the way.

Off the pitch, Millwall enjoyed their best season in recent memory recording a profit of £0.3m after cumulative losses of £40m in the previous seven years. This was largely owing to a record transfer fee received for their star player, partly explaining their poor season…

Let’s delve into the numbers.

Millwall 2019 Profit

Revenue Analysis

Millwall 2019 Revenue

Millwall reached record revenue levels of £18.4m in 2019, up from £15.6m in 2018 (18%) after retaining their Championship status and their lengthy FA Cup run. Retaining their Championship status was vital to both their short and long term revenue prospects, allowing them to maintain and improve matchday, commercial and broadcast revenue levels.

Matchday Revenue

Matchday revenue was stable at £5.7m after seeing a small £0.5m boost following promotion in 2018. Matchday revenue is likely to remain at its current levels for the foreseeable future unless the club is either promoted or relegated.

Average league attendance was relatively stable, increasing from 13,368 to 13,624 (2%). With The Den having a capacity of 20,146, there is still room for matchday revenue to increase outside of ticket price changes, however attendances are only likely to rise on the back of promotion to the Premier League, with attendance at the Everton FA Cup fixture being 16,764.

Broadcast Revenue

Millwall saw another jump in broadcast revenue, increasing from £7.6m to £10m (32%) owing largely to their successful FA Cup run. Whilst there was an increase in EFL distributions in 2019, Millwall finishing 13 places lower than in the 2017/18 season meant they failed to see any significant rise in broadcast revenue from the EFL.

With the FA Cup kicking off this weekend and the club already through to the Fourth Round after a 3-0 victory over Newport County, Millwall will be hoping to enjoy another FA Cup adventure. Millwall are also currently in the top half in the Championship meaning that the club is likely to see an increase in EFL distributions next year.

Commercial Revenue

Millwall saw a slight increase in commercial revenue from £2.3m to £2.7m (17%) on the back of retaining their Championship status and the introduction of LED advertising boards at The Den.

Going forwards, Millwall will be looking for other opportunities to improve on their relatively low commercial revenue.

What does the future hold?

Millwall’s aim will be to consolidate in the Championship and then push on for promotion when the time is right, improving their revenue and finances along the way.

Next season should see Millwall maintain a similar level of revenue, remaining around the £16-18m range, with an increase above the £20m barrier unlikely.

Expense Analysis

Millwall 2019 Costs

Millwall saw operating costs rise from £19.4m to £24.9m (28%), interestingly increasing at a faster rate than their revenue, damaging their profitability (which was saved by the sale of George Saville (see Transfer Analysis).

Amortisation 

Millwall saw their amortisation costs more than double from £0.5m to £1.3m (160%) after significant investment in the playing squad (using the Saville windfall) that saw Millwall break their transfer record twice.

With Millwall traditionally relying on free transfers and investing in their academy for first team players, amortisation has been relatively low, meaning any significant spending sees large rises in amortisation.

Operating leases

The operating lease on their stadium increased by £54k to £587k (10%) as the costs naturally rise over time.

Other operating lease costs remained stable at £0.1m.

Net interest expense

Millwall had no interest income or expenses in 2018, however in 2019 Millwall had a net interest expense of £52k, a minimal amount owing to short term debts taken out during the year.

Wages 

Millwall 2019 Wages

Millwall saw wages increase from £13.4m to £16.9m (26%) as the costs of being a competitive Championship team continue to rise. The new signings had to be offered competitive wages, while some existing players also received new, more lucrative contracts.

This increase in wages works out as an extra £67k a week, a relatively normal increase in wages for a Championship club, especially a recently promoted side.

Millwall now have a wage/turnover ratio of 92%, a relatively high and financially unstable amount. This is an issue among the majority of Championship sides, who regularly record large losses that require owner funding or affect transfers plans/cause Financial Fair Play issues. Going forward, Millwall will be looking to manage these costs.

The only director on the payroll of this company was paid £300k, up from £275k in 2018.

What does the future hold?

Millwall are likely to see a similar level of costs in 2019/20, with the club unable to increase costs significantly without large losses accumulating. Wages and other costs are likely to increase by 10-20% owing to the general rise in such costs over the years in order to remain competitive.

A few new signings in the 2019/20 summer transfer window will mean wages and amortisation will rise a little bit, however these costs will need to be managed if Millwall want to become financial sustainable.

Transfer Analysis

Millwall 2019 Transfers

Millwall had an eventful transfer season in 2018/19, breaking their transfer record twice whilst also receiving a record transfer fee for their star player.

In came (for transfer fees) Bradshaw (£1m), Leonard (£1m) and Skalak (£0.9m) for a combined £2.9m.

The only outgoing for a transfer fee was George Saville for £7m.

This led to a net transfer income of £4.1m after a £0.5m net transfer spend in 2017/18.

The new signings disappointed with the club trapped in a relegation battle, while Saville was clearly missed despite the large sum received for him.

The sale of Saville did however help Millwall record a profit after his sale meant the club recorded a profit on player sales of £5.4m, meaning a loss of £5.1m would’ve been recorded without his sale. With no such sales in 2019/20 so far, a loss is likely to be recorded in next year’s accounts.

Transfer debts

In debt terms, Millwall are owed £3.4m, of which £1.2m is due in 2020. In contrast, Millwall do not owe any transfer sums to other clubs, a great position to be in.

Millwall could however owe £1m in contingent transfer fees and player contracts clauses should certain conditions be met. It is unlikely all of this amount would ever become payable, however even if it did, Millwall would not worry much due to the size of the amount.

Net Debt Analysis 

Millwall 2019 Debt

Millwall traditionally operate with low cash reserves, with the majority of cash received required for the operations of the football club. Cash reserves did increase this year from £0.3m to £0.7m because of the improving finances of the club. This position could improve further once the club receives all the cash from the record sale of George Saville.

Debt levels did also increase slightly, rising from £91m to £93m (2%), all of which is owed to their owner and is interest free. This isn’t something that should worry fans particularly and is usual for clubs, especially those in the Championship and below where the majority are loss-making and require financial input from their owners.

The small £2m given during the 2019/20 season showcases an improved financial picture which the owner will be happy with, burning a smaller hole in his pocket than in previous seasons.

Millwall are a traditional Championship club, however are run fairly well compared to some of their peers, recording lower losses than many others at their levels meaning that Financial Fair Play breaches and the associated sanctions are never a concern for the club. Going forward, Millwall will hope to unearth a few gems from their youth academy while buying well in the transfer market in a bid to continue to run in a relatively financial secure fashion.

Should they do this successfully, a consolidated position in the Championship should be easily achievable, giving the club the perfect platform to fight for promotion to the Premier League in the future.

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Norwich City FC’s 2019 Finances – Pukki Promotion Party

Norwich City FC's 2019 Finances

Norwich had a wonderful 2019, gaining promotion back to the Premier League after three years in the Championship. Norwich won the league unexpectedly after a poor season in 2018 and the sale of key players Maddison and Murphy.

It was clear this year all focus was on promotion leading to early exits in both domestic cup competitions.

Off the pitch, Norwich recorded one of their largest losses ever, and certainly the largest in recent history with the initial costs of promotion (plus the end of their parachute payments) led to a loss of £33m in 2019. This is only a short term issue with the club due to receive an influx of revenue after returning to the Premier League.

Let’s delve into the numbers.

Norwich 2019 Profit

Revenue Analysis

Norwich 2019 Revenue

Norwich saw a huge drop-off in revenue following the end of their parachute payments relating to their relegation from the Premier League in 2015/16. Total revenue fell from £62m to £34m (45%).

Matchday Revenue

Matchday revenue remained stable at £10m in 2019 with average attendance increasing slightly from 25,960 to 26,017.

Matchday revenue should increase following promotion with matchday revenue rising to £12m in their last Premier League campaign owing to higher ticket prices. Carrow Road is maximum capacity of 27,244 means that matchday revenue is restricted by this factor and can only really increase by increasing ticket pricing.

Broadcast Revenue

Norwich saw broadcast revenue plummet from £40m to only £11m (73%) after their parachute payments ended, meaning their return to the Premier League is very timely! 

With no cup runs to supplement the lack of parachute payments, broadcast revenue fell off a cliff and this would have been their new normal revenue level had they not gained promotion in 2019.

Broadcast revenue will increase nearly ten fold this year following promotion. Huddersfield, who finished bottom of the Premier League in 2018/19 received £97m, while every other club received over £100m.

Commercial Revenue

Norwich saw a slight bump in commercial revenue from £12m to £13m (8%) with the club yet to see any real effects from their promotion, which will be apparent in due course.

Norwich will be hoping to effectively exploit their new Premier League status better than the last time they were in the Premier League as commercial revenue only reached £14m, a figure they will be aiming to significantly improve upon in 2019/20.

Other Revenue

Other revenue fell from £0.7m to £0.5m.

What does the future hold?

Norwich are going to see a huge uplift in total revenue in 2019/20. The riches on offer in the Premier League will see broadcast revenue jump from £11m to over £100m, even if the club is relegated and finish bottom.

Matchday revenue and commercial revenue will also increase, depending largely on ticket pricing and commercial effectiveness respectively.

It would be a surprise if Norwich didn’t see an increase of over £100m in their total revenue next year.

Expenses Analysis

Norwich 2019 Costs

Norwich obviously knew their revenue was due to drop significantly and aimed to reduce their costs to match. This wasn’t possible as costs only fell from £93m to £76m (18%), significantly reducing their profitability as they recorded one of their biggest ever losses.

Amortisation

Amortisation more than halved form £24m to £10m (58%) after another year of falling playing squad investment following their relegation from the Premier League in 2016.

The expensive players brought during the 2015/16 season were largely cleared amount meaning amortisation charges began to fall away after they were replaced with much cheaper players.

Net Interest Expense

Norwich saw their net interest expense increase from £0.5m to £1.5m (200%), owing to a new bank overdraft facility and loans that were needed following their fall in revenue.

Wages

Norwich 2019 Wages

Norwich’s wage bill remained stable at £54m. This is because of promotion bonuses that were paid at the end of the season that significantly increased their wages and one of the main reason behind their large losses, showing the short term costs of promotion.

Without these bonuses, wages would likely have fallen significantly and in line with the fall in revenue after the sales and release of high earners.

The only director on the payroll saw their salary more than quadruple from £108k to £480k following promotion.

What does the future hold?

Norwich are likely to see a rise in costs following promotion. However, any rise is likely to be minimal compared to the other two promoted clubs with Norwich being incredibly frugal with their finances, spending only a small amount on new signings. With promotion bonuses falling away next year, the wages of the new signings is likely to only see a small rise in wages (if any).

Therefore, Norwich are likely to record one of the largest ever profits of a promoted side next year after running in such a financially secure manner, which can only be commended.

Transfers Analysis

Norwich 2019 Transfers

Norwich had a busy 2018/19 in the transfer windows, largely utilising the free transfer market to replace key players, something they did with remarkable success.

In came Marshall (£1.5m), Buendia (£1.4m), Leitner (£1.4m), Passlack (Loan – £0.5m) and Heise (£0.2m) for a combined £4.9m.

Out went Maddisson (£22.5m), Murphy (£10.3m), Watkins (£1m) and Franke (Loan – £0.1m) for a combined £33.9m.

This led to a net transfer income of £29m, up from £17m in 2018. This was their third consecutive net transfer income as the club came to terms with relegation in 2016.

The new signings were no doubt a resounding success as the club achieve promotion. A special mention has to be made of the free transfer signing of Pukki who is arguably one of the greatest bargains of the last decade as he scored 29 goals in the Championship to finish the season as top scorer.

Daniel Farke successfully replaced key young players Maddison and Murphy who were sold to help the club meet Financial Fair Play requirements and ease the stress on their finances.

The sales of Maddison and Murphy were recorded in their 2017/18 finances and hence the club only recorded a profit on player sales of £2m in 2019.

Transfer Debts

In debt terms, Norwich owe £14m in transfer fees, of which £13m is due in 2020. However, fortunately the club are owed £25m in transfer fees but only £7m is due in 2020, meaning they may have a short term cash issue in paying these which will need to be resolved (probably via an overdraft or short term loan).

Norwich also potentially owe clubs and players £33m in contingent transfer fees and contract clauses should certain conditions be met. It is unlikely the full amount will ever become payable.

Cash

In cash terms, Norwich spent £10m cash on transfers in 2019, however received cash of £21m, a net cash inflow of £11m which was much needed.

Net Debt Analysis

Norwich 2019 Debt

Norwich’s cash position took a tumble in 2019, falling from £16m to £2m (88%) as the club’s revenue drop had to be met by their existing cash reserves (and a new overdraft facility).

The £11m cash inflow from transfers was vital in alleviating any issues relating to the size of their overdraft.

Norwich typically operate with little debt, however 2019 saw debt levels quadruple from £6m to £24m (300%), owing to a £20m overdraft facility which was needed to make up for their short term cash shortfall.

Hence, a net cash position of £10m fell to a net debt position of £23m. This isn’t something Norwich fans should worry about. This is largely a short term issue that will be resolved following promotion when the club receive a huge uplift in revenue from the riches on offer in the Premier League.

Norwich seem to have learned from past mistakes and have been financially sensible this year in their approach to surviving in the Premier League, meaning even if the club are relegated they will be in a financially secure position that should aid them in returning to the Premier League if the worse scenario occurs this season.

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