Manchester United’s 2019 Finances – Ole at the Wheel

Manchester endured a turbulent 18/19 season as they struggle to return to the successes of the Ferguson years.

Following a much publicised poor start to the campaign, Jose Mourinho was sacked and replaced with club legend Ole Gunnar Solskjær, sparking an incredible run of form that saw the club appoint him full time manager.

However, form dipped following this and Manchester United laboured to a sixth placed Premier League finish and no Champions League football next year following their quarter final exit.

There was no further joy in the domestic cups with exits in both by the quarter final stage.

This didn’t stop the club posting record revenues as one of the world’s biggest clubs continue to perform off the pitch.

Let’s delve into the numbers.

Revenue Analysis

Despite a disappointing campaign on the pitch, a return to the Champions League saw Manchester United’s revenue reach record levels, rising from £590m to £627m (6%).

Matchday revenue remained relatively stable, increasing from £110m to £111m (1%). This rise was largely due to competing in the Champions League and the more expensive ticket prices of the competition over the Europa League.

Broadcasting revenue was up significantly, rising from £204m to £241m (18%), mainly due to a return to the Champions League and UEFA’s new licensing agreement. This offset the £7m revenue loss Manchester United suffered by finishing 4 places lower in the Premier League.

Commercial revenue was pretty much stable, falling from £276m to £275m (0.4%). Sponsorship revenue remained the same as Manchester United reach what may be a critical mass in sponsors until their next deal cycle. Interestingly, the fall in revenue was down to a decline in merchandise and retail sales, which fell to £102m.

Looking ahead, Manchester United are likely to see a drop in revenue after they failed to qualify for the Champions League. With a title winning campaign unlikely, there is no other way for the club to bridge the loss revenue from the lack of a Champions League campaign except strong commercial growth.

Such growth commercially has not occurred in the last 3 years and this will need to change to protect revenue from falling.

Costs Analysis

Manchester United saw a modest rise in costs given the rise in revenue in 18/19, with costs rising from £564m to £583m (3%). This 3% rise is half the rise in revenue (6%), which has saw Manchester United’s profitability improve last season.

Amortisation fell from £138m to £129m (7%) on the back of a relatively quiet season by Manchester United standards, with their smallest net transfer spend since 2012 (see transfer analysis section).

Net interest costs increased from £18m to £23m (27%), this was largely due to the strengthening of the dollar against the pound, showing the effects Brexit and other macro-economic factors can have on a football club.

Manchester United saw wages rise significantly despite a quiet transfer season, increasing from £296m to £332m (12%). This was largely due to contract renewals (Shaw, Smalling, Jones) as well as new signings that entered plus a full season of Alexis Sanchez’s much publicised wages.

This increase in wages works out as an extra £692k a week and interestingly, wages also increased by 12% last year, showing an increasing trend in wage growth in football.

Further to their staff costs, Manchester United shelled out £20m in compensation to Jose Mourinho following his sacking. Such costs are one-offs and will not occur this season (Ole is reportedly on much lower wages and contract term than Mourinho was) and should go some way to offsetting the fall in revenue expected from no Champions League.

Other costs fell from £117m to £108m (8%), largely due to the World Cup which meant a shorter preseason tour and there was also a reduction in domestic cup costs.

Looking ahead, Manchester United are likely to see a similar level of costs next year. The lack of severance pay next year as noted will see an immediate £20m reduction in costs. This plus the exit of high earners such as Herrera, Lukaku and Valencia (most of Sanchez’s wages are still being paid by Manchester United), should more than cover the increase in wages from their latest signings.

Transfers Analysis

Manchester United Net Transfer Spend 2019

Manchester United saw three players join and three leave for transfer fees in 18/19.

In came Fred (£53m), Dalot (£20m) and Grant £2m for a combined £75m. Out went Blind (£14m), Johnstone (£7m) and Fellaini (£7m) for a combined £28m, leading to a net spend of £48m, down 66% of last year’s net spend of £138m.

The big new signing Fred struggled to get into side and has disappointed fans with his performances. Dalot impressed in spells and clearly has potential.

None of the departed players were particularly missed, however with things proving difficult for Mourinho and co, the new signings Fred and Dalot were clearly not enough to keep Manchester United challenging.

The sales of Fellaini, Blind and Johnstone led to Manchester United recording a profit on player sales of £26m which was £8m up from the prior season and helped the club record a profit.

In cash terms, Manchester United spent £178m on players in 18/19, primarily due to instalments due from previous signings.

In contrast Manchester United received £43m, leading to a net cash outflow of £135m, explaining partly why last summer was a lighter year transfer wise for the club.

Manchester United are owed £18m in transfer fees, of which £10m is due this year.

However, Manchester owe a huge £188m, of which £111m is due this year.

This means that net, Manchester United owe clubs £170m, of which £101m is due this year, further showing why the club didn’t back Mourinho last summer with more signings.

In contingent transfer fees, Manchester United could also pay a maximum of £74m should certain clauses in player contracts be met, although it is unlikely this full amount will ever become payable.

Debt Analysis

Manchester United are notoriously run via debt however this has been a model that has worked for the club ever since the Glazers took over.

On the cash side, Manchester United are at their most cash rich point ever after cash reserves rose from £242m to £308m (27%). This was primarily due to an improvement in cash from operations and an increase in revenue.

On the other side, debt levels also increased to new highs, rising from £496m to £511m (3%), this £15m increase is primarily due to changes in the exchange rate as the dollar strengthens/pound weakens.

Overall, this means Manchester United’s net debt has fallen from £254m to £204m (20%). This will please fans who feel the club should be becoming more sustainable and will also lessen any Financial Fair Play concerns UEFA or other parties have.

Looking ahead, it is clear Manchester United have a rebuilding job on their hand which may take some time. However, the key financially is to remain in the Champions League, something they have failed to do.

Commercial revenue and matchday revenue will remain robust, so the shortfall is likely to only be due to performances on the pitch which can only be improved by better management and/or players which is easier said than done.

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February 22, 2019February 22, 2019

Liverpool – The Kop’s Commercial Weakness

Liverpool FC released their financial results recently to great fanfare, record profits, growing revenue and a competitive wage structure were all reasons for Liverpool fans to get excited. Among all this excitement the composition of their revenue went under the radar.

Roughly half of their revenue was from TV money and prize money, which although shows success in a season, isn’t something that can be relied upon each year. Unless your Real Madrid or Barcelona, Champions League finals/trophies are a rare occurrence due to the strength of the competing rivals.

Roughly a fifth of Liverpool’s revenue came from matchday earnings which has remained fairly stable but is increasing as the capacity of Anfield increases.

This leaves around a third of Liverpool’s revenue being from commercial revenue. Commercial revenue is made up of sponsorship deals and merchandise sales. This is the area where Liverpool are below Europe’s top table and an area that has significant room for improvement.

The Problem

The graph above shows the potential Liverpool have to grow this area of revenue and boost income significantly to boost their financial muscle. Liverpool’s commercial revenue is the 8^th highest in Europe according to Deloitte and is less than half the amount Real Madrid command. Although no one is saying Liverpool are as big a club as Real Madrid, the difference is much bigger than it should be.

Liverpool lag their northern rivals in Manchester significantly too, by more than £100m in Manchester United’s case. This gap needs to shrink if Liverpool are serious about mixing with Europe’s finest.

Mr. Popular

The reason Liverpool have so much potential and are currently under achieving when it comes to commercial revenue is the growth the club has experienced in popularity and appeal worldwide under Klopp.

Liverpool have struggled over the past couple of decades to ‘get with the times’ and match their rivals in digital popularity as football moved into the modern era. Manchester United perfectly exploited and channelled the new commercial era and as a result saw their finances explode with Liverpool playing catch up ever since.

However, Liverpool are catching up and are ahead of many in terms of social media followers. The club have the 6^th highest number of twitter followers of the twenty teams to make up the Deloitte Money League. They also have 9^th highest number of followers on Instagram which could be improved upon with more engagement and is an area for growth.

The club only has the 10^th highest number of Facebook ‘likes’ and should look at these platforms as areas that could grow significantly. In all these areas they aren’t far of moving further up the social media chain as the club engage to a greater extent with the fans and their success on the pitch attracts more digital fans.

The importance of this nowadays cannot be underestimated, a club’s social media pull gives companies a great way to advertise directly to their target market being football fans or geographical location. A greater number of followers makes it much easier to negotiate lucrative sponsorship deals, especially the smaller club partners who can make up a considerable amount of a club’s commercial revenue.

Kitted Out

Liverpool currently earn roughly £28m from their kit manufacturer New Balance annually. This is almost a third of the amount Manchester United attract in their £75m deal with Adidas and 5 times less than Barcelona’s high of £140m from Nike.

Liverpool are (and should be) entertaining offers from the likes of Adidas and Nike as they look to match, if not exceed the amount earned by Manchester United when their deal with New Balance runs out at the end of next season.

Liverpool should be able to increase their kit deal significantly as Manchester United negotiated their deal a few years ago so by now, this should be well within the grasp of Liverpool considering the growth in popularity the club has sustained of late.

Their current deal is also below the likes of Chelsea and Manchester City, clubs of a similar stature social media wise however Liverpool also have a larger fan base outside of this and would therefore hope to command at least in excess of the £50m Manchester City recently negotiated with Puma.

Getting More Shirty

Liverpool have stayed loyal to their shirt sponsors historically, seemingly married to Carlsberg until they parted ways a few years ago and Standard Chartered took their place. Liverpool chose wisely and have recently renegotiated their deal on £40m a year for four years, up from £30m. This was a shrewd move and Liverpool are doing well in terms of their shirt sponsor and there is not much room to improve in this area.

The club should focus on maintaining a good working relationship with Standard Chartered and negotiate at the appropriate time to improve the terms, maybe by incentivising additional performance related bonuses that will reward the club on the back of successes on the pitch.

Opportunity Knocks

Liverpool have many additional areas that could enhance commercial revenue with some controversial and others just sensible.

Sleeves

Liverpool currently have a 5-year deal with Western Union as their sleeve sponsor, mainly in line with their rivals. Arsenal are currently leading the way with an £8m-a-year deal, something Liverpool should consider exceeding considerably when their current deal expires in 3 years, something for the future.

Training kits

Liverpool’s training kit is sponsored by BetVictor and their current deal expires at the end of the season, making it an opportunity to bring in a more lucrative deal. For comparison, Barcelona have reportedly the highest training kit deal (with Beko) at around £16m a year, which offers a sizeable boost in revenue should Liverpool get anyway near that figure, either by improved terms of a new sponsor.

Naming Rights

Stadium naming rights are a controversial topic in England among fans with many opposed to the idea of ruining club traditions all for the sake of a few quid. However, recent studies have shown it is no longer a few quid with valuations in excess of £10m being placed on Anfield and other famous stadiums. A boost of even £10m in commercial revenue would by over 5%.

Club Partners

Liverpool could attempt to go a different way and go for volume with sponsors. Club partners can add small multi-million-pound deals here and there however if this was scaled up, could run to the tens of millions. The main drawback here is the time it may take and the devaluing of their main sponsor who may not be best pleased to see all these deals that take the shine of their large deals.

Go Strange

What if Liverpool find the newest trend like the sleeve sponsor? This is an option for the creative. How about shorts sponsors? Press conference sponsors? These are all options and many more. The club could also develop a new medium to share their content that substantially boost their social media following and attracts more lucrative deals.

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October 6, 2018

Manchester United 2018 Financial Review – Strong and Stable Leadership

Manchester United Financial Review 2017:18

Manchester United had what for many would be a good season. However, this is Manchester United and a second-place finish, especially to their noisy neighbours was not the season they had hoped for. This coupled with an early Champions League exit and a runners-up medal in the FA Cup was not good enough.

Off the field, financial performance was steady although a disappointing loss after tax was recorded due to changes in US tax law (let’s not go into this), meaning Manchester United lost £37.3m while pre-tax profit more halved to £26.0m.

Alarmingly, this is the first after tax loss since 2015 under Moyes.

Let’s delve into the numbers.

Revenue Analysis

Manchester United’s revenue remained relatively stable, increasing from £581.2m to £590.0m (1.5%) as the £600m revenue barrier continues to elude them. They are still a way clear of their Manchester rivals who just broke the £500m barrier.

Commercial revenue stayed essentially the same, rising from £275.5m to £276.1m (0.2%) on the back of decent growth in their sponsorship portfolio which increased to £173.2m, with Adidas accounting for £79.0m of this revenue. Disappointingly, retail sales fell to £104m as the lack of real success on the pitch led to less merchandise being brought by fans.

Broadcasting revenue rose significantly, increasing from £194.1m to £204.1m (5.2%) as the club were boosted by a second place Premier League finish, netting the club £151.6m while European revenue actually fell as they earned £38.3m despite returning to the Champions League, showcasing how lucrative the Europa League can be (if you win it).

Matchday income dropped, falling from £118.6m to £109.8m (-1.6%) as Manchester United suffered from having less home games than the season before. Manchester United operate at almost full capacity at every home game (>99% in each of the last 20 years) and as such, struggle to raise matchday income with its value derived almost entirely from the number of home games in that season.

Manchester United will be disappointed not to have reached the £600m revenue mark last year, something we thought would have happened and should have if they had progressed slightly further in the Champions League. We expect Manchester United to struggle to meet their target this year also with revenue sources becoming harder to come by with gains to be made on the field more likely to make a difference. This does not seem to be the case at the time of writing with a poorer season than last looking likely and as such we expect any commercial revenue gains to be offset by a poorer performance on the field yielding lower revenue.

Expense Analysis

Manchester United’s revenue may not have risen by much but this did not stop operating expenses from doing so as they rose from £511.3m to £564.0m (10.3%), reducing profitability considerably.

A huge reason for this was amortisation which rose from £124.4m to £138.4m (11.3%) as Mourinho invested heavily in a few players to no avail other than to push up costs.

Other operating expenses fell ever so slightly to £117.0m. This consists of commercial costs (£25.9m), matchday costs (£24.2m) and property costs (£21.6m) as well as other smaller general costs.

Net finance costs did however fall from £24.3m to £18.0m (-25.9%) after favourable FX movements saw their repayments fall and interest income rise.

Now to the tax point that has caused a loss this year. To not drive you away from reading on, it’s essentially accounting hocus pocus where a change in the tax regime in the US (where Manchester United pay tax) means they will pay more tax at a later date, this has to be recorded in part this year hence there was a £48.8m deferred tax expense which caused the loss.

Wages were the biggest culprits to their rising costs, increasing from £263.5m to £295.9m (12.3%). The main reason given was salary uplifts due to a return to the Champions League while the new marquee signings of Lukaku and Sanchez would have also burnt a hole in the pocket. These extra wages work out as an additional £623k a week.

Included within wages are payments of £12.9m to directors in the company with the majority of this going to Ed Woodward, this was a £600k increase on last year.

Expenses are likely to rise slightly again next year. Manchester United only made one major signing while they also let go of a couple players to negate this, a small drop in operating expenses to £550m is also a possibility.

Transfers Analysis

Mourinho’s policy going into last year transfer window was to target their weak areas and buy the very best in those positions. The club ran into difficulties obtaining his number one targets, and this led to only 3 signings rather than the 4 he originally hoped for.

In came Lukaku (£76.2m), Matic (£40.2m) and Lindelof (£31.5m) for a combined £147.9m spend.

Departing were only Januzaj (£7.7m) and Pereira (Loan – £2.7m) for a combined £10.4m.

This meant Manchester United had a huge net transfer spend of £137.6m, up 10.9% on last year.

This also doesn’t include the swap deal of Sanchez for Mkhitaryan where no cash swapped hands.

The signings of Lukaku and Matic were a success. However, they were not enough to compete with Manchester City and in Europe with Lindelof turning out to be a poor signing.

Alarmingly Manchester United owe clubs an eye-watering £258.3m in transfer fees with £156.2m of that due in the next year, possibly explain the lack of transfers this summer.

In comparison Manchester United are only owed £29.2m in transfer fees with only £4.7m of that owed this year, leaving a net of £151.5m owed to club’s this year.

It doesn’t stop there as Manchester United may owe a further £58.2m should certain contingent transfer conditions be met.

This is after an already heavy cash outflow last year, where £155m left the club’s coffers and only £46.9m came in from transfers in cash terms.

It is yet to be seen whether this heavy transfer debt burden is the main reason for a lack of spending or whether it really was due to a differing in transfer policy opinion between Mourinho and Woodward.

Net Debt Analysis

Manchester United are notoriously a debt-ridden club, however due to being one of the biggest clubs in the world this has not been a problem and continues that way for now.

Despite the amount of debt held within the club, the cash position of the club is very healthy. This is despite cash reserves falling from £290.3m to £243.0m (16.6%) as the club saw a huge transfer fee outlay and a loss for the year overall. This combined with £13.3m of capital expenditure on the stadium, a divided to shareholders of £22m and £18.9m of repaid debt saw cash fall significantly. The club still have more than enough cash for the day to day running of the club.

Debt also fell slightly, decreasing from £503.3m to £495.8m (-1.5%) as the club paid down debt of £18.9m. The majority Manchester United’s debt is long term, with only £9.1m due this year. The debt is all external debt meaning the interest rate is higher than owner debt and averages at around 3-4% a year which adds considerable cash burden to the club that their less indebted rivals do not experience.

This means Manchester net debt rose significantly, increasing from £213.0m to £253.8m (19.2%) due to the decrease in cash reserves. As mentioned this isn’t a major cause of concern for Manchester United given their stature, however as clubs begin towards an era of sustainability, this isn’t something Manchester United can currently achieve. As time goes on Manchester United may lose some financial competitiveness and miss out on key signings due to financial constraints due to their high debt levels, something we may be already beginning to see.

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August 16, 2018

Premier League 2018 Review – Wages

As Premier League clubs grow richer, so do the players as we saw in our revenue analysis, revenue has increased dramatically and so have wages, rising 18.5% to surpass the £2.5bn barrier.

In this new Premier League world, we have wages of £150k a week as commonplace throughout the league, not just the top 6. Wages rose by over £7.5m per week and this includes the growing wage of directors and key management as their competence off the field grows in importance.

This article analyses the wages of players and directors among Premier League clubs competing in the 2016/17 season.

Who’s Up, Who’s Down?

Wages increased on average by 28.6% as the majority of clubs saw sharp increases due to increased player investment.

The promoted clubs were key contributors here with Burnley (59.4%), Middlesbrough (100.3%) and Hull (104.3%) experiencing the highest growth rates as they looked to align their wages with their newly earned Premier League riches. Interestingly, only Burnley survived despite being considerably more cautious with their wages than the other two.

Chelsea (-1.2%) and Liverpool (-0.6%) were surprisingly the only clubs to experience a fall in wages, albeit very small drops. Chelsea’s sales of high earners Oscar, Cuardrado (Loan), Ivanovic and Mikel were the main reasons for this in a season of few high-profile purchases. Liverpool similarly saw the exit of Benteke, Skrtel, Balotelli and Sakho who were all on high wages as Jurgen Klopp began his rebuild.

Tottenham saw wages grow by 26.9% as they looked to reward their players performances with new, improved contracts such as Kane, Alli and Eriksen. The purchases of Sissoko, Janssen and Wanyama supported this growth with the only high-earner to depart being Chadli.

Manchester City financial growth saw no signs of slowing down as wages grew by 33.5% as the Guardiola era began with a summer transfer spree featuring minimal departures as surplus players entered the final year or two of their high paid contracts, we expect wage growth to fall as these players depart at the end of their contracts.

Rivals Manchester United experienced a smaller rise of only 13.5% despite the high-profile purchases of Pogba and Ibrahimović due to a number of departures and the relative size of their wage bill already.

Leicester rewarded their Premier League winning squad with substantial pay rises leading to wage growth of 40% as the likes of Vardy, Mahrez and Schmeichel signed new deals which was added to by new higher profile players.

On the low side alongside Chelsea and Liverpool were Sunderland (0.6%) and Stoke (3.2%), possibly signalling they were worried about their soon to be relegations and were preparing for as much.

In absolute terms, the average wage rise was £375k per week, or £19.5m a year. Leading the way however was Manchester City’s astronomical rise of £1.3m a week in wages after their transfer spree to introduce Guardiola to the Premier League.

Crystal Palace saw wages rise £600k a week after the introduction of Sam Allardyce who used the winter transfer window to significantly strengthen the squad with a sizeable investment, a tactic that ultimately worked as they secured survival.

Middlesbrough also experienced a £600k a week increase but were unfortunately much less successful in doing so after suffering relegation and the unenviable wage reduction strategy required. Wages are likely to fall automatically as relegation wage clauses come into effect.

Tottenham significant contract renewals contributed to wages rising by £517k a week as Harry Kane and Co became richer after another top 4 finish for the club.

Manchester United saw wages rise by £600k a week despite a relatively small % increase due to the enormous size of their wage bill to begin with.

As mentioned, on the other end of the scale is Chelsea and Liverpool who saw minimal wage drops per week of £50k and £15k, remaining relatively stable in terms of wages after offloading deadwood.

Arsenal also remained relatively stable with wages growing by £77k a week, a minimal 2% increase for the club.

Wage to Revenue Ratio

A key performance indicator for all clubs, the wage: revenue ratio is key to a club in measuring financially stability and prudence. A high ratio suggests overspending, making profitability almost impossible whilst a ratio too low suggest over cautiousness and a failure maximise the use of resources. The average is 57% and most clubs will be aiming for a ratio of 50-55%.

The ratio shows a clear trade-off between risk and reward with clubs having to balance the need to grow and meet their targets and their financial future. Clubs near the bottom of the Premier League are likely to have higher ratios due to their lower revenues, however these clubs still spend an awful lot on wages due to the riches of staying in the Premier League.

Those higher up the table pay higher wages but see relatively higher revenue – which is what those spending large near the bottom are aspiring to.

Crystal Palace have the highest rate at 78.5% after their huge spending in the winter transfer window to preserve their Premier League status, a gamble that paid off but also potentially jeopardised their future, however such a gamble has enriched those at the club including senior management (more on this later).

Swansea’s was nearly as high at 77.3% due to low revenue and relatively high wages, a situation we hope they have remedied in 2018 after relegation which will cause this key ratio to increase.

Tottenham much discussed wage policy sees them achieve the lowest ratio at 41.4% as Daniel Levy continues to run a tight ship, something he is proud of considering their recent domestic performances, an increase in revenue will however help them increase their wages more in line with their rivals.

North London rivals Arsenal are 3^rdon the list at 47.6%, another club who are notoriously known under Wenger to watch the purse strings, it must be something in the water up in North London!

Manchester United despite have one of the largest wage bills in world football have a wage to revenue ratio of only 45.3% due to the huge revenue they generate, showcasing that potentially player investment and huge wages leads to larger revenue, a model that Manchester City seem to have adopted in their earlier years.

Chelsea at 60.8% have the highest ratio due to providing players with historically high wages whilst also stockpiling young talent meaning they have more player wages on their books.

Liverpool (57%) and Manchester City (55.8%) complete the top 6 who all have lower than 61% ratios which is around the ball park most clubs should be.

Other than Chelsea, Crystal Palace and Swansea, the only other clubs with ratios above 60% are Everton (61.1%), Southampton (61.2%), Stoke (62.5%), Sunderland (66.8%) and Watford (60.3%), all clubs with aspirations of growing despite Sunderland and Stoke’s recent troubles.

Of the rest, Burnley’s low ratio (50.5%) should be commended due to their performances in 2017 and 2018. Outside of those already mentioned Bournemouth (52.4%), Hull (52.4%), Middlesbrough (53.5%) and West Ham (51.8%) all have ratios below 55%.

Rich Directors

Directors and key management staff are becoming increasingly vital to the success of football clubs with their business acumen key in driving revenue from off the field sources. The work of many executives has been praised in both the transfer market and in raising the profile of their club. A good executive can propel a financially ruined club into a viable business and footballing success.

This is apparent in the fact that directors’ salaries rose 19% to £41.5m despite not playing a minute of football, with the average salary being just under £4m, working out an average of £72k a week which is a respectable Premier League footballer wage.

However, note that director salary disclosures in the accounts may not show the full picture with some directors paid in other opaque companies and through other means which are hidden and difficult to locate so the numbers here are likely to be understated to some degree.

The highest director compensation paid was by Manchester United unsurprisingly considering their global profile and stock listing. Manchester United directors were paid £12.5m last year with this including stock options that may be more valuable than recorded currently.

Tottenham are the next closet some way behind with payments of £9m with Daniel Levy paying himself £6m as a golden pat on the back for the recent successes of the club that few would argue with despite his insistence of being more prudent than that on his players.

Arsenal also pay highly with directors being paid £3.4m despite performing poorly as of late.

Liverpool’s directors were paid relatively poorly compared to their above rivals, receiving a meagre £1.6m.

Chelsea and Manchester City had minimal values in their accounts. This may have to do with Chelsea having no CEO for the majority of the year and until the appointment of Guy Laurence. The payments for other key management were likely to not have been disclosed and as such no analysis can be performed. There is a similar story for Burnley as well.

The lowest outside of this appears to be Hull with payments of only £185k made to directors.

Also, below £1m were Leicester (£325k), Stoke (£806k), Swansea (£634k) and Watford (£571k). The most surprising club here is Leicester due to the absence of any significant rise in director payments despite the incredible season they recently had.

Crystal Palace have a notably high compensation package for directors with wages paid to directors of £2.4m, with Steve Parrish paying himself all of that as the club’s only director after the club steered clear of relegation last year, a controversial decision by the Mr. Parrish.

Wages Summary

There was £2.5bn in wages last year, an eye-watering £48.1m a week with Premier League clubs incurring an average wage bill of £125m. The Premier League Top 6 account for a huge 51% of total wages, showing their unparalleled financial power.

There was a change at the top of the wage bill chart as Manchester City’s continuing financial growth saw them shell out £264.1m in Guardiola’s first season, overtaking Manchester United who paid out £263.5m in wages.

Chelsea (£219.7m), Liverpool (£207.5m) and Arsenal (£199.4m) follow at around the £200m mark as they continue to pay players top dollar to maintain their power and clutch of world class players.

The ever-rising Tottenham lag their rivals yet again in this department, paying out ‘only’ £126.9m on wages due to Levy’s tight wage policy, a strategy that may see them struggle to keep competing with their rivals.

Burnley must be commended for their comfortable survival despite operating the lowest wage bill in the Premier League of £61.2m.

Bournemouth (£64.9m) and Hull (£61.3m) were the only other clubs with wages under £70m.

On the other end of the scale, Leicester (£112.6m), Everton (£104.7m), Crystal Palace (£111.8m) and Southampton (£112.4m) were the only clubs outside the top 6 with wages exceeding £100m.

With this all said, wages are likely to continue increasing as the amount of revenue continues to rise in the Premier League and player wage demands continue to rise and the price of relegation becomes costlier. Wages are likely to increase to around £3bn in the coming year.

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August 13, 2018

The True Costs of Transfers

Premier League True Summer Transfer Cost

The True Costs of the Premier League 2018 Summer Transfer Window

The Premier League transfer window has officially shut with over £1.2bn spent by Premier League clubs ahead of the new season.

Clubs have to be wary of Financial Fair Play when purchasing players to avoid penalties and bans (for more on this click here) and also need to ensure they are running sustainably for their owners etc.

This brings us to this article, which will explain the true costs of transfers from the 2018 summer transfer window explained briefly below:

When clubs sign a player, from an accounting perspective this is not all charged in the year of the transfer as the payments are matched to how the player will be used. So, a player signing for £50m on a 5-year contract is deemed to cost the club £10m a year, known as the amortisation cost. This is the true costs of the transfer per season for the club.

Another key element is player sales. In this regard the profit the club gain is not simply the transfer fee received minus the transfer fee paid, it is the transfer fee received less the remaining value of the player sold. So, for a £50m player on a 5-year contract, he will be ‘worth’ £50m minus the amortisation charges to date, so after two years of charges, the player will be ‘worth’ £30m. Hence, should a player be sold 2 years later for £50m, a ‘profit’ of £20m will be recorded, rather than nothing like many people believe.

This article will analyse each Premier League club’s business and compare to their counterparts.

Due to the availability of data, this excludes the costs of loans and player wages. All transfer fees and contract lengths are via Transfmartk.co.uk. In order to simplify the amortisation costs, we have ignored contract renewals which make the calculation more complex without much added insight.

Let’s Not Talk About Spend, Let’s Talk About Net Spend

Premier League clubs had an active transfer window despite its shortening, spending over £1.2bn, receiving only £353m in return, leaving the club with an astronomical net spend of £909m.

This was due to higher spending by certain clubs, with Liverpool leading the way by a distant after investing heavily following their Champions League heartache with Naby Keita, Fabinho, Alisson and Shaqiri joining while only Danny Ward left, leaving the merseysiders with a net spend of £151m.

Fulham became the first promoted club to ever break the £100m barrier after a barnstorming transfer window with 7 players arriving for transfer fees and only 1 leaving. This led to the club having a net transfer spend of £101m with Seri the pick of the players signed.

Fellow West Londoners Chelsea had the third biggest net spend at £92m after breaking the world transfer record for a goalkeeper in the £72m paid for Kepa after losing Courtois to Real Madrid and they also signed Jorginho.

Manchester United and Manchester City had quiet windows with both making one big purchase a piece with Fred joining United (along with Dalot and Grant) and Mahrez joining City.

At the other end of the scale were Watford with a net transfer spend of minus £23m after not reinvesting all of their Richarlison windfall. Newcastle also were in the black after recording a net transfer spend of minus £13m as Mike Ashley used transfer cash received to purchase House of Fraser rather than reinvest in the Toon.

Additional Amortisation Costs

Premier League clubs face additional transfer costs of £275m this year alone after a huge transfer spend of over £1.2bn, with this cost spread of the players signed contracts which average at just over 4-year contracts.

Amortisation costs are, as explained above, based on transfer spend and contract lengths and as such the costs are higher for larger spends and also higher when contract lengths are shorter. A key example is Kepa, a £72m keeper who signed a 7-year contract, costing Chelsea just over £10m a year. While Mahrez, a £61m purchase on a 5-year contract cost Manchester City more at just over £12m a year despite the smaller transfer fee.

Liverpool unsurprisingly lead the way after their impressive transfer window where they spent £164m with Alisson signing a 6-year contract while Keita, Fabinho and Shaqiri signed 5-year deals. Liverpool will have additional costs of £31m after these deals.

Fulham had the second highest net spend after their £105m 7 player splurge with contracts lengths 4 years on average, bringing amortisation costs of £24m over that period.

Leicester despite their relatively small net spend have a large transfer costs due to their £103m spend with the Mahrez deal diluting their net spend after the club reinvested the Mahrez cash and then some, leading to an amortisation cost of £22m.

Chelsea and West Ham also had large amortisation costs above £20m after their productive transfer windows.

Tottenham were at the other end of scale after an inactive transfer window, becoming the first club since the transfer window came into effect in 2003 not to purchase or sell a player.

Crystal Palace were the only other club to have an additional amortisation cost below £5m.

Amortisation Costs Savings

Premier League clubs saved £41m on amortisation cost after after player sales of £353m with many players sold either brought cheaply or have been long serving players that no longer attract amortisation costs after staying longer than their original contract.

Amortisation costs savings are driven again by the transfer fee paid when the player was brought and their original contract length. So, for instance Daley Blind signed for Manchester United 4 years ago for £15.8m on a 4-year contract, costing Manchester United just under £4m a year for those 4 years. Now that the 4 years are up, Blind costs United nothing from an accounting perspective, so no amortisation costs are saved and hence no savings included in our calculations.

As such many Premier League clubs didn’t recorded any savings as the players sold had already seen their entire transfer fee amortised. This includes players signed as youths such as Danny Ward at Liverpool or long serving players such as Courtois at Chelsea.

In a couple of situations, players were signed and immediately sold. This was the case for Benik Afobe at Wolves and Mikel Merino for Newcastle. In both these cases the amortisation costs were excluded when calculating additional costs and savings.

Bournemouth were the biggest savers, saving just under £8m after the sales of the after mentioned Benik Afobe to Wolves (before Wolves later sold him to Stoke), Lewis Grabban and Max Gradel.

Everton (£7m), Newcastle (£6m) and Watford (£5.5m) were the only other clubs to save in excess of £5m on player sales after the sales of the likes of Klassen, Mitrovic and Richarlison.

Burnley, Cardiff, Crystal Palace and Tottenham sold no players hence the reason for their lack of amortisation costs savings.

Chelsea, Liverpool, Manchester United, Southampton and West Ham also had no amortisation costs savings despite player sales due to the players sold having been at the club for at least their original contract lengths such as Courtois, Danny Ward, Blind, Tadic and Kouyate.

Profit, Profit, Profit (Or Loss)

Premier League clubs due to this made profits on their sales of £247m after selling players for £353m, a 70% return on investment.

When players are sold, as seen above, this may not lead to amortisation costs savings if the players amortisation costs were low due to the price paid or they have been at the club a long time.

This doesn’t mean they receive nothing, as the amount earned is recorded as a profit on player sales. This is recorded as the transfer fee received minus their remaining value as explained in the introduction. However, to avoid you having to scroll up, here is an example from this season using Courtois.

Courtois cost Chelsea £8m 7 years ago on a 5-year contract, costing the club £1.6m a year initially. Each year he is worth less of his transfer fee, so after 1 year he is worth £6.4m and after 2 years £4.8m etc. After 5 years he is worth essentially zero, at this point when he is sold the transfer fee received is all profit, so Chelsea record a profit of £31.5m.

Clearly the biggest benefiters here were Leicester after their sale of Mahrez was essentially all profit and hence the club recorded a profit of £67.1m.

Chelsea also benefited as described above, whilst Watford were the only other club to record a profit of more than £30m after their sale of Richarlison.

Everton were one of only two clubs to make a loss after the costly purchases of Klassen and Funes Mori who they both made a loss on after buying them recently and then selling on the cheap. Leading to a loss of £3.8m.

Arsenal also made a loss on the flop transfer of Lucas Perez, diluted slightly by the sale of academy graduate Akpom.

Burnley, Cardiff, Crystal Palace and Tottenham made no transfer sales and hence recorded no profit or loss this year.

The Summary – The True Cost

To work out the true cost of this transfer window we use the following formula:

Additional amortisation costs – Amortisation costs saved -/+ Profit/Loss on player sales.

This gives an interesting picture for Premier League clubs with a net transfer costs of minus £13.9m! Meaning Premier League clubs as a whole have saved on transfers this year from a Financial Fair Play perspective.

This is heavily skewed due to the net savings made by Leicester, Watford and Newcastle in particular.

Leicester, due to the Mahrez deal have made a saving of approximately £50m after their new signings, while Watford and Newcastle have also saved in excess of £20m.

Both Manchester clubs are in the black after making one big purchase each and selling a couple fringe players.

Chelsea are also in the black after selling Courtois.

Fulham have the highest cost of £20m after their sensation transfer window in which they spent hugely for a Premier League newcomer, making a statement on their ambitions.

Liverpool were unsurprisingly up there with a net cost of £18m. Everton and Arsenal were the only other clubs with a net cost exceeding £15m.

To put this all into perspective there is a mismatch. The profits received are all given in the period of sale, while new transfers are spread over their contract. This means that Chelsea, despite making a profit on Courtois, and hence their net costs are negative, will indeed see amortisation costs rise in the long run as next year they will not have that Courtois profit.

The same is the case for amortisation costs saved, for some of the players sold, they may only have had one more year of amortisation costs and as such this saving will not be there next year and hence they will see amortisation costs rise the following year.

Amortisation costs have risen over the years and will continue to as long as clubs net spends are still as large as they are.

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June 24, 2018June 29, 2018

Premier League Financial Review – Summary

Here is your summary of Premier League financial performance for all Premier League clubs in 2018. As financial accounts are released one year in arrears, finances are based on 2017 season performance. In depth summaries of these finances are available by clicking the club’s name or the infographic.

Arsenal – Wenger’s Wonga

Bournemouth – Finances With a Cherry on Top

Burnley – Marking Their Turf

Chelsea – Riches of Champions

Crystal Palace – The Price Of Survival

Everton – Stuck Toffees

Hull – Tigers Timid Roar

Leicester – Foxes’ Fortunes

Liverpool – Top 4, Top Finances

Manchester City – Sky’s The Limit

Manchester United – No Top 4, No Problem

Middlesbrough – Down The River

Southampton – Saints Keep Marching On

Stoke – Cold, Wet and Windy But Safe

Sunderland – Out of Lives

Swansea – Survival Swans

Tottenham – White Cash Lane

Watford – Honest Hornets

West Brom – Unusual Addicks

West Ham – Ambitious Hammers

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February 12, 2018February 12, 2018

Financial Football News Round-Up Edition 13

Financial Football News Weekly Round-Up 13

Here is your weekly financial football news round-up to keep you up to date with all things financial football! This is your round-up for the week commencing 5th February 2018, featuring the Premier League, Champions League, Bayern Munich, Manchester United, Alexis Sanchez, Liverpool and Hartlepool.

Premier League TV Deal First Round

The deadline for the first round of bids for Premier League TV rights for 2019 – 2022 passed this Friday with technology giants Facebook, Google and Netflix declining to bid, seeing this bold step into televised football as a step too far currently.

There is growing speculation of an Amazon bid for one of the smaller packages, however the usual suspects Sky and BT are expected to lead the way in live games taken. There is a record 200 Premier League live games available each year for the next 3 seasons.

Football Fans Save Hartlepool

Football fans united to remarkably save Hartlepool’s future by raising the £48k necessary to pay overdue taxes to HMRC to avoid a winding up order coming into effect.

Hartlepool fan Rachel Cartwright set up a just giving page which was promptly filled as Hartlepool fans contributed before it gained publicity and football fans worldwide all came together to help a club in need, and ended up raising nearly double the £48k needed.

Hartlepool will be hoping the worst is behind them now after a terrible twelve months where they were relegated from League 2, dropping to the conference for the first time in 96 years.

Priceless – Mastercard Renew Champions League Deal

Mastercard continue their synonymous partnership with the UEFA Champions League by renewing their deal for 2018 – 2021.

This is the fourth cycle that the two companies will be intertwined with their partnership starting as early as 1994 and are the exclusive payment partner of Europe’s biggest cup competition.

They join Pepsi, Heineken, Nissan and Satander in agreeing commercial deals with UEFA for 2018 – 2021.

North American 2026 World Cup Economic Study Supports Bid

Boston Consulting Group have released a report stating that a North American 2026 World Cup could bring in $5bn of economic activity to the area.

The United States, Mexico and Canada are combining to bid for the 2026 World Cup and such news will excite these countries officials with the competition expected to be able to support 40,000 jobs across the region.

The 2026 World Cup is to be the biggest in history with a record 48 teams competing for the World’s most prestigious football trophy.

Bayern Check-In with Marriott Hotels

Marriott Hotel, the largest hotel chain in the world have become the Official Hotel Partner of the Bundesliga giants Bayern Munich until 2020.

Bayern are perhaps surprisingly the most commercial club in the world, bringing in the most commercial revenue of any club and this will only enhance that by joining forces with another leading brand in their industry.

The partnership will involve the build of a custom-built executive box at the Allianz Arena as special offers for Bayern fans and Marriott club members.

Neymar Electrifies TCL

Brazil’s £200m Superstar Neymar has signed a new endorsement deal to be a brand ambassador for Chinese electronics company TCL.

This is another commercial success for the ever-growing Neymar brand, who is also enjoying a stunning year on the pitch after signing for PSG who are romping to the French Ligue 1 and our one of the favourites for the Champions League.

Manchester City Transfer In AvaTrade

Manchester City and AvaTrade have announced a multi year sponsorship where AvaTrade will become Manchester City’s Official Online Trading Partner in China, Asia and Latin America as Manchester City look to grow their presence worldwide.

AvaTrade is a leading online brokerage and will gain brand exposure through exclusive offers and giveaways for Manchester City experiences to their customers.

This is just one of a number of recent commercial deals signed by the Premier League Champions in waiting as they look to grow commercially and financially.

Adidas Win From Sanchez Deal

Manchester United have announced that the signing of Alexis Sanchez has smashed their previous record shirt sales by 3 times the prior record.

The huge domestic transfer has undoubtedly cause a buzz with Manchester United beating their Manchester rivals to the signing of their domestic rivals best player, creating a huge demand in shirts with the No.7 on the back.

It is an even more outstanding feat being mid season, with most fans purchasing their kits at the beginning of the season.

This news will be music to the ears of Adidas who will profit the most from the deal, gaining most the shirt sale revenue as part of their £75m a year deal with Manchester United, and will be hoping to recoup a sizeable portion as part of this deal.

MediaPro Win Serie A Race

Spanish Media Company MediaPro have won the race for the Italian Serie A rights for 2018 – 2021, paying €1.05bn the minimum threshold required by Serie A who will be slightly disappointed but also relieved the process is over.

Sky Italia missed out and not one to go quietly are calling on Serie A to reject the deal as they claim MediaPro will not act as the actual broadcaster, with MediaPro rumoured to be planning to help Serie A launch its own channels, taking care of scheduling and editorial matters, making them a glorified intermediary.

Sky will be hoping their challenge is successful as they look to continue their stranglehold on televised football.

Alexis Sanchez Avoids Prison Time

Alexis Sanchez is the latest player to fall foul of Spanish tax law after accepting a 16 month suspended jail sentence for tax fraud, avoiding a trial in the process.

The case relates to unpaid taxes amounting to £886k from image rights deals in 2012 and 2013 during his time in Spain at Barcelona. The Chilean’s agent has denied his client any wrongdoing and had “fully obeyed” laws and his image rights income “has been declared”.

Liverpool Petro-Canada Lubricants

Liverpool have announced a three-year deal with Petro-Canada Lubricants with the Canadian lubricant manufacturer being able to offer exclusive Liverpool offers for its customers.

Manchester United Second Quarter Financial Results

Manchester United announced their second quarter results this week, with revenue up 4% on last year due mainly to increased broadcasting revenue (up 17%) from a return to the Champions League and more Premier League live games than last season at this stage.

Profits before tax were down nearly 5% due to rising costs suffered by the Manchester Club despite record revenues.

Debt levels were down 20%, leading to financing costs falling an incredible 64.2% which will seem to be a step in the right directions for the heavily financed Premier League giants.

As a publicly listed company in America, Manchester United are required to report their financial performance every 3 months, with an annual financial performance review in the final quarter of their financial year.

For a detailed review of their second quarter performance click here.

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February 11, 2018February 12, 2018

Manchester United Q2 Financial Results Analysis

Manchester United Second Quarter Results 2017

Season Review to date

Manchester United have enjoyed a mixed start to the season. Like all of the Premier League big boys, they have failed to keep up with the irresistible leader Manchester City, which means another season without a Premier League for the once dominant force of the division.

Other than that obvious disappointment the season has been efficient to say the least, easing their way to the knockout rounds of the Champions League and placing themselves comfortably (ish) in the Premier League top 4 in second place. A shock loss in the League Cup to Championship Bristol City robbed Manchester United of an early trophy and a face-off with Manchester City, however a strong showing in the second half of the season will hide this embarrassment.

Manchester United disappointingly saw profits before tax fall 4.7% to £24.4m. Rising expenses outweighed increasing revenues due to rising wages and player amortisation costs. A large tax bill due to the US tax reform changes caused some accounting hocus pocus, leading to a loss after tax of £29.1m, despite recording a £17.5m profit after tax for this period last season.

A return to Champions League will be of great viewing to the club with the increased revenue already apparent this early into the season with the extra broadcasting revenue significantly contributing to a 4% increase on last years second quarter revenues.

Revenue Analysis

Revenue rose 4% on last years figures to £163.9m, leading to an expectation of revenue for the year of between £575m and £585m, a huge figure.

This rise was largely due to increased broadcasting revenue (up 17%) derived from a return to the Champions League and two more Premier League live games than last season than at this stage last season, something that will be smoothed out over the second half of the season.

The rising broadcasting fees received from the Premier League continue to see clubs breaking their previous broadcasting revenues year on year and Manchester United are no different.

Commercial revenue is down 2.1% for the quarter to £61.6m with the signing of Melitta as Manchester United’s official coffee partner being the only highlight over the last 3 months.

Matchday revenue fell 4.4% to £36.9m due to receiving no home draws in the two games they played in the League Cup this quarter, highlighting the importance of the luck of the draw as last year they had two home ties.

Expenses Analysis

Operating expenses growth outstripped revenue growth as expenses grew 12.4% to £136.2m.

Operating expenses have grown year on year as Manchester United continue to strive towards a return to their glory days under Sir Alex Ferguson.

Staff costs contributed significantly to this figure, increasing 9.4% to £69.6m, largely due to Champions League participation bonuses to players that were part of their contracts. The wages of new signings Lukaku, Matic and Lindelof would have also contributed to this increase. Overall staff numbers were also on the up by 10%, increasing to 923 staff members.

Amortisation of player contracts increased 9.1% to £37.3m due to the above mentioned new signings, while other expenses increased by 4.7% to £26.5m in what proves to have been an expensive period for the club.

Debt Analysis

Debt levels were down an astonishing 20% to £328.6m from a record high of £409.6m, as the club begin to pay off their outstanding debt helped by favourable currency movements in the Pound against the US Dollar.

Currency movement has contributed to fluctuations in net debt levels over the years with the net debt levels fluctuations around an average of about £340m since 2012.

The currency movement led to a remarkable fall of 64.2% in financing costs of Manchester United’s US debt to £4.3m, a decrease of £7.7m.

The net debt position was improved further by an increase of 26.6% in their cash position to £155.3m. It is worth noting their cash position in June was significantly better, with cash reserves of £290.3m which would of been used for transfer purchases, debt repayments and other expenses in the close season.

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February 7, 2018February 7, 2018

You’ve Been Sponsored

Sponsorship revenue is a major source of income for premier league clubs and has been increasing year on year. Commercially vital to clubs, major sponsorships provide revenue of a long period due to the contracts usually being over a few years. This year club sponsorships brought in £282 million in revenue for premier league clubs before taking into the various partnerships they also delve into. This article will will go into detail about the types of industries that are attracted to invest and sponsor football clubs. We will also look at kit manufacturers and the role they play in football finance.

Football sponsorship has changed immensely over the years. Looking at the last 11 years (2007 – 2017), Beer has diminished as a large purchaser of sponsorships with no current club having a beer manufacturer as a sponsor. Betting companies have dominated as of late with a high of 9 companies donning sponsorship deals in 2016/17 season, nearly half of all clubs. This makes perfect sense being that football fans represent a key audience for betting companies. Interestingly, this space is not dominated by the largest, most well-known betting companies (other than Bet365 and BetWay), rather overseas and casino gambling companies being the most keen sponsors. It would be interesting to see if the likes of Paddy Power and Ladbrokes decide to enter this space in the future.

Financial services companies are aiming to fill the gap left since Barclays no longer sponsor the Premier League. Banks, Insurance and pay-day loans companies are all present here and the financial sector has been ever present in the sponsoring premier league clubs, with at least 3 on average in each of age last 11 years.

Airlines are another major part of the football clubs with two of the largest clubs, Arsenal and Manchester City representing the industry. Both have long standing partnerships with their respective airline.

Other industries to have sponsored Premier League clubs over the years include Sports fashion, Charities, Automobiles and confusingly a Zoo!

As mentioned, sponsorships are a huge source of cash for the clubs with over £282m coming from shirt sponsors alone. Above we have the league table of shirt sponsors. It has a very familiar look to it, with domination from the top 6 who take home over 75% of sponsorship revenue. Man United show their dominance as the most reputable club in English football if not the world, with their Chevrolet deal bring them a handsome £47m a year. While newly promoted Huddersfield and Brighton at the foot of the table with deals of £1.5m each, more than 30 times less than Manchester United.

West Ham can be pleased at being 7th with their BetWay sponsorship bring in £10m a year, this is due to run until the end of this season and they will be hoping a strong showing in the league this season can lead to a similar, if not larger deal especially with the attraction of such of large stadium and tourist attraction for prospective sponsors.

Leicester have a long term agreement with shirt and stadium sponsor King Power and have yet to really cash in their title heroics through this commercial medium.

Interestingly, all London clubs are in the top half of the table, suggesting their is a preference among sponsors to pay a premium to sponsor London clubs, with Crystal Palace above the likes of Newcastle, Leicester, West Brom and Southampton.

Please Stay!

In terms of turnover of club sponsorships, only Tottenham of the Premier League ever-presents has had more than 2 sponsorships, with 6 in the 11 years analysed. Only Arsenal however have not changed sponsors during this period, however most of these changes were after a long period with that sponsor and we suspect their current deals to continue for the foreseeable future. West Brom have a record high of 7 sponsors in 9 years (including 1 year with none), this is interesting as to whether this indicates poor commercial success or just a policy of renewal. This doesn’t seem to be working with their current deal the 4th worst in the league ahead of only newly-promoted Brighton and Huddersfield, and Burnley.

Kitted Out

Kit manufacturer income is another major source of sponsorship income, many large sport brands pay millions to create kits for clubs, profiting from the sales of these. The largest two manufactures are the most well known sports brand in the world, Adidas and Nike. Adidas have seen a huge decline however since their high of 9 kits in 2013 to only 3 in 2017, even losing Chelsea who cut their sponsorship short to sign for Nike last season, paying £67m in the process. The spread of sport companies has diversified in recent years with none dominating as was the case with Adidas, Nike and Umbro in previous years. Umbro were previously a huge producer of kits, making 6 kits in 2007, the largest at that time to none in 2013 before renewing their presence recently with 3 currently rocking the diamond on their kits.

It will be interesting to see how Adidas react to their recent fall, they may decide to attract a large club such as Arsenal to their ranks after missing out on Manchester City who have agreed a deal with Puma for next season.

Speaking of Puma, they lead the way this year for clubs wearing their brand, which has been on a steady increasing trend since 2007.

There is the usual pattern for Kit makers as there is in performance in domestic leagues, the top 6 dominate due to their domestic success and the large fan bases that come with that. The top 6 take home a remarkable 89% of income generated from kit manufacturers.

Surprisingly, Manchester City lag their domestic rivals significantly in the value of their deal with Nike, coming in at only £12m a year compared to the £75m Adidas deal of their Manchester rival or £60m a year deal of Chelsea who also have their kits made by Nike, something that will be rectified once Puma take over in the summer in a £50m a year deal.

Data was unavailable for Huddersfield and Brighton, however we suspect their deals to be around the £1m mark, maybe lower than Bournemouth who are bottom with an £800k annual deal.

Sleeves of Gold

A new phenomenon among premier league clubs is the introduction of sleeve sponsorships, with 17 out of the 20 premier league teams (Arsenal, Manchester United and Tottenham are yet to have one). This has brought in on average £3m a year extra revenue to premier league clubs, for example Liverpool Western Union deal has brought in £5m a year to the clubs coffers. Chelsea have the largest sleeve sponsor deal to date, with an extra £8m year brought in, while at the other end of the scale Huddersfield only bring in £300k in extra revenue from their sleeves.

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December 29, 2017December 29, 2017

Matchday Money – Gameweek 20

Welcome to the first in a new series where we estimate the matchday gate receipts taken at all premier league games each week. We will compare the revenue generated between teams and compare their strategy for maximising matchday revenue.

The revenue is calculated based on an average of the highest and lowest prices offered to club members for each match. This amount is then multiplied by the number of tickets available for sale which for home teams is attendance less away ticket allocation and season tickets sold. Away teams is simply the away ticket allocation multiplied by the away ticket price. A separate article will analyse the season ticket revenue taken by each club.

The away allocation differs from game to game with it up to negotiation between the clubs. The lower of 10% of stadium capacity or 3,000 seats must be offered to away teams on each matchday, however this is not always taken up as clubs analyse the demand for the game among their fans and choose accordingly.

Here are the matchday results for gameweek 20:

Bournemouth 3 – 3 West Ham

Chelsea 2 – 0 Brighton

Crystal Palace 2 – 3 Arsenal

Huddersfield 1 – 1 Stoke

Liverpool 5 – 0 Swansea

Manchester United 2 – 2 Burnley

Newcastle 0 – 1 Manchester City

Tottenham 5 – 2 Southampton

Watford 2 – 1 Leicester

West Brom 0 – 0 Everton

Gameweek 20 Analysis

Chelsea led the way in stadium capacity percentage with 99.8% of the stadium filled as 41,568 fans flocked to their boxing day fixture, closely followed by Newcastle fans who watched their team play league leaders Manchester City. Unsurprisingly, Manchester United’s attendance of 75,046 was the highest by a distance with Tottenham second nearly 20,000 behind despite a stadium capacity percentage of 61.6% in their temporary 90,000 seater home.

Despite their lowly stadium capacity %, Tottenham led the way with gate receipts with takings of over £1.3m, in part due to their high ticket prices of £55 and the fact they only sold 28,000 season tickets for Wembley, meaning a more matchday tickets on sale equating to a higher taking each matchday.

Liverpool’s season ticket sales of 25,000 also allow them to benefit from more expensive matchday tickets. Manchester United and Chelsea complete the top 4 this week with Manchester United’s lower due to the 55,000 season tickets sold. These amounts are more secure, so there is always a trade off between the guaranteed selling of season tickets and the potential for empty seats on matchday.

Bournemouth’s 11,360 seat stadium, combined with season ticket sales of 7,000 mean their takings from games are low, something they will be hoping to rectify after stabilising in the Premier League.

For away teams the revenue is usually fairly balanced, with the away allocation always fairly similar. All premier league teams agreed to cap away ticket prices to £30, with Arsenal even taking it a step further at £26. Southampton playing away to spurs were allocated the full 3,000 meaning they lead the way in away matchday revenue, followed closely by Brighton, Burnley Manchester City and Swansea – who all played teams with stadium capita of over 45,000. West Ham lag the rest by far, playing at the smallest stadium in the top flight by far, Bournemouth’s Vitality Stadium which boasts 11,360 seats. West Ham were only given an allocation of 2,000 seats.

Thats it for the first week of this matchday money series – any feedback would be greatly appreciated as we continue to refine the formula to get as accurate a read on matchday takings.

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