Swansea City FC’s 2018 Finances – Sinking Swans

Swansea saw their 7^th consecutive season in the Premier League end in relegation after a loss on the final day of the season sealed their fate and a return to the Championship.

A disappointing season had the one positive of a FA Cup Quarter Final run that lifted the mood around the club but may have proven a costly distraction in their Premier League survival bid.

A disappointing season was compounded off the pitch with a £12.9m profit in 2017 turning into a £2.8m loss this year, although they did have the great news that they have purchased the Liberty Stadium from the Council that should enable development of the ground at a later date.

Let’s delve into the numbers.

Revenue Analysis

Swansea saw their revenue remain fairly stable, even increasing slightly from £127.8m to £128.2m (0.3%) despite a disappointing season on the pitch.

Matchday revenue remained stable at £7.4m despite an increase in games due to their FA Cup run. With attendances remaining stable, increasing from 20,619 to 20,623 it would seem fans are spending less at games due to a poor campaign.

Broadcasting revenue fell from £109.4m to £104.7 (4%) as Swansea fell from 15^th to 18^th in the Premier League. This fall in revenue would have been more pronounced if not for the Swans run to the FA Cup Quarter Finals.

Commercial revenue rose from £9.4m to £12.1m (29%) as Swansea managed to exploit their Premier League status successfully one last time. This growth in commercial revenue has been promising and it’s a shame this growth will be halted by relegation.

Other revenue increased from £1.6m to £4.0m (150%). What this relates to is not disclosed.

Looking ahead, Swansea will see a huge drop in revenue following relegation. A difficult season in the Championship hasn’t helped either. Parachute payments will significantly offset the loss in revenue, however revenue will still fall by at least a third and probably to around £60-70m as matchday and commercial revenue suffer, although the major fall will be due to broadcasting revenue falling by around 40-50%.

Costs Analysis

Swansea saw a large rise in costs despite revenue flatling, meaning profitability was hurt significantly as Swansea attempted to stave off the threat of relegation. Costs increased from £150.8m to £176.2m (17%) which was not enough to aid their survival push.

Amortisation increased from £24.2m to £37.1m (53%) as Swansea ramped up spending, however it proved too little to late as they reinvested the cash received from the sales of Sigurdsson, Llorente and Cork poorly.

Relegation also saw the value of some of their players crash. This led to Swansea impairing player value by £14.8m, a cost of their relegation (this is likely to relate in the main to Andre Ayew). Interestingly, without this impairment Swansea would have made a profit of a similar level to last year, proving relegation was the main reason for their losses.

Swansea will then be hoping for a quick return to the Premier League, although 2019 has proven too soon after a disappointing season back in the Championship that has at least ended strongly.

Interest costs increased from £0.6m to £1.1m (83%) as interest costs on players signed increased due to the number of instalment deals negotiated this year while their costs on other loans also rose.

Swansea paid minimal tax due to the club making a loss this year.

Wages surprisingly fell, dropping from £98.7m to £91.1m (7%) as despite the incoming signings, the departure of key players and high earners actually saw wages fall. Relegation wage drops would have also come into effect right at the end of the season which would have contributed to this fall.

Having already begun reducing wages as they braced themselves for the Championship, Swansea should be well placed financially to further reduce these wages and and maintain current levels of profitability to some degree which is vital for Financial Fair Play and their overall financial health.

The fall in wages works out at a cool £146k per week saving in wages, a decent sum that will help the club going forward.

Directors saw their wage increase slightly despite relegation, increasing from £634k to £655k (3%).

Looking ahead, costs will fall out of necessity. Wages will fall as relegation wage drops come into effect and high earners depart while amortisation will also fall after a large drop in the level of player investment following relegation.

Transfers Analysis

A busy transfer season was imposed on Swansea following the loss of their talisman Gylfi Sigurdsson with 6 players entering and 6 departing the Liberty Stadium.

In came Andre Ayew (£20.5m), Clucas (£14.7m), Bony (£11.7m), Mesa (£11.3m), Sanches (Loan – £7.7m), Harries (£0.3m) for a combined £66.1m.

Out went Sigurdsson (£44.5m), Llorente (£13.6m), Cork (£8.2m), Kingsley (£3.0m), Gomis (£2.3m) and Barrow (£1.5m) for a combined £73.0m.

This led to Swansea recording a net transfer income of £6.9m for the first time in 3 years.

The Sigurdsson money was reinvested in former players with Ayew and Bony returning to the club and confirming that former players should never go back after both disappointed. The signing of Mesa was also poor with the Spaniard never settling. Clucas was a decent purchase and while Sanches looked an inspired loan signing, it just never quite worked out.

Sigurdsson and Llorente were missed hugely, proving costly departures with the loss of their Premier League status likely to prove far costlier than the cash their sales brought in.

The sales of these key players did help Swansea record a profit on player sales of £46.1m, up from £36.9m in 2017. This does however show that without selling players, Swansea would have recorded huge losses, explaining to some extent the need for these departures. This will be even more vital in the Championship due to the drop in revenue.

In cash terms, Swansea spent cash on transfers of £38.5m but received a chunky £54.4m, a net cash inflow of £22.8m, a nice bumper on their return to the Championship.

Swansea are also owed a further £30.0m in transfer fees. However, Swansea owe £43.0m (£32.1m due this year), a net creditor position of £13.0m which has clearly affected Swansea in the transfer market this year.

Swansea could potentially also owe a further £12.7m in contingent transfer fees should certain clauses be met relating to signings.

On top of this, Swansea have signing on bonuses that could become payable should players stay for at the club for a specific period. These amounts may reach £8.2m.

Both these figures above are unlikely to ever become payable in full.

Debt Analysis

Swansea saw their cash reserves depleted after a difficult season. Cash levels fell from £7.5m to £1.1m (85%) plus Swansea now have an overdraft of £0.8m, effectively leaving them with actual cash of their own of £0.3m.

Cash levels were severely affected by the losses incurred this year which were funded for by the sales of Sigurdsson and Llorente as well as new loans of £4.5m. These new loans did also enable Swansea to spend £1.8m on improving club infrastructure, although this was about halve the £3.9m spent last season, a worrying trend.

Debt increased from £9.2m to £15.3m (66%) as their new owners plunged a bit more money into the club following relegation to keep the club ticking along. The level of debt within Swansea is very low compared to their rivals and isn’t an area of concern although relegation may see their debt rise out of necessity.

Net debt hence rose from £1.7m to £14.2m (735%), a huge increase from the previous lowly figure.

Swansea are in an important period financially with the ability for their finances to go either way.

The club have to be smart and invest well so they can secure a swift return to the Premier League. This season hasn’t gone to plan although the Swans form has improved since the turn of the year and promotion should be an achievable target depending on signings made.

A failure to return to the Premier League in the next couple of years will make it increasingly difficult to then return as parachute payments will taper off and revenue will be much lower, meaning their costs will also have to fall in line and investment will have to drop to avoid Financial Fair Play issues.

Taking The Liberty

The Liberty Stadium was purchased from the Swansea Council for free with operating control now with Swansea who will pay Swansea Council an annual fee for the Stadium and will also receive a share of any naming rights placed on the stadium.

As part of the deal Swansea will also purchase a number of 3G pitches for the local community in an all round good deal for all parties.

The purchase of the stadium now gives Swansea the ability to expand the stadium as they wish and consider naming rights should a lucrative deal appear. Recently the club have also purchased the land behind the stadium which will be used to expand the Liberty Stadium but only once the club are back in the Premier League, making a return even more exciting and important.

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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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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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March 18, 2018

Swansea Financial Review 2018

Swansea earned yet another season in the Premier League having battled with relegation for much of the season, their sixth consecutive season in England’s top flight.

The season was not without its troubles, twice having to change manager to secure the Premier League survival that is so important to the club’s financial stability and future.

Having secured survival they can look with delight at their finances, returning to profit with a huge £25m swing from a loss of £13m to profit of £12m on the back of significant profit on player sales. With Premier League survival secured, the club have even agreed to take ownership of their Stadium, the Liberty Stadium from the Swansea City council for £300k a year after lengthy discussions, a move that brings Swansea much more power over how to best shape the fan experience and increase revenue, including the potential to sell naming rights.

Lets delve into the numbers.

Revenue Analysis

Revenue increased significantly, rising from £97.1m to £127.7m (23.5%), driven mainly by the increased Premier League TV deal this season, a common theme among all Premier League clubs.

Matchday revenue remained fairly stagnant, falling slightly by £100k to £7.4m, a 1.3% drop. This was due in part to the introduction of an away game ticketing pricing cap, whereby all Premier League clubs can charge a maximum ticket prices to fans of £30 on away days. Matchday revenue has stayed in the £7.5m range for the past 3 seasons after experiencing a significant drop from their early Premier League years under Brendan Rodgers, when revenue was around £9.5m, signalling less optimism by the club since his departure to Liverpool.

Commercial revenue rose significantly from £7.4m to £9.4m after a succession of new sponsorship deals. The club agreed a couple major new sponsorship deals, first a new kit manufacturer in Joma, replacing household name Adidas, Joma are paying a higher price as they look to build a presence in the Premier League. The club also agreed a main shirt sponsorship deal with betting company BetEast, this only lasted a year, being replaced by Letou for the upcoming season which is sure to boost revenues once again.

Broadcasting revenue grew from £79.3m to £109.4m due to the increased size of the Premier League TV deal, this is despite Swansea finishing 3 places lower in the Premier League than last season.

Other revenue dropped by half to £1.5m on the back of lower loan fees and other such payments.

Revenue should stay around the same level as last year, with the big caveat of Premier League survival, something that looked precarious not too long ago. However once again a huge upturn in form has come about on the appointment of a new manager in Carlos Carvahal who has led the Welsh club to having a good chance of survival.

Another good commercial campaign, and the possibility of a stadium naming right sale, may lead to 3rd consecutive season of revenue growth.

Expense Analysis

Operating expense showed a large increase, moving from £117.6m to £150.8m (28.2%), driven mainly by increases in amortisation costs and wages.

Amortisation costs rose from £17.3m to £24.2m (40%) after significant investment in the playing squad, with 9 incoming signings and 4 outgoing.

Wages rose significantly too, increasing from £81.8m to £98.7m (20.7%) with new contracts for key players and also the wages of all their new signings. The rise in wages equals a respectable £325k a week in wages by the club.

Net interest costs rose by two-thirds to £500k, a minimal costs to Swansea. The rise is on the back of new loans to the tune of £9m as the club look to continually expand.

The club also paid £365k in taxes to the Government, an effective tax rate of only 2.8% having utilised the losses in the club in previous years, including as recent as last year’s £13m loss.

Transfers Analysis

There were significant ins and out of Swansea with a then record signing in Borja Baston (£16.2m) being the highlight incoming signing, while two key players in Andre Ayew (£21.7m) and club captain Ashley Williams (£12.6m) both departed to Premier League rivals.

Swansea signed Baston (£16.2m), Mawson (£5.3m), Llorente (£5.3m), Jordan Ayew (£5.3m), Fer (£5m), Carroll (£4.7m), Olsson (£4.1m), Narsingh (£4.1m) and Van Der Hoorn (£2.3m) for a combined outlay of £52.4m, an average of just £5.8m a player.

Leaving the club were only 4 players in Andre Ayew (£21.7m), Williams (£12.6m), Paloschi (£5.4m) and Euro 2016 winner Eder (£4.1m) for a combined £43.7m, an average of £10.9m a player.

This left the club with a net spend of just £8.7m, making Premier League survival a great achievement.

Outside of the club record signing, the new signings could be marked a success, coming into their own towards the end of the season after an adjustment period with Mawson, Ayew and Llorente particularly impressing, with the latter sealing a big money move to Tottenham on the back of his Swansea exploits.

Transfers played a huge role in Swansea returning to profit, with the sales of Williams, Ayew, Paloschi and Eder bringing in £36.9m in profit compared to just £6.1m last year, a 505% increase! This profit increase of £30.8m eclipses the profit increase of £25m made. This means that without these transfers, Swansea were staring at a loss albeit a smaller one than the previous season, which is still an improvement.

Asset/Liability analysis

Net debt rose significantly in the year, from a net cash position of £19.9m to a net debt position of £1.8m, a 109% change. This was due to significant changes in both Swansea’s debt and cash levels.

Debt rose from a measly £0.3m to a much larger £9.3m on the back of new loans taken out in order to improve the squad, the new loans harbour an interest rate of 3.5%.

Cash levels dropped as the club used more than half of their £20.2m in order to improve facilities and the playing staff, ending with a cash balance of £7.5m, a 62.9% fall.

A large reason for this was a large cash outlay on players of £54.6m, with only £25.4m coming back into the club’s coffers during the year, with the rest of the transfer fees owed due in later periods.

Swansea have continued to invest in the club, committing £935k to improving facilities by purchasing new fixed assets.

On the transfer front, the club have potential liabilities of £11.2m should certain transfer clauses happen that have been agreed, rising from £6.7m last year on the back of new transfers, a 67.2% increase.

On a better note, loyalty bonuses owed to players, should they stay at the club for an agreed amount of time or due to other clauses, has fallen 52.8% to £11.6m from £24.6m on the back of Andre Ayew and Ashley Williams’ exits.

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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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November 20, 2017November 24, 2017

Financial Football News Round-Up Edition 1

Introducing 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 13th November 2017, featuring Manchester City, Arsenal, the FA and Swansea. Stay tuned for further analysis of these developments over the coming week.

Manchester City are Primed for Success

Amazon Prime Manchester City

Manchester have announced an agreement with Amazon to produce a multi-episode, behind-the-scenes documentary following the progress of the team over the season. It will be aired on Amazon Prime video with the dates yet to be disclosed. The deal will net Manchester City £10 million in revenue. Read more here …

Arsenal and Money Transfers – A Match Made in Heaven ?

Arsenal WorldRemit Sponsorship Deal

Arsenal have agreed a sponsorship deal with leading innovative money transfer company, WorldRemit. The deal will provide WorldRemit with player access, Matchday LED sponsorship exposure across domestic games as well as social media access to reach out to all of Arsenal’s fans. Read more here …

Swansea are Taking the Liberty

Swansea have agreed to lease the Liberty Stadium from Swansea City’s Council for £300,000 a year. The deal will entitle Swansea to a share of any future commercial sponsorship deals with the stadium. As part of the deal, Swansea are committed to creating two 3G pitches in the city every 5 years. They will continue to share the stadium with the Rugby team Ospreys. Further analysis to follow…

Life’s Good for the F.A.

Football Association and LG Sponsorship Deal

The F.A. have terminated their sponsorship with Ladbrokes and replaced them with electronics giants LG. LG will kit out Wembley and ST George’s Park with state-of-the-art products to enhance the hospitality space. As part of the deal, LG will gain brand exposure with LED boards for all England Men’s games at Wembley as well as Emirates FA Cup games. The deal is worth a similar amount to the £4m a year deal signed last year with departing sponsors Ladbrokes. Further analysis to follow…

First Eleven – EFL Extend Deal with SkyBet

The English Football League (EFL) have signed a new 5-year sponsorship with SkyBet, running until the close of the 2023/24 season, taking their partnership to 11 years. The finances have not been disclosed, however Skybet announced it will be a 20% year on year increase from the 2019/20 season. Further analysis to follow…

Premiership TV Deal to get Bigger and Bigger

190 league games for next premiership TV rights deal

The Premier League have announced that the new TV deal for the 2019/20 season, due to be auctioned in December, will be for 190 games – half of all premier league games. The last deal, signed in 2015 for 2016 – 2019, was worth just over £5.1 billion, which was 70% increase on the previous deal. Sky and BT will compete, potentially among others for the TV rights. Further analysis to follow…

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