West Brom FC’s 2018 Finances – Red & Relegated

West Brom suffered relegation in 2018 after an 8 year stay in the Premier League following a rock-bottom finish in 2018. A turbulent season saw West Brom run through 4 managers (albeit one was just a caretaker for one game).

A poor season was capped off with early exits in both domestic competitions.

Relegation hurt West Brom off the pitch as well, with a profit of £32.3m swinging to a £5.9m loss.

Let’s delve into the numbers.

Revenue Analysis

West Brom inevitably saw a drop in revenue after a difficult season. Revenue fell from £137.9m to £124.8m (9%), although this is just the start.

Matchday revenue surprisingly rose from £6.8m to £7.4m (9%) as fans supported their team throughout their battle with relegation. Average attendances rose from 23,876 to 24,520 (3%), meaning West Brom were running at a stadium fullness of 92%.

Broadcasting revenue was the reason for the fall in revenue, dropping from £118.7m to £102.0m (14%) after West Brom plummeted 10 places in the Premier League.

Commercial revenue rose as West Brom enjoyed and exploited their final season of their Premier League Status. Commercial income increased from £12.4m to £15.4m (24%).

Looking ahead, relegation will see a huge drop in revenue as Championship prize money hits. This will be a huge shock to the system for West Brom who have now grown accustomed to Premier League TV money.

Parachute payments will soften the blow, but revenue will still fall by at least a third. Matchday revenue is likely to remain robust, while both broadcasting and commercial revenue will be hit hard.

Costs Analysis

West Brom saw a large rise in costs, increasing from £112.2m to £138.2m (23%). With revenue falling, this large increase in costs resulted in their profitability plummeting.

Amortisation rose from £17.1m to £25.4m (49%) after heavy investment which obviously didn’t work but showed their desire to remain in the Premier League.

West Brom had no interest costs due to a lack of debt In the club (see debt analysis).

There was also no tax due to their loss making status, this is likely to persist into the near future.

Wages rose from £79.0 to £92.2m (17%) after an influx of new signings in the summer, while there was probably sizeable severance pay paid in the year, although no amounts have been disclosed.

These extra wages worked out at a sizeable extra £254k a week, an amount that will need to be completely reversed in the Championship.

Director remuneration of £90k has been disclosed, halve of the £180k paid last year as directors were penalised for relegation. This amount seems relatively low, so there is likely to be additional directors whose pay was not disclosed.

Looking ahead, Relegation will mean it is now vital West Brom reduce costs. Relegation wage drops will come into effect, reducing wages significantly while high-earners have departed. Amortisation is likely to fall after a negative net transfer spend in 2018/19.

General costs will fall due to the lower standards required in the Championship however this will not be huge.

Revenue is likely to fall by a greater extent than costs, meaning profitability will drop even further and losses will grow.

Transfers Analysis

West Brom had a busy transfer window in an attempt to remain in the Premier League with 8 signings and a couple of departures at the Hawthorns.

In came Burke (£13.7m), Rodriguez (£12.3m), Gibbs (£6.8m), Zhang (£6.5m), Hegazi (£4.5m), Sturridge (Loan – £2.1m), Barry (£1.0m) and Gabr (Loan – £0.5m) for a combined £48.2m.

Out went Gardener (£1.6m) and Zhang (Loan £0.3m) for a combined £1.9m.

This saw a huge increase in their net transfer spend from £9.8m to £46.3m (372%), showing their ambition to remain in the Premier League.

However, the signings proved to be poor. Burke never settled and Zhang only lasted half a season. Gibbs and Rodriguez are good players, but injuries halted their progress. Barry proved a level headed presence while Hegazi was a hit signing initially before tapering off.

West Brom recorded a profit on player sales of £5.8m, an amount that does include the sale of Evans on top of the sale of Gardener.

In cash terms, West Brom paid transfer fees of £41.7m and only recouped £6.0m in the year, a net cash outlay of a hefty £35.7m.

West Brom are also owed a further £15.2m in transfer fees (£5.1m due this year), however they owe clubs a chunkier £27.6m (£17.0m due this year), a net £12.4m creditor position.

This may affect future transfer plans for the club should they not bounce straight back to the Premier League.

West Brom also have contingent transfer fees of £8.7m which are payable if certain clauses are met, although it is unlikely all these fees will ever become payable.

Debt Analysis

This is going to be a pretty short section.

Cash reserves plummeted from a healthy £39.5m to £9.2m (72%) after significant transfer spending in the year and the small loss incurred this year.

On top of this, West Brom also spent £1.7m on improving club infrastructure.

West Brom have no debt, being completely funded by their success and misfortunes on the pitch.

Hence, West Brom saw a huge dip in their net cash position from £39.5m to £9.2m (72%).

West Brom are in a good place financially to bounce back to the Premier League, being a model Premier League club throughout their stay. It does however show that a few bad decisions can unravel even the most sensible of clubs with a poor strategy and signings causing their demise.

Their finances provide a great foundation to return sooner rather than later with no need to go for broke to return, making the decision to sack Moore even more perplexing, although it may be a function of their owner being unwilling to provide the funding a prolonged Championship stay would require.

West Brom are however in need of investment and a solid long term strategy to return to the Premier League and stay there.

Should promotion not be achieved in the next couple of years, growing losses would cause Financial Fair Play issues which would constrain their ability to compete and increasingly make a return more difficult.

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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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May 8, 2018

West Brom Financial Review 2018

West Brom secured their 8th consecutive season in the Premier League with a commendable top half finish, finishing in 10th place. Despite this success murmurs of fan discontent were apparent with the lack of evolution of West Brom’s playing style showcased by falling matchday revenue despite their improved results, this was compounded by poor performances in the domestic cups.

Profits did however shoot up, rising from a minimal £1.0m to a huge £32.3m after their success on the pitch in the Premier League.

Lets delve into the numbers.

Revenue Analysis

West Brom continued their year on year revenue growth with new record revenues as revenue rose from £98.3m to £137.9m (40.3%), breaking the £100m barrier for the first time.

All areas of revenue rose except for matchday revenue which fell from £7.7m to £6.8m (11.7%) as fan discontent around the club’s playing style led to more empty seats at the Hawthorns while the introduction of the away day ticket price cap compounded the issue.

Broadcasting revenue unsurprisingly rose, increasing from £78.9m to £118.7m (50.4%) with the new Premier League deal in effect while a improved 10th place finish boosted West Brom’s merit payments. Poor domestic cup performance meant that they relied almost exclusively on the Premier League for broadcasting revenue, while their better performances also led to more live TV games in the Premier League than usual, featuring 11 times last season.

Commercial revenue remained relatively stable with minimal new sponsorships. West Brom saw commercial revenue increase from £11.7m to £12.4m (6.0%), suggesting the club need to revamp their commercial strategy, although this may be too late due to their inevitable relegation. They have however pressed ahead revamping their director team with the exits of Richard Garlick and Nick Hammond.

West Brom have had an awful season which will inevitably at this point lead to relegation and as such West Brom will see a huge drop in revenue the year after next, this will slightly be offset by parachute payments. Matchday revenue is likely to continue falling with less fans turning out by the week while any relegation clauses in commercial deals may come into effect decreasing this as well. Broadcasting revenue will also fall due to a league position 10 places lower on the cards, offset slightly by improved domestic cup performance.

Expense Analysis

Expenses rose but only slightly relative to revenue leading to the huge boosts in profits, increasing from £100.1m to £112.2m (12.1%).

Amortisation costs did however rise significantly after player investment led to an increase from £13.2m to £18.1m (37.1%)

West Brom interestingly had no finance costs in the year while they had finance income of £0.2m.

West Brom saw wages increase a manageable amount, rising from £71.4m to £79.0m (12.1%), this represents only a modest increase in wages of an extra £165k a week after the club managed to get a couple high earners of the wage bill to make room for new signings, such prudence bodes well as the club prepare for their Championship season.

Directors took huge pay cuts despite their 10th place finish, with director pay falling from £3.4m to £1.3m (61.8%) as the cub began to shake up their management team. The highest paid director took a devastating pay cut, seeing wages fall to £262k from £1.9m!

West Brom had a sizeable tax bill of £7.5m, an effective tax rate of 18.8% which is effectively the UK tax rate with some minor adjustments leading to the slightly lower figure.

Expenses are likely to rise this year after player investment before a high drop the following year following relegation as wage drop clauses come into affect and amortisation costs drop.

Transfers Analysis

West Brom spent moderately last season with 4 players coming in and 5 leaving in what looked like a 1 in, 1 out policy for the Baggies.

In came Chadli (£13.7m), Livermore (£10.4m), Phillips (£5.9m) and Nyom (£4.2m) for a combined £34.1m.

Leaving the club were Berahino (£12.5m), Chester (£8.4m), Lambert (£1.8m), Gamboa (£1.1m) and Gardner on loan (£0.5m) for a total of £24.3m.

This left West Brom with a modest net spend of £9.8m, down significantly for the previous year’s net spend of £27.0m (63.7%) as the club scaled back the ambition of the club. Despite this tiny spend, the signings were successes as the club recorded a 10th placed finish after finally selling the troublesome Berahino. This success may have led to a false sense of comfort in their ability to compete on a budget, potentially a cause of their Premier League demise this season.

The club made a healthy profit on player sales, recording a profit of £13.9m, up from a measly £2.8m last year.

The club spent cash of £28.2m last season while only bringing in cash of £6.3m on players sales after giving clubs generous terms on when they need to pay for players brought last summer.

West Brom may also have to pay £5.7m based on contingent transfer fees. They also have the obligation to pay £3.2m for players brought this season and further £10.3m due after a year or longer.

Asset/Liability Analysis

West Brom are a conservative club showcased by their debt management, improving their finances to such an extent after a successful season that they moved from a net debt position to a net cash position in the year, deciding to consolidate their finances rather than kick on, a decision that looks short sighted with foresight.

Cash levels rose significantly, more than doubling from £14.3m to £39.5m (167%) after record profits and player sales leading to a huge cash boost which was not reinvested into the playing squad.

Debt levels remained fairly stable, adding debt of £1.2m to move the club from £22.5m to £23.7m (5.3%) in debt s the club new improved cash position meant no debt increase was really required to fund spending.

This meant West Brom moved from a net debt position of £8.2m to a net cash position of £15.8m, a huge swing in debt levels.

This approach obviously wasn’t appreciated by those at the top who have subsequently overawed the senior management team in a bid to learn from their mistakes that led to relegation.

Such a prudent approach may however suit them well in the Championship, however the owners will be thinking what could of been had they spent heavier in the first place.

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March 12, 2018

Financial Football News Round-Up Edition 17

Financial Football News Weekly Round-Up 17

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 March 2018, featuring Amazon, Manchester City, Bundesliga, Chinese Super League, Liverpool, Leicester and Wolves.

Amazon Infiltrate La Liga In New Documentary

Amazon continue to increase their presence in football with the consumer giants set to produce a documentary on La Liga.

The documentary, Six Dreams is to feature Atletico Madrid midfielder Saul Niguez and Athletic Bilbao forward Inaki Williams among others, following their day to day activities aimed at the Spanish football fans.

Amazon are producing similar documentaries with Manchester City and Juventus having completed one for Argentinian giants Boca Juniors, with rumours of a second series of Six Dreams featuring Real Madrid and Barcelona already rife.

The documentary is scheduled for a 2018 fall release.

Serie A Have A New Chief In Town

Gaetano Micciché has been unanimously approved as the temporary president of Italy’s Serie A by all Serie A clubs as the Italian league look to overhaul the division to better compete with their European rivals.

Micciché is presently the chairman of financial services group Banca IMI and will be hoping to bring a fresh look at the troubled league that with the exception of Juventus, have failed to progress on and off the pitch.

Their new TV deal significantly lags those experienced in Germany, Spain and England and will need a long term strategy to bridge the gap.

Manchester City Agree US Barclays Deal

Barclays have agreed a sponsorship deal with soon-to-be Premier League champions Manchester City to be their sponsor during their US preseason tour, where they compete in the International Champions Cup (ICC).

Barclays branding will appear on interview backdrops during pre-season player and manager interviews, while Barclays will hold various competitions and offers during the tournament.

IMG Win Chinese Super League TV Rights

Global sports agency IMG has agreed a three-year extension with the Chinese Super League for the distribution of the global TV rights to the upcoming league.

The new contract also includes in-flight rights, while IMG will also advise the Chinese Super League on television production for the league.

SWM Motors Secure Chinese Team’s Name

Continuing on a successful commercial week for the Chinese Super League, SWM Motors have also signed a sponsorship deal with the CSL club Chongqing Dangdai Lifan to rename the club!

The club will be named Chongqing SWM until 2020 for a fee of £21.3m, something that would cause complete outrage in England but is seen as financially wise in the forward thinking Chinese Super League.

Bundesliga are Completely Sleeved After Freiburg Deal

Freiburg have become the final Bundesliga side to sign a sleeve sponsor, signing a deal with energy company Badenova.

This means all Bundesliga clubs next season will sport sleeve sponsors, the first league to do this. The Bundesliga have done a good job of remaining financially competitive despite low TV rights compared to Spain and England and this is just another example of that impressive feat.

Wolves – Foul or Fair Play?

Wolves inevitable pursuit to the Premier League has hit a bump in the road after Championship clubs complained of Financial Fair Play, with accusations of suppressed transfer fees for their star players so they can

Wolves connections through super agent Jorge Mendes has lead to some of Europe’s top young talent now plying their trade in the Molineux Stadium such as Ruben Neves and Diego Jota, players who have been linked with top Premier League clubs for fees larger than they paid in the past.

Wolves are “entirely comfortable” with their compliance with Financial Fair Play. We will watch this develop with intrigue and keep you up to date with developments.

Flurry of Financial Statements

In a big week of financial announcements the following clubs have released their financial results:

Premier League

Leicester

Liverpool

West Ham

Watford

Championship

Cardiff

Ipswich

Nottingham Forest

QPR

Reading

Sheffield Wednesday

Wolves

League 1

MK Dons

Rotherham

We will be analysing all these accounts at FFN, stay tuned !

Directors On The Move

A new feature! Here is a list of Director movement at Premier League and Championship clubs this week:

Chelsea
- In: Jonathan Guy Laurence
West Brom
- In: Mark Jones Jenkins
- Out: Richard Garlick

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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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