Ipswich had another steady year in 2018, finishing 12thin what was their 16thconsecutive season in the Championship
It was a disappointing cup year with Ipswich not progressing past the third round in either competition.
Fans were not happy about yet another year in the Championship and the playing style of the team, with it all coming to a head with Mick McCarthy’s shock resignation.
Things haven’t improved this season with relegation looming which would affect finances going forward which are already not in a great state.
Losses increased by 21% to £5.2m, the third consecutive year Ipswich have recorded a loss.
Let’s delve into the numbers.
Revenue Analysis
Ipswich saw stable revenue, falling ever so slightly from £17.3m to £17.2m (1%), showcasing how stagnant the club have become even financially.
Matchday revenue fell from £5.1m to £4.7m (8%) due to attendances falling from 16,980 to 16,272 (4%) as fans became bored with a timid playing style and the same-old results. This was showcased by season ticket sales at the beginning of the season falling from 12,022 to 10,144 (16%), although this may have partly been a new ticketing strategy.
Broadcasting revenue increased from £7.8m to £8.1m (4%) after an increase in distributions from the EFL and the fact Ipswich finished 4 places higher than the previous season.
Commercial revenue remained stable at £4.4m as the club managed to retain existing deals but were unable to broker any significant new ones.
Looking ahead, a difficult season looks like ending in relegation will see a drop in revenue as broadcasting revenue falls due to less EFL prize money. Matchday revenue will fall as attendance once again drops while the loss of their Championship status would see commercial revenue drop. However, the full effect of relegation would be felt in the following season when they receive League One TV money rather than Championship money which would see a drop of at least 60%.
Costs Analysis
Ipswich saw costs rise despite stable revenue, hurting profitability significantly. Operating costs rose from £20.5m to £25.7m (25%).
Amortisation rose from £0.7m to £1.1m (57%) after Ipswich invested relatively heavily (considering previous transfer windows) to try and revitalise the club from their sombre state.
Interest costs, you guessed it, remained stable at £0.6m, decreasing by £12k in total.
Ipswich had no corporate tax to pay due to making a loss last year.
Wages were the main area where costs grew, increasing from £17.8m to £18.5m (4%) as their new signings attracted slightly higher wages. Wages make up the majority of their costs at 72%.
To put it into context though, these extra wages costs Ipswich an extra £13k a week, a minor sum.
Surprisingly, directors saw their wages increase from £76k to £130k (71%) despite an average season.
Looking ahead, Ipswich are likely to see a drop in costs regardless of whether they retain their Championship status. The sale of key players this year will see wages drop, while if they get relegated they will also see wages drop as relegation wage-drop clauses come into effect.
Transfers Analysis
Ipswich were busier than usual in the transfer market, bringing in 5 players in what was their biggest transfer outlay in years.
In came Huws (£1.0m), Garner (£1.0m), Waghorn (£1.0m), Drinan (£0.1m) and Cotter (£0.1m) for a combined £3.2m.
The only departure was Kieffer Moore for £0.8m.
This led to a net transfer spend of £2.4m their biggest since 2013 (which was also the last time they had a net spend).
Ipswich sold Adam Webster to Bristol City on the 28 June 2018 (just before their financial year ended on 30 June 2018) which along with the sale of Moore helped Ipswich record a profit on player sales of £3.8m. Webster was not included above as it relates more to the 2018/19 season that to this one.
The signings by Ipswich showed promise with Waghorn being a great buy who was sold to Derby for more than £5m this season. Huws seemed a good buy while Garner was also decent for Ipswich before leaving for Wigan.
In cash terms, Ipswich spent cash of £1.4m and received cash of £1.4m, meaning they pretty much broke even.
Ipswich are also owed a further £3.4m (most probably in relation to the sale of Webster) while they only owe £1.1m in transfer fees to other clubs (of which £0.6m is due this year). This should be useful in providing funds for future investments or too cushion relegation should the worse materialise this season.
Ipswich could potentially owe another £0.6m in transfer fees should certain clauses be met, although it is unlikely the full amount would be realised, and even if it did the amount is minimal and unlikely to affect their long-term finances.
Debt Analysis
Ipswich remained in a very similar position to last year, the club had minimal cash in their coffers as all cash received from revenue and transfers was used to pay their transfer fees and cover the increased costs.
Increased costs were also partly funded by new loans of £6.1m, while their financial plight saw club investment stifled, as club facilities investment spending fell from £0.5m to £0.2m (60%).
Debt rose from £89.3m to £93.2m (4%) after new loans were provided by companies owed by Marcus Evans with interest rates varying from 0% to 7%.
Debt levels have remained around £86m for some time as Marcus Evans refuses to invest more heavily in the club that desperately needs revitalisation following years of stagnating.
Net debt hence increased from £89.3m to £93.2m (4%).
Rumours have been rife that Marcus Evans is open to a sale of Ipswich, with a price of £35m mooted, although this has been denied by the club.
Evans is deeply fond of Ipswich having grown up in Suffolk and is said to be only willing to sell the club to someone who has the finances to take the club forward.
With relegation looming, the value of Ipswich is likely to have plummeted making any sale difficult. Relegation may be just the tonic Ipswich need to get out of their 16-year Championship slumber and restructure the club to then move forward.
The finances have been poor for some time, losing on average of £6m a year which will only increase with relegation and may require further investment soon from Evans or elsewhere going forward to avoid financial disaster. Financial Fair Play unlikely to be an issue currently with the losses within the limits allowed.
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