Millwall were back to reality in 2019 after two very successful seasons which saw the club gain promotion back to the Championship (2017) and then finish just outside the play-off places in 8th placed on their return to the Championship (2018).
2019 saw Millwall come close to returning to League One after a relegation battle saw the club narrowly survive in 21st place, securing their Championship status with two games to spare. Millwall fans would have felt optimistic going into the season of avoiding such a relegation battle given their 2018 exploits.
The FA Cup was an enjoyable distraction from their Championship troubles as Millwall managed to reach the Quarter-Finals stage, beating Everton along the way.
Off the pitch, Millwall enjoyed their best season in recent memory recording a profit of £0.3m after cumulative losses of £40m in the previous seven years. This was largely owing to a record transfer fee received for their star player, partly explaining their poor season…
Let’s delve into the numbers.
Revenue Analysis
Millwall reached record revenue levels of £18.4m in 2019, up from £15.6m in 2018 (18%) after retaining their Championship status and their lengthy FA Cup run. Retaining their Championship status was vital to both their short and long term revenue prospects, allowing them to maintain and improve matchday, commercial and broadcast revenue levels.
Matchday Revenue
Matchday revenue was stable at £5.7m after seeing a small £0.5m boost following promotion in 2018. Matchday revenue is likely to remain at its current levels for the foreseeable future unless the club is either promoted or relegated.
Average league attendance was relatively stable, increasing from 13,368 to 13,624 (2%). With The Den having a capacity of 20,146, there is still room for matchday revenue to increase outside of ticket price changes, however attendances are only likely to rise on the back of promotion to the Premier League, with attendance at the Everton FA Cup fixture being 16,764.
Broadcast Revenue
Millwall saw another jump in broadcast revenue, increasing from £7.6m to £10m (32%) owing largely to their successful FA Cup run. Whilst there was an increase in EFL distributions in 2019, Millwall finishing 13 places lower than in the 2017/18 season meant they failed to see any significant rise in broadcast revenue from the EFL.
With the FA Cup kicking off this weekend and the club already through to the Fourth Round after a 3-0 victory over Newport County, Millwall will be hoping to enjoy another FA Cup adventure. Millwall are also currently in the top half in the Championship meaning that the club is likely to see an increase in EFL distributions next year.
Commercial Revenue
Millwall saw a slight increase in commercial revenue from £2.3m to £2.7m (17%) on the back of retaining their Championship status and the introduction of LED advertising boards at The Den.
Going forwards, Millwall will be looking for other opportunities to improve on their relatively low commercial revenue.
What does the future hold?
Millwall’s aim will be to consolidate in the Championship and then push on for promotion when the time is right, improving their revenue and finances along the way.
Next season should see Millwall maintain a similar level of revenue, remaining around the £16-18m range, with an increase above the £20m barrier unlikely.
Expense Analysis
Millwall saw operating costs rise from £19.4m to £24.9m (28%), interestingly increasing at a faster rate than their revenue, damaging their profitability (which was saved by the sale of George Saville (see Transfer Analysis).
Amortisation
Millwall saw their amortisation costs more than double from £0.5m to £1.3m (160%) after significant investment in the playing squad (using the Saville windfall) that saw Millwall break their transfer record twice.
With Millwall traditionally relying on free transfers and investing in their academy for first team players, amortisation has been relatively low, meaning any significant spending sees large rises in amortisation.
Operating leases
The operating lease on their stadium increased by £54k to £587k (10%) as the costs naturally rise over time.
Other operating lease costs remained stable at £0.1m.
Net interest expense
Millwall had no interest income or expenses in 2018, however in 2019 Millwall had a net interest expense of £52k, a minimal amount owing to short term debts taken out during the year.
Wages
Millwall saw wages increase from £13.4m to £16.9m (26%) as the costs of being a competitive Championship team continue to rise. The new signings had to be offered competitive wages, while some existing players also received new, more lucrative contracts.
This increase in wages works out as an extra £67k a week, a relatively normal increase in wages for a Championship club, especially a recently promoted side.
Millwall now have a wage/turnover ratio of 92%, a relatively high and financially unstable amount. This is an issue among the majority of Championship sides, who regularly record large losses that require owner funding or affect transfers plans/cause Financial Fair Play issues. Going forward, Millwall will be looking to manage these costs.
The only director on the payroll of this company was paid £300k, up from £275k in 2018.
What does the future hold?
Millwall are likely to see a similar level of costs in 2019/20, with the club unable to increase costs significantly without large losses accumulating. Wages and other costs are likely to increase by 10-20% owing to the general rise in such costs over the years in order to remain competitive.
A few new signings in the 2019/20 summer transfer window will mean wages and amortisation will rise a little bit, however these costs will need to be managed if Millwall want to become financial sustainable.
Transfer Analysis
Millwall had an eventful transfer season in 2018/19, breaking their transfer record twice whilst also receiving a record transfer fee for their star player.
In came (for transfer fees) Bradshaw (£1m), Leonard (£1m) and Skalak (£0.9m) for a combined £2.9m.
The only outgoing for a transfer fee was George Saville for £7m.
This led to a net transfer income of £4.1m after a £0.5m net transfer spend in 2017/18.
The new signings disappointed with the club trapped in a relegation battle, while Saville was clearly missed despite the large sum received for him.
The sale of Saville did however help Millwall record a profit after his sale meant the club recorded a profit on player sales of £5.4m, meaning a loss of £5.1m would’ve been recorded without his sale. With no such sales in 2019/20 so far, a loss is likely to be recorded in next year’s accounts.
Transfer debts
In debt terms, Millwall are owed £3.4m, of which £1.2m is due in 2020. In contrast, Millwall do not owe any transfer sums to other clubs, a great position to be in.
Millwall could however owe £1m in contingent transfer fees and player contracts clauses should certain conditions be met. It is unlikely all of this amount would ever become payable, however even if it did, Millwall would not worry much due to the size of the amount.
Net Debt Analysis
Millwall traditionally operate with low cash reserves, with the majority of cash received required for the operations of the football club. Cash reserves did increase this year from £0.3m to £0.7m because of the improving finances of the club. This position could improve further once the club receives all the cash from the record sale of George Saville.
Debt levels did also increase slightly, rising from £91m to £93m (2%), all of which is owed to their owner and is interest free. This isn’t something that should worry fans particularly and is usual for clubs, especially those in the Championship and below where the majority are loss-making and require financial input from their owners.
The small £2m given during the 2019/20 season showcases an improved financial picture which the owner will be happy with, burning a smaller hole in his pocket than in previous seasons.
Millwall are a traditional Championship club, however are run fairly well compared to some of their peers, recording lower losses than many others at their levels meaning that Financial Fair Play breaches and the associated sanctions are never a concern for the club. Going forward, Millwall will hope to unearth a few gems from their youth academy while buying well in the transfer market in a bid to continue to run in a relatively financial secure fashion.
Should they do this successfully, a consolidated position in the Championship should be easily achievable, giving the club the perfect platform to fight for promotion to the Premier League in the future.
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