Crystal Palace extended their longest ever stay in the Premier League, securing their 7th successive season in the top division under Roy Hodgson despite relatively low spending of £10m.
It was a season of much the same for Crystal Palace, finishing 12th (11th in 2018) in the Premier League and once again exiting the League Cup at the fourth round. There was a FA Cup run to the Quarter Final with the club just missed out on a trip to Wembley.
Financially, the fact there was little change on the pitch meant there was little change off it, with large losses once again likely due to a lack of player sales.
Let’s have a look at the numbers.
Revenue Prediction
Matchday Revenue
Crystal Palace had matchday revenue of £11m in 2018 and will see minimal change in 2018 owing to having the same number of home games (21) as in 2018.
Average Premier League attendance rose slightly from 25,063 to 25,455 (2%) which may see a slight increase in matchday revenue, however, is likely to remain around £11m.
Commercial Revenue
Crystal Palace earned £15m in commercial revenue in 2018. A new kit deal with Puma (replacing Macron) and a couple of other new partnerships should see a small rise in commercial revenue to around £17m.
Broadcasting Revenue
Broadcasting revenue was £121m for Crystal Palace in 2018, 81% of their total revenue which showcases the importance of Premier League survival to the club.
Premier League distributions remained at £114m for Crystal Palace as the slight increase in prize money available compensated for their one position drop in the league table, having been shown on TV 12 times (the same as in 2018).
Crystal Palace had an improved showing in the FA Cup, making the quarter-finals having only made the third round the previous year. This should boost broadcasting revenue by around £1m to £123m.
Other Revenue
Other revenue was £3m in 2018. As we don’t know exactly what this amount comprises of, our best estimate is it will remain at this level, having also been at £3m in 2017.
Total Revenue
Based on the above, Crystal Palace should see a slight rise in revenue from £150m to £153m. Any growth will be dependent on Crystal Palace’s commercial revenue and any lucrative new deals the club managed to make.
It would be no surprise to see revenue remain the same as in 2018, given the minimal change in performance on the pitch.
Costs Prediction
Amortisation
Crystal Palace recorded amortisation of £46m in 2018 and after a summer of only one signing for a transfer fee in Kouyate (£10m), it is likely that amortisation may fall slightly to £45m based on the lack of reinvestment this year compared to previous seasons.
Wages
Crystal Palace paid wages of £117m in 2018 and are likely to see an increase in this due to the signing of bosmans Meyer and Guaita on lucrative wages.
A few departures on free transfers will offset some of these wages and therefore we expect wages to increase slightly to £120m.
Other Operating Costs
Crystal Palace recorded other operating expenses of £24m in 2018. We expect the trend of slight increases to continue and for other costs to rise to £25m.
Total Costs
Crystal Palace’s costs were £187m in 2018, and with the above predictions we expect to increase slightly but remain at a similar level at £190m.
Any rise in costs is likely to be similar to any rise in revenue and therefore their profitability (or the lack of it) will remain relatively similar.
Transfers Analysis
It was a quiet summer for Crystal Palace with Kouyate joining for £10m. Batshuayi and Ayew joined on loan while Meyer, Guaita and Sako joined as free transfers.
There were no sales in the year with Cabaye the only notable departure after his contract expired.
This net transfer spend of £10m was considerably down on their net spend of £44m in 2018 and was the lowest net spend by the club since 2013 when they were promoted, showing a tightening of the purse strings by the club.
There were minimal player sales in 2018, however a profit on player sales of £2m was recorded. In 2019 with no player sales means there shouldn’t be any such amount recorded which will negatively impact their bottom line.
Crystal Palace had significant net transfer fee debts of £38m that were due in 2018/19, showing why they had to be more conservative last year owing to previous summer transfers. Crystal Palace also owe a further £9m in transfer fees in 2020 and beyond.
Profit/Loss Predictions
Crystal Palace recorded a loss of £33m in 2018 and when accounting for the above adjustments are likely to see a similar loss in 2019 of £35m, meaning they have total losses of nearly £70m in the last two seasons which obviously isn’t a sustainable position unless their owners are willing to input serious capital, which doesn’t seem to be the case.
This shows why the club had to sell either Aaron Wan-Bissaka or Zaha in the summer as their finances needed a boost and explains why the majority of the sale to Manchester United hasn’t been reinvested. The sale of Wan-Bissaka for £50m will be realised as all profit next year which will swing Crystal Palace back to a profit if they have a similar season to the last two.
A strong start to the season and the sale of Wan-Bissaka suggest that Crystal Palace may once again be profitable in 2020.
Cardiff secured their second season ever in the Premier League after an unexpected promotion-winning campaign in 2018 under Neil Warnock.
The season was always expected to be a difficult one in attempting to avoid relegation, however it proved even more emotional due to the sad passing away of Sala following his signing in the January transfer window.
Despite an emotional campaign, Cardiff put up a good fight in attempting to remain in the Premier League, showing signs of revival until a controversial loss to Chelsea halted their momentum and relegation was shortly after confirmed.
The riches of the Premier League are apparent throughout these predictions with a swing in their financial situation detailed below in what proved to be a financially successful season for Cardiff despite relegation.
Let’s delve into the numbers.
Revenue Prediction
Cardiff would have been predicting a large increase in revenue following promotion and won’t be disappointed with a huge increase likely on last season’s £33m revenue.
Matchday Revenue
Matchday revenue is usually the most stable revenue source for clubs with attendances staying fairly constant year on year. However, this wasn’t the case for Cardiff who saw average attendance rise from 20,146 to 31,229 (55%) as fans clamoured to see their team back in the big time for the first time since 2013.
This, combined with the higher ticket prices from their Premier League status, is likely to see a sizeable increase in their matchday revenue to around £9m from £5m. In comparison, Cardiff had matchday revenue of £8m last time they were in the Premier League in 2013/14.
Commercial Revenue
Commercial revenue has slowly deteriorated since relegation where commercial revenue was £7m (2013/14). Commercial revenue went as low as £3m prior to 2018 where promotion saw commercial revenue increase to £6m.
Despite their main sponsor (Visit Malaysia) and kit manufacturer (Adidas) remaining the same, new deals with a variety of partners including a new sleeve sponsor (JD) and official betting partner (1XBet) will see a sizeable rise in commercial revenue to around £10m.
This however may be reduced by any relegation clauses negotiated with these sponsors.
Broadcasting Revenue
Broadcasting revenue has languished at between £20-30m since relegation from the Premier League, with Cardiff recording broadcasting revenue of £22m in 2018 following a 2ndplaced Championship season.
Now, following a season in the Premier League, Cardiff will benefit in a sharp rise in revenue due to receiving £103m from the Premier League for their 18thplaced finish and for featuring on TV 12 times.
This will be the majority of Cardiff’s broadcasting revenue due to insignificant domestic campaigns with exits by the Third Round in both.
At £103m, this represents a £81m, 368% increase in broadcasting revenue.
Total Revenue
Based on the above predictions, matchday revenue and commercial revenue will increase by around £4m each while broadcasting revenue will increase by around £81m give or take.
This will see total revenue increase to approximately £122m, an £90m increase from 2018, showcasing the huge riches on offer for securing promotion to the Premier League.
This affect won’t last long following relegation, although parachute payments will soften the blow. However, despite parachute payments, Cardiff can expect their revenue to fall by around 30-40% following relegation.
Costs Prediction
With promotion, costs are expected to increase significantly in order to compete and try and survive in the Premier League. A conservative Cardiff however seemed to play it financially safe as detailed below.
Amortisation
Cardiff recorded amortisation of £5m in 2018 and after spending £46m in the summer saw a large increase on this total.
(Due to the sensitivity and uncertainty surrounding Sala, any financial analysis has omitted his transfer fee and wages).
Based on the transfer fees recorded and their reported contract lengths, we expect amortisation to rise by around £8m to £13m.
Wages
Cardiff saw a large rise in their wages in 2018, from £29m to £48m (66%), largely due to exceptional costs relating to promotion bonuses to players and staff which won’t be incurred this year.
Based on available information on their signings’ wages, new contracts and also due to the lack of outgoings, we expect underlying wages to rise by around £10m. However, due to the promotion bonuses recorded, actual wages is likely to fall by £13m from 2018, an unusual situation but one that does occasionally happen (Newcastle saw their wages drop following promotion).
Other Costs
Cardiff had over costs of £14m in 2018. Following promotion to the Premier League, these costs are likely to increase significantly due to the extra costs of functioning as a Premier League club due to additional administrative, broadcasting and security costs.
We expect costs to increase to around £20m on the back of these assumptions.
Total Costs
Based on the above predictions, we expect costs to increase slightly to around £70m from £67m, a relatively small 4% increase.
With revenue increasing by such a large extent absent of a significant rise in costs, profitability should improve hugely for a club that has incurred a loss in 6 out of the last 7 seasons.
This also means that there should be less pressure on Cardiff to reduce their costs and wage bill following relegation which may well position them for an immediate return to the Premier League.
Transfers Analysis
Cardiff saw a number of incoming signings from the Championship, a league they and their manage are familiar with and hence had trust in them to potentially make the step up to the Premier League.
In came Murphy (£10m), Reid (£10m), Cunningham (£4m), Smithies (£4m) and Bacuna (£3m) for a total of £46m, more than their transfer outlays in the last 4 seasons combined.
There were no significant outgoings for transfer fees as Warnock looked to keep the majority of his group together.
The signings all did fairly well but proved limited in some areas which saw the club relegated despite their best efforts.
Cardiff had no player sales in 2019 and hence no profit on player sales. In 2018 Cardiff recorded a profit on player sales of £2m.
In terms of transfer fees owed, Cardiff are owed around £0.5m and owe roughly £2m, a £1.5m net creditor position. This isn’t a significant amount and gives Cardiff greater financial freedom in the transfer market, although this is likely to have increased following their signings unless the majority were paid up front, which is possible given the Premier League cash they received.
Cardiff may potentially also face some contingent transfer fee clauses, these were £2m in 2018 and are likely to have increased a fair bit.
Profit/Loss Prediction
Cardiff recorded a huge £36m loss in 2018 following promotion (a large portion does however relate to promotion bonuses of £23m). Following promotion and their newfound Premier League riches, Cardiff are likely to record a profit of £40-50m, an outstanding amount considering no player sales.
This is largely due to a conservative approach following promotion in which the club chose not to overspend to attempt to secure survival, potentially due to the odds seemingly being stacked against them from the beginning.
This financially safe approach does put them in good stead to be financially secure back in the Championship and sustainably build for a return to the Premier League in the next few years. It also will help with Financial Fair Play compliance which shouldn’t be an issue with their current financial health.
Manchester endured a turbulent 18/19 season as they struggle to return to the successes of the Ferguson years.
Following a much publicised poor start to the campaign, Jose Mourinho was sacked and replaced with club legend Ole Gunnar Solskjær, sparking an incredible run of form that saw the club appoint him full time manager.
However, form dipped following this and Manchester United laboured to a sixth placed Premier League finish and no Champions League football next year following their quarter final exit.
There was no further joy in the domestic cups with exits in both by the quarter final stage.
This didn’t stop the club posting record revenues as one of the world’s biggest clubs continue to perform off the pitch.
Let’s delve into the numbers.
Revenue Analysis
Despite a disappointing campaign on the pitch, a return to the Champions League saw Manchester United’s revenue reach record levels, rising from £590m to £627m (6%).
Matchday revenue remained relatively stable, increasing from £110m to £111m (1%). This rise was largely due to competing in the Champions League and the more expensive ticket prices of the competition over the Europa League.
Broadcasting revenue was up significantly, rising from £204m to £241m (18%), mainly due to a return to the Champions League and UEFA’s new licensing agreement. This offset the £7m revenue loss Manchester United suffered by finishing 4 places lower in the Premier League.
Commercial revenue was pretty much stable, falling from £276m to £275m (0.4%). Sponsorship revenue remained the same as Manchester United reach what may be a critical mass in sponsors until their next deal cycle. Interestingly, the fall in revenue was down to a decline in merchandise and retail sales, which fell to £102m.
Looking ahead, Manchester United are likely to see a drop in revenue after they failed to qualify for the Champions League. With a title winning campaign unlikely, there is no other way for the club to bridge the loss revenue from the lack of a Champions League campaign except strong commercial growth.
Such growth commercially has not occurred in the last 3 years and this will need to change to protect revenue from falling.
Costs Analysis
Manchester United saw a modest rise in costs given the rise in revenue in 18/19, with costs rising from £564m to £583m (3%). This 3% rise is half the rise in revenue (6%), which has saw Manchester United’s profitability improve last season.
Amortisation fell from £138m to £129m (7%) on the back of a relatively quiet season by Manchester United standards, with their smallest net transfer spend since 2012 (see transfer analysis section).
Net interest costs increased from £18m to £23m (27%), this was largely due to the strengthening of the dollar against the pound, showing the effects Brexit and other macro-economic factors can have on a football club.
Manchester United saw wages rise significantly despite a quiet transfer season, increasing from £296m to £332m (12%). This was largely due to contract renewals (Shaw, Smalling, Jones) as well as new signings that entered plus a full season of Alexis Sanchez’s much publicised wages.
This increase in wages works out as an extra £692k a week and interestingly, wages also increased by 12% last year, showing an increasing trend in wage growth in football.
Further to their staff costs, Manchester United shelled out £20m in compensation to Jose Mourinho following his sacking. Such costs are one-offs and will not occur this season (Ole is reportedly on much lower wages and contract term than Mourinho was) and should go some way to offsetting the fall in revenue expected from no Champions League.
Other costs fell from £117m to £108m (8%), largely due to the World Cup which meant a shorter preseason tour and there was also a reduction in domestic cup costs.
Looking ahead, Manchester United are likely to see a similar level of costs next year. The lack of severance pay next year as noted will see an immediate £20m reduction in costs. This plus the exit of high earners such as Herrera, Lukaku and Valencia (most of Sanchez’s wages are still being paid by Manchester United), should more than cover the increase in wages from their latest signings.
Transfers Analysis
Manchester United saw three players join and three leave for transfer fees in 18/19.
In came Fred (£53m), Dalot (£20m) and Grant £2m for a combined £75m. Out went Blind (£14m), Johnstone (£7m) and Fellaini (£7m) for a combined £28m, leading to a net spend of £48m, down 66% of last year’s net spend of £138m.
The big new signing Fred struggled to get into side and has disappointed fans with his performances. Dalot impressed in spells and clearly has potential.
None of the departed players were particularly missed, however with things proving difficult for Mourinho and co, the new signings Fred and Dalot were clearly not enough to keep Manchester United challenging.
The sales of Fellaini, Blind and Johnstone led to Manchester United recording a profit on player sales of £26m which was £8m up from the prior season and helped the club record a profit.
In cash terms, Manchester United spent £178m on players in 18/19, primarily due to instalments due from previous signings.
In contrast Manchester United received £43m, leading to a net cash outflow of £135m, explaining partly why last summer was a lighter year transfer wise for the club.
Manchester United are owed £18m in transfer fees, of which £10m is due this year.
However, Manchester owe a huge £188m, of which £111m is due this year.
This means that net, Manchester United owe clubs £170m, of which £101m is due this year, further showing why the club didn’t back Mourinho last summer with more signings.
In contingent transfer fees, Manchester United could also pay a maximum of £74m should certain clauses in player contracts be met, although it is unlikely this full amount will ever become payable.
Debt Analysis
Manchester United are notoriously run via debt however this has been a model that has worked for the club ever since the Glazers took over.
On the cash side, Manchester United are at their most cash rich point ever after cash reserves rose from £242m to £308m (27%). This was primarily due to an improvement in cash from operations and an increase in revenue.
On the other side, debt levels also increased to new highs, rising from £496m to £511m (3%), this £15m increase is primarily due to changes in the exchange rate as the dollar strengthens/pound weakens.
Overall, this means Manchester United’s net debt has fallen from £254m to £204m (20%). This will please fans who feel the club should be becoming more sustainable and will also lessen any Financial Fair Play concerns UEFA or other parties have.
Looking ahead, it is clear Manchester United have a rebuilding job on their hand which may take some time. However, the key financially is to remain in the Champions League, something they have failed to do.
Commercial revenue and matchday revenue will remain robust, so the shortfall is likely to only be due to performances on the pitch which can only be improved by better management and/or players which is easier said than done.
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Hull endured a second successive season in the Championship following relegation from the Premier League in 2017.
It was an underwhelming season once again for the Tigers, who finished mid table in 13th, improving on the previous season’s 18thplaced finish.
A poor end to the season for Nigel Adkins’ side spelled the end of a late play-off push, something the club will be hoping to amend in the coming season under new boss Grant McCann.
Financially, Hull remain one of the few profitable Championship clubs due to the benefit of parachute payments following relegation and a number of player sales in the 2018 season. Despite the financial boost these gave, their reduction and the lack of player sales in 2019 have seen Hull’s profit after tax fall from £19m to £3m (84%), showing a significant downward trend in profits.
Let’s delve into the numbers.
Revenue Analysis
Despite an improved domestic campaign, Hull saw underlying revenue (excluding payments) fall from £12.3m to £11.2m (9%). When taking into account parachute payments the drop is far greater, falling from £55m to £48m (13%).
This was primarily due to a fall in match day revenue of £1m from £7.2m to £6.2m (14%) as average attendances fell from 15,622 to 12,165 (22%) as fan goodwill faded following a poor season. Hull also benefited in 2018 from a run to the FA Cup Fifth Round, featuring a lucrative trip to Stamford Bridge.
Broadcasting revenue increased, rising from £2.3m to £2.7m (17%) after Hull finished 5 places higher in the Championship last season. This is despite exiting the FA Cup at an earlier stage.
Parachute payments began to taper off following a prolonged stay in the Championship, falling from £43m to £37m (14%). These parachute payments will continue to decline over the next two seasons before ceasing, meaning Hull may have to prioritise a return to the Premier League or face worsening finances.
Hull suffered from a second successive season in the Championship commercially, with commercial revenue falling from £2.8m to £2.2m (21%). Should Hull fail once again to gain promotion (or challenge), commercial revenue may fall below £2m.
Looking ahead, revenue is very likely to fall in the 19/20 season due to another drop in parachute payments. Even if promotion is secured, in the short run (next year), Premier League income would lag a season behind the fall in parachute payments and therefore revenue is likely to deteriorate further.
Costs Analysis
Hull have undergone cost control in order to safeguard their finances, with revenue falling year on year following relegation. Total costs fell from £60m to £49m (18%), a greater fall than revenue, improving underlying profitability.
Amortisation remained relatively stable, increasing from £12.3m to £13.0m (6%) after minimal player investment (just over £2m was spent in the season – see transfers analysis section).
Interest costs fell from £3.1m to £2.4m (23%) after a decrease in the debt owed by the club (see debt analysis section).
In a bid to remain profitable, Hull adopted strict wage controls to reduce their wage bill. Wages fell from £31m to £25m (19%), greater than the fall in revenue (13%), essentially improving underlying profitability despite the figures not showing such.
A host of high-earners such as Meyler, Larsson and Hernandez were released, freeing up wages for new signings while also reducing the overall wage bill.
Hull were also taxed £424k, an effective tax rate of 14%, below the actual tax rate of 19%.
Looking ahead, Hull were fairly inactive in the 2019 summer transfer window and as such wages and amortisation (two of the largest costs) are likely to remain fairly stable, with a slight increase being expected to overall costs.
Transfers Analysis
Hull saw a significant pool of players depart on free transfers in 2018/19 with little in the way of transfer fees with no departures (for fees) and only 3 signings (for fees).
In came Burke (£1.5m), De Wijs (£0.4m) and Milinkovic (£0.3m) for a combined £2.2m.
The signings all performed as expected with none really disappointing in their first season with the onus now being on them to kick on.
The lack of player sales compared to the exodus following relegation helped stabilise the team on the pitch and it showed. However, without such sales, Hull saw their profit on player sales fall from £31m to £5m (83%). (Despite no player sales in 2018/19, contingent transfer fees would’ve have been activated hence the £5m profit).
In cash terms, Hull spent £1.9m on new players and received £4.6m, a net cash inflow of £2.7m.
Hull are also owed £5.5m in transfer fees, although this is significantly down on last year’s £20m (which has boosted cash reserves – see debt analysis).
However, Hull do themselves owe £2.5m in transfer fees in the next year, which is more than covered by the amounts owed to them so shouldn’t be a financial worry.
In terms of contingent fees, Hull could be liable to make payments of £6.6m depending on palter appearances etc. Fortunately, Hull could also be due £7.3m should players previously sold meet certain clauses.
Debt Analysis
Hull are fairly cash-rich compared to their peers, with cash reserves increasing from £3m to £10m (233%) in their second Championship season. This was due to their ability to reduce costs by more than the fall in revenue and also due to the net transfer income they received.
This allowed Hull to repay £13m in loans, ensuring the club are more sustainable going forward.
As mentioned above, Hull have begun attempting to reduce the debt owed by the club to their owner, Mr Allam. Debt fell from £63m to £50m (21%) after the repayment mentioned above, which also reduced interest costs.
Hence net debt has fallen from £60m to £40m (33%).
Going forward, Hull will need to be careful to manage the balance between their ambitions and finances to ensure compliance with Financial Fair Play in a period where many EFL clubs are at risk of falling foul of the measures.
Hull have prudently managed their finances since relegation, recording profits in both periods, although this will become increasingly difficult as parachute payments fall and unless the club make any significant player sales. However, due to profits of £22m over the past two years, Hull should be fairly secure from any FFP troubles for the next couple of seasons at least, plenty of time to attempt to secure promotion back to the Premier League.
Chelsea had a turbulent 2019. After missing out on the top 4 in 2018, Conte lost his job and Chelsea were condemned to the Europa League. Sarri-ball entered Stamford Bridge and renewed optimism following a strong start to the season that saw them neck and neck with title rivals Manchester City and Liverpool.
However, things soured, with Sarri-ball deemed ‘boring’ and points began to be dropped, leaving Chelsea in a top 4 battle and calls for Sarri out. Sarri turned it around following an eventful League Cup final loss where Kepa refused to be subbed off, with Chelsea going on to lift the Europa League and finish 3rdin the Premier League, a good season by anyone’s standards.
Despite this, Sarri sought pastures new and landed nicely on the Juventus job, leading to club legend Frank Lampard taking the reins for the new season, under the constraints of a transfer ban.
This article analyses the financial effects of Chelsea’s lack of Champions League football and whether a Europa League win was enough to aid their finances.
Revenue Prediction
Chelsea saw their revenue balloon to record levels in 2018, rising from £368m to £448m after a return to the Champions League. Things were not so rosy in 2019 after dropping out of the competition once again…
Matchday Revenue
Chelsea’s matchday revenue was £74m in 2018, up from £65m in 2017 due to the lack of Champions League games. Chelsea dropped into the Europa League in 2019 and did in fact have 1 more home game. However, the lower pricing of Europa League games compared to the Champions League should see a drop in matchday revenue of around £2m to £72m. This drop could be more significant depending on the ticket price drop of the Europa League, however their appearance in the final should negate this.
Broadcasting Revenue
Chelsea’s broadcasting revenue broke the £200m barrier for the first time in 2018 at £204m thanks to their Champions League return.
An improved Premier League performance (moving from 5thto 3rd) boosts Premier League distributions by £4m for Chelsea to £146m, this is despite featuring on TV once less in the season.
The 2018 FA Cup winners fared far worse in last season’s competition, exiting in the 5thround to Manchester United (who they beat in the 2018 final). This saw their total prize money fall from around £3.5m to £0.3m, despite total prize money in 2019 doubling from 2018 levels.
Chelsea reached the League Cup final in 2019, going one step further than in 2018. The prize money on offer is immaterial to Premier League clubs and isn’t considered in our analysis.
Now to Europe. Chelsea reached the Last 16 in the 2018 Champions League, being eliminated by Barcelona. They fared much better in the lesser Europa League, beating London rivals Arsenal in the final to claim their second Europa League trophy.
You may think the prize money on offer for winning the Europa League would rival that of only reaching the Last 16 of the Champions League. WRONG.
UEFA confirmed that Chelsea received a humungous £58m from their 2018 Champions League campaign.
As for the 2019 Europa League campaign based on the guidance provided by UEFA on distributions, Chelsea stand to make the around £30m from the trophy winning exploits. This is a £28m drop in prize money despite winning a trophy, showing why the top six fight tooth and nail for those top four places.
In total, broadcasting is revenue is likely to fall by around £27m to £177m, a drop of 13%.
Commercial Revenue
Chelsea saw a big boost in commercial revenue in 2018, rising from £140m to £170m on the back of their lucrative Nike kit deal.
No such big deal was secured in 2019 meaning the rise will be a lot less. Chelsea did secure a lucrative new sleeve sponsor in Hyundai worth £5m a year while Chelsea would have also secured new partnerships with commercial companies.
Therefore, we suspect a rise of around £12m to £182m to a prudent estimate for the Blues.
Total Revenue
Overall despite a trophy winning season, there was always likely to be a drop in revenue following their inability to qualify for the Champions League.
Combining the above predictions, Chelsea are likely to see a £18m drop in revenue from £448m to £430m, almost entirely due to their drop from the Champions League to the Europa League, despite winning the competition.
A larger rise in commercial revenue than predicted here would close the gap (while a smaller one would widen it). Chelsea did fortunately qualify for the Champions League for the 19/20 season so their revenue should bounce straight back up (provided they reach the knockout stages).
Costs Prediction
With record revenue came record costs for Chelsea in 2018, with costs breaking the £500m barrier for the first time at £524m, well in excess of their revenue last year, showing their lack of profitability.
Fortunately, costs are likely to experience a smaller increase than in 2018.
Amortisation
Chelsea had amortisation of £127m in 2018, up from £90m in 2017 due to reinvestment in the playing squad.
In 2019, Chelsea broke the world record transfer fee for a goalkeeper in Kepa (£72m) to replace the outgoing Courtois (£32m). The other big transfers were Jorginho and Pulisic (who joined in January and was loaned back to Dortmund for the remainder of the season).
Based on the transfer fees and contract lengths of the new signings and those sold, we expect amortisation to rise by around £18m to £145m for Chelsea. This is on the basis that both Courtois and Fabregas had already been amortised to close to zero when they were sold.
Wages
Chelsea have one of the world’s highest wage bills at £246m, only Manchester United, Manchester City and Liverpool had greater wage bills in the Premier League than Chelsea.
Wages are the most difficult area of finances to predict due to the opaque nature and privacy of these amounts.
Chelsea signed Kepa, Jorginho, Pulisic (loaned straight back out), Higuain (on loan), Kovacic (on loan) and Green in 2018. They sold Courtois and Fabregas while they also loaned out a whole host of fringe players.
Based on the data available, wages are likely to fall by around £10m to £236m based on the loaning out of a large number of players. The wages may however be higher if they are paying the wages of any of the players loaned out.
Other Costs
Chelsea have seen a steady rise in other expenses, rising from £129m in 2017 to £151m in 2018. We expect this to continue with a £10m rise in 2019 to £161m.
Chelsea are likely to have other costs relating to the sacking of Conte that will likely see costs rise. A rumoured pay-out of £9m is expected based on information from various sources, taking pay-offs by Abramovich to an outstanding £92m during his time at the club.
Total Costs
Based on these additional costs, we expect total costs to increase by around £27m from £524m to £551m, largely due to amortisation rising and the compensation due to Conte.
This means that before taking into account transfers, Chelsea continue to be losing money, approximately £80m, a huge amount that could quickly cause financial issues for Abramovich who will have to continue footing the bill.
Transfers Analysis
Chelsea had a busy summer of outgoings with various loan deals while key players had to be replaced. Courtois (£32m) was replaced with Kepa (£72m) and Fabregas (£8m) was replaced with Jorginho (£51m). Pulisic was also brought in for the 19/20 in anticipation of the sale of Hazard, which was duly completed and their now active transfer ban.
This took Chelsea to a net spend of £141m, up significantly on the £54m spend in 2018 as Chelsea looked to back Sarri in the transfer market, while they also had one eye on their transfer ban.
Kepa has proven a good signing despite a few troubles while the quality of Jorginho cannot be denied, fans are still adapting to his playing style and main qualities. Neither Fabregas nor Courtois were particularly missed.
With sales much lower than in 2018, there will be a steep drop off in profit on players sales which was £113m in 2018. Courtois and Fabregas were sold for a combined £40m and this should be all profit based on both players being at the club for a long time. Therefore, Chelsea’s profit on player sales is likely to fall by a huge £73m, meaning profitability will take a huge hit.
This may be reduced slightly by the number of loan fees the club received in 20189which is likely to be between £15-20m.
Chelsea are in an okay position regarding transfer fees owed. Chelsea owe clubs a huge £136m in fees in 2018/19 and a further £33m after this, however they are also owed £92m in 2018/19 and £58m after this.
Therefore, Chelsea are in a net creditor position of £44m this year however after that date they are owed £25m so the differences aren’t huge and shouldn’t affect transfer plans.
Profit/Loss Prediction
Chelsea made a profit before tax of £30m in 2018, largely due to profit on player sales of £113m.
With revenue due to fall by £18m, costs to rise by £27m (including Conte compensation), profit on player sales to fall by £72m and loan fees to up around £17m, we expect profits to fall by an eye-watering £100m, meaning a loss of around £70m in 2019.
This isn’t great new for Chelsea and their owner, although it would largely have been expected due to the lack of Champions League football, lack of player sales and the sacking of Conte.
With the return to Champions League football and the sale of Hazard, this is merely a timing issue with Chelsea likely to return to a profit in a huge way next year so fans should not worry too much.
The only issue is without player sales, the underlying profitability is poor and unsustainable, however this is an issue common for the majority of Premier League clubs.
I hope you enjoyed this article! Share with a Chelsea fan and look out for when the actual finances are released to see how we fared!
Burnley had a spectacular 2018, finishing 7thand securing a preliminary spot in the Europa League for 2019. This seemed to promise newfound riches in what was their first season in Europe for 51 years.
However, qualifying was harder than expected with a half fit squad barely back from their holidays and with the headache of balancing their early Premier League fixtures, Burnley found themselves out in the Play-off round against Greek club Olympiacos.
This was disappointing not only due to the failure to make the groupstage, but it was a sign of things to come as Burnley struggled to match their previous season performances following a lack of significant investment, nearly seeing the side relegated before they steered clear to a 15thplaced finish.
This article analyses the effects of Burnley’s (short) European adventure and their disappointing domestic campaign on their finances.
Revenue Prediction
Burnley saw their revenue rise to record levels of £139m in 2018 following their remarkable 2018 achievements given their budget. Things were not so rosy in 2019…
Matchday Revenue
Burnley saw a nice boost to matchday revenue from £7m to £8m following promotion in 2017, at which level it has remained since.
Average attendance at Premier League games fell slightly from 20,688 to 20,534 (1%). Despite this, Burnley’s adventures into Europe yielded an additional 3 home games and although it ended quickly, Burnley should see matchday revenue rise slightly but remain at the £8m level (when rounded).
Broadcasting Revenue
Burnley saw broadcasting revenue reach record levels of £122m in 2018 following their 7thplaced Premier League finish, which made up a huge 88% of their total revenue in 2018.
The majority of broadcasting revenue is Premier League revenue for Burnley, accounting for £120m of the £122m in 2018. Following a drop of 8 places to 15thin 2019, Premier League revenue dropped £13m in 2019 to £107m. This is despite Burnley seeing an extra televised game (11) in 2019 following their relegation battle.
Burnley didn’t fare much better in the domestic cups. Burnley went one round further in the FA Cup to the 4thRound, netting approximately £136k extra from this. League Cup performances were just as bad as 2018, exiting in the Third Round.
Now, the Europa League was meant to be a nice boost to Burnley’s finances in 2019, with a place in the group stage potentially worth £7-10m based on performances.
However, an exit in the Play-Off round meant none of this was realised and Burnley can only expect to receive around £1m for their troubles, a disappointing figure.
Therefore, Burnley should see a sharp drop of around £12m in broadcasting revenue to £110m in 2019, adversely affecting their bottom line.
Commercial Revenue
Burnley have seen commercial revenue more than double since promotion, rising from £4m in 2016 to £9m in 2018.
This trend is likely to continue on the back of the successes of 2018, with a new, slightly more lucrative deal agreed with Laba360 (£3m a year), who replace Dafabet (£2.5m a year) as their main sponsor.
This, plus many smaller partnerships should see a boost to around £11/12m in commercial revenue, a £3m rise.
Total Revenue
Overall, it wasn’t the season Burnley were hoping for and as such, it will have a negative impact on their revenue, primarily due to the sharp drop in the Premier League table.
Combining the above adjustments, revenue is likely to fall by around £9m to £130m, showing that clubs cannot rest on their laurels as the pace of the Premier League club is brutal. Burnley were never expected to repeat 2018’s heroics and a drop off was expected, however the failure to reach the Europa League group stage saw revenue fall by a greater amount than was expected.
Any improvement on last season’s 15thplaced finish in 2019/20 will see a rise in revenue.
Cost Predictions
Burnley somehow secured a 7thplaced finish with costs of only £126m in 2018, a ridiculously low figure. By comparison, Everton and Leicester had costs of £287m and £193m respectively, showcasing the huge achievement it was.
Despite revenue being likely to drop in 2019, costs continue to increase as the cost to compete and survive in the Premier League continue to grow…
Amortisation
Burnley had amortisation of £28m in 2018, a relatively low figure. Player investment was greater than in recent years despite being nothing major in comparison to their rivals and will see amortisation rise.
Based on the transfer fees and contract lengths of the new signings and those sold, we expect amortisation to rise by around £8m to £36m for Burnley.
Wages and Other Costs
Other expenses such as stadium maintenance, lease costs etc. amounted to £16m in 2018. These costs rose by £2m from £14m in 2017 and we expect a similar rise this year to £18m.
Wages are the most difficult area of finances to predict due to the opaque nature and privacy of these amounts. Burnley’s wage bill was £82m in 2018.
Burnley signed Gibson, Vydra and Hart while Vokes and a host of fringe players left (Long, Arfield, Marney). New contracts were provided to McNeil and Hendrick which will see wages rise slightly.
Loans of Wells and Walters are likely to however reduce the wage bill. Based on the data available, wages are likely to remain at £82m and perhaps even fall based on the release of fringe players on decent wages and the players signed not commanding huge wages.
Burnley are also likely to see a significant fall in bonuses which may actually see wages fall to around £80m, however due to the opaqueness of this, our best bet is wages flatline.
Total Costs
Based on these additional costs, we expect total costs to increase by around £10m from £126m to £136m, largely due to amortisation rising.
This means that before taking into account transfers, unlike 2018, Burnley will be losing money, approximately £6m, should this continue into the future (which we don’t think it will) this could quickly cause financial issues.
However, Burnley are a well-run club that brilliantly live within their means to great success and we expect Sean Dyche and Co to continue thriving in the difficult Premier League arena.
Transfers Analysis
Burnley spent only £30m to build on their 7thplaced finish in 2018, purchasing Gibson (£15m), Vydra (£11m) and Hart (£4m) while the only monetary departure as Vokes for £7m.
This led to a net transfer spend of £23m, a £36m swing on 2018’s net income of £13m (another showcase of how remarkable their 2018 campaign was).
The signings were uninspiring to say the least. Gibson failed to readapt to the Premier League and struggled to get into the side. Vydra provided relatively little goals and Hart fell out of favour following a series of errors.
This meant that Dyche once again relied predominately on the same players as last year which proved difficult with everyone else improving and some of their dependable players suffering dips in form.
In 2018, Burnley realised a profit on player sales of £30m following the sales of Keane and Gray, which significantly boosted profits.
With only the sale of Vokes in 2019, this will fall significantly. Vokes was brought in 2012 and no longer attracts amortisation and therefore the full £7m will be recognised as profits; this is still a £23m drop in profits compared to last year.
In terms of transfer fees owed, Burnley were still owed around £28m (predominately from Everton and Watford) of which £7m was due in 2019 and later.
In comparison Burnley owe £23m in transfers in 2018, of which £9m was due 2019 and later. There is not much between these figures and therefore this should have no impact on future transfer plans.
Another season of little sales will see a similar level of profit on sales as is expected in 2019, with the only summer departure being Heaton for £8m. Similarly, to Vokes, this will all be profit.
Profit/Loss Prediction
Burnley made a profit before tax of £45m in 2018 (£37m after tax) and this will see a significant drop in 2019.
With revenue falling by around £9m and costs likely to rise by around £10m, profits before transfers are taking into account will fall to around £26m.
Then taking into account the lack of sales in 2019 and hence a much lower profit in player sales, profit are likely to fall by a further £23m to around £3m, a £42m drop.
These drops in profitability may be a common theme of 2019 for most mid-table Premier League clubs with the costs of competing in the top flight rising considerably. Clubs look like only recording profits currently based on player sales rather than underlying financial stability.
Burnley can however still be positive as they are still very financially stable with many of their rivals likely to record losses on the back of similar seasons.
Burnley are run very sustainably and are in safe hands and look primed to have a more successful season this time out, although the priority is still survival.
I hope you enjoyed this article! Share with a Burnley fan and look out for when the actual finances are released to see how we fared!
The Premier League transfer window has officially shut with approximately
£1.3bn spent by Premier League clubs ahead of the new season up from just over
£1.2bn in 2018.
Clubs have to be wary of Financial Fair Play when purchasing
players to avoid penalties and bans (for more on this click here) and also need
to ensure they are running sustainably for their owners etc.
This brings us to this article, which will explain the true
costs of transfers from the 2019 summer transfer window as explained briefly
below:
When clubs sign a player, from an accounting perspective
this is not all charged in the year of the transfer as the payments are matched
to how the player will be used. So, taking Harry Maguire as an example, his
£80m transfer to Manchester United costs United just over £13m a season based
on him signing a 6-year contract. Leicester on the other hand brought him for
£12m on a 4-year deal, so save £3m a season from selling him.
Another key element is profit on player sales. In this
regard the profit the club gain is not simply the transfer fee received minus
the transfer fee paid, it is the transfer fee received less the remaining value
of the player sold. So, carrying on the Maguire example, he will be ‘worth’
£12m minus the amortisation charges to date, so after two years of charges
(from a 4-year contract), the player will be ‘worth’ £6m. Hence, having been
sold for £80m, a profit of around £74m will be recorded, rather than £68m like
many people believe.
This article will analyse each Premier League club’s business
and compare them to their counterparts.
Due to the availability of data, this excludes the costs
of loans and player wages. All transfer fees and contract lengths are via
Transfmartk.co.uk and may not include add-ons etc. In order to simplify the
amortisation costs, we have ignored contract renewals which make the
calculation more complex without much added insight.
Let’s Not Talk About Spend, Let’s Talk About Net Spend
Premier League clubs had an active transfer window, spending
£1,298m, while receiving only £598m in return (a figure that may increase due
to the European windows still being open), leaving clubs with a net spend of
£700m, down significantly on 2018’s £909m net spend as clubs look to spend more
shrewdly this year.
This was largely due to a lack of spending by certain clubs,
with Liverpool spending around £150m less than in 2018, while mid-table clubs
as a whole also spent less.
Aston Vila followed Fulham’s lead by spending over £100m after
a barnstorming transfer window which saw 12 players arriving for transfer fees
and no significant departures. This led to the Midlands club having a net
transfer spend of £134m with Wesley and Mings the most notable of the players
signed.
Arsenal were uncharacteristically one of the biggest
spenders, breaking their club transfer record to sign Pepe for £72m, spending
£113m in total with no huge transfer fees received in return, leading to a net
spend of £97m.
Both Manchester clubs also spent big, with Manchester United
breaking the record fee for a defender in their purchase of Maguire. While
Manchester City broke their record with the signing of Rodri.
Brighton were the biggest surprise spenders, backing new man
Graham Potter with a net spend of £57m.
Chelsea were also somehow big spenders despite their transfer
ban with Pulisic (a pre-arranged January transfer) and Kovacic (a loan made
permanent) both signing this summer as Chelsea managed to use the money from
the sale of talisman Hazard.
Despite these signings, Chelsea (£9m) were one of only four clubs to record a net transfer income alongside Liverpool (£25m), Crystal Palace (£47m) and Norwich (£0.4m).
Additional Amortisation Costs
Premier League clubs face additional transfer costs of £300m
this year alone after a huge transfer spend of over £1.3bn, with this cost
spread of the players signed contracts which average at just over 4-year
contracts.
Amortisation costs are, as explained above, based on transfer fees and contract lengths and as such, the costs are higher for larger fees and also higher when contract lengths are shorter. A key example is Pepe, a £72m signing who signed a 5-year contract, costing Arsenal around £14.4m a year and Rodri, a £63m purchase on a 5-year contract cost Manchester City around £12.6m a year.
Aston Villa saw their amortisation costs rise the most at £32.5m
after signing 12 first team players to prepare themselves for the Premier
League. The sheer volume of signings, despite no fees in excess of £23m, meant
they accrued a big additional amortisation spend as the likes of Wesley, Mings
and Target joined. Aston Villa will benefit from a surge in revenue following
promotion that should more than cover these additional costs.
No other club saw additional amortisation in excess of £30m
with Arsenal the closest at £29.6m. The signings of Pepe (£14.4m), Saliba
(£5.4m), Tierney (£4.9m), Luiz (£3.9m) and Martinelli (£1.2m) have added around
£30m to their amortisation costs. With Arsenal’s revenue relatively stagnant, these
costs will eat into profitability.
Manchester United (£26m), Manchester City (£24m), Leicester (£23m),
Everton (£23m) and Wolves (£21m) were the only other clubs to add more than
£20m to their amortisation costs.
On the other side of the scale, Burnley (£4m), Crystal
Palace (£2m), Liverpool (£0.3m) and Norwich (£0.3m) added less than £4m to
their amortisation costs in what were surprisingly quiet windows for the
quartet with Burnley, Crystal Palace an Norwich taking their chances with relatively
similar squads to steer themselves to safety, while Liverpool hope the likes of
the Ox and Brewster will be like ‘new signings’.
Amortisation Costs Savings
Premier League clubs saved £51m on amortisation cost after player
sales of £598m with many players sold either brought cheaply or have been long
serving players that no longer attract amortisation costs after staying longer
than their original contract.
Amortisation costs savings are driven again by the transfer
fee paid when the player was brought and their original contract length. So,
for instance Eden Hazard signed for Chelsea 7 years ago for £31.5m on an initial
5-year contract, costing Chelsea £6.3m a year for those 5 years. Since Hazard had
been at Chelsea for 7 years, Hazard costs Chelsea nothing from an accounting
perspective, so no amortisation costs are saved and hence no savings included
in our calculations.
As such many Premier League clubs didn’t recorded any
savings as the players sold had already seen their entire transfer fee
amortised. This includes players signed as youths such as Wan-Bissaka at Crystal
Palace or long serving players such as Delph at Manchester City.
Manchester United were the biggest savers, saving around
£15m after selling Lukaku, a £76m purchase.
West Ham (£9m), Everton (£5m) and Tottenham (£5m) were the
only other clubs to save in excess of £5m on player sales after the sales of
the likes of Arnautovic, Gueye and Janssen.
Aston Villa, Brighton and Sheffield United sold no players
hence the reason for their lack of amortisation costs savings.
Chelsea, Crystal Palace, Burnley and Wolves also had no
amortisation costs savings despite player sales due to the players sold having
been at the club for at least their original contract lengths or former academy
players such as Hazard, Wan-Bissaka, Heaton and Hause.
Profit, Profit, Profit
Premier League clubs due to this made profits on their sales
of £494m after selling players for £598m, a 83% return on investment.
When players are sold, as seen above, this may not lead to amortisation
costs savings if the players amortisation costs were low due to the price paid
or they have been at the club for a long time.
This doesn’t mean there is no effect in their accounts, as
the amount earned is recorded as a profit on player sales. This is calculated
as the transfer fee received minus their remaining value as explained in the
introduction. However, to avoid you having to scroll up, here is an example
from this season using Lukaku.
Lukaku cost Manchester United £76m 2 years ago on a 5-year
contract, costing the club £15m a year initially. Each year he is worth less of
his transfer fee, so after 1 year he is worth £61m and after 2 years £46m, his
value now. Having been sold for a reported £59m, Manchester United will record
a profit in their accounts of around £13m, despite making a loss on his actual
transfer fee of £17m.
Clearly the biggest benefiters here were Chelsea after their
sale of Hazard which was essentially all profit and hence the club recorded a
profit of £90m.
This helped Chelsea record the biggest profit of all clubs,
with the additional sales of Aina, Kalas and Luiz leading to a huge total
profit of £107m.
Leicester also recorded a large profit (for the second season
in a row after the sale of Mahrez last year) due to Maguire’s transfer,
recording a profit of £72m in total.
Crystal Palace (£50m) and Everton (£48m) were the only other
clubs to record profits above £30m due to the sales of Wan-Bissaka, Lookman and
Gueye.
Norwich, Aston Villa, Brighton and Sheffield United all
recorded nil profit/loss on player sales due to a lack of sales. No club recorded
a loss.
Burnley (£8m) and Wolves (£3m) were the only other clubs to
record a profit of less than £10m after selling 1 player each in Heaton and
Hause for relatively low fees.
The Summary – The True Cost
To work out the true cost of this transfer window we use the
following formula:
Additional amortisation costs – Amortisation costs saved -/+
Profit/Loss on player sales.
This gives an interesting picture for Premier League clubs
with a net transfer costs of a staggering minus £245m! Meaning Premier League
clubs as a whole have saved on transfers this year from a Financial Fair Play
perspective.
This is due to only 5 clubs having a net costs this window
after significant sales by most teams led to large profits on player sales.
Chelsea, due to the Hazard deal have made a saving of
approximately £88m after their new signings, while Leicester (£53m), Crystal
Palace (£48m), Everton (£32m) and Liverpool (£26m) all saved costs in excess of
£25m.
Aston Villa unsurprisingly have the highest net costs of £33m
after their sensational transfer window in which they spent hugely for a
Premier League newcomer, making a statement of their ambitions.
Wolves (£18m), Brighton (£15m), Arsenal (£14m) and Sheffield
United (£11m) were the only other clubs to record net costs.
To put this all into perspective there is a mismatch. The
profits received are all given in the period of sale, while new transfers are
spread over their contract. This means that Chelsea, despite making a profit on
Hazard, and hence their net costs are negative, will indeed see amortisation
costs rise in the long run as next year they will not have that Hazard profit.
The same is the case for amortisation costs saved, for some
of the players sold, they may only have had one more year of amortisation costs
and as such this saving will not be there next year and hence they will see
amortisation costs rise the following year.
Amortisation costs have risen over the years and will
continue to as long as clubs net spends are still as large as they are.
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Brighton entered their second successive season in the Premier League wary of the infamous ‘second-season syndrome’ and they were worried for much of the season as the club hung around the drop zone for the majority of the season.
A terrible run of form towards the end of the season led to some tense, nail-biting situations, however a few points were plucked here and there, and Brighton managed to stay up by the skin of their teeth in 17thplace and secure a third Premier League season.
A run to the FA Cup Semi Final was a welcome boost to the club with relegation never far away.
The season wasn’t without its casualties, with Chris Hughton losing his job after performing admirably during his time there but a breath of fresh air was needed for everyone around the club.
This article aims to predict how last season affected Brighton and their finances and what the future holds.
Let’s delve into the numbers.
Revenue Prediction
Matchday Revenue
Brighton have fairly high matchday revenue for a club their size at £19m which saw a sizeable boost following promotion.
This season, matchday revenue should remain robust at a similar mark, especially considering the club had 22 home games once again.
The FA Cup Semi Final at Wembley will boost matchday revenue so a slight increase to £20m seems an adequate prediction given average attendance increased by a whole 19 people to 30,426 in 2019.
Broadcasting Revenue
Brighton’s broadcasting revenue was £110m in 2018, of which a huge £108m related to Premier League TV payments after finishing 15thin the Premier League.
Despite increased distributions overall in the Premier League, a drop of two places to 17thmeant that Brighton saw their Premier League revenue drop £2m to £106m. Brighton featured in the same number of live games as they did in 2018 (13).
However, a magical run to the FA Cup Semi-Final and Wembley boosted revenue by around £1.6m in prize money as compared to their Quarter Final appearance in 2018, essentially eliminating the fall in revenue from their lower Premier League position.
The League Cup offers silverware and not much else so an earlier second round exit will not materially affect finances.
Therefore, overall, we expect broadcasting revenue to remain at £110m as their FA Cup run minimises the impact of their fall in Premier League revenue.
Commercial Revenue
Brighton have one of the lowest commercial revenues in the Premier League, lower than some Championship clubs even.
However, their continued presence in the Premier League will continue to boost revenue, which increased from £5m in 2017 to £9m last year.
Survival means that this trend will continue and a rise to around £12m should be easily achievable, with rises in excess of this dependant on survival bonuses and further commercial activity.
The rise is unlikely to be much higher than this due to their ongoing contracts already in place with Nike and America Express which are their most lucrative deals.
Other Revenue
Brighton had other revenue of £2m in 2018 and are best guess here is it will remain at this level with not much else to go to predict this amount.
Total Revenue
A steady year for Brighton means revenue will not change a great deal however we predict that on the basis of matchday and broadcasting revenue remaining at similar levels to last year, commercial revenue growth will help Brighton to increase revenue by around £4m to £143m from £139m in 2018.
Survival is obviously the main goal with around 75% of Brighton’s revenue dependant on Premier League survival. This revenue will make it possible for Brighton to continue investing into the club and players.
Cost Prediction
Amortisation
Brighton had a big summer, spending just shy of £80m on new players in 2019, having already spent £57m in the previous summer to stay up.
Brighton signed an astonishing 14 players with the standouts being club record signing Jahanbaksh (£17m), Bissouma (£15m), Bernardo (£9m) and Montoya (£6m) as they went on a spending spree.
This spending, something Brighton are not accustomed too, is likely to increase amortisation from £19m to £35m, based on transfer fees and contract lengths.
Wages
Brighton commendably have one of the lowest wage bills in the Premier League and despite this spending, that is likely to still be the case. Despite a host of new signings, many went out on loan with wages being recouped with the first team additions all being on relatively humble wages compared to their Premier League rivals.
Based on this, an increase from £78m to £95m is possible, however I suspect they will not break the £100m barrier this season, although it won’t be far away with the costs to compete in the Premier League growing at an astonishing pace.
Other Costs
Brighton’s other expenses to run a Premier League were £33m in 2018 following promotion, 2017 was much lower due to being in the Championship so a further jump of around £5m to £38m is likely.
Total Costs
It was an expensive year for Brighton as they successfully battled for their Premier League place and it did come at a cost, with total costs likely to increase from £139m to around £168m based on the above.
These costs are likely to continue rising as they remain in the Premier League with the costs of the Premier League continually rising.
Transfer Analysis
Last summer was the biggest summer in Brighton’s history as they spent huge sums they have never spent before.
In came Jahanbaksh (£17m), Bissouma (£15m), Bernardo (£9m), MacAllister (£7m), Montoya (£6m), Andone (£5m), Button (£4m), Burn (£3m), Tau (£3m), Mlakar (£3m), Baluta (£3m), Dreyer (£2m), Gwargis (£1m) and Arce (£1m) for a combined £80m.
Out went Baldock (£4m), Goldson (£3m), Norwood (£2m), Murphy (£1m) and Skalak (£1m) for a total £12m.
This meant Brighton had their highest net spend in their history at £68m, eclipsing the £57m net spend in 2018.
Brighton also recorded a measly profit on player sales of £3m in 2018. 2019 is likely to be a little bit higher due to increased sale activity and based on transfer fees paid and received on these departures and their original contract lengths, a profit of around £10m is likely, a £7m increase.
Based on the 2018 accounts, Brighton were owed a measly £2.9m in transfer fees with only £1.5m due in 2019, which will hardly help given their large spending.
In contrast, Brighton owe clubs £19m in transfer fees with £10m due in 2019, a net creditor position of £8.5m, adding to last summer’s outlay.
This is likely to mean their cash levels of £9m in summer 2018 are likely to fall.
Profit/Loss Prediction
Based on all of the above, despite a small rise in revenue being predicted and an increase in profit on player sales, the rise in the costs of competing in the Premier League significantly outweigh this and a £11m profit in 2018 is likely to turn into a loss of around £15m.
The increased spending and wages are to blame for this; however, such spending was required to show ambition, and more importantly, survive.
2019/20 poses to be an interesting season for the club under a new regime under the impressive Graham Potter who will bring his own ideas and needed his own players, leading to another expensive summer window where the club spent over £60m, showing that costs are only going to continue rising as long as Brighton remain in the Premier League, something they would very much like to do.
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Bournemouth enjoyed their fourth consecutive season in the Premier League, and it was another successful one as they survived (with a few scares along the way), finishing 14th, a slight fall on the previous season (12th).
A run to the League Cup Quarter Finals gave the fans some hope of silverware, however an unimpressive FA Cup campaign finished in the Third Round, meaning the season ended in pretty unspectacular fashion.
This article aims to predict how last season affected Bournemouth and their finances and what the future holds.
Let’s delve into the numbers.
Revenue Prediction
Matchday Revenue
Bournemouth’s matchday revenue was the lowest among Premier League clubs in 2018 at £7m due to a stadium capacity of 11,329 which is ridiculously low for a Premier League club and shows how well the the south coast club are doing to survive fairly comfortably.
Average attendance fell slightly to 10,532, however Bournemouth did have 1 more home game this season due to their League Cup exploits so it is likely matchday revenue will remain at £7m.
Bournemouth have begun looking at boosting matchday revenue by building a new stadium, although this is proven difficult with plans on hold after the club were overly optimisticabout plans to move into a new stadium by 2020.
Broadcasting Revenue
Broadcasting revenue was £120m in 2017/18 after a solid mid table season was combined with poor domestic cup campaigns.
As with many mid table clubs, Bournemouth are heavily reliant on Premier League TV money and this makes up the majority of their revenue.
Premier League revenue was £111m in 2018, 82% of their total revenue and 93% of their broadcasting revenue.
In 2019, Bournemouth finished two places lower in the Premier League and were shown on live TV once fewer, costing the club around £3m as Premier League payments fell to £108m despite an increase in overall distributions.
Bournemouth will expect a similar amount of FA Cup prize money as they exited at the Third-Round stage again.
Whilst they did well to reach the League Cup Quarter Finals, the competition prize money is small and will make little difference financially to Bournemouth.
Based on the above, Broadcasting revenue is likely to fall by around £3m to £117m due mainly to the drop in Premier League payments.
Commercial Revenue
Bournemouth’s commercial revenue increased significantly in 2018, rising from £5m to £8m. Bournemouth can expect another jump in commercial revenue as they continue to consolidate as a Premier League club while the Premier League’s commercial appeal continues to grow.
Bournemouth are slightly limited by their shirt and kit sponsors being in the middle of contracts so will have to rely on growth in commercial partners. Based on this, Bournemouth should see an increase in commercial revenue by around 25% to £10m.
Other Revenue
Bournemouth’s other revenue amounted to £0.5m in 2018 and we expect it to remain at a similar level.
Total Revenue
Overall, Bournemouth’s revenue is likely to be at the same level as 2019 at £135m. Performance in the Premier League, FA Cup and League Cup was similar to 2018 and as such was never going to change significantly.
The fall in Premier League payments is likely to be offset by commercial revenue rises with strong growth of around 40% likely to see revenue actually increasing slightly although it is unlikely commercial growth will reach these levels.
Costs Prediction
Amortisation
Amortisation is a large portion of total costs to a Premier League club and Bournemouth incurred amortisation of £27m in 2018. The signings of Lerma, Rico, Solanke, Mepham and Brooks undoubtedly add significantly to this figure, with the departures of Afobe, Grabban and Gradel offsetting some of this rise in amortisation.
Based on the transfer fees and contract lengths of the new signings and those sold, we expect amortisation to rise by around £9m to £36m for Bournemouth.
Wages and Other Costs
Other expenses such as stadium maintenance, lease costs etc. amounted to £24m in 2018. These costs rose by £1m from £23m in 2017 and we expect a similar rise this year to £25m.
Wages are the most difficult area of finances to predict due to the opaque nature and privacy of these amounts. Bournemouth signed Lerma, Rico, Solanke, Mepham, Brooks and Clyne (on loan) as first team players in 2019 while only Afobe, Grabban and Gradel took anything meaningful of the wage bill.
New contracts were handed to Lewis Cook and Francis which will add to these wages
With these arrivals and we expect an additional £6m of wages to be incurred which will take total wages to around £108m from £102m. This could be larger based on survival bonuses players may have in their contracts.
Total Costs
Based on these additional costs, we expect wages to increase by around £17m from £153m to £170m.
This means that before taking into account transfers, Bournemouth will be losing around £35m, an unsustainable financial position that will need to be addressed by either selling players, further funds from their owners or by boosting revenue.
Transfers Analysis
As mentioned, Bournemouth signed Lerma (£25m), Solanke (£19m), Rico (£14m), Mepham (£12m) and Brooks (£10m) for a combined £80m.
Departing the Vitality Stadium were Afobe (£10m), Grabban (£6m) and Gradel (£2m) for £18m.
This led to net transfer spend doubling to £62m, showcasing the ever increasing ambition of the club as they strive to move up the table.
In 2018, Bournemouth made a profit on player sales of £1m due to low sale activities, this year there were more sales and despite none being earth shattering, profit on players sales should be around £6m, an increase of £5m that will boost profits (or reduce losses).
In terms of transfers fees owed, clubs owe Bournemouth £11m as of 2018 with £6m due in 2019 which will come in handy.
However, Bournemouth owe clubs transfer fees of £38m, of which £27m was due this year, which may affect transfer plans going forward unless revenue begins to rise.
Looking ahead, the sale of Mings and Mousset will boost profit on player sales considerably which should help Bournemouth record a profit in 2020.
Profit/Loss Prediction
Bournemouth made a loss of £11m last year and are likely to record an even bigger one this season. With revenue flatlining but costs likely to rise by around £15-17m, even a rise in transfer sales means losses are likely to increase to around £25m. This is partly due as well to the lack of exceptional income after Bournemouth settled an FFP fine for £3m less than expected in 2018 which won’t be the case in 2019.
These increasing losses may be a theme of 2019 for most mid-table Premier League clubs with the costs of competing in the top flight rising considerably. Clubs look like only recording profits currently based on player sales rather than underlying financial stability.
Bournemouth’s reliance on Premier League revenue is more than most due to the relative size of the club, commercially and stadium-wise. The situation is improving commercially due to the playing style of the club and their continued Premier League presence, while a new stadium would boost matchday revenue considerably with attendance restricted by their current size.
As mentioned, the sale of Mings and Mousset will boost profits considerably and help fund further investment. However, the owner may have to pump additional cash into the club to keep them ticking over and growing.
I hope you enjoyed this article! Share with a Bournemouth fan and look out for when the actual finances are released to see how we fared!
Arsenal experienced their first Wenger-less year in the 2018/19 season, with Unai Emery taking the reigns following a steady decline in performance in recent years.
The early signs were promising, and it would’ve been a successful season had the club not succumbed to a 4-1 loss to London rivals Chelsea in the Europa League final and secured a Champions League place for the coming season.
A slight improvement in the Premier League was welcomed, however defeat at home to Crystal Palace and a draw with Brighton in the last few weeks of the season robbed Arsenal of a Top 4 finish which was very much available with London rivals Chelsea and Tottenham stumbling into the Champions League.
This article aims to predict how last season affected Arsenal and their finances and what the future holds.
Let’s delve into the numbers.
Revenue Prediction
Matchday Revenue
Arsenal’s matchday revenue was £99m in 2018, falling slightly from £100m in 2017 after a difficult season. Despite their Europa League run this season, Arsenal had the same number of competitive home games as in 2017/18 and therefore matchday revenue is unlikely to increase substantially.
However, Arsenal should see a slight increase due to reaching the Europa League final, with the competition (and ticket prices) being considerably more lucrative than the League Cup (in which Arsenal reached the final and had many home games in 2018).
Premier League average attendances rose from 59,323 to 59,899 (1%) and therefore, we expect a slight increase of about 1% in matchday revenue to £100m.
Broadcasting Revenue
Broadcasting revenue was £180m in 2017/18 after a poor season with the only highlight being a League Cup final appearance.
Despite finishing a position higher in the Premier League last season, Premier League prize money remained at £142m as despite distributions increasing, Arsenal featured on live TV three less games last season than in 2018.
Arsenal also fared far worse in the League Cup this year, only reaching the Quarter Finals compared to a final defeat in 2018. However, the prize money available in this competition is tiny and will have an immaterial impact on Arsenal’s finances.
Going a round further in the FA Cup will boost revenue by a few hundred thousand pounds for Arsenal which will more than negate the fall in revenue from the drop in League Cup performance.
Arsenal did manage to go a round further than last season in the Europa League, reaching the final in Baku and despite not achieving the result desired, will likely see a boost in revenue of around £4-6m from prize money of the competition which has become more lucrative in recent seasons.
With much of Arsenal’s other competition revenue remaining the same as in 2018, this should see Arsenal’s broadcasting revenue increase by around £5m to £185m.
Commercial Revenue
Commercial revenue saw a drop from £117m to £107m in 2017/18 in Wenger’s final season. We expect commercial revenue to bounce back in what seems to be a new drive at the Emirates to boost their relevance once more. The general popularity of the Premier League has seen all club’s commercial income rise and this should be no different for Arsenal.
A new Adidas deal will significantly boost revenue in 2020, however before that comes into effect, we expect a rise in revenue to around £115m to be reasonable.
Other Revenue
Arsenal also had a significant amount of other revenue of £17m, compromising of transfer loan income (£2m) and property sales (£15m).
Arsenal only have one more property in their portfolio after the sale of a property next to Holloway Road Station in 2018 and there is no evidence this has been sold or the what the value of this property is. With the loans of the likes of Asano, Nelson, Ospina and Chambers, it is likely Arsenal obtained £3-5m on these loans.
Therefore, we predict that Arsenal’s other revenue will only be £5m, UNLESS they sale their remaining property which could bring in a significant chunk of extra income.
Total Revenue
Overall, Arsenal’s revenue should be around £405m, a slight increase on 2018 (£403m) due mainly to potential rises in commercial revenue and their Europa League campaign. Revenue may increase by a larger extent if that final property held is sold.
All-in-all, revenue is likely to remain fairly similar to last year due to competition performance improving only slightly with the club remaining trophy-less and Top 4-less.
Cost Predictions
Amortisation
Amortisation is a large portion of total costs to a Premier League club and Arsenal incurred amortisation of £86m in 2018. The signings of Torreira, Leno, Sokratis and Guendouzi will add a fair bit to these costs while the departure of Perez will reduce this slightly.
Based on the transfer fees and contract lengths of the new signings, we expect amortisation to rise by around £15m to £100m for Arsenal.
Exceptional Costs
As mentioned, Arsenal sold one of their two remaining properties in 2018 which brought the cost of that property into their expenses last year of £9m. With the sale of the one remaining property unknown, property costs have been excluded in our 2019 prediction.
The departure of Wenger and some of his staff and then the costs of bringing in Emery, Arsenal incurred exceptional costs of £17m at the end of last season. These costs are obviously not expected again and have been excluded.
Wages and Other Costs
Other expenses such as stadium maintenance, lease costs etc. amounted to £88m in 2018. We expect these have increased to around £95m in 2019 based on recent trends.
Wages are the most difficult area of finances to predict due to the opaque nature and privacy of these amounts. Arsenal brought in Torreira, Leno, Sokratis, Guendouzi and Liechtensteiner as first team players in 2019 while high earners such as Cazorla and Mertesacker departed the Emirates.
Therefore, despite these arrivals we do not expect wages to increase significantly and as such we predict wages are likely to increase from £240m to around £245m.
Total costs
Overall costs are hence due to increase to around £450m subject to the effects of salary bonuses and property sales. Furthermore, contract renewals (which were few) may be more significant than first thought.
Lastly, should there be any exceptional costs (which in nature cannot be predicted) costs may increase to a larger extent.
Transfers Analysis
Arsenal brought in Torreira (£26m), Leno (£23m), Sokratis (£14m), Guendouzi (£7m) and Liechtensteiner (Free) as first team players in 2019 for a combined £72m.
Departing were Perez (£4m), Campbell (£1m) and Akpom (£1m) for a combined £6m.
This led Arsenal to a net transfer spend of £66m, much changed from the net transfer income of £3m in 2018.
However, in 2018, Arsenal saw a host of departures (£141m) which led to a massive profit on player sales of £115m due to the sales of the likes of the Ox, Walcott, Giroud, Szczesny etc.
With the lack of player sales in 2019, Arsenal will be lucky to record a profit on sales of £5m, a drop of more than £110m, which will see profitability take a huge hit.
Cash will also take a hit after spending in 2018/19, with the club already owing clubs a net £50m in transfers (Arsenal owe around £100m and are owed about £50m), plus the £72m spent this season, showing why Arsenal are so desperate to agree deals in instalments this season (Hi Zaha and Pepe).
Arsenal need not worry however with cash reserves of £231m in the bank.
Profit/Loss Prediction
Arsenal made a pre-tax profit of £70m (post tax: £57m) in 2018 largely due to player sales that were not evident in 2019. As mentioned, player sales are likely to fall by around £110m and with revenue and costs predicted to remain at similar levels, a loss of between £30-40m is likely.
A return to the Champions League is hence vital to the club’s long-term finances. However, the new Adidas deal will see a significant bump in revenue which should help the club to return to profitability in 2020, subject to how they perform in the upcoming season and player sales.
I hope you enjoyed this article! Share with a Gunner and look out for when the actual finances are released to see how we fared!
