Scunthorpe United 2018: The Light Pours Out Of Me

If you think this is do or die try the playoffs


Peter Swann, the Scunthorpe United owner, recently claimed “we are probably one of the best-run clubs in the Football League” so it’s time to take a look at the finances of the Lincolnshire team, presently sat at the bottom of League Two.

EFL chairmen may have to decide soon in terms of Bury’s appeal to be reinstated to the league and if so, there will be two rather than one sides relegated to the National League.

The chances of a club in a position similar to that of Scunthorpe voting for reinstatement are remote as it could be the difference between survival or demotion to the National League.


Every football club has three main sources of income, matchday, broadcasting and commercial.

Relying on crowds of just over 4,000 is not going to be sufficient for a club to survive and these have brought in around £1 million per season in recent years.

Some clubs in League One have average attendances three or four times those of Scunthorpe which shows that the club was at a disadvantage in terms of this income source.

We would like to show matchday income for more clubs but sadly many take advantage of a legal loophole for small businesses that allows them to avoid showing many types of income and costs.

A club in the EFL receives two types of broadcast income, solidarity payments from the Premier League (about £900k for a L1 club) and a share of the EFL’s own TV deal with Sky (£500k for a L1 club).

New rules introduced by the Premier League will result in solidarity payments falling as the owners of the elite clubs think they are subsidising smaller clubs too much.

Nervous owners of clubs in League One and Two will also be concerned at the noises coming from some Championship club owners too who want to renegotiate the EFL deal and it’s unlikely these owners will be wanting to give smaller clubs a bigger share of the pie.

How the money is split at present is 80% to Championship, 12% to League One and 8% to League Two so Scunthorpe realistically can expect about £950k this season from broadcasting.

A form of parachute payment is made when clubs are relegated to the National League, where clubs would get 100% of the EFL money in the first season and half of this sum in the second.

Sponsorship, advertising, commercial, hospitality and academy revenue in the admirably detailed Scunthorpe accounts amounted to £1.7 million in 2017/18, more than doubling in the last five years.

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The importance of such income streams is critical to a club the size of Scunthorpe especially with relatively modest attendances so credit should be given to whoever is negotiating sponsor and commercial deals.

Having commercial income as the biggest income contributor, as Scunthorpe have managed recently, does give the club more control issues that the off-field team can’t control, such as broadcast money splits and relegation.

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Regardless of which division it plays in, the main costs for a football club are player related, in the form of wages and transfer fee amortisation.

Every fan wants to see their team have a competitive squad and all the research shows unsurprisingly that there is a positive link between player wages and league position.

Each of the last six years shows that Scunthorpe paid out more in wages than they generated in income, with the total over the period being £19.9 million income and £27.9 million in wages.

Not all clubs publish wage data, which is disappointing but unsurprising given the lack of governance & transparency at the EFL.

In paying just over £3k a week Scunthorpe’s wages are highly competitive with the rest of the division, although noticeably lower than those of clubs recently relegated from the Championship.

Peter Swann has clearly backed managers here in terms of giving them a wage budget that in theory should allow them to recruit players who could help the club challenge for promotion to the Championship.

Paying competitive wages allowed Scunthorpe to make the playoffs in 2017/18 with an impressive fifth place finish.

Losing to Rotherham in the playoffs was a hammer blow and the club struggled the following season.

EFL rules do in theory limit player wages to 60% of income, but if the owner puts money into the club this is also taken into consideration and Peter Swann’s financial commitment allowed Scunthorpe to pay wages that otherwise would have been prohibited.

Scunthorpe’s investment in players has also resulted in the amortisation charge increasing. Amortisation is the transfer fee cost spread over the contract signed by the player. So, if Scunthorpe signed Cameron Burgess from Fulham for (say) £45,000 in 2017 on a three-year deal, this results in an annual amortisation charge of £15,000 (£45,000/3).

One person who has benefitted well at Glanford Park is the highest paid director. Directors were previously unpaid at Scunthorpe but there is now one person who is receiving about £190,000 a year at the club.


Profits are income less costs and given that Scunthorpe spend more on wages than they generate in revenue clearly the club is loss making.

Scunthorpe’s losses were magnified in 2017 and 2018 due to a £1.3 million write-down of an asset under construction. What this is isn’t clear from the accounts, but its value fell from just over £1.3 million to just £12,000.

Losses have trebled since 2013/14 as a result of the increased spend on players. Losing nearly £90,000 a week does result in challenges for those running the club. There are a variety of ways to reduce these losses, with player sales being the main ‘football’ approach.

Over the past six years Scunthorpe have generated nearly £1.5 million in profits in player sales, which is some way short of the £18.6 million of losses in the same period.

Scunthorpe have therefore had to rely on the club owner to cover the losses. Part of Peter Swann’s investment has been in the form of loans from his company Coolsilk, but these loans have been interest bearing and the club was paying over £4,000 a week in interest as a result in 2017/18.

With the club losing so much money there is little likelihood of it having to pay corporation tax, which are related to profits. In the last three years Scunthorpe have sold their tax losses to Peter Swann’s Coolsilk which has reduced losses by about £4 million over the period.

This is apparently something to do with a tax avoidance (and therefore totally legitimate) scheme called ‘Group Relief’. I did try to Google what this meant but when I typed it into the search engine is took me to a website called Pornhub, which I suspect is nothing to do with tax, but another three-letter word ending in ‘x’.

As a result of the above shenanigans Scunthorpe’s total losses stand at £15 million at 30 June 2018.

Peter Swann has also supported the club financially by buying shares in Scunthorpe. The advantage of this approach is that shares pay dividends rather than interest, and only if the club has an overall profit (which the above total of £15 million losses suggests is unlikely for some time).

Player Trading

Many clubs in the lower leagues have very tight player recruitment budgets and Scunthorpe are no exception. Over the past six years the club has spent £1.3 million buying players and generated nearly £1.7 million from sales.

Spending just £10,000 on players in 2017/18 meant that Scunthorpe were near the bottom of the recruitment table, perhaps a little more investment would have given the club the extra boost to get closer to promotion and kept Graham Alexander in a job.


As a result of the Coolsilk loans Scunthorpe’s debts have nearly quadruped to over £9 million since 2013.

These loans are not huge by League One/Two standards, but as has been seen in the case of both Bolton and Bury all loans come at a risk. (Note in the table below Bradford have not disclosed their loans as the club’s hierarchy are so contemptuous of the fans that they won’t even reveal the figures).

Summary and conclusion

Scunthorpe have lived beyond their means under Peter Swann since he acquired the club. There is nothing wrong with this, but it does increase risk if for whatever reason he can’t (Stewart Day at Bury, Tony Xia at Villa) or won’t (Steve Day at Bury, Ken Anderson at Bolton, Ellis Short at Sunderland) underwrite the losses.

Peter Swann has been generous to the club and should be given credit for that, but unlike many other owners who have lent their clubs money interest free (Coates family at Stoke, Matthew Benham at Brentford, Tony Bloom at Brighton, Dean Hoyle at Huddersfield etc.) has charged interest. The transfer of tax losses makes sense but also leaves a slightly uneasy taste in the mouth as to what is driving the investment.

Back to back playoff appearances are a testament to how a generous owner can elevate a club up the table, but unfortunately Scunthorpe didn’t get over the line.

Does the above analysis suggest that Peter Swann’s support his “we are probably one of the best-run clubs in the Football League” comment? That’s for others to decide rather than us.

Bury: Another brick in the wall


Guinness Book of Records announces new entrant in ‘World’s Smallest Fan Club’ category

The company has taken advantage of legislation for small businesses to avoid publishing full financial statements. This means that there is no profit and loss account or income/wage details.

No accounts have been published for the year ended 31 May 2018, in breach of company law, making the directors guilty of a criminal offence.

Losses accelerated for the company from 2013 onwards, following the acquisition of the club by Stewart Day.

In the two years when the club did publish fuller sets of accounts, wages exceeded income.

Income details

Bury’s income increased in 2015/6 and 2016/7 when the club was in League One. This is partially due to increased broadcasting revenues which are 50% higher for clubs in League One compared to League Two.

Compared to other League One teams Bury generated low levels of income. Detailed breakdown of income is not given, but clubs in the division earn about £1.4 million a year from broadcasting and the balance is from matchday and commercial sources.


Bury’s wage bill has only been published twice, but there was a 29% increase in 2015/16 following promotion. In 2014/15 Bury paid £129 in wages for every £100 of income in League Two in 2014/15 and were still paying £100 in wages the following season despite the boost to income following promotion.

Compared to other clubs in the division Bury’s wage bill was moderate. There is a commonly held view that Stewart Day was trying to ‘buy’ promotion via paying unsustainable wages, and this some merit on a proportion of income basis but not on in terms of the total wage bill.


Bury have been losing about £50,000 a week in the last few years, although figures for the period since 2016/17 are not available.

The deterioration in Bury’s profitability started when Stewart Day acquired the club, with losses exceeding £50,000 a week in the last three years.

Bury had the fourth highest losses in League One in 2016/17.

Stewart Day/Mederco

Investors can either lend money to a business or buy shares. In the case of Stewart Day and Mederco there has been a combination of both. Day has historically said that loans would be converted into shares where necessary and this appears to have been the case. There were of course other loans from lenders with a less benevolent attitude to the club.

Bury’s level of borrowing was modest by League One standards, however the key issue in respect of debt is the ability of the borrower to repay sums due to lenders.


Bury’s financial performance and position deteriorated under Stewart Day. His ambition to make Bury a competitive team at the top of League One with the aim of promotion was based on having the ability to underwrite the losses. Once Day’s other businesses, which were the means by which the losses were covered, went into administration then the excess spending meant the club was no longer viable.

As Day needed to sell the club to relinquish responsibilities for the £50,000 a week losses, he didn’t/couldn’t take too much notice of the background of Steve Dale, to whom he sold the club for £1.

Dale displays characteristics of a sociopathic narcissist, similar traits to those of Ken Anderson at Bolton. Combine those character traits with a history of asset stripping and it was sadly no surprise that Bury’s financial problems multiplied under his ownership to date.

Football Finances: Serpent’s Kiss

Out of 92 football clubs in the Premier League and the EFL, 61 made a net loss in their most recent accounts. The total losses made by those clubs came to £589 million and that’s after some, especially those in the Premier League, receiving the riches of bumper TV and sponsorship deals as well as player sales.

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Manchester United’s losses are distorted by Trump related tax changes in the US, where the company’s shares are traded, but it’s noticeable that all three clubs relegated that season lost money too.

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In the Championship loss making is the norm, with the three promoted clubs in 2017/18 being in the top five loss making.

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Promotion bonuses contribute to those losses, but also suggests that owners are prepared to gamble on trying to buy promotion via big transfer fees and wages. Remember those losses are AFTER the receipt of £250 million of parachute payments and Derby and Sheffield Wednesday selling their stadia to themselves at huge profits to ensure compliance with FFP.

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In League One there’s still a gambling mentality. There is a £7 million difference in broadcast income between this division and the Championship, so some owners will do the equivalent of twisting on 19 in relation to getting promoted. The Venkys at Blackburn, initially reviled by fans, have been very generous in their financial support, though fans will point out that money has been spent poorly, with a series of ‘advisors’ seemingly more interested in lining their own pockets than recruiting players who will improve things on the pitch.

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Budgets are tight in the bottom two divisions and this does mean that there are a few more clubs who have broken even, but overall this is a loss making division. Notts County’s implosion, partly due to owner Alan Hardy’s social media todger related antics, has meant they still have not published their 2018 accounts.

Recent events at Bury and Bolton, the former expelled from the league and the latter rescued at the eleventh hour, have focussed attention on other clubs who are also struggling to survive. Whilst Bury and Bolton’s troubles more to do with sociopathic asset-stripping owners than inherent financial issues, there are clubs whose balance sheets are showing signs of distress. Here are five examples of the types of stresses impacting upon individual clubs.

Club: Coventry City

Loss for 2017/18: £2,480,000

Reason for concern: Homeless and owners not football fans

Playing this season at Birmingham City’s ground after a dispute between hedge fund owner Sisu Capital and stadium landlords Wasps rugby club. Sisu’s motives for buying Coventry are no clearer than when they acquired the club in 2007 the club has lost £64 million.

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Sisu have spent a lot of time and money trying to buy the Ricoh Arena where the club started playing matches when in opened in 2005. Sisu and a similar mysterious organisation based in the Cayman Islands called the Arvo master fund have lent the club £37 million but there seems to be little chance of repayment. If either Sisu or Arvo decide to demand their loans back, then the club has no assets from which they can be repaid. Coventry have been successful in developing stars in recent years who now play in the Premier League such as James Maddison and Callum Wilson, but this is a hit and miss way of generating cash. A screenshot of a cell phone

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Club: Scunthorpe United

Loss for 2017/18: £3,605,000

Reason for concern: Wages far exceeding income

Currently at the bottom of League Two, Scunthorpe United’s finances are as concerning as their form on the pitch.

In recent years the club has paid out substantially more in wages than it has generated in income.

With wages exceeding income there is nothing left to pay for the day to day running costs and so the club has incurred losses averaging £50,000 a week over the last six years.

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Scunthorpe’s owner Peter Swann has underwritten these losses to date but the clubs outstanding borrowings have ballooned. Should relegation occur then there would be a substantial fall in income as it would lose solidarity payments from the Premier League as well as the EFL broadcasting monies halving as the club only receives parachute payments for a short period.

Club: Macclesfield Town

Loss for 2017/18: £250,000

Reason for concern: Winding up order

Sol Campbell performed a minor miracle last season in helping Macclesfield avoid relegation to the National League from League Two, but the club’s financial problems are more pressing. The club failed to pay wages more than once occasions in 2018/19. It is now facing a winding up order due on 11 September due to former players suing The Silkmen for unpaid wages. This dispute is now settled but HMRC have taken over the winding up order as Macc lurch from pillar to post.

Macclesfield’s losses might seem relatively low at an average of £4,000 a week in recent years compared to the millions elsewhere, but the club is a classic case of any losses are too much if you can’t afford to cover them.

Club: Charlton

Loss in 2017/18: £10,450,000

Reason for concern: Owner threats

Charlton’s Belgian owner Roland Duchatelet has been trying to sell the club for some time, but to date no one has come near his asking price. Duchatelet has even demanded that the EFL itself buy the club from him as his relationship with fans has deteriorated since be bought Charlton in January 2014.

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Charlton lost money both before and since Duchatelet’s arrival at The Valley, but the extent of the losses has been significant, with only the sales of Lookman, Gudmunnson & Pope in 2016/17 allowing the club to break even. Under Lee Bowyer Charlton have made an excellent start to the present season and will be hoping for promotion and access to the riches of the Premier League, but with debts exceeding £60 million there could be problems if the owner gets fed up and tries to recoup his investment, which is the stumbling block with prospective buyers at present.

The owner has invested significantly in the player wages, but if Charlton fail to make progress from the Championship how long he will continue to underwrite the losses is uncertain.

Club: Morecambe

Losses in 2017/18: £452,000

Reason for concern: Losing money despite lowest wage bill in English football

Many football fans would struggle to name any Morecambe player, the colour of their home shirt or the name of their stadium. The club had the lowest wage bill in League Two in 2018 of those clubs who reported such details (many clubs use legal loopholes to reduce their transparency in this regard).

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Even with a wage bill so low it has failed to pay them on time at least four times in recent years, the last time being November 2018.

The average wage paid by The Shrimps is less than £1,000 a week, but with crowds averaging only 2,000 per home match they still lose money on a regular basis.

Clubs such as Morecambe are reliant on the goodwill of owners and with new owners in place and Jim Bentley being the longest serving manager in all four divisions, they hopefully can put such issues behind them.

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Whilst we’ve chosen five clubs the list could be easily have been added to by that number again. The likes of Oldham, Reading, Oxford and Southend have also were late with wage payments last season and whilst this is a feature they share with Bury and Bolton hopefully they will not end up getting so close to ceasing to exist at those two historic clubs.

Bury: Minutes to Midnight

Summer 1976 and I’m gathered around a bed with my mum and my eleven-year-old sister, watching my dad, full of tubes, breath slower and slower.

The priest has just given him the last rites, the consultant has just explained he’s done all he can, my mum is weeping, I’m holding my sister’s hand.

Even then I was obsessed with numbers and I’m staring at the heart rate monitor, watching it count down and hoping for a miracle*.

Very sad you might say, but why the melodrama, and what the Dickens has this got to do with Bury football club?

Emotional blackmail this isn’t though, Bury fans are watching their own life support machine run down as the EFL have set a final, final, final, final deadline of 5pm on Friday in terms of the club’s existence.

Down at Gigg Lane fans have been consuming rumours, counter-rumours and website pronouncements as owner Steve Dale has blamed everyone (apart from himself) for the potential demise of the club.

A look at the club’s accounts in recent years shows that Bury have been living beyond their means for some time, but that doesn’t give the full explanation as to why they, and not one of perhaps a dozen or more clubs in the lower leagues, are facing extinction.

Losses in recent years accelerated following previous owner Stewart Day’s ambition being based on his other businesses being successful and underwriting Bury’s day to day losses.

Except those other businesses weren’t successful and Day’s Mederco, which, depending on your viewpoint was either a daydreamer’s folly or a Ponzi scheme, went into administration with Bury owing Mederco nearly £4.3 million according to the most recent published accounts dated 31 May 2017.

In the most recent administrator’s report Mederco’s debt from Bury had ballooned to £7.1 million and may have allowed Steve Dale to force through the Creditors Voluntary Arrangement (CVA) that allows him to still run the club on a day to day basis.

Strictly Bury’s biggest creditor per the CVA is due to a company called RCR Holdings, which was formed on 16 July 2019, but apparently was owed £7.1 million by Bury on 18 July 2019, when the CVA proposal was forced through.

A minimum of 75% of all creditors in terms of the value of the sums due must vote in favour for a CVA for it to be accepted, and with RCR Holdings debt being so large it meant that 84% of all creditors were in favour.

Who is in charge of RCR is a mystery, the director is listed as Kris Richards an identical creditor claim of £7.1 million from Steve Dale has been conveniently ignored by Steven Wiseglass, the person in charge of the CVA, RCR paid £70,000 for the £7.1 million debt.

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An adjustment is made in terms of approving a CVA if a connected party to the business ownership is a creditor to them, and if these debts are excluded there still must be at least 50% of creditors in favour of the CVA.

Not voting for the CVA was HMRC, due over £1 million by Bury, who had been petitioning for the club to be wound up due to Steve Dale’s refusal to pay PAYE and NI contributions, as well as failing to pay the wages of players and staff on a regular basis since February.

Kind words are few and far between for Dale, who bought Bury for £1 in December 2018 and has had a string of former companies dissolved in recent years, leading to accusations of being an asset stripper.

Perhaps the most damning indictment of Dale comes from his running of the company Terrapin Limited where workers went unpaid and Steve Dale washed his hands of any responsibility.

Under Dale’s reign at Bury two new companies were created in the first few days as Bury FC Leisure Limited and Bury FC Heritage Limited.

Fearing bailiffs acting on behalf of creditor taking Bury’s assets is the reason that Dale has given for the creation of these companies, who apparently have had some of the football club’s assets transferred to them.

Football clubs aren’t attractive to regular banks as they rarely make profits, which perhaps explains why Bury took out a loan from Broad oak Finance Limited recently

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In addition, The Guardian’s football finance sleuth David Conn uncovered the club had borrowed money whilst Stuart Day was in charge and interest was clocking up at 138% a year.

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No one seems to have much knowledge of Capital Bridging Finance Solutions although a look at its accounts reveals that it owns a property development subsidiary company…and now has a loan secured on Gigg Lane.

Where does this leave Bury? The club was poorly run by Stewart Day originally, with wages exceeding income as he tried to buy success for the club.

Steve Dale inherited a mess, but unlike Andy Holt at Accrington and Mark and Nicola at Tranmere, took the club backwards rather than forwards.

His beratement of the EFL, staff at the club, fans and others who have queried his decisions has alienated the whole of the fanbase and anyone who had goodwill towards him.

The EFL, whose reputation plummeted during the leadership of Shaun Harvey, is under resourced and unable to do much apart from implore Steve Dale to show he has the means to fund the club, which to date he claims to have done but this is at odds with the EFL’s reading of the situation.

Using a disgraced insolvency practitioner to conduct Bury’s CVA has not helped Dale’s cause either. Steven Wiseglass has twice been found guilty of misconduct in recent years by his governing bodies, who usually are reluctant to discipline their members. This allows critics to claim that the insolvency practitioner is in Steve Dale’s pocket, although there is no hard evidence to support this viewpoint.

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The representative of RCR Holdings at the CVA meeting, has also been before the beak in relation to prior behaviour and has appeared with Tommy Robinson in the past. Again there is nothing wrong in employing whoever you choose to represent you, but given the high profile nature of Bury’s current position it opens people to criticism.

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Back to 1976 and my old man miraculously survived that summer. He had no interest in football, but knowing I was mad on the subject the last thing we did together as dad and lad was to go to a match at the Goldstone Ground. I still cherish that day, and for many families football provides a bond and memories that cover generations.

Steve Dale also has no interest in football but has the power to allow similar memories and bonds to take place between families friends and generations for the regulars of Gigg Lane.

For the sake of those good people and the sake of our national game, do the right thing Steve and let the club live.

Selling your stadium to yourself: It’s not cricket


Sale and leaseback is the latest buzz phrase in the world of football finance, as Derby County, Aston Villa and Sheffield Wednesday have used this mechanism to avoid points deductions in the EFL Championship.

How does it work, is it legitimate and what the benefits to the clubs involved (and their owners) in terms of FFP ‘compliance’ will be covered in this article?

What is sale and leaseback?

Accountants have used sale and leaseback for a long time to help companies raise money and it is usually a transaction arranged with a bank or other lender effectively mortgaging an existing property owned by a business.

Under present accounting rules when a company sells a property it can book a profit, calculated as the difference between the sale proceeds and the book (not market) value of the asset.

New owners of the stadium (which in the case of both Derby and Villa (and probably Wednesday too) is a new company set up by club owner) pays an agreed amount for the stadium then agrees a rental agreement with the ‘tenant’ (i.e. the football club).

How the price in relation to the sale of the stadium is agreed has provoked some raised eyebrows from other Championship club chairmen as there is a suspicion this has been inflated to maximise the profit on the disposal.

Applying the rules

As the ultimate ownership of the stadium is unchanged then what is effectively happening is that Mel Morris (in the case of Derby), Wes Eadons and Nassef Sawiris (at Villa) and Dejphon Chansiri (at Wednesday) have simply shifted large amounts of money from one of their bank accounts to another, but their respective clubs have had a FFP boost as a result.

Referring to the Derby accounts for the three years ending 30 June 2018 shows the club had an accumulated loss before tax of £23.7 million, seemingly well within the Profitability and Sustainability limit of £39 million.

Viewing the accounts of parent company SevCo5112 Ltd revealed that the loss of £1.1 million in 2018 was partly due to the sale of Pride Park at a price of £81.1 million, which generated a profit of £39.9 million as a result.

Every Derby fan will claim that the transaction was within the rules and based on the pre-tax figures in the accounts the three-year loss was ‘just’ £23.7 million.

Yet these losses can be reduced further by clubs spending money on ‘good’ activities, such as infrastructure, academy, women’s football and community schemes as these are excluded from FFP calculations.

If these costs are included then Derby would have had a P&S loss of £11.1 million, well within the allowable limit.

Should the profit on the sale of the stadium have been disallowed (as per the original FFP rules) then the loss would have been £39.1 million higher at £50.2 million and a probable eight-point deduction in 2018/19 meaning Middlesbrough, rather than Derby, would have made the playoffs.

Aston Villa had a much lower ‘sale’ price of Villa Park, which initially seems odd given that the stadium site is much larger, but this allowed the club to state that it complied with FFP for 2018/19, although based on our calculations there would probably have been only a three point deduction and Villa would still have made the playoff.

Compliance is very much the watchword in relation to P&S rules and the use of such creative accounting is surely more to do with the appallingly lax set of rules created by the EFL rather than clubs cheating, as has been accused by fans of other clubs.

Over at Hillsborough the stadium was ‘sold’ for £60 million and a £38.1 million profit booked although this is further confused by Land Registry still showing in July 2019 that it still belonged to the club even though the accounts in which the sale is shown are for 2017/18.

Have they done anything wrong?

Middlesbrough owner Steve Gibson has been the most vocal critic of the sale and leaseback transactions and has threatened legal action but whilst the actions of the Derby et al aren’t cricket we don’t think they have broken any rules.

Potential legal action by Gibson is therefore unlikely to succeed, although it will make for another tense meeting of club chairmen when they have their next EFL meet up.

Less clear is whether Gibson’s suspicion that the sale price of the stadia ‘sold’ has been at an inflated price.

Each club who has made such a sale has presumably used a firm of surveyors to determine the value although critics will point out that given the club chairmen are effectively paying the surveyors’ fees there will be a conflict of interest.

Those of you who watch daytime TV will have seen the likes of Dion Dublin take about a yield on properties which are bought to let, and this principle could be applied in relation to the three clubs involved.

Every company that has a rental agreement should in theory show the rents due in future years in the footnotes to the accounts.

Buried away in the Derby footnotes on page 33 is a note showing that Derby’s rent for the following year was increasing by about £1.05 million and the club appears to be committed to paying a total extra rent of £23 million in future years, far less than the £80 million sale proceeds.

Entering those numbers into our big calculator gives the new owner of Pride Park a 1.3% yield, which is unlikely to be given a thumbs up from Dion Dublin and co.

Looking at the accounts for Sheffield Wednesday gives equal confusion as the club does not appear to have any rental cost for Hillsborough in future years despite selling the ground for £60 million and so the new owner could have a zero yield.

Leasing football grounds, it must be stressed, is perfectly legitimate (Manchester City have such an arrangement with the local council for the Etihad, West Ham similar with the London stadium).


Each Championship club that has taken such an approach in the last couple of years has benefitted in terms of their ability to compete on the pitch as a result of these transactions and this has caused resentment from other club owners who have not used such mechanisms.

No one seemed to notice the change to the P&S Rules initially in 2016 and this is where the crux of the problem lies, as someone should take responsibility and explain whether the change was simply a cock up or a deliberate dilution of P&S.

Don’t expect anyone at the EFL to hold their hands up though, given the record of the organisation claiming to be ‘only a competition organiser’ whenever the flak starts flying.

Under the old EFL FFP rules profits on sales of tangible fixed assets, such as stadia, were specifically excluded from the calculations, which would have had a huge impact upon the ability of the clubs involved to trade. Derby, for example, spent over £15 million in 2017/18 on new players and a further £18.5 million in 2018/19, albeit with sales of players bringing in £16 million over that period too. Sheffield Wednesday were able to spend £168 on wages in 2017/18 for every £100 of income and Villa kept the superb Jack Grealish at Villa Park on the back of a lucrative new contract and were rewarded with promotion to the Premier League.

The new P&S rules make no reference to profits on asset sales and therefore they are legitimately included in the calculations. Why the change was allowed to go through has never been explained, although we have heard on the grapevine that the EFL simply cut and pasted the Premier League P&S rules (which have always allowed asset sales) without looking at the small print for any changes, unlike the accountants and lawyers at Derby.

The overall lesson learnt, as some are finding out with the present FaceApp photo ageing application, is that if you don’t read the small print someone else will, and they can make you look fairly stupid as a result, as the EFL is probably privately conceding at present.

Our view from day one of FFP is that it’s an artificial construct that has earned large sums for accountants and lawyers (the EFL’s legal costs for the QPR ruling are estimated to be £3 million and presumably QPR’s silks didn’t do it for free either) and looking at Bolton, Bury, Notts County, Oldham, Macclesfield etc hasn’t achieved much in the way of financial restraint.

Sheffield Wednesday 2017/18: When the sun goes down

If I stay I can eat my weight in tuna every year? It’s tempting.

Championship football may be the most unpredictable and exciting in the country, but it comes at a price, and Sheffield Wednesday’s very delayed 2017/18 accounts are no exception.

Huge losses are run up in the division as chairmen leave common sense behind and twist on 18 in the hope of achieving promotion to ‘the promised land’ of 8pm kickoff on a Monday night at home to Watford.

Accountants can now be as valuable as strikers if they can come up with schemes that Baldrick from Blackadder would call ‘cunning’ and help clubs avoid the laughably called Profitability and Sustainability (P&S) points deductions of up to 12 points.

No club apart from Birmingham City has suffered a points deduction to date though but have Sheffield Wednesday pushed the rules to the limit in their accounts covering 14 months to 31 July 2018?


Sheffield Wednesday should ideally show three types of income in their accounts, matchday, broadcast and commercial, but for reasons best known to owner Dejphon Chansiri they combine the first two, so some assumptions have been made.

Income from matchday sales decreased by 4% on the back of Wednesday having a forgettable season and finishing 15th compared to 4th in 2016/17 and average attendances dropped by 1,400 per home match.

Relative to other clubs in the division Wednesday have reasonably good attendances and had the fourth highest matchday income in 2017/18, although they did have 14 months instead of 12 when they were generating this sum, much of it out of season.

Income from broadcasting is mainly generated by solidarity payments from the Premier League (about £4.3 million) and the EFL deal with Sky (about £2.3 million plus appearance fees of £100-140,000 per home match).

If a club has been relegated from the Premier League in the last 2-3 years though it also receives parachute payments of £14-41 million.

Not receiving parachute payments puts the remaining Championship clubs at a significant disadvantage, although the Premier League argues such a system helps reduce the possibility of relegated clubs going out of business.

There are a few Championship owners who think they are short-changed with the present EFL TV deal but realistically they will struggle to generate significantly more than the existing arrangement, which is split 80% to the Championship, 12% to League One and 8% to League Two clubs.

Even if the Sky deal, which lasts five years, was scrapped, it’s unlikely that a new broadcaster would be willing to pay much more, as armchair fans tend to focus on the elite Premier League teams and the remainder of that division are simply fortunate that collective sale of rights takes place.

Revenue from commercial deals and sponsors was up 17% for Wednesday in 2017/18 to £7.1 million, although most of this was due to the additional two months of trading.

For clubs in the Championship it is a cut throat market trying to persuade sponsors to sign deals, but Wednesday have an advantage to a degree in that their shirts bear the owner’s name and there are other deals with Elev8 drink and sportswear and a local taxi company that appears to have no taxis, both of which are owned by the club owner which generated about £1.2 million.

Even taking into account the above issues Wednesday are at best mid table in terms of commercial income, reflecting the club being in the doldrums for so long in terms of national and global profile.

Relative to the period prior to Chansiri’s involvement with Wednesday, the club is now earning about £10 million a year more, but this is chicken feed compared to those in the Premier League or receiving parachute payments.


Every fan knows that the biggest costs for a football club relates to players and the Owls’ accounts illustrate this clearly.

Sheffield Wednesday’s wage bill increased by over a half to £42 million in 2017/18 as the owner backed the manager in the transfer market and also the full year cost of new contracts for the likes of Forestieri.

Wages in the Championship average £15,000 a week, and Wednesday are in the top half of this table at £20,300.

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Increased rewards for promotion to the Premier League have resulted in Championship clubs paying higher and higher amounts in trying to get there.

The average wage paid by Wednesday has increased by 418% over the last decade, but most noticeably is how wages have nearly tripled in the last three years under Chansiri.

High player remuneration in the last three years has meant that Wednesday were paying £168 in wages for every £100 of income meaning the club is automatically making sizeable losses before any of the day to day running costs are incurred.

Getting wages under control was in theory one of the aims of Financial Fair Play, now called Profitability and Sustainability (P&S) rules but this would appear to have failed in the Championship as wages are now the highest ever compared to income.

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Only in football would spending more money on wages than generated through revenue be applauded by many, but from a fans’ perspective so long as the club is promoted the end is justified by the means.

Amortisation is the other main expense in relation to players where the transfer fee is spread over the life of the contract such as Wednesday signing Jordan Rhodes for £8 million on a three-year contract this works out as £2.67 million amortisation a year.

The amortisation fee in the profit and loss account takes into account all the squad players signed for fees and reflects the longer term investment in transfers.

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Sheffield Wednesday have spent substantial sums in the transfer market since Chansiri by their previous standards and this is reflected in the amortisation charge increasing by a factor of ten.


Profits are revenues less costs and the consequences of Wednesday’s recent splurge on player spending has meant that day to day losses increased rapidly and have averaged £420,000 a week under Chansiri.

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Even though Wednesday’s losses last season were the largest in their history, they were still exceeded by seven other clubs in the Championship in 2017/18.

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The only way that clubs can usually reduce these losses is via player sales or owners underwriting them. Wednesday have had relatively little success in terms of player sales in recent years though.

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This unwillingness or inability to sell players for large fees isn’t unique to Wednesday, but some other clubs have been able to generate huge sums which are used to ensure P&S compliance.

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Wednesday therefore took extreme measures to reduce the losses in selling Hillsborough. The agreed fee appears to be £60 million, as the stadium had a value in the accounts of £22m and so booked the difference of £38m as profit.

This transaction has been contentious in a number of ways. Under the old version of FFP profits on asset sales used to be disallowed and so there was no incentive for clubs to make disposals.

However, when the rules were brought into line with the Premier League in 2016, Shaun Harvey, the Mr Bean of football regulators, and co ignored a change which allowed asset sales to be included.

Derby County’s accountants were the first to spot this anomaly and ‘sold’ Pride Park for £80 million in their 2017/18 accounts to another company owned by chairman Mel Morris-Obe, helping to reduce a trading loss of £47 million. Aston Villa have done similar with Villa Park in the present season, which allowed them to keep Jack Grealish and be promoted on the back of his sublime skills, whilst transferring the stadium from the left to the right hands of the new owners after running up operating losses of £95 million in the first two years following relegation.

Wednesday have done the same, but the way they’ve gone about the sale of the ground has won them no favours. The ‘sale’ of the stadium is to a related party of Chansiri, was revealed in the footnotes to the accounts, but he clearly thinks that the fans have no right to know about such significant transactions.

There’s no indication as to the date of the sale or to which of Chansiri’s other companies the sale has been made. In the debtors note to the accounts there is a disclosure that indicates the sale proceeds are being spread over eight years.

If this is the case then presumably Wednesday should be able to charge interest on the outstanding payments. The price of £60 million has been queried in some circles, but presumably it has been assessed by an independent surveyor (appointed and paid for by Chansiri) and ticked off by the independent auditors (also appointed and paid for by Chansiri).

With the sale of the stadium it looks as if Wednesday would have made a P&S loss of just over £19 million in the three year assessment period. If the old FFP rules had still applied then the loss would have been £57 million and a likely 12 point penalty would have applied.

Player Trading

Under the previous regime Wednesday were cautious in the transfer market but Chansiri has allowed managers to recruit in order to try to achieve promotion.

A net spend of £10.7 million in 2017/18 was certainly competitive for last season but not excessive by Championship standards.

Owner Funding

Club owners can invest money in three ways, loans (which may or may not be interest bearing, share issues or related party transactions such as the stadium sale.

Since arriving at Hillsborough Chansiri has lent the club £65 million, and in September 2018 put in another £21 million via a new share issue.


Football should be about goal, chances, signings, red cards and abusing Mike Dean. If there are to be financial rules and regulations they should be robust and transparent.

The EFL’s P&S rules have proven to be weak and allowed rich owners to use expensive and creative accountants to devise schemes that achieve ‘compliance’ but having nothing to do with either Profitability or Sustainability.

In doing so the game is reduced to a rich man’s plaything and theres a lot of evidence that rich men think that rules don’t apply to them, as they can be ignored, bought or circumnavigated.

It’s no surprise that the three clubs who have applied the stadium sale and leaseback loophole are .owned by very wealthy people who consider themselves to be above the principles that FFP was supposed to be about, of preventing clubs ‘buying’ promotion or success by injecting as much money as was required to achieve their objectives. 

Villa were promoted to the Premier League on the back of such  behaviour, Derby made the playoff finals, suggesting that the concepts of sporting integrity that many hold dear are sneered at by the billionaires, multi-millionaires, weasel accountants and lawyers in their slick haircuts and sharp suits who wriggle their way through the small print and champion loopholes rather than football skill and prowess. 

Wednesday have ended up with a soft transfer embargo due to Chansiri’s stubbornness in refusing to send in the accounts to the EFL by the due deadline. This has resulted in the club being unable to deal in the transfer market as easily as the manager would like. 

The fans are left in the dark, they are lucky in a way to have an owner who is willing to empty his pockets (or rather those of his successful family) into Wednesday but at the same time his lack of football knowledge means he’s open to be taken advantage of by those who see the game purely as a commission making vehicle and a lot of money ( admittedly his) is wasted in the process. 

If such benevolence results in promotion then no one cares, but if not then there’s little to cheer about if you’re an Owl, as you’re the person who invests emotionally every week in the club, when you renew your season ticket and when you travel 400 miles on a Tuesday night for an abysmal away performance out of loyalty and love for your club. 

Ultimately it’s his club to do with as he sees fit, but having a soft transfer embargo as a result of some of his actions offsets the generosity he’s shown to players and managers over the last few years. It’s a shame because as an away fan a trip to Wednesday is a great day out. 

So long as the money keeps coming in then fans can be happy as they have someone willing to fund transfers and wages. Speak to fans of Liverpool under Hicks and Gillett,  Blackpool under the Oystons, Villa under Tony Xia,  Birmingham under Carson Yeung, Bolton under Ken Anderson and Bury under the last two owners (as well as many others who I’ve not mentioned) and the issues of club governance and owner motives do give cause for concern. 


Leeds 2018: Heartland

In the failing failing failing, Heartland make the places mine


Standing on the brink of promotion to the Premier League, playing exciting football and with a cult hero as a manager, Leeds United are cool to like again.

The club’s recently published accounts show that this success hasn’t come free but by the standards of the Championship Leeds have been a model of restraint compared to other owners who have gambled with the existence of their clubs.

Elland Road regulars have plenty of experience of improper owners and at present they seem to be operating with a competitive budget without going overboard.

Very few clubs get promoted making a profit and whilst Leeds are unlikely to do so themselves at least the level of losses incurred will be modest compared to other clubs who have gone up recently.


EFL rules encourage clubs to split their revenue into at least three categories, matchday, broadcast and commercial.

Every club is trying to maximise all revenue sources at present due to rapidly rising wages, but Leeds were one of the very few who have been in the Championship for a few years to increase all type.

Various other revenue streams are also shown by some clubs (Leeds separate out catering and merchandise for example) but for the purposes of consistency they are all added to the ‘commercial’ heading.

Average attendances at Elland Road were 31,521 in 2017/18, up nearly 4,000 from the previous season, which contributed to a 10.6% increase in matchday income.

Nearly all the additional matchday income came from higher attendances as average revenue per fan has been broadly static for the last five seasons, with 2012/13 being higher partly due to good cup runs that season.

Sunderland, Sheffield Wednesday and Bolton haven’t published their results for 2017/18 yet (all three have reasons to hide the numbers) but for a team that finished 13th in the Championship last to have the second highest matchday income in the division is a sign of the club’s potential.

Income from broadcasting is a thorny subject for Leeds fans as whilst they are regularly chosen for live matches on TV this causes maximum disruption for fans planning their weekends and minimal extra income for the club.

Sky pay £100,000-£140,000 for home Championship matches (and £10,000 for away matches) but compared to parachute payments for those clubs relegated from the Premier League this is miniscule.

Non-parachute payment receiving clubs such as Leeds start each season in the Championship at a huge disadvantage, with research showing that those clubs recently relegated have a seven-point head start due to their extra PL funding.

On the other hand, some sides recently such as Sunderland and Wolves have dropped straight out of the Championship into League One despite receiving parachute payments, mainly due to having disaffected players on huge contracts refusing to move on due to the money they are earning.

The revenue generated from commercial deals and sponsors is where Leeds had the most impressive growth in 2017/18, with an increase of 33% compared to the previous season.

First in the commercial income table by a street is an impressive performance by Leeds as the club leveraged on the goodwill towards the new owner and made the most of being a big single club city.

Income from commercial sources in the Championship included catering (up by £1 million) merchandising (up £1 million) and general sponsorship (up £3 million) but overall Leeds success here helped give additional funds to be reinvested into the playing squad.

The fact that Leeds had more commercial income than half the clubs in the Premier League shows that the potential here is significant if the club is promoted.

Total income over £40 million is very impressive for a club not in receipt of parachute payments and should ensure Leeds are competitive at the top of the division regardless of whether they go up.


Overall costs for Leeds increased significantly in 2018 and it will come as no surprise to fans that this was driven mainly by a rise in player costs.

Staff costs rose by over £10 million in 2017/18 although this would include redundancy payoffs for Thomas Christiansen and Paul Heckingbottom (along with their coaching staff).

Nevertheless, despite this increase Leeds were only about mid-table in the Championship wage table last season, as the clubs with parachute payments were able to afford higher sums to players and management.

In terms of wage control Leeds, despite the increase in costs, only paid out £77 in wages for every £100 of revenue, compared to a Championship average of £108.

For any club in the Championship it is a constant battle between gambling on player investment to increase the chances of promotion which if unsuccessful could put the whole future of the club in the balance.

Financial Fair Play (FFP) in theory was introduced to try to prevent this but doesn’t seem to have worked in the Championship to date, with last minute rescues of the likes of Villa and Bolton being the only reason these clubs haven’t gone into administration or worse.

Birmingham being fined 9 points is hardly surprising given that the club spent more than twice their revenue on wages, what is surprising is that other clubs have not been subject to a similar fate.

In terms of transfer fees, these are spread over the life of the contracts signed by players in what are referred to as amortisation costs.

Ezgjan Alioski was signed by Leeds for £2.2m from Lugano in August 2017 on a four-year deal, so that would normally work out at £550,000 (£2.2/4) a year in amortisation costs.

Leeds total amortisation cost, which is the figure that represents all transfers, increased by 50% in 2017/18 as the club invested in Forshaw, Jansson, Saiz, Roberts, Alioski and others for million pound plus transfer fees.

Spreading transfer fees via amortisation reduces the volatility of the cost of transfer fees in a single season and reflects a club’s long-term spending on players.

Amortisation and wages together as a proportion of revenue was 97%, which meant that Leeds had little left to pay for the other day to day running costs of the club, such as rent (£2.2 million) depreciation (£1.6 million) and so on, with ‘other costs’ in total coming to over £17 million.

Profits and losses

Subtracting costs from revenue gives a profit or loss figure for the year and Leeds had an operating loss from day to day transactions of just under £20 million for 2017/18.

Big losses are incurred in the Championship by nearly every club as owners commit to pay the wages and transfer fees on signings that they hope will result in promotion.

In the Championship losses were £505 million last season (and that is without Sunderland, Sheffield United and Bolton) which shows the extreme pressures of trying to compete in the division.

Championship clubs all made operating losses last season and the only way for these to be financed is via player sales or owners investing money via loans or shares.

Yearly profits from player sales have been beneficial for Leeds recently, and Liam Bridcutt’s and Chris Woods’ departures, along with some sell on clauses on previous disposals, were the main drivers of the £18 million profit on player sales last season that absorbed most of the operating losses.

Championship clubs managed to recoup over £210 million of the losses via player sale profits but this still leaves a big gap to be plugged by owners.

Letting players go does generate cash but also has a detrimental impact on the quality of the remaining squad but is a financial necessity at times, fortunately for Leeds good cheap recruitment and an impressive academy scheme have improved the quality of football this season.

Excluding costs such as amortisation and depreciation (depreciation is the same as amortisation except this is how a club expenses other long-term asset such as office equipment and properties over time) then another profit figure called EBITDA (Earnings Before Income Tax, Depreciation and Amortisation) is created. This is liked by professional analysts as it is the nearest thing to a cash profit figure.

Struggling to generate cash from operations is common in the Championship but is does mean that clubs must increasingly hope that owners will make up the deficit.

EFL rules allow clubs to lose for FFP purposes (officially called Profitability and Sustainability in the Championship) £39 million over three seasons, but some costs (infrastructure, academy, women’s football and community schemes) are excluded from the calculations.

An estimated P&S profit of £1.6 million over the last three seasons suggest Leeds, even if they are not successful this season, are well within the limits and would not need a fire sale of players during the summer of 2019.

The actual details of P&S calculations for EFL Championship clubs are unknown, prompting much speculation and anger amongst fans who are unsure whether or not their club is subject to ‘soft’ sanctions, which are not publicised, but Leeds are almost certainly not being punished for these given the relatively prudent way the club is run.

Player Trading

Leeds spent £28 million on new signings in 2017/18 on many signings as the two new managers tried to mould squads. The sale of Chris Wood offset a large proportion of these player purchases.

The large spend on players is why the amortisation charge in the profit and loss account is so high. Fans often point out that clubs also sell players and that net spend is a better measure of a club’s investment in talent but again Leeds here have been relatively modest by the standards of the division.

Leeds have been building up the squad in recent seasons, which had a total cost of £37 million at then end of 2017/18. The appointment of Bielsa as coach in the summer of 2018 resulted in a further estimated net spend, mainly on Patrick Bamford, of about £4 million.


Clubs can obtain funding in three ways, bank lending, owner loans (which may be interest free) or issuing shares to investors. The tie up with SF49’ers brought in share investment of £11 million and there was net borrowing of about £2.5 million in 2017/18.


Leeds had a hit and miss season in 2017/18 on the field, but the club’s strong revenue growth meant that it was in a strong position from an FFP perspective at the start of the current campaign.

It’s on a knife edge at present whether the club will go up automatically, but a playoff position is guaranteed. Promotion to the Premier League would see revenues rise by at least £100 million and the club is in a strong position given the size of the city and its history to sign some lucrative deals.

Leeds are certainly one of the best three teams in the division this season, but their biggest problem might arise is if they have a chance and fail to make automatic promotion on the last day of the season if the playoff positions are already finalised, as their potential opponents could rest the squad for the final fixture.

Promotion this season will be great for fans, but even if they fail to do so the club is in a strong position financially both in the short and medium term from the figures it has published.

Date Summary

Newcastle United 2017/18: Apply Some Pressure


Mike Ashley, Newcastle United’s unloved owner, has finally submitted the accounts for the year ended 30 June 2018 for public scrutiny as The Toon became the final Premier League one to produce results for 2017/18.

In the club’s first season back in the Premier League after winning the Championship Newcastle reversed the big losses and managed to reduce wages from 2016/17, the latter of which is a first for a promoted club.

Kind words are in short supply in Tyneside for Ashley, who bought the club in May 2007 and has overseen two relegations since then.

Easy to criticise, and hard to love, but is Ashley as bad as some make out, given that he has lent the club over £140 million interest free, and invested a similar sum in buying shares in the club too?

A deeper look at the numbers is required to give a broader assessment of Ashley’s stewardship of the club, is he the Freddie Kreuger of football owners or is there some method to the apparent madness of his period at the club?


Starting at the top of the profit and loss account, Newcastle’s total revenue doubled to £179 million but is over £200 million lower than that of Spurs, it was only £16 million less when Ashley took over.

Having money is one thing, and Newcastle have now generated revenue of over £1 billion under Ashley’s ownership, whether that money has been spent wisely is another matter.

Looking at total revenue for 2017/18, Newcastle had the 8th highest in the Premier League, although there is an element of chicken and egg as prize money is linked to the final position in the table.

Easily the biggest revenue stream last season was broadcasting, which generated over £126 million for Newcastle, partly due to promotion, partly due to prize money (each additional place in the Premier League is worth an extra £1.9 million) and partly due to the club being popular with broadcasters (each club is paid for ten matches in the basic fee and every additional match shown live is worth an extra £1 million, and Newcastle were shown live 18 times in 17/18).

Year by year volatility for broadcast revenue is also due to combination of which division the club is in and the renewal date for broadcasting deals (the present one kicked in in 2016/17) with Newcastle earning £652 million in total during the Ashley era.

Income from broadcasting in the Championship for non-parachute payment clubs is a basic of about £6.5 million a year, plus £100-£140,000 for every home match shown live on Sky, which shows the importance of being back in the top flight.

Some Premier League clubs generate additional broadcast income by being in UEFA competitions which are worth up to £80 million for winning the Champions League, but other than that the distribution of broadcast income is relatively democratic.

A huge gap therefore exists between those clubs who are in the Champions/Europa League and those that do not, although if Newcastle does qualify for the latter Thursday night trips to the Balkans and Malta are for the dedicated and/or insane only.

Commercial income for 2017/18 nearly doubled to £28 million, but critics of Mike Ashley identify this area as his biggest failing at the club as this has hardly increased since he first walked into the club.

Over at Spurs, commercial income has exceeded the £100 million a season mark on the back of a year at Wembley and Champions League participation.

Commercial income is the one area that clubs can independently grow and in doing so increase the budget for the manager.

Knockers of Ashley will point out he uses St James Park as an advertising vehicle for his Sports Direct cheap and cheerful sports emporium, and he should be generating more commercial income than any other club in the division.

Just £385,000 was earned by Newcastle from Sports Direct last season for this advertising but the club also spent nearly £1.5 million itself buying goods back from SD .

Until the club is sold to a new owner it will be difficult to tell if Ashley has missed a trick in terms of commercial sales but looking at the table overall (and Everton’s is inflated by some unusual naming rights for the training ground) Newcastle are broadly where you would expect them to be for a non ‘Big Six’ club.

Getting fans to turn up at St James’ Park for every match is relatively easy given the loyalty of the locals but getting more money out of them is more of an issue.

Gallowgate end regulars haven’t had to pay more for season tickets following a long term price freeze by Mike Ashley some years ago which explains why the revenue per fan barely changed last season, although individual matchday tickets, which are as difficult to find as a virgin in the Bigg Market on a Saturday night, did go up in price.

Lack of UEFA competition participation and the high prices that can be charged when facing glamourous European opponents is the main reason why Newcastle are so far behind the ‘Big Six’ in terms of matchday revenue, along with having fewer football tourists visiting the North East.


In the history of the Premier League, no club has ever had a reduction in the wage cost following promotion from the Championship…until Newcastle United in 2017/18.

Newcastle’s wage total fell by sixth last season, although it could be argued that the figures from 2016/17 were distorted by large promotion bonuses and the club accelerating some wages from future years into the Championship accounts via some eyebrow raising accounting that increased wages by £22 million in 2016/17 and decreased the total by £10 million the following season.

Getting wages under control has been one of Mike Ashley’s main ambitions since acquiring the club and with the club paying out just £52 in wages for every £100 of revenue this was easily achieved in 2017/18.

The danger level for wages according to UEFA for a top division club is 70% of revenue and if Newcastle had been at this level then wages would have been £125 million, placing The Toon between Leicester and Everton in the wage table.

Having a bottom half of the table wage bill means that last season’s tenth place finish was impressive, but fans feel that investing more in the squad would give Benitez an opportunity to compete for a European slot.

Unless there is a change in ownership though it is unlikely that this strategy will change as Premier League existence, rather than competing for trophies, appears to the limit of Ashley’s ambition.

Newcastle’s other main expense in relation to players is transfer fee amortisation, which is a non-cash expense, but all clubs show it in the accounts.

Dividing a transfer fee by the contract length is how amortisation is calculated, so when Newcastle signed Jacob Murphy for £10 million on a four-year deal in July 2017 this works out as an annual amortisation cost of £2.5 million (£10m/4).

Every Newcastle fan will point out that historically Mike Ashley has been reluctant to spend money on players and this certainly held true in the early years of his reign but the club’s mid-table position in the amortisation table suggests that in the last 2-3 years he has relaxed the policy to a degree.

Reducing costs to a minimum is a hallmark of how Mike Ashley runs all his businesses and it is impressive that the ‘other costs’ of Newcastle, which covers all the overheads such as marketing, HR, maintenance, insurance and so on are still lower than those of the first season in which he had control of the club over a decade ago.


Costs subtracted from income gives profit and Newcastle announced an £18 million profit in a press release compared to a £91 million loss for the previous season.

Understanding profit is a tricky issue though, as there are many variants so care must be taken and it is unwise to rely on just a single profit figure, especially one produced by a marketing department which may want to promote a particular message to either fans or potential buyers of the club.

Newcastle’s turnaround compared to the previous year, however expressed, is spectacular and reflects the additional income from being in the Premier League and cost control in terms of player wages in a division that is less profitable than many perceive.

The early years of Ashley’s reign were loss making and the only way these losses can be funded is through player sales or the owner injecting money.

Total operating losses under Ashley since 2008 come to £140 million but player sales profits more than cover this at £184 million, so this shows the approach taken by the owner.

If you strip out the one-off transactions and amortisation (as it is a non-cash expense) we get to a profit measure called EBITDA (Earnings Before Interest Tax Depreciation and Amortisation). This is the figure most focussed on by city analysts and valuers, at it is a sustainable cash proxy for profit. This was a record £61 million in 2017/18 which meant that the club was generating over £1 million a week in cash from its day to day activities.

Player trading

Mike Ashley’s reluctance to spend money in the transfer market is legendary. In the period since he bought the club, he has spent £382 million on players and generated player sales income of £272 million.

This gives a net spend of just £110 million over the period, although this is distorted by £94 million of this arising in 2015/16 during Steve McLaren’s disastrous spell at the club.

Compared to the rest of the division Newcastle’s recruitment in 2017/18 was low and this was part of the reason why fans were so hostile towards the owner, fearing his reluctance to spend was increasing the chances of relegation.


Mike Ashley lent the club a further £10 million during the 2017/18, but was repaid this later in the season, meaning his total interest free loans stayed at £144 million. The club also had an overdraft at 30 June 2017, presumably used to pay the promotion bonuses, but this was wiped out when the Premier League broadcast income for 2017/18 started to flow to the club and by the end of the season Newcastle had £34 million in the bank.

Since the year end Ashley has been repaid a further £33 million taking his loan down to £111 million, which apparently won’t be repaid until the club is sold.

In addition to the loans Ashley has invested a further £134 million in shares in the club, taking his total investment to £278 million. Rumour is he is trying to sell if for £300-350 million.


Newcastle did take a gamble in not investing in players in 2017/18 and the risk of relegation was significant until the last third of the season when results improved.

Mike Ashley’s financial strategy appears to have been one of careful cost control to impress potential buyers. This is borne out when plugging in Newcastle’s financial figures into the Markham Multivariate Model used to value Premier League clubs, which churned out an eyebrow raising figure of £442 million, mainly due to excellent wage control, significant prize money on the back of Benitez’s management and a sold-out St. James’ Park for every match. This feels too high a figure but does show the potential of the club to an owner willing to take more risks than the present one. Adjusting for the wages provision reduces the value by about £40 million.

The club’s unusual accounting in relation to wages suggests that, a bit like some of Ashley’s recently acquired retail stores, it has been subject to some window dressing to make things look better than they are.

Data Summary

Derby County 2017/18: Say You’ll Be There

What I really really want? Promotion!

Making sense of Derby County’s 2018 accounts is a challenging task as the club’s structure has been changed nearly as often as the line-up of the Sugababes.

Enigmatic is the politest word that could be used to describe way that a myriad of different companies that are now running different elements of Derby which was further complicated by a new holding company Gelaw NewCo 203, taking over on 28 June 2018.

Is this 4-4-2 or 4-1-3-2?

Legally such a structure is perfectly valid and is common in other industries, whereas previously all of the club’s activities went through Derby County Football Club Limited the new set up arose after Mel Morris CBE took control of the club.


Matchday, broadcast and commercial income are the three standard income categories used to comply with EFL League recommendations.

Obviously, clubs recently relegated from the Premier League have parachute payments too to increase their income and research indicates this is worth about seven extra points in the first season back in the Championship.

Runs in the cup that are televised and live appearances on Sky can increase the broadcast income slightly, with payments of £100-£140,000 for home Championship matches (and £10,000 for away matches).

Relative to other non-parachute payment receiving club Derby do fairly well as they have generated decent TV audiences, but the extra sums received are miniscule compared to those clubs recently relegated.

Income for clubs in the Championship from matchday is (number of matches x average price per ticket x average attendance) so with a ground that is practically sold out every home match there’s not a lot of scope to increase revenues unless prices go up.

Sponsorship and commercial income are an area where there is growth potential but there are 23 other clubs in the Championship also competing in this area but Derby have done well by divisional standards.

Some cynical fans might take the view that the big increase in commercial and hospitality income that commenced in 2017 may have come from companies related to Mel Morris CBE but there’s no evidence to support this theory although seeing with the fourth highest commercial income in that division and also earn more than quite a few Premier League clubs too does cause eyebrows to raise.

For a club the size of Derby to have the second highest non-parachute payment income in the division is an achievement, and surprising that they’ve outperformed the likes of Villa and Wolves in this regard too.

A breakdown of Derby’s overall income shows a fairly even split between the sources. Some clubs in the Premier League have nearly 90% of their income from broadcasting.


Very many fans get angry when the subject of players’ earnings are discussed, and Derby’s wage bill seems to have taken a big jump in 2017/18.

Overall wages for parent SevCo 5112 were nearly £47 million, an effective increase of 18% (SevCo’s actual wages for 2016/17 were £33.1 million but only covered a period of 10 months instead of 12) which meant that wages were £157 for every £100 of income, part of the increase could be attributed to commercial staff numbers increasing by 39 but the majority relates to players.

Unless players receive a competitive wage, they’re likely to go elsewhere and as owners and fans want promotion so clubs such as Derby with no parachute payments have to pay accordingly.

Relative to clubs in receipt of parachute payment Derby were not far behind other clubs last season (apart from Villa) but were high payers compared to other clubs, especially if the promotion bonuses paid to Fulham, Wolves and Cardiff are stripped out.

In terms of transfer fees, these are spread over the life of the contracts signed by players in what are referred to as amortisation costs.

Tom Lawrence cost Derby an estimated £5 million when he signed from Leicester in August 2017 on a five-year deal, so that would normally work out at £1 million (£5m/5) a year in amortisation costs.

Experienced Rams’ fans may know that their club is unique in the way it treats amortisation though which has the effect of reducing the expense in the accounts in what is best known as ‘Melenomics’ and no other clubs in England use such an approach.

Spreading the cost of transfers the ‘Derby Way’ resulted in the club being sandwiched between Brentford and Bristol City in the Championship amortisation table for last season which seems very low given that Derby’s wage bill is the same as both clubs combined.

Putting wages and amortisation together gives a total cost of £53.3 million which vastly exceeds revenues of £29.1 million, Derby had an expense of £183 in this area for every £100 of revenue but this was still far from the highest in the Championship last season.

Identifying the other costs incurred by the club is tricky as they are grouped together as ‘other costs and these increased by , depreciation increased by £1 million, rents paid doubled to £325,000 but ‘other costs’ overall increased alarmingly to nearly £19 million with no explanation in the accounts.

Costs therefore totalled £76 million which led to the sale of Pride Park to another part of Mel Morris CBE’s business empire which generated a profit of £40 million in order to ensure the club did not breach Profitability and Sustainability (FFP) limits and risk sanctions such as the points deduction suffered by Birmingham City.

Exceptional transactions such as the sale of the stadium appear to blow a hole in the principles of FFP but if allowed by the EFL as the club seems to imply then fans needn’t worry too much.

Getting away with such behaviour (and it looks as if Sheffield Wednesday may have done similar with Hillsborough) gives further support to the view that the only winners from FFP are the creative accountants and slippery lawyers who devise such transactions.


In the press release on the Derby website it said the club had made a profit of £14.8 million, but this applies to Derby County Football Club Limited and conveniently ignores the costs incurred by the commercial department, academy and stadium running costs which form the other subsidiaries of SevCo 5112.

Reading the SevCo 5112 accounts is more depressing as there was an operating loss, which represents revenue less day to day running costs, of £46.8 million.

Losses before disposals for the Championship total over half a billion pounds for 2017/18 and that is excluding results from Sunderland, Sheffield Wednesday and Bolton as many clubs gamble on being one of the three teams that win the golden ticket to the Premier League.

Incurring losses of this magnitude means that clubs are reliant on asset sales (usually players) and owner investment to cover the losses.

Stripping out costs such as amortisation and depreciation (depreciation is the same as amortisation except this is how a club expenses other long-term asset such as office equipment and properties over time) then another profit figure called EBITDA (Earnings Before Income Tax, Depreciation and Amortisation) is created. This is liked by professional analysts as it is the nearest thing to a cash profit figure.

Making cash losses of over £700,000 a week last season explains why Derby needed to sell Pride Park although selling it back to Mel Morris CBE is equivalent of transferring money you already have from the left hand to the right hand.

EFL rules allow clubs to lose £39 million over three seasons, but some costs (infrastructure, academy, women’s football and community schemes) are excluded from the FFP calculations.

Losses for Profitability & Sustainability purposes were, based on our calculations, £53 million over the three years, which, based on the publication of the Birmingham City ruling, equivalent to an eleven point deduction.

Chopping eleven points off Derby’s total for this season would have sent the club spiralling out of contention for a playoff scheme, so whoever came up with the idea of the sale and leaseback of Pride Park should perhaps win the player of the season award.

Other clubs such as Villa, Sheffield Wednesday, Reading and potentially Birmingham have followed the Derby approach but not have sold their stadia for as high a price.

Bringing the stadium sale into consideration doesn’t just ensure that Derby have complied with the P&S rules, it also means that if the club is not promoted this season it should be able to compete in the summer transfer market as the cumulative P&S total shows a substantial profit.

EFL critics will be up in arms if this type of transaction is allowed, but it is the club owners who vote for the rules, they are not imposed by the league itself independently.

One consequence of the sale and leaseback deal is that it looks as if Derby will be paying rent of about £1.1 million a year for the use of the stadium.

Player Trading

Derby spent £15 million on new signings in 2017/18 on Lawrence, Wisdom, Huddlestone and Jerome and had sales of £4.3 million mainly in relation to Cyrus Christie. The sales of Will Hughes and Tom Ince which took place in the summer of 2017 were included in the accounts for the year ended 30 June 2017.

The large spend on players is why the amortisation charge in the profit and loss account is so high. Fans often point out that clubs also sell players and that net spend is a better measure of a club’s investment in talent.

Mel Morris CBE’s commitment to getting the club promoted is evident from the above graph as prior to that Derby were not serious players in the Championship transfer market.

The total cost of Derby’s squad at 30 June 2018 was £62 million which puts the club at the top end of the division which again puts it at odds with the relatively low amortisation charge.


Clubs can obtain funding in three ways, bank lending, owner loans (which may be interest free) or issuing shares to investors. Mel Morris CBE had put over £95 million into Derby in 2016 and 2017, his approach for 2017/18 came in the form of the stadium purchase for £81 million.


Derby went for broke in 2017/18 in trying to achieve promotion to the Premier League. To achieve this the club had to indulge in some eyebrow raising accounting transactions which appear to be at odds with the spirit, if not the letter, of P&S rules.

Promotion this season will be great for fans, but the legacy of the stadium sale income should ensure that even if the club doesn’t go up then Frank Lampard still has some leeway in recruiting players this summer and there is no need for a fire sale.

Incurring losses of this magnitude means that clubs are reliant on asset sales (usually players) and owner investment to cover the losses and Derby took an unusual approach here.

Relying on owners to keep putting money into clubs, especially when so many are abused by some financially illiterate fans for ‘lacking ambition’ does increase the risk of clubs going into administration or worse if the owner decides they have had enough grief.

Letting players go does generate cash but also has a detrimental impact on the quality of the remaining squad but is a financial necessity at times as was seen in 2016/17 when Derby sold Ince, Hughes and Hendrick to generate over £16 million profit.

If the EFL is going to allow owners to sell stadia to themselves to comply with P&S, then it would make sense the rules to be scrapped. At present the nature of the rules simply results in very expensive accountants and lawyers to devise schemes and fans would rather money be spent on the game instead of school fees and Ranger Rovers for bean counters.

Crystal Palace 2017/18: I Just Can’t Be Happy Today

Six Year in the Premier League? Neat, Neat, Neat.

Surviving in the Premier League is even tougher than getting there and an eleventh place position is testament to Roy Hodgson in guiding the club to another season at the top table.

Usually Palace start the season poorly and improve in the second half of the season and 2017/18 was no exception after the De Boer experiment was quickly jettisoned.

Sustainability from a financial perspective wasn’t achieved however as the club, despite record revenues, lost £750,000 a week from day to day operations and was reliant upon the club owners to finance the gap.

An increased capacity Selhurst Park is part of the club’s strategy to improve the finances in the long term and this should improve the financial performance in the Premier League.


Nowadays all clubs split income into at least three categories to comply with EPL recommendations, matchday, broadcasting and commercial.

Nearly all ‘Other 14’ clubs are very dependent upon broadcast income for the lion’s share of their earnings and Palace are no exception.

A new TV deal in 2016/17 was the driver of the big increase that season, but Palace’s 11th place finish earned them an extra £6 million in prize money in 2017/18 to £121 million, slightly offset by being chosen for live broadcasts two fewer times than the previous season.

Having a reliance on broadcast income is fine so long as the rules don’t change, and it’s sad to see the greed of the ‘Big Six’ force through a new method for distributing money from TV so that the rich get richer from Premier League International Rights.

Relating broadcast income to live appearances and final league position has a lot of merit but the existing formula has worked successfully for years and allowed clubs such as Palace to retain their best players, making the Premier League more competitive and unpredictable.

Europa and Champions League participation by the regulars ensures they have more broadcast income from UEFA than the remainder of the Premier League, so it is nothing but naked greed from foreign owners that has driven the new distribution model from 2019/20.

Income from matchday for Palace has been relatively static due to ground capacity constraints and the club has been reliant on cup runs to boost totals as price freezes and sold out matches mean this figure can’t be increased in the short term.

Diving into the footnotes of the accounts there was an ominous comment from chairman Steve Parish “with strong demand and a low relative cost to other Premier League London football ticket pricing will be further reviewed for the 2019/20 season” and Palace season ticket holders already know the consequences of this.

Palace’s matchday income is okay by Premier League levels but the board see scope for growth, especially in terms of hospitality consumers who are put off by the prices elsewhere in London and a revamped Selhurst could give the club an extra £5-10 million per season.

Eagles’ fans may not like the garish logo on the club shirts of new sponsor ManBetX but this has been a major contributor to the 20% increase in commercial income.

Getting new sponsors and commercial partners for a club isn’t easy unless you are one of the global brands with tourist fans, so Palace have done well here to keep growing this income stream.

Selling the club to sponsors is made slightly easier by being in London and the continued existence in the Premier League has increased the appeal of the club too.

Some clubs such as Manchester City, Everton and Stoke have the benefit of connected parties being willing to pay generously for commercial deals but Palace have had to do it the hard way.

Total income increased by 5% to £150 million which is more than ten times the money generated when Palace were in the Championship and total Premier League income since then is £590 million.

Even monied clubs such as Stoke, Swansea, Hull and Sunderland have been relegated in the last two seasons and struggled to make much of an impact in the Championship, which highlights just how important it is for Palace to avoid getting into a relegation fight as there are no guarantees of coming straight back up.

Very few clubs bounce back straight away in the Championship as has been seen in the present season where the three teams challenging for promotion in Sheffield United, Leeds and Norwich finishing last season 10th, 13th and 14th respectively.


Every fan knows that the main costs for a PL football club are focussed on player related expenses relating to player wages and transfers.

Player costs have accelerated in 2017/18 for nearly all clubs despite broadcasting income being flat overall as Sky/BT are in the second year of a fixed three year contact.

Amortisation is the cost of all the transfer fees paid by the club spread over the contract life, so when Palace signed Mamadou Sakho for £26 million from Liverpool on a five-year deal this works out as an amortisation charge of £5.2 million a year (£26m/5).

Rapid increases in amortisation are common in the Premier League if a club is promoted and stays in the division due to legacy players from the Championship being replaced by more expensive signings in the top flight over a number of years.

In signing Sakho, Riedewald, Sorloth and Jach Palace instantly increased the overall squad cost to nearly £200 million and the amortisation expense rose in line with this especially as the previous season saw Schlupp, van Aanholt and Milivojevic all arrive in January 2017 with only had a half year of amortisation on their transfers.

Spending more on transfer fee amortisation than London rivals Spurs and West Ham might surprise some Palace fans, but the club has been very active in the transfer market especially given the rapid turnover of managers at the club who want different players and styles.

Having spent money on transfers it’s no surprise that Palace’s wage bill grew last season, albeit by a relatively modest 5% to £117 million but that still put the club 9th in the wage table.

With such high wages and amortisation charges it is of little surprise that these costs absorb all of Palace’s income, representing £109 of costs for every £100 of revenue, meaning that the excess and all other overheads have to be paid for by either player sales or the owners underwriting the costs.

If Palace maintain their Premier League status for a few more seasons this is fine provided the owners continue to bankroll the club, but if not the club is at risk of major cutbacks as has been seen at Swansea in recent months.

The average wage at Palace is £56,000 a week but by all accounts some players are on about twice that sum which is usually accepted if the player is delivering (such as Zaha) but causes resentment when he is not (such as Benteke).

Having a wages to income spend at a constant in theory is a sign of good cost control but Palace do have a problem here in that UEFA recommend clubs should aim to spend no more than £70 in wages for every £100 of income and Palace have been above that benchmark in the last three seasons.


Agreeing what is meant by profit is always tricky as there are many variants, but the simplest definition is that it represents income less costs although deciding what is included in income and costs can muddy the waters.

Subtracting total costs from income gives what is called net profit and here Palace have a negative figure in the form of a net loss of £35.9 million.

This was perhaps bigger than expected although the rescue plan in recruiting a new manager and players after the De Boer experiment failed was expensive to repair.

Reports in the media recently have focussed on net profits especially with Spurs and Liverpool announcing ‘world record’ sums but the Premier League as a whole made a £286 million net profit in 2017/18 with those two clubs being responsible for three-quarters of the total.

A lot of the net profit can come from one off transactions, such as high tax charges (Manchester United’s was £63 million) or profits on player sales (Liverpool’s was £124 million, mainly through Coutinho going to Barcelona).

Profit from operations is perhaps a better measure as it ignores the distortions caused by tax and finance costs (some clubs pay interest on loans, others have interest free deals with owners) and concentrates on the money made just from regular business activities.

Operating profits for Palace are however little different to net profit as the club had a tax rebate that effectively offset the £35,000 a week in interest that was charged.

Nerds may be familiar with a profit measure called EBIT (Earnings before interest and tax) which strips out one off transactions, such as player sales gains and other irregular expenses and income.

Crystal Palace benefitted from these substantially in 2016/17 due to the sale of Bolasie to Everton which helped generate a £35m profit on player sales plus £4 million from the repulsive Tony Pulis in a court case where the club successfully recovered a bonus that he had claimed but to which he was not entitled.

A lot of clubs in the Premier League are dependent upon player sales to make ends meet, despite the benefits of broadcast income, as can be seen by EBIT losses being £184 million overall compared to net profits being a positive of £286 million.

Liverpool, for example, saw their profits fall from the world record £131 million quoted in the press to just £7m once the Coutinho profit (which won’t arise every year) was removed but Palace’s numbers barely changed as player profit sales were just £2 million.

Leaving out the amortisation cost (which is an accounting expense rather than a cash one) and depreciation (the same) gives something called EBITDA (Earnings Before Interest Tax, Depreciation and Amortisation) and the good news for Palace is that this is a positive figure.

Earnings analysts like EBITDA because it is the nearest thing to a cash profit figure that can be easily calculated as it removes all the accounting nonsense which can be manipulated by unscrupulous businesses (Palace have NOT done this though as far as we can tell).

Player Trading

Delving into the footnotes of the accounts shows that Palace £54 million on new players in the year to 30 June 2018 but sales were much lower at just under £4 million.

Large investments in players, as has been already seen, led to the rise in the amortisation charge in the profit and loss account.

In each year in the Premier League Palace have spent more on player than they’ve generated in sales, which shows the board has backed the managers even if some fans think they should have spent more.

The total net spend by Palace since promotion in 2013 has been £184 million.

The Premier League pays inflated prices for many players, but the total net spend last season was over £1,240 million, with the usual suspects at the top of the spending table.

Liabilities for player signings can arise if clubs make signings on credit and agree to pay over a number of years via instalments and here there is cause for concern as Palace owed £49 million to other clubs at 30 June 2018.


Every club can obtain funding in three ways, bank lending, owner loans (which may be interest free) or issuing shares to investors and Palace have borrowed in recent years as new owners have put money into the club to underwrite its losses.

Palace benefitted from £38 million of interest free loans in 2017/18 and the owners have stuck in a further £24 million since June 2018 and this is before the stadium expansion project is implemented which will involve cash going out before it generates revenues.

It’s likely that similar investment will have to be made unless Palace cash in on the crown jewels in their squad this summer as underperforming players on big contracts may be reluctant to take the pay cut their talents perhaps deserve.


Every year Palace defy a poor season start and end up mid table and 2018/19 looks likely to repeat the formula, which is crucial as the club is vulnerable should relegation occur due to its disproportionately high player costs.

Relying on two or three star players to earn enough points to keep Premier League membership and paying them handsomely has worked to date and it would be foolhardy to change what has worked to date.

Sorting out the infrastructure cannot come fast enough if Steve Parish’s aim of establishing Palace as a top ten team in the Premier League as the relative lack of matchday revenue will hold the club back in what is becoming an increasingly important income source with broadcast deals unlikely to repeat their quantum leaps of the recent past.

Key Financial Highlights for year ended 30 June 2018

Turnover £150 million (up 5%)

Wages £117 million (up 5%)

Pre-player sale losses £38.9 million (up 50%)

Player sale profits £2.4 million (down from £34.7 million)

Player signings £54 million (down from £104 million)