Everton Financial Results: We Are Glass

Introduction:

In what could have been a good title for a song title by The Cure, 10:30 on a Friday Night is a very odd time for a club to tease out its financial results. Initially there was a press release, full of positives as one would expect, and enough for the media to put out a column or two.

To find out the full details it was necessary to wait though, and that’s something we don’t like because the story has become old news by the time some of the key numbers have been released (Chelsea have just done the same).

Having said that, it was a memorable season for Everton from a financial perspective, as the benefits of new owner Farhad Moshiri’s investment impacted upon both profitability and balance sheet strength. In addition, the club inched closer to a new stadium, which will be necessary financially (although will be a loss emotionally) if the club is going to break through the glass ceiling and challenge for Champions League places.

Key figures for 2016/17:

Income £171.3 million (up 40.9%).

Wages £104.7 million (up 24.6%)

Losses before player sales £12.3 million (down 28.1%)

Player signings £92.1 million

Player sales £54.7 million

Farhad Moshiri investment £150 million (£45 million since the end of the season).

League position 7th (11th)

Everton had a decent season, qualified for the Europa Cup, but were still 15 points off a Champions League place.

Everton are controlled by Blue Heaven Holdings Limited, a company based in the Isle of Man tax haven.

Bluesky are owned by Farhad Moshiri, born in Iran, his family fled the revolution and came to the UK, where he attended university in London and obtained British citizenship (no doubt being part of the migrant ‘problem’ and stealing our undergraduate places according to the Nigel Farage wing of football fans) before a successful career working for some leading accounting firms.

How he made his fortune is unclear, which didn’t stop the Grauniad having a thinly veiled pop at the nature of his investment and the role played by Alisher Usmanov, the minority shareholder in Arsenal. The inference is that Moshiri is influenced/controlled by Usmanov, but there’s no hard evidence to support that.

He then bought a share in Arsenal, before selling it to acquire 49.9% of Everton in 2016, although his loans via Bluesky make him the effective club owner.

How he made his fortune is unclear, which didn’t stop the Grauniad having a thinly veiled pop at the nature of his investment and the role played by Alisher Usmanov, the minority shareholder in Arsenal.

Moshiri also appears in the Panama Papers, which ultimately means nothing, but again fuels the nudge-nudge wink-wink school of cynic.

https://offshoreleaks.icij.org/nodes/80015954

https://www.theguardian.com/football/blog/2017/jan/25/everton-farhad-moshiri-alisher-usmanov-new-money-ownership

Income:

All clubs generate money from three sources, matchday, broadcasting and commercial. For a club such as Everton, with no Champions League benefits and a competitive ticket pricing policy, they are reliant on broadcasting income to a greater degree than the media concocted ‘Big Six’ (ignoring that Everton have won the top division more recently than Spurs).

After effectively treading water from an income perspective for three years, due to the Premier League (EPL) signing a TV deal of that length with BT Sport and Sky, commencing in 2013/14, Everton benefitted from the new deal that kicked in for 2016/17.

The previous season Everton had 68% of their income from TV, whilst not as much as the likes of (Plucky Little) Bournemouth, it was still substantially higher than the ‘Big Six’.

A screenshot of a cell phone Description generated with high confidence

2016/17 resulted in a £48 million (58%) increase in TV revenues, most of it simply for being in the EPL, but about £8 million was due to increased prize money for finishing four places higher up the table than the previous season.

Only six clubs have reported their results to date for 2016/17, but there is a noticeable increase in the contribution made by TV monies.

A screenshot of a cell phone Description generated with very high confidence

Matchday income from ticket sales fell 20% to £14.1million, despite an increase in average attendances by over 1,000 to over 39,000. This was due to Everton reducing some ticket prices, especially for younger fans.

This is both a decent thing to do from an economic point of view, but also makes sense in allowing more young fans to see the club and increase the likelihood of them coming to see Everton if the move to the Bramley Moore dock stadium, where the club hope to have more than 61,000 seats available. This is dependent upon the move taking place, as costs seem to be rising all the time.

As a result, Everton’s average income per matchday fan dropped from £462 to £359. This also reflects that the club’s present facilities are not geared towards attracting large numbers of corporate fans, who pay premium prices to watch the game. Whilst there’s no love lost by regulars of any club towards the prawn sandwich brigade, the chinless wonders who occupy those seats can contribute towards the budget for players and other facilities.

A screenshot of a social media post Description generated with very high confidence

A problem for Everton is the new stadium is not expected to be available until 2022. Generating about £50 million a season less than local rivals Liverpool from matchdays does put the club at a significant disadvantage if wanting to break into the Champions League contenders.

https://www.theguardian.com/football/2017/dec/31/everton-new-stadium-costs-escalate-2022-target-bramley-moore-dock

Commercial income increased by £5.3 million (24.5%). On the face of things this looks impressive, but all is perhaps not as it seems. The club signed a deal to sponsor the training ground name, which generates an impressive £6 million. This deal was signed with USM Holdings, controlled by Alisher Usmanov.

Under normal circumstances this would have Arsene Wenger’s handlers reaching for his straightjacket and the padded cell, as he would be dragged away muttering incoherently about ‘financial doping’ as he has done in the past in relation to Manchester City’s eyebrow raising commercial and naming rights deals with Etihad Airways.

It would be cynical to suggest that Wenger seems less concerned when the unusual naming rights deal comes from a major shareholder in his own club Arsenal…

Costs:

The main costs for a club are in relation to players, and come in the form of wages and player amortisation.

Wages in total rose by a quarter to £104.7 million. Only a third of clubs have reported their details to date for 2016/17, but it does seem that Everton did invest in the squad in terms of their payments to players for the season. What is noticeable is that in 2015/16 Everton’s wage bill was only 2% higher than that of Stoke, in 2016/17 this gap had increased to 23%.

This suggests that Moshiri’s commitment had found its way to the player budget, but the extra income generated ensured that that wages as a proportion of revenues actually fell to 61%. This compares to a Premier League average of 67% in 2015/16.

A screenshot of a cell phone Description generated with very high confidence

The wages increase might explain the USM sponsorship deal too. Under Premier League rules, clubs can only increase their wage bill by £7 million plus any increases in non-broadcast income plus the average gains from player sales over the last three years.

This is known as the Short-Term Cost Control (STCC) rule. (Anyone wanting to read it is welcome to look at page 116 of the Premier League 2017/18 Handbook, but I’m sure you’d rather pick your feet to be honest, it’s more enjoyable).

The aim of STCC is to prevent all the increases in TV monies going straight through to the pockets of players and agents. Instead the increase in this revenue stream will go to either fans in the form of lower ticket prices (kudos here to Everton) and/or club owners (because multi-millionaires need extra cash too).

For Everton, with a wage bill increase of £20.7 million, the STCC rules are satisfied as follows.

£’m
Annual increase allowed 7.0
Increase in sponsorship income 5.3
Decrease in matchday income (3.5)
Averaged three year gain on player sales 21.0
Total 29.8

Everton were therefore well within the rules for 2016/17, due to both the USM sponsorship and the sale of John Stones to Manchester City.

The other player related expense is that of player amortisation. This is the cost of signing a player spread over the length of his contract. Everton’s biggest signing in 2016/17 was Bolasie from small London club Crystal Palace for £25 million on a five-year contract. This works out as an amortisation charge of £5 million per year for five years.

In our view amortisation is a better measure of player investment than net player spend, as it smooths out individual transfers over a longer period of time, and shows the trend in terms of player investment.

The downside of focussing on player amortisation is that it ignores the impact of academy players and Bosman deals on the strength of the squad (but so does net player spend TBH) as these involve zero cost and therefore zero amortisation.

A screenshot of a cell phone Description generated with very high confidence

Following a previously seen trend in relation to Everton, the club broadly plateaued between 2014-16, but the new TV deal and owner investment allowed the club to commit more to player signings and therefore amortisation in 2017.

We would expect this figure to accelerate significantly in 2017/18 due to the £150 million spend on new players during summer 2017.

Directors pay

One beneficiary of the extra monies at the club is that of the highest paid director. The club does not name the individual (there is no legal requirement to do so), but our money is that Chief Executive Robert Elstone is the likely person. His salary increased from £400,000 to £588,000.

That’s clearly a significant pay rise, but in 2015/16 the average pay for an EPL chief executive was £1.4 million, so he is relatively underpaid for the job he does (and it has to be said he’s a thoroughly nice chap too).

Profits and losses:

Losses are income less costs, and were £12.3 million last season, or £236,000 a week, before taking into consideration player sales, mainly that of John Stones, of £54.7 million.

We tend to look at what is called EBIT (Earnings Before Interest and Tax) as a main profit metric, as this removes the volatility of player sales and one off expenses (for example, Everton paid out £11.3 million in 2016 to Roberto Martinez and his team when the manager was sacked, this expense is excluded from EBIT as it is non-recurring in nature).

Everton have made EBIT losses of £35.5 million over the last five years, which explains why they have sold players to balance the books. Total gains on player sales during the same period were £107 million.

A screenshot of a cell phone Description generated with very high confidence

There’s a case for saying that EBIT profits are too harsh, as it excluded player sales but included player acquisition costs in the form of amortisation.

It’s therefore also useful to consider EBITDA (EBIT with player amortisation and the depreciation of long term assets such as property and equipment) in addition to EBIT. This shows a healthier position for the club, which made an EBITDA profit every year.

A screenshot of a cell phone Description generated with very high confidence

Player trading:

2016/17 was a record year for Everton (although will be surpassed by 2017/18). The club purchased players for £92.1 million, and had sales of £54.7 million, to give a net spend of £37.4 million. Although the gross figures are higher than in previous years, the net spend is in line with that of recent years.

A screenshot of a cell phone Description generated with very high confidence

Everton seem to make a number of signings which are performance related. At the start of the 2017/18 season they were committed to additional payments for players, usually linked to appearances, trophies/Champions League qualification, international caps, loyalty bonuses and so on. This could cost the club £50 million if all the conditions are achieved, and we suspect that the fans would be more delighted than the finance department if those payments had to be made.

A close up of a newspaper Description generated with high confidence

Even after selling Lukaku to Manchester United, Everton did spend a net £60.6 million on the squad in summer 2017. On top of this Wayne Rooney arrived on a free transfer, so expect a major increase in the wage bill in 2017/18.

A screenshot of a cell phone Description generated with very high confidence

The Owner:

Farhad Moshiri’s total investment is a mix of shares and quasi-loans. He paid £87.5 million for his 49.9% investment in 2016, but this money was to existing shareholders rather than the club itself.

His main action has been to pay off the bank loans of around £55 million, and replace them with an interest free advance of £105 million. During the summer of 2017, after the club’s year end, he advanced a further £45 million to fund player signings.

The early repayment of the bank loans was both good and bad news for Everton. The club had being paying out interest costs of £100,000 a week prior to Moshiri taking over, and this saving can therefore be invested in the playing squad. The banks did however charge a penalty fee £6.6 million for early repayment of the loans, revealing themselves to be a bunch of cockjuggling thundercunts harsh negotiators.

The club also took out a loan with a Chinese bank after the year end. Whether this is dipping the toe into the water in terms of financing the new stadium is yet to be seen.

Following Moshiri cleaning out the debts we estimate that the club is now worth £375 million, using our version of the Markham Multivariate Model. Given that the club was valued at £175 million when the takeover took place less than two years ago, plus £115 million in quasi-loans from Moshiri, it is a decent return on his original investment.

Summary

Everton are trying to be upwardly mobile as a result of new club ownership. To be realistically competitive for a Champions League place on a regular basis is unrealistic if the club continues to be based at Goodison, where the restrictions in terms of capacity and corporate income streams are an ongoing constraint.

By the time the Bramley Moor dock stadium is opened (and we’re assuming 2022 as the earliest date) Manchester United, Manchester City, Arsenal, Spurs, West Ham, (and possibly Liverpool and Chelsea) will have 60,000 plus capacity stadia too, and all will be aiming for those top four spots too. Having a large capacity stadium is no guarantee of success, just look at some of the clubs in the Championship.

Everton’s wage bill is currently less than half of the largest clubs, and it’s difficult to see how that gap will be eliminated in the short to medium term.

The Numbers

A close up of text on a white background Description generated with very high confidence

Bristol City: Unfinished sympathy

Introduction:

Bristol City showed the challenge that exists for clubs trying to survive, let alone compete, in the Championship after racking up a recurring loss of £19.2 million before player sales last season. This is for a club that finished 17th in the division. The previous season similar losses were £14.4 million for finishing one place lower in the division.

The continued development of Ashton Gate should give City a better base on which to generate income.

The Championship remains the most frightening division in European football in terms of the financial gamble that exists there, as club owners decide whether to fund a promotion push with the potential £100 million a season that brings in terms of Premier League TV monies.

City are one of the earliest teams to report their results for 2016/17, but we maintain our estimate of sustainable pre-player disposal losses for the Championship exceeding £400 million for the season (compared to £361 million in 2015/16).

Key figures for 2016/17:

Income £21.2 million (up 49.3%).

Wages £20.9 million (up 19.9%) .

Losses before player sales £19.2 million (up 33.3%)

Player signings £13.6 million

Player sales £16.7 million

Steve Lansdown investment £118 million (up £14.9 million).

City had a wobbly season, early contention for the playoffs evaporated and they ended up needing good results in the last month to avoid relegation.

The club are owned by Pula Sports Limited, a company based in the tax haven of Guernsey. Pula Sports Limited also own Bristol Rugby club and Bristol Flyers basketball team.

Pula are owned by Steve Lansdown, a very successful accountant and businessman, half of Hargreaves Lansdown, the £8 billion plus valued financial services company.

Income:

All clubs generate money from three sources, matchday, broadcasting and commercial. What separates out the Championship from other league is the impact of parachute payments from clubs who were previously members of the Premier League (EPL).

Total income for the season was £21.2 million. To put this in context, the three clubs relegated from the Premier League, Aston Villa, Newcastle and Norwich, each earned over £40 million in parachute payments.

A screenshot of a cell phone Description generated with very high confidence

Whilst we don’t have figures for most of the clubs for 2016/17, as City are one of the first to announce their results, the table below, based on 2015/16 data, gives a rough indication of just how difficult it is to compete for those clubs without parachute payments.

Football clubs generate cash from three main sources, matchday, broadcasting and commercial.

A screenshot of a cell phone Description generated with very high confidence

Matchday income from ticket sales rose 28% to £5 million. This was due to attendances at Ashton Gate increasing 26% from 15,292 to 19,256.

Broadcasting income rose 42% to 6.8million. This was due to the ‘solidarity payment’ paid by the Premier League to the English Football League increasing from £2.3 million to £4.3 million as a result of a new domestic TV deal for 2016/19 secured by Sky and BT Sport.

In addition, the club gets a share of the EFL TV deal with Sky, and is estimated to earn £100,000 for each home game and £10,000 for every away game broadcast live on Sky.

Other income, mainly commercial and retail, rose by an impressive 71%. This is mainly due to the completed development of Ashton Gate, the stadium that City share with Bristol Rugby Club. Having more modern facilities allows the club to generate extra money from hospitality, hosting conferences, restaurants etc, and allows the club to be open for more than the 25-30 days a year in which football matches are taking place.

Even with these significant increases in income City cannot hope to compete with those clubs in receipt of parachute payments, and so will be in the bottom half of earners in the Championship for the foreseeable future, unless attendances rise to the 25,000 plus level, which will only come if there is a sustained promotion campaign.

Costs:

The main costs for a club are in relation to players, and come in the form of wages and player amortisation.

Wages in total rose by 20% to £20.9 million. This is quite a frightening figure in many regards, as if a club in the bottom third of the division has to increase wages by 20% to tread water, it bodes poorly for the sustainability of teams in this division unless they are bankrolled by owners.

The wage/income ratio for City was the lowest for a number of years at 99%. This still means that wages were 99% of income, or to put it in more simple terms, Bristol City paid out £99 in wages for every £100 they generated from revenue. This of course leaves effectively nothing to pay for all the other overheads of the club, such as ground maintenance, heat and light, HR, finance and so on.

In the Championship as a whole, this puts the club slightly lower than the average wage level for 2015/16 of £23.1 million, and a wage/income level of 101% for the division as a whole.

Whilst the increase in wages was substantial, it is still significantly less than those of relegated Norwich, who paid out £55.1 million in 2016/17, and promoted Brighton, with £31.3 million plus a further £9 million in promotion bonuses.

The other player related expense is that of player amortisation. This is the cost of signing a player spread over the length of his contract. In the directors’ report City said that the club was heavily reliant on loan players for the season, most noticeably Tammy Abraham from Chelsea, who scored 23 goals in 2016/17.

Despite the use of the loan system, City also spent £13.6 million on signings during the season. The biggest signing was probably Lee Tomlin for about £3 million on a three year contract. This works out as £1 million of amortisation per year.

City’s amortisation charge rose by 160% to £5.2 million compared to the previous season.

A screenshot of a cell phone Description generated with very high confidence

The advantage of focussing on amortisation instead of just looking at transfer fees is that it removes some of the volatility from making one big signing in a single year.

We would expect the amortisation charge to continue at these levels at least for 2017/18. Despite selling tubby convicted felon Lee Tomlin to Cardiff in the summer of 2017, City still spent a net £9.5 million on players during the transfer window.

Other costs:

The club has significant other costs operating from the redeveloped Ashton Gate. Total expenditure on the stadium in 2016/17 was £11 million, bringing the total for the last few years to approximately £45 million.

The stadium and other property costs are being written off over 50 years, but to this is added the costs of depreciating shorter life assets such as office equipment. This gives an overall depreciation charge of £2.5 million, significantly up from £0.6 million the previous season, when the stadium improvements were not still a work in progress. This means that the deprecation charge was higher than for clubs with other stadia (Norwich’s was £1.9 million, for example).

Directors pay

Bristol City seem to have a fairly tight policy in relation to director pay. It could be that the costs are borne by holding company Pula Sports in Guernsey, but at £115,000 the amount is fairly low compared to other clubs, with seven clubs paying over £200,000. The Brighton CEO was paid £1.2 million in 2016/17 as the club was promoted.

A screenshot of a cell phone Description generated with very high confidence

Losses:

Losses are income less costs, and were £19.2 million last season, or £370,000 a week,before taking into account the sale of Jonathan Kodjia to Aston Villa, for £15 million. This sale was the main driving force behind gains on player disposals of £13.6 million.

Over the last five years City have racked up losses before player sales of £70 million, and the highest positon during that period was last season’s 17th in the Championship.

Player sales have reduced these losses by over £16.7 million, but it is still a substantial level of commitment required from owner Steve Lansdown to underwrite these losses.

A screenshot of a cell phone Description generated with very high confidence

Some of you may by querying how the club has complies with financial fair play (FFP), which restricts losses to £39 million over three seasons, so it must average £13 million a season.

FFP is calculated using a different formula to the accounting losses, and some expenses, such as infrastructure, promotion, women’s and academy football, community schemes and so on are excluded.

Whilst City don’t detail all of these costs, they appear to be easily FFP compliant last season. We’ve asked around some of our chums in football, and have calculated the following FFP loss for 2016/17.

A close up of text on a white background Description generated with very high confidence

The sale of Kodjia ensured that the FFP losses were not an issue for the club, and this effectively means that they can incur losses of £39 million over two rather than three seasons and stay compliant.

Player trading:

As previously mentiond, according to the accounts CIty paid out £13.6 million in 2016/17 on player additions.

£13.6 million is a record sum for City, more than triple the amount of the previous season. There is a noticeable discrepancy between this figure and the amount of cash spent on players of £8.9 million. This suggests that a number of signings were made on credit.

it’s a reasonably high figure for a Championship club, but not if compared to the amounts spent last season by clubs relegated from the Premier League in Aston Villa (£76 million) Newcastle (£57 million) and Norwich (£20 million), and promoted Brighton (£19 million).

Similarly, although Kodjia was sold to Villa for £15 million, the amount of cash received from player sales was £6.6 million. Again this is due to the deal being based on instalments rather than a single cash sum. This is borne out by looking at City’s debtors footnote, which reveals that the club is now owed over £10 million from other clubs, comparted to just £250,000 at the end of the previous season.

Spending during the 2017 summer window has resulted in the club transfer record being broken with the signing of Famara Diedhiou from Angers for £6 million.

The Owner

Steve Lansdown’s total investment increased further in 2016/17 as he invested a further £15 million in the club via a new share issue.

This takes his total investment to just over £118 million, in the form of shares and interest free loans.

A screenshot of a cell phone Description generated with very high confidence

Realistically, Lansdown will have to subsidise the club by a minimum of £10 million a year for the foreseeable future, unless promotion to the Premier League is achieved. The investment in the stadium at Ashton Gate will help to generate extra income, but this will not make a serious dent in the operational losses, especially with no sign of wage growth slowing down in the Championship.

The good news for City fans is that there’s no sign of his affection for the club in the city where he made his fortune, or sport in Bristol, waning, despite him moving to Guernsey for tax reasons. He remains the club’s biggest asset, but also it’s biggest risk should anything happen to him and he can no longer underwrite the losses.

Lansdown appears to have adopted the Brighton model of improving the infrastructure first to lay down the foundations of being able to compete in the Championship, and then using this as the basis for a promotion push.

More nights such as the recent defeat of Manchester United in the League Cup are likely to continue to cement Lansdown’s love affair with the city and the club.

The numbers

Brighton and Hove Albion. Please, please, please, let me get what I want

Brighton and Hove Albion: Please, please, please, let me get what I want.

A group of people standing in front of a crowd Description generated with very high confidence

Introduction: Bigmouth strikes again.

This report will focus on the cost of Brighton being promoted to the Premier League in the six years since they’ve moved to the Amex stadium in 2011.

Key figures for 2016/17: Panic

Income £29.2m (up 18.3%).

Wages £31.3m* (up 11.0%) *excludes £9.1million bonus paid to staff upon promotion, would be a 42.9% increase if bonus included.

Losses before player sales £38.9 million (up 50.1%)

Player signings £19.0 million

Player sales £ 0.3 million

Tony Bloom investment £280 million

The Albion just missed out on promotion at the end of 2015/16, first on goal difference to Middlesbrough, and then via the playoffs following a match at Hillsborough in which four players limped off injured in the first hour.

Chairman and professional poker player Tony Bloom was therefore faced with a dilemma at the start of 2016/17. Sell some of their players who were being courted by other teams (Dale Stephens and newly promoted Burnley, Lewis Dunk and small Premier League outfit Crystal Palace, Antony Knockaert and just relegated Newcastle), or stick with them and go all in for one final promotion push.

He knew the latter would be a gamble, as if the club didn’t achieve promotion in 2016/17 it would have had to scale back its investment in the playing squad the following season to comply with financial fair play (FFP).

Bloom’s experience of when to go ‘all in’ worked, he backed Chris Hughton by turning down offers, investing in the squad, and was rewarded with promotion.

Income: Frankly, Mr Shankly

Total income for the season was £29.2 million. To put this in context, the three clubs relegated from the Premier League, Aston Villa, Newcastle and Norwich, each earned about £50 million in parachute payments. The sum is also four times the amount the Albion were generating when playing at the Withdean stadium prior to the move to the Amex in 2011.

Whilst we don’t have figures for most of the clubs for 2016/17, as the Albion are one of the first to announce their results, the table below, based on 2015/16 data, gives a rough indication of just how difficult it is to compete for those clubs without parachute payments.

Football clubs generate cash from three main sources, matchday, broadcasting and commercial.

Matchday income from ticket sales rose 14% to £10.7 million. This was due to attendances at the Amex increasing to 27,966 from 25,583.

Broadcasting income rose 48% to 8.1million. This was due to the ‘solidarity payment’ paid by the Premier League to the English Football League increasing from £2.3 million to £4.3 million as a result of a new domestic TV deal for 2016/19 secured by Sky and BT Sport. In addition, the club is estimated to earn £100,000 for each home game and £10,000 for every away game broadcast live on Sky. With the Albion being in the two top all season, they were regulars on television too.

Other income, mainly commercial and retail, rose by a modest 7%.

Promotion to the Premier League will have a major impact on those figures. Benchmarking against Stoke City, the only club of a similar size who have published their 2016/17 figures to date, we would anticipate matchday income to rise by about 10%, commercial/other income to double, and broadcasting income to be somewhere between £95-£120 million in 2017/18, depending upon how often the club appears on TV, and the final league position.

To get a rough idea of the increments involved, if a club appears on live TV more than ten times they get about £1 million for each additional appearance, and there is prize money for finishing in every position in the Premier League that increases by just under £2 million for each place up the table, so the difference between finishing 11th and 16th is therefore about £10 million.

Costs: Stop me if you think you’ve heard this one before

The main costs for a club are in relation to players, and come in the form of wages and player amortisation.

Wages in total rose by 43% to £40.3 million. Included in this figure is a £9.1 million promotion bonus paid to all 288 staff members, both playing and operational, by Tony Bloom. Excluding the bonus wages would have risen by a more modest, but still challenging 10.6%.

This means that wages (excluding bonuses) were 107% of income, or to put it in more simple terms, Brighton paid out £107 in wages for every £100 they generated from revenue.

A close up of text on a white background Description generated with very high confidence

In the Championship as a whole, this puts the club at slightly more than average wage payers, compared to 101% for the division as a whole.

Whilst the increase in wages was substantial, it is still significantly less than those of relegated Norwich, who paid out £55.1 million in 2016/17.

This may explain why Alex Pritchard, who had apparently had agreed to sign for Brighton in summer 2016 for a then record fee of up to £8 million, mysteriously made a last-minute decision to sign for Norwich as he headed back up the motorway to his then host club Spurs.

Pritchard then took on the role of pantomime villain for the 2016/17 season in the eyes of many Brighton fans, for making exactly the same decision they would have made themselves under the circumstances.

The wages paid also perhaps put paid to the claims made by former manager Gus Poyet, who said the club had ‘hit the ceiling’ in terms of wages in 2013.

In recent years it has been an expensive business in terms of wages for clubs to fund promotion. Neither Newcastle nor Huddersfield have as yet published their accounts for 2016/17, so not possible to compare the Albion to the other promoted teams.

The other player related expense is that of player amortisation. This is the cost of signing a player spread over the length of his contract. Brighton broke their transfer record in summer 2016 in signing Shane Duffy from Blackburn, for a fee rumoured to be £3.5 million, on a four-year contract. This gives an annual amortisation charge of £875,000 (£3.5m/4).

The advantage of focussing on amortisation instead of just looking at transfer fees is that it removes some of the volatility from making one big signing in a single year.

A screenshot of a cell phone Description generated with very high confidence

Albion’s amortisation increased significantly in 2011/12 with the then record signings on Will Hoskins, Will Buckley and Craig Mackail-Smith as the club was promoted and moved to the new stadium.

In then plateaued for the next three years before Tony Bloom backed Chris Hughton and sanctioned a modest increase in 2015/16, then making an extra commitment in the summer 2016 window.

Other costs: Well I wonder

The club has significant other costs operating from the Amex stadium. Land and buildings have a balance sheet value of £134 million. This includes £2.5 million spent during the year, which is probably in respect of property close to the training facilities at Lancing.

The stadium and other property costs are being written off over 50 years, but to this is added the costs of depreciating shorter life assets such as office equipment. This gives an overall depreciation charge of £4.4 million, down 10% on the previous year, but still higher than many other clubs in older stadia, constructed at a much lower cost. (Norwich’s was less than half that of the Albion, at £1.9 million, for example).

The Albion have a unique cost in terms of transport. Because of the sustainable transport policy that was a condition of planning permission being granted, the club has to contribute significantly to the local train and bus companies to provide free transport to and from home games. This cost is unknown but is estimated to be in the region of £2.5 million.

Director Pay: Barberism begins at home

One expense that will perhaps result in comment is the remuneration of chief executive Paul Barber, who joined the club over five years ago.

Barber’s pay more than doubled to over £1.2 million. Part of this was performance and bonus related, part of it was to prevent other clubs headhunting him. It was publicised in The Times that PB was on Liverpool’s radar when they were looking to replace Ian Ayre, their chief executive. Ayre’s package at Liverpool was…£1.2 million

A screenshot of a cell phone Description generated with very high confidence

We’ve had some dealings with PB here at the Price of Football, and our view is he’s worth every penny. There can be few chief executives of what is now a £140 million a year business who will reply to every email they receive, and engage in fan debate to the degree that Barber has done during his time at the club.

Ultimately if Tony Bloom thinks Paul Barber is worth the money then that’s more than good enough for us. We don’t always agree with the decisions made, but then I don’t always agree with decisions made by my wife either, and still manage to think she’s wonderful.

For some reason PB generates a hysterical reaction from the Mavis Reilly element of the fanbase, who use any excuse to give him stick. We find such behaviour bewildering.

Losses: Hand in glove

Losses are income less costs, and were £38.9 million last season. This was an increase of £13 million from 2015/16. The losses were underwritten by Tony Bloom, to the tune to £107,000 a day.

Since moving to the Amex the Albion have racked up total losses of £118 million in trying to achieve promotion to the Premier League.

Some of you may by querying how the club has complies with financial fair play (FFP), which restricts losses to £39 million over three seasons, so it must average £13 million a season.

FFP is calculated using a different formula to the accounting losses, and some expenses, such as infrastructure, promotion, women’s and academy football, community schemes and so on are excluded.

Whilst the Albion don’t detail all of these costs, they have stated that they were FFP compliant in 2016/17. We’ve asked around some of our chums in football, and have calculated the following FFP loss for 2016/17.

The above suggests that the Albion were probably at their limit in terms of complying with the FFP rules in 2016/17, and would probably have had to make some player sales in 2017/18 in order to ensure they satisfied the three year figure of £39 million.

FFP in the Premier League is more relaxed, and of more concern to the club will be satisfying the wage control limits of STCC (Short term cost control) that only allow a Premier League club to increase the wage bill by £7 million a season, plus any rises in non-broadcast income

Player trading: Never had no one ever

According to the accounts the Albion paid out £19 million in 2016/17 on player additions.

On the face of it these seems much higher than the sums being quoted in the press, as the main signings were Shane Duffy (quoted at the time as going for a then record £3.5 million), Glenn Murray (£3 million), and Oliver Norwood, (£2m), although the club, as one would perhaps expect from a business owned by a professional poker player, keep their cards close to their chest and don’t disclose actual numbers.

We suspect the discrepancy is because many signings came with conditions in which extra fees kicked in should the Albion be promoted, and these payouts therefore became due at the end of 2016/17.

£19 million is a record sum for the Albion, more than double of any previous season, it’s a reasonably high figure for a Championship club, but not if compared to the amounts spent last season by clubs relegated from the Premier League in Aston Villa (£76 million) Newcastle (£57 million) and Norwich (£20 million).

A screenshot of a cell phone Description generated with high confidence

The club did appear to retrench in 2013 and 2014, partly due to tighter FFP rules, but as these were relaxed in 2015/16 spending has been modest, but perhaps more importantly, of mainly high quality. Previous years signings in the likes of Knockaert, Stephens, Murphy, Baldock, Hemed, Stockdale and so on can all be considered to be bargains.

Spending during the 2017 summer window has resulted in the club transfer record being broken three times. Most Premier League clubs do disclose in the accounts the amount spent (sometimes gross, sometimes net) in the window, in what is called the ‘post balance sheet events’ note, and we’re disappointed (actually probably just nosey) in that the Albion have not followed suit here.

The club have also spent £15.7 million in respect of buying land for development next to the training ground in Lancing. Once this is converted into retail and housing stock this could be a very useful additional source of income for the club. The hotel once proposed for the Amex site seems to presently be on the back burner.

The Owner: Handsome Devil

Tony Bloom’s total investment increased further in 2016/17 as he lent the club £28.2 million in the year. He underwrote the losses incurred, which was the equivalent of subsidising every ticket sold at the Amex in the Championship by £60 per match.

This takes his total investment to just over £280 million, in the form of shares and interest free loans. In addition to Bloom’s loans, the club also had racked up an overdraft of over £16 million by the end of May 2017, probably to pay out the staff bonuses as a result of promotion.

A screenshot of a cell phone Description generated with very high confidence

Some fans are muttering about him selling out at a profit to a mythical Chinese or Middle Eastern investor. There’s no evidence to support this as (a) he’s a local lad (who just so happened to be a billionaire through his mathematical genius mind) who clearly loves the club, and travels to matches by train with the fans, and (b) he wouldn’t get his money back, as the club is worth less than the sum he invested.

Premier League status should allow him to stop having to subsidise the club as the extra monies of the Premier League should enable the club to break even (Stoke, for example, a club of similar size, made a profit of just £3 million in 2016/17).

Bloom remains the club’s biggest asset, as his devotion and decision making have proven to date have been exemplary. That also makes him the biggest risk, as if anything were to happen to him then the status of the club’s loans, for example, is unknown.

As a fan, all I can say is thank you Tony Bloom for bringing me some of the most memorable days of my life, and long many you continue to be in charge.

Walsall: Mama Weer All Crazee Now

Football, it’s all about money, footballers are a bunch of greedy tossers, all clubs lose a fortune and are bankrolled by overseas millionaires, the game is going to destroy itself etc.

But here’s a different club. It lives within its means, makes a profit every year, and that’s without selling a single player for a fee, and has 128 staff who between them earn just over half of what Manchester United pay Jesse Lingard.  Perhaps it could make you fall in love with the game again?

The club is Walsall, in the Black Country, nice little stadium, shame about the lack of decent pubs nearby, but other than that the epitome of a stable lower league outfit who have spent the last ten years in League One. (I now await revelations from angry Saddlers fans who spill the dirt on their club).

As a Brighton fan, I have mixed reactions about Walsall, watching my team lose 2-1 in an insipid Capital One Cup game at the start of 2015/16 season. and seeing the mighty Chris O’Grady’s last kick for the club as he put a penalty for the Albion into Row Z before being immediately substituted and running off the pitch faster than he’d moved during the match.

Income

Most clubs show three types of income in their accounts, but somewhat frustratingly Walsall only show two, by combining broadcasting and commercial streams.

Walsall’s income was almost unchanged at £6.6 million in 2016/17, although a £493,000 increase in commercial/broadcast offset a £425,000 (28%) fall in matchday income. The latter was partially due to a playoff finish and reasonable runs in cup competitions benefitted the club in 2015/16 when they played Chelsea in the League Cup and made it to the fourth round of the FA Cup.

A new BT/Sky TV deal for the Premier League resulted in an increase in solidarity payments that trickle down to League One clubs from £360,000 to £645,000.

Over the last five years Walsall’s income has been growing steadily, mainly due to non-matchday sources.

A picture containing text Description generated with high confidence

Costs

Footballs main costs are in relation to players, and here Walsall seem to have a lid on their ambitions.

The total wage bill for 2016/17 was £3.12 million, or just over £60,000 a week, before adding in pension and national insurance costs. This works out as an average of £470 a week for the staff. Even so this represents a 36% increase in the wages paid in 2012/13 of £2.29 million, where the average Walsall employee was on £390 a week.

The club clearly have a tight wage budget set each year, and this is why the wage to income ratio fluctuates in a narrow range around 50%. This compares to an average of 101% for clubs in the Championship.

A screenshot of a cell phone Description generated with very high confidence

The employees who have perhaps done most well from the club are the directors, whose pay has increased from £106,000 to £192,000 over the five years of our analysis.

A screenshot of a cell phone Description generated with very high confidence

The club appears to rent its stadium and training ground. The rent fluctuates from year to year, and went up from £400k to £449k in 2017. This appears somewhat strange, as the club appears to both own and rent the Bescot.

Talking to some fans on Twitter, it appears that the club owns the stadium, but the land it occupies is rented. Apparently the land is owned by Chairman Jeff Bonser’s pension fund.

This has been investigated by the excellent David Conn in The Grauniad.

https://www.theguardian.com/football/david-conn-inside-sport-blog/2011/mar/30/walsall-stadium-sale

The club is therefore committed to paying about another £5m in rent for land at the stadium until the next review.

It therefore appears that the board are generating money from the club directly and indirectly in three areas, fees (£192k), rent (£440k) and interest on loans (not too clear but at least £6k).

This doesn’t mean that Posner and his colleagues are in the Monty Burns category of evil company owners, but neither are the likely to be nudging the likes of local philanthropists at other clubs such as Steve Gibson (Boro), Peter Coates (Stoke) and Tony Bloom (Brighton) off their crowns either.

Profits

Profits are income less costs. Walsall seem to be able to break even each year, just. This could be manipulated by the directors’ tweaking their pay to ensure the club finishes in the black each season.

A screenshot of a cell phone Description generated with very high confidence

Player trading

You don’t see Walsall mentioned too often in the transfer gossip columns of the papers or sports broadcasters, and there’s a good reason for that.

It initially appears that during  the four years leading up to 2016/17 the club neither sold nor bought a player for a fee.

This record was broken during the last season, when Cypriot striker Andreas Makris was signed for a supposed record fee of £270,000 (€300,000). This was funded by Walsall’s success the previous season.

This fee is at odds with the accounts though, which reveal that the actual amount paid was £179,000 (€200,000). Makris’s season proved to one of disappointment, with one goal in 32 games. After proving to be shite a disappointment Makris’s value was written down in the accounts, and he was sold back to Cyprus in the summer of 2017. Whilst the fee wasn’t disclosed, it looks, from a bit of number triangulation, the fee was about £110,000.

In relation to the sale of players, the issue is muddied by the way the club appears to have dealt with the issue. Normally, when a club makes a disposal, it is shown separately on the profit and loss account, as the club is not in the actual business of selling players.

Sheffield United do this in their accounts, as do practically all others.

What Walsall appear to have done is fold in the profit on player sales within their ‘football and commercial income’ heading. That’s at best reducing transparency, we think it’s a shabby way to deal with the subject, and inconsistent with what we believe is best business practice.

Conclusion

Walsall have shown that a club can break even, by managing their wage budget carefully, and being cautious in the transfer market (ten clubs in League One did not sign players for fees in 2015/16 for example).

Had they been promoted to the Championship in 2015/16 after finishing third and making the playoffs, they would have had a season in the sun, playing the likes of local rivals Villa, Birmingham and Wolves. Having done so once, and seen the likes of Shrewsbury have a good season to date in League One, it’s difficult to see the Saddlers change their business model for the foreseeable future.

The club does have debts of around £2 million from the directors, but these are serviceable. Part of these loans are interest free.

From an analysts’ perspective, it’s also a breath of fresh air to see a club being so transparent and putting out its full results in the public domain for fans to see. Clubs are a part of the community, and the community have a moral right to know about how the club is financed.

However what should be three cheers is reduced to two.

The methods used to extract money from the club by some who are responsible for its long term welfare, and the way that some figures (such as player disposals) are not disclosed.

This is harsh on those who travel the length and breadth of the country watching the team play every week.

Fans invest more than money into their clubs, and have a degree of moral and emotional right to know the extent to which the club has benefited from player trading.

The Numbers

A picture containing receipt, text Description generated with very high confidence

Celtic: Inbetween Days

Introduction

Celtic’s accounts for 2016/17 arrived in our inbox 24 hours before the club lost its 69 game domestic unbeaten run.

We recently reported on the financial situation of Rangers, who were promoted to the Scottish Premiership (SPL) in 2016/7.

http://priceoffootball.com/glasgow-rangers-201617-orange-crush/

They highlight the paradox of being in their current position, too rich compared to their peers to make Scottish football competitive (although Hearts fans may now query that), but too poor to be able to challenge in the Champions League, leading to their fans searching through Google Maps as they try to find how easy it is to get to St Petersburg on public transport for the forthcoming Europa League match against Zenit.

A person standing posing for the camera Description generated with very high confidence

Key figures for 2016/17

Income £90.6m (2016 £52.0m)

Wages £52.2m (2016 £36.9m)

Profit before player sales £3.7m (compared to £13.6m loss in 2016)

Player signings £13.8 m (2016 £8.8m)

Player sales £4.2m (2016 £14.0m)

Income

According to the accounts the club generates its income from three main sources. Matchday, merchandising and broadcasting.

A screenshot of a cell phone Description generated with very high confidence

Matchday income was up 50%, the main reasons for this were:

  • Champions League qualification and attractive ties against Munchengladbach, Barcelona and Manchester City.
  • Higher season ticket sales as fans wanted to ensure they saw their team play against Rangers in the Scottish Premiership for the first time in years.
  • Preseason tournament against Leicester, Barcelona and Inter Milan.

Matchday income contributed 41.5% of total revenues for the club. Compared to the English Premier League (EPL), this is a far higher proportion than for any club in that competition.

Celtic’s matchday income would place them seventh if they had been in the EPL, which shows the contribution made by fans to the club.

Broadcast income more than doubled, again driven by a Champions League qualification. The payout was €31.7 million, compared to only €5.8 million the previous year, when the club only qualified for the Europa League.

Celtic also benefited with the payouts being made in Euros, as the pound fell in value at the UK’s economy was downgraded as a result of the Brexit vote. This added a further 15% to the sterling value of the sum received by Celtic.

Other/merchandising income was up 30%, as the club launched three new kits during the season.

Compared to rivals Rangers, who have the second highest level of income in Scotland, Celtic’s income was substantially higher in all three main areas. The figures also show that the Scottish Premiership’s TV deal with Sky is paltry compared to the riches available in the Champions League.

A screenshot of a cell phone Description generated with very high confidence

Having three times as much income as the next largest club makes it very difficult for anyone to compete with Celtic when it comes to paying out the costs of running a club.

Costs

The main expense for a football club is in relation to players. These consist of two main elements, wages and amortisation.

A close up of a map Description generated with very high confidence

Wages rose by over 40% because Brendon Rogers signed the likes of Scott Sinclair, Kolo Toure, Cristian Gamboa and Eboue Kouassi, all of whom were on lucrative contracts by Scottish standards. Players would also have been paid bonuses for featuring in the Champions League.

At £52.2million, Celtic’s wages were three times those of Rangers (£17.6m). The next highest in Scotland was Aberdeen at £6.8m.

For the first time a Celtic director received pay of more than £1 million, with Peter Lawwell taking home in total £1,167,000. Somewhat bizarrely, for the four previous years the highest paid director had always been paid £999,000, perhaps not wanting to upset fans with the thought of one of the suits trousering more than a million for being to help mastermind the defeat of the likes of Ross County and ICT.

Celtic seem to have their wage levels under control, even with the increased amounts being paid. The wage/income ratio, which in the English Championship was over 100%, was more in line with the EPL, which averages 68%.

A screenshot of a map Description generated with very high confidence

Player amortisation represents the transfer fee cost being spread over the life of the contract signed by the player. So. if Scott Sinclair signed for £3million on a four year deal, this would result in an amortisation charge of £750,000 a year.

The amortisation charge arose as a result of Celtic spending £13.8 million on players for the 2016/17 season. Over the last five years Celtic have spent a total of £49.8 million on new players, which will get you one very good full back in the Premier League.

This contrasts with Rangers spending £10.3 million in their first season back in the SPL, although that was in marked contrast to the £4 million they spent in total over the four preceding years.

Celtic did have a further £1.5 million of costs in 2016/17 that were called ‘exceptional’. These are expenses that are one off in nature and so not expected to recur every year.

This included £287k in relations to signings that proved to be shite less impressive than when the club bought the player, and so had to be written down. There were also payments to former employees and over £1 million.

A screenshot of a cell phone Description generated with very high confidence

Profits and losses

Ask an accountant what they mean by profit, and they will start to sweat, loosen their tie, and look nervously around the room.

There are many levels of profit that can be calculated, but here at the Price of Football we concentrate on three.

The first is operating profit. It is total income less all day to day operational costs of running the club.

A screenshot of a cell phone Description generated with very high confidence

Celtic’s operating profit rose by a factor of ten to £7.5 million in 2016/17, driven by the increased income mentioned above. Rangers had an operating loss of £6.8 million during the same period.

The problem with operating profit is that it can be distorted, especially by player disposals. We therefore also calculate profit before player sales and other one off items. We refer to this as EBIT (Earnings Before Interest and Tax) This removes the volatility in relation to selling one player in a single season at a huge gain (such as Van Dijk), and having no such sale the following year.

Despite the domestic success and European qualification over recent years, Celtic made an EBIT loss of over £31 million in the last five seasons.

A close up of a map Description generated with high confidence

This shows that the club is dependent upon selling players each year to help make the books balance.

A screenshot of a cell phone Description generated with very high confidence

Gary Hooper and Victor Wanyama contributed most of the gain in 2014, and Virgil Van Dijk that for 2016. These gains are used to offset the EBIT losses. Celtic have had a negative net transfer spend of £600,000 over the last five years as a result of these sales.

The final profit figure adds on player amortisation and depreciation of the stadium and other long-term assets. We call this EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation). This is the nearest figure we have that is a ‘cash’ profit total. This is what is used by analysts when they are trying to calculate a price for a club that is up for sale (such as Newcastle at present).

A screenshot of a cell phone Description generated with very high confidence

Celtic’s EBITDA profit of £12.9 million, compared to a loss of £6.9 million the previous season shows how critical it is for the club to have Champions League qualification. This compares to an EBITDA loss of £0.7 million for Rangers.

Debts

Celtic are debt free, having cash of £24.5 million of cash at 30 June 2017, compared to outstanding loans of £13.5 million. This should be good for Rodgers if he is looking to strengthen the squad in the January transfer window. He did spend over £6 million on signings in the summer 2017 window. Rangers, by comparison, had a net receipt of £240,000 during the same window, as they sold more players than they signed.

A screenshot of a cell phone Description generated with very high confidence

Conclusion

Celtic are in a strong position financially. Qualification for the Champions League in 2017/18 guaranteed the club another £30 million in broadcasting income. Whilst, as expected in a group featuring PSG and Bayern, they did not qualify for the knock-out stage, they are now in the Europa League, albeit with a tough first draw against Zenit.

The financial gap between them and Rangers is substantial, which gives them a playing advantage too. Whilst Celtic fans don’t care, how good the lack of competition is for Scottish football, especially if it is trying to negotiate new TV and commercial deals, is uncertain.

The numbers

A close up of text on a white background Description generated with very high confidence

 

Sheffield United: Crushed by the wheels of industry

Introduction

We’ve always considered Sheffield United to be a big club. Whether that’s due to Tony Currie being a favourite player when I was a kid, Brian Deane scoring the first ever Premier League goal, or Sean Bean’s very public support of the club, we’ve always been well supported, with a decent stadium, so one would expect them to be in the top two divisions.

It’s therefore a surprise to see that it took the Blades six years to return to the Championship, since being relegated in 2011.

Key figures for 2016/17

Income £11.4m (up 7.5%).

Wages £10.0m (down 11.5%)

Losses before player sales £7.7m (down 18.1%)

Player signings £3.1 million

Player sales £2.8 million

Income

United have certainly been one of the biggest teams in League One for the last six years. Although they were unable to keep with those clubs who dropped into that division who were receiving parachute payments during that period (Wolves and Wigan come to mind), they had income higher than most other clubs during that period.

In League One the majority of income for a club comes from matchday income, as the EFL TV deal with Sky, and parachute payments, are skewed towards clubs in the Championship.

Attendances were slightly up at an impressive 21,892 (compared to 19,803 in 2015/16), but made little difference to matchday income, as the previous season included a lucrative FA Cup match at Old Trafford.

Broadcast income was slightly up, partially due to EFL clubs receiving a proportion of the new Premier League TV deal with BT and Sky.

Promotion to the Premier League will increase broadcast income to about £6.6 million in 2017/18.

Costs

The main cost for clubs at all levels is wages. United managed to keep a lid on their wages in 2016/17, paying out £10 million, down from £11.4 million. This is still high by League 1 standards (the median is about £4 million).

United have backed their managers during their time in League One in terms of a player budget. Wages have matched or exceeded income three times during that period.

The club had to cut back on wages significantly in 2013 to ensure compliance with FFP rules in League One.

The other main cost is player amortisation. This is accounting talk for the way that clubs deal with player transfers. The fee paid is spread over the life of the contract signed by the player. So a £1 million signing on a four year contract will give an amortisation charge of £250,000 a year.

In addition to this the club showed an impairment of £614,000 during 2016/17. An impairment arises when a club signs a player for a fee, and then realises he is rubbish (or has a career ending injury) and has to write his value down in the accounts. Who this player was for 2016/17 has not been disclosed in the accounts.

A £3.1 million spend on signings in 2016/17, high by League One signings (ten clubs in the division paid no transfer fees), combined with the inspirational management of Blades fan Chris Wilder, meant that the club was promoted with over 100 points.

The club has traded well with their existing playing staff, making significant profits from selling players every season, with the likes of Jamie Murphy, Kyle Walker, Harry Maguire being sold, and generating over £13 million over the six years in League One.

Hidden away at the back of the accounts is a little disclosure that will benefit the club substantially in 2017/18. It shows that United earned over £7 million as a result of sell on fees in respect of former players. Again, no details are given, but the smart money is on a 10% fee for the sales of Kyle Walker to Manchester City and Harry Maguire to Leicester.

A picture containing screenshot Description generated with high confidence

Losses

Losses are total income less costs. United’s losses, before taking into account player sales, were £7.7 million in 2016/17, or about £150,000 a week. Total similar losses during the League One years were £31.2 million, although player sales reduced this by £12.5 million.

The club did make a profit of over £30 million in 2013/14, but this is more to do with the dark arts of accounting than actual trading. This arose when another member of the group wrote off a £30 million loan.

Summary

United have returned to where many would consider their natural place is in the football hierarchy, but it has taken time and a lot of money to achieve promotion.

Being competitive in the Championship is expensive (we estimate losses to exceed £300 million for clubs in 2016/17).

The ownership of the club is a little muddy. The McCabe family, who had owned the club for a long time, sold a 50% share of the parent company Blades Leisure Limited to a Saudi investor via a company called UTB LLC, registered in the West Indies in 2013. Hopes of a Manchester City style splashing of the cash from Middle East ownership have never materialised though. This may change perhaps in the Championship, with the allure of Premier League exposure being so close.

In recent months there has been musical chairs in the boardroom, with directors leaving and then returning. It would appear that the McCabe family, who have bankrolled the losses for many years, are still in effective control.

 

A screenshot of a cell phone Description generated with very high confidence

The Numbers

Grimsby Town: Seven Seas

Introduction

Remember ITV Digital? The board of directors of Grimsby Town certainly do. They are still blaming the demise of the company for the financial woes of the club 15 years after the Monkey advertised channel went kaput in…err…March 2002.

A screenshot of a cell phone Description generated with very high confidence

For those of you unfamiliar with the company. ITV Digital went bust after signing a £105 million per season TV deal for live broadcast of Football League matches.

To give some context, the current Sky deal for the Football League is worth about £60 million.

Whoever signed the contract on behalf of the Football League was clearly put on the naughty step, as it ended up losing about £180 million when ITV Digital went into administration. Grimsby, like many small provincial clubs, were hit hard by the event, as TV rights generated about 60% of the club’s income in 2002. The club was relegated in 2003, and that was the last time the club was in the top two divisions.

Since then it’s been a struggle for the club in terms of both league position and finances. But how much of this misfortune can be put at the door of ITV Digital?

A close up of a map Description generated with very high confidence

That’s a shame, as we like Grimsby here at the Price of Football. Not only can you get a great fish and chips pre match, there is also the experience of the final game at the end of the 2002/3 season, between Grimsby and Brighton, which took place on a Sunday afternoon.

Both sides had to win to have a chance of avoiding relegation, and to get to the match on time we ended up spending our first (and possibly last) Saturday night in Cleethorpes.

A great time was had by all, shapes were thrown on the dancefloor of some memorable nightclubs. The highlight however was being offered by a local lady of indeterminate age and morality a chance of a romantic encounter behind a skip after buying her a drink, on the grounds that she’d ‘never had a Cockney’.

What she would have offered for if a bag of chips had been offered as well was sadly never clarified.

The offer was declined, partly because of fear (she claimed to have four children by three different fathers, all of whom were apparently in prison), and partly because we feared her genital cleanliness was as impressive as her knowledge of geography.

The financial consequences.

The ITV Digital demise certainly cost Grimsby money, in 2002 it accounted for 70% of total income that season.

However, the club would have suffered financially too if the club had been relegated. This is because the TV deal was very much skewed towards clubs in the Championship.

Worse was to happen in 2009/10, when the club was relegated to the National Conference, which was not covered by the EFL TV deal. This explains why income took another dive in 2011, as the club took its time to come to terms with a new life.

Latest results

Grimsby eventually returned to the EFL in 2016/17, and have just published their first set of financial results since being once again part of the 92.

The first thing to say about Grimsby is a positive one. The club has not hidden behind Companies Act legislation and produced abbreviated accounts, which do not show key metrics such as income, wages and profits.

Here at the Price of Football we are hugely disappointed that so many clubs (8 in League One and 17 in League Two) are not transparent and show the full picture of their finances to fans, who are the spiritual and emotional, if not necessarily the financial, owners. The Football Association could do something here, but their silence on this governance issue is damning.

Impact of promotion

Promotion has been good for Grimsby, with income rising by 24% and average attendances up 21% to 5,259, the sixth best in the division. The rise in attendances only made a £30k increase in matchday revenue, mainly because the figures for the previous season were boosted by Grimsby getting promoted via the playoffs at Wembley, which was a big payday for the club.

Wages also took a hit since the administration. The club does seem to have had some bad years where wages were as high or higher than income, but have taken back control ((c) All Brexit Voters) of wage levels in recent years. Whilst wages rose by 30% in the first season back in League 2, this was more than covered by the benefits of return to the EFL.

Player signings

Grimsby have never been a wealthy club, known for big signings, and this is reflected in the sums paid for players since 2002.

2016/17 resulted in Grimsby having their highest player outlay since before ITV Digital went bust. On the plus side, the club also sold the splendidly named Omar Bogle to Wigan. Whilst Grimsby have not disclosed the fee, a bit of accounting fun and games suggests that total player sales for the year generated £1,066,000.

It does appear that some Grimsby fans are unhappy with the ownership of the club. The largest shareholder is John Fenty, a local businessman and Conservative councillor, who has we think about 42% of the shares.

Owner investment

Like many provincial clubs, Grimsby are dependent upon the owners for financial support.

From what we can see, the total invested in the club by the board is as follows:

It certainly appears that the board (presumably Fenty) has put money into the club, especially after relegation to the Conference/National League. How wisely the money has been spent is best dealt with by those with local knowledge. Many seem to think that Fenty’s decision making is on a par with my ability to do ballroom dancing whilst blindfolded.

There doesn’t, however, appear to be much of a correlation between the fall of ITV Digital and the owners writing out cheques to cover losses. Grimsby made an operating loss of just £111,000 between 2002 and 2017, although is should be emphasised that this period was bookended by £1 million profits in both 2002 (as the club had received some money from ITV Digital) and 2017 (due to the sale of Omar Bogle).

Where the club goes from here is open to conjecture. Attendances are down 15%, as second season syndrome kicks in. In Russell Slade they have an experienced EFL manager, and currently sit just three points off a playoff position.

Promotion to League 1 is worth about £400,000 a season extra in TV income. Whether Grimsby could then survive in the bear pit of the Championship, where we are estimating total losses to exceed £300 million, is debatable, but the likes of Burton, who were the team who relegated Grimsby into non-league football, have shown it can be done.

West Ham and the London Stadium: Flares ‘n’ Slippers

Introduction:

We don’t particularly like politicians here at Price of Football. Not because we have any left/right leanings, our viewpoint is mid-Atlantic on most issues, but because they repeatedly fail the competence threshold, regardless of their affiliations.

Present London mayor Sadiq Khan (Labour) commissioned an investigation into the deal which has resulted in West Ham residing in the former 2012 Olympic (now London) stadium. The deal to give the Hammers the stadium was granted by the former administration, run by foot in mouth former mayor Boris Johnson (Conservative).

Herein lies the first point, had the previous mayor been Labour, what would be the chances of this investigation and report taking place?

The scenario

Moore Stephens forensic accounting department were tasked with investigating why the transformation costs of the stadium for football purposes rose from an initially estimated £115m in 2014, then £192m and then a final total of £323 million by the time West Ham took occupancy in the 2016/17 season.

Sadiq Khan clearly had a WTF moment when he found out that the local taxpayer would be paying for a substantial element of this increase in cost.

The report, a never-mind-the-quality-feel-the-width 169 pages, takes ages to read, but we nobly gave up a few evenings of gin, hookers and cocaine to wade through the contents.

https://www.london.gov.uk/sites/default/files/olympic-stadium-review.pdf

The history

Before the Olympics took place, the Olympic Park Legacy Company was set up to decide what to do once the games finished.

OPLC looked at a series of options, which were narrowed down to five. The initial desire was to have a 25,000 seater athletics stadium (option 4 below), but a wide range of other issues were considered too.

These were assessed initially from a financial perspective, with the following estimated costs.

The options were also considered from a non-financial perspective.

grt

The final decision was to go ahead with option 10a, but when the decision was made the costs (and more importantly, who would bear them), did not seem to be a major consideration.

This meant that West Ham ended up as tenants in the London Stadium (attempts to negotiate naming rights for the stadium have proven to date to be as successful as Marco Boogers career at the Hammers).

The second ranked alternative was the purpose built football stadium, likely to have been occupied by Spurs.

Either way, a significant amount of work would have been needed to convert an athletics stadium into one appropriate for football or multi-sport, and also back again if required.

The findings

There are two main areas when the costs appear to have gone haywire.

1: Construction costs

Political point scoring overrode commercial sense, and the desire to have a legacy (the stadium was chronically underused after the Olympics finished in 2012 until West Ham took occupancy) clouded the judgement of those negotiating from the side of the stadium owners.

West Ham didn’t do anything wrong, they were effectively lottery winners, who paid £15 million for a stadium that cost £323 million to make into something appropriate to play football, plus £2.5 million annually in rent*.

(*they also have to pay for a machine that blows bubbles when the team comes out at the start of the match and half time. It might also be used when they score a goal, but when I went to watch a match there, this facility was not required).

The increase in costs was due to many factors. Seemingly at every planning meeting a new problem would arise, or extra costs would have to be incurred to meet a deadline (such as hosting Rugby World Cup and Diamond League athletics meetings).

A screenshot of a cell phone Description generated with very high confidence

So who paid for these expenses? When West Ham signed up to be tenants, they were effectively capped at contributing £15 million. The rest mainly came from the public sector, the benefits to which are questionable.

A screenshot of a cell phone Description generated with very high confidence

2: Running costs

The set up for running the stadium is complicated. A company, E 20 Stadium LLP (E20), was set up in 2012 by two partners. 65% by LLDC (London Legacy Development Corporation) and 35% by NLI (Newham Legacy Investment) to operate the stadium on a day to day basis. E20 have made losses of nearly £255 million in the first few years of trading, and generated income of…err…£4.9 million.

The main reason for the losses is what is called impairment. Normally under accounting rules, if you buy an asset that will last you a long time you spread the cost over the period you use the asset. This is called depreciation, so build a property for £100 million, you think you will use it for 20 years and then scrap it, so depreciation is £100m/20 years = £5 million annual cost in the accounts.

Imagine, however, that you buy something and find out that you have vastly overpaid for it (this is also known as the Andy Carroll theorem). Under the accounting rules you have to include the asset in the accounts at its expected market price.

Any fall in value is called an impairment.

This is what has happened at the London Stadium. In the first three years of running the London Stadium, E20 has spunked spent £272 million on transforming the stadium into a multi sport arena, and then written off over £246 million of that cost as what has been created is vastly overvalued in market terms. The stadium is therefore valued at £26 million at at June 2016, when West Ham were due to move in.

Front loading of costs is not unusual in the murky world of public-private finance, and can be called prudent (albeit by the Hogwarts school of creative accounting). If you front load your costs and losses, then in later years you can make the company look more profitable.

However…whoever originally drew up the figures has made major miscalculations, and anything that could go wrong has gone wrong (including holes in the new roof apparently).

It is now estimated that the cost of removing seats for athletics meetings, and then bringing them back for when the football season starts will cost £7-8 million a year, and remember, West Ham are paying rent of £2.5 million a year.

A screenshot of a cell phone Description generated with very high confidence

E20 appear to be responsible for all day to day costs of the stadium, including things such as the flags for when West Ham play home matches. Moore Stephens conducted a forecast using best case scenarios, but still envisages annual losses being made by the London Stadium, and borne by the taxpayer.

A picture containing text Description generated with high confidence

Conclusion

We now have a blame game between the have bequeathed the current situation. Those who five years ago were desperate to be associated with the Olympics, and have a selfie with Usain Bolt seem to have gone unusually quiet. Whilst many people co-operated with Moore Stephens, others were less communicative, or circumspect in their responses.

A screenshot of text Description generated with very high confidence

Those who are criticising West Ham are doing it because they don’t like the club and/or the club owners. Being effectively the only willing tenant for a multi-sport stadium meant that West Ham were in a very strong negotiating position when it came to determining their contribution to the transformation cost, and the annual rent. If you have a strong hand, then surely the logical thing (lets not pretend that ethics or morality are an issue here, they’re not) is to play it, even at huge cost to the public purse.

In that respect what we have with the London Stadium is merely a very high profile and visible varation of PFI deals signed up and down the country over the last 10-15 years by grinning politicians and their management consultant advisors.

Blackpool: Season in the sun

Owen Oyston, Blackpool’s controversial owner, has put the club up for sale, http://www.bbc.co.uk/sport/football/41944602 following losing a legal case with fellow investor Valeri Belokon.

Wealthy they may be, but, after the court ruling, in which Oyston and his son, Karl, were ordered to pay Belokon £31.5 million, both Oystons’ had their assets seized. https://www.theguardian.com/football/2017/nov/06/oystons-blackpool-ordered-pay-shareholder-high-court-valeri-belokon

Establishing reliable information as to the extent of the Oyston family wealth is difficult, as between them as Owen Oyston has at least 40 directorships according to Companies House.

Never popular with fans,  the Oyston empire has many tentacles, but valuing the sum of all the individual elements is difficult.

One approach to unravelling the involvement of the football club in all this is to look at the accounts in the years since the club became members of the Premier League.

Yet the accounts to an extent paint a mixed picture as to the drivers of what initially appears to be a profitable business.

Some of the transactions do support the view, taken by disaffected fans, that the Oystons were using the riches of the one season in the Premier League and the subsequent parachute payments to subsidise other elements of the family business.

The best place to probably start is the impact of Premier League status on  the profit and loss account of the football club.

One year before promotion in 2010 the club had sneaked under the radar into the Premier League via the Championship Playoffs, beating Cardiff 3-2 at Wembley.

No one expected them to stay up in the Premier League, as Karl Oyston had initially won over the those who claim that players are overpaid by saying that there would be a wage cap.

Initially, Oyston’s stance against high player wages found favour in the media and amongst fans, and this coincided with a decent start for Blackpool in the Premier League.

Soon the problems of struggling to compete in the player market caught up with the team, who were relegated, despite still being outside of the drop zone at the end of April 2011.

A look at the club wage bill showed that with a wage bill of over £24 million, almost twice that of the previous season.

Careful review of the wage note in the accounts then showed that within the total was £11 million to the highest paid director of the club, almost certainly someone with the surname Oyston.

Underdogs Blackpool’s wages for the remainder of the staff, at £13.6 million, were just 7% of those of the club that won the Premier League, Chelsea, with £191 million, and a Premier League average of £79 million.

Net profit for Blackpool, even after paying out the large sum to Karl Oyston, was over 20 million, more than wiping out the modest losses made by the club in previous years.

The accusation made by the Oystons’ critics is that the benefits of being in the Premier League in subsequent years, in the form of parachute payments, were used to subsidise other companies owned by the Oyston family.

How much was promotion worth to Blackpool? The TV money from the one season in the Premier League, and then four years of parachute payments came to £101 million. The court concluded that nearly £27 million of this ended up in companies controlled by the Oystons.

In doing so, it would appear that Valeri Belokon, who originally bought 20% of the club in 2006 for £4.5 million, was disadvantaged by such transactions with Oyston companies. This is because diverting money to other Oyston controlled companies reduced the profits of the club, and also the value of his investment.

How much the Oystons can realistically expect to receive for the club is open to question. As someone who has been involved in the sale of distressed businesses in the past, I’m aware that potential buyers will take advantage of the seller’s need for cash, and bid as low as possible accordingly. Unless there are a large number of interested parties, the club could be sold for a pittance.

With no parachute payments to look forward to, Blackpool, who have been subject to a fan boycott in recent years as part of the NAPM (Not A Penny More) campaign led by the superbly named Tangerine Knights, to starve the Oystons of cash, are difficult to benchmark in terms of a realistic revenue figure from matchday sales.

Attendances this season are averaging just over 4,000, but have been as low as 2,600. This suggests the boycott is having an impact.

If the club is losing money week to week as a result, then the Oystons will be under greater pressure to sell the club as they may struggle to subsidise it from their other business interests, given the court ruling (which they are appealing).

This would be ironic, as the football club would appear to have been subsidising the other parts of the Oyston empire in recent years. There’s a case for saying that the club could be sold for as little as £1, with additional payments linked to future success, just to get the operational losses off the back of the present owners

Where will it all end? The lawyers and other business advisors will certainly have had a happy time from all of this, as legal costs are estimated to run into millions. Blackpool fans will just be hoping for a football club they can get behind under a new owner, and perhaps make some signings in January to give the club a chance of making the playoffs.

Valeri Belokon’s ambitions are unclear, he could conceivably buy the remainder of the club, but will the family sell to him. The intentions of the Oystons, whose credibility and integrity were questioned by the judge in the legal proceedings, are also open to question.

The whole issue calls into question the credibility of the Football League Owners and Directors tests, which are aimed at preventing abuses of stewardship by senior club officials. There’s not a happy ending to this story as yet, although the fans’ are hopeful of a return to the days when the most distressing thing about supporting their club is finding out that Mike Dean is the referee and is almost certainly going to ruin their Saturday afternoon with some attention seeking decisions.

Glasgow Rangers 2016/17: Orange Crush

Introduction

I’ve only ever seen Rangers play once, which was at the 2008 UEFA Cup final. It’s fair to say that there was a discrepancy between the number of people who came to Manchester for the event and those who had tickets. The following morning I was on a breakfast TV show, and had to walk around and over hundreds, if not thousands, of Rangers fans who had decided to sleep al fresco on the streets following the match.

2016/17 saw a return after four years to the Premiership, Joey Barton scrapping with team mates, lawsuits against former directors and Mike Ashley, three managers, fan groups buying shares in the club, fan groups falling out with each other after buying shares in the club and occasionally some football.

Rangers accounts are…err… comprehensive, clocking in at 59 pages. Having said that, there are some excellent disclosures that put other clubs to shame, showing a degree of transparency at times that is a credit to those who prepared the information. The financial statements touch upon the ongoing disputes with enemies both within and external to the club.

The club’s recent history is  a source for fiery debate in Scotland, and the legal status of Rangers International Football Club plc provokes incendiary comments on social media from polarised views on both sides of the divide.

None of the name calling is of any interest to us at the Price of Football, we are non-partisan.  As someone who works in higher education though, it is nice to see so many people from East Glasgow enrolling on night courses on Scottish Insolvency Law in recent years.

Suffice to say a club called Rangers ended up applying to join the Scottish Third Division,  and schools in small towns such as Elgin, Peterhead and Alloa had to introduce seventeenth century Irish history into the curriculum for the impending visit by the club and its fans.

The accounts don’t really answer the question as to how big are Rangers, as the numbers reveal a paradox when comparing to clubs south of the border.

Income

Unlike clubs in the English Premier League, some of whom have 80% of more of their income from broadcasting rights, Rangers are reliant mainly on matchday income as a source of revenue. This is unlikely to change until the club starts not only competing but also progressing in UEFA competitions.

Rangers total income rose by just over 31% in the year to £29.2 million. This is some way behind Celtic’s total (for 2016, they have not yet published their 2017 figures) of £52 million, but way above that of the next largest Scottish club, Aberdeen (£13.4 million). Rangers third place finish in 2016/17 is poor compared to the club’s financial advantage over every SPL club except Celtic.

Compared to England, the income total places Rangers between Wolves and Leeds in the English Championship, but behind small clubs in the Premier League such as Bournemouth and Crystal Palace.

Promotion back to the Scottish Premiership (SPL) in 2016 led to an increase in average attendances at Ibrox from 44,359 to 48,893, of which over 43,000 were in the form of season tickets.

Such attendances drove matchday income to £21.6 million, far in excess of any club in the Championship, and would put the club in the top half of the English Premier League (EPL).

Admittedly Rangers matchday totals includes ‘hospitality’, of which there is probably copious amounts at Ibrox to help the locals give vocal backing to the team.

Broadcasting rights, whilst better in the SPL than the Championship, are still miniscule at £3.6 million compared to the £100 million minimum in the EPL.

‘Other’ income including shirt sponsorship (£1.5m) and commercial income (£0.3m) are also up significantly by 43%. Rangers should benefit in 2017/18 from having greater control over their merchandising in future years, following the resolution of a dispute with Sports Direct. This can be a significant sum for a club with such a committed fan base. Celtic, for example, had merchandise sales of over £12.5 million in 2016.

Costs

Rangers have had the second highest wage bill in Scottish football for a number of years. Even when they were playing against the local amateur teams in the third division the wage bill was over £17 million, more than the total of the bottom two Scottish divisions put together.

Wage costs were brought under control slightly in subsequent years, but promotion to the SPL resulted in a 35% increase in total wage costs.

Rangers’ unusual (but welcome) breaking out of player from other wages shows that player wages took up £10.4 million (59%) of total staff costs. This is quite low compared to English clubs, where player wages are usually in the 80-85% of total staff costs range.

This means that player wages as a percentage of total income was only 36% (29% in 2015), and total wages to income 60% (59% in 2016), a figure that would make many English owners jealous (in the Championship wages were 101% of wages in 2016).

Part of the reason for the good wage control was due to highest earner Joey Barton being only paid for a couple of months before getting a free transfer to Ladbrokes, and Kenny Miller was old enough to claim a pension and so wasn’t officially on the payroll.

How the other £7 million wages are distributed at Ibrox is not disclosed. If the club has an in house legal team I’d expect that they have been very busy in recent years and will have been paid accordingly.

In past years the highest paid director at the club has been on a significant sum, especially if viewed solely in the role of running a lower division Scottish football club.

As boardroom regimes have come and gone at Ibrox that particular cost has diminished, and directors have not rewarded themselves for the last couple of seasons. This is in contrast to Celtic, where the directors took home over £1.6 million in 2016.

Rangers did disclose that ‘key management personnel’ costs were £455k for the year. This is presumably the combined costs of Mark Warburton and the Yoda like Pedro ‘The dogs bark and the caravan keeps going’ Caixinha.

Other costs rose by 30% to £12.3 million, this is not fully disclosed, but increased repairs, stewarding, policing and travel for an overseas pre-season tour have contributed.

Rangers invested significantly in the squad in 2016/17 following promotion, with £10.3million being spent according to the accounts. This might cause a few eyebrows to raise amongst Rangers fans, as apart from £1.8 million for Joe Garner from Preston most signings were thought to be for no more than low six figure sums or free transfers. Perhaps Mike Ashley managed to sign himself for the club for £5 million in one of his more creative moves, as the numbers otherwise look very strange.

Alternatively there may have been some payments in relation to previous signings that were conditional on Rangers being promoted to the Scottish Premiership.

Celtic, by means of a benchmark, spent £8.8 million on players in 2015/16.

Equally baffling is the amortisation charge on these transfers of ‘only’ £1.6 million. Amortisation is the cost of the players spread over their contract period, so we would expect this figure to be much higher (£10.3/4 = £2.6 million, plus amortisation of the existing squad)  if players were on an average of a four-year contract.

Rangers showed a cost of £3 million in respect of resolving one of their many disputes. This particular one was with a man who is as unpopular in Newcastle as he is at Ibrox, Mike Ashley. The settlement did however allow Rangers to have greater control in terms of selling and making profits from merchandise sales. Rumours that all you can eat restaurants in Glasgow were celebrating as Ashley severed his ties with the city, as they lost money every time he visited, have yet to be confirmed.

Profitability

Profits are income less costs. Rangers losses more than doubled in the year to £6.3million (£2.7 million 2016). Excluding the Mike Ashley payoff, the losses are broadly the same as the previous season.

Losing £120,000 a week is substantial, although half of it is a one off cost. For Rangers to turn to profitability they will need to make progress in Europe, as it is not realistic to increase their other income streams, and for that they will need to invest in the playing staff, or get a manager who can manage.

Rangers have claimed that their EBITDA profits (which exclude non-recurring items, depreciation and amortisation, are £110,000. We’ve done our own calculations and arrive at a loss of about £700,000. There’s no agreed definition for this category of loss, it just depends on the assumptions used. What is important is that Rangers losses are looking far lower than a few years ago.

Debts

Whilst Rangers do have a fair amount of debt (£14.4m), most of this is in the form of loans from directors and friendly parties. These loans are due for repayment in July and December 2018, and July 2019 It’s not possible to see how such repayments will be made, so we anticipate lenders will roll over the debts to a later date. Alternatively, Rangers might issue shares to investors which are used to pay off the loans.

Rangers have other outstanding legal issues, which may or may not increase the level of indebtedness.

Conclusion

To a certain extent Rangers are boxed in. Celtic have had the benefit of Champions League participation, which, even if they are regularly knocked out in the group stages, gives them a minimum £25 million a year advantage in terms of income, which can be used for player recruitment and wages.

Celtic benefit from the market pool in terms of Champions League distribution, which is where British clubs take more money out as a result of BT Sport paying such a huge sum to broadcast the competition.

The Europa League is a more realistic option for Rangers at present, but it is long haul before it starts to be lucrative for competing teams.

Whilst there is regular talk in the media of both Old Firm clubs playing in England, there’s no realistic chance of this occurring. English teams probably don’t want the competition, and there could also be a breach of UEFA rules.

Rangers therefore need to hope that they can secure investment, from a benefactor, rather than an investor wanting a financial return, to be able to topple Celtic and then have the riches that Champions League membership brings. But the club has seen in recent years promises from some of those at the top turn to dust.

Five Year Financial Summary

Rangers International Football Club plc 2013 2014 2015 2016 2017 Year
£’m £’m £’m £’m £’m Change
Income
Matchday 13.2 12.4 11.6 17.3 21.6 24.9%
Broadcast 0.8 1.0 1.2 2.1 3.6 71.4%
Other 5.1 4.2 3.7 2.8 4.0 42.9%
Total Income 19.1 17.6 16.5 22.2 29.2 31.5%
Operating expenses
Staff costs 17.9 14.4 13.3 13.0 17.6 35.4%
Other costs 13.5 10.8 10.0 9.4 12.3 30.9%
EBITDA (12.3) (7.6) (6.8) (0.2) (0.7)
Player amortisation 1.7 0.9 1.0 0.8 1.6
Depreciation 0.8 1.3 2.1 1.6 1.6
EBIT (14.8) (9.8) (9.9) (2.6) (3.9)
Non-recurring income (costs) 16.2 0.0 0.0 (0.8) (2.5)
Gain on player sales 0.0 0.4 1.2 0.1 (0.4)
Total Costs 17.7 27.0 25.2 25.5 36.0
Operating profit/(loss) 1.4 (9.4) (8.7) (3.3) (6.8)
Net interest paid 0.2 0.1 0.1 0.0 0.0
Profit before tax 1.2 (9.5) (8.8) (3.3) (6.8)
Tax (0.3) (0.2) 0.0 (0.1)
Profit after tax 1.2 (9.2) (8.6) (3.3) (6.7)
£’000 £’000 £’000 £’000 £’000
Highest paid director 716 378 225 0 0
£’m £’m £’m £’m £’m
Total player cost 19.6 14.9 13.1 13.7 19.6
Wages/Income % 94% 82% 81% 59% 60%
Total player cost/income % 103% 85% 79% 62% 67%
Balance Sheet Highlights
Player trading
Player additions 1.6 0.3 0.3 1.7 10.3
Player sales 1.0 0.5 1.3 0.1 0.8
Net player addition/(disposal) 0.6 (0.2) (1.0) 1.6 9.5
Post year end player trading
Net cost (income) 0.0 0.0 0.7 3.0 (0.2)
Cash 11.2 4.6 1.1 3.0 2.8
Borrowings 1.7 2.4 9.2 9.0 14.4
Net debt/(cash) (9.5) (2.2) 8.1 6.0 11.6
Position 3D 1 L1 1 C 3 C 1 P 3