Bristol City: Unfinished sympathy


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.


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.

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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.

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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.


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.

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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.

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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.

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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.

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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.

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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

Norwich City 2017 Financial Results: Up the Down Escalator


It’s difficult to dislike Norwich (unless you’re an Ipswich fan). Old fashioned provincial stadium, once beat Bayern Munich, bit of a yo-yo existence, owner gets a bit lively after a few red wines, nothing brash or flash about them.

Their financials are broadly the same, live within their means, sensible transfer policy, most matches sold out at home.

Norwich were relegated at the end of 2015/16, but were among the bookies favourites to be promoted back to the Premier League the following season.

Their board appeared to back the manager Alex Neill in the transfer market, and they spent £19.9 million in the transfer market signing Alex Pritchard (pantomime villain on the South Coast after agreeing to sign for Brighton and then Norwich gazumping the wages offered whilst he was on the M25), Wildschut, Oliveria and Canos. Whilst a few players left the nucleus of the squad stayed with the club.

A good start to the season meant the Canaries were top of the table after 12 games, and those who had backed the club at the start of the season were getting excited. The wheels then fell off, only two wins in the next 12 games, and they eventually finished outside of the playoffs in 8th position. Manager Alex Neil paid the price for not bringing the club the success that was anticipated by losing his job.


The financial results show that relegation has hit the club, but not disastrously. Total income is down 23%, nearly all of this is due to Premier League TV money of £70.2 million in 2015/16 being replaced by parachute payments of £50.5 million. Parachute Payments broadcast income accounted for 67% of total income for Norwich last season, compared to 72% in the Premier League in 2015/16.

These parachute payments will fall in 2017/18 by about a further £10 million. It is however in 2018/19 that the real impact would be felt should Norwich remain in the Championship. The club is only entitled to two years of parachute payments as they were relegated the first season after being promoted. This would mean that broadcasting income would then fall

Gate receipts were down 20%, although average attendances were hardly affected by the drop. The fall may be due to the club being unable to charge the same level of prices to corporate fans, who are less excited by Burton Albion than Chelsea.

Norwich did manage to sell some players during the season, and generated a profit of £11.9m on total player sales income of £18.4m, mainly from the sales of Robbie Brady, Martin Olsson and Nathan Redmond. This helps to reduce losses for the season, but may have impacted upon success on the pitch too.


Like all clubs, Norwich’s main outlay is in the form of players. Wage costs are one expense, and Norwich, despite apparently having relegation clauses in contracts, still had a total wage expense of £55.1 million. This is the second highest Championship wage bill ever published (although I anticipate Newcastle and Villa may trump these totals when their results are published in due course over the next few months). It’s clear that the board backed the manager in keeping onto the bulk of the squad rather than cashing in, but this was not reflected in results.

The wage/income ratio at 73% is only marginally higher than the previous season in the Premier League at 69%. The ratio was very high in 2014/15 (96%) due to Norwich being promoted to the Premier League and having to pay promotions bonuses, which most boards of directors classify as a ‘nice problem’.

Compared to other clubs in the division, whilst Norwich’s wages look high (the average for the Championship in 2016 was (£23.1 million), the wage/income relationship is far lower than the Championship average of 101% in 2016. This is because many clubs in this division do not have any parachute payments, and so their income is far lower (average of £22.9m in 2016).

Norwich made total payments of £4.3milion for severance. This includes Alex Neil (rumoured to be £2 million) and chief executive Ged Moxey, recruited from Wolves in August 2016, who only lasted until February 2017. He managed to earn during that period £417,000 plus a payoff of £712,000. The reasons behind his departure were never made clear, although rumours of boardroom bust-ups suggest that all was not harmony and light between Moxey, Delia Smith and Ed Balls. Perhaps he criticised Ed Balls’ performance on Strictly, or didn’t like one of Delia’s flans, but, whilst out of work, he won’t be needed to sell the Big Issue just yet after trousering nearly £6,500 a day whilst at Carrow Road.

Norwich do have a history of paying their chief executives well. In previous years some CEO’s have taken home over a million pounds. Moxey would not have quite reached these levels if his pay was pro-rated, but even still it is a considerable sum.

The other cost in the profit and loss account relating to players is that of player amortisation. Whilst here we are straying into accounting nerd territory, amortisation is how clubs account for player signings, by spreading the transfer fee over the length of the contract signed by the player.

For example, if Norwich paid £8 million for Alex Pritchard (and I suspect the actual fee was far lower than this, unless Norwich are promoted), and he signed a four-year contract, then there would be a £2 million annual amortisation charge in the profit and loss account in each of the next four years.

Amortisation is useful because it helps to remove some volatility from player costs, as it spreads the cost over the seasons the player is due to perform for the club.

Norwich’s amortisation charge was £16.5 million, down from £22.4 million the previous season in the Premier League, but still markedly higher than the Championship average of £4.5 million in 2016.

This high amortisation fighure reinforces the view that the club had a strategy of keeping the squad together to try and bounce back into the Premier League.

If we add together the wages and amortisation totals, and compare to income, Norwich’s profitability looks more precarious.

The above shows that for every £100 coming into the club, £95 was being expensed in the form of wages and amortisation.

This is high for all clubs (the Championship average was 120%) but if the club is not promoted this season, then the ratio will rocket due to the lack of parachute payments.

The alternatives available to Norwich would be to either seriously prune back the squad by selling the best (and highest paid) players, or borrow money from either the board or a bank.

A wage bill of £55 million and high amortisation figure could also potentially cause some financial fair play (FFP) issues, although this is now based on a three-year rolling loss total, so Norwich’s relatively good results in 2016/17 will be of benefit.


Profits are income less costs, so taking the above totals into consideration, Norwich made an overall post tax loss of £2.7 million in 2016/17. It’s not pleasant losing £53,000 a week, but if you strip out the severance costs of £4.3 million, which are (hopefully) not going to recur every year, then the club made a small profit.

Because the club has relatively little debt (no loans and an overdraft of ‘only’ £1.8 million, interest charges were quite low.

The Championship is a bearpit of a division in terms of loss making. In 2016 Championship clubs had total non-recurring losses of £361 million, so Norwich is far stronger on a relative basis to nearly all other clubs.


As mentioned above, Norwich’s debts to lenders appear easily manageable. Delia Smith’s loans have been repaid, they have other borrowings.

The main sums that are payable are in respect of transfers due to other clubs. This is over £18 million at 30 June 2017, of which £15 million must be paid within a year. To counterbalance this the club is owed £7.3 million from other clubs at 30 June 2017.

The small print

In the footnotes to the accounts are a couple of interesting additional pieces of information. Norwich potentially might have to pay out up to £23.7 million if conditions included in transfer and player contracts are fulfilled. This is likely to be linked to promotion.  A further £3 million of loyalty payments could be due too. I’m sure the board would again like to file these as ‘nice problems’ and welcome them, as they are likely to coincide with a return to the Premier League.

The final footnote to the accounts shows that in the summer 2017 transfer window Norwich signed players for £8.8 million (which could rise to £11.3 million) and had player sales (Jacob Murphy, Johnny Howson etc.) of £16.9 million (rising to £19.6 million).


Norwich seem on paper well positioned to compete financially with other clubs in the Championship in 2017/18. One of the problems in the Championship is that many owners take a short-term gamble with clubs, spending large sums of money with no guarantee of success, and then facing a financial hangover if it does not bear fruit.

The Norwich board do not seem to be taking such an approach, which is to be applauded. The danger is that by doing so, they could end up as a very well run Championship club for a long period of time, and that isn’t necessarily any fun, just ask fans of Ipswich Town.