West Ham 2018/19: Flares’n’Slippers

In January 2020 David Sullivan, West Ham’s controlling shareholder said “Overall, I believe the club’s in a far better state than 10 years ago” so we thought we’d put that to the test with a look at the club’s finances during that period.

Decade of success or standing still? The West Ham that Sullivan and Gold acquired from the former Icelandic Bank owners was certainly in crisis, but have their efforts improved the happiness of fans who now attend the rented London Stadium?

Rebelling fans know West Ham have just announced their accounts for the year ended 30 June 2019, and like events on the pitch last season, disappoint more than excite.


A Football club generates income from three main sources, matchday, commercial and broadcasting.

The matchday income for West Ham in 2018/19 was £27.1 million, which is just £200,000 more than the club’s final season at the Boleyn, and £7 million more than most of the preceding seasons.

Having this amount of matchday income puts West Ham 7th in the Premier League, but a long way behind the ‘Big Six’ that fans thought the club would be challenging when they said farewell to their spiritual and cultural home in 2016.

Every club generates matchday income by (number of matches x average price per ticket x average attendance) and here despite big attendances West Ham are ahead of the provincial clubs but behind the elite.

Relatively low prices at the London Stadium, which has a traditional old school working class fanbase, coupled with fewer matches than those clubs playing in UEFA competitions, meant that West Ham generated only 28 pence per seat for every £1 that Chelsea made last season.

Being tenants at the London Stadium also means that West Ham can effectively only make cash from the stadium for 19 days a season (plus any home cup matches) whereas Spurs can sweat their asset in the form of the new stadium with NFL matches, conferences, catering and concerts.

Every club has a season ticket price policy and West Ham, to their credit, seem to have some available at £299 (£320 for 2019/20) but for some matchdays the cheapest adult tickets are £55 each, which doesn’t include the binoculars needed to see the pitch from these vantage points.

Being able to exploit the modern facilities of the new stadium for commercial gain was another justification for the move in 2016, and this appears to have some merit.

A look at the commercial income totals shows that West Ham have doubled this revenue source over the last decade, with a noticeable jump since moving to the new stadium in 2016/17.

Commercial income follows that of matchday in that West Ham are again ‘best of the rest’ (Everton’s should be treated with caution following their deals with Putin pal Alisher Usmanov) but still far behind the elite.

Keeping up with the Big Six of the Premier League is unrealistic for West Ham unless they can offer sponsors UEFA competition exposure or the attraction of players that have huge social media followings.

A look at Broadcasting income shows a similar story, with West Ham recoding record figures that look good compared to the club’s history, but pale into insignificance when matched against the peer group they want to challenge.

The increase in broadcast income was mainly due to West Ham finishing 10th last season compared to 13th in 2017/18, as each additional place is worth just under £2 million.

The importance of qualifying for European competition is evident from the above table which shows the benefits to the elite clubs for reaching the latter stages of the Champions and Europa League, which can be worth up to an extra £100 million in prize money plus additional gate receipts and sponsor add-ons.

Having European qualification would change things for West Ham but realistically they would have to be regular participants there before competing in the same pond as the ‘Big Six’.

Even if the club did make it to the Europa League, they are now competing for places with Everton, Wolves and Leicester domestically, all of whom have owners who are keen to pour more money into their clubs to secure higher places in the table.

Broadcasting income growth has fallen domestically for the three years starting 2019/20 but the rise in the international rights has offset that, realistically there is limited future growth in traditional TV rights.

Overall West Ham are stuck against the glass ceiling in terms of being the 7th biggest revenue generators in the Premier League but still only earning half of that of Arsenal, the next club in the earnings league.


Like it or lump it, player related expenses are the highest element of a club’s cost base and generate endless discussion from fans and the media.

Every club needs to pay competitive wages to attract talent, resulting in what Sir Alan Sugar calls the ‘prune juice’ effect of additional money coming into the top of the game quickly exiting at the bottom in the form of player wages and transfer costs.

Year on year in 2018/19 wages increased by over 27% to an average weekly sum of £63,000 for first team regulars.

No one will be surprised that West Ham have the 8th biggest wage bill as they have the 7th biggest income stream, what will disillusion fans is the failure to make more progress on the pitch given that the unpopular owners have invested money on the pitch, albeit poorly.

The concern with the wage bill is that West Ham spent £71 on this for every £100 of income, UEFA recommend keeping this to no more than £70 so realistically the club have limited wiggle room in recruiting new players unless some existing ones leave.

Having a new signing does not mean that the whole fee is charged as an expense immediately due to the accounting dark art that is amortisation.

Amortisation is the effective rental cost of a player in relation to the transfer fee paid for his registration.

Numbers for individual transfer fees are difficult to obtain, but amortisation totals give a good long term indicator of the investment in players by the club.

Amortisation is the transfer spread over the contract life so when West Ham signed Haller for £40 million on a five-year contract, this will result in an annual amortisation charge of £8 million a year.

Squad amortisation for 2018/19 was a record £57 million, up 40% on the previous season, again suggesting investment was made, but the decisions made by the recruitment team were unsuccessful.

Overall West Ham’s amortisation cost for the last decade was £270 million, and has increased noticeably in recent years, but this has not turned into better football being seen by fans.

Under a succession of managers West Ham’s recruitment policy looks poor when compared to the amortisation costs of the likes of Spurs or Leicester, with Liverpool’s being only moderately higher too.

Looking at the rapid increase in amortisation costs indicates that West Ham have spent large sums recruiting players from other clubs and paying them handsomely, but the quality of the recruitment must be called into question.

Life in the boardroom at West Ham isn’t easy in the sense that many fans blame Gold, Sullivan and Brady for the lack of progress on the pitch, but this is offset by a 27% pay rise for West Ham’s CEO.

Ed Woodward at Manchester United, another unpopular executive, is the highest paid club CEO but there are now a considerable number earning million pound plus sums each year.

Some West Ham fans may be surprised that the club did make over £12 million profit last season from selling players, nearly all of this is likely to be in respect of Kouyate joining Crystal Palace and Reece Burke going to Hull.


So overall West Ham went from a profit before tax of £18 million to a loss of £28 million in 2019.

By looking at the above table it’s evident that West Ham’s player policy is the main reason for the reversal of profits is player related.

Owners David Gold and Sullivan have not endeared themselves to fans by charging a further £1.9 million on their £45 million loan to the club though, taking the total interest charges to over £18 million, not a game changer to the club, but high when compared to some other owners, including Mike Ashley at Newcastle, who for all his faults has lent £111 million interest free. .

West Ham managed to fund the loss last season by borrowing money secured on future broadcast rights, whilst this is a common event in the Premier League it will cause problems if the club is relegated.

Losing Premier League status would be challenging for West Ham, but the auditors seem happy with the club’s going concern status and many players have significant relegation wage clauses in their contracts.

Player trading

West Ham signed players for £108 million in the year to 31 May 2019 as Anderson, Diop, Yarmolenko, Fabianski and Co were recruited. Sales were a modest £14 million. Since then the club spent a net £36 million in the summer 2019 window and Bowen, Randolph and Soucek in January 2020.

Over the course of the last decade West Ham spent a total of £444 million on players and recouped about a third of it in sales. What is noticeable is that the club has made many of the player signings on credit, which could be a concern if the club is relegated.


West Ham have borrowed money from a variety of sources. Gold and Sullivan have lent £45 million and presently charge interest at 4.25%. In addition, there was a £42 million loan from Rights and Media Limited, which was half paid off shortly before the year end and so reduced the liability at the balance sheet date. The loan was then effectively renewed shortly after the year end. David Sullivan candidly admits that 75% of the club’s income is effectively generated between 31 May and 31 July.

The criticisms levelled at the owners are that other club owners have lent money to the club and not charged interest, including the US investors at West Ham, who own 10% of the company. Whilst the interest charged ultimately is relatively insignificant (1.8%) of revenue if the club is not delivering on the pitch then it sticks in the throat of those who have given up what has been a huge part of their lives for an anodyne extension to a shopping centre.


So, where does this leave West Ham? There is no doubt that the Gold, Sullivan and Brady are unpopular with a large proportion of fans. They hugely overpromised and underdelivered in relation to the benefits of the stadium move. The very big financial gap between West Ham and the ‘Big Six’ is as big as ever. What was so great and identifiable historically about West Ham has been lost in the shape of being representative of East End working class culture has been replaced with a very bland, very corporate and very anonymous ‘matchday experience’ that is for many a price too high. If the club was closer in the Premier League table as it is in the income and wage table then perhaps a lot would be forgiven, but until then it’s going to be a hostile environment and a sense of loss by the fans.

Newcastle United 2017/18: Apply Some Pressure


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

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

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

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

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


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


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

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

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

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

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

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

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

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

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

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


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

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

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

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

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

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

Player trading

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

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

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


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

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

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


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

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

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

Data Summary

Burnley 2017/18: I Thought You Were Dead

Seventh position in the Premier League and qualifying for the Europa League was an achievement for Burnley in 2017/18 and the club’s financial results were almost as impressive.

Earnings, wages and player trading profits all hit record levels yet some fans seem bored by life in the Premier League.


All clubs split income into three categories to comply with EPL recommendations, matchday, broadcasting and commercial.

Nowadays most ‘Other 14’ clubs earn a small fraction of their total income from matchday sales and Burnley is no exception as frozen ticket prices and slightly less domestic cup progress meant that this fell by £200k compared to the previous year.

Due to having a relatively small ground capacity and few prawn sandwich eating fans there’s little scope for this income source to grow in the future so Burnley, with a population of 80,000, have to expect to be in the bottom six of matchday earners in this division.

Year on year Burnley’s matchday income fell by 4% last season but has been relatively static during the Premier League seasons.

Contributing just 4% of total revenues means that whilst the club doesn’t take fans for granted its focus will be ensuring Premier League membership and taking a pragmatic approach under Sean Dyche to earning points.

Having to compete with glamourous clubs within a fifty mile radius means that Burnley has to price tickets keenly and has the second lowest matchday income per fan in the Premier League.

Earnings from broadcasting increased by £16.5 million mainly due to higher prize money from the Premier League.

How the Premier League distributes broadcast money from both domestic and international TV deals is a thorny subject and the cause of much argument between club owners.

A half of the broadcast income domestically and all international deals are split evenly between all twenty EPL clubs, whereas a quarter is based on the number of live TV appearances and a further quarter is prize money linked to the final league position.

Seventh position meant that Burnley earned £24.7 million in prize money, which starts off at £1.9million for the team finishing bottom and increases by the same amount for each additional place in the table.

A million pounds is paid to clubs for each live appearance on BT/Sky and clubs are paid for a minimum of ten matches although for Burnley were only chosen for seven despite their strong position in the table.

Premier League broadcast payments are the lifeblood for a club such as Burnley, so it is no surprise to see that it was responsible for over 87% of total income.

Expect broadcast income to be slightly lower this season (2018/19) as Europa League income from the qualifying rounds is unlikely to offset the decrease in Premier League prize money.

Trying to sign up new sponsors and commercial partners is tricky in the present economic environment.

Having a potential global audience watching Burnley works fine when the club is playing Manchester United or Liverpool but doesn’t attract viewers when it’s a small club such as Crystal Palace.

A lot of clubs in the Premier League have gambling companies as their shirt sponsors and Burnley are no exception, with Laba360 replacing Dafabet as the Clarets signed a record deal that helped boost commercial income by 14% in 2017/18.

Manchester United are in a league of their own when it comes to commercial income (neighbours City are fortunate to have owners who have influence over some sponsor deals) but Burnley are in a fairly large group of 8-9 clubs whose income is broadly similar from this source.

Selling the charms of Turf Moor isn’t easy for the commercial team as the location isn’t in London or another large metropolis and sponsors will often try to barter down a price by threatening to take their money to another club of similar stature in the PL.

Total income for the Clarets was up nearly 15% and very dependent upon continued Premier League status which appears to have been achieved until at least 2019/20.

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

Relative to its peer group Burnley’s total income is towards the top end of those clubs who would be expected to be in the bottom half of the Premier League at the start of the season.


Costs for a PL football club are focussed on player related expenses, namely amortisation and wages.

Amortisation is the cost of all the transfer fees paid by the club spread over the contract life, so when Burnley signed Chris Wood for £15 million from Leeds on a four-year deal this works out as an amortisation charge of £3.75 million a year (£15m/4).

Life in the Premier League is expensive and Burnley’s amortisation charge increased by over £5 million as Wood, Cork, Wells, Walters etc. came at a total cost of £43 million, offset by not having to amortise Keane and Gray when they departed at the start of 17/18.

Looking at amortisation it can be an indicator of potential relegation as West Brom and Stoke, both established PL clubs, were at the bottom of the table, with Brighton and Huddersfield unsurprisingly below them as they’d both just been promoted to the top flight for the first time.

Everyone has an opinion on football player wages but Burnley seem to have a fairly tight policy where all players are paid within a narrow range and this has an impact upon the nature of who they recruit and let go.

Driven by prize money bonuses for finishing 7th, Burnley’s total wage bill increased by 33% to over £81 million, over five times the level when the club was in the Championship and receiving parachute payments.

Burnley’s wage bill however was still the third lowest in the division despite the large increase in the year and based on our (somewhat crude) calculations work out at about £39,000 a week.

In letting Michael Keane go to Everton for three times that wage level Burnley seem to have a strategy that is appealing to players who want to further their career and see the club as a stepping stone to a ‘bigger’ club should they perform well at Turf Moor.

Getting the balance right between player costs (amortisation and wages) and sporting success on the pitch is challenging but Burnley have done supremely well in 2017/18 in paying out £79 in player costs for every £100 earned, leaving plenty to pay the other day to day overheads of running the club.


Defining profit is always tricky as there are many variants, but most simply put profit is income less costs although that contains lots of layers and distractions.

A lot of clubs cherry pick one of the many different profit figures available and Burnley have partially done this on their website by announcing a record net profit of £36.6 million.

Various alternative figures could have been used though and we will look at these in some detail.

Everyday profits arising from income less all the running costs of the club except loan interest are often referred to as ‘operating profits’. This a ‘dirty’ measure in that it includes one-off non-recurring costs such as redundancy when a manager is sacked or volatile gains arising from player sales that are best eliminated when trying to work out long term sustainable profitability.

Burnley’s operating profit was even more impressive than the figure quoted in the club website at a £45 million, higher than that of Manchester United.

A big driver of Burnley’s profits for 17/18 was profits from player sales. The sales of Keane and Gray generated a profit of over £30 million, compared to just over £1 million the previous season.

Stripping out player sale profits and other non-recurring items (redundancies, legal cases, debt write offs etc.) gives a more constant profit measure called EBIT (Earnings Before Interest and Tax).

Burnley’s EBIT profits are still impressive but lower than the two previous seasons in the Premier League when the club’s wage bill was far lower.

The Premier League EBIT table shows just how dependent clubs are on player sales in making the books balance. Liverpool, for example, saw their profits fall from the world record £131 million quoted in the press to just £7m once the Coutinho profit (which won’t arise every year) was removed.

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

Burnley’s EBITDA profit was £44 million which shows that the club is generating cash from its day to day activities which can then be reinvested into the playing budget when Sean Dyche is looking to recruit players.

Once trading costs have been paid, many clubs also have to pay interest on their borrowings, which in Burnley’s case was nothing, and tax on profits, which came to £8.5 million. Adusting for these two figures gives pre and post-tax profits, which takes us to the record profit figure quoted by the club itself of £36.6 million.

Player Trading

Burnley spent £43.5 million on new players in the year to 30 June 2018 as the club strengthened its squad, note that the sum committed was broadly similar to the EBITDA profit from the previous season.

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

Burnley had a net spend of only £7 million in 2017/18 so to achieve their final legal position on such as modest outlay is a testament to the management, coaching team and commitment of the players.


Clubs can obtain funding in three ways, bank lending, owner loans (which may be interest free) or issuing shares to investors. Historically Burnley have run a very tight ship and used the money generated through on the field, especially broadcast income and parachute payments to fund player purchases and this continued in 2017/18. The club owners have not had to dip their hands in their pockets for many years.

Key Financial Highlights for year ended 30 June 2018

Turnover £139 million (up 15%)

Wages £82 million (up 33%)

Pre-player sale profits £14.4 million (down 45%)

Player sale profits £30.7 million (up from £1.3 million)

Player signings £44 million (up from £43 million)


Burnley achieved a miracle in 2017/18 that went relatively unheralded. Unloved by broadcasters, too workmanlike for the pundits to get excited about, they went about their business and the players were drilled repeatedly to get results.

The Europa League at the start of 2018/19 was a step too far and it was a blessing in disguise they were eliminated so early as it allowed Sean Dyche to get back to what he does best, training players hard for five days for the next fixture.

Barring a miracle they will be in the Premier League in 2019/20 where once again they will fly under the radar, accumulating points but getting little credit for doing this without handouts from owners.

Everton 2017/18: The Long and Winding Road

He who smelt it, dealt it…


Farhad Moshiri, Everton’s new owner, had a busy year in 2017/18, sacking two managers and trying to make progress on a new stadium for the club.

After sacking Ronald Koeman in October 2017, the club’s fans grumpily tolerated the alehouse tactics of Sam Allardyce that took them from 13th to 8th in the Premier League, and then he too was jettisoned.

To an outsider this seems harsh, but phone ins and social media comments clearly indicated that Allardyce’s pragmatism in achieving results was not enough for a fanbase that had high expectations last season.

Spending restrictions under the previous owner Bill Kenwright were replaced with both managers splashing the cash as never before, and this trend has continued in 2018/19 under Marco Silva.

An analysis of Everton’s accounts shows that the club is in a far better place under Moshiri, but is this enough for them to challenge the ‘Big Six’ or should expectations be more focussed on being the best of the rest?

Key financial figures for year to 31 May 2018: Everton Football Club Company Limited

Income £189.2 million (up 10%).

Wages £145.5 million (up 39%) .

Operating loss £10.2 million (previous year £39.7million profit)

Player signings £214.6 million (up 133%)

Player sales £108.5 million (up 98%)

Owner loans £149.25 million


Matchday income for a club such as Everton tends to be the smallest element, but is essential for both financial fair play (FFP) purposes and if the club wants to challenge the established elite.

How to increase this income stream is tricky, as it can realistically can only be achieved by higher prices, more fixtures (such as through cup runs of qualifying for UEFA competitions)…or by moving to a bigger venue.

As can be seen from the above graph, Everton’s matchday income rose by 15% last season, as the club participated in, but did not progress too far, in the Europa League.

A screenshot of a cell phone Description automatically generated

Selling tickets at competitive prices has always been a symbol of Everton’s traditional working class fanbase, and this is reflected in the relatively low total of £418 per fan, as the club’s stadium is not presently suited for prawn sandwich consumers.

Relative to Liverpool, Everton only generated 29 pence from each fan for every £1 of matchday income for their rivals from Anfield.

A move to Bramley Moore Dock, which is presently under discussion, is therefore essential if Everton have genuine ambitions at generating the level of income that will allow them to compete at the top table.

Nevertheless, it is difficult to see Everton attracting the number of football tourists, who are prepared to pay higher ticket prices and spend large sums in the merchandise store that will substantially boost matchday income, even if the club does move venues.

Commercial income for Everton rose by 60% in 2017/18, and the reason for this, according to the accounts, is that somewhat surprisingly Europa League income of €14.1 million was allocated to this source, as well as new shirt sponsorship deals from SportPesa and Angry Birds.

Income from UEFA is mainly in the form of central payments which are funded by TV companies, so it would seem logical to perhaps show this money as part of broadcasting income, although we would stress Everton have done nothing wrong with the way they accounted for this money.

Diving into the footnotes of the accounts shows that Everton’s commercial income also included £6 million again for sponsorship of the training complex from USM Services, the Ukrainian metal trading company that is partly owned by Farhad Moshiri, this has caused critics to question the commercial logic of such a deal and mutter about ‘financial doping’ of the accounts.

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Finally, Everton generated money from broadcasting, and like most Premier League clubs, this is the main source of income.

As the club finished one place lower than the previous season, this meant that broadcast income was lower, as the formula for how it is allocated to clubs includes an element that is based on the final position in the table.

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Relative to the clubs who finished around it the table, Everton were an attractive proposition to the TV companies in 2017/18, perhaps initially partly due to the Rooney factor, with 19 Premier League matches being shown live, one more than the previous season.

The club has been quoted as saying that the proportion of total income received from broadcasting fell to 69% in 2017/18 from 76% the previous season, but if UEFA prize money is included within broadcasting this figure has hardly changed.

So, overall, Everton’s income for 2017/18 was broadly in line with the club’s final position in the table and whilst the gap to the next club up (Leicester) will be eliminated as the Foxes are no longer in the Champions League, there is still a £120 million hole before Everton can catch up with Spurs, who will have the benefits of playing at Wembley and a new stadium to boost their finances.


The main costs for clubs are those relating to players, in the form of wages and transfer fee amortisation.

Whilst Everton’s income rose by 10% in 2017/18, it failed to keep pace with player related costs as the investment of players of the calibre of Sigurdsson, Pickford, Rooney, Walcott, Keane and Tosun came with associated wage demands. Normally there is a big wage jump in the first year of a new TV deal (which commenced in 2016/17) followed by relative stability, but this has not been the case for Everton as Moshiri released the handbrake on player recruitment.

Everton’s average weekly wage (and we fully accept that these are rough and ready figures) jumped from £49,000 to £70,000 a week, putting Everton substantially ahead of Champions League qualifiers Spurs (albeit Spurs figures are for 2016/17).

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As a consequence, Everton’s wages to income ratio increased to 77%, meaning that the club was paying £77 in wages for every £100 of income.

It is not just players who have benefitted from the generosity of the owner, the highest paid director saw their income rise by 57% to £927,000.

By Premier League standards Everton’s board are reasonably well paid, but this pales into significance when compared to Daniel Levy’s package of over £6 million at Spurs, although Daniel’s fan club will no doubt point out this is partially linked to bonuses linked to his amazing success at delivering Spurs’ new stadium on time and budget.

The amortisation cost represents the transfer fee paid spread over the term of the contract signed by a player. So, when Everton signed Sigurdsson for £45 million on a five-year deal it meant that the amortisation cost is £9 million (45/5) a year for five years.

Everton’s annual amortisation cost has tripled since Moshiri acquired the club, showing the extent of his investment in the playing squad.

In using amortisation, it is possible to get a broader feel for a club’s longer-term transfer policy rather than just a couple of windows of buying a selling within an individual season. It would appear that Everton’s strategy is to try to compete with the big six in terms of player investment, although this is an arms race where you have to run to stand still as competing clubs constantly up the ante (apart from Spurs).

The substantial investment made in the fees paid for players meant that if amortisation costs are added to wages, it cost Everton £112 in player costs for every £100 of income generated, leaving nothing to pay the remaining bills of the club, unless there are substantial player sales too or an owner willing to underwrite the day to day expenses.

In terms of player sales, these were substantial, as the departure of Lukaku, Barkley and Deulofeu were the main contributors to a profit of £88 million. The danger with such an approach to funding the club’s day to day costs though is that sometimes it forces the club to be a seller, and also there are no guarantees that there will be buyers for your prize assets at the price you were hoping to sell them for.

Everton had some costs that fans will hope will not be repeated.

  • Sacking Koeman and Allardyce, along with their entourages, did not come cheap, as the club has to pay out £14.3 million to show them the door at Goodison. It had cost the club £11.3 million in 2016 when Roberto Martinez was sacked.
  • There were transfer fee write downs of £8.2 million, not sure who the players are, but no doubt Everton fans have their suspicions and will be able to finger them.
  • The new stadium project progressed during the year, but as usual consultants, accountants, lawyers and other parasites had their snouts in the trough as things crystallised, and this cost the club a further £11.4 million, which hopefully will be money well spent if the plans come to fruition.

Everton borrowed substantial sums during 2017/18. Whilst Farhad Moshiri’s loans are interest free, the club also took out a £43 million loan secured on future TV revenues, and a couple of IOU’s from other clubs for transfers (almost certainly those of Manchester United for Lukaku) were used to borrow money from another lender. Consequently, the club ended up with an interest charge of nearly £120,000 a week on these loans.

Profits and Losses

Profit, if you ask the right accountant, is what you want it to be, and there are as many types of profit as there are flavours of Pringles.

A rough definition is that profit represents income less costs, and if this figure becomes negative it becomes a loss.

The headline figure in the Everton press release was a loss of £22.9 million, although this excluded all aspects of player trading, which, if included, would reduce the loss to £10.2 million, compared to a profit of £25 million in 2016/17. This figure is distorted by the one off factors such as manager sacking costs and profits on player sales that have been discussed above.

Stripping out the above distortions gives something called EBIT (earnings before interest and tax) profit, which is a better measure of recurring profits excluding the one-off volatile items.

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Everton’s EBIT losses worked out at £1,232,000 a week in 2017/18, as the investment in player wages and transfer fees had such a significant impact on costs. This is far in excess of previous years, although could be seen as an investment in players for the future, and if it results in qualification for UEFA competitions could be substantially reduced in future seasons.

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If non-cash costs such as player amortisation are stripped out, the position however improves, and Everton have an EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) profit instead of a loss.

EBITDA is an important profit measure as it is the closest to a ‘cash’ profit that analysts use to assess a business and shows how much the club has to invest in player acquisitions from its day to day activities. Everton have made over £70 million in EBITDA profit over the last six years but have invested more than that in improving the squad.

Player trading:

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According to the accounts Everton spent over £215 million in 2017/18 on player signings, and on top of that Wayne Rooney was recruited on a free transfer. This is almost as much as the club spent in the five previous years put together.

Even taking into account the record domestic transfer fee when selling Romelu Lukaku the net spend was still £106 million.

Compared to their peer group, Everton’s spending is very much as the top end of the table.

Since the end of the season the board have backed new manager Marco Silva with a net £83 million on new signings such as Richarlison.

Funding the club

Clubs usually have a choice between third party loans (which attract interest payments) owner loans (which may or may not charge interest) and shares (which occasionally pay dividends).

In the case of Everton, the club have focussed on owner loans and short term interest-bearing loans.

On top of the sums borrowed in 2017/18, the footnotes revealed that Farhad Moshiri has lent a further £100 million to the club since May 2018. This money has presumably been invested in new players and the ongoing application for a new stadium.


Under Moshiri Everton have certainly moved to a new level of investment, mainly in terms of the playing squad. This wasn’t particularly successful in 2017/18, but there are signs of improvement under Marco Silva as the squad starts to gel together.

Whilst the club is playing at Goodison there is little scope to increase income, and every year until a new stadium is open for business will increase the gap between the club and the ‘Big Six’, all of whom have competitive advantages in terms of income generating capacity and facilities.

Until the new stadium arrives, unless Moshiri is willing and able to underwrite substantial losses (which could cause financial fair play problems should Everton qualify for UEFA competitions) then realistically seventh place and entertaining football is the realistic target for the club.

Rangers: Automatic for the people


8pm on 31st October is when I’m usually wondering if I can eat all the fun size Mars Bars that haven’t been vacuumed up by local youths dressed in Freddy Kreuger or Gary Neville fright masks trick or treating for Halloween.

Instead my email inbox pinged, and something came through about Rangers. Initially I ignored it, couldn’t be important surely, as after all the first team were playing high flying Kilmarnock at the same time.

At half-time, having prised myself away from the match on TV, it appeared that Rangers had published their annual results, a good time to bury bad news perhaps?

Key figures for 2017/18

Income £32.7m (2017 £29.2m) Up 12%

Wages £24.1m (2017 £17.6m) Up 37%

Recurring loss before player sales £9.9m (2017 £3.9m) Up 153%

Player signings £9.7m (2017 £10.3m)

Player sales £1.7m (2017 £0.8m)


The club, like most others, generates its income from three main sources. Matchday, broadcasting and commercial.

Rangers didn’t produce accounts for 2011 and 2012 due to the club being in liquidation and the accountants not being obliged to submit them to the registrar.

Matchday income was up 6%, the main reasons for this were:

  • An early exit from Europe, although this still added an extra home match to the season’s total.
  • Higher average attendances which rose slightly to 49,173.
  • Season ticket prices rose from an average of £314 to £328.

Matchday income contributed 70% 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. Rangers are also far more reliant than Celtic for matchday income as the latter had the benefit of Champions League participation.

Ranger’s matchday income was the second highest within the SPFL which places it is an awkward position. Too far behind Celtic to compete financially, too far ahead of other clubs in the division to be threatened, once it comes to term with the standard of that division, a state that hasn’t been reached yet based on results. The former duopoly in the domestic game has not quite yet been achieved.

If the club had been part of the English Premier League, Rangers’ matchday income figure would have placed it ninth in that division.

Broadcast income rose by 22%, to £4.4 million. Part of the increase was due to a UEFA pay-out for all clubs, although for Rangers it is just £650,000.

In 2018/19 this will rise significantly as the club has qualified for the group stages of the Europa League.

In 2018/19 the total prize money in the Europa League, whilst sneered at in some quarters for being the poor relation in UEFA compared to the Champions League, is £495 million

The SPFL TV deal is worth just £19 million a season split between 13 teams.

Even so, compared to the Premier League, where the side finishing bottom still earned £100 million in TV money, Rangers are paupers compared to those clubs, but kings compared to most of the rest of the SPL.

Rangers also benefited with the payments being made in Euros, as the poond continued to be weak following the decline in the UK economy following Brexit.

Commercial income was up by a third as the club made money from a successful pre-season tour and greater sponsorship and catering.

In the last six years, Rangers have earned overall £290 million less than Celtic. Most of this money has been spent but it gives Celtic a significant advantage of terms of investment in the playing squad and infrastructure, which can help generate greater income from conferencing and catering.


The main expense for a football club is in relation to players. These consist of two main elements, wages and amortisation. Wages are straightforward enough, amortisation is how the club deals with transfer fees for players bought, by spreading the cost over the contract life. Therefore, when Rangers signed Alfredo Morelos for £900,000 in 2017 on a three-year contract, this works out as an amortisation cost of £300,000 a year for three years. This is subtracted from income when profits are calculated.

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The amortisation charge has increased five-fold in the last two seasons as Rangers have invested in the squad since promotion to the SPFL. The problem they have is that Celtic’s amortisation last season was £8.8 million, highlighting the additional spending power they have.

Wages increased by 37% in 2017/18. This is partially due to the investment in new players, as well as giving new contracts to established players who have performed well in the top tier. The wages bill also probably includes the payoff to Caininha and Murty (Kenny Miller’s will be in next year’s accounts).

The problem Rangers have is that whilst their wages dwarf those of nearly every other club in the division, their fans are only focussed on their local rivals, who paid £250 in wages for every £100 paid out by Rangers.

This gap is likely to drop in 2018/19 as Celtic’s wages are likely to fall as Champions League bonuses will not be paid, and the recruitment of Gerrard and new players will increase Rangers’ costs. Even so there is likely to be a significant difference between the two clubs.

Whilst paying higher sums to players does not guarantee better performance, in the main there is a link between wage totals and final league position. It’s possible but rare for this not to be the case, Leicester City winning the English Premier League in 2016 being an example.

Rangers total wage bill puts it about par with a mid-table Championship club in England, as the club has the 37th biggest total in the UK.

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One group who are not benefitting from the higher wage bill are the directors, for the past three seasons they have not taken payment for their roles at the club.

Because wages increased faster than income, Rangers wage control percentage rose from 60% to 74%. This means for every £100 of income the club paid out £74 in wages, this compares to £58 for Celtic.

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A good target rate for clubs is often claimed to be 60% or lower, which Rangers achieved the previous season but were unable to maintain.

Rangers had an additional cost of £3.3 million for 2017/18 in ‘impairment’ costs. This is where the club has signed players in the past who turned out to be pish a bit rubbish, and so the club wrote down their values. Rangers fans will no doubt have a good ideas as to the identity of these flops.

How much Rangers spent in the year on legal fees is unknown, but the club does have a few ongoing cases.

Profits and losses

Profit is income less costs.

There’s no ‘correct’ profit figure, different vested parties will have different viewpoints, so it’s best to look at a few to get an overall picture.

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

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Rangers’ made an operating loss of £12 million in 2017/18, as higher wages, amortisation and impairment already mentioned increased player related costs.

The problem with operating loss is that it can be distorted, especially by player disposals. It therefore makes sense to also calculate profit before player sales and other one-off items such as redundancy payments and contract disputes.

This is referred to 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 as has already been seen.

Stripping out these figures reduced Rangers’ losses to £9.9 million. Over the last six years Rangers have sold players at a profit of £2.5 million, a relatively small sum which reflects that they were playing in the lower echelons of Scottish football during this period.

Celtic have made a profit of over £100 million during the same period (including the Dembele sale this summer), reflecting that they’ve been able to buy better players at a young age and sell on at a profit after showcasing them in Europe.

One final profit figure adds on player amortisation and depreciation of the stadium and other long-term assets to the EBIT total. This is called EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation).

This is the nearest figure to a ‘cash’ profit total, used by analysts when they are working out how much cash a business is generating or haemorrhaging each year.

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This loss of £4.2 million is in many respects the most disturbing, as if a club is losing cash from trading then the owners (or a bank) will have to stick their hands into pockets to fund these losses.

English Premier League clubs average an EBITDA profit of £61 million, on the back of the TV deals south of the border.

Player Trading

Ranger’s player trading is big by Scottish standards but still trails their rivals. They can outbid most other Scottish clubs, but with the arrival of Steven Gerrard also seem to be looking to pick off players from England who are perhaps not getting a game and fancy playing in front of nearly 50,000 people for home matches.

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The board have backed managers in the last couple of seasons since promotion, whether that money has been spent well is still uncertain, although as always for every success there is a turkey.

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Since June 30th Rangers have also spent a further £6 million on additional players.


Rangers’ previous financial history means that the club finds it difficult to borrow from banks, and so is dependent upon directors and friendly parties to lend the club money to make up the shortfall from regular operations and player trading.

Over the last six years the board has funded the club by pumping in over £53 million.

At 30 June 2018 the loans element had risen to £21 million.

The net debt (borrowings less cash) total has risen significantly since Rangers promotion to the SPFL. It will have halved following the share issue recently, but has a high chance of returning to an upwards trajectory as the running costs under Steven Gerrard are likely to exceed income, unless relative European success is achieved.

Rangers fans who had hoped that the club had generated over £12 million from a much publicised share issue will be disappointed.

90% of the share issue was used to convert loans to shares, which is swapping one piece of paper for another, rather than generating fresh money for the manager. The club did borrow a further £2million but this will require repaying.

The audit report gives a warning signal about the future.

Rangers need to raise over £7.5 million during the next two seasons to stay afloat. That money could come from (a) loans from owners, (b) a successful run in the Europa Cup, or (c) player sales. The uncertainty makes planning for the future very uncertain.


Rangers are in a tricky situation. Fans have been patient to date but will expect regular silverware at some point. The club is dependent upon a board that is still given to infighting and a lack of unity, apart from when it comes to picking a dispute with outsiders (such as Sports Direct and the Takeover Panel). Chairman Dave King, who seems to have modelled his stewardship of the club using the handbooks of Ken Bates, Mike Ashley & the Oystons at Blackpool, but without the pleasant element of their characters, seems to have a smoke and mirrors approach to the club’s troubles.

How much additional funding is available is uncertain, but unless Rangers repeat their achievement of 2008 in making it to a UEFA cup competition final (a match I attended as live in Manchester, which will stick in the memory for a long time for the sights in the centre of the City at 6am when I went to work), or at least make major progress in the competition, then it would appear that significant further funds will be needed to keep the club trading.

If the owners are willing to continue to provide such funding then all is good, if not then the Gerrard experiment may have a limited shelf life, and the club could be plunged into another financial crisis.

The numbers

Celtic: Rattlesnakes


Is that what you call a treble?

Celtic announced their 2017/18 results in mid-September 2018, but these came in the form of a detailed press release, rather than the full annual report. Like many things in relation to Celtic, it left a few unanswered questions where perhaps it would have been easier to give a fuller story.

Having failed to make the qualifying rounds of the Champions League, the club face a challenging season where for the first time in many years there could be a credible challenge to their domination of the domestic game.

Ambivalent comments from manager Brendan Rodgers, a Rangers who are getting a lot of attention since the arrival of Steven Gerrard and a decent start from the two main Edinburgh teams seem to have knocked the confidence of the club and its fanbase.

Having achieved the double treble in 2017/18, where does this leave the club financially for the following season, in a sport and city where memories are very short.

Key figures for 2017/18

Income £101.6m (2017 £90.6m) Up 12%.

Wages £59.3m (2017 £52.2m) Up 14%.

Recurring profit before player sales £5.1m (2017 £6.7m) Down 23%

Player signings £16.6 m (2017 £13.8m)

Player sales £16.5m (2017 £4.2m)


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

Matchday income was up 16%%, the main reasons for this were:

  • Champions League and Europa Cup participation meant there were mor games at Parkhead. Attractive opposition in the form of PSG and Bayern Munich meant that premium prices could be charged for these matches.
  • Higher average attendances which rose to over 57,000.

Matchday income contributed 43% 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.

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Celtic’s matchday income was far higher than that of any other club in the SPL, with Rangers being closest at £21.6 million, due to more matches and higher attendances. If the club had been part of the Premier League it’s matchday total would have placed it seventh in that division.

Being in Europe against glamour opposition such as PSG and also playing Rangers domestically allows the club to charge higher prices too,

Broadcast income rose by 10%, to over £40 million, again driven by Champions League qualification. This is crucial for Celtic as the domestic TV deal is relatively meagre. In 2017/18 the total prize money in the Champions League was £1,200 million, compared to £350 million in the Europa League. The SPFL deal is worth just £19 million a season split between the teams.

As can be seen from the above, when Celtic make it to the group stages of the Champions League, as they did in 2012/13, 2013/14, 2016/17 and 2017/18, there is a spike in broadcast income.

Even so, compared to the Premier League, where the side finishing bottom still earned £100 million in TV money, Celtic are paupers compared to those clubs, but kings compared to most of the rest of the SPL.

The payout from participation in UEFA competitions has increased significantly in 2018/19 to enlarge the gap still further.

Celtic also benefited with the payments being made in Euros, as the poond continued to be weak following the decline in the UK economy following Brexit.

Commercial/merchandising income was up 8%, the club launched another three kits with New Balance.

Hibernian are the only other club to publish their results to date for 2017/18, but even so the gap between Celtic and the other clubs is huge.

The failure to qualify for the group stages of the Champions League could narrow the gap between Celtic and Rangers in terms of income for 2018/19 substantially.


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

Wages increased by 14% in 2017/18. This could be due to bonuses being paid for winning the domestic treble and participation in the Champions League group stages. After a period of relative stability during the decade Celtic’s wage bill rose significantly in 2016/17 and then by a further £7 million in 2018.

Hibernian are the only other club to report for 2017/18 and their wage bill rose by 17%.

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%.

Amortisation is the method clubs use to spread the cost of a transfer over the length of the contract signed. For example, when Celtic bought Scott Sinclair for £3m on a four year deal this works out as an amortisation cost of £750,000 a year (£3m/4 years).

The total amortisation figure in the accounts each year relates to the whole squad for which the club have paid a fee.

Even considering the amortisation fee for the year, Celtic’s total spending on players worked out as £67 for every £100 of income in 2017/18.

The amortisation charge arose as a result of Celtic spending £10.6 million on players for the 2017/18 season.

Eh pal, explain to me what amortisation means again.

Exceptional costs

Celtic did have a further £4.1 million of costs in 2017/18 that were called ‘exceptional’. These are expenses that are one off in nature and so not expected to recur every year.

This included £511k 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 totalling £3.5 million in respect of staff who had their contracts terminated early, which is likely to include Nadir Ciftci, who was encouraged to leave the club a year early after signing for £1.5 million from Dundee United and scoring four goals during his three seasons at Parkhead.

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 types 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.

Celtic’s operating profit was a record £18 million in 2017/18, due to the good cost control already mentioned but distorted by the 20% profit sell on when Virgil Van Dijk was sold by Southampton to Liverpool in January 2018.  Rangers had an operating loss of £6.8 million for 2016/17 but broke even in the six months to 31 December 2017.

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 such as redundancy payments and contract terminations.

This is referred to 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 as has already been seen.

Despite the domestic success and European qualification over recent years, Celtic made an EBIT loss of over £30 million in the last nine seasons.

This shows that the club is dependent upon selling players each year to help make the books balance. Celtic have made a profit of £83 million since the summer of 2009 on player sales and this is likely to have increased substantially further in 2018/19 after the sale of Moussa Dembele for £18 million to Lyon.

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.

Celtic’s EBITDA profit of £15.9 million in 2017/18 was the same as the previous season and 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 for 2016/17.

In the English Premier League EBITDA profits average £61 million, which highlights the gulf between that and the SPL,

Player Trading

Celtic’s player trading reflects their dilemma. By Scottish standards they are a huge club but compared to the Premier League they are small fry financially. Over the last nine years the club has had a net zero spend on signings, and this is likely to turn negative once the Dembele sale is taken into consideration in 2018/19.

Whilst this means the club is likely to vacuum up many trophies domestically it also results in a squad that struggles to make much progress in Europe.

Celtic have made a profit of about £100 million, taking into account Dembele, since the summer of 2009


Celtic are debt free, having cash of £43million of cash at 30 June 2018, compared to outstanding loans of £11 million. Whilst this will no doubt impress investors and potential buyers of the club, fans may feel that the club should have invested more money in players if it wants to progress in Europe and ensuring that Rangers are kept at arms-length domestically.

Celtic’s investors have neither bought shares in the club nor lent it money over the period of analysis. This may because they feel there has been no need, as Rangers’ well documented struggles have left with bigger issues to deal with and the other clubs in the SPL are so far behind financially that they have not generated anything than token rivalry.

This has allowed Celtic to pay down debts to lenders relatively slowly, but at the same time could be indicative of a club lacking in ambition to compete on a broader sphere, in the shape of European football.


Celtic are in a strong position financially but money in the bank is no guarantee of trophies in the cabinet. The SPL looks more competitive this season than for a long time, and Celtic could be accused of resting on their laurels for a season too long.

Such are the riches of UEFA competition it could only take one season for the huge financial  gap between the two Glasgow clubs to evaporate, and that season could potentially be 2018/19.

The numbers

Walsall 2018: Heading Out on the Highway


Walsall have just published their financial results, the first for a League One club for 2017/18, and, just as they have done for the previous five years, they’ve made a profit and kept their status in that division for the eleventh consecutive year.

That seems to be enough to satisfy the ambitions of the club owner, Jeff Bonser, though some fans seem to be fed up with his control of the club, and the way he extracts money from it through owning the stadium.

Financial summary

Income: £5,853,000 (down 12%)

Wages: £3,376,000 million (down 0.3%)

Sustainable operating profit £63,000 (down 89%)

Wages to income 58% (up from 51%)

Player sales £110,000 (purchases of £179,000 in 2016/17)

Borrowings £2,038,000 (down £289,000)


Not breaking the law

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

Matchday income was almost identical to 2016/17 at just under £1.1 million. Average attendances fell by 6.2% and early exits from the cup competitions didn’t help either. The importaince of a good cup run or a draw against a ‘big’ team was highlighted in 2015 and 2016 when the Saddlers made it to the FL Trophy final at Wembley and had a cup draw against Chelsea respectively.

This works out at £229 per fan for the season, a 7,5% increase on the previous season, but probably due to having an extra home cup game compared to 2016/17. If fans think this is far lower than the price they pay for their season ticket, note that the club figures exclude VAT at 20% and are an average of adult and concession prices.

‘Other’ income fell by nearly £800,000 to £4.76 million. The main components of ‘other’ income are broadcasting (estimated at £1.5 million) and commercial sponsors, catering conferencing and so on. The importance of this income source, which can generate cash far more often than the 23-28 home match days each season is highlighted as it brought in more than half of the Saddler’s revenue in 2017/18.

Compared to the income of L1 clubs the previous season, Walsall in 2017/18 were about mid-table in terms of the total generated (Bolton’s figures were distorted as they were in receipt of parachute payments from the Premier League).


Footballs main costs are in relation to players, and here Walsall continue to keep tight control.

The total wage bill, including pensions and national insurance costs, was 0.3% lower than the previous season, despite the club employing eight more staff., The reason for the slight fall is likely to be linked to a 19th place finish in League One, compared to 14th the previous season, and so player win bonuses would be lower.

The club clearly have a tight wage budget set each year, but the wage to income ratio increased from 53% to 58%, meaning that the club was paying out £58 in wages for every £100 of income that was generated in 2017/18. This compares to an average of 100% for clubs in the Championship.

The increase in staff numbers meant that the average annual salary of someone at Walsall fell by 6% to £24,824. Players and management are clearly likely to be on higher than this average figure, and we estimate they earned about £90,000 (£1,730 per week) which puts the club at the lower end of the division of those clubs who report wage totals (many clubs hide behind a legal loophole and don’t show this figure), and may explain why they have infrequently challenged for promotion to the Championship in recent years.

Director pay at Walsall fell by 9% but was still £175,000

One figure that irks some Walsall fans is the rent paid by the club, as it does not own the Bescot Stadium. For the last couple of seasons Walsall have paid £449,000 a year to Suffolk Life, owner Jeff Bonser for rent for the stadium, training facilities and car park. Whilst the rent was frozen compared to 2017, it had risen significantly in prior years.

It does seem that whilst Walsall are one of the lowest wage payers in the division, they are one of the most generous tenants to their landlord.


My Oh My

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.

There are different profits that can be used when analysing a business, Operating profit is before taking into account interest costs on loans.

Walsall’s operating profit fell by 78% in 2018, mainly due to the decline in income in the year, but the club made a profit, which is not the case for many of its fellow League One clubs.

EBIT (Earnings Before Income & Tax) is the same as operating profit but strips out non-recurring items such as gains on player sales, legal cases writedowns and redundancies.

Walsall’s EBIT was £63,000 in 2018, whereas every other League One club that published an profit and loss account made a loss in 2017, and there is little reason to suspect this will have changed in 2018.

Walsall paid £50,000 in interest costs in 2018, of which £23,000 was on loans from directors. This means that directors made a total of £656,000 from the club in 2017/18 (Rent £459,000, pay £175,000 and interest £22,000).

One of us is in the money.

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.

In the four years leading up to 2016/17 the club neither sold nor bought a player for a fee. This record was broken when Cypriot striker Andreas Makris was signed for £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 and this has shown up in the 2018 accounts as a fee of £110,000.

Walsall did not sign any players for a fee in 2017/18, but they are not alone in League One in relying on Bosman signings and loans.


The sale of Makris allowed Walsall to repay some of their outstanding loans. In total the club had borrowings of just over £2 million at 30 June 2018, a reduction of £289,000 compared to the previous year. Included within these borrowings is £1,339,000 due to directors and £399,000 to the bank, which is guaranteed by Jeff Bonser.


Walsall, almost uniquely for a League One club, have shown that they can break even season after season by managing their wage budget carefully, and being ultra-cautious in the transfer market.

Promotion to the Championship is worth about an extra £7 million a season in TV money, plus bigger gates against local rivals such as Villa, West Brom and Birmingham City. With the club so close to the playoffs at present going up could be an income windfall.

The danger with promotion is that wage bills also tend to balloon (the average is £22 million per season) and for clubs with resources such as Walsall the stay in the Championship is often brief (Burton, Barnsley and Rotherham can testify to that).

Whilst owner Jeff Bosner has been generous in lending money and guaranteeing the bank loans and overdraft, he is also the biggest beneficiary of the club financially in terms of the varying income sources from Walsall.

From an analysts’ perspective, we do however commend Walsall for producing their results so quickly after the end of the season and not taking advantage of legal loopholes to restrict the amount of information they publish.

The Numbers


Manchester United 2018 Finances: Made of Stone

Panic on the streets


Tuesday 25th September 2018 may not go down as a great day in Manchester United’s history, as the club lost in the Carabao Cup to Derby County and there was a very public spat between Jose Mourinho and Paul Pogba, but off the field the club announced record revenues for the year ended 30 June 2018.

They’re paying Woodward HOW much?

How this was achieved is more to do with the abilities of the marketing department which continues to set a standard that most other clubs can only envy.

Earnings this high are likely to ensure that United are once again top or close to the top of the Football Money League when other clubs announce their results, although this is of little consolation to fans who saw their team go without a trophy in 2017/18.

Goals rather than profits excite fans, although the financial results show that United are still setting the standard that others aspire to in terms of generating money.

Losing a match in the Carabao Cup is likely to have little impact on United’s financial fortunes, as the competition generates only £100,000 prize money for the competition winners, compared to £1.8 million for the FA Cup and £38.6 million for the Premier League.


All clubs divide their income into three main streams, matchday, broadcasting and commercial.

Zooming in on the figures show that United’s matchday income fell by £1.8 million last year.

Extracting the matchday income is straightforward, as it is the average ticket price multiplied by the number of matches played at home.

Reducing the number of games at Old Trafford in 2017/18 was the main driver of the fall in income as United’s early exit in the Champions League to Sevilla resulted in five fewer home matches.

Since acquiring the club, the Glazers, whilst criticised for many of their early pricing activities by fans, have frozen matchday prices for most of the last decade and this is reflected in matchday income being relatively constant.

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As a member of the Premier League, United, like all clubs, agree to centrally negotiated broadcasting deals which are usually for three-year periods which commenced in 2014 and 2017.

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Reds fans are used to rarely seeing their team play at 3pm on a Saturday, and this is because United are very popular with TV audiences, appearing more times last season than Champions Manchester City due to their ability to deliver high ratings.

Each incremental final season position in the Premier League is worth an extra £2 million to a club, so United finishing 4th compared to 2nd in 2017 generated £4 million on top of the benefits of being in the Champions League compared to the Europa Cup.

The area in which United have excelled over the last decade has been commercial income as the club’s marketing department has struck global and regional deals with everyone from tractor manufacturers to Indonesian isotonic drink partners.

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Whilst commercial income has plateaued in the last three years, mainly due to the new big deals with adidas and Chevrolet both being long term, United have announced a sleeve sponsor deal for 2018/19 with American toilet and generator manufacturer Kohler which is likely to be worth many millions.

Adding all three income sources together took United to overall revenues of £590 million, a substantial way ahead of the only other club to have announced results for 2017/18, Manchester City.

The income gap between the two Manchester clubs has narrowed in 2018, but over the last decade United have generated over £1.1 billion more than City and far more than any other club in the Premier League.

Superior levels of income are however no guarantee of success in terms of trophies, a lot depends on how well a club spends its income.


For most clubs the main expenses are going to be player related, in the form of wages and transfer fee amortisation.

United’s wage bill increased by 12% in 2017/18, despite paying no bonuses for winning trophies, the increase was due to new contracts for existing staff such as Jessie Lingard and Jose Mourinho as well as signing Alexis Sanchez in January for a contract estimated to cost the club £20-25 million a year.

City’s wage bill, which a few years ago was out of control as the club tried to attract players by paying above market rates, now show more modest rises since 2013 as the owners focus on FFP compliance and a breakeven model in terms of profitability.

Keeping players happy and recruiting new ones is always a challenge whilst not exceeding the wage budget but what United do have in their favour is good control of wages as a proportion of income.

Only a club with owners who were prepared to underwrite huge losses could have coped with City’s wage bill a few years ago, as wages peaked at £114 for every £100 of income in 2011 whereas United have always had one of the lowest wage control financial metrics since the Premier League started.

Funding transfers is another big outlay for clubs, and this is shown in the profit and loss account via the amortisation charge, which is the fee paid spread over the contract life.

For example, United paid Everton £75 million for Romelu Lukaku in July 2017 on a five-year contract, which works out as an annual amortisation cost of £15 million (£75m/5).

Every transfer fee is amortised, and the total is shown as an overall expense in the profit and loss account, United’s amortisation figure rose by 11% to £138 million.

Despite the amortisation figure rising substantially since Sir Alex Ferguson’s retirement in 2013 United have failed to win the Premier League or Champions League, which adds further weight to those who take the view that Ferguson was able to maximise results without breaking the bank.

Overall costs rose by 9% compared to just a 1.5% increase in income, which hit profits. Included in costs was £896,000 paid to United’s auditors, PriceWaterHouseCoopers (PWC) for the audit and ‘tax compliance services’. Ed Woodward is a former employee of…PWC.

Because the Glazers acquired United by borrowing huge sums of money, the club has historically paid large amounts of interest on loans. The good news for United is that these interest costs are falling as time progresses but have still sucked a large amount of money away from the playing budget over the years.

Over the last decade United’s net interest cost has been £447 million. In the early years of Glazer ownership, the club was seen to be risky borrower, and so ended up paying interest rates of up to 16.25%. As things improved, in part due to Alex Ferguson’s caution in the transfer budget the interest cost has fallen, but the club has now paid an estimated £785 million to banks since the takeover arose in 2005.

Other clubs, funded by their owners, such as Chelsea, Manchester City and Stoke City, have paid no interest on the sums advanced.


There are a variety of profit measures to consider when looking at a business, the good news for United is that the club has performed well regardless of the assessment method compared to most other clubs, but 2018 was poor compared to the previous year at Old Trafford.

Operating profit is simply income less day to day running costs excluding interest. This fell by 45% in 2018, as the increase in player costs exceeded the rise in income. United’s record operating profit was in 2009 when they sold Cristiano Ronaldo for a then world record fee and banked a huge profit on the transaction.

Compared to their local rivals, United have made £618 million of operating profits whereas City have lost £474 million.

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Some figures in the profit and loss account are erratic and so distort profits. These include gains on player sales, redundancy costs, legal settlements and so on. If these are stripped out we get EBIT (Earnings Before Interest and Tax), which reflects a more sustainable view of United as a business.

EBIT profits fell by nearly 60% to £28 million in 2017/18, again reflecting the club’s big investment in player costs that was not matched by income increases, along with the price of an early exit from the Champions League, which was worth $102 million in prize money to winners Real Madrid last season. The low EBIT figure in 2015 in the table shows the impact of not qualifying for the Champions League to United that season.

Stripping out the non-cash costs of transfer fee amortisation and depreciation gives EBITDA (Earnings Before Interest Tax Depreciation and Amortisation). United like to quote this figure in press releases as it excludes some key costs (interest to banks and player amortisation) and so tends to be a high number. Other analysts like EBITDA because they claim it is a cash proxy of profits as non-cash costs are ignored.

EBITDA fell by 12% to £177 million but was still the third largest in the club’s history.

United’s fiscal muscle is very much shown in the EBITDA figures, generating £1.3 billion of such profits in the last decade, a billion more than Manchester City.

The final profit figure to consider is profit before tax. This shows the impact of the Glazer’s borrowing so much money to finance their acquisition of the club. United’s profit before tax was £26 million, equivalent to Sanchez’s wages for the season. United have made £171 million in profits before tax over the decade, compared to City’s loss of £544 million in the same period.

Profits belong to the club owners, who have the choice of either reinvesting back into the club’s future or withdrawing in the form of a dividend. The Glazer’s are the biggest shareholders in United and they and other shareholders took £22 million of the profits for the year for themselves.

Player trading

United spent £163 million on new players in 2017/18, recruiting Lukaku, Matic, Lindelof and Sanchez, although the latter was part of a swap deal with Arsenal for Henrik Mkhitaryan.

This takes the club’s spending over the last decade to just over £1 billion. The problem for United, is that the transfer market is competitive and crowded, and City have spent £460 million more than them in the same period.

Many fans talk about ‘net spend’ when it comes to player trading, and here United are in an unusual position as unlike many other clubs they do not need to sell to buy.

Having said that their player sales in recent years have not been particularly lucrative, reflecting some acquisitions, such as Depay, Di Maria, Zaha and Babe who have failed to impress in a United shirt.

Since selling Cristiano Ronaldo in 2009, United have only made £86 million profits from player sales in the subsequent nine years. City have more than that in the last three years and Liverpool exceeded this sum from the sale of Coutinho last season.

What United do seem to have done is adopt a policy of signing players on credit rather than paying cash for them.

Since the Sir Alex days, the sums owed by the club have increased rapidly, from £11 million at the start of the decade to £258 million by June 2018. This may explain why the United board were so reluctant to allow Mourinho to sign more players in the 2018 summer transfer window, as so much was still owed for previous recruits.


Clubs can be funded from borrowing from a bank and/or owner investment in shares. Under the Glazers United borrowed over £1/2 billion from banks to buy the club from the previous owners.

Debt has both good and bad qualities, it is tax efficient and can multiply the original investment from owners but comes at a cost of the interest being paid and can lead to bankruptcy if payments are not made.

United’s borrowings have increased since 2014 but this is as much to do with the club taking out two loans in US dollars (one for $425 million and the other for $225 million) and sterling falling in value post Brexit as much as anything else.

Critics of United supremo Ed Woodward will query why the club has over £240 million of cash sitting in a bank account earning next to no interest, which perhaps would be better used to pay down the loans, where the interest rate being paid is higher.

A look at the loans appears to indicate that the money is not repayable to the banks until 2027 and 2025. Critics of Woodward point out that he’s an ex-banker and is more concerned with earning fees for his old chums in finance than doing what is best for United.

If United’s EBITDA profit falls below £65 million then they may have to pay interest penalties, but there appears to be little chance of that happening at present.


United are in a strong financial position. Woodward’s recent comment that “playing performance doesn’t really have a meaningful impact on what we can do on the commercial side of the business” won’t have gone down with the United faithful.

This is further evidenced by United’s board’s refusal to accede to Mourinho’s summer transfer requests suggesting that they don’t particular care, or need to care, what the fans think, and whether you’re a Red or ABU, that isn’t good for football.

Data Set