Financial Results

Aston Villa 2017/18 Finances and FFP: Devil in the Detail


Down at Villa Park fans are hopeful that the recent return to the first team of Jack Grealish can cement the club’s playoff position as they have the benefits of the final year of parachute payments.

Over the other side of the city rivals Birmingham City have just been docked 9 points as a punishment for a breach of the EFL’s Profitability and Sustainability rules.

Championship football is challenging as the clash between those with parachute payments, stalwarts of the division and recently promoted League One teams means that there is a lack of a level playing field between the 24 competing clubs.

The reign of Doctor Tony Xia, the flamboyant club owner until the summer of 2018 nearly took the club into liquidation but there appears to be some greater financial stability since his departure.


Overall total income for clubs is split into three categories to comply with EFL League recommendations, matchday, broadcasting and commercial.

Relying on fans to turn up and watch a team is more important in the Championship than the Premier League due to the lower sums earned from broadcasting.

Throughout the last decade Villa had a big decrease in matchday income in 2011/12 when the club finished 16th under Alex Mcleish and began a period in the lower half of the Premier League prior to relegation in 2015/16.

Of the £11.8 million of matchday income for 2017/18 about £1m came from the playoff final as it is custom for the side promoted to forego its share of the Wembley receipts as it is about to receive a large cash injection upon joining the Premier League.

Nevertheless, Villa still generated more matchday income than any other club in the division, although Leeds are yet to publish their 2017/18 accounts and may run Villa close.

Year on year Villa’s matchday income increased by 10% in 2017/18.

Getting an average attendance of over 32,000 last season was an achievement and this year the figure has increased to over 35,000 as fans bought into the commitments of the new owners.

In terms of broadcast income Villa saw a drop of 16% to just over £40 million as the second year of parachute payments results in a fall from £41m to £34 million with the remainder of the money being from the EFL deal with Sky Sports.

Villa will see a further drop in broadcast income of about £20 million this season due to a further cut in parachute payments to about £14 million.

EFL clubs earn about £2.5 million from the broadcast contract plus £100-140,000 for a home match that takes place before the cameras and £10,000 for an away match.

Some clubs feel this deal undervalues the Championship and there are rumours of a breakaway to try to negotiate better terms although as yet there is nothing concrete.

Sponsorship and commercial income are therefore essential for Championship sides and here Villa posted a 9% increase mainly due to the training ground being sponsored.

The problem with the Championship is that because it is seen in less countries than the Premier League in terms of a TV audience commercial partners are not willing to pay the same levels for deals and that is why Villa’s income has halved since 2016.

Every club in the Championship (with the possible exception of Dirty Leeds) would like to be in Villa’s position in terms of commercial income as the benefits of a being a big city club and a legacy of the time spend in the Premier League make it attractive compared to much of the competition.

Villa’s overall income was therefore a division leading £68.6 million which explains the paradox of the club’s financial performance as it was also the lowest generated at Villa Park for over a decade.

Earnings in the Championship as a whole are split between into three broad tiers, with those in receipt of parachute payments at the top followed by Championship regulars such as Leeds and Forest and finally clubs who have been bobbing up and down between the division and League One.


Player costs

Being so close to the Premier League and its riches has meant that clubs often overspend on player costs as they gamble to get promoted.

Running up huge wage costs was one of the reasons why Tony Xia nearly destroyed Villa as the club was effectively paying out Premier League salaries whilst in its second season in the Championship by recruiting the likes of John Terry and Robert Snodgrass on loan as well as the legacy of previous disastrous purchases such as Scott Hogan on lucrative contracts which meant they could not be moved on.

Usually relegated clubs reduce wages in the second season following relegation from the Premier League but Villa’s increased by 19% to £73 million.

Compared to other Championship clubs Villa had by far the biggest wage bill in the division paying more than the bottom five clubs combined with an average player salary of £1.8 million a year.

Earning so much from parachute payments meant that Villa ‘only’ paid out £107 in wages from every £100 of income last season, which is low by Championship standards, although this could rise substantially this season and even more so in 2019/20 should they fail to be promoted unless there is a major clear out of highly paid players.

Having a big wage bill is only part of the player costs for a club, as there is also transfer fee amortisation to consider too.

Amortisation works by spreading the cost of transfers over their contract life, so when Villa signed Scott Hogan in January 2017 for £12 million on a four year deal this results in an annual cost of £3 million in the profit and loss account over that period.

Normally a club relegated from the Premier League would have a reduced amortisation charge but the huge spending in 2016/17 on player of £88 million sanctioned by Tony Xia meant there was an increase that season of nearly half and a legacy cost of the same sum the following season.

Doubters of Villa’s modest transfer spend in 2017/18 should not the club was second to ‘Boro in the Championship amortisation table and Villa’s total player investment cost worked out at £141 in wages and amortisation for every £100 of income, meaning the club was dependent upon Xia to pay for the excess as well as all the other club running costs.


Jumping over other expenses and looking at profit, which is income less costs and Villa, like all clubs show a variety of profit measures in their accounts, so they need a bit of explanation.

Operating profit is income less all the running costs of the club except loan interest. It is a ‘dirty’ profit measure in that it includes one-off non-recurring costs such as redundancy, write downs and gains on player sales that distort the underlying figures when trying to work out long term sustainable profitability.

Both Randy Lerner and Tony Xia oversaw a club that had operating losses every single year during the last decade despite the benefits of Premier League membership and parachute payments.

Stripping out the volatile impact of player sale profits and other one off events, which are unpredictable and not part of the clubs’ day to day trading, gives a profit measure called EBIT (Earnings Before Interest and Tax) which gives even more depressing news for Villa fans.

In the case of Villa, the club had non-recurring income of £3 million from ‘Income from compensation deed relating to freehold land’ which appears to compensation for part of Villa’s training facilities being used the for HS2 rail project.

Villa’s EBIT losses average £790,000 a week over the last decade and the only way these can be covered is by selling players, borrowing money or having the owner invest by buying more shares. Villa made a profit of £16 million on player sales in 2017/18 and may need to sell more players if they fail to be promoted this season.

Total losses in the Championship from the 17 clubs who have reported to date are £366 million and could easily be increased by at least £100 million more once the likes of Sheffield Wednesday, Derby and Sunderland have reported their figures.

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.

Villa’s EBITDA loss was still more than £500,000 a week and it has had losses in nine years out of the last ten which shows that is has failed to generate cash from its day to day activities.

Profitability and Sustainability/FFP issues

The present incarnation of Financial Fair Play is called Profitability and Sustainability. Clubs are assessed over a three year period and allowed to lose a maximum of £35 million before tax for each year in the Premier League and £13 million in the Championship. Therefore, for Villa in 2017/18 the allowable loss was £61 million.

Some expenses are excluded for FFP purposes, namely promotion bonuses, academy, infrastructure, women’s football and community schemes.

In 2016 Villa wrote down property values by nearly £45 million when the club was relegated from the Premier League.

The above calculation suggests that Villa were within the FFP limits by £2.6 million in 2017/18, with the HS2 land sale being just enough to keep the right side of the limit.

Being so close to the limit does also mean that Villa (and other clubs which are too close to the FFP naughty step for comfort) will have had to submit regular monthly financial reports to the EFL to ensure they are compliant with P&S rules for the present season.

Player Trading

Villa spent just £1.8 million on new players in the year to 30 June 2018 as the club had a hangover from the previous season when purchases were £88 million.

The large spend on players in previous years 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.


Clubs can obtain funding in three ways, bank lending, owner loans (which may be interest free) or issuing shares to investors. In the year ended 31 May 2018 Villa issued nearly £70 million in shares to investors as Tony Xia stuck money into the club for a period of time. However, when Xia’s money ran out the club was unable to continue to pay the bills, leading to the crisis that nearly destroyed it.

Nassef Sawiris and Wes Edens acquired control of the club in the summer of 2018 and injected the cash needed to continue trading.


Key Financial Highlights for year ended 31 May 2018

Turnover £68.6 million (down 7%)

Wages £73.1 million (up 19%)

Pre-player sale losses £54.0 million (up from £41.1 million)

Player sale profits £15.9 million (down from £26.6 million)

Player signings £1.8 million (down from £87.9 million)

Villa gambled and lost under Tony Xia in the last two seasons trying to return to the Premier League. The failure to achieve this meant that it came close to ceasing to exist. If the club is not promoted this season there will be a tough challenge ahead as income will fall again leaving the club with high running costs and a likely player exodus to balance the books as the FFP limit falls from £61m to £39 million.

The trainspotter's trainspotter of football finance.


  • Ray Gorman Villa fan for 66years

    If we fail to get promotion then Jack will be off (30 mill at least) and possibly McGinn 20 mill If we get promotion there is no problem so really nothing to worry about!!

  • Paddy

    Great analysis as per.

    Think their academy expenditure £10m or so last year?

    Still, can’t quite see how they pass it in the 3 year period to 2019.

    TV money down £20m, non recurring compensation we think of £3m…

    Yes gate receipts up, wages surely down but so too is (likely) profit on player sales.

    Dunno if that’s cancelled out by (surely) reduced amortisation though?

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