Financial Results

Bournemouth 2017/18: Boom Boom Ba-Ba Boom


Establishing yourself as a Premier League club, especially with only an 11,000 capacity stadium, is as much as a challenge as promotion from the Championship in the first place.

Down at the Vitality stadium Bournemouth can look forward to their fifth consecutive season in the top flight in 2019/20 although financial results are not as impressive as those on the pitch.

Detailed accounts have just been published which show that the price of recruiting the likes of Ake, Begovic and Defoe came at a significant price and the club made a loss in 2017/18.

Investing in the squad wasn’t enough to prevent the Cherries falling from 9th to 12th in the Premier League, although this was still an impressive performance for a club that spent nearly all its time in the lower leagues.

Eddie Howe’s management has enabled the club to compete with most of the ‘Other Fourteen’ clubs on the pitch and his biggest problem will be preventing some of the star names leaving as players such as Wilson and Brooks attract admiration from wealthier rivals.

Having an accounting period of eleven months in 2016/17 does make some comparisons tricky so bear this in mind when looking at the figures.

Key financial figures for year to 30 June 2018: AFC Bournemouth Limited

Income £135 million (down 1%).

Wages £102 million (up 42%) .

Operating loss before player sales £13 million (previous season profit £15.2 million)

Player signings £56 million (previous season £9 million but distorted by moving year end from 31 July to 30 June)

Player sales £9 million (previous season £3 million)

Owner loans £70 million (up £17 million)


Overall income for Bournemouth decreased slightly, mainly due to lower prize money from the Premier League.

With a ground capacity a fraction of that of other clubs in the division it was no surprise that Bournemouth had the second lowest matchday income of any club in the Premier League in 2017/18.

Earning so little money from this source does give the club a financial disadvantage and it would benefit significantly from moving to a bigger venue.

Realistically the club cannot generate any more money from matchday unless it increases prices (not popular with fans) the number of matchday events (only likely if get a Europa Cup place) or the number of seats (not feasible at the Vitality).

Everyone knows that the Premier League is a success due to its popularity with TV audiences and this is reflected in the large sums distributed to clubs.

Selling Premier League rights at a loss overseas in the initial years of the division have proven to be a masterstroke and these now bring in about £1.3 billion a year compared to about £1.7 billion for the domestic rights.

Every club has historically received an equal share of the overseas rights but this is set to change after the ‘Big Six’ (Spurs, Arsenal, Chelsea, Liverpool, Manchester United and City) threatened to join a European SuperLeague unless they receive more money from this source in future years.

Many fans will see this as fair because overseas viewers are more likely to tune into matches featuring the Big Six but the relatively democratic way that TV money is distributed in the Premier League.

Broadcast income represents over 88% of Bournemouth’s total and shows just how essential continued existence in the Premier League is to the club.

Lower broadcast income was a result of Bournemouth finishing three places lower in the table than in 2016/17 (each position is worth an additional £1.9 million) and two fewer live TV appearances (each is worth about £1 million).

Earnings from commercial sponsors increased by 45% to over £10 million for Bournemouth but this was still the lowest in the division as the constraints of operating from such a small stadium reduce opportunities to generate money from this area.

Sponsor and commercial income include things such as retail sales, so a move to a new stadium would allow Bournemouth to address this issue.

A club such as Bournemouth has to be realistic in terms of attracting commercial partners as it does not have the global fanbase of the Big Six but a longer period in the Premier League and the attractive football it plays will increase its popularity with these providers of money.


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

Having a 42% increase in wages when income decreased appears surprising, but the main players recruited came from Premier League clubs on large salaries.

Unlike the previous season, where Bournemouth lost Matt Ritchie to Newcastle due to a better wage offer despite being in a lower division, existing squad members were offered substantially improved terms of their deals.

Nevertheless, to see any established business’s wage costs rise by 738% in five years in astounding and a testament to the pulling power of the Premier League in attracting viewers.

Despite joining the £100 million a year wage bill club Bournemouth’s average weekly wage (and we fully accept that these are rough and ready figures) of £49,000 a week is slightly below the Premier League average.

Ensuring that Bournemouth’s best players continue to play for the club comes as a price and the club paid out £76 in wages last season for every £100 of income, above UEFA’s recommended benchmark of 70%.

Reversing this upward trend is important if the club wants to break even, although there’s no sign that owner Maxim Demin is concerned about the wage costs and compared to the years before the club joined the Premier League the figures are low.

Being second only to Everton, who spent money wildly on players in 2017/18 in the wage control table is a cause for concern although Bournemouth are not alone in being above the 70% UEFA danger sign.

It is not just players who have benefitted from the generosity of the owner, the highest paid director saw their income rise by 8% to £1,356,000, which puts the club into the top half of the table by Premier League standards.

Rather than show the full transfer fee of a player in the year he signs as a single expense that year, football clubs use an accounting method called amortisation.

Dividing the transfer fee cost over the contract length gives the annual amortisation charge, so when Bournemouth signed Nathan Ake from Chelsea for £20 million on a five year contract this works out as an annual amortisation cost of £4 million (£20m/5).

Premier League clubs spend a lot of money on players and this is reflected in high amortisation charges as evidenced by Bournemouth’s total increasing from £1m when in League One to £27m in the EPL.

If the cost of player purchases is spread over the life of a contract you might intuitively expect similar from player sales, but this is not the case.

Large profits on player disposals arise when they are sold because this is calculated as the sale price less the accounting value (cost less total amortisation) and all of this sum is shown in the year of sale.

Over a period of years profits on sales even out but they can be very volatile in a single season, often dependent on whether the player was sold a few days before or after the club year end.

The strategy of Bournemouth appears to be one of trying to hold onto their players and this has resulted in relatively modest profits and losses on disposals in recent years.

The large profit in 2015/16 relates to Matt Ritchie who was sold in July 2016 and as Bournemouth used to have a 31 July year end this appeared in the 2015/16 accounts.

In addition to profits on player sales Bournemouth made over £5 million from loan fees in respect of players given to other clubs.

Clubs with significant borrowings such as Bournemouth may have significant finance costs but all of the sums lent are from the owners and are interest free.

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 types of Brexit.

A simple definition is that profit is income less costs, and if this figure is negative it is called a loss.

The headline figure for Bournemouth was a loss of £9.1 million before taking into consideration finance costs and tax. Taking such a profit figure as a measure of success is okay, but it includes some items which are volatile (such as player sales gains, redundancy costs and player write-downs).

Stripping out the above distortions gives something called normalised EBIT (earnings before interest and tax) profit, which is a better measure of profits generated by day to day activities excluding the non-recurring transactions.

Bournemouth’s EBIT is lower than the operating profit for two reasons. There was a small profit on player sales and income of £2.9 million due to the EFL reducing the FFP fine relating to 2014/15 from £7.6m to £4.5m. Bournemouth says this is due to the EFL agreeing that ‘there was no wrong doing by the club’ but surely if this is the case then the fine would have been wiped out altogether?

The club’s share of Richard Scudamore’s leaving present from the EPL is also shown as a non-recurring fee, which seems a bit strange as this is being paid over three years and there is no guarantee that Bournemouth will be in this division for all of them.

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Bournemouth’s EBIT losses worked out at £240,000 a week in 2017/18 and they are modest by Premier League standards.

If non-cash costs such as player amortisation are stripped out, the position however improves, and Bournemouth have an EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) profit of £15 million.

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. Bournemouth were failing to break even in the lower leagues using this measure but since promotion have generated £60 million to use in player trading.

Player trading:

Bournemouth had a significant 2017/18 in terms of player purchases as Ake and Begovic were the main recruits, but not too much should be read into 2016/17 as the finances ran from 1 August 2016 to 30 June 2017 and so did not include the traditionally busy transfer month of July.

At 30 June 2018 the total squad cost was £126 million which is far lower than their market value.

Summary of figures

Compared to their peer group, Bournemouth’s spending is very modest.

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 Bournemouth, the club have focussed on owner loans. Bournemouth borrowed a net £3 million in the year and at 30 June 2018 owed Maxim Demin controlled AFCB Enterprises in the British Virgin Islands tax haven’t £46 million and the American Peak6 Football Holdings a further £24 million.

Since the year end Peak6 have sold their investment to Maxim Demin.


Bournemouth continue to defy the odds in terms of reasonable finishes in the Premier League, an attractive style of play and developing good young players.

The level of investment in the squad in 2017/18, especially in terms of player wages, is not sustainable at the present rate of growth and could result in a breach of FFP rules.

An overreliance on broadcast income is only a genuine problem if the club is relegated and there appears to be little chance of that happening provided the club holds onto its best players.

The trainspotter's trainspotter of football finance.

One Comment

  • Kirsikka

    “Bournemouth’s EBIT is lower than the operating profit for two reasons. There was a small profit on player sales and income of £2.9 million due to the EFL reducing the FFP fine relating to 2014/15 from £7.6m to £4.5m. Bournemouth says this is due to the EFL agreeing that ‘there was no wrong doing by the club’ but surely if this is the case then the fine would have been wiped out altogether?”

    It’s a good point but the statement actually came from the EFL, not the club.

    “A statement from the EFL said: “The club was deemed to have breached the EFL’s Championship Financial Fair Play Rules (“the Rules”) at the time, but proceedings were stayed pending the outcome of a legal challenge by Queens Park Rangers against those Rules.

    “In reaching a settlement, the EFL acknowledges that the club did not make any deliberate attempt to infringe the Rules or to deceive. All relevant matters were taken into account when determining the quantum of the settlement.

    “The agreed settlement of £4.75m is in full and final settlement of all and any claims by the EFL against the Club and its officers, in respect of the FFP Regulations for Season 2014/15.”

    Presumably there was an infringement but it was deemed accidental is all we can take from that. Despite fans of certain clubs desperate to point fingers it’s impossible to know the actual reason without more detail and it’s disappointing that the EFL don’t want to release that information to the fans, or the club.

    Speculation but it could simply be down to the club’s financial accounting year at that point running to the end of July so the recruitment of Mings and so on that summer went into the promotion year financial accounts which would have taken the numbers over the limits.

    If that’s the case you could see why technically there was a breach and fine to pay but there wasn’t a deliberate attempt to circumvent the rules since the spending took place outside of the season when that spending would have influenced playing matters and was done in the knowledge that it would be funded by the PL money coming the next year.

    Presumably this is one reason why the club changed their financial year the year before the above, to bring the accounting period more in line with the football season.

    It’s hard to say for sure really and I wish the the FA and EFL insisisted on clubs being a lot more transparent about these things.

    Meanwhile, the mud will stick for those people that want it to and the EFL statement will justify it in the other direction for fans of AFCB.

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