English Football Club Finances – Net profit/Loss

[Alex Rover]

The 92 League clubs ranked in order of profitability
Accounts for the 2018-19 season show 52 of the 72 EFL clubs losing money.

2017-18 Net profit and loss
1 Tottenham £113m
2 Liverpool £106m
3 Chelsea £62m
4 Arsenal £57m
5 Burnley £37m
6 Southampton £29m
7 Newcastle £19m
8 Hull £19m
9 West Ham £17m
10 Norwich £15m
11 Barnsley £13m
12 Huddersfield £11m
13 Brighton £11m
14 Manchester City £10m
15 Exeter £2.4m
16 Leicester £1m
17 Preston £1m
18 Port Vale £1m
19 Stevenage £0.8m
20 Luton £0.6m
21 Peterborough £0.5m
22 Forest Green £0.4m
23 Accrington £0.4m
24 Fleetwood £0.4m
25 Burton £0.3m
26 Shrewsbury £0.3m
27 Gillingham £0.1m
28 Plymouth £0.1m
29 Newport £0.1m
30 Yeovil £0.1m
31 Walsall no profit/loss
32 Barnet no profit/loss
33 Grimsby -£0.04m
34 Cheltenham -£0.1m
35 Carlisle -£0.1m
36 Mansfield -£0.1m
37 Bradford -£0.3m
38 Rochdale -£0.3m
39 Crawley -£0.3m
40 Morecambe -£0.4m
41 Oldham -£0.5m
42 Rotherham -£0.5m
43 Wimbledon -£0.5m
44 Wycombe -£0.7m
45 Crewe -£0.8m
46 Cambridge -£0.8m
47 Chesterfield -£1.1m
48 Lincoln -£1.1m
49 Derby -£1.1m
50 Portsmouth -£1.4m
51 Notts County -£1.5m
52 Swindon -£1.8m
53 Sheffield Utd -£1.9m
54 Northampton -£2m
55 Oxford -£2m
56 Blackpool -£2.1m
57 Coventry -£2.5m
58 Doncaster -£2.8m
59 Bury -£2.8m
60 Swansea -£3m
61 Southend -£3.1m
62 Colchester -£3m
63 Bristol Rovers -£3m
64 Scunthorpe -£3.6m
65 Brentford -£3.9m
66 Leeds -£4.3m
67 MK Dons -£4.6m
68 Millwall -£4.6m
69 Ipswich -£5.2m
70 Bolton -£5.4m
71 Nottingham Forest -£5.6m
72 West Brom -£6m
73 Middlesbrough -£6.6m
74 Wigan -£7.7m
75 Sunderland -£10.2m
76 Charlton -£10.4m
77 Bournemouth -£11m
78 Everton -£13m
79 Blackburn -£16.8m
80 Reading -£21m
81 Sheffield Wed -£21m
82 Bristol City -£25m
83 Watford -£31m
84 Stoke -£32m
85 Aston Villa -£35m
86 Cardiff -£36m
87 Crystal Palace -£36m
88 Manchester Utd -£37m
89 Birmingham -£37m
90 QPR -£38m
91 Fulham -£45m
92 Wolves -£57m

[Alex Rover]

Need to credit Martyn Ziegler of The Times for the info

[Alex Rover]

**Just my opinion as I have little knowledge of this but is the below about right?**

 

Although it doesn’t necessarily matter about your profit and loss from year to year I suppose, it’s your total debt that is the issue.  Once that spirals (like Portsmouth/Bolton) and your benefactor/directors no longer want to plug the losses, then its administration time. 

If you have saleable assets (stadium, training ground, academy etc) then you’ll get a buyer because there’s something concrete to secure your purchase against and take the debt on.  This happened with Bolton initially a few years back.  Their problem (and Bury’s for that matter) has been that the successive owners who took over have tried to asset strip some parts for whatever reason (inject more cash into the club, pay off loans the new owners used to buy the clubs in the first place or a potential opportunity to make money personally from the club) whilst continuing to make losses.  Loans then get called in, creditors want their cash, tax bills go unpaid.  Sometimes the process will then repeat itself but in this instance Bolton and Bury have been so poorly managed, sold key assets (Steve Dale has sold the stadium & car park) potential new buyers aren’t as attracted and pull out. 

A wiseman once said, if you owe 100m and can’t pay it back, it’s the banks problem. If you owe 5-10m and can’t pay it back it’s your problem.

The people who took over at Bolton & Bury had no money themselves to stem any losses.  They weren’t fans, they simply bought he club with loaned money which they aimed to repay by carefully stripping the club of a few assets at a time and hopefully injecting a bit of cash into the playing side to get some success.  They’d then sell the club and make some money back (as would their initial backers).  Only thing is it is not as simple as that.

[Herbie6590]

In business, cash is king. If the cash coming in exceeds cash going out, you stay in business. When the reverse applies, you go bust...in VERY simple terms.

Profit & Loss shows trading performance but it does not equate to cash flow...a company consistently making losses will struggle with its cash flow eventually. A business can sell off assets to mask trading losses but you can only sell your ground & star centre forward once.

You are correct about the balance sheet - if a company is asset rich but cash poor, it may still be an attractive proposition as a new owner may think they can generate income (cash) from those assets. 

A basic rule is that money only comes from three potential sources; trading (profit), cash injections from owners (shares or loans) or external borrowings. Profit is the best source (obviously), owners cash next best - preferably shares but benevolent loans a good proxy, last is external borrowing as that is outside the business’ direct control. It often comes with associated lending covenants, arrangement fees and of course interest rates. Dividends are optional, interest bills are mandatory.

Come back here same time tomorrow accountancy fans for another in our popular series of “Finance for Beginners” courses...brought to you by BRFCS, the forum of choice for financial directors everywhere... ?

 

[old darwen blue]

6 hours ago, Alex Rover said:

The 92 League clubs ranked in order of profitability
Accounts for the 2018-19 season show 52 of the 72 EFL clubs losing money.

2017-18 Net profit and loss
1 Tottenham £113m
2 Liverpool £106m
3 Chelsea £62m
4 Arsenal £57m
5 Burnley £37m
6 Southampton £29m
7 Newcastle £19m
8 Hull £19m
9 West Ham £17m
10 Norwich £15m
11 Barnsley £13m
12 Huddersfield £11m
13 Brighton £11m
14 Manchester City £10m
15 Exeter £2.4m
16 Leicester £1m
17 Preston £1m
18 Port Vale £1m
19 Stevenage £0.8m
20 Luton £0.6m
21 Peterborough £0.5m
22 Forest Green £0.4m
23 Accrington £0.4m
24 Fleetwood £0.4m
25 Burton £0.3m
26 Shrewsbury £0.3m
27 Gillingham £0.1m
28 Plymouth £0.1m
29 Newport £0.1m
30 Yeovil £0.1m
31 Walsall no profit/loss
32 Barnet no profit/loss
33 Grimsby -£0.04m
34 Cheltenham -£0.1m
35 Carlisle -£0.1m
36 Mansfield -£0.1m
37 Bradford -£0.3m
38 Rochdale -£0.3m
39 Crawley -£0.3m
40 Morecambe -£0.4m
41 Oldham -£0.5m
42 Rotherham -£0.5m
43 Wimbledon -£0.5m
44 Wycombe -£0.7m
45 Crewe -£0.8m
46 Cambridge -£0.8m
47 Chesterfield -£1.1m
48 Lincoln -£1.1m
49 Derby -£1.1m
50 Portsmouth -£1.4m
51 Notts County -£1.5m
52 Swindon -£1.8m
53 Sheffield Utd -£1.9m
54 Northampton -£2m
55 Oxford -£2m
56 Blackpool -£2.1m
57 Coventry -£2.5m
58 Doncaster -£2.8m
59 Bury -£2.8m
60 Swansea -£3m
61 Southend -£3.1m
62 Colchester -£3m
63 Bristol Rovers -£3m
64 Scunthorpe -£3.6m
65 Brentford -£3.9m
66 Leeds -£4.3m
67 MK Dons -£4.6m
68 Millwall -£4.6m
69 Ipswich -£5.2m
70 Bolton -£5.4m
71 Nottingham Forest -£5.6m
72 West Brom -£6m
73 Middlesbrough -£6.6m
74 Wigan -£7.7m
75 Sunderland -£10.2m
76 Charlton -£10.4m
77 Bournemouth -£11m
78 Everton -£13m
79 Blackburn -£16.8m
80 Reading -£21m
81 Sheffield Wed -£21m
82 Bristol City -£25m
83 Watford -£31m
84 Stoke -£32m
85 Aston Villa -£35m
86 Cardiff -£36m
87 Crystal Palace -£36m
88 Manchester Utd -£37m
89 Birmingham -£37m
90 QPR -£38m
91 Fulham -£45m
92 Wolves -£57m

All hail the venkys, they were only misguided at the beginning. 

 

?

[philipl]

If you look at number 5 on that list, you can probably see the Venky's strategy.

[Stuart]

“Strategy”

[philipl]

Just now, Stuart said:

“Strategy”

Yes Strategy.

The £500K plus spent on consultants in the close season of 2016/17 will have given them a strategic bible for Rovers which it would appear they are adhering to.

[Exiled in Toronto]

Those financial geniuses who sold our club did so for less than Burnley make each year. The Trust’s £3 million a year cash injection would now be making a 12-fold return annually.

It’s also staggering that Barnsley made more money than the champions of England

[Crimpshrine]

45 minutes ago, philipl said:

Yes Strategy.

The £500K plus spent on consultants in the close season of 2016/17 will have given them a strategic bible for Rovers which it would appear they are adhering to.

Could you elaborate ? I don't see much difference in their behaviour since summer 2017. Same regular cash injections ( share issues ) to pay the bills, similar transfer/loan policies, no change to the infrastructure at the  club. What's the new strategy ?

[JHRover]

1 hour ago, philipl said:

Yes Strategy.

The £500K plus spent on consultants in the close season of 2016/17 will have given them a strategic bible for Rovers which it would appear they are adhering to.

The 'consultants' they brought into the club in the summer of 2017 were accountants. So well placed to advise the owners on a financial strategy but I'm not sure how qualified they were to advise on a footballing strategy. 

'Invest in promising young players who will grow in value and be worth a lot more in a few years' isnt a football strategy, it's a business one. In any event the owners already did all that under Bowyer so it is hardly something new to them. 

Many people have tried and failed to run football clubs on the advice of non footballing people on non footballing agendas. It rarely works.

As far as I can see there has never been any football expertise other than the manager they stumbled across and like. 

[Mattyblue]

Well of course we’d like to be the 5th most profitable club in England and a solid PL club, and that’s with a home support of about 18,000, but so would half of football.

I don’t see how Venky’s ‘strategy’ is getting us remotely close to it.

[Herbie6590]

3 minutes ago, Crimpshrine said:

Could you elaborate ? I don't see much difference in their behaviour since summer 2017. Same regular cash injections ( share issues ) to pay the bills, similar transfer/loan policies, no change to the infrastructure at the  club. What's the new strategy ?

This is conjecture of course but here’s my take on strategy for what worth...

Objective - get to PL to cash in on TV money, until then manage losses down to levels within FFP tolerances, whilst hoping that a crop of young players comes through at the same time to enable us to “do a Burnley”

 

Action Plan

1. Income growth needed

• Keep academy status to develop & sell promising young talent
• review contracts regularly to avoid losing talent on Bosmans 
• 1875 club so we can increase away fans ticket prices
• upselling to season ticket holders (lounges etc) - optimise income from existing fans
• three kits regularly on sale in club shop
• new concourse catering contract
• sleeve sponsors/ training kit sponsors/ shirt bottom sponsors

2. Cost containment/reduction

• Loan out players wherever possible to reduce wage bill - e.g. Mulgrew
• small number of staff redundancies after consultants came in
• (Speculation) reduce amount spent on ground/stadium maintenance 

[Mattyblue]

5 minutes ago, Herbie6590 said:

This is conjecture of course but here’s my take on strategy for what worth...

Objective - get to PL to cash in on TV money, until then manage losses down to levels within FFP tolerances, whilst hoping that a crop of young players comes through at the same time to enable us to “do a Burnley”

 

Action Plan

1. Income growth needed

• Keep academy status to develop & sell promising young talent
• review contracts regularly to avoid losing talent on Bosmans 
• 1875 club so we can increase away fans ticket prices
• upselling to season ticket holders (lounges etc) - optimise income from existing fans
• three kits regularly on sale in club shop
• new concourse catering contract
• sleeve sponsors/ training kit sponsors/ shirt bottom sponsors

2. Cost containment/reduction

• Loan out players wherever possible to reduce wage bill - e.g. Mulgrew
• small number of staff redundancies after consultants came in
• (Speculation) reduce amount spent on ground/stadium maintenance 

That is what they are doing, but let’s be frank trying to milk more and more out of our rump of 8,600 paid season ticket holders and a couple of thousand walk ones is tinkering around the edges, and is obviously an order from up high to reduce losses year in year out, but will make minimal difference in establishing a top Championship side.

Edited August 29, 2019 by Mattyblue

[philipl]

51 minutes ago, Crimpshrine said:

Could you elaborate ? I don't see much difference in their behaviour since summer 2017. Same regular cash injections ( share issues ) to pay the bills, similar transfer/loan policies, no change to the infrastructure at the  club. What's the new strategy ?

The strategies were written by the consultants in the summer of 2017 and seem to have been adhered to. So no you won't see any difference until their next strategic review which would probably come around 2022 unless something completely unexpected happens.

For what its worth, I think if you watch is happening and being said, the strategy is aiming for promotion in 20/21 to the Premier League with the fundamentals of a squad capable of staying up.

Edited August 29, 2019 by philipl

[philipl]

51 minutes ago, JHRover said:

The 'consultants' they brought into the club in the summer of 2017 were accountants. So well placed to advise the owners on a financial strategy but I'm not sure how qualified they were to advise on a footballing strategy. 

'Invest in promising young players who will grow in value and be worth a lot more in a few years' isnt a football strategy, it's a business one. In any event the owners already did all that under Bowyer so it is hardly something new to them. 

Many people have tried and failed to run football clubs on the advice of non footballing people on non footballing agendas. It rarely works.

As far as I can see there has never been any football expertise other than the manager they stumbled across and like. 

They were the consulting divisions of accounting firms accompanied by their less illustrious bean counting colleagues- hence the eye watering six figure bills

And with the money at the top end of football these days, the city offices of consultancies are getting quite a bit of work from football and building considerable expertise.

[lraC]

I did hear that the accountants were brought in, as there appeared to be funds disappearing, with no trace of where these were going. As already mentioned, accountants advising on a traditional business is one thing, but a football club, is a totally different animal.

Here we are all speculating again though, instead of the owners coming out and stating, what has happened in the past, where we are now and where they want us to be in the future. Perhaps once they do, a bit more income could come in, as a few more fans may start to believe in them and trust them. 

[Crimpshrine]

2 hours ago, philipl said:

The strategies were written by the consultants in the summer of 2017 and seem to have been adhered to. So no you won't see any difference until their next strategic review which would probably come around 2022 unless something completely unexpected happens.

For what its worth, I think if you watch is happening and being said, the strategy is aiming for promotion in 20/21 to the Premier League with the fundamentals of a squad capable of staying up.

I can see what you and Herbie6590 are saying - run a tight ship, maximise income - with customers ( fans ) being fair game for fleecing. Look after your player assets and make sure they are tied down on contracts. Don't spend if you don't need to. Have a discussion at the next AGM ( ad infinitum..)

However, is that any different to what was happening before the accountants came in ? 

As for keeping on top of players contracts, I think they were a bit too hasty when it came to Smallwood, Evans and Mulgrew.

So, that's all business strategy which is simple common sense.

The football strategy is cross your fingers and hope Mowbray does OK. Sell players at a profit if possible. 

If we are seriously aiming at promotion 20/21 then next summer's transfer window will be fun!

 

[Husky]

Who'd have thought Forest Green would be £37.4million better off than Man Utd ?

[Herbie6590]

48 minutes ago, Crimpshrine said:

I can see what you and Herbie6590 are saying - run a tight ship, maximise income - with customers ( fans ) being fair game for fleecing. Look after your player assets and make sure they are tied down on contracts. Don't spend if you don't need to. Have a discussion at the next AGM ( ad infinitum..)

However, is that any different to what was happening before the accountants came in ? 

As for keeping on top of players contracts, I think they were a bit too hasty when it came to Smallwood, Evans and Mulgrew.

So, that's all business strategy which is simple common sense.

The football strategy is cross your fingers and hope Mowbray does OK. Sell players at a profit if possible. 

If we are seriously aiming at promotion 20/21 then next summer's transfer window will be fun!

 

To the point about is it any different ? Not massively, but I for one am happier that when advice is sought these days, it comes from accountants rather than agents & accounting firms’ motivations are fee generation rather than getting their kids a playing contract & suggesting sacking all the existing directors & manager ?.

[philipl]

Got to remember relegation in 2016/17 was an existential crisis. All options would have been on the table for consideration by the KPMG and Deloitte teams including highly distasteful ones.

So look at the club now compared with the one in 2016 and there has been a wholesale revolution. Even more so than in 2015 when Balaji's preferred funding method suddenly dried up and we had a Chairman we were openly slagging off in a Court of Law...

The route chosen in 2017/18; take a £20m hit including retention of Category A academy thankfully was rewarded by immediate promotion with a squad and management decently assured of staying up.

Again retaining a cat A academy doesn't guarantee anything but it now looks feasible that having a Premier League level youth facility could be beginning to yield Premier League level young players.

Doubtful Rankin-Costello, Travis, Buckley, Butterworth are going to be the backbone of a promotion winning squad this season but 20/21 could be a different matter. There are other players who will be coming into contention too.

Edited August 29, 2019 by philipl

[tomphil]

I thought the main reason for the audits was to see where the cash was going and stop any unaccounted for drains ?

There could well have been a subsequent set of basic recommendations made but not sure about a strategic plan being followed to the letter it just seems a tad optimistic.

Whilst it was buying a young player with alleged potential investing that sheer amount on one guy with Brereton doesn't equate to much sense in my view it more points to bad advice again. If they'd signed him, AA and another for that combined it would've pointed to a better 'investment' model i think.

Edited August 29, 2019 by tomphil

[philipl]

1 hour ago, tomphil said:

I thought the main reason for the audits was to see where the cash was going and stop any unaccounted for drains ?

There could well have been a subsequent set of basic recommendations made but not sure about a strategic plan being followed to the letter it just seems a tad optimistic.

Whilst it was buying a young player with alleged potential investing that sheer amount on one guy with Brereton doesn't equate to much sense in my view it more points to bad advice again. If they'd signed him, AA and another for that combined it would've pointed to a better 'investment' model i think.

This is the first I have heard about audits looking for cash drains.

Cash may has been spent hugely inadvisably particularly in the first four years but Mrs D has always kept a tight system of authorising and accounting for expenditures.