Huddersfield debt is the softest a club could get

The authoritative Swiss Ramble has now turned his attention to Huddersfield Town, their 2016/17 accounts relating to the year in which they won promotion. As he now tweets rather than blogs, I follow the practice of consolidating his insights so that they may be more widely shared.

He notes, 'The loss before tax widened from £1.6m to £19.6m, as they paid the price for success with £11.9m of promotion expenses (e.g. bonuses). Post-tax loss was £17.1m, thanks to £2.5m tax credit. Revenue rose £4.5m (40 per cent) to £15.8m, but profit on player sales was down £5.7m to £1.2m.'

The main reason for the club's £4.5m revenue growth was the new Premier League TV deal, which resulted in a higher solidarity payment, thus increasing broadcasting income by £2.6m. Commercial income and match day rose £1.0m and £0.9m respectively.

Their £20m loss was one of the highest in the Championship in 2016/17, though not as big as fellow promoted club Brighton £39m. In general, almost all clubs in this division lose money.

Losses are nothing new for Huddersfield, as the last time they made a profit was way back in 2006 – and that was less than £100k. Since owner Dean Hoyle came on board in April 2008, the club has sustained higher losses, amounting to £57m in nine years.

The £16m revenue was one of the lowest in the Championship in 2016/17, highlighting the immense achievement in securing promotion. For some context, highest revenues to date are Norwich £75m & Aston Villa £74m. Revenue in the Premiership should be above £100m, enabling the club to return to profit.

Championship revenue is greatly influenced by those Premier League parachute payments, e.g. £41m to Aston Villa, Newcastle & Norwich (up from £26m in 15/16 thanks to new Premier League TV deal). Those alone were 2.5 times as much as Huddersfield's total revenue of £16m.

The decision to slash season ticket prices to £179 (around £8 per game), funded by higher TV money, led to a huge increase in average attendance from 12,631 to 20,343. The move to cut ticket prices followed decline in attendance from 15,071 in 12/13 to 12,631 in 15/16. Hoyle said, 'Let’s get the stadium fuller and see where it takes us.' Not only did this fan-friendly move pay off financially, but it must have helped the promotion push.

The 2017/18 shirt sponsor is OPE Sports, a global betting brand, replacing Pure Legal, who have become the club’s first sleeve sponsor. The deal is reportedly worth £1.5m a year.

The wages to turnover ratio of 137 per cent is the 2nd highest reported to date in the Championship, only below Blackburn Rovers 147 per cent, though again is obviously adversely impacted by large promotion bonuses. In any case, half of the clubs in that division have ratios above 100 per cent.

The club only spent £7m on players in 16/17, one of lowest in Championship, though they also made some astute loan signings (Mooy, Ward, Brown & Palmer). They were significantly outspent by clubs like Villa £88m, Wolves £32m, Fulham £24m, Derby £21m, Norwich £20m and Brighton £19m.

Gross debt rose £10m to £53m, almost all owed to owner Dean Hoyle (£52.3m). It is long-term, unsecured, interest-free, with no repayment date, so this is just about the 'softest' debt a club could get. Even after this increase in debt of £50m is by no means the largest in Championship, e.g. the three highest reported to date are Brighton £207m (new stadium & training ground), Cardiff City £127m and Ipswich Town £89m.

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The Political Economy of Football V2

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