Ajax: a big fish in a small pond

The authoritative Swiss Ramble takes a look at Ajax's 2017/18 accounts which cover a season when they finished second in the Eredivisie (for the fourth year in a row), but failed to qualify for the Champions League or Europa League group stages (the first time since 1990/91).

Profit before tax decreased from €67m to €2m (profit after tax down from €50m to €1m), largely due to profit on player sales halving from €79m to €39m and revenue dropping €26m (22%) from €118m to €92m following the lack of income from European competition. Ajax are essentially a profitable club, reporting profits in seven of the last eight years (and the only loss in 2015/16 was less than €1m). Over that period, they have accumulated €159m profits, averaging €20m a season.

All three Ajax revenue streams decreased: broadcasting fell €18m (58%) from €30m to €12m; match day was down €6m (17%) from €38m to €32m; while commercial was €2m (4%) lower at €48m. Revenue decline was partly mitigated by lower costs: wage bill cut €2m (4%) to €53m; other expenses decreased €2m (5%) to €49m; and net interest payable/receivable improved €2m.

Reflecting the relative decline of Dutch football compared to the 'big five' leagues, few clubs in the Eredivisie make big profits. In 2017/18 largest was Feyenoord €16m, thanks to Champions League money. Even though Ajax reported only €2m profit, this was still the fifth highest in the league. Six clubs are under special supervision by the KNVB due to poor finances.

Ajax are known for their strategy of developing and selling players and 2017/18 benefited from €39m profit here, mainly Davinson Sanchez to Tottenham. The previous season was even higher at €79m (Milik to Napoli, Klaasen to Everton, Cillessen to Barcelona and Bazoer to Wolfsburg).

The club are still reliant on player sales to make a profit, earning a thumping great €277m from this activity in last 10 years. If these sales were excluded, total loss would have been €148m. That said, only major 2018/19 sale currently Justin Kluivert to Roma.

Although Ajax revenue of around €100m is not too bad, it pales into insignificance compared to elite overseas clubs with Manchester United, Real Madrid, Barcelona, Bayern Munich and Manchester City earning above €500m. Unfortunately, this revenue gap for Ajax is worsening. In 2011 their revenue was only €11m behind the 20th placed club in the Deloitte Money League, but this had widened to €81m in 2017. The gap to the top club has increased from €408m in 2011 to a colossal €658m in 2018.

To reinforce the enormous revenue disparity for Dutch clubs, the Eredivisie had €451m revenue in 16/17, less than 10% of Premier League €5.3 bln. Also miles behind Spain €2.9 bln, Germany €2.8 bln, Italy €2.1 bln and France €1.6 bln. Even below Turkey €734m & Russia €701m. For some perspective, the club finishing top of the Premier League received around €170m in broadcasting revenue, while the bottom club got €108m, i.e. 12 times as much as Ajax €9m. Basically, Ajax get the same as an English Championship club that does not benefit from parachute payments.

Average attendance remained the highest in the Eredivisie, rising by around 2,000 from 48,945 to just under 51,000. The other Dutch clubs above 20,000: Feyenoord, 45,600, PSV Eindhoven 33,300, Twente 25,100 and Heerenveen 20,300.

The Ajax wage bill of €53m is by some distance the highest in the Eredivisie, over 50% more than Feyenoord and PSV Eindhoven, both around €35m, who are in turn around twice as much as AZ, Twente and Vitesse (€17-18m). However, the Swiss Ramble concludes, 'However, for #Ajax it is a case of being “a big fish in a small pond”, as their €53m wage bill is significantly lower than the top clubs in the major leagues, e.g. only around 10% of Barcelona €487m. This makes it inevitable that their young stars will move abroad.'

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The Political Economy of Football V2

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