Parachute payments make life difficult for Bristol City

Bristol City are yet another Championship club hit by the skewed playing field caused by parachute payments concludes the authoritative Swiss Ramble in a review of their recently published accounts.

The Swiss Ramble notes, 'Despite the growth in revenue, Bristol City's £26m revenue is still only mid-table in the Championship. For some context, in 2016/17 Newcastle led the way with £86m, a full £60m more. So far in 2017/18, Norwich City and Hull City have posted £62m and £56m (with Sunderland and Boro to come). It’s difficult to compete with clubs receiving Premier League parachute payments with no fewer than eight clubs benefiting from these in 2017/18.'

'If parachute payments were to be excluded, it would be a very different story. In this case, Bristol City would have the seventh highest revenue in the Championship, which would give them a very decent chance of making the play-offs.'

'Almost all clubs lose money in the Championship, but their £25m loss would have been among the highest in 2016/17, only behind Newcastle United £47m and Brighton and Hove Albion £39m (both adversely impacted by promotion bonuses and exceptional payments).'

All revenue streams were up: commercial by £2.2m (23%) to £11.6m; match day by £1.6m (32%) to £6.6m; and broadcasting by £0.9m (13%) to £7.7m.

'Player sales dried up in 2017/18 with their tiny £0.3m profit unsurprisingly being one of the lowest in the Championship. This is in stark contrast to Norwich City, whose bottom line last season was greatly boosted by £48m from this activity.'

The club have rarely made big money from selling players. In fact, the £14m profit in 2016/17 (largely sale of Jonathan Kodija to Aston Villa) is around two-thirds of the £20m generated in last ten years from this activity. However, this season will include £23m sales of Bobby Reid, Aden Flint and Joe Bryan (cash income £13m).

'Attendances have significantly increased since promotion from League One, rising 80% from 11,681 to 20,953. The redevelopment of the Ashton Gate stadium (capacity 27,000), shared with Bristol rugby club and also used for major concerts, has helped generate revenue.' Even so, 'average attendance of 20.953 was only the 12th highest in the Championship, over 10,000 less than Aston Villa and Leeds United. However, the club has announced a record number of season ticket sales for 2018/19, despite controversy over the pricing scheme.

'The wages to turnover ratio worsened from 98% to 105% [the recommended level is 50 per cent], but still much better than 170% in the 2012/13 Championship season.' More than half the Championship clubs have ratios of over 100 per cent as they compete for the riches of the Premier League.'

'The gross debt of £72m is quite large for a club of their size, but many other clubs in the Championship have larger debts. The debt is not an issue, so long as Steve Lansdown remains a friendly owner, as he demonstrated when converting £37m of debt to equity in 2013.' The Swiss Ramble comments, 'I estimate that he has put in around £134m to date (capital £114m, loan £20m) with little sign of the need for this funding going away. Bristol City are fortunate to have a benevolent owner in Steve Lansdown, but this is in reality a necessity for those Championship clubs that are not in receipt of sizeable parachute payments, if they wish to compete.

Threat of financial calamity removed from Baggies

West Bromwich Albion had effectively been in decline ever since the club was sold to a Chinese consortium in August 2016, paying a figure north of £200m to buy former owner Jeremy Peace’s stake. Controlling shareholder Guochuan Lai’s ownership was fairly disastrous for the club, but his unloved tenure finally came to an end after Bilkul Football WBA, a company ultimately owned by Florida-based entrepreneur Shilen Patel and his father Dr Kiran Patel, acquired an 87.8% shareholding in West Bromwich Albion Group Limited, the parent company of West Bromwich Albion Football Club. This change in ownership was urgently required, due to the numerous financial problems facing West Brom, including growing high-interest debt and serious cash flow concerns, following years of no investment from the former owner. Indeed, West Brom’s auditors had already rung the alarm bell in the 2021/22 accounts when they cast doubt on the club’s ability to continue as a going concern without making player s...

Spurs to sell minority stake

Tottenham Hotspur is in talks to sell a minority stake in a deal that could value it at up to £3.75 billion and pave the way for Joe Lewis and his family to sever ties with the Premier League football club. Tottenham chairman Daniel Levy is seeking an investment that values the club at between £3.5 billion and £3.75 billion, including debt. While the terms of any deal have not been finalised, City sources expect Spurs to sell about 10 per cent. The club is being advised by bankers from Rothschild on the sale. Tottenham wants to raise fresh capital for new player signings and to help fund the development of an academy for its women’s team, as well as a 30-storey hotel next to its north London stadium. The financier Amanda Staveley, who brokered the deal for Saudi Arabia’s Public Investment Fund to take over Newcastle United, is understood to be among the parties to have expressed an interest in Tottenham. Staveley’s fund, PCP Capital Partners, has raised about £500 million to ...

Millwall punch above their weight

Millwall’s season was overshadowed by the tragic death of owner John Berylson following a car accident. The American had been an exemplary owner, beloved by the fans for his leadership, passion and generosity. Millwall’s finances had been pretty good during his tenure, which we shall explore by looking at the most recent accounts from the 2022/23 season, when the club narrowly missed out on a place in the play-offs after finishing 8th. Millwall’s pre-tax loss slightly reduced from £12.6m to £12.2m, as revenue rose £0.8m (4%) from £18.6m to a club record £19.4m and player sales improved from a £0.1m loss to £2.5m profit. However, other operating income dropped from by £1.1m from £1.3m to £0.2m, while operating expenses increased £1.7m (5%) from £31.6m to £33.3m. The main driver of the revenue increase was broadcasting, which rose £1.1m (12%) from £9.1m to £10.2m, though match day was also up £0.4m (7%) from £5.8m to £6.2m. In contrast, commercial fell £0.7m (19%) from £3.7m to £3....

The Political Economy of Football V2

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