Ajax reliant on player sales to make a profit

Ajax's triumph over Real Madrid pushed the Dutch club's shares up 11 per cent to a record high. The Eurotext listed club added roughly €27m to its market capitalisation.

Ajax is the biggest team Netherlands with revenues of €92m in 2018. However, it does not make it into the top 30 of Europe's richest clubs according to Deloitte.

In 2017/18 Ajax's 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 (figures from the authoritative Swiss Ramble).

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.

Although revenue of around €100m is not too bad, it pales into insignificance compared to elite overseas clubs with Manchester United, Real Madrid, Barcelona, Bayern and Manchester City earning above €500m. As director Edwin van der Sar said, 'We don’t have the spending power of other clubs.' The absence of European group qualification really hurt Ajax in 2017/18. They earned €20m prize money the previous season for reaching Europa League final after being eliminated in Champions League play-off.

Ajax are known for their strategy of developing and selling players and 2017/18 benefited from €39m profit here, mainly Davinson Sanchez to Tottenham. Previous season was even higher at €79m (Milik to Napoli, Klaasen to Everton, Cillessen to Barcelona and Bazoer to Wolfsburg). 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 & France €1.6 bln. Even below Turkey €734m & Russia €701m.

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. However, Ajax 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.

The wage bill fell by €2m (4%) from €55m to €53m due to lower player bonus payments, though this is still €8m (18%) more than the €45m reported three years ago. Looked at another way, it is only €1m more than the €52m paid seven years ago in 2011. 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.

If there was a genuine European Superleague based on size,success and history, Ajax would have to be in it. They are one club who would seriously benefit from it by being able to keep their players.

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The Political Economy of Football V2

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