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Forest lose £82m in last decade

The Swiss Ramble has provided another authoritative examination of a club's accounts, this time Nottingham Forest for 2017/18.

The club reported a £6m loss before tax compared to £32m the prior season, though the £38m drop is a bit misleading, as it was largely due to loan write-offs decreasing from £40m to £5m. Revenue rose £1.9m (9%) to £22.7m, but profit on player sales fell £4.7m to £10.1m.

The £1.9m revenue increase was due to more broadcasting revenue from the EFL, up £0.8m (10%) to £9.0m, and higher ticketing income, up £0.9m (14%) to £7.4m, as attendances grew by 21%. Commercial income was flat overall at £5.2m, while player loans rose £0.2m to £1.1m.

The £6m loss is actually not too bad for the Championship, as most clubs in this division lose money. In fact, three clubs reported losses just under £40m: Cardiff City £39m, QPR £38m and Birmingham City £37m. However, it is worth noting that the figures were boosted by £10m of profit on player sales, very largely Britt Assombalonga to Boro.

In the past the club made very little money from player sales, but this has changed in recent seasons: 15/16 £4m (Antonio); 16/17 £15m (Burke & Lansbury); and 17/18 £10m (Assombalonga). However, there have been very few lucrative player sales this season.

The £32m reported profit in 2017 was entirely due to the £40m loan write-off. Excluding that special factor, the last profit was way back in 2005 – and that was only £1m. Since then, the club has consistently lost money, amounting to £82m in the last decade.

Match day revenue rose by 14% (£0.9m) to £7.4m, despite price reductions, as average attendance increased from 20,333 to 24,680 and they hosted one more game at the City Ground. This is the 8th highest in the Championship. Attendances had been declining, due to the poor results on the pitch and unhappiness with the owner, but they bounced back strongly last season. The 2017/18 average of 24,680 was around 25% (5,000) higher than the low two years ago of 19,676.

Commercial income was unchanged at £5.2m. Few Championship clubs earn big money commercially, but it is still disappointing that a club with Forest's great tradition (two European cups) is towards the lower end of the division.

The wage bill was cut by 5% (£1.5m) from (restated) £29.2m to £27.7m with number of staff falling by 10 to 197 (all non-playing). Allied with the revenue growth, this has reduced the wages to turnover ratio from 140% to 122%. This still among the worst in the Championship, only exceeded by Cardiff City (promoted) and Birmingham City ('Redknapp effect').

It is the second year in a row that wages have fallen. As a consequence, Forest's £28m wage bill is in the bottom half of Championship, around the same level as Bristol City £27m. To underline the magnitude of new manager Martin O’Neill’s challenge, it was miles below Boro £49m, Cardiff City £48m, and even Birmingham City £39m.

The club spent just £7m on players in 17/18 (including Murphy, Cummings, Bridcutt and Darikwa), one of the lowest in the Championship, though more than prior season’s £5m. As a comparison, Boro splashed out £66m, while the majority of clubs that have reported to date spent £12-17m.

Gross debt fell from £42m to £31m, comprising £22m from the new Greek owners, £8m promissory notes and £1m owed to other related parties. Debt would have been considerably higher without capitalising £70m of debt and writing-off £63m of loans. The £31m debt is not that large for the Championship, and is considerably lower than some clubs.

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