Fosun's gamble paid off for Wolves

The authoritative Swiss Ramble has taken an in depth look at the 2017/18 accounts of Wolverhampton Wanderers. the club'sloss shot up from £23m to a breathtaking £57m, largely due to increased expenditure on players and wages plus an estimated £20m on bonuses and additional transfer fee payments following promotion. The £57m loss is the highest ever reported in the Championship, unless one excludes the £60m boost to QPR 2013/14 accounts for the write-off of a shareholder loan (challenged by the EFL for FFP purposes), which would mean their loss would have been higher at £70m.

Under former owner Steve Morgan Wolves were very prudent, making profits six times in seven years. Fosun have a very different strategy, namely 'strong investment into the squad', leading to £70m combined losses in the last two years – but the gamble paid-off with promotion.

TV income was unchanged at £8.0m, including PL solidarity payment £4.5m and £2.3m EFL central distribution. The huge amounts received in the top flight (£150m for 1st place, £95m for 20th) help explain why Wolves 'went for it' in pursuit of that prize. 7th place would give them £128m.

Revenue rose 11% (£2.6m) from £23.8m to £26.4m, as commercial increased £1.4m (15%) to £10.6m and gate receipts were up £1.3m (20%) to £7.8m, but broadcasting was flat at £8.0m. Profit on player sales was £5.9m higher at £8.1m.

Wolves can anticipate revenue of around £145m this season with the new TV deal. There is a balanced revenue mix: commercial 40%, broadcasting 30% and match day 30%.

Commercial income will increase in 2018/19 via a raft of new deals: shirt sponsor W88 ('the largest in the club’s history'), kit supplier Adidas and sleeve sponsor CoinDeal, while the owners, Fosun International, will sponsor the training ground.

Last season’s average attendance of 28,298 was almost as high as the Premier League peak of 28,366 in 2009/10, which is a real change in fortune after the steady decline under the previous ownership.

The wage bill surged 80% (£23m) from £28m to £51m, though this included promotion bonuses and 'settlement costs of the outgoing management team'. This means that wages have nearly tripled since Fosun’s arrival. It is actually £12m more than the last time in the Premier League.

Wolves splashed out £25m on players in 2017/18, including Ruben Neves, Roderick Miranda, Rafael Mir and Barry Douglas. This was the second highest in the Championship, though massively outspent by Boro £66m and was also less than their previous season’s £32m spend. Gross transfer spend has tripled since Fosun’s takeover, and is actually more than they spent when they were last in the top flight. The accounts note that they have since spent an amazing £110m this season, including Castro, Traoré, Patricio, Jota, Boly, Afobe and Moutinho.

The Swiss Ramble observes, 'There is no doubt that Fosun have transformed Wolves. They took big financial risks, but would argue that the ends justify the means, as their prospects look very good in the Premier League. Whether this strategy is the right one for other Championship clubs is more debatable.'

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The Political Economy of Football V2

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