The authoritative Swiss Ramble has been taking an in depth look at the recently published reports of Preston North End. He notes that Preston is 'the very definition of a club punching above its weight, though it does still require owner support.' The £3m profit is the third best reported so far in the Championship.
The club's £13m revenue is 3rd lowest in the Championship, only above Burton Albion and Brentford. To show how much the club has outperformed, this is around 20% of the revenue clubs with parachute payments which distort the financial picture in the Championship. Revenue has grown by £6.0m (82%) from £7.3m to £13.3m in the 3 years since promotion from League One in 2015. Almost all of this is due to higher TV money in the Championship (£5.7m) with a small £0.3m increase in commercial. Match day has actually dropped by £0.1m.
Preston's £36m debt is not that large for the Championship, and is considerably lower than some clubs, e.g. Boro £101m, Ipswich £89m and Cardiff £74m. That said, the debt would be a lot higher if the owner had not waived £18.7m and converted £15.4m into equity in 2014.
As might be expected, gross spend on players has increased in the three years following promotion from League One with the annual average rising from £0.3m to £2.7m. The growth in net spend is smaller, as sales have also increased from £0.5m to £1.9m.
Preston spent £5.4m on players in 17/18 (including Rudd, Moult amd Bodin), which is high by their standards (more than the previous five seasons combined). However, it is still one of the lowest in the Championship. Most clubs that have reported spent £12-17m, while Boro splashed out £66m.
As a rule, Preston have made very little money from player sales (only £4.4m in total in the 7 years up to 2017), but they made more than twice as much in 2018 alone from the Hugill transfer. Greg Cunningham’s move to Cardiff City will be included in the 2018/19 accounts.
The wages to turnover ratio rose from 100% to 113%, 'as the club has contracted a squad with wages which are high in comparison to its revenue.' However, this is far from unusual in the Championship as half the clubs have ratios above 100%. Nevertheless, the £15m wage bill remains one of the smallest in the Championship, only above Brentford, Millwall, Barnsley and Burton Albion.
Commercial income fell £0.2m (6%) to £2.8m, unsurprisingly one of the lowest in the division. Few Championship clubs generate big money commercially. However, the 13,776 average attendance was only the 20th highest in the Championship, a long way below clubs like Aston Villa 32,097. Attendances have been steadily rising. In fact, the 2017/18 average of 13,776 is around 50% (4,500) higher than the recent low in League One five years ago of 9,324. Match day revenue is the second lowest in the Championship, only ahead of Burton Albion, and less than a third of that at Villa.
The directors stated, 'In common with many football clubs in the Championship, Preston North End is likely to incur future losses and net cash outflows.' Annual losses are usually around £5m, funded by the owner, Trevor Hemmings. Any differences are due to once-off factors or player sales.
Fortunately, Hemmings has been described by a club spokesman as 'a highly committed shareholder who has supported the club throughout his adult life' and there is little sign of that (financial) support coming to an end. Since Hemmings bought Preston in 2010, he has put in £38m and also took on the £6m overdraft. Another £7m of funding has come from tax losses in group companies. Two-thirds of the £50m available cash has been used to cover losses with only £2m spent on player purchases (net). He will probably have to put in around £6.7m this year.
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