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Player sales key to Southampton business model

The authoritative Swiss Ramble has analysed Southampton's financial results for 2017/18. Pre-tax profit fell from £42m to £35m, as revenue dropped 16% (£30m) to £153m, due to the poor performance on the pitch, though this was largely offset by profit on player sales increasing by £27m to £69m. Profit after tax was down from £34m to £29m. This was the first season under the ownership of Lander Sports (UK), controlled by Chinese businessman Jisheng Gao.

The £30m revenue fall was driven by broadcasting’s £26m (18%) decrease from £143m to £117m, mainly due to lower Premier League position and no Europa League money. Match day was down £3.2m (14%) to £19.2m, while commercial was £0.5m (3%) lower at £16.4m.

The £35m profit is actually the fourth highest to date in 17/18 Premier League, only behind Liverpool £125m, Arsenal £70m & Chelsea £67m. MD Toby Steel said, 'We continue to be self-sustaining', which is not to be sneezed at considering large losses at Watford £32m, Swansea City £30m and Everton £13m. Saints made a small £7m loss in their first season after promotion to the Premier League in 2012/13, but since then they have delivered £126m of profits in the last five years.

Saints £69m profit on player sales is actually the seventh highest ever made by an English club. Clearly, player sales has become a key part of the club's business model. In the last 4 years, they made a hefty £184m profit from this activity with only Chelsea £272m and Liverpool £260m ahead of them.

If Southampton are relegated, their TV money would fall considerably from last season’s £107m to around £45m in the first year in the Championship, including a £41m parachute payment, though this would still be a lot higher than the £8m most clubs receive in that league.

The wage bill slightly increased by £1m to £113m, mainly due to contract renewals, offsetting lower bonuses. Player remuneration dropped from £87m to £85m, while total employees rose from 380 to 429. Wages to turnover rose from 62%, to 74% due to the revenue reduction, slightly above the 70% level recommended by Uefa.

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