Financial results for Huddersfield offset relegation

The authoritative Swiss Ramble has analysed Huddersfield Town's accounts for 2017/18. Despite their relegation, their financial results are positive. The financial blow will be cushioned by £91m of parachute payments (year 1 – £42m, year 2 – £34m, year 3 – £15m). This means that promotion will have been worth around £290m in TV money in total.

The Terriers swung from a £20m loss before tax in the Championship to a £30m profit in the Premier League, a £50m improvement, as revenue increased by £109m from £16m to a club record £125m and profit on player sales was up £5m to £6m. After tax, a £17m loss was turned into £26m profit.

To illustrate the huge difference in the Premier League, not only is Huddersfield's 2017/18 £125m revenue a massive £109m more than the previous season’s £16m, but is also more than twice as much as the previous five seasons in the Championship combined (£60m).

Nevertheless, the £125m revenue was still the lowest in the Premier League (pending results from WBA and Swansea), highlighting the immense achievement in avoiding relegation last season. That said, it was within striking distance of the likes of Watford £128m and Stoke £127m. Furthermore, the revenue of £125m was not far short of the sum generated by Portuguese giants Benfica, who took 30th place in the Deloitte Money League with £133m.

The £109m revenue growth was very largely driven by broadcasting’s £102m increase to £110m, reflecting the financial chasm between the Premier League and the Championship, while match day also increased £0.8m (20%) to £4.8m and commercial rose £6.2m (145%) to £10.6m.

The £30m pre-tax profit is sevneth highest of the 15 Premier League clubs that have reported to date in 2017/18 and is over twice as much as fellow promoted club Brighton £12m. This is very respectable, given the large losses made by Watford £32m, Swansea City £30m, Everton £13m and Bournemouth £11m.

The profit is all the more impressive, given they made just £6m from player sales, mainly Nakhi Wells to Burnley and Kyle Dempsey to Fleetwood. To highlight how important player trading can be, three clubs earned more than £100m in this way.

The 2017/18 profit of £30m is the first time that the club have made money since 2006 – and that was less than £100k. In the 9 years before promotion to the Premier League the club sustained losses amounting to £57m, averaging over £6m a season.

A massive 88% of revenue came from TV (£110m out of £125m), which is the second highest dependency in the top flight, only behind Bournemouth 89%, though in fairness it should be noted that no fewer than 12 of the 20 clubs in the Premier League are above 75%. TV money included £102m from the Premier League. RThe club received £80m equal payment (50% domestic deal, 100% overseas & commercial) plus £10m merit payment (25% domestic, based on league position) and £12m facility fee (25% domestic, based on number of times shown live).

The wage bill almost tripled from £21.7m to £62.6m. Both years included large bonuses, first for promotion, then surviving in the Premier League. The club expects wages to further rise in 2018/19. Chief executive Julian Winter has confirmed contracts include relegation clauses.

Despite the increase, the £63m wage bill was still by far the smallest in the Premier League, a full £15m below the next lowest Brighton £78m and almost £20m less than Burnley £82m. The wages to turnover ratio decreased (improved) from 138% (impacted by large promotion bonuses) to 50%. In fact, this is the lowest of those reported to date in the Premier League, even better than Manchester United, though the Swiss Ramble notes, 'arguably the club has been overly conservative.'

Gross debt dropped £3m to £50m, almost all owed to owner Dean Hoyle (£49.4m). It is long-term, unsecured, interest-free, with no repayment date, so this is just about the 'softest' debt a club could get. The debt of £50m is firmly in the bottom half of the Premier League, but it has grown from less than £3m in 2008. In addition, the club expects the amount owed to the owner to increase in 2018/19, following the further transfer activity this season. The fact that his loans are interest-free gives them a competitive advantage against a number of their rivals, who have to pay interest on their loans, e.g. Watford £3.3m.

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The Political Economy of Football V2

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