Profits and losses in the Premier League

The authoritative Swiss Ramble has looked at the 2017/18 accounts and cash flow statements of each Premier League club. There is too much to report in detail, but here a few highlights. More can be found on Twitter @SwissRamble.

Arsenal went from £52m operating profit to £42m operating loss, due to lower revenue after failing to qualify for the Champions League, compounded by higher wages and player amortisation plus Wenger pay-off. However, £120m profit on player sales resulted in £70m profit before tax.

Following promotion to the Premier League, Brighton and Hove Albion made £9m operating profit, but a small £3m profit on player sales meant that profit before tax was 'only' £12m. However, that represented a £51m improvement over the £39m loss in the Championship, including £9m promotion payments. Chairman Tony Bloom once again put his hand in his pocket, providing £32m new loans. The owner has provided over £300m in total.

The Chelsea business model has been to run large operating losses (driven by a chunky wage bill), offset by big profits from player trading. 2017/18 was no exception with £47m operating loss more than compensated by £113m profit on player sales, giving £67m profit before tax.

Crystal Palace had the highest loss before tax in the Premier League with £36m, despite achieving a club record revenue of £150m. Investment in the squad saw player amortisation and wages rise £19m, leading to the operating loss widening to £37m. Profit on player sales was only £2m. The £12m operating cash flow was eaten up by £41m on players (purchases £54m, sales £13m), £2m on ground improvements, £3m on tax and £1m on interest payments, leaving a £34m shortfall. The shortfall was funded by £36m of loans: £29m external and £7.5m from the owners.

Everton's operating loss shot up from £12m to £88m, the worst by far in the Premier League, due to £70m increase in player costs (wages and player amortisation) and £15m management changes. Largely offset by £88m profit on player sales, but new stadium costs meant a £13m loss before tax.

Leicester City went from a £56m operating profit to a £34m operating loss, largely due to revenue falling by £74m to £159m, as no repeat of the unprecedented 2016/17 Champions League participation. This was compensated by £38m profit on player sales, thus ending up with £2m profit before tax.

Liverpool's £125m profit before tax is the second highest ever reported in the Premier League, but this was driven by £124m profit on player sales. Operating profit was unchanged at £7m, as £91m revenue growth was absorbed by increases in wages, player amortisation and other expenses.

Manchester City reduced their operating loss from £30m to £22m, mainly thanks to £27m revenue growth. Wage bill was flat, but player amortisation was £13m higher. £39m profit on player sales helped produce a £10m profit before tax.

Manchester United's operating profit dropped from £70m to £26m, mainly due to growth in wages and player amortisation. Relatively low £18m profit on player sales, combined with £18m interest payable, meant £27m profit before tax. Tax bill up from £17m to £63m after change in US corporate tax.

Following promotion, Newcastle United made £18m operating profit, a staggering £108m improvement. This was 4th highest in the Premier League, but low £4m profit on player sales meant that profit before tax was 'only' £23m. However, that was £70m better than the £47m loss in the Championship.

For Tottenham Hotspur, operating profit increased by £43m to £76m, by far the highest in the Premier League (£50m more than 2nd place Manchester United), as revenue was up £71m, while wages and player amortisation only rose £36m. Profit on player sales of £73m helped drive profit before tax to £139m.

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The Political Economy of Football V2

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