The authoritative Swiss Ramble has reviewed the 2018/19 accounts of Swansea City. He notes that the Abertawe club's loss before tax widened from £3.2m to £7.0m, as revenue almost halved following relegation from £127m to £68m, despite parachute payments, and profit on player sales fell £16m to £30m, largely offset by cutting costs by £72m. After tax, loss increased from £2.9m to £6.0m.
The main reason for Swans £59m (46%) revenue reduction was broadcasting, which more than halved in the Championship from £105m to £52m, though commercial was also down £6m (45%) to £8m and match day fell £0.8m (11%) to £6.6m. Player loans up £1.7m to £2.0m.
To offset the steep revenue reduction, Swans cut the wage bill by £43m (47%) from £91m to £48m, applying relegation clauses, although apparently some wages are close to Premier League levels. Despite the decrease, Swans £48m wage bill is still third highest reported to date in the 2018/19 Championship, only beaten by Stoke City £56m and Norwich City £51m. In fact, it is actually the 13th highest ever in this division, though a long way below Newcastle United £80m in 2016/17.
The wages to turnover ratio improved from 72% to 70% (72% including the onerous contracts provision), one of the lowest (best) in the Championship. Worth noting that more than half of the clubs in the Championship have ratios over 100%, with Reading 197% 'leading the way'.
Even though Swans broadcasting income more than halved from £105m to £52m following relegation, this was still a lot more than the £8m most Championship clubs received, including £2.5m EFL central distribution and £4.6m Premier League solidarity payment.Nevertheless, this is a lot less than the TV riches available in the Premier League with revenue distributions ranging from £97m to £152m in 2018/19. That said, Swans did earn over half a billion Pounds from their seven years in the top flight.
The Swiss Ramble emphasises, 'The £7m loss is obviously not great, though to be fair very few clubs manage to make money in the extremely competitive Championship. In fact, the highest losses are often reported by promoted clubs, though these invariably include hefty promotion bonuses.'
Reliance on player sales
The loss would have been even higher without £30m profit on player sales, one of the highest in the Championship. The Swans have become increasingly reliant on player sales, where average annual profit has increased to £38m in the last three seasons. As chairman Trevor Birch noted, 'If we had not sold players in the last few seasons, we would have reported significantly higher losses.' He continued, 'Profit on player sales has gone on funding player wages, running the Academy and more general the significant operating costs of running a top-level football club.' In fact, the importance of player trading to Swans has even been noted by the auditors. [This is a trend that has been seen in clubs across Europe, but it is a volatile source of income and is usually most available in the year after relegation].
The Swans were profitable five times in seven seasons in the top flight – though have now reported losses two years in a row. Chairman Birch has warned of 'the difficulty in running a financially sustainable football club, if you are not an established Premier League team.'
Club revenue has fallen by £59m (46%) from £127m to £68m and it will continue to fall as parachute payments tail off. Birch warned that turnover would decline to £17m in 2021/22 if the club is not promoted – a drop of £110m in total. The club benefited from £43m parachute payments, which will fall to £35m in 2019/20, £16m in 2020/21 and nothing in 2021/22. Stoke City and WBA received the same amount, while Hull City, Middlesbrough and Sunderland got £34m; QPR £17m; and Aston Villa £15m.
If parachute payments were excluded, Swans £30m would still be among the highest revenues in the Championship, though they would be behind Norwich City £34m, Stoke City £33m and Bristol City £30m (in 2018/19) and Leeds United £41m and Aston Villa £39m (in 2017/18).
Despite the steep decrease, Swans £68m revenue is the second highest to date in 2018/19 Championship, only behind fellow relegated club Stoke City £71m (though the other relegated club WBA and Aston Villa are yet to publish their accounts for last season). In fact, Swans £68m revenue is the 6th highest ever in the second tier, only surpassed by Newcastle United £86m (2016/17), Norwich City £75m (2016/17), Aston Villa £74m (2016/17). Stoke City £71m (2018/19) and Aston Villa £69m (2017/18).
Match day income fell £0.8m (11%) from £7.4m to £6.6m, despite staging three more home games, as average attendance was 11% lower. Average attendance dropped by more than 2,000 from 20,623 in the Premier League to 18,444 in the Championship. Their advance through the leagues had been matched with growth in attendances, facilitated by the move to the Liberty Stadium in 2005.
The club bought the land at the south end of the stadium for £1.4m, while acquiring 100% of the company responsible for the Liberty Stadium management. This would facilitate stadium capacity expansion, but this would only be considered after a return to the Premier League.
Commercial revenue was down £6m (45%) to £8m, comprising £5.3m commercial income and £2.6m other. This was mid-table in the Championship, but miles behind the likes of Leeds United £22m and Bristol City £16m.
WG: Swansea do not have the easiest of tasks given the population size they serve, and the levels of prosperity, although they have tried to hold down season ticket prices. Diolch i Ramble y Swistir am ei ddadansoddiad rhagorol arferol o Ddinas Abertawe.
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