Bournemouth reliant on their owners

Writing from his Zurich fastness, the Swiss Ramble analyses the recent published accounts of AFC Bournemouth for 2019/19. CEO Neill Blake said, 'focus was to consolidate our position in the Premier League through targeted expenditure on assets and expertise in the playing squad and supporting infrastructure.' The Swiss Ramble comments, 'This is a big challenge with their limited finances, so owner support still required.'

On January 2019 Maxim Demin once again took full ownership of the club by buying back the 25% shareholding that he had sold in November 2015 to Peak6 Football Holdings, an American investment firm based in Chicago.

In the eight seasons since Maxim Demin arrived, the club's main source of funds has been £130m from owners (£109m loans & £21m preference shares) with £18m from operations. Most of this (£121m) has been spent (net) on players with £17m on infrastructure, and a £10m increase in cash balance.

The club made a small £2m cash loss from operating activities, but then spent a net £36m on player recruitment (£47m purchases less £11m sales), which was funded by £40m of new loans from the owner. Money will be needed for new training ground at Canford Magna.

The debt picture is a little concerning, but is manageable – as long as the owner continues to provide support. Their interest-free loans give them a competitive advantage against some of their rivals, who have to pay interest, e.g. West Ham £6.8m and Watford £6.2m.

As might be expected, the club's average annual gross transfer spend has substantially increased as the club progressed up the leagues: £3m in League One; £6m in the Championship; and £35m in the Premier League. £35m spent since accounts: Billing, Danjuma, Kelly and Stacey.

The wages to turnover ratio increased from 76% to 85%, which is the second highest (worst) in the Premier League, only behind Everton 85%, though Everton’s accounts covered 13 months. Still much improved from the horrific 230% in the Championship (partly due to promotion bonuses).

Commercial revenue rose £0.2m (2%) to £10.2m, comprising sponsorship & advertising £7.1m, hospitality & events £1.5m, shop merchandise £1.2m and other income £0.3m. Nevertheless,revenue from commercial operations is still the lowest in the Premier League.

The average attendance of 10,532 is by some distance the lowest in Premier League, though close to 11,329 capacity. It’s around half of the next smallest, Watford 20,016, and incredibly is below all but three of the clubs in the Championship. Manchester United and Arsenal earn more from match day income in two games than the Cherries do in a whole season. The board has put proposed new stadium on hold, as they do not want to 'take away our ability to perform at our strongest levels on the pitch.'

If relegated,TV income would fall significantly in 2020/21, though will be cushioned by a £43m parachute payment in year 1, which is much higher than the £4.6m solidarity payment that most Championship clubs receive. Parachutes then fall to £35m (year 2) and £16m (year 3).

The £131m revenue is the second lowest reported to date in the 2018/19 Premier League, only ahead of Cardiff City £125m (though Burnley, Fulham and Huddersfield are still to publish). For some perspective, only around a fifth of Manchester United’s £627m.

Bournemouth have now reported losses two years in a row, having made money in their first two seasons in the Premier League. Before that they posted four consecutive years of losses, amounting to £69m, including a hefty £39m deficit in the 2014/15 promotion season.