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Losses are nothing new for Fulham

The Swiss Ramble analyses Fulham's financial results for 2018/19. They reduced their loss from £45m to £20m. However, the club still lost money, despite revenue rising £100m from £38m to £138m following promotion, as competing in the Premier League increased expenses by £63m, while profit on player sales fell £11m to £3m.

The main driver of the £100m revenue increase was broadcasting, which rose £87m from £22m to £109m, due to the significantly more lucrative Premier League TV deal, though commercial also grew £8m (88%) to £18m, while gate receipts were up £3.7m (53%) to £10.7m.

Revenue will dramatically fall in 2019/20 to around £65-70m, despite parachute payment. The £43m parachute payment is much higher than £4.6m solidarity payment that most Championship clubs receive. Fulham will only get two years of parachutes, as they were relegated after just one season in the top flight.

TV money included £102m from the Premier League. Received £83m equal payment (50% domestic deal, 100% overseas and commercial) plus £4m merit payment (25% domestic, based on league position) and £16m facility fee (25% domestic, based on number of times shown live). 79% of club revenue came from broadcasting, though to be fair this is far from unusual in the top flight. In fact, 13 of the clubs in the Premier League earn more than 70% of total income from TV and seven clubs were even more reliant than Fulham on this revenue stream.

Despite the significant growth, the £138m revenue was one of the lowest in the Premier League, though ahead of Bournemouth £131, Cardiff City £125m and Huddersfield £119m (Burnley £139m in 2017/18 still to publish). For some perspective, Manchester United £627m was almost half a billion higher.

While the £20m loss is not great, it should be noted that over half (nine) of the 17 Premier League clubs that have so far published 2018/19 accounts lost money. In fact, Fulham’s loss is actually the smallest reported, significantly better than Everton and Chelsea (both above £100m).

Profit on player sales fell from £14m to just £2.5m, mainly David Button to Brighton and Cauley Woodrow to Barnsley. This is the second lowest profit from this activity to date in the 2018/19 Premier League, miles below the likes of Chelsea £60m, Leicester City £58m and Liverpool £45m. The club have only averaged £8m a year profit from player sales in the last six years. This had looked to be on the rise with £17m in 2017 and £14m in 2018, but dropped to just £3m in 2019. That said, profit will be higher in 2020 after the sale of Ryan Sessegnon.

The club spent an amazing £120m on player purchases, which was not only a club record by some distance, but was the fourth highest in the Premier League. Also more than Fulham spent in the previous six years combined.

Gate receipts rose by 53% (£3.7m) to £10.7m, despite five fewer home games, as average attendance increased from 19,910 to 24,371. Revenue still only 15th in Premier League, but was boosted by relatively high (London) ticket prices. Unsurprisingly, crowds were much lower in Championship, but 2019 was also around 1,000 below last time in Premier League in 2014. Club held Premier League prices at same level for most season ticket holders, but some unrest following steep increases for new ST holders and match day tickets.

Commercial income rose 88% (£8.5m) from £9.6m to £18.1m, though this includes £0.4m 'compensation'. This increase placed Fulham 13th in the Premier League, which is pretty good going, though Big Six earned between £275m and £111m. Will shrink in Championship. The club signed a 'record' two-year shirt sponsorship deal with Dafabet in 2018/19 (reportedly worth £3m a year), replacing Grosvenor Casinos, while the kit deal with Adidas has been extended until 2023. Also had a new sleeve sponsor in the Premier League with trading firm ICM.

Losses are nothing new for the Cottagers, as the last time they made a profit was in 2011. In fact, they have only made money twice in the last 22 years. Losses have accelerated since Shahid Khan bought the club in July 2013, amounting to £160m in the last six years (averaging £27m a year).

Wages shot up 70% (£38m) from £54m to £93m, though prior year was inflated by 'substantial' promotion bonuses, so the underlying increase was even higher. Furthermore, the wage bill was actually £24m (35%) more than the last time Fulham played in the Premier League in 2014. The £93m wage bill was 15th highest in the Premier League (compared to 17th highest for revenue).

Interestingly, just above Wolves £92m, who enjoyed a much better season on the pitch. Will decrease in Championship following departure of some high earners and relegation clauses. The wages to turnover ratio dropped (improved) from 142% to 67%, the club’s lowest for many years (it was 75% in the Premier League in 2014).

Work started on expanding Riverside Stand at Craven Cottage at end of the season, which will increase capacity from 25,700 to around 30,000, at a cost of £80m.

Gross debt is less than £1m, despite Shahid Khan loaning an additional £49m in 2019, as he converted this into equity. An incredible £424m of debt has now been 'written-off' in this way in the last 8 years: £212m by Khan plus £212m by former owner Mohamed Al Fayed.

One question posed by a fan is whether it is still possible to make substantial profits in the first year in the Premier League which was once the case.

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