Relegated Villa would be in better shape

Every day the Swiss Ramble toils away in his Zurich fastness to provide an authoritative and informative analysis of a new set of football club accounts. The latest club to be so assessed is Aston Villa, one of the country's most historic clubs which has also sometimes punched below its weight.

The Swiss Ramble reminds us that in July 2018 NSWE SCS, owned by billionaire businessmen Nassef Sawiris and Wes Edens, bought a controlling stake from Dr. Tony Xia after Vila “experienced significant liquidity problems”, including a missed tax payment to HMRC. Xia’s minority share bought out in August 2019.

In 2018/19 Villa were promoted with the biggest ever loss in the Championship. The loss widened by £33m from £36m to £69m, as revenue dropped £14m (21%) to £54m and profit on player sales fell £5m from £16m to £11m. Operating expenses increased by £15m, while £46m promotion payments were offset by stadium sale £36m and HS2 land compensation £14m.

Almost all clubs lose money in the ultra-competitive Championship, but Villa's £69m loss is the largest by far of the clubs that have reported to date in 2018/19. The closest challenger is Norwich City with a £39m loss, as both clubs booked hefty promotion-related payments.

The £14m revenue fall was mainly due to lower parachute payments, which meant broadcasting was £18m (45%) down at £22m. Partly offset by increases in commercial, up £4.2m (31%) to £17.6m, and gate receipts, up £0.9m (8%) to £12.7m, though player loans fell £1.4m to £1.6m.

The wage bill, excluding £11.7m promotion bonuses, shot up by £10m (14%) from £73m to £83m. Wages to turnover ratio worsened from 107% to 154%, over twice the Uefa recommended level. (175% including bonuses). Whichever way you look at it, the club's wage bill was by far the highest in the Championship. The “clean” wages figure of £83m is around 50% more than the next highest, Stoke City £56m. If £12m bonuses are included, to give reported £95m, the gap would be around £40m. This was actually the highest wage bill ever in the Championship. In fact, in the last three seasons Villa have now registered three of the five highest wage bills in the English second tier.

Aston Villa sold their stadium to another group company for £57m, which produced a £36m profit (after £21m book value). If this transaction were excluded, they would have reported a larger £105m loss. Interestingly, much lower sales price than Rams £81m, though similar to Owls £60m.

The Swiss Ramble notes, 'NSWE Stadium Ltd now owns Villa Park, though the ground has been leased back to the football club. The sale is within EFL rules, but this is undoubtedly some fancy financial footwork by [the club].'

Like many other clubs, Vila have increasingly relied on player sales, averaging £22m annual profit in the last 4 seasons, compared to just £1m in the preceding 3 seasons. However, the profit has declined each year (2016 £35m, 2017 £27m, 2018 £16m and 2019 £11m) and 2020 also likely to be low.

Club revenue decreased £63m (54%) from the £117m peak in the 13/14 Premier League to £54m, mainly TV £50m and commercial £8m. Revenue has fallen five years in a row. The importance of parachute payments is evident, down from £41m in 2017 to £16m in 2019. Despite the decrease, the £54m revenue is still third highest reported to date in the Championship, only behind Stoke City £71m and Swansea City £68m, though likely to be overtaken by WBA and Middlesbrough when they publish 2018/19 accounts.

Villa benefited from £16m parachute payments, which makes a total of £90m over the last three years. However, other clubs received much more, so Stoke City, Swansea City and WBA got £43m, while Hull City, Middlesbrough and Sunderland got £35m; and QPR £17m.

Average attendances held up quite well in the Championship and increased by 12% from 32,097 to 36,027 in 2018/19. This is the highest since 2013/14 (in the Premier League), but still a fair bit below the recent high of 40,000 in 2008. Nevertheless, Vila still had the largest crowds in the Championship last season with their 36,027 comfortably ahead of Leeds 34,033 and Forest 28,144.

Commercial income rose by £4.2m (31%) to £17.6m, comprising sponsorship £7.3m and commercial £10.3m. This revenue stream is down from £28m in Premier League, but it was still the second highest in Championship, only behind Leeds.

The Swiss Ramble concludes, 'The new owners have given Vila fans cause for optimism, though they still have to provide considerable financial support. If Villa do get relegated, they would be in better shape than before, but likely that they would have to sell some top players.'

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The Political Economy of Football V2

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