The Political Economy of Football V2

The authoritative @SwissRamble is posting two page financial fact sheets on each Premier League club in response to requests from fans. As an example, promotion to the Premier League in 2019 saw £100m increase in Fulham revenue, but not enough for a profit, due to higher wages and player amortisation plus low player sales. Huge transfer spend (£120m, 4th highest in Premier League). Debt-free after Shahid Khan converted £155m loans to equity. More detail is available online. The Swiss Ramble has also produced a fact sheet for Everton. His summary is: 'Everton have had significant investment from owner Farhad Moshiri, driving large increases in debt, transfer spend, wages and player amortisation. Revenue relatively flat in last 3 years, leading to highest loss in the Premier League in 2019 (2018 benefited from high player sales). The Swiss Ramble has also summarised Swansea City in the following terms, two page fact sheet on his twitter feed: 'Revenue has fallen by nearly 50...

The authoritative Swiss Ramble analyses the 2018/19 accounts from Southampton. The Saints went a from £35m pre-tax profit to £41m loss, a swing of £76m, mainly due to profit on player sales decreasing by £48m from £69m to £21m (Virgil van Dijk sale prior year). Revenue also down £3m (2%) to £150m, while expenses grew £25m. The Swiss Ramble comments, 'The £41m loss before tax is actually the third highest to date in the 2018/19 Premier League, only surpassed by Everton and Chelsea, but their numbers were significantly worse (over £100m). It is true that half the clubs in the top flight lose money, but this is not great.' The loss in 2019 came after five consecutive profitable years, worth £126m in total, including £42m in 2017 and £35m in 2018. Between 2006 and 2013 they reported (smallish) losses in League One, the Championship and the first season back in the Premier League. Player trading has been a key part of the Saints business model. In the last five years, they made ...

Football finance guru Kieran Maguire has come up with estimates of Premier League values for 2020. There is an analysis of each club accompanied by detailed graphs: Premier League club values The overall conclusion is that 'The Big Six clubs continue to be very valuable and their dominance of revenue streams is likely to ensure that the gap between themselves and the remaining clubs in the Premier League is maintained.' 'Cost control is proving to be very difficult for all clubs in the division, especially in terms of wages and this may restrict future growth in the value of clubs especially with broadcast revenue growth slowing. Wages as a proportion of revenue grew in 2018/19 as the Premier League entered the final year of the three season deal with Sky and BT. Broadcast revenues were set to rise slightly in 2019/20 but it is unlikely to match wage growth.' In addition clubs face a likely revenue hit from the effects of the pandemic with chances of a resumption of...

The recently published annual report of the Football Association (available online at Companies House) discusses the changes in European club competition proposed by Uefa to operate from 2024. These have important implications for clubs outside the top six. The UEFA Champions League would be made up of 32 teams and be selected on the basis of club domestic rankings in the previous four seasons. Beyond the first season one would have to win the domestic league to be guaranteed a place. In other words, if you finished second in the Premier League you wouldn't be guaranteed a place unless your previous record justified it or you got to the semi-finals of the Europa League (or 'League Two' as it is confusingly termed. The Europa League of 32 teams would be based on domestic rankings in the previous four seasons. The new Europa Conference League would have 64 teams but would be very much a third ranked competition and would not generate much revenue for clubs. It would al...

Charlton's takeover is like the Polo sweet with a hole in the middle where the money should be. The club risks going the way of Bury: Tahnoon Nimer taking Charlton the Bury way The article notes: 'Only after Dale got his mitts on Bury did the EFL address funding, and it is the same here. When Roland Duchatelet relinquished control of Charlton, the EFL stood idle. Only once the equally dubious Nimer took charge did it become an EFL matter. Too late. At the point of change of control is too late. Within 10 working days of the takeover is too late.' 'In advance, is when Nimer should have proved he could buy Charlton, before he was given the opportunity to harm a damaged club yet further. No deal should have been passed until that point.' The article also reviews what happened at Bury.

A study by the University of Strathclyde's Fraser of Allender Institute has found that football contributes over £200m to Scottish GDP and supports 5,700 jobs: Economic study In the course of the 2017/18 season, the turnover of SPFL clubs was £223m and they directly employed around 2770 people. In the 2017/18 season, there were 4,871,000 attendances at SPFL league and cup matches, with the majority of these in the Premiership.

Brentford are the smartest kids in the Championship room when it comes to talent development says Kieran Maguire of the Price of Football. Profits on player sales £71.5m in the five years in the division and an extra £13m from sale of land. Brentford have had a net player spend of MINUS £35m in five years in the Championship, and that's before selling Neal Maupay in the summer of 2019. Brentford day to day income up nearly 20% in 2018/19 and up 50% since promotion to Championship. Still one of the lowest in the division, so club innovates in terms of player development.

If the Premier League season is ended on a points per game basis, as contemplated by Uefa, this could hit Tottenham Hotspur very hard. They could end up without a place in any European competition for the first time in ten years. This in turn would constrain transfer spending: Spurs could miss out on millions

The Zurich-based Swiss Ramble blogger casts his authoritative eye over the 2018/19 accounts of Sheffield United. He comments: 'Apart from the pandemic, this has been a glorious period for Sheffield United. There is much to admire about their strategy. Despite their financial limitations, they have delivered on the pitch under Wilder, even with board room issues, and are genuinely competitive in the Premier League.' These accounts cover the final year of co-ownership between Kevin McCabe and Prince Abdullah. Since then the High Court has ruled that McCabe must sell his 50% share to the Prince for £5m. As a result, the club will purchase the stadium and training facility for £43.5m. The club's loss increased from £2m to £21m, reflecting the “exceptional cost of promotion to the Premier League”. Revenue rose 4% (£0.8m) to £21m, while profit on player sales was up £6m (69%) to £14m, but this was more than offset by £26m of cost growth. Although the £21m loss is obviously no...

A clear majority of National League clubs have voted to end the season: National League decision How difficult question of how promotion and relegation should be dealt with remains to be resolved. Probably the least bad way would be to not promote or relegate any club, but understandably clubs like Barrow do not like that prospect.

It's not 1984 again for Charlton Athletic says fanzine editor Rick Everitt referring to the traumatic events 36 years ago that nearly saw the liquidation of the club: Failure would be one man's choice Everitt points out that football has been transformed since the 1980s. The EFL is not going to risk damage to its reputation through creating another Bury type situation. The Voice of the Valley editor reiterates his view that there are two serious potential purchasers. At the end of the day it's down to one man, Belgian ultimate owner Roland Duchatelet, and it's not in his interests to put the Addicks into administration. All parties have now responded to EFL’s investigation into potential misconduct around the takeover of Charlton Athletic. It’ll be discussed at tomorrow’s EFL board meeting. The EFL asked Charlton's new 'owners' for proof of funds six times before launching their investigation: EFL probe

A significant threat to the takeover of Newcastle United has emerged with a letter sent by beIN sport to the Premier League and all its member clubs. The Qatar based broadcaster has a three year TV deal with the Premier League worth £500m. BeIN sport warns that Saudi Arabia's involvement in piracy of Premier League matches is a threat to the future prosperity of the game's richest league. The Premier League has attempted to take legal action in Saudi Arabia against the state-owned channel Arabsat which transmits top flight matches on the pirate channel beoutQ. All this is tied up with the murky world of Gulf politics and recent tensions between Saudi Arabia and Qatar.

Rhyl Football Club is to close after 141 years. The club was unable to find the significant new investment it needed: Rhyl FC A deadline of Monday at 5pm was set to find £175,000 needed to keep them in business until May 2021. Despite offers of interest, these were deemed not credible by the club’s board of directors which has resulted in this tragic move. After failing to purchase the ground from owner David Butters, the lack of income due to the coronavirus fixture suspension, has only increased their difficulties. The Fans Association may attempt to form a new club in the town.

The EFL has launched an investigation into potential misconduct with regards to the takeover of Charlton Athletic by East Street Investments. Tahnoon Nimer has still yet to satisfy EFL requests for proof of funds. Matt Southall and Jonathan Heller also being investigated. The club has until Wednesday to respond: Under investigation One time Charlton fan director Ben Hayes saw it as bad news: 'it may delay any injection of funds to pay wages and creates more uncertainty when we need stability. Also EFL chronically slow to act and make decisions.'

Posting from his Zurich fastness the authoritative Swiss Ramble examines the 2018/19 financial results of Burnley. Profit before tax dropped from a club record £45m to £5m, mainly because profit on player sales fell £24m from £31m to £7m, though revenue was also slightly lower at £138m and expenses increased £15m. Profit after tax was down from £37m to £4m. Despite the decrease, Burnley FC pre-tax profit of £5m is still highly creditable, given that half of the clubs in the Premier League lost money, including two with deficits above £100m (Chelsea and Everton). Profit is all the more impressive, as they only had £7m gains on player sales, mainly Sam Vokes to Stoke City. Prior year profitability boosted considerably by £31m from sales of Andre Gray and Michael Keane. The Clarets have rarely made big money from player sales, though annual average has increased to £13m in last four years against £3m in previous six years. Only made profits above £10m twice in last decade. This year w...

The hearing over Sheffield Wednesday's legal battle with the English Football League will take place in July. Wednesday have been locked in a dispute with the EFL since last November after they were charged with breaching Profitability and Sustainability rules through the re-sale of their stadium, and a date has now been set for their fight to go before an independent disciplinary commission. The Championship club have strenuously denied financial misconduct but could face severe punishment if found guilty, with the possible sanctions ranging from a heavy points deduction to a transfer embargo or fine.

The Saudi Arabia backed deal to take over Newcastle United will be the first test of the Premier League's strengthened takeover rules. The deal is being structured through an investment vehicle created by British financier Amanda Staveley. Saudi Arabia's Public Investment Fund steered by Crown Prince Mohammed bin Salaman is providing 80 per cent of the funds. Ms Staveley is personally putting up 10 per cent with 10 per cent coming from her PCP private equity firm in which David and Simon Reuben, the British property investors, are expected to take part. The Premier League tightened up its rules to bar individuals if they had committed an act in a foreign jurisdiction that would be considered a criminal offence in the UK, even if illegal in their home territory. Activists such as Amnesty International have applied pressure by describing the Newcastle takeover as an attempt to 'sportswash' Saudi Arabia's poor human rights record. The process of clearing the take...

Port Vale are in a better position than many EFL clubs because of the financial commitment of the club's owners. However, their chief executive says that many lower division clubs genuinely fear they will go out of business: Port Vale

The authoritative Swiss Ramble blogger reviews the 2018/19 financial results for Leeds United. He notes, 'investment has given them a great chance to regain their status in the Premier League, despite competing against clubs benefiting from hefty parachute payments. Currently top of the division, seven points ahead of 3rd place, they will surely hope that the season is concluded.' The Swiss Ramble comments, 'To date Radrizzani has been a good owner at Leeds, buying back the ground and investing significantly more in the squad. However, he has spoken of selling a stake to other investors, including Qatari Sports Investment.' He continues, 'However, any plans to sell a stake have been put on hold, due to the coronavirus pandemic. Leeds are particularly impacted by the football shutdown, as they make so much money from their home games. Players, coaches and managers have deferred wages to ensure other staff are paid.' If parachute payments were excluded, Leeds ...

After much controversy, Dundee have cast their vote and the Scottish league season is to end: Scotland Relegation threatened Hearts have been mollified by being given leadership of a working party to consider expanding the Premier League. The top flight could be expanded from 12 to 14 clubs.

Ajax are the most prominent feeder club for teams in the Premier League, La Liga, Serie A, the Bundesliga and Ligue 1, according to a study conducted by the CIES Football Observatory. Benfica are next in line: Stepping stone clubs La Liga was revealed by the CIES Football Observatory to have encouraged youth development the most out of the top five leagues.

Talks for a takeover at Newcastle United by PCP Partners are at an advanced stage with changes in relevant documentation being made at Companies House: Newcastle takeover Football finance expert Kieran Maguire explains the significance of the documentation lodged at Companies House here: What it means for a Saudi takeover It appears that Mike Ashley is lending PCP money to help complete the deal and end his 13 year tenure at the club.

The authoritative Swiss Ramble reviews the financial situation of the Premier League in the pandemic. He notes, 'Although England’s top flight may be in a stronger position than lower leagues, it still faces immense financial challenges, due to lost revenue.' He adds, 'The reality is that football did not look like a particularly healthy business even before coronavirus arrived, as the current Premier League clubs posted a combined £330m loss with 12 of them losing money, including two reporting deficits over £100m, namely Everton and Chelsea. On the face of it, Premier League clubs should be fine, given that they generate an impressive £5.2 bn revenue between them. However, this disguises the fact that the Big Six account for £3 bn of this total, i.e. around 60%, leaving £2.2 bn shared between the other 14 clubs. The highest earning club Manchester United £627m has five times as much revenue as the bottom club Norwich City (estimated) £128m. Furthermore, the gap between ...

Three parties are interested in purchasing AFC Sunderland, although little is known about them. The coronavirus crisis has held up the process and a sale by the end of the season (whenever that is) seems unlikely: Sale prsopects

BetVictor has ended its two year sponsorship deal with the Northern Premier League, Isthmian League and Southern League. The deal was worth £100,000 a year. The gambling company opted to exercise a break clause after one year because of the negative reception the sponsorship received and because some clubs did not meet its requirements. Negative stories in the national press bothered BetVictor and led them to believe that the risk to their brand exceeded the digital benefits which were their main focus. After the coronavirus outbreak it will be hard to find a replacement. Northern Premier League chairman Mark Harris commented: 'Would we looking for a betting partner again? I have to say it wouldn't be my first choice.' 'The lesson out of this is that betting is so heavily regulated and is so heavily ensconced in social attitudes - particularly through social media - my preference this time would be to go for a sponsor that isn't quite from such a heavily regu...

From his Zurich fastness the Swiss Ramble casts his analytical eye over the 2018/19 accounts of Middlesbrough. Boro improved from a £6m loss before tax to a £2m profit, even though revenue dropped £6m (10%) from £62m to £56m and expenses were £3m higher, because profit on player sales more than doubled from £15m to £33m. They are actually one of just four Championship clubs to report a profit to date in 2018/19 with their £2m only behind Bristol City £11m, Hull City £3m and Rotherham £3m. This is a good performance, considering that almost all clubs lose money in this ultra-competitive division. That said, Boro would have also posted a hefty loss without £33m profit from player sales, including Adama Traoré to Wolves, Ben Gibson to Burnley and Patrick Bamford to Leeds. This was the second highest in the Championship, only surpassed by Bristol City £38m. Boro have made a profit twice in the last three years after accumulating £112m of losses in the previous six years, including a £32...

Clubs that took out pay day type loans secured on broadcasting revenue are particularly vulnerable to a loss of television money. A number of clubs have some kind of borrowing arrangement based on expected TV income which requires them to pay back sums running into tens of millions of pounds. They include Bournemouth, Everton, Leicester City. West Ham United and Wolves. The Premier League has been paid all the money owed to it for this season both domestically and internationally. The real worry is about money that would normally arrive in June which is typically half of a club's domestic TV income. Payments from overseas rights holders are even more likely to be delayed. Meanwhile Premier League executives, club owners and players have got involved in a blame game about how to absorb the losses incurred from the suspension of fixtures. There is little trust between them. The concerns facing Premier League clubs are less acute than those in the lower leagues. Lost match da...

Football finance expert Kieran Maguire discusses Championship finances and asks whether the coronavirus pandemic could mean the end of the Championship as we know it. David Sharpe, the former chairman of Wigan Athletic, contributes to the discussion: The future of the Championship

The precarious nature of lower league football is brought home by the example of Fleetwood Town, reports Kieran Maguire of the PriceofFootball. They lost £6m in 2018/19, have total losses of £15m, paid £128 in wages for every £100 of income and are propped up by owner loans of £17m that realistically can never be repaid. Things are even worse in the Championship, the 2018/19 accounts show. Total income £796 million but wages £855m. Total operating losses £650m and average weekly wage £16,553.

With a £18.2m loss in 2018/19 Blackburn Rovers are living dangerously according to football finance expert Kieran Maguire. They are reliant on Venky's for continued investment and fortunately they regard the club as a trophy asset. Their business is not badly affected by current disruption: Blackburn Rovers

Leeds United lost £36 million in 2018/19 despite record revenues for an EFL club not in receipt of parachute payments, reports Kieran Maguire of the PriceofFootball. Player sale profits were down by £15m. Player purchases were £16m and sales £16m. Leeds may have to pay £20m bonuses if promoted to the Premier League. Reference made in the accounts to ‘a number of legal claims’ against the club which are not quantified. Leeds were due to repay two loans to their owner in August 2018. After failure to do so interest rate on about £7m of loans increased from 4% to 6% above base rate. Other loans of £17m at 2%. Total interest cost 2018/19 £2m. Leeds paid over £2.2m in rent (operating leases) in 2018/19, West Ham pay £3m at the London Stadium. Maguire emphasises, 'They will be fine financial fair play wise. Revenue up substantially in 2019/20, £17m more of player sales and hardly any purchases so figures will look a lot better.'

Tottenham Hotspur's hopes of securing a naming rights deal for their new stadium have been dealt a blow by the coronavirus pandemic. Spurs had been hoping to secure a 15-year deal starting in the 2020/21 season which would have been worth £375m, a world record: Blow to naming rights ambitions Even before the pandemic naming rights deals were becoming increasingly difficult to secure so Spurs did well to get so close to a deal. It is not clear whether they will settle for a reduced deal.

Premier League clubs are looking at a June resumption of football and will delay the start of next season if necessary: June start date Uefa and the European Clubs Association president have warned that league cancellations must be a last resort: Cancellations 'premature' and 'unjustified'

The tireless Swiss Ramble analyses the 2018/19 accounts of Huddersfield Town. He comments, they 'deserve praise for reaching the top flight (and surviving two seasons) on a very low budget compared to others. They concluded, “Whilst relegation was clearly disappointing, the club is generally in a much better position than it was prior to promotion to the Premier League."' Profit before tax fell £26m from £30m to £4m, as revenue decreased £6m (5%) from £125m to £119m, profit on player sales halved from £6m to £3m and expenses rose £17m. After tax, prior season’s £26m profit was down to £3m, as the tax charge dropped from £4.1m to £0.5m. The £6m revenue fall was almost entirely driven by broadcasting’s £6m (5%) decrease from £110m to £104m, due to lower finishing position in the Premier League, while commercial also dropped £0.5m (5%) to £10.0m. However, match day slightly rose by £0.2m (2%) to £5.0m. The £119m revenue is still £103m higher than £16m generated in season ...

West Ham are planning a £30m rights issue to help them overcome the financial challenges posed by the corona virus pandemic: Right issue plan Whether shareholders will take it up remains to be seen, but at least they are not going to the taxpayer for support.

Burnley calculate they could lose £50m if the season is not finished while other Premier League clubs could lose £100m: Clarets shortfall Hopes of a May restart now look forlorn, but Uefa reckons that any postponed season would have to be finished by the end of August.

Reading had an operating loss of £40.6m in 2018/19, which is after taking into account £1.7m of management charge income to another group company and £3m loan fee for Sone Aluko to a club controlled by Reading owners. Without these losses would have been over £45m, reports Kieran Maguire of the PriceofFootball. Reading reduced losses to ‘just’ £30m through player disposals and selling training ground to club owners for £13m at a profit of over £8m. The previous season Reading undertook a similar exercise with the Majedski Stadium. Reading did not receive any cash for the sale of the training ground, it was offset against the sum due to owners, who put in £28m of shares and increased loans by £6.5m. Reading are paying rent of £1.5m a year for the Majedski Stad after selling the stadium for £26.5m. Reading’s wage bill increased by £5.4 million in 2018/19. Excluding the unusual loan fee Reading therefore paid £225 in wages for every £100 of income which is a Championship record, beatin...

Clubs may not be accepted into the Champions League if they have not qualified in the normal way, providing an additional incentive to complete the season: Clubs risk exclusion if season ends prematurely

The Bundesliga is seeking €300m to weather the financial effects of the coronavirus pandemic and is considering investments from two private equity firms: Seeking capital injection

Burnley income fell slightly in 2018/19 despite being in Europa League due to their lower Premier League position which is worth £2m per position, reports Kieran Maguie of the PriceofFootball. The Clarets made a slight operating loss of £2m but this more than covered for by player sale profits. Burnley have a very strong balance sheet with £41m cash and £65m of profits over the years. 83% of Burnley’s income comes from broadcasting. This is not an unusual figure for smaller Premier League clubs. Burnley wage bill up slightly, staff numbers increased by 71 in 2018/19 the club paid £63 in wages for every £100 of income. This is well within the recommended Uefa limit of £70 per £100. Burnley player trading 2018/19: Purchases £33m sales £8m.

The authoritative Swiss Ramble comments from Zurich on the 2019/19 accounts of Tottenham Hotspur. He comments that the club 'have done very well to compete against teams that spend much more on transfers and wages, while their focus has been on building a new stadium. However, these excellent financials owe much to their success in the Champions League, where qualification is far from certain.' In the last decade Spurs generated £1 bn cash from own operations, but also needed to raise £587m loans and £55m share capital. An incredible £1.3 bn has been invested in the new stadium and training centre, £77m interest, just £62m on players, £54m tax and £40m shares buyback. The club generated an impressive £278m cash from operations (including £104m increase in trade payables), but then spent a massive £413m on the new stadium, £26m interest, £8m tax and £3m (net) on players. This was funded by £195m new loans. paid £26m interest last year, the highest in the Premier League, ahe...

The Canal+ channel has told Ligue 1 that it will not be paying its €120m broadcasting rights instalment due on April 5th: Canal Plus won't pay This could be the harbinger of more trouble for football with broadcasting companies. Sky and BT are shedding subscribers because they have no sport to show. The Premier League had already seen its last domestic rights auction drop 7.5 per cent to £5 billion despite the involvement of Amazon. This was offset by overseas rights going up to £4.2 billion over 2019/22, up from £3.1 billion in the previous three year period, thus giving an overall income of over £9 billion. The Premier League came through the global financial crisis largely unscathed. No two recessions are the same and that will not happen this time, although it will still be more attractive globally than other leagues. Clubs will face some difficult choices. Should they spend the money they have on transfer fees or player wages? Probably the cost of both will fall, bu...

Shrewsbury Town are in a stronger position that 99 per cent of clubs with no debts and reserves in the bank: Showing others the way forward Football finance guru Kieran Maguire recently singled out chief executive Brian Caldwell for praise as one of the best in the business. We often talk about the difference made by managers, but less about the key contribution of a good CEO. The club recently reported a profit of £2.25m for 2018/19, the fourth year in the row they have reported a profit, a stark contrast to many clubs in the lower reaches of the Football League. They still managed to invest heavily in the playing squad, including a record transfer fee, and in infrastructure. Considerable emphasis is placed on good relations with supporters.

Wigan had an operating loss of £16 million in the Championship in 2018/19, reports Kieran Maguire of the PriceofFootball. Player sales reduced this to £9 million. Wigan player trading 18/19: Purchases £7.1m sales £7.6m. Agents fees paid amounted to £1.1m. Wigan owed £3.7m by other clubs on player sales but owed £3.3m on purchases. Also owed parent company £20m in loans interest free. Unusual ‘capital contribution’ of nearly £12 million from owners in year. Large operating losses are par for the course in the Championship.

West Bromwich Albion income down to £54m in 2018/19, broadly matched by decline in costs due to relegation clauses in contracts. Operating loss was £17 million but gains on player sales reduced this loss to £7 million, reports Kieran Maguire of the PriceofFootball. West Brom effectively debt free but owe £18.5 million on player transfers to other clubs. Also due to receive about the same in instalments due on player sales. West Brom may have to pay up to £13.2m in add on fees and contract bonuses if certain goals are achieved. Club player trading 2019/20 has generated net income of £17.7 million.