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 £32m record deficit in 2016. In part this has been achieved by becoming a selling club with an annual average profit of £20m on player sales over the last three years.
The £6m revenue decline was very largely driven by broadcasting’s £6m (12%) fall from £47m to £41m, due to a smaller parachute payment, though gate receipts also dropped £1m (15%) from £7m to £6m. Commercial rose slightly by £0.3m (4%) from £8.3m to £8.6m.
Boro's £56m is the fourth highest Championship revenue reported to date, only behind the three clubs relegated from the Premier League the previous season, namely WBA £71m, Stoke City £71m and Swansea City £68m, but just above Aston Villa £54m.
Revenue has fallen by £65m from £121m to £56m since relegation from the Premier League two years ago, and will further decrease in 2019/20 to around £24m after parachute payments stop (clubs only receive two years’ payments if relegated after one season). After this cushion is removed in 2019/20, they will only get the same £8-9m as most other Championship clubs (including £4.6m PL solidarity payment and £2.5m EFL distribution).
Unsurprisingly, Boro crowds are around 7,000 lower in the Championship compared to the 30,000 they attracted in the Premier League, though attendances are still much higher than most of the seasons when they were last in the second tier.
The wage bill was cut by 18% (£9m) from £49m to £40m, so has now fallen by 38% (£25m) from £65m two years ago in the Premier League. Wages to turnover ratio improved from 79% to 72%. Wages will further decrease in 2019/20 to offset the lack of parachute payment revenue. The 72% wages to turnover ratio was actually one of the lowest (best) in the Championship, where more than half of the clubs have ratios over 100%.
The club made £11m player purchases, including Aden Flint and George Saville. Significantly less than prior season’s massive £66m, which Pulis described as 'the most disastrous transfer window in the club’s history'. Still quite high for the Championship, but miles below Stoke’s £67m.
Gross debt rose £4m to £105m, all of which is owed to the owner. In fact, Gibson’s debt increased £11m, while a £7m bank loan was repaid. Debt would have been even higher had £63m not been converted into share capital, highlighting Gibson’s financial support. The £105m gross debt is the third highest in the Championship, only below Blackburn Rovers £142m and Stoke City £141m. However, like almost all debt in this division, it is provided interest-free by the owner, so is of the 'soft' variety.
A fan commented: 'Thank god for Steve Gibson and upon further reflection what a great job Tony Pulis did by keeping the team competitive whilst selling prized assets and significantly reducing the wage bill.' That support is even more valuable in current circumstances.
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