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Fall in profit on player sales hits Saints

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 a hefty £205m profit from this activity with only Chelsea £332m and Liverpool £306m ahead of them.

A £3m revenue fall was driven by broadcasting’s £4m (4%) decrease from £117m to £113m, mainly due to fewer Premier League shown live. Match day was also down £2.2m (11%) from £19.2m to £17.0m, but commercial rose £3.4m (21%) from £16.4m to £19.8m.

Revenue has now fallen two years in a row from the £182m peak in 2017 to £150m in 2019, mainly due to less TV money (absence of Europa League £13m and lower finishing position in Premier League), though match day has also dropped £5m (24%).

Saints revenue of £150m is 13th highest in the Premier League, just behind Crystal Palace £154m, though the gap to the Big Six is enormous - almost a quarter of a billion to 6th placed Arsenal.

Although a substantial 75% of club revenue came from TV (£113m out of £150m), this is far from unusual in the top flight and is only the 10th highest reliance in the Premier League. Furthermore, it should be noted that no fewer than 13 of the 20 clubs are above 70%.

Saints have signed a club record shirt sponsorship deal (reportedly £7.5m a year) with Chinese company LD Sports in 2019/20, replacing Virgin Media, who remain sleeve sponsor. They also have a 7-year kit supplier partnership with Under Armour, which started in 2016.

The wage bill slightly increased by £2m (2%) to £115m, though this disguised a reduction in underlying wages, as bonuses based on final league position rose. Wages have grown by less than £3m in last two years, but wages to turnover up from 62% to 77%, due to revenue fall. The increase in the wages to turnover ratio to 77% means that this is the fifth highest (worst) in the Premier League of clubs that have reported to date, though a fair way below Bournemouth 85%. However, it is above UEFA’s recommended 70% maximum limit.

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