Bristol City have a very generous benefactor

The authoritative and tireless Swiss Ramble has tweeted from Zurich on the 2019/20 accounts of Bristol City. [I should add that I am client of Hargreaves Lansdown].

The Swiss Ramble states: 'Like most Championship clubs, Bristol City make operational losses, though they have limited the damage with profitable player trading. This revenue source is under pressure (as are others) in the current pandemic, so they are lucky to have a benevolent owner in [Steve] Lansdown.'

The Swiss Ramble estimates that Lansdown 'has put in around £203m to date (capital £133m, loan £70m) with little sign of the need for this funding going.' [He is the co-founder of Hargreaves Lansdown which is now a listed company].

[As at many clubs] 'Player trading has become increasingly important at the club with £78m profits in the last four years, compared to only £6m in preceding six years. As Lansdown said, this “is all part and parcel of the process” of making the club sustainable. That said, few sales were made last summer.'

Bristol City 'swung from £11m profit before tax to £10m loss, mainly due to profit on player sales falling £12m from £38m to £26m, while revenue dropped £3m (10%) from £30m to £27m and expenses rose £6m (10%) to £64m. After tax, £10m profit to £9m loss.' Accumulated losses over the decade are £104m.

The operating loss (i.e. excluding player sales and interest payable) widened from £26m to £35m, as revenue fell, but expenses increased. This is surely the club’s worst financial performance ever, only offset by the lucrative player sales.

The club's £27m revenue is still only 10th highest in the Championship, significantly below some of the clubs benefiting from parachute payments [which create an unlevel playing field].

The club splashed out £26m on player purchases, one of the highest in the Championship, including Kalas, Palmer and Dasilva (Chelsea), Massengo (Monaco), Wells (Burnley), Bentley (Brentford) and Nagy (Bologna). More than £22m total expenditure in the previous two seasons.

The wage bill rose £2.8m (9%) to £33.5m, a club record, despite players agreeing to defer a percentage of their wages for three months due to COVID. This means that wages have nearly doubled (up £16m) since the first season after promotion from League One in 2016.

Most Championship clubs operate at a significant loss, due to very high wages to turnover ratios, as they compete for promotion to the “promised land” of the Premier League. That said, Bristol City's £35m operating loss was firmly in the bottom half of the table.

The wages to turnover ratio increased from 101% to 123%, which is not great, but this is pretty much par for the course in this ultra-competitive division, where 16 clubs are above 100%, much worse than UEFA’s recommended 70% upper limit.

Gross debt of £73m is quite large for a club of their size, but a few other clubs in the Championship owe more. The debt is not an issue, so long as Steve Lansdown remains a friendly owner, as he demonstrated last year by converting £8.7m of debt to equity.

The club have no problems with Profitability & Sustainability rules. Reported £24m losses over three-year monitoring period less estimated £17m allowable deductions for academy, community, infrastructure and COVID take their FFP losses to £7m, easily within the £39m target.

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The Political Economy of Football V2

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