Did Blades play it too safe?

From his Zurich fastness, the authoritative Swiss Ramble casts his forensic eye over the 2019/20 accounts of Sheffield United.

Following promotion the Blades swung from £21m pre-tax loss to £19m profit, a £40m improvement, as revenue shot up £122m from £21m to club record £143m, though profit on player sales fell £10m to £4m and competing in the Premier League increased expenses by £72m. Profit after tax was £18m.

The main driver of the £122m revenue increase was broadcasting, up £109m from £8m to £117m, due to the much more lucrative Premier League TV deal, though commercial also rose £13m from £7m to £20m, while match day was up £0.8m (13%) from £5.9m to £6.7m.

Revenue of £143m is an incredible 13 times as much as the £11m they reported in League One just three years ago with £115m of the £132m increase coming from broadcasting, which contributes 82% of total revenue. There was slso significant growth in commercial, up from £3m to £20m.

£143m revenue was a very respectable 11th highest in the Premier League, ahead of clubs like Crystal Palace £141m and West Ham United £140m. That said, this was still £200m below Arsenal £343m, the lowest of the so-called “Big Six”.

£19m profit is the second best result reported to date in the 2019/20 Premier League, only surpassed by Chelsea £36m. The scale of the achievement is emphasised by no fewer than 8 clubs posting losses above £50m. The other promoted club Norwich City made a much smaller £3m profit.

The club managed to post a £16m operating profit (i.e. excluding player sales and interest) in the Premier League, which is actually the highest to date in 2019/20, significantly better than most other clubs, e.g. three had losses over £100m

Without COVID, revenue would have been £11.2m higher at £154m, due to £8.7m broadcasting rebate and £2.5m other lost income. Along with £0.5m additional costs incurred, this would have resulted in the club posting an even higher profit of £31m.

Blades only benefited from £4m profit from player sales, down from £14m the previous year. This is one of the lowest profits from this activity in the top flight. The profit from player sales has increased in the last three years, totaling £27m, including sell-on fees for Harry Maguire and Kyle Walker. This is twice as much as the previous 7 years combined. Very little profit in 2020/21 to date, though summer sales are to come.

If the Blades are relegated from the Premier League, TV income would fall significantly, albeit cushioned by £42m parachute payment, which would give them much higher revenue than most other Championship clubs. . Parachutes fall to £35m in year two and £16m in year three.

The wage bill nearly doubled from £41m to £78m. Prior season included hefty promotion bonuses, so wages were only £19m in 2017/18. This means that wages have grown £59m in the last two years, while revenue has increased £123m in the same period.

Despite the steep increase, the £78m wage bill is the lowest in the Premier League in 2019/20, around £11m less than the other promoted club Norwih City£89m.

The wages to turnover ratio improved from 195% in the Championship (including sizeable promotion bonuses) to only 54%, one of the lowest in the Premier League. It would have been just 50% if COVID impact excluded. Arguably, the club played it too safe.

The £66m outlay on player purchases last season was more than three times as much as the previous nine years combined (£21m). Club spent a further £44m last summer.

£17m gross debt was one of the smallest in the Premier League, much lower than some other clubs, though many of these have taken on debt for new stadiums or training grounds.

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The Political Economy of Football V2

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