Blackburn Rovers lose £172m under Venky's

The tireless Swiss Ramble has been casting his forensic eye over the 2019/20 accounts of Blackburn Rovers.

The club’s loss widened by £4m from £18m to £22m, as revenue fell £3.2m (19%) from £16.7m to £13.2m, while operating expenses grew £3.6m (10%), partly offset by profit on player sales rising £2.5m to £3.1m and £0.6m government furlough income.

Since Venky’s arrival in 2010, Rovers have only once made a profit – in 2012 when last in the Premier League (boosted by £23m player sales). In this period they have lost £172m, some achievement considering they had two seasons in top flight followed by four with parachute payment.

Debt increased by £14m from £142m to £156m, thanks to another loan from Venky’s, who the club now owe £141m. There is also a £14m bank overdraft (guaranteed by Venky’s) and a £0.6m loan from the EFL. The £156m debt was the second highest in the Championship, only below Stoke City £187m. In fact, they actually had the 9th highest debt in England at the end of the 2019/20 season, partly because the last time the club’s owners converted debt into equity was back in 2011

Most Championship debt is provided interest-free by owners, which is the case with Venky’s loans. However, interest still increased from £495k to £614k, due to paying 2.65% over LIBOR on the overdraft. Only 5 clubs in this division paid more than £1m interest

Relatively small losses in 2016 and 2017 were due to decent profits from player sales, but they have only made £5m from this activity in the last three years. Performance was no better in 2020/21, as no meaningful sales were made in the season just gone.

The financial challenge is highlighted by the fact that their £13.5m revenue was third lowest in the Championship, only above Preston and Wigan. For some perspective, this was only around a quarter of Fulham £58m, Leeds £54m and WBA £54m.

Although the£22m loss is obviously not great, it is by no means the worst in the Championship. Only three clubs posted a (small) profit in 2019/20, while the largest losses were made by Stoke City £88m.

Revenue has more than halved since their £30.4m peak in the Championship in 2014. It has dropped £41m (75%) since relegation from the Premier League. In the first four years they benefited from £55m parachute payments, but they lost this advantage in 2017

All three revenue streams were lower, mainly due to COVID: commercial dropped £1.5m (27%) from £5.5m to £4.0m; match day fell £1.0m. Broadcasting remains the most important revenue stream, accounting for 50% of their total revenue, followed by commercial 30% and match day 20%%) from £3.7m to £2.7m; and broadcasting was down £0.6m (8%) from £7.4m to £6.8m.

Despite the revenue decrease, costs still grew, due to investment in the squad “to be competitive”, as wages rose £3.2m (14%) from £22.4m to £25.6m. For some perspective, this was £11m lower than their first season following relegation from the Premier League in 2013 (when they had parachute payments).

The wages to turnover ratio increased from 134% to 189%, which was even worse than the 187% in League One two years ago. Most clubs in the Championship have unsustainable wage bills, well over 100% of revenue, but Blackburn’s was the second highest in the division.

Profit on player sales increased from £0.6m to £3.1m, largely from David Raya’s move to Brentford, though this was one of the lowest profits for this activity in the Championship, far below the likes of WBA £29m, Bristol City £26m, Fulham £25m and Brentford £25m.

Transfer spend has significantly reduced following relegation from the top flight, exacerbated by an FFP transfer embargo. In fact, their gross outlay was only £17m in the last five years, compared to £45m in the preceding five-year period. Low expenditure again in 2020/21

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The Political Economy of Football V2

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