Owls lose over £70m in five years

The doyen of football club accounts, the Swiss Ramble, analyses the 2019/20 accounts of Sheffield Wednesday from Zurich.

Sheffield Wedneday swung from £19m profit to £24m loss, largely due to prior year including £38m profit from selling the stadium and a £6.5m “confidential settlement payment”. Revenue fell £1.9m (8%) from £22.8m to £20.9m, while expenses were flat. Profit on player sales rose £3.4m to £6.2m.

The club sold their stadium for £60m, which gave them a £38m profit after deducting the £22m book value. If this transaction were excluded, they would have reported a £19m loss in 2019, which means that the £24m underlying loss in 2020 was £5m higher.

Most clubs in the Championship lose money, but Wednesday’s £24m loss is the sixth highest in the division to date, though far below Stoke City £88m. operating loss (i.e. excluding player sales and interest) rose slightly from £28m to £30m, though much better than LUFC £65m, WBA £53m and Stoke City £49m. Almost every club in the competitive Championship posts large operating losses, i.e. half of them are above £30m.

The club have consistently lost money, only reporting a profit twice in the last decade, and both of those were due to one-offs. Underlying losses have been rising since the arrival of owner Dejphon Chansiri, aggregating £71m over the last five years (£109m excluding the stadium sale).

The Swiss Ramble estimates that COVID led to £3.2m reduction in revenue, split between £1.9m lost (match day £1.6m, TV rebate £0.3m) and £1.4m broadcasting deferred to 2020/21, offset by a £0.9m government grant, leading to a net £2.4m adverse impact.

Profit on player sales can also improve the bottom line, but this has not been a big money-spinner at Hillsborough. While the 2020 profit of £6.2m was the highest ever, (I think) they have made less than £16m profit from this activity in the last 10 years.

Based on the Swiss Ramble’s estimate, the most important revenue stream is broadcasting (41%), followed by match day (32%) and commercial (27%). Championship clubs without parachute payments have a much more even balance than Premier League clubs, who are far more reliant on TV money.

The owner Dejphon Chansiri has managed to grow revenue by £6m (40%) since he bought the club from £14.9m to £20.9m. £21m revenue is mid-table in the Championship. If parachute payments were excluded, £21m would move them up to 8th highest revenue in the Championship,

Commercial income fell £0.4m (7%) from £6.1m to £5.7m, the club’s lowest since 2016. This was mid-table in the Championship, far below the likes of Leeds £34m, Bristol City £14m and Stoke City £14m.

Wages fell £2.9m (8%) from £36.4m to £33.5m, which is £9m less than 2018 £42m peak (14 months), though still much more than £13m in 2015. Since these accounts many high earners (Fletcher, Forestieri, Rhodes, Westwood, Reach, etc) have left, so wages will drop significantly. Even after the decrease, the £34m wage bill was 10th highest in the Championship, which means that the club has punched well below its weight.

The wages to turnover ratio was virtually unchanged at 161%, the sixth highest in the Championship. This is obviously unsustainable, though it is pretty much the norm in this division, where the vast majority of clubs have ratios well over 100%

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The Political Economy of Football V2

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