Poor player sales hit Milan finances

The authoritative Swiss Ramble reviews the latest accounts of AC Milan.

The club’s pre-tax loss more than halved from €192m to €92m, thus improving by €100m, as revenue increased €69m (40%) from €172m to €241m. Profit on player sales rose €3m to €18m, while operating expenses fell €30m (8%). The loss after tax was €96m. The €96m post-tax loss is nowhere near the highest in Italy in 2020/21, as it is comfortably surpassed by Inter €246m, Juventus €210m and Roma €185m.

It is worth noting that Milan are responsible for six of the 20 worst losses in Serie A, but for some perspective Barcelona posted a €481m loss last season. In fact, the big four Italian clubs have lost a staggering €1.3 bn in the last two seasons (€591m in 2019/20 and €737m in 2020/21), though Milan were the least bad with their €291m deficit being the smallest, behind Roma €389m, Inter €348m and Juventus €300m.

Milan have lost an amazing €827m in last 8 years (pre-tax), though president Paolo Scaroni said, “The trend is positive. We’ll see about breaking even further on, but it depends on many factors, including whether we are in the Champions League. We hope to improve our results.”

Broadcasting income rose €75m (118%) from €63m to €138m, including revenue deferred from 2019/20 accounts plus return to Europa League, and commercial increased €17m (22%) from €77m to €94m. This compensated for COVID driven reduction in match day, down €24m to zero.

Commercial revenue rose €17m (22%) to €94m, due to increases in sponsorship and advertising. This is the third highest in Italy, but a full €100m below Juventus €194m. It is the highest growth in Italy in the last three years, though they actually had the most commercial income in 2016.

The Swiss Ramble estimates total the club’s COVID revenue loss as €74m (€27m in 2020 and €47m in 2021), split between match day €47m, broadcasting €16m and commercial €11m.

Profit on player sales rose €3m to €18m, mainly Suso to Sevilla €20m, offset by €2m loss on Musacchio to Lazio. The transfer market has crashed due to COVID, but this is still a relatively small gain, e.g. much lower in 2020/21 than Atalanta €68m and Sassuolo €39m. Unlike many leading clubs, Milan have made very little from player sales, only averaging €12m profit a year since 2014, including actually losing money in two of those years. Same story this season with small profits earned from sales of Laxalt, Olzer and possibly Hauge.

Poor player trading is one reason they have struggled financially. In 5 years up to 2020, they only made €72m profit here, which is miles below Juventus €563m, Roma €372m and Napoli €325m. In fact, they only sold one player for a profit higher than €20m in the last four years.

It is imperative that Milan do well in Europe to boost broadcasting income, as TV rights in Serie A are relatively low. England €3.6 bn and Spain €2.0 bn saw big increases in 2019, while Italy was unchanged at €1.3 bn. In fact, the new 2021-24 deal will be lower.

The Swiss Ramble estimates that the club earned €17m for reaching Europa League last 16 after the UEFA FFP one-year ban meant they could not participate in 2019/20. Much lower than Champions League representatives: Juventus €83m, Lazio €54m, Atalanta €51m and Inter €50m. They have only received €46m from Europe in the last five years, miles behind Juventus €454m, Napoli €243m and Roma €209m. However, they have earned around €45m from this season’s Champions League, even though they were eliminated at the group stage.

The club had the second highest attendance in Italy of around 50,000 pre-COVID, so they will be happy that fans have returned to Italian stadiums this season. Capacity had been increased to 75%, but rising COVID cases has meant a reduction recently.

The Milan and Inter joint project to build a new stadium has been approved. President Scaroni said, “We cannot become protagonists again unless we have a modern stadium. Without this, it is very challenging to bridge the gap with top European clubs”, as seen by match day income.

Threat of financial calamity removed from Baggies

West Bromwich Albion had effectively been in decline ever since the club was sold to a Chinese consortium in August 2016, paying a figure north of £200m to buy former owner Jeremy Peace’s stake. Controlling shareholder Guochuan Lai’s ownership was fairly disastrous for the club, but his unloved tenure finally came to an end after Bilkul Football WBA, a company ultimately owned by Florida-based entrepreneur Shilen Patel and his father Dr Kiran Patel, acquired an 87.8% shareholding in West Bromwich Albion Group Limited, the parent company of West Bromwich Albion Football Club. This change in ownership was urgently required, due to the numerous financial problems facing West Brom, including growing high-interest debt and serious cash flow concerns, following years of no investment from the former owner. Indeed, West Brom’s auditors had already rung the alarm bell in the 2021/22 accounts when they cast doubt on the club’s ability to continue as a going concern without making player s

Gold standard ground boosts Tottenham's income

The gold standard in European football grounds is the Tottenham Hotspur stadium in north London, a £1bn construction project completed in 2019. Its impact on the club’s finances has become increasingly clear as the effects of the pandemic have faded. Previously, the average fan would spend less than £2 inside the ground on a typical match day, but now that figure is about £16, thanks to new facilities including the longest bar in Europe and an on-site microbrewery. Capacity has gone up from 36,000 at the club’s previous home of White Hart Lane to 62,000. The new stadium — built on land adjacent to White Hart Lane — has opened the door to a broad range of other events that have helped to push commercial income up from €117mn in 2018 to €215mn in 2022. Last year, Tottenham hosted US singer Beyoncé for five nights on her global Renaissance tour, two NFL matches, as well as rugby games and heavyweight boxing bouts. Money brought in from football has gone up too. Match day income is

Spurs to sell minority stake

Tottenham Hotspur is in talks to sell a minority stake in a deal that could value it at up to £3.75 billion and pave the way for Joe Lewis and his family to sever ties with the Premier League football club. Tottenham chairman Daniel Levy is seeking an investment that values the club at between £3.5 billion and £3.75 billion, including debt. While the terms of any deal have not been finalised, City sources expect Spurs to sell about 10 per cent. The club is being advised by bankers from Rothschild on the sale. Tottenham wants to raise fresh capital for new player signings and to help fund the development of an academy for its women’s team, as well as a 30-storey hotel next to its north London stadium. The financier Amanda Staveley, who brokered the deal for Saudi Arabia’s Public Investment Fund to take over Newcastle United, is understood to be among the parties to have expressed an interest in Tottenham. Staveley’s fund, PCP Capital Partners, has raised about £500 million to depl

The Political Economy of Football V2

Search This Blog