Benefactor owner pumps money into Fulham

Fulham are poised to return to the Premier League and the tireless Swiss Ramble spent the Easter holiday analysing their accounts.

Their pre-tax loss widened from £48m to £93m, despite revenue doubling from £58m to £116m following promotion to the Premier League, as profit on player sales fell £25m to zero, while expenses increased by £78m (60%) in the top flight.

Operating loss (i.e. excluding player sales and interest) increased from £73m to £94m, which was one of the worst in the Premier League, only better than Chelsea £159m and Everton £118m. This was significantly higher than the £23m loss the last time they were in the top flight.

A full year of the pandemic meant some very large losses in the Premier League, though Fulham at £93m was one of the highest, only surpassed by Chelsea £156m, Arsenal £127m and Everton £121m.

Losses are nothing new for Fulham, as the last time they made a profit was in 2011. Since Shahid Khan bought the club in July 2013, they have posted £301m losses, averaging £38m a year. In fact, the losses have been accelerating with £207m in the last 4 years (£52m average).

Revenues

Main driver of the £58m revenue increase was broadcasting, up £61m from £44m to £105m, due to the more lucrative Premier League TV deal, though commercial also grew £2m (26%) to £11m. This offset the COVID driven reduction in gate receipts, down £5.3m (96%) to just £231k.

Despite revenue doubling after promotion, the £116m revenue was second lowest in the Premier League, only above Blades £115m. For context it was around a fifth of Manchester City £570m.

The Swiss Ramble estimates the 2020/21 revenue loss due to COVID as £23m (match day £10m, commercial £7m & broadcasting £5m), partly offset by £6m TV money deferred from 2019/20 for games played after the 30th June accounting close. That gives £26m total revenue impact in last 2 years.

Broadcasting income shot up by £61m from £44m to £105m, the club’s second highest ever from this revenue stream. As Fulham’s 2019/20 income included parachute payments, their growth was smaller than a promoted club without those benefits.

Commercial income rose £2.3m (26%) from £8.7m to £11m, though this was a fair bit lower than the £18m they made the last time they were in the Premier League, partly due to COVID. This was the lowest in the top flight, miles below Man City £272m, but also less than Blades £14m.

Player sales and transfers

Loss was not helped by the absence of profit from player sales, which dropped from £25m (Ryan Sessegnon to Spurs) to just £146k. This was one of the worst player trading results in the Premier League, miles below the likes of Man City £69m, Wolves £61m and Leicester £44m.

The club spent £51m on players, including Anthony Knockaert, Harrison Reed, Terence Kongolo and Kenny Tete. This was lower than prior year’s £53m in the Championship and less than half the record £120m outlay two years ago.  This placed them in the bottom half of the Premier League, just below West Ham £54m.

Nevertheless the Cottagers have spent nearly quarter of a billion (£224m) on player purchases in the last three years, though they have been more frugal since then, as the accounts note that the cost of acquiring new players since year-end was only £18m (Harry Wilson and Rodrigo Muniz).

They have not made much money from player sales with only £59m in total in the last five years, which is much lower than others, e.g. their West London neighbours Chelesa made £413m in that period. It will be much the same this season with only £5m profit (per the accounts).

Attendances and stadium

The 2019/20 average attendance in the Championship of 18,239 (for games played with fans) was around 6,000 (25%) less than the 24,371 they achieved in the 2018/19 Premier League. However, that was still one of the lowest in the top flight.

The expanded Riverside Stand at Craven Cottage will increase capacity from 25,700 to 29,600. Fulham described this as a “game changer”, though fans are unhappy with £1,000 season tickets (£500 for under-18s). Significant funds from the owner required to complete the development.

Wages

Wages rose significantly by £41m (57%) from £73m (including promotion bonus) to £114m, easily a club record and £21m higher than the last time they were in the Premier League.  It would have been higher if they had avoided relegation, as they would have paid a survival bonus.

Even after the increase, the £114m wage bill was firmly in the bottom half of the Premier League, though it was higher than a few clubs that retained their status in the top tier, e.g. Saints £113m, Seagulls £109m and Leeds £108m.

Following promotion the wages to turnover ratio decreased from 125% in the Championship to 98% in the Premier League, though this was the highest (worst) in the division. Even if COVID impact were excluded, I estimate the ratio would still be as high as 86%

Owners shell out

Gross debt is less than £1m, despite Shahid Khan loaning an additional £151m in 2020, as he converted this into equity. An incredible £653m of debt has now been “written-off” in this way (£441m by Khan plus £212m by former owner Mohamed Al Fayed).

Khan has now provided Fulham with £654m funding, all converted to equity, including £244m in the last two years alone (£151m in 2021 and £93m since year-end). For context, only the owners at Everton and Villa have put in more money in the 5 years up to 2021.

In the last decade all of the £453m available cash has come from the owners’ pockets with £217m used for player purchases (net), £136m on infrastructure, £88m to cover losses and £3m on loan payments.

The club paid no interest,  which gives them a competitive advantage against many other clubs who have to pay interest on their loans. Some had very high charges in 2020/21, e.g. Arsenal £34m (debt refinancing break fee), Man United  £21m and Spurs £18m.

Despite the large losses, the Zurich-based expert’s model suggests that Fulham were OK with Profitability and Sustainability rules, as they were just about within the limit over the 3-year monitoring period after taking into consideration allowable deductions, promotion bonus and COVID impact.