The formidable Swiss Ramble reviews Middlesbrough’s 2020/21
accounts, when they reduced pre-tax loss from £36m to £31m, but still one of
the highest in the Championship.
Boro reduced
their pre-tax loss from club record £36m despite revenue dropping £4.9m (25%)
from £19.4m to £14.5m, as other income rose £2.7m to £4.6m, operating expenses
were cut £5.7m (10%) and profit on player sales rose £0.8m to £4.3m. Loss after
tax was £27m.
They have lost money eight times in the last decade with
their cumulative losses adding up to £157m. Over the last two years their
deficit is £66m, partly due to COVID, but also the end of parachute payments. They posted a £7m profit in the Premier League
in 2017.
The club also benefited from parachute payments in 2018
(£42m) and 2019 (£35m), but these have now ended. These are so significant that
they make it difficult for others to compete, e.g. in 2019/20 a relegated club
received £42m in year one, £34m in year two and £15m in year three. [This will be an issue for the proposed
independent regulator to look at, but don’t hold your breath, WG].
Big revenue fall
Revenue has
fallen by three-quarters (£48m) since the first season after relegation from
the Premier League in 2018, very largely due to £37m decrease in broadcasting
after parachute payments ended, though there were also reductions in gate
receipts £7m and commercial £4m.
Following the decrease, the £14.5m revenue is firmly in the
bottom half of the Championship, only around a quarter of the clubs receiving
parachute payments
Revenue was “significantly” impacted by COVID, leading to
reductions in gate receipts, down £4.5m (99%) to just £36k, and commercial,
down £1.6m (26%) to £4.3m. However, broadcasting increased £1.1m (12%) from
£9.0m to £10.1m, partly due to iFollow streaming.
The club did not detail the impact of the COVID on these
financials, though the Swiss Ramble would estimate this as around £6m in
2020/21: match day £4.2m (games played without fans) and commercial income
£1.6m. So the club would have still posted a big loss even without the
pandemic.
Commercial revenue fell £1.6m (27%) from £5.9m to £4.3m,
comprising sponsorship & commercial £2.6m and merchandising £1.7m. This is
down 60% from the £11.1m peak in the 2017 Premier League. This is the lowest since 2014 and only around
a third of Stoke City’s £12m.
Boro compensated
for the revenue decline by cutting costs. Wage bill fell £4m (13%) from £31m to
£27m, while player amortisation decreased £6m (32%) to £13m. On the other hand,
other expenses were up £3m (44%) to £10m (rather odd) and they booked £1.3m
player impairment.
Despite the improvement, the £31m loss is still one of the
worst in the Championship, only surpassed by Bristol City £38m and Reading £36m
to date in 2020/21.
Player sales and
transfers
Profit on player
sales rose £0.8m from £3.5m to £4.3m, which was mid-table in the Championship.
However, this was significantly lower than the 3 clubs relegated from the
Premier League, who each generated £56m to £60m, another advantage on top of
parachute payments.
One reason that Boro
losses have increased in the last two years is relatively low profits from
player trading. After £60m of gains in the three years between 2017 and 2019,
they have only made £8m since then. The 2021/22 accounts will include a
similarly low figure. [Clubs across
Europe have become increasingly reliant on player trading, but it is a volatile
and unreliable source of funds, WG].
Boro spent £7.1m on player purchases, including Akpom and
Morsy. Slightly higher than prior season’s £6.5m, but only around a tenth of
the massive £66m outlay three years ago, which one time manager Tony Pulis
described as “the most disastrous transfer window in the club’s history”.
In the three
years between 2016 and 2018 Boro really pushed the boat out, as they averaged
gross spend of £52m, compared to £4m in the preceding four years. However, in
the three years since then, this has dropped to £8m with £19m sales, leading to
£11m net sales.
Wages down
The wage bill fell £4m (13%) from £31m to £27m, as the club
“significantly reduced the size and cost of the playing squad to partially
offset the reduction in income”. Wages down 58% (£38m) from £65m peak four
years ago in the Premier League.
Following the decrease, Boro‘s £27m wage bill is now in the
bottom half of the Championship, making promotion even more difficult. It is less than half of Watford at £68m.
The wages to
turnover ratio increased from 160% to 186%. This is obviously far from great,
but in fairness the vast majority of clubs in the very competitive Championship
have unsustainable ratios well above 100% (incredibly five of them are over
200%).
Average
attendance in 2019/20 (for games played with fans) was 19,933, which was 11th
highest in the Championship. This is over 10,000 lower than the 30,449 they
achieved in the Premier League, but they are averaging more than 21,000 this
season.
Debt
Gross debt rose £13m from £116m to £129m. Most of this is
owed to Steve Gibson, who increased his loan by £5m to £121m, but there is also
a new £8m loan from the EFL, secured against future TV income.
The £129m gross
debt is the fifth highest in the Championship, only below Stoke City £212m, Cherries
£165m, Blackburn £152m and Watford £139m. The debt would have been even higher
if £63m had not been converted into share capital, highlighting Gibson’s
financial support.
[Clearly the club’s
finances would be transformed if they get into the play offs and win promotion,
but the odds are quite long. WG]
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