The authoritative Swiss Ramble reviews the accounts of Sheffield United for 2020/21 when they were relegated from the Premier League.
Pre-tax profit fell from £19m to £10m, as revenue dropped
£28m (20%) from club record £143m to £115m and profit on player sales decreased
£3m to £1m, partly offset by operating expenses falling £21m (17%). Net
interest payable was up £1.7m to £2.5m.
The Blades are one of only four Premier League clubs to
report a pre-tax profit to date, only surpassed by Wolves £145m (including
£127m loan write-off) and Leeds £26m.
This is the
second year in a row that they were profitable (£29m in total). They only made a profit on one other occasion
since 2008, though £31m in 2014 was due to McCabe writing-off £35m loan before
partnering with the Prince. The £19m loss in 2019 was impacted by promotion
bonus.
This was the second year under new owner Prince Abdullah
after the High Court ruled that Kevin McCabe had to sell his 50% share to the
Prince. This also triggered an agreement whereby the club had to purchase the
stadium, training facility, gym, hotel and offices for £38m.
All three revenue
streams fell with the largest reduction in broadcasting, down £19m (16%) from
£120m to £101m. COVID meant that match day dropped £6.6 m (99%) to just £58k,
while commercial fell £2m (15%) from £16m to £14m. Other income included £2.5m
insurance claim.
The 2020/21 revenue loss due to COVID was £8.9m (mainly
match day), so their underlying profit would have been even higher at £19m.
Added to the £11.2m shortfall in 2019/20 (including £8.7m rebate to
broadcasters), that means total revenue lost of £20m in the last two years.
Player sales
Furthermore the bottom line only benefited from £1m profit
from player sales, down from prior year £4m. Mainly Callum Robinson to WBA with
many players released. One of the worst player trading results in the Premier
League.
Profit from player sales has fallen two years in a row from
the £14.2m peak in 2019 to just £1.1m. Last few years have included sell-on
fees for Harry Maguire and Kyle Walker. This year’s figures will feature Aaron
Ramsdale’s big money move.
£112m outlay on player purchases in the last two years was
more than five times as much as the previous eight years combined. However,
they have spent hardly anything on recruitment since relegation to the
Championship.
Despite the fall
in 2021,the £115m revenue is still more than five times as much as the £21m
they generated in their last season in the Championship. In fact, they earned
over a quarter of a billion pounds (£258m) in their two seasons in the Premier
League.
Revenue
£115m revenue was the second lowest in the Premier League,
slightly more than Burnley £115m. For some perspective, it was only around a
fifth of Man City £570m.
Broadcasting income fell £19m (16%) from £120m to £101m,
largely due to a lower merit payment, as their league position dropped from 9th
to 20th (each place worth £1.8m). This was the lowest in the top flight, as
others benefited from revenue deferrals from 2019/20.
Relegation from the Premier League, their TV income will
have fallen significantly, albeit cushioned by £42m parachute payment, which
gives them much higher revenue than most other Championship clubs. Parachutes
fall to £35m in year two and £16m in year three.
Average attendance of 30,869 in 2019/20 (for games played
with fans) was in the bottom half of the Premier League, though 4,700 (18%)
higher than their last season in the Championship and over 13,000 more than
their 2013/14 low in League One.
Wages
The wage bill fell £21m (27%) from £78m to £57m, mainly
because prior year included bonuses for staying up. It’s a bit misleading due
to accounting period changing from 13 months to 11 months. On a like-for-like
basis, the decrease would be £10m (14%) from £72m to £62m.
Following the
steep increase, the £57m wage bill is by far the smallest in the Premier
League, £29m below the next lowest Burnley £86m. While the club could be
commended for its tight cost control, the flip side is that low wages made
relegation more likely.
The wages to turnover ratio fell from 54% to 49%, lowest in
the Premier League, having significantly improved from 195% in the Championship
(including hefty promotion bonus). It would
have been 50% if adjusted for 11 months and COVID impact. Arguably, the club played
it too safe.
Debt
Gross debt increased from £17m to £48m, as they took out a
£30m bank loan from Macquarie, secured on TV money. Also have £18m from
shareholders. Debt would have been much higher without owners writing-off £35m
debt and converting £27m of debt to equity since 2014. Despite the increase, the£48m gross debt was
still one of the smallest in the Premier League.
Some fans would argue that the additional debt has
effectively been used to fund the Prince’s purchase of the stadium and other
assets (as part of the agreement to buy the club from McCabe), so in some ways
the takeover was analogous to a leveraged buy-out.
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