The authoritative Swiss Ramble reviews Swansea City’s 2020/21 accounts, when they swung from £2.7m pre-tax profit to £4.6m loss. Revenue fell £22m to £28m (lower parachute payment & COVID impact) and profit on player sales down £5m to £12m, largely offset by big cost reduction.
They swung from a
pre-tax profit of £2.7m to a loss of £4.6m, as revenue fell £22m (45%) from
£50m to £28m and profit from player sales dropped £5m (30%) to £12m, partly
offset by total expenses reducing by £17m (26%) and £3.3m insurance claim. Loss
after tax was £4.1m.
The main reason for the £22m revenue decrease was
broadcasting, which dropped £17m (44%) from £39m to £22m, mainly due to lower
parachute payment, though COVID also drove reductions in match day, down £3.0m
(63%) to £1.8m, and commercial, down £1.8m (31%) to £4.1m.
Although a loss
is rarely good news, the £4.6m deficit was one of the better results in 2020/21
with five clubs posting losses above £20m. As chief executive Julian Winter said,
“The club remains in a comparatively positive financial position within the
Championship.”
In their seven seasons in the Premier League (between 2012
and 2018), profits amounted to an impressive £36m. Performance has deteriorated
in the last three seasons in the Championship, but this has only resulted in a
relatively low net loss of £9m.
Since relegation from the Premier League, revenue has
dropped by £99m (78%) from £127m in 2018 to £28m, very largely due to less TV
money in the Championship (£83m decrease), though commercial and match day are
also down £10m and £6m respectively.
Revenue decline has been cushioned by Premier League
parachute payments, though these have fallen in each of the three years since
relegation: 2019 £43m, 2020 £34m and £2021 £15m. Last season was the final
tranche, so 2021/22 revenue will be even lower.
Commercial revenue fell £1.8m (31%) to £4.1m, comprising
£3.1m commercial income and £0.9m other, the lowest since 2011 and down from
£14.5m three years ago. This is mid-table
in the Championship, a fair way below the likes of Stoke City £12m, Norwich £8m
and Bristol City £8m.
Reliance on player
sales
The club noted that £12.5m profit from player sales was
“used to partially fund the operating loss”, though down from prior year’s
£17.8m. Mainly came from sale of Joe Rodon to Spurs. This is still pretty good.
The Swans have become quite reliant on player sales, adding
up to £144m in the last five years, compared to £46m in preceding 5-year
period. This season’s profit will be lower (Connor Roberts to Burnley and Jamal
Lowe to Bournemouth), so more player trading likely this summer to balance the
books.
If forecast
player sales are not achieved, they would need to find further sources of
funding to maintain cash flow. The auditors noted, “This represents a material
uncertainty which may cast significant doubt about the club’s ability to
continue as a going concern.”
Average attendance in 2019/20 (for games played with fans)
was 16,151, which was in the bottom half of the Championship. Down 4,500 (22%)
since relegation. The club slashed ticket renewal prices for the 2021/22
campaign.
Wages
The wage bill fell £11m (28%) from £39m (excluding £1.7m
onerous contracts) to £28m, which means that wages have been cut by £63m (69%)
in the three years since relegation (revenue down £99m in same period). Club’s
lowest wage bill since £17m in 2011.
Following the decrease, the £28m wage bill is mid-table in the
Championship. Less than half of Watford £68m, Norwicj £67m and Bournemouth £57m
(though the first two included hefty promotion bonuses). Number of staff
reduced from 409 in the Premier League to 244.
Despite the
reduction in wages, the wages to turnover ratio increased from 77% to 101%,
though this was actually one of the lowest (best) in the Championship. The vast
majority of clubs in this division have unsustainable ratios well above 100%
(incredibly six are over 200%).
Debt
Gross debt rose £21m from £2m to £23m, including £13.6m
convertible loan (as a result of director Jake Silverstein’s investment in
August 2020) and two interest-free EFL loans amounting to £7.5m. This is the
club’s highest debt since 2015.
Despite the
increase, the £23m gross debt is one of the smallest in the Championship, far
below Stoke City £212m, Bournemouth £165m, Blackburn Rovers £152m and Watford
£139m. However, almost all debt in this division is from the clubs’ owners, so
is “soft” in nature.
The club have bought the land at the south end of the
stadium, while acquiring 100% of the company responsible for the Liberty
Stadium management. This would facilitate stadium capacity expansion, but this
would only be considered after a return to the Premier League.
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