Losses at Palace better than many top flight clubs

The authoritative Swiss Ramble reviews the latest accounts of Crystal Palace where the pre-tax loss narrowed from £58m to £40m, despite revenue falling £8m (6%) from £142m to £134m, due to profit on player sales increasing from £1m to £10m and expenses falling £17m (8%), mainly due to a change in the accounting date (two fewer months).

Although the £40m loss is obviously not great, the 2020/21 Premier League was badly impacted by the pandemic. Only four clubs were profitable, while many reported huge losses with three of them above £100m.

Since promotion to the Premier League in 2013, Palave have made money in half of their eight seasons, though they have made an overall £93m loss in that period, including a £128m deficit in the last four years alone. This is in line with the Premier League average.

Revenue falls

Main driver of revenue fall was COVID, which led to reductions in gate receipts, down £8m (97%) to just £247k, and commercial, down £4m (20%) from £21m to £17m. Partly offset by TV money rising £4m (4%) from £113m to £117m, mainly due to broadcasters’ rebate in prior year.

Revenue has fallen by £21m (14%) from its pre-pandemic club record of £155m in 2019 to £134m. However, it has still grown by £44m (49%) since 2014, their first season following promotion to the top flight, with much of that growth due to new Premier League TV deals.

£134m revenue was one of the lowest in the Premier League, only above Fulham, Sheffield United and Burnley, though this season’s rankings are distorted by different amounts of revenue deferred from 2019/20 accounts. For some perspective, this is less than a quarter of Man City £570m.

Commercial income fell £4m (20%) from £21m to £17m, due to less money from sponsors (11 months) plus lower revenue from events, catering and club shop (COVID). This is one of the lowest in the Premier League, despite including £2.5m for business interruption insurance claim.

Players sales and purchases

Despite COVID depressing the transfer market, the profit on player sales increased from £1m to £10m, mainly Alexander Sørloth to RB Leipzig, though still far below Man City £69m, Wolves £61m and Leicester £44m. Many players released for no money at end of season.

The club could have improved financials with more player sales, but they have opted to retain talent instead of cashing in. Their £10m profit from player trading over the last two years is one of the lowest in the top flight, though this has helped them stay in the Premier League.

Player purchases more than doubled from £12m to £28m, including Eberechi Eze from QPR, but this was the third year in a row that Palace were among the lowest spenders in the Premier League, ad £217m player purchases in last 5 years, but that included £104m back in 2017. Of the clubs in the Premier League in 2020/21 only Leeds, Burnley and Sheffield United spent less in this period. However, Palace did spend big last summer (£73m) under new manager Patrick Vieira.

Importance of stadium project

Average attendance fell slightly from 25,455 to 25,060 in 2019/20 (for games played with fans), the 4th lowest in the Premier League, which helps explain the decision to build a new main stand at Selhurst Park. Crowds have grown by nearly 8,000 (45%) since promotion.

The stadium project is expected to cost around £100m, though negotiations for land still need to be resolved. The club say it “will offer a step change in revenue potential with over 8,300 new seats, up to 3,000 new premium covers and major opportunities for non-matchday revenue.”

Despite COVID delays, Steve Parish has said that the stadium development “is a long-term plan for the future of the football club. To be competitive, we need as much revenue as possible and other Premier League clubs have £20m-£30m more revenue than Palac

Wages

The wage bill fell £6m (4%) from £133m to £127m, mainly because the accounting period only covered 11 months in 2020/21 (prior year 13 months). On a like-for-like 12 months basis, wages would have actually increased by £17m (13%) from £122m to £139m.

The reported £127m wage bill was 12th largest in the Premier League, probably higher than most would expect. If it were adjusted to £139m, based on 12-month period, the Eagles would be in 10th place. Either way, this was around £200m below Man City £355m and Chelsea £333m.

The wages to turnover ratio increased from 93% to 95%, which was 3rd highest in the Premier League, though this would rise to 103%, the worst in the top flight, based on 12-month wages. Like all other clubs, the ratio in 2020/21 is inflated by the loss of revenue due to COVID.

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The Political Economy of Football V2

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