Business as usual after Covid

The Swiss Ramble continues his analysis of the impact of Covid on the top six and also looks at three other Premier League clubs.

Arsenal posted a huge £181m pre-tax loss, though this was inflated by interest payable including a once-off £32m refinancing fee, as around £200m external bonds were redeemed and replaced by a loan from Stan Kroenke. Net cash outflow of £148m was funded by reduction in cash balance.

Chelsea’s enormous £294m operating loss was partially offset by £171m profit from player sales, but they still made £120m pre-tax loss. However, net cash outflow was restricted to £20m, mainly due to relatively low net player purchases plus £50m share capital from Roman Abramovich.

Liverpool’s £114m operating loss was largely offset by £66m profit from player sales, so their pre-tax loss was “only” £51m. After spending £145m on net player purchases and £41m on infrastructure (training ground), the cash loss was mainly funded by £77m external loans.

Manchester City’s significant £218m operating loss was partially offset by £108m profit from player sales, but they still made £120m pre-tax loss. Even after £23m capital injection from the owners, the net cash outflow was still £85m. It was funded by a reduction in cash balance from £130m to £45m.

Manchester United’s £45m pre-tax loss was smallest of Big Six, mainly due to low operating loss of just £57m. Highest cash loss of £203m, mainly due to £285m net player purchases, but still paid £34m dividends and £21m share buyback. Funded by big fall in cash balance plus £56m external loans.

Tottenham Hotspur’s £148m pre-tax loss included £80m interest payable on loans for building their new stadium. This project also led to £110m capital expenditure (albeit much lower than the £474m outlay in preceding 2 years). Funded by £191m external loans, taking gross debt to £854m.

Although the Big Six appear to have coped relatively comfortably with the effects of the pandemic, other clubs have been less fortunate and have required significant additional financing, though some of this is linked to the usual ambitions (and not just driven by COVID).

That said, it does look like much of the money provided has simply been used for “normal” activities, i.e. to finance expenditure on players, either in the form of transfers or wages. In other words, business as usual for most clubs.

Everton’s £261m pre-tax loss in the past 2 years was the highest in the top flight, as their £347m wages accounted for 92% of revenue. In cash terms their loss was £200m, which they funded with £150m from owners (£100m share capital and £50m loans) plus £93m bank loans.

Leicester City’s £188m operating loss was partially offset by £107m profit from player sales (mainly Harry Maguire to Manchester United). Their £134m cash loss was largely down to £110m capital expenditure (new training ground), which was funded by £162m loans from the owners, King Power.

West Ham United’s £121m operating loss was partially offset by £43m profit from player sales, but £14m interest payable meant a £92m pre-tax loss. The £53m cash loss was covered by £30m share capital from a rights issue (mainly Sullivan and Gold) plus £31m external loans.