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Sound finances at Huddersfield

The authoritative Swiss Ramble analyses the 2020/21 accounts of Huddersfield Town.

Since these accounts, it has been reported that former owner Dean Hoyle has almost completed a takeover of the club by acquiring the 75% controlling stake he sold to Phil Hodgkinson in 2019. As Hoyle had kept 25%, he would have full ownership if the deal is finalised.    Hodgkinson’s main company had been placed into administration in November 2021, so there was concern that this would cause problems for the club.

The club swung from a £8.5m pre-tax loss to £2.6m profit, despite revenue falling £8m (16%) from £53m to £45m, exacerbated by decreases in profit on player sales (from £18m to £10m) and player loans (from £5.7m to £0.6m). This was thanks to a huge £33m (38%) cut in expenses.

Huddersfield were one of only four clubs to post a pre-tax profit in the 2020/21 Championship, though their £2.6m was outpaced by two clubs relegated from the Premier League the prior season: Norwich  £21m and Bournemouth £17m. No fewer than five clubs had losses above £20m.

The operating loss (excluding player sales and interest) improved from £23m to £5m, one of the best results in the Championship, where almost every club has substantial operating losses, i.e. nearly half of them are above £30m.   The club generated a £23m profit in Premier League in 2018.

The club have made money in three of the last four years, boosted by two seasons in the Premier League (including a hefty £30m profit in 2018). Before that, they generally posted small losses with the £20m reported in 2017 adversely impacted by estimated £12m promotion bonuses.

Revenue

Main reason for the £8m revenue decrease was COVID, which drove reductions in match day, down £2.4m (58%) to £1.7m, and commercial, down £1.6m (41%) to £2.3m. Broadcasting fell £4.3m (10%) to £40.4m, as lower parachute payment were partly offset by deferred 2019/20 revenue.

Since relegation from the Premier League, revenue has dropped by £75m (63%) from £119m in 2019 to £44m, very largely due to less TV money in the Championship (£64m decrease), though commercial and match day are also down £7m and £3m respectively.  Even after the decrease, the £44m revenue was still 5th highest in the 2020/21 Championship, though a fair way below the clubs receiving the largest parachute payments,

The revenue decrease has been cushioned by Premier League parachute payments (£42m in 2020 and £34m in 2021), though this will have fallen to £15m in 2022. That was the final year of these payments, so next season Town will have to make do without a parachute.

Commercial income fell £1.6m (41%) to £2.3m, mainly due to COVID. This is the club’s lowest since 2011 and significantly down from £10.6m in top flight.    This is one of the smallest in the Championship, only ahead of Luton Town, Barnsley and (probably) Wycombe.

Player sales and transfers

The £28m profit the club have made from player sales in the last two years is as much as previous seven years combined. Since these accounts, many players have left, but very largely on free transfers (to get them off the wage bill), with only Juninho Bacuna to Rangers attracting a fee.

The club said they “continued to invest heavily in the squad”, but they actually only spent £2m on players, mainly Pipa, Duane Holmes and Sorba Thomas, which was one of the lowest in the Championship.   This was  less than 10% of Brentford.

The club have spent £128m on players in the last five years, compared to just £11m in preceding five-year period. Unsurprisingly, expenditure was much higher in the Premier League. Down three years in a row since then. Very little was spent this season with many arrivals being on free transfers.

Average attendance (for games played with fans) was 21,748 in 2019/20, so has fallen over 2,000 since the 2018 Premier League peak of 24,032. However, this was still 9th highest in the Championship and also more than the 2017 promotion season.

Wages

The wage bill fell £5.6m (19%) from £30m to £25m, as the club “continued to balance reducing the football wages cost while maintaining a competitive squad.” This means that wages have been cut by £39m (61%) since relegation from the Premier League.  Following the decrease, the £25m wage bill was firmly in the bottom half of the Championship, the lowest of all clubs with parachute payments.

Thanks to a combination of parachute payment and wage reductions, Huddersfield had by far the lowest wages to turnover ratio in the Championship with 55%, only slightly higher than 53% in the Premier League. Vast majority of clubs in this division have ratios well over 100%.

Gross debt decreased £14m from £58m to £44m, so down £31m in 2 years. The amount owed to former owner Dean Hoyle was £34m (discounted at 5.5% in accounts to £30m) with the former owner rescheduling repayment to help the club. The remaining balance is a bank loan.

 

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