Sound finances at Bayern

The authoritative Swiss Ramble reviews the finances of Bayern Munich. Despite the significant impact of COVID, the club “achieved sound financial results”, once again posting a pre-tax profit, though down from €17m to €5m (€2m after tax). Revenue (club definition) fell €54m (8%) from €698m to €644m, largely offset by €42m cut in expenses.

Bayern were one of only three clubs in the Bundesliga to post a profit in 2020/21, due to “sensible management and not spending more than we earn”, though their €5m was just below RB Leipzig’s €8m. Some clubs lost a huge amount of money, especially Hertha €78m. In fact, the Bavarians have now been profitable for an amazing 29 years in a row, generating €241m pre-tax profit in the 4 years before COVID.

For the second year in a row Bayern retained 3rd place in the Deloitte Money League in 2021, with their €611m revenue only surpassed by Manchester City €645m and Real Madrid €641m.

At €5m Bayern were one of a small number of European clubs that were profitable in 2020/21, along with Man City €6m and Real Madrid €2m. In stark contrast, other clubs had some staggering losses, including Juventus €208m, PSG €225m, Inter €239m and especially Barcelona €555m.

The income from player sales almost halved, falling from €64m to €33m, mainly Thiago’s move to Liverpool. This was partly due to the transfer market being depressed by COVID, though some clubs still made good money from player trading, e.g. Real Madrid €106m and Man City €77m.

Like many clubs Bayern have become increasingly reliant on player trading. Although income fell to €33m in 2021, they earned an impressive €154m in the previous 2 years. Few big money sales in 2021/22 (Alaba left on a free), but this season was better.

The revenue gap between Bayern and Borussia Dortmund has narrowed in recent years, but was still as much as €274m in 2021. Put another way, Bayern’s €611m revenue was nearly 80% higher than Dortmund’s €338m, which is a huge difference between first and second ranked clubs in a country.

Commercial income fell €15m (4%) from €360m to €345m, though the small decrease was a pretty good performance during the pandemic. In fact, this was the highest commercial revenue in Europe, ahead of PSG €337m, Real Madrid €322m.

Broadcasting revenue rose €51m (25%) to €255m, a club record for this revenue stream, mainly from UEFA TV money, up €54m to €136m, due to income deferred for games played after 2019/20 accounting close. Still far below Man City €336m, due to low Bundesliga TV money.

The wage bill rose €33m (10%) from €340m to €373m, which means that wages have risen by €108m (41%) since 2017. One reason for the increase in 2021 was the players taking a voluntary salary cut in the previous season. These were by far the highest wages in Germany.

Baern enjoy a major competitive advantage in Germany, as their €373m wage bill is a hefty €158m (73%) more than Borussia Dortmund €216m, the highest ever gap. This difference is much higher than a similar comparison in England, Spain and Italy, only smaller than PSG’s lead in France.

wages to turnover ratio increased (worsened) from 54% to 61%, obviously impacted by COVID revenue losses, though this was still one of the best figures in Europe, only behind Tottenham Hostpur 57% and Real Madrid 58%, but miles better than the likes of PSG 88%.

Threat of financial calamity removed from Baggies

West Bromwich Albion had effectively been in decline ever since the club was sold to a Chinese consortium in August 2016, paying a figure north of £200m to buy former owner Jeremy Peace’s stake. Controlling shareholder Guochuan Lai’s ownership was fairly disastrous for the club, but his unloved tenure finally came to an end after Bilkul Football WBA, a company ultimately owned by Florida-based entrepreneur Shilen Patel and his father Dr Kiran Patel, acquired an 87.8% shareholding in West Bromwich Albion Group Limited, the parent company of West Bromwich Albion Football Club. This change in ownership was urgently required, due to the numerous financial problems facing West Brom, including growing high-interest debt and serious cash flow concerns, following years of no investment from the former owner. Indeed, West Brom’s auditors had already rung the alarm bell in the 2021/22 accounts when they cast doubt on the club’s ability to continue as a going concern without making player s...

Spurs to sell minority stake

Tottenham Hotspur is in talks to sell a minority stake in a deal that could value it at up to £3.75 billion and pave the way for Joe Lewis and his family to sever ties with the Premier League football club. Tottenham chairman Daniel Levy is seeking an investment that values the club at between £3.5 billion and £3.75 billion, including debt. While the terms of any deal have not been finalised, City sources expect Spurs to sell about 10 per cent. The club is being advised by bankers from Rothschild on the sale. Tottenham wants to raise fresh capital for new player signings and to help fund the development of an academy for its women’s team, as well as a 30-storey hotel next to its north London stadium. The financier Amanda Staveley, who brokered the deal for Saudi Arabia’s Public Investment Fund to take over Newcastle United, is understood to be among the parties to have expressed an interest in Tottenham. Staveley’s fund, PCP Capital Partners, has raised about £500 million to ...

Millwall punch above their weight

Millwall’s season was overshadowed by the tragic death of owner John Berylson following a car accident. The American had been an exemplary owner, beloved by the fans for his leadership, passion and generosity. Millwall’s finances had been pretty good during his tenure, which we shall explore by looking at the most recent accounts from the 2022/23 season, when the club narrowly missed out on a place in the play-offs after finishing 8th. Millwall’s pre-tax loss slightly reduced from £12.6m to £12.2m, as revenue rose £0.8m (4%) from £18.6m to a club record £19.4m and player sales improved from a £0.1m loss to £2.5m profit. However, other operating income dropped from by £1.1m from £1.3m to £0.2m, while operating expenses increased £1.7m (5%) from £31.6m to £33.3m. The main driver of the revenue increase was broadcasting, which rose £1.1m (12%) from £9.1m to £10.2m, though match day was also up £0.4m (7%) from £5.8m to £6.2m. In contrast, commercial fell £0.7m (19%) from £3.7m to £3....

The Political Economy of Football V2

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