Coventry have over achieved despite play off blow

London-based hedge fund SISU Capital Limited had saved Coventry City from administration in 2007, but came under fire from many supporters for their penny pinching approach.

However, the SISU era recently came to a close, after local businessman Doug King took ownership of the club in January 2023, initially through the acquisition of an 85% stake and then buying the remaining 15%.

Just to make Coventry’s renaissance even more inspirational, it has been achieved on a very low budget, as can be seen by a review of their 2021/22 accounts. These covered a season when the Sky Blues “achieved another creditable finishing position” of 12th in the Championship.

Coventry’s pre-tax loss widened from £4.7m to £7.0m, despite revenue rising £6.3m (53%) from £11.8m to £18.1m. This was offset by operating expenses increasing £6.4m (38%) from £16.8m to £23.2m. In addition, there were reductions in profit from player sales, down from £1.9m to £0.5m.

Although losing money is clearly not ideal, Coventry’s £7.0m loss was actually one of the better financial performances in the Championship, so they cannot be accused of buying their way to success.

Coventry have only reported a profit once in the last 10 years – and that was just £13k in 2019. That said, they have managed to keep the losses low with their conservative model, averaging just over £3m a season since 2015. On the other hand, their pre-tax loss has now increased three years in a row.

Coventry’s higher revenue was largely due to the return of fans to the stadium following the removal of COVID restrictions, which helped drive increases in match day, up from just £273k to £4.3m, and commercial, which nearly doubled from £2.7m to £5.0m. However, broadcasting slightly reduced by £0.1m to £8.8m. Broadcasting is the most important revenue stream, contributing 49% of total revenue, followed by commercial 28% and match day 24%.

Following last season’s increase, Coventry’s revenue has nearly tripled from the pre-pandemic £6.3m in 2018/19 to £18.1m, obviously boosted by the promotion from League One, where revenue was as low as £3.8m in 2013/14. This was also much higher than the £10.8m generated the last time the club was in the Championship in 2011/12, though was not quite high as the £20.5m the last time Coventry played in the Premier League in 2000/01. Even after this steep growth, Coventry’s £18.1m revenue was firmly in the bottom half of the Championship, which highlights how well they did to reach the play-off final.

Coventry’s average attendance bounced back to an impressive 19,541 last season, which was nearly three times as much as 6,677 two years ago, largely due to the club returning to Coventry instead of having to play games at St Andrews in Birmingham. In fact, Coventry’s 19,541 average attendance was the 7th highest in the Championship.

Coventry’s wage bill rose £2.5m (19%) from £13.2m to £15.7m, which means that wages have more than doubled from £6.5m two years ago in League One. This was only slightly lower than the club record of £16.7m in the Premier League in 2000/01. Even after this growth, Coventry’s £15.7m wage bill was still very much on the low side in the Championship. In fact, there were only three clubs with lower wages, namely Barnsley, Hull City and Blackpool. Coventry’s 87% was actually one of the best wages to turnover ratios in the Championship.

Coventry’s gross transfer spend has increased in the last two years after promotion from League One, but still only averaged just over £3m. That said, they actually recorded net spend for the first time since 2011.

Although Coventry City fans will be understandably disappointed after the result going against them at Wembley, the reality is that they have massively over-achieved, given their financial disadvantages compared to most other clubs.

The good news is that Coventry have recovered from the dark days in League Two and are now competing strongly in the Championship. Even more encouragingly, they now have an owner in Doug King who seems to have the best interests of the club at heart.

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The Political Economy of Football V2

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