Huge loss at Bournemouth paid off

Bournemouth has changed hands after 11 years under the ownership of Maxim Demin. In December 2022 the Russian sold his 100% stake in the club to Black Knight Football Club, where Bill Foley is the Managing General Partner.

Demin had provided Bournemouth with £189m of funding since his arrival, including £36m in 2021/22. The owner had averaged £12m a season in his first six years up to 2017, which very nearly doubled to £23m in the following five years. Split between £168m loans and £21m share capital.  In the 10 years up to 2022 Demin’s £182m funding was one of the highest for clubs competing in the Championship last season, though was much lower than Fulham’s incredible £722m and QPR’s £268m.

Foley has experience in running a sports club, as he also owns the Vegas Golden Knights, a successful NHL franchise. Various figures have been reported for the purchase price, but the most commonly quoted is £120m. Importantly, Foley said that there were no borrowings involved in the deal.

Bournemouth swung from a £17m pre-tax profit to a £56m loss in 2021/22, mainly because profit from player sales dropped £49m from £56m to £7m, though revenue also fell £19m (26%) from £72m to £53m. In addition, other operating income decreased £4m to £1m, while operating expenses were very slightly up. 

The club said that this was because of the focus on achieving promotion back to the Premier League, i.e. the price of success, though they added that they still ensured that the business was on a stable financial footing. Bournemouth’s good performance on the pitch came at a cost, as their £56m loss was the second worst in the Championship, only just surpassed by Fulham £57m, but ahead of Nottingham Forest £46m.

The main driver of Bournemouth’s £19m revenue decrease was broadcasting, which fell £25m (37%) from £68m to £43m, due to lower parachute payments in the second year in the Championship.

Bournemouth have now posted losses in four of the last five years, though two of those were adversely impacted by COVID, including the club record loss of £60m in 2019/20.  Since Maxim Demin bought the club in November 2011, they have made £192m of losses, averaging £17.5m a year, and only reporting a profit three times.  In fact, Bournemouth’s £189m loss over the last 10 years was the third worst of clubs competing in the Championship in 2021/22, only behind Fulham £361m and QPR £231m.

Bournemouth’s revenue has fallen five years in a row from the club’s peak of £136m in 2016/17 to £53m, decreasing by £83m (61%). There was actually very little change in gate receipts and commercial, but there was a huge £82m reduction in broadcasting from £125m to £53m. Nevertheless, broadcasting was still easily the most important revenue stream, contributing 80% of total revenue, with gate receipts and commercial accounting for 10% apiece.

The new owner has not ruled out expanding the current stadium, not least because Bournemouth could purchase the land for a favourable price, as there are only five years remaining on the lease and the site can only be used for sport.  However, the preferred option seems to be building a new stadium with about 20,000 seats, which Foley believes could be done for £80-90m, using the land where the club’s training facilities are currently located.

Bournemouth spent £22m on player purchases, compared to only £7m the previous year, including Kieffer Moore from Cardiff City, Ryan Christie from Celtic, Siriki Dembélé from Peterborough United, Jamal Lowe from Swansea City and James Hill from Fleetwood Town.  This was the second highest gross spend in the Championship in 2021/22, only behind Fulham £24m, but around twice as much as Nottingham Forest £12m.

Bournemouth reported a huge loss in 2021/22, but this was partly due to the determination to get back to the Premier League as soon as possible, so was arguably more than justified.  On the pitch, this season has been even more impressive, as Gary O’Neil has achieved the new ownership’s initial objective of avoiding relegation. Foley is clearly ambitious to reach the next level, though many will be sceptical about whether this is realistic for a club with a relatively small fan base.