Rovers rely on owner funding

Blackburn Rovers’ pre-tax loss increased by £4.6m from £6.6m to £11.2m in 2021/22, despite revenue rising £2.1m (15%) from £14.5m to £16.6m, mainly because prior year included £13m profit from the sale of the training ground.

Rovers’ £11.2m loss was not great, but it was only middling for the Championship. Indeed, some clubs posted much higher losses, especially the three promoted to the Premier League in 2021/22 (Fulham £57.0m, Bournemouth £55.5m and Nottingham Forest £46.2m), partly because they included hefty bonus payments.

Rovers’ loss would have been much worse without £10.1m profit on player sales, up from only £0.6m the previous season. This was largely due to the big money sale of Adam Armstrong to Southampton, though many senior players also left for free.  This was one of the best results in the Championship, though the two clubs that made the most money from player trading were WBA and Fulham.

Rovers have only once made a profit under the Venky’s ownership, which was back in 2011/12 when the club was last in the Premier League (boosted by £23m player sales). In the ten years since then they have managed to lose £176m, despite benefiting from four years of parachute payments.  In fairness, losses have reduced since the sizeable deficits in the first two seasons in the Championship: £37m in 2012/13 and £42m in 2013/14. The only three clubs that lost more money in this period were Fulham, QPR and Bournemouth.

Rovers could have generated more money if they had sold Chilean international Ben Brereton Diaz, but instead they opted to extend his contract by a year. They effectively gambled that his goals might help secure promotion, but the risk was that he could leave for free at the end of the season.

Rovers £16.6m revenue was almost exactly the same as the £16.7m they earned before the pandemic in 2018/19, though the mix was a bit different. Broadcasting increased by £1.0m (13%), while there were reductions in both commercial, down £0.6m (11%), and match day, down £0.4m (10%).  Revenue has fallen by more than two-thirds (£37m) since relegation from the Premier League, where they earned £54m in their last season.

Rovers’ challenge is highlighted by the fact that their £16.6m revenue is firmly in the bottom half of the Championship, miles below clubs recently relegated from the Premier League, who are in receipt of parachute payments, e.g. Fulham £72m, WBA £65m and Bournemouth £53m.

Rovers’ 13,501 average attendance was firmly in the bottom half of the Championship, over 12,000 less than Sheffield United 27,611 and Nottingham Forest 25,778.

Rovers’ wage bill dropped £1.3m (5%) from £25.7m to £24.4m after the departure of a few senior player last summer. Wages have been more or less the same level since promotion from League One four years ago, but are now £12m lower than their first season following relegation from the Premier League in 2013 (when they had parachute payments). Rovers’ £24m wage bill was again in the bottom half of the Championship, so they have been outperforming their budget.  Rovers’ wages to turnover ratio decreased from 177% to 146%, so has improved from 189% two years ago. However, this is still higher than the pre-pandemic 134% in 2018/19.

Rovers’ transfer spend has significantly reduced following relegation from the top flight, exacerbated by an FFP transfer embargo. In fact, their gross outlay in the last five years was only £18m, which is around the same as the £16m they spent in 2012/13 alone. Furthermore, expenditure has now fallen three years in a row.

Rovers debt rose £11m from £152m to £163m, comprising £144m owed to Venky’s, a £12m bank overdraft and £6m loan from the EFL. The owner’s debt increased by £14m, while the external loans were reduced by £3m.  Rovers’ £163m debt was actually the second highest in the Championship, only below Bournemouth £184m. In fact, they actually had the 8th highest debt in the whole of England at the end of the 2021/22 season.   The amount owed would have been even higher if the owners had not converted £30m into equity the previous season.

The £177m that Venky’s have put into the club means that they have basically signed a cheque for £15m a year ever since their arrival at Ewood Park. After reducing their funding in 2016 and 2017, which arguably led to the relegation to League One, they have returned to former levels in the last five years.

Rovers’ low revenue means that they will always face a tough challenge in the Championship, competing against clubs with much higher spending power, especially those benefiting from parachute payments.   Their losses are pretty much par for the course in England’s second tier, so they remain dependent on financial support from Venky’s. The owners have made more than a few mistakes over the years, but their funding has been invaluable.