Ajax's model under strain

 ome would argue that the balance at Ajax has tipped too far towards making money, which has had an inevitable impact on performances on the pitch.

Despite the poor sporting results, Ajax still achieved an impressive €55m pre-tax profit in 2022/23 (€39m after tax), compared to a €32m loss in the previous season.  The €87m improvement was largely due to significant profit from player sales, which shot up €75m from €38m to €113m. In addition, revenue increased by €7m (4%) from €189m to €196m, while operating expenses fell €6m (3%) to €248m.

Ajax’s revenue was hit by lower TV income from European competitions, which led to an €18m (25%) reduction in broadcasting from €74m to €56m, but this was offset by increases in the other two revenue streams.

Match day rose €17m (49%) from €34 to €51m, as some matches were played without crowds the previous season because of COVID restrictions, while commercial was up €9m (11%) from €81m to £90m.

Ajax’s 2022/23 figures greatly benefited from a hefty €113m profit from player sales, which was three times as much as the prior year’s €38m, mainly thanks to the big money transfers of Antony and Lisandro Martinez to Manchester United and Sebastien Haller to Borussia Dortmund.

Ajax normally run a sustainable business model, but they had posted losses amounting to €43m in the two previous seasons, though this was obviously heavily influenced by the pandemic.

However, they bounced back big time in 2022/23 with the €55m profit, which means that they have made money in 10 of the last 13 years, amounting to more than a quarter of a billion Euros in this period.

Ajax are well known for their strategy of developing and selling players, as highlighted by the €320m profit made in the 5 years up to 2022, which was nearly €200m more than PSV’s €145m. No other Dutch club made more than €100m in this period.  Mislintat possibly went too far this summer with player sales, especially as the experienced Dusan Tadic and Davy Klaassen also left on free transfers.

The importance of Europe

It is estimated that Ajax earned €46m from Europe in 2022/23, even though they were eliminated at the Champions League group stage. That was worth €45m, which was boosted by another €1m after dropping down to the Europa League, when they immediately lost in the knockout round..   A large slice of Ajax’s European money comes from the UEFA coefficient payment (based on performances over 10 years), where they were ranked 14th in the Champions League, thus receiving a very useful €22m. This distribution methodology basically rewards the club’s good record in Europe.

Ajax have earned a hefty €284m from European competition in the last 5 years, which is considerably more than other Dutch clubs, with the next highest being PSV €74m and Feyenoord €41m. To further put this into context, European TV earnings are around five times as much as Ajax earned from the domestic broadcasting deal in this period.

Therefore, the importance of Champions League qualification to the Ajax business model cannot be over-stated.  By only finishing third in last season’s Eredivisie, they will have to make do with the much lower Europa League money this season, hence the pressure to reduce their budget this summer.

Ajax’s €90m commercial revenue is comfortably the highest in the Eredivisie, well ahead of Feyenoord €51m and PSV €47m, though it is still a lot less than the elite European clubs, five of whom generate more than €300m a year.

Ajax’s wage bill decreased €10m (9%) from the club record €109m to €99m, mainly due to lower bonuses for worse sporting results.  The club had clearly shifted its approach five years ago, when wages almost doubled from the €50m level, though this summer’s clear-out has moved some big earners off the payroll.

Big fish in a small pond

However, for Ajax it is a case of being “a big fish in a small pond”, as even their all-time high €109m wage bill in 2021/22 was significantly lower than top clubs in the major leagues, e.g. less than a sixth of PSG €729m and a quarter of Real Madrid’s €478m. This makes it fairly inevitable that their young stars will move abroad at some stage.

Ajax’s €105m gross financial debt is the highest in the Eredivisie, followed by PSV €45m, Twente €19m and Utrecht €10m. However, Ajax are a long way below debt levels at other European clubs, e.g. Real Madrid and Tottenham both have more than €1 billion after their substantial stadium investment.

However, that virtuous circle has now been broken, so the club has had to tighten its belt. The challenge now is to get back to the top with what looks like a much weaker squad, but they have to achieve this difficult task with an inexperienced coach, exacerbated by much turmoil in the executive board.