Brentford impress on and off the pitch

Brentford once again posted a pre-tax profit, though this fell from £30m to £9m, despite revenue rising £26m (18%) from £141m to a club record £167m. Profit from player sales also rose £1.0m from £4.6m to £5.6m.   However, this growth was offset by operating expenses shooting up £49m (42%) from £117m to £166m, while net interest swung from £0.2m receivable to £0.8m payable.

The main driver of Brentford’s £26m revenue increase was broadcasting, which rose £20m (18%) from £115m to £135m, though there was also good growth in commercial, up £4m (29%) from £16m to £20m, and match day, up £1m (8%) from £10m to £11m.

Despite the reduction, Brentford’s £9m pre-tax profit is the second best financial performance to date in the Premier League in 2022/23, only surpassed by Manchester City’s huge £80m surplus.  This is clearly another very impressive performance, as the other clubs that have so far published accounts for last season all lost money: Newcastle United £73m, Manchester United £33m and West Ham £18m.

While it is not unusual for a club to make a healthy profit in its first season after promotion to the Premier League, it often does worse in its second season, as it needs to further invest in the squad and other areas.

Cliff Crown had warned that this was likely when commenting on the previous year’s record profit, “in a deteriorating economic environment in which higher salary and overhead costs remain essential to our retaining Premier League status, this financial performance will be difficult to repeat.”

However, Brentford still generated a very healthy £31m operating profit (i.e. without the benefit of player sales) in their first two seasons in the top flight, which is one of the best performances after promotion in the last decade, only behind Burnley, Leicester City and Newcastle United.

Brentford have registered profits in both their seasons in the Premier League, in contrast to the many years before they were promoted, when they only once made money. That said, they did manage to keep the size of their losses relatively small, which is no mean feat in the highly competitive Championship.

Player trading

Next season is likely to be boosted by a big money deal for Ivan Toney with manager Thomas Frank saying that it was “relatively obvious” that the striker would leave in the summer, especially as there is only one year left on the big man’s contract.

Brentford’s player trading model has been so good that they were actually mid-table of Premier League clubs in terms of profits from player sales in the five years up to 2021/22, even though that only included one season in the top flight. Their £115m gain in this period was ahead of the likes of Manchester United, West Ham, Brighton and Newcastle United.

There is a colossal difference between Brentford’s financial position in the Premier League and the Championship, with their club record £167m revenue being almost 11 times as much as the £15m peak before promotion.  This incredible growth has very largely been driven by broadcasting income, though there have also been very good increases in commercial and match day.

Even after this steep increase, Brentford’s £167m revenue is still one of the lowest in the Premier League, miles below the Big Six with the gap to the sixth highest, Arsenal being nearly £300m. Furthermore, the top five clubs all earned at least three times as much as Brentford, led by Manchester City with £713m.

Another sign of Brentford’s progress is that they only just missed out on inclusion in the Deloitte Money League, which ranks clubs globally by revenue. Their £167m was only a little below the club in 30th place, namely Everton with £172m,

The club said that the TV money is “fundamental to our business model”, which is fair comment, given that it accounted for 81% of its total revenue in 2022/23. In fact, no Premier League club was more reliant on broadcasting income in the previous season, so Brentford will be looking to grow their other revenue streams.

This was the second full season in the club’s splendid new Gtech Community Stadium, which has helped revenue to more than triple from the pre-pandemic £3.5m peak.   Despite this growth, Brentford’s £11.3m match day revenue was again one of the lowest in the Premier League. To place this into perspective, it was less than a tenth of the likes of Manchester United and Tottenham, who generated £136m and £117m respectively.

Wages

Brentford’s wage bill shot up £31m (45%) from £66m to £99m, setting a new record, as the club invested in its squad to match its Premier League rivals, including contract extensions for players that have performed well in the higher division. Headcount was up from 190 to 243 with players and training staff rising from 106 to 129.

This means that wages have almost quadrupled in just four years. It is worth noting that the £41m reported wages in the last season in the Championship was inflated by £12m promotion related bonuses, so the underlying wages were only £29m.

Despite the increase, Brentford’s wage bill remains one of the lowest in the Premier League. To place this into perspective, Brentford’s £99m was less than a third of the top four clubs, and less than a quarter of Manchester City’s £423m.

Brentford’s 59% wages to turnover ratio was on the low side for the Premier League, only really bettered by clubs with far higher revenue, e.g. Tottenham 46%, Arsenal 51% and Manchester United 51%.  In contrast, some clubs had a much worse ratio, such as Chelsea 79% and Newcastle United 75% in 2022/23 and Everton 90% the previous season.

For many years Brentford spent relatively little on player recruitment, but they have now splashed out £176m in the last four seasons, split between £123m in the Premier League and £53m in the Championship.

Since these accounts closed, Brentford have again spent a reasonable amount, bringing in Nathan Collins from Wolves and Mark Flekken from Freiburg, plus two experienced players on loan: Neal Maupay from Everton and Sergio Reguilon from Tottenham.  Only last week they again broke their club record to bring in Brazilian striker Igor Thiago in the summer for a reported £30m, potentially as Toney’s replacement.

Even after this increase, Brentford’s £168m squad cost is still very low for the Premier League. For example, Manchester City have broken through the billion pound barrier and Chelsea will almost certainly join them (and probably overtake them) when their 2022/23 accounts are published.

Brentford’s £62m debt is one of the lowest in Premier League, miles below the likes of Tottenham £853m (new stadium) and Manchester United £613m (Glazers’ leveraged buy-out).   Brentford’s debt is very much of the “soft” variety, having been provided on an interest-free and unsecured basis by the owner. As a result, they only had to pay £47k interest last season (with a net receivable of £197k).

Brentford are paying their way in the Premier League, while owner Matthew Benham is always there to provide support if required.  Indeed, in the last 10 years Brentford’s major source of funds has been the £64m put in by Benham, which was boosted by £19m from the land sale, £9m from operating activities and £8m external loans.

This has largely been used to fund £60m spent on infrastructure investment (stadium and training ground) and £29m on player purchases (net).   As well as the new stadium, there has also been significant redevelopment of the Jersey Road training ground complex, recently renamed as the Robert Rowan Performance Centre.

Ownership and new investment

Matthew Benham’s commitment to Brentford now stands at £104m, comprising £66m loans and £38m share capital. That included £23m of loans specifically in relation to new stadium.  One sign of Brentford’s financial progress in the past few years is that Benham’s commitment has been largely unchanged since 2017. In other words, it has not been necessary for the owner to put his hand in his pocket since then.

Unlike many other clubs, Brentford have no problems with the Premier League’s Profitability and Sustainability rules, as they were well within the limit for the 3-year monitoring period, even before deducting allowable expenses for academy, community, infrastructure, promotion bonus and COVID impact.

Brentford have recently opened the door to potential new investors, but any such transaction is likely to be very much on the club’s terms, as they explained:   “Given the recent rise and growth of our club and the changing shareholder landscape within the Premier League, it’s no surprise that there has been interest in investment opportunities at Brentford FC.  While Matthew Benham’s commitment to the club remains as strong as it ever was, it is only natural, and perhaps even essential, for us to carefully explore what new investment could potentially mean for the future of Brentford FC.

Brentford’s time in the Premier League has obviously been very successful in terms of league position, but this has not compromised their ability to deliver off the pitch. Not only have they posted profits in each of their first two seasons in the top flight, but in doing so they have set club records across the board in all revenue streams.