Villa spend to progress

Aston Villa swung from a small pre-tax profit of £0.4m to a massive £120m loss in 2022/23, despite revenue rising £40m (22%) from £178m to a new club record £218m, as profit from player sales fell £75m from £97m to £22m. In addition, operating expenses shot up £82m (30%) to £357m, while interest payable quadrupled from £0.8m to £3.3m.

Unsurprisingly, Villa’s £120m pre-tax loss is the worst financial result so far this season in the Premier League, though some other clubs have also posted large losses in 2022/23, such as Southampton £87m, Newcastle United £73m, Wolves £67m and Arsenal £52m.

In the last decade Villa have lost around half a billion pounds, including an incredible £326m in the five years since the current owners bought the club.   Looking at the 10 years up to 2022, Villa lost more money than any other club in the Premier League, as their £420m deficit was even higher than Everton and Chelsea – and that was before last season’s mega £120m loss.

In fact, Villa’s loss last season was the worst in Europe, according to UEFA’s Club Finance and Investment Landscape report. This was even ahead of clubs that are well known for losing large amounts of money, such as Juventus, PSG, Roma and Inter. However, Barcelona would have reported a worse result than Villa without the benefit of their famous economic levers.

All three of the main revenue streams were higher, led by broadcasting, which rose £30m (24%) from £123m to £153m. Commercial increased by £11m (36%) from £30m to £41m, while gate receipts were up £3m (17%) from £16m to £19m.

Villa’s £41m commercial income is still only 12th highest in England, miles below the Big Six. As an example, the two Manchester clubs both generate more than £300m.  That gap is huge, though perhaps understandable, but Villa were also behind the likes of Everton £50m, Leeds United £49m, West Ham £48m, Newcastle United £47m and Leicester City £42m.

Following this significant growth, Villa’s £218m revenue is now ninth highest in the Premier League, but obviously a long way below the Big Six, all of whom earn at least twice as much. Indeed, Manchester City’s £713m revenue is nearly half a billion more than Villa.

Player sales

One of the main reasons for the deterioration in Villa’s bottom line was a substantial drop in profit on player sales from £97m to £22m, as the previous season was boosted by the club record sale of Jack Grealish to Manchester City.

The dramatic impact of Grealish’s sale is illustrated by the £97m profit from player trading in 2021/22 being more than the profit from this activity for the previous nine years combined. It was actually around three times as much as Villa’s previous record (£35m in 2015/16).  However, last season’s player trading was more in line with the preceding years, dropping back to £22m profit.

This season will be a bit better with the club noting net income of £40m since the 2022/23 accounts closed. Much of this is due to what looks like a change in strategy, namely selling Academy products, which represent pure profit.  In the last 18 months, this has generated nearly £60m, mainly from the sales of Cameron Archer to Sheffield United, Chukwuemeka to Chelsea and Aaron Ramsey to Burnley.

Plans to increase capacity at Villa Park to over 50,000 were approved by Birmingham City Council in December 2022, including building a new North Stand and expanding hospitality, retail and entertainment facilities.  However, these have been put on hold, due to concerns about rising prices and transport links.

Wages

Villa’s wage bill shot up £57m (42%) from £137m to £194m, following significant investment into the squad, which means that wages have more than doubled in just four years to a new club high.  There were also many more employees, as full-time headcount increased by 56 from 505 to 561. This included 23 more players, football management and coaches, while commercial, merchandising and operations was up 27.

Following this growth, Villa’s £194m wage bill is now the 7th highest in the Premier League, only behind the Big Six, but more than Newcastle United’s £187m, which might come as a surprise to some fans.  In fairness, it was still a lot lower than Manchester City £423m and Liverpool £373m, who both paid around twice as much, but the gap to Arsenal has narrowed to £41m.

Villa’s 89% wages to turnover ratio is currently the highest (worst) in the Premier League, around the same level as Everton’s 90% in 2021/22.

Villa’s other expenses were also much higher, rising £24m (59%) from £42m to £66m. Like other clubs, they had to cope with the inflationary impact on a number of services, especially utilities, but this growth still seems pretty steep.   Unfortunately, clubs rarely detail what is included in this category, though Villa did note that youth development expenditure increased from £14.0m to £14.4m, while women’s football expenses rose from £3.0m to £4.4m.

Villa spent £64m on player purchases in 2022/23, which the club said was in line with the “long-term strategic plan to enhance the playing squad in a sustainable fashion”.  This is the lowest gross spend in the Premier League to date, much less than the likes of Arsenal £251m, Manchester United £247m, Manchester City £221m and Wolves £212m with big clubs like Chelsea and Tottenham yet to publish their accounts.

This represented a big slowdown compared to Villa’s recent transfer spending, which had really ramped up since promotion (and the arrival of Sawiris and Edens), adding up to nearly half a billion in the previous three seasons, averaging £154m a year.

Villa’s FFP loss over the 3-year monitoring period was £95m, so £10m below the maximum allowed loss of £105m.  Nevertheless, it is clear that FFP restrictions are at the forefront of Villa’s thinking.

While Villa’s £120m loss last season is obviously not great, it is symptomatic of the investment required for a club that aspires to move to the next level in the Premier League.