Millwall punch above their weight

Millwall’s season was overshadowed by the tragic death of owner John Berylson following a car accident. The American had been an exemplary owner, beloved by the fans for his leadership, passion and generosity.

Millwall’s finances had been pretty good during his tenure, which we shall explore by looking at the most recent accounts from the 2022/23 season, when the club narrowly missed out on a place in the play-offs after finishing 8th.

Millwall’s pre-tax loss slightly reduced from £12.6m to £12.2m, as revenue rose £0.8m (4%) from £18.6m to a club record £19.4m and player sales improved from a £0.1m loss to £2.5m profit. However, other operating income dropped from by £1.1m from £1.3m to £0.2m, while operating expenses increased £1.7m (5%) from £31.6m to £33.3m.

The main driver of the revenue increase was broadcasting, which rose £1.1m (12%) from £9.1m to £10.2m, though match day was also up £0.4m (7%) from £5.8m to £6.2m. In contrast, commercial fell £0.7m (19%) from £3.7m to £3.0m.

Very few clubs make money in the Championship, so Millwall’s £12m loss was slap bang in the middle of the division, a lot better than many others, e.g. four clubs lost more than twice as much, namely Burnley £36m, Sheffield United £31m, Norwich City £27m and Birmingham City £25m.

The last time that Millwall made a profit was more than 20 years ago – and that was only £60k. In the last 10 years they have lost £92m, including £50m in the last four years alone.

Unlike many clubs, Millwall have rarely made big money from player sales, only generating a profit above £1m once in the last 10 years, namely £5.4m in 2019, thanks to George Saville’s move to Boro. It was much the same this season, as it looks like the only sale for money was Tyler Burey to Odense for around £500k.

Millwall £19.4m revenue was firmly in the bottom half of the Championship, less than a third of the clubs recently relegated from the Premier League, who were in receipt of parachute payments, e.g. Norwich City £76m, Watford £66m and Burnley £65m.

Millwall’s £6.2m match day revenue has reached the top ten in the Championship, albeit a fair way below Sunderland £10.7m, Norwich City £10.0m and Sheffield united £9.7m.   Millwall’s average attendance increased from 12,998 to 14,767 in 2022/23, which was the highest since moving to the new Den in the 1990s.  However, the growth did not stop there, as crowds have shot up to 16,540 this season, which is the highest since the early 50s. Kavanagh attributed this incredible rise to improvements in the match day experience.

Falling commercial income

Millwall’s commercial income fell £0.7m (19%) from £3.7m to £3.0m, mainly due to the decision to outsource retail operations (with an offsetting saving in the cost of sales).  This was exacerbated by Elite Sports, the club’s retail provider, going into administration in November 2022. A new partnership with Fanatics should be more beneficial going forward.

Following the decrease, Millwall’s £3.0m commercial revenue was the second lowest in the Championship, only above Blackpool. This was a long way short of the likes of Bristol City £21.1m, Norwich City £17.0m, Stoke City £16.9m and Sunderland £14.7m.  Little wonder that the club said that “growth of all commercial revenues is of critical importance of the club’s overarching strategic direction.”

Millwall’s £22.6m wages are still very much on the low side in the Championship, obviously much smaller than clubs benefiting from parachute payments, e.g. Norwich City £56m, Burnley £54m and Watford £49m. For more context, they were sandwiched between Wigan Athletic £23.2m and Cardiff City £22.3m.  In fact, there were only six clubs with lower wages last season, so it is clear that Millwall have been punching well above their weight.

Millwall’s challenge is highlighted by the fact that their £9.7m squad cost is still very much in the bottom half of the Championship. There is a huge gap to clubs recently relegated from the Premier League, such as Burnley £134m, Watford £103m and Norwich City £90m, which makes it very difficult to compete.

Millwall owners have provided £82m of funding in last 10 years (£72m share capital and £10m loans). This was almost entirely used to cover the club’s £73m operating losses, with very little spent on either (net) player purchases or infrastructure, around £6m apiece.

In fact, the £16.9m capital injection provided by the Berylson family in 2022/23 was the highest annual funding in the last decade. The owners have had to pump in £30m in the last two years alone, entirely in the form of share capital, which was actually more than the previous five years combined.

The auditors (and indeed the directors) mentioned a material uncertainty in the accounts, as the club’s ability to continue as a going concern “is dependent on additional funding from the shareholder that is not guaranteed”.  Such a comment is clearly not ideal, as it’s relatively rare for an auditor to sound such a note of caution. However, it’s worth noting that seven other clubs in the Championship currently include a similar “material uncertainty” comment, so fans should not be overly alarmed.

The New Den

Millwall’s best opportunity to generate more revenue is by developing the land adjoining the stadium. They have a regeneration plan to create affordable housing, student accommodation, retail and office space, a hotel and conference centre plus a stadium expansion.   This would increase the capacity at The Den from around 20,000 to 34,000 by adding an additional tier to each side of the existing ground.

The good news is that Lewisham council recently awarded the club a new 999-year lease on The Den and its surrounding area, bringing an end to a long period of uncertainty.

Millwall have punched well above their weight in the Championship, given their relatively low revenue and wages, though their business model has required the owner to cover the club’s losses each year, thus allowing them to remain competitive.

On the plus side, the new lease gives the club a chance to broaden its horizons, though the loss of Berylson, who has acted as Millwall’s benefactor for so long, allied with the recent departure of chief executive Steve Kavanagh after eight years at The Den, means the club is undergoing a lot of change.