Well-considered plan underpins Ipswich's rise

For the most part, their 17 years in the second tier Ipswich Town felt like they were running to stand still, as the financial disparity with the parachute clubs continued to widen.  In fact, things got worse before they got better, as the Tractor Boys were relegated in 2019 to League One, where they languished for four seasons before a dramatic change in their fortunes.

The transformation was effected under the new owners, who purchased the club in April 2021 for a reported £40m. As a result, Ipswich Town became majority owned by the appropriately named Gamechanger 20 Limited, though the ultimate owner is a US investment firm, ORG.

The new ownership group has certainly put its money where its mouth is to date, investing a lot into the squad and the club’s infrastructure. However, this looks like its part of a well thought-out plan, as shown by some astute recruitment. McKenna is the obvious jewel in the crown, but they also brought in former Bristol City chief executive, Mark Ashton, to lead operations off the pitch.

Their view was that Ipswich represented an excellent investment opportunity, as ORG chief executive Ed Schwartz explained, “Our view is that we've bought, at a lower value, an asset that has potential and history. Ipswich really was the perfect scenario for us.”

The club received additional funding in March this year, as Bright Path Sports Partners, a US private equity firm which specialises in professional sports franchises, invested £105m for a 40% minority stake. This was described as “an exciting step which will further secure the club’s future”.

Following this transaction, ORG’s stake has reduced to around 50%, while Bright Path now has 40% with the remaining 10% allocated to smaller investors, split between 5% for three businessmen (Brett Johnson, Berke Bakay and Mark Detmer) and 5% for Marcus Evans.

They paid the price of success in 2022/23, as the pre-tax loss widened from £12.6m to £18.2m, despite revenue rising by a very impressive 51% (£7.4m) from £14.4m to £21.8m.  All three revenue streams were higher, though the largest increase was in commercial, which shot up £4.2m (74%) from £5.7m to £9.9m. There was also good growth in match day, up £2.3m (40%) from £5.7m to £8.0m, and broadcasting, up £0.8m (27%) from £3.1m to £3.9m.

Ipswich made less than £11m from player sales during their 4-year stay in League One, averaging just £2.7m a season. In the last decade, they have only achieved double digit profits once, which was back in 2014/15 when they made £12m, mainly from the sales of Tyrone Mings to Bournemouth and Aaron Cresswell to West Ham.

The Swiss Ramble estimates  that Ipswich would have generated around £31m in the Championship, based on higher crowds, a 6% ticket price increase and assuming 20% growth in commercial income.  Ipswich’s revenue will be even higher next season in the top flight. Looking at the three clubs most recently promoted to the Premier League, their revenue increased by over £100m on average, more than tripling in the process.

Even if Ipswich were to finish last they would still earn more than £140m, which is mainly driven by the lucrative TV deal in the top flight, but also assumes a further increase in attendances, the announced 8% ticket price increase, plus a doubling in commercial revenue.

Wages have grown by nearly 50% (£6.4m) from £13.4m in the last two years, though part of this increase will have been down to a promotion bonus, while there has also been much investment support staff off the pitch.

Town spent £8.0m on player purchases in 2022/23, which might not sound like much, but was an enormous amount for League One with the next highest outlay being only £1.5m by Portsmouth.

The new owners have certainly put their hands in their pockets, as they have provided around £70m of funding since their arrival, including £29.5m in 2022/23 and an estimated £21m in 2023/24. The amount last season is based on the £15m mentioned in a note in the accounts (relating to events after year-end) plus £6m from a filing to Companies House.  That’s an average of £17.4m a year, which is ten times as much as Evans provided in the last six years of his tenure, though in fairness this was a lot lower than his initial contribution.

It does feel like this is part of a well-considered plan, as the owners have invested as much in the club’s infrastructure as the playing squad, while they clearly have one eye on FFP compliance. It’s also a good sign that funding has come in the form of equity injections.

Perhaps the most encouraging thing is that that they managed to hang on to Kieran McKenna, which Ashton described as “the best signing the club will make this summer”.