Preston need to do better, but few signs so far

In the nine seasons since Preston were promoted to the Championship they have finished between 7th and 14th, so have become the very definition of a mid-table club.    On the one hand, this has to be considered a decent achievement, as they have to compete with far fewer resources than most of their rivals; on the other hand, a recent open letter from a couple of fan groups described Preston as “the most boring club in the EFL”.

They added, “While we appreciate the Hemmings family’s financial support, the club’s leadership raises serious questions.”

Preston’s pre-tax loss was virtually unchanged at £14.3m, even though revenue rose £1.3m (9%) from £15.6m to £16.9m, a new club high. Profit from player sales halved from £0.8m to just £0.4m, while operating expenses increased by £0.9m (3%) to £31.6m.

Interestingly, the club focused on the improvement in the loss after tax, which reduced by £2.3m (19%) from £12.2m to £9.9m. This was because the tax credit more than doubled from £2.2m to £4.5m.

There was growth across the board, as all three revenue streams set new club records. The largest increase was in broadcasting, which rose £0.8m (9%) from £8.7m to £9.5m, while match day was up £0.4m (12%) from £3.9m to £4.3m. In addition, commercial was slightly higher, up £0.1m (2%) to £3.1m.

Only two Championship club have to date published accounts for 2023/24, but we can see that Preston’s £14.3m pre-tax loss is pretty normal for this division, looking at other clubs’ results from the previous season. In fact, continuing Preston’s theme of recent years, the loss can be described as mid-table.

Most clubs in the Championship make very little from player trading, but Preston have one of the smallest gains in the division. The highest profits in 2022/23 were made by Watford £59m, Middlesbrough £22m, Stoke City £15m and Hull City £15m, while last season Norwich generated £13m.

Preston have only managed to generate a pre-tax profit once in the last decade - and that was just £2.6m in 2017/18. As a result, they have now lost money six years in a row, adding up to £90m, which works out to an average of £15m a season.   This can be regarded as the cost of a club with Preston’s limited resources trying to be reasonably competitive in England’s second tier.

Preston’s £16.9m revenue remains one of the lowest in the Championship, so even though the fans are not happy with their mid-table finishes, they have clearly outperformed their budget.

Preston’s wage bill rose £0.4m (2%) from £21.6m to £22.0m, though this was still lower than the £24.6m peak two years ago. That said, wages have more than doubled since they paid £10.6m in the first season after promotion from League One in 2015/16.   However, Preston’s £22.0m wage bill is one of the smallest in the Championship, significantly lower than the amounts paid by clubs benefiting from parachute payments, e.g. Burnley £54m in 2022/23 and Norwich City £52m last season.

Director Peter Ridsdale said, “To compete, PNE has to be a lean and focused operation. We have to get more bang for our buck.” In fairness, given the size of the budget, it is clear that Preston have been punching well above their weight.

The club warned that the recent government budget will significantly increase national insurance and minimum wage costs, which will cost an additional £0.5m a year from next April.

Preston’s gross financial debt decreased by £39.3m from £88.0m to £48.7m, almost entirely owed to the Hemmings family via their company Grovemoor Ltd.   The net reduction was the result of the owners providing another £10.8m loan last season, but also converting £50m of previous debt into equity, which “greatly strengthens the club’s balance sheet”.

Preston were acquired by local businessman Trevor Hemmings in 2010 following a winding-up petition from HM Revenue and Customs. When he died in 2021, control of the club passed to the family trustees, including his son Craig Hemmings. Fellow director Kathryn Revitt is also a key figure at Deepdale.  

However, in July it was reported that the club had asked bankers Rothschild to undertake a strategic review of its ownership options. It looks like the Hemmings family would be prepared to step aside if the right investor came forward.    If that does come to pass, it could potentially be the catalyst that the club needs, but it could also be a case of “be careful what you wish for”.

As with all clubs in the Championship that don’t benefit from parachute payments, life is difficult for Preston.

The fact is that even with their prudent approach to wages and the transfer market, they still post large losses every year, so they remain reliant on their owners to fund the shortfall.  If they could generate more money from player trading, that would help the club in its annual balancing act. The good news is that they are well aware of the need to do better, but there has been little tangible evidence of improvement here as yet.

It will take something special for Preston to break out of their mid-table obscurity and challenge at the top end of the league, as the Championship is a brutally competitive division, especially for clubs with a limited budget.   Indeed, this season they have come close to the relegation positions.