Baggies in positive mood despite financial challenges

This season is the fourth in a row for West Brom in the Championship, which is the their longest unbroken period out of England’s top flight for more than 20 years, but there is still an air of quiet positivity around The Hawthorns.

This could be attributed to the change in ownership, as Bilkul Football WBA, a company ultimately owned by Florida-based entrepreneur Shilen Patel and his father Dr Kiran C. Patel, acquired an 87.8% shareholding in West Bromwich Albion Group Limited, the parent company of West Bromwich Albion Football Club, in February 2024.  The remaining 12.2% is owned by minority shareholders, many of whom are represented by Shareholders 4 Albion (S4A).

West Brom had effectively been in decline ever since the club was sold in August 2016 to a Chinese consortium, which bought out former owner Jeremy Peace’s stake. Controlling shareholder Guochuan Lai’s ownership turned out to be fairly disastrous for the club, culminating in numerous financial issues following years of no investment, including a growing amount of high-interest debt and serious cash flow concerns.

Shilen Patel explained the situation thus, “With all the turmoil around the club, the turnover and different situations, it didn’t really have the opportunity to plan beyond the next few months.”

However, that has all changed under the new ownership, “Just by the sake of us being involved, the outlook is stabilised. The club is now no longer worried about the things that it was worried about a year ago, in terms of how are we going to make it to the next season or the next month.”

Despite the upbeat mood, West Brom’s pre-tax loss more than tripled from £11.0m to £33.9m, as revenue halved from £56.7m to £28.2m after their parachute payments ended, while profit from player sales also dropped from £6.5m to £3.5m.

The steep revenue reduction was only partially compensated by a relatively small £8.8m (12%) cut in operating expenses to £66.7m, as the club pushed hard to get back to the top flight.

End of parachute payments

Obviously, the main reason for Albion’s £28.5m revenue decrease was the fact that they had no more parachute payments in the third season after relegation from the Premier League, which led to broadcasting falling £31.7m (74%) from £43.1m to £11.4m. Whatever the rights and wrongs of parachutes, there is no doubt that they make it difficult for other clubs to compete, but Albion effectively wasted this big advantage, so are now among the “have nots”Patel commented, “When you add in the challenges of the financial advantage of the clubs who have parachute payments, you can really understand why promotion is such a challenging goal.”

 In contrast, there were small increases in the other revenue streams. Gate receipts rose £2.2m (45%) from £4.9m to £7.1m, while commercial was up £0.9m (11%) from £8.8m to £9.7m.

Normally, when a club experiences such a reduction in revenue, it compensates by cutting costs, but West Brom decided to retain as strong a squad as possible to enhance the prospects of a return to the Premier League, though the gamble ultimately just fell short.

The vast majority of clubs in the Championship lose a lot of money, but West Brom’s £33.9m is the worst reported to date for last season, a fair bit more than Stoke City £25.7m, Millwall £19.1m and Hull City £18.8m.  The two clubs with the largest losses in 2022/23, namely Burnley £36.0m and Sheffield United £31.5m, were both promoted to the Premier League, so their substantial deficits were partly driven by high bonus payments (in other words the price of success).Only three clubs managed to generate a profit in 2023/24, namely Watford £12.8m, Coventry City £8.7m and Blackburn Rovers £3.3m.

West Brom’s bottom line was not helped much by profit from player sales, which was only £3.5m, so only around half of the previous year’s £6.5m.  Having made £16.9m from player sales in the first season after relegation, mainly from the sale of Matheus Pereira to Saudi club Al-Hilal, West Brom have only generated a total of £10m in the two seasons since then.

West Brom have now lost money in five of the last seven seasons, including a hefty £23.4m in 2019/20, though last season’s £33.9m is the club’s worst ever result.  This is very different from the Peace era, when the club was run on a prudent financial basis, making money eight years in a row between 2009/10 and 2016/17.   However, there was considerable controversy surrounding Peace’s financial arrangement s.  Patel cautioned that it would be a while before things improved off the pitch, “We are, unfortunately, going to be looking at another year of losses in the 2024/25 season.”

West Brom’s gate receipts increased £2.2m (45%) from £4.9m to £7.1m, which is not too far short of the amounts they generated in the Premier League. This was thanks to higher crowds, one additional home game and a small rise in ticket prices.   Despite the large increase, Albion’s £7.1m match day income was still mid-table in the Championship, a fair way below Sunderland £11.6m, Norwich City £11.3m, Middlesbrough £10.9m and Coventry City £10.0m.

Strong fan base

West Brom’s average attendance has increased two years in a row, rising from 21,900 to 24,049, so is approaching the 25,000 that they regularly achieved in the Premier League.  Following the increase, West Brom had the tenth highest average attendance in the Championship in 2023/24, though their 24,049 was more than 10,000 below Sunderland 41,029 and Leeds United 35,989.

Crowds should be even higher this season, as noted by Patel, “A real positive since the 2023/24 campaign concluded has been our incredible season ticket numbers, which have to date bettered any prior sales from the last decade and are likely to set a new club record for the second tier.”

Albion’s £43m wage bill was still one of the highest in the Championship, only below clubs with parachute payments, e.g. Norwich City £52m. Figures for Leicester City, Southampton and Leeds United are still pending; these are all likely to be higher than WBA.  West Brom’s wage bill will be much lower this season after the departure of some players on free transfers and loans, even if those deals did not generate much money in terms of player sales.

Having splashed out a hefty £74m between 2019/20 and 2020/21, West Brom have had to slam on the brakes in the transfer market, due to the various issues with their finances. This meant a total outlay of less than £8m in the three seasons since then, with only around £0.5m in the last two years.  Patel warned, “The financial restrictions mean there is a limit to what we can spend on players”, so it seems unlikely that Albion will be going on a spending spree any time soon.

The new owners have already put in a lot of money, adding up to £25m to date, made up of the £10m loan plus a £15m capital injection received after these accounts. This is in addition to taking responsibility for the outstanding loans.

West Brom now have an ownership that is fully invested in the club, which will be important as the club strives for promotion back to England’s top flight.  The Championship is one of the most competitive leagues in world football, so getting promoted is easier said than done. West Brom are on course to once again make the play-offs, but there’s still a lot to do before they can open the champagne.