Success came too soon for Ipswich despite good decisions

Ipswich Town’s relegation has been confirmed after just one season back in the top flight - along with the other two teams that were promoted the year before. This is the second season in a row that all three promoted clubs went straight back down, underlining the increasing struggles for clubs coming up from the Championship.

In fairness to Ipswich, they did spend big in an attempt to survive in England’s elite competition, having the seventh highest gross transfer spend this season with £129m, which was nearly £100m more than champions Liverpool.    Indeed, in terms of net spend, their £127m was actually the second highest in England, only surpassed by Brighton, so more than every single member of the so-called Big Six.

In fact, only three promoted clubs have ever spent more than Ipswich in their first season in the Premier League, namely Nottingham Forest (2022/23) £170m, Aston Villa (2019/20) £156m and Bournemouth (2022/23) £130m.   Therefore, it’s fair to say that Ipswich could not have done much more in their attempt to be competitive, at least from a financial perspective. However, it has become evident that even splashing out more than £100m does not guarantee survival in the Premier League, when a promoted club is up against more established clubs.

Ipswich’s transformation has been driven by the arrival of new owners, who purchased the club in April 2021 for a reported £40m. As a result, Ipswich Town are now 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 great deal in the squad, as well as the club’s infrastructure. However, this has been part of a well thought-out plan, as they have made some astute recruitment. As well as McKenna, they 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 last year, as Bright Path Sports Partners, a US private equity firm which specialises in professional sports franchises, invested “up to £105m” for a 40% minority stake. This was described as “an exciting step which will further secure the club’s future.”

Following these transactions, ORG retains around 50%, while Bright Path has 44%, with the remaining shares split between 5% for Three Lions (businessmen Brett Johnson, Berke Bakay and Mark Detmer) and 1% for Ed Sheeran.   The shirt sponsor since 2021 has been Ed Sheeran, one of the club’s most famous supporters, who has brought Ipswich significant exposure and led to record-breaking shirt sales. Ashton commented, “We built a rocket ship that took shirt sales from 10,000 a year when we joined to 100,000 this year.”

The owners would probably consider Ipswich’s relegation to be a blip in the club’s progress, as it is unlikely that they would have expected the club to progress up the pyramid so quickly, despite their obvious ambitions.

Revenue growth

The 2023/24 financial results covered “another excellent season for the club”, as Ipswich finished in a hugely impressive second place in the Championship, thus “achieving a second successive promotion”.   However, they paid the price for this fine achievement, as their pre-tax loss more than doubled from £18.2m to £39.3m, despite revenue rising by 71% (£15.5m) from £21.8m to £37.3m.

All three revenue streams grew following promotion from League One. The higher TV deal in the Championship led to broadcasting rising £6.4m from £3.9m to £10.3m, though the largest increase was actually in commercial, which shot up £6.6m (68%) from £9.9m to £16.5m. There was also good growth in match day, which rose £2.5m (31%) from £8.0m to £10.5m.   However, this revenue growth was more than offset by a steep rise in costs. Investment in the squad, exacerbated by promotion bonuses, led to wages more than doubling, rising £24.7m from £19.8m to £44.5m.

In fact, last season’s £39m loss is the largest ever reported by the club (by some distance), while the club has lost £76m under the current ownership, which is markedly different to Marcus Evans’ more frugal/sustainable approach (delete as appropriate).

Ipswich’s revenue was obviously much higher after promotion to the Championship, though it’s worth noting that last season’s £37.3m was more than twice as much as the £18.0m they generated the last time they were in this division in 2018/19. The largest growth in this period was in commercial, which more than tripled in the last five years.   Commercial was Ipswich’s most important revenue stream, accounting for 44% of their total income, which was one of the highest in last season’s Championship.

Ipswich’s revenue will be even higher this season in the Premier League. Looking at the clubs most recently promoted, the closest comparison is probably Nottingham Forest, whose revenue grew from £30m to £155m. Indeed, Ashton has already forecast more than £153m for 2024/25.  This is largely driven by the incredibly lucrative TV deal in the top flight. If Ipswich end up in 18th place, that would be worth £115m in TV money alone, based on the 2023/24 distributions.

Stadium and training ground

Ipswich have “big plans for the stadium”, looking to expand Portman Road from its current capacity of around 30,000 to at least 35,000 (maybe as much as 40,000).  The club has already bought land behind the Cobbold Stand to facilitate the expansion, but Ashton said that there is no fixed timeline with other projects being prioritised, especially the training ground.  Clearly, stadium development could help further increase the club’s revenue, but Ashton pointed out that they would lose 4,000 fans for 18 months during the rebuild.

After many years of virtually no investment in infrastructure, the new owners have seen this as a priority, spending £13m in the last two seasons. This included renovating the stadium, as they started to get this ready for the Premier League.

a £30m redevelopment of the club’s Playford Road training ground has been approved.  Ashton did not pull his punches, “Let's not hide away from it, we have the worst training facilities currently in the Premier League. We have got every ounce out of the current facilities that we could, but we now need to upgrade to a real elite facility that can help us attract and develop players.”

The objective is to move from a Category two to Category One academy within 12 months, in order to take advantage of Ipswich’s location. As Ashton explained, “This county is so large, it's a one club county, and we have a real opportunity here. We have to attract, incubate and grow that young talent.”

Wages

Ipswich’s wage bill more than doubled, rising £24.7m from £19.8m to £44.5m, which was easily a new club record, overtaking the previous peak of £24.2m in the last season in the Premier League in 2001/02.  This was obviously inflated by a £15.6m promotion bonus, but wages would still have increased by 46% to £29.0m.   This means that wages have more than tripled in the last three years, rising from £13.4m in 2020/21, as the club has invested in the squad and support staff.

Following this significant growth, Ipswich’s £45m wage bill was the fifth highest in the Championship, but a long way below the three clubs relegated from the Premier League the previous season: Leicester City £107m, Leeds United £84m and Southampton £81m.

Even including the promotion bonus, Ipswich’s £45m wage bill is the third lowest of clubs promoted to the Premier League in the last five years, only higher than Brentford (2020/21) and Luton Town (2022/23).

The current owners have certainly put their hands in their pockets, as they have provided around £132m of funding since their arrival, including £39.2m in 2023/24 and £44.5m in 2024/25.   That’s an average of £26m a year, compared to the £10m that Evans provided in total in the last six years of his tenure, though in fairness his initial contribution was higher.

After being promoted two years in succession, taking Ipswich all the way from League One to the Premier League, this season has proved to be something of a reality check.  Every club that comes up from the Championship faces a huge challenge in adapting to the requirements of England’s elite competition, but this was even more acute for Ipswich, given their rapid ascent.

Ipswich face a different challenge now, as they will need to re-adjust to life in the Championship. They will be boosted by parachute payments, but these are not a guarantee of success – as Luton Town fans will appreciate.  It looks like they will manage to hang on to Kieran McKenna, who has managed to remain positive, “I think there’s still the potential to make some big strides over the next few years.”

Ipswich confounded expectations by getting to the top flight, but it always felt that their success had come too quickly.   It's as if one of the county's successful arable farmers had switched from tractors to  combine harvesters overnight!   But being the one club in a prosperous county is a great strength.

This report is dedicated to my friend Richard who still supports Ipswich from his home in the Orkney Islands.    They’re certainly a lot better than Athletico Stromness!