Portsmouth owner Michael Eisner has warned of the risk of financial collapse in the Championship. Coventry, Oxford, West Brom and Charlton have all chalked up big losses. Eisner said: ‘No club can survive for long in this system and if that continues, catastrophe will happen.’
Negotiations to secure a bigger share of Premier League
revenues have made little progress with top flight clubs questioning the extent
of their obligation to less successful rivals.
In most sectors of the economy stronger businesses are not expected to
subsidise weaker ones. Supermarkets do
not subsidise corner shops, but the latter have their own market niche.
The regulator is looking at the distorting effect of
parachute payments in the Championship, but an early intervention is not anticipated.
The Swiss Ramble has provided a forensic analysis of
Portsmouth’s accounts for 2024/25 from his Zurich fastness and some highlights
follow. The full in depth analysis is available
on his Substack page (free trial offered).
Any comments of my own are in square brackets.
Following promotion to the Championship, Portsmouth’s
pre-tax loss slightly narrowed from £5.6m to £4.4m. Although losing money is
never great news, Portsmouth’s £4.4m loss is actually one of the best results
in the Championship to date. Only one club has managed to generate a profit –
and that was just £0.3m at Plymouth Argyle.
Revenue shot up £11.0m (80%) from £13.6m to £24.6m, but this
was pretty much offset by the increased cost of competing in the higher
division, as operating expenses rose £9.9m (52%) from £19.3m to £29.2m.
Despite this growth, Portsmouth’s £24.6m revenue was one of
the lowest in the Championship last season, only above Millwall £23.9m, Preston
£20.5m and Oxford United £19.0m. It was
less than a third of the clubs recently relegated from the Premier League, who
were in receipt of parachute payments, as seen in 2023/24 with Leeds United
£128m, Leicester City £105m and Southampton £85m.
Profit on player sales also increased, but only to a
relatively low £0.4m.
The higher TV deal in the Championship led to broadcasting
income more than quadrupling from £2.5m to £11.6m, while there was also good
growth elsewhere, as match day rose £1.3m (19%) from £5.9m to £8.2m, while
commercial was up £0.6m (13%) from £4.2m to £4.8m. The importance of gate receipts to Portsmouth
is very clear, when looking at how much this contributes to total revenue.
Their 33% was only surpassed by Coventry City’s 36%, while it was around the
same level as Sunderland.
Portsmouth’s average attendance increased for the third year
in a row, rising from 18,953 to 20,263, the highest for more than 50 years.
This was mainly due to the capacity increase, while season ticket numbers were
capped at 15,000 with over 3,000 on the waiting list. Crowds are actually higher than the last time
that Pompey were in the Premier League in 2009/10, when they averaged 18,249.
Wages
Portsmouth’s wage bill shot up £6.8m (65%) from £10.6m to
£17.4m, following strong investment in the squad. This means that wages have
more than doubled in the last two years, rising from the £8m level they had
held for the previous five seasons.
However, even after the growth, Portsmouth’s £17.4m wages
were comfortably the lowest in the Championship, as the next smallest were at
least 20% higher, namely Plymouth Argyle £21.2m and Oxford United £21.7m. From this perspective, it is clear that
Portsmouth have been punching well above their weight – or operating with one
hand tied behind their back. [This
helps to explain their current league position as the relationship between
playing budget and league position is a close one].
Portsmouth’s wages to turnover ratio decreased (improved)
from 78% to 71%, thanks to the impressive revenue growth. Given Portsmouth’s
previous excesses, it is not overly surprising that they have adopted a more
sustainable approach to wages. [By
comparison Charlton’s ratio is 141 per cent, double the recommended level].
Despite increased activity in the transfer market,
Portsmouth’s £4.6m gross spend was the lowest in the Championship in 2024/25,
as they were outspent by the two other clubs promoted from League One: Derby
County £11.8m and Oxford United £5.9m.
Capital expenditure was a hefty £26m in the last five years,
significantly more than the £9m in the previous 5-year period.
The £8m funding in 2042/25 took the amount that the current
owners have put in to the club to £45m, split between £37m capital and £8m
loans.
These results demonstrate how difficult life is for clubs in
the Championship, as Portsmouth have tried to be competitive with just about
the smallest budget in the division – and yet they still lost £4m.
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