My large family displays no interest in football, the one exception being a son-in-law who is a Southampton season ticket holder. I have not intruded into private grief but his wife tells me he will not discuss Spygate.
The following material extracts highlights from the Swiss
Ramble’s latest review of the club. Much
more in depth analysis is available on his Substack page.
Southampton had long been held up as an example of a club
punching above its weight, finishing in the top eight four seasons in a row
during their 11-year stay in the top flight, but went down in 2022/23,
finishing in 20th place.
The relegation in 2022/23 took place in the first full
season under the control of Serbian media mogul Dragan Solak, who bought 80% of
the club for £100m in January 2022 via his investment vehicle Sport Republic
Limited. However, the rot had already
started to set in after Chinese businessman Gao Jisheng acquired a majority
stake in 2017, with Katharina Liebherr retaining the remaining 20%. Southampton
have only managed to generate a profit once in the last seven years, losing a
chunky £279m in this period.
The hit from Spygate
As well as missing out on the riches available in the
Premier League, there could be other financial implications for Southampton of
Spygate:
- The
players are exploring their options regarding legal action against the
club, as members of the squad who had taken 40% pay cuts after suffering
relegation from the top flight were due to have that reinstated in the
event of promotion to the Premier League.
- Wrexham,
the club that finished just outside the play-off places, could potentially
argue that they were disadvantaged by Southampton’s cheating, so they
might seek damages.
- Southampton’s
sponsors and commercial partners could claim money or even terminate the
relationship, due to a breach of any clauses for reputational damage.
- There
has been pressure to refund supporters for both legs of the play-off
semi-finals, as these games ultimately proved to be meaningless. In
addition, the Fan Advisory Board has asked the club to freeze season
ticket prices.
Despite promotion to the
Premier League, Southampton swung from a £17.3m pre-tax profit to a substantial
£53.9m loss in 2024/25, a deterioration of £71.2m, driven by a steep £94.4m
reduction in profit on player sales from £123.0m to £28.6m.
Revenue rose £73.6m (87%) from £84.8m to £158.4m, but this was
partly offset by an increase in operating expenses, which were up £46.9m (27%)
from £173.6m to £220.5m. Net interest payable was also higher, rising £1.2m
(6%) from £19.1m to £20.3m.
The
main driver of Southampton’s £73.6m revenue increase was broadcasting, which
more than doubled, rising £58.8m from £55.9m to £114.7m, as this is
“significantly higher in the Premier League than the Championship”.
The
other revenue streams were also up as a result of promotion with commercial
nearly doubling, rising £11.3m (90%) from £12.6m to £23.9m, while match day
increased £3.6m (22%) from £16.2m to £19.8m.
Southampton’s
£54m pre-tax loss was obviously not great, but quite a few Premier League clubs
did even worse. Chelsea led the way with an incredible £262m loss, followed by
Tottenham £121m, West Ham £104m, Nottingham Forest £79m, Leicester City £71m
and Brighton £56m.
Player trading
Southampton’s
business model is very dependent on player trading, which was perfectly
demonstrated in 2023/24, when the £123m profit took the club back into the
black. The other side of the coin was
shown last season, when the much smaller £29m profit resulted in a hefty
overall loss.
This
season will see another sizeable profit from player sales, as once again a few
key players left after relegation, including Mateus Fernandes to West Ham,
Tyler Dibling to Everton, Kamaldeen Sulemana to Atalanta, Adam Armstrong to
Wolves and Jan Bednarek to Porto. According to Transfermarkt,
Southampton had £128m sales proceeds, which was the highest in the
Championship, a fair way above the other relegated clubs, Ipswich Town £80m and
Leicester City £50m.
Revenue streams
Southampton’s
revenue will have significantly reduced after relegation. The last time that
this occurred, it fell 42% (£61m) from £146m to £85m, hence the need for player
sales.
Southampton
will have benefited from parachute payments after relegation. This would have
been worth £49m this season, dropping to £40m next season. It would then stop the following year, as the
Saints were relegated after just one season in the top flight, so are only
eligible for two years of parachutes, instead of the normal three years.
Southampton’s
£20m match day revenue was firmly in the bottom half of the Premier League. To
place this into perspective, it was more than £90m below the top four clubs,
led by Manchester United £160m and Arsenal £154m. Southampton’s average attendance increased
from 29,373 to 30,865 in 2024/25, despite the terrible results on the pitch. Following relegation, Southampton’s average
attendance held up pretty well, so their 28,456 was fourth highest in the
Championship, only behind Coventry City 30,290, Leicester City 28,907 and Derby
County 28,563.
Despite
growth, Southampton’s £24m commercial revenue was still the second smallest in
the Premier League, only above Brentford £21m.
The gap to the Big Six was absolutely huge, with five clubs generating
more than quarter of a billion Pounds, led by Manchester City £340m, Manchester
United £333m and Liverpool £323m.
Southampton’s
wage bill rose £34.9m (43%) from £80.9m to £115.8m, which was the club’s second
highest ever, only behind the £122.5m in 2022/23. The underlying increase would
have been even higher, as the previous season featured a sizeable promotion
bonus. One reason for Southampton’s
worsening performance in the Premier League was an almost complete lack of
growth in wages, which were essentially held flat for six years, while there
was sizeable growth at their rivals.
Southampton
spent £90m on player purchases, which was a lot of money, but still not much
for the Premier League, where three clubs splashed out more than £300m
(Manchester City £353m, Manchester United £343m and Chelsea £305m).
Debt and funding
Many
owners provide debt with little or no interest, but this is not the case with
Southampton, as the Sport Republic loan is at 5.5%.
Between
2016 and 2022 Southampton did not receive any owner funding. In fact, they
actually repaid £13m of owner loans, as Katharina Liebherr sold up, then Gao
Jisheng was unwilling (or unable) to provide money following Chinese law
changes. Solak put £85m into the club in the 2022/23 season in five separate
tranches, diluting the shareholding of Liebherr below 20%, then provided a £12m
loan in 2024/25.
Other
owners have put in a lot more funding, which has made Southampton’s position
even more difficult. For example, in the last three years, Solak contributed
£97m in total, but this was much lower than the likes of Chelsea £1.1 bln,
Aston Villa £366m and Newcastle United £274m.
As
it stands, they face a second season in the Championship with a 4-point
deduction, exacerbated by a smaller parachute payment. Their rivals will also
include tough competition from the three relegated clubs, whose coffers have
been boosted by many seasons in the top flight.
The
risk is that various factors combined mean that Southampton again fail to
secure promotion, in which case they will lose their parachute payments, when
life would become really difficult for the South Coast club.
As
well as my son-in-law I have two friends who are supporters. Once again it is the fans who have suffered
from mismanagement.
Commenting on the club statement issued yesterday, football finance guru Kieran Maguire posted on X: 'Poor from the Southampton execs. Trying to discredit the commission with whatabouttery does them no credit. Leaders set the tone and the culture, they’ve let the fans and the club down with this.'
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