Middlesbrough’s 2020/21 financial results covered a season when they finished 10th in the Championship under manager Neil Warnock, who has since been replaced by Chris Wilder in November. Some thoughts in the following thread #Boro
#Boro reduced their pre-tax loss from club record £36m to £31m, despite revenue dropping £4.9m (25%) from £19.4m to £14.5m, as other income rose £2.7m to £4.6m, operating expenses were cut £5.7m (10%) and profit on player sales rose £0.8m to £4.3m. Loss after tax was £27m.
#Boro revenue was “significantly” impacted by COVID, leading to reductions in gate receipts, down £4.5m (99%) to just £36k, and commercial, down £1.6m (26%) to £4.3m. However, broadcasting increased £1.1m (12%) from £9.0m to £10.1m, partly due to iFollow streaming.
#Boro compensated for the revenue decline by cutting costs. Wage bill fell £4m (13%) from £31m to £27m, while player amortisation decreased £6m (32%) to £13m. On the other hand, other expenses were up £3m (44%) to £10m and they booked £1.3m player impairment.
Despite the improvement, #Boro £31m loss is still one of the worst in the Championship, only surpassed by Bristol City £38m and Reading £36m to date in 2020/21. Highest profits came from 2 clubs relegated from the Premier League the previous season: #NCFC £21m and #AFCB £17m.
#Boro did not detail the impact of the COVID on these financials, though I would estimate this as around £6m in 2020/21: match day £4.2m (games played without fans) and commercial income £1.6m. So the club would have still posted a big loss even without the pandemic.
#Boro profit on player sales rose £0.8m from £3.5m to £4.3m, which was mid-table in the Championship. However, this was significantly lower than the 3 clubs relegated from the Premier League, who each generated £56m to £60m, another advantage on top of parachute payments.
#Boro have lost money eight times in the last decade with their cumulative losses adding up to £157m. Over the last two years their deficit is £66m, partly due to COVID, but also the end of parachute payments. Posted a £7m profit in the Premier League in 2017.
One reason that #Boro losses have increased in the last two years is relatively low profits from player trading. After £60m of gains in the three years between 2017 and 2019, they have only made £8m since then. The 2021/22 accounts will include a similarly low figure.
#Boro operating loss (i.e. excluding player sales and interest payable) reduced from £38m to a still sizeable £34m. In fairness, almost all Championship clubs report substantial operating losses (nearly half of them more than £30m), so this is essentially par for the course.
#Boro revenue has fallen by three-quarters (£48m) since the first season after relegation from the Premier League in 2018, very largely due to £37m decrease in broadcasting after parachute payments ended, though there were also reductions in gate receipts £7m and commercial £4m.
Following the decrease, #Boro £14.5m revenue is firmly in the bottom half of the Championship, only around a quarter of the clubs receiving parachute payments, e.g. in 2020/21 these included #AFCB £72m, #NCFC £57m, Watford £57m and Cardiff City £55m.
#Boro also benefited from parachute payments in 2018 (£42m) and 2019 (£35m), but these have now ended. These are so significant that they make it difficult for others to compete, e.g. in 2019/20 a relegated club received £42m in year one, £34m in year two and £15m in year three.
#Boro broadcasting income rose £1.1m (12%) from £9.0m to £10.1m, partly due to iFollow streaming, though this was significantly lower than £102m they earned in the top flight in 2017. Most Championship clubs earn £8-10m TV money, but there is a huge gap to clubs with parachutes.
#Boro match day income dropped £4.5m (99%) to just £36k, as all home games were played behind closed doors, which means this revenue stream has fallen 4 years in a row. They were mid-table in the Championship in the last season pre-pandemic in 2019.
#Boro average attendance in 2019/20 (for games played with fans) was 19,933, which was 11th highest in the Championship. This is over 10,000 lower than the 30,449 they achieved in the Premier League, but they are averaging more than 21,000 this season.
#Boro commercial revenue fell £1.6m (27%) from £5.9m to £4.3m, comprising sponsorship & commercial £2.6m and merchandising £1.7m. This is down 60% from the £11.1m peak in the 2017 Premier League. Lowest since 2014 and only around a third of Stoke City’s £12m.
#Boro have extended their “record-breaking” shirt sponsorship with online casino 32Red by 3 years to 2024, while kit supplier Hummel signed a five-year deal in 2018/19.
#Boro other operating income increased from £1.9m to £4.6m, including insurance proceeds £2.75m, Premier League grant income £1.2m and the government furlough scheme £0.6m. Second highest in this category in the Championship, only below #AFCB £5m (including £1.8m player loans).
#Boro wage bill fell £4m (13%) from £31m to £27m, as the club “significantly reduced the size and cost of the playing squad to partially offset the reduction in income”. Wages down 58% (£38m) from £65m peak four years ago in the Premier League.
Following the decrease, #Boro £27m wage bill is now in the bottom half of the Championship, making promotion even more difficult. Less than half of Watford £68m, #NCFC £67m and #AFCB £57m (though the first two did include hefty promotion bonuses).
#Boro wages to turnover ratio increased from 160% to 186%. This is obviously far from great, but in fairness the vast majority of clubs in the very competitive Championship have unsustainable ratios well above 100% (incredibly five of them are over 200%).
#Boro paid no directors remuneration in the football club company in stark contrast to the likes of #AFCB £2.1m and Birmingham City £1.4m. However, the accounts do note that one director was remunerated through another group company.
#Boro other expenses (i.e. excluding wages, player amortisation and depreciation) increased by £2.9m (44%) from £6.6m to £9.5m, which seems strange, as there would have been lower costs for staging games without fans.
#Boro player amortisation, the annual charge to write-off transfer fees over a player’s contract, fell £6m (32%) from £18m to £12m. Down from £26m two years ago, but still one of the highest in the Championship. Also booked £1.3m impairment to reduce player values.
#Boro spent £7.1m on player purchases, including Akpom and Morsy. Slightly higher than prior season’s £6.5m, but only around a tenth of the massive £66m outlay 3 years ago, which former manager Tony Pulis described as “the most disastrous transfer window in the club’s history”.
In the three years between 2016 and 2018 #Boro really pushed the boat out, as they averaged gross spend of £52m, compared to £4m in the preceding four years. However, in the three years since then, this has dropped to £8m with £19m sales, leading to £11m net sales.
#Boro gross debt rose £13m from £116m to £129m. Most of this is owed to Steve Gibson, who increased his loan by £5m to £121m, but there is also a new £8m loan from the EFL, secured against future TV income.
#Boro £129m gross debt is the fifth highest in the Championship, only below Stoke City £212m, #AFCB £165m, #BRFC £152m and Watford £139m. The debt would have been even higher if £63m had not been converted into share capital, highlighting Gibson’s financial support.
Gibson’s debt is interest-free, so is very much of the “soft” variety. #Boro do not include a cash flow statement, so we do not know how much interest was paid, but £0.6m interest payable in the profit and loss account is among the highest in the Championship.
#Boro have managed to reduce transfer debt from £56m in 2018 to just £7m. Still one of the higher payables in the Championship, albeit miles below the three clubs most recently relegated from the Premier League, namely Watford £62m, #AFCB £45m and #NCFC £23m.
#Boro cash balance rose slightly from £167k to £181k, which is the smallest in the Championship. In fairness, most clubs in this division held less than £3m cash in the bank, so this is not unusual, but emphasises the club’s reliance on the owner’s money.
In the last decade Gibson has put in £113m to #Boro via loans, including £27m in the last 3 years. That’s pretty good, but is much lower than QPR £285m, Stoke City £195m and Cardiff City £194m, as the Championship has an endless appetite for owner funding.
Some #Boro fans have pointed out that Gibson’s company has benefited by utilising the football club’s tax losses as group relief, but it is clear that he has still made a significant contribution on a net basis.
Despite the large losses, #Boro were fine with Profitability & Sustainability rules, as reported losses were within the limit for the 3-year monitoring period even before adjusting for allowable deductions (academy, community & infrastructure), promotion bonus and COVID impact.
Going forward, #Boro might have more FFP issues, as they will lose the benefit of the 2017/18 profit and relatively small loss in 2018/19. Earlier this year, Gibson reached an agreement regarding their claim that #DCFC financial breaches had cost them a play-off place in 2019.
#Boro face a tough challenge now that parachute payments have ended, though Gibson said, “the club will continue to strive for progression and promotion to the Premier League”. The club continues to make significant losses, so his financial support remains critical.
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