Stoke City recently published 2017/18 financial results, covering a season when they were relegated to the Championship after ten consecutive years in the Premier League and had two managerial departures (Mark Hughes and Paul Lambert). Some thoughts in the following thread #SCFC
#SCFC reported a £30m loss before tax, compared to a £5m profit the previous season. This was largely due to £29m impairment that reduced the value of some players in the accounts. Without this non-cash charge, Stoke’s loss would have been less than £1m. 
#SCFC revenue dropped £9m (6%) from £136m to £127m, mainly due to TV income, which fell £8m (7%) to £101m, as payments are linked to league position. Commercial was also down £1m (7%) to £19m, but gate receipts rose £0.5m (8%) to £7.7m. Profit on player sales up £19m to £22m.
To compound #SCFC misery of relegation, this happened despite significant investment in the playing squad, as the wage bill surged £9m (11%) from £85m to £94m and player amortisation increased £3m (14%) to £27m (both record highs for Stoke). Other expenses also £3m (13%) higher.
#SCFC £30m loss would have been the worst financial performance in the Premier League in 2016/17. Worth noting that thanks to TV money and wage controls, the English top flight is now very profitable with only Sunderland reporting a loss, while many generated huge profits.
#SCFC loss would have been even higher without £22m profit on player sales, up from just £4m the previous season. Largely due to sale of Marko Arnautovic to West Ham, but also included Joselu to Newcastle, Jon Walters and Phil Bardsley to Burnley and Glenn Whelan to Aston Villa.
This is the first time that #SCFC have reported a loss in five years, though the highest profit in this period was £5.2m in 2015. In fact, four consecutive years in the black only delivered £16m profits in total, as the club has invested almost all of its spare cash in the squad.
#SCFC have traditionally made very little from player sales – averaging just £1m a year in the 7 seasons to 2015. However, in the last 3 years, profit has increased to £13m a season. Will also generate at least £14m in 2018/19, mainly due to sale of Xherdan Shaqiri to Liverpool.
#SCFC EBITDA (Earnings Before Interest, Tax, Depreciation & Amortisation), which can be considered as a proxy for cash operating profit, slumped £21m from last season’s record £25m to £4m, the lowest since 2013. Note that this excludes the £29m impairment charge.
Unsurprisingly, #SCFC EBITDA of £4m is one of the lowest (worst) in the Premier League, only “beaten” by Swansea City’s £3m in 2016/17. As a comparison, the other club relegated in 2017/18 (WBA) managed to generate £45m EBITDA the previous season.
After four years of growth, #SCFC revenue decreased 6% to £127m. It will further fall in 2018/19, as the parachute payment will not compensate for the absence of Premier League TV money. My estimate is a £58m (46%) reduction to £69m.
That said, #SCFC did have the 29th highest revenue in the world in 2016/17 with £136m (as per the Deloitte Money League), just ahead of Benfica. Thanks to the amazing TV deal, there were no fewer than 14 clubs from the Premier League in the top 30.
#SCFC Premier League TV money fell £8m from £107m to £99m, as they were adversely impacted by dropping 6 league places from 13th to 19th (merit payment down £12m), though partially offset by being shown live 3 more times (facility fee up £2m) and £2m increase in overseas payment.
As the club noted, #SCFC revenue was “derived principally” from the Premier League broadcasting contract. In fact, a massive 79% of their turnover came from TV in 2017/18. In fairness, this is not uncommon in the top tier with 9 clubs getting 80-90% of their money from TV.
Therefore, relegation will hit #SCFC finances hard, as they go from £99m in the Premier League to £45m in the Championship (parachute payment £41.6m plus Football League distribution £2.3m). However, still a lot more than most clubs £8m (solidarity payment £4.5m plus £2.3m).
Six clubs will benefit from parachute payments in 2018/19: #SCFC, Swansea City and WBA £42m; Hull City, Middlesbrough and Sunderland £34m; QPR £17m; and Aston Villa £15m. Unless Stoke are promoted, their parachute payment will fall to £34m in 2019/20 and £15m in 2020/21.
#SCFC commercial revenue fell 7% (£1.5m) from £20.1m to £18.6m, mainly due to other operating income. This was mid-table in Premier League. Owner bet365 pays a reported £3.2m for shirt sponsorship and also has stadium naming rights. Macron have a 5-year kit deal from 2016/17.
#SCFC gate receipts rose 8% (£0.5m) to £7.7m, despite hosting 1 fewer game, as attendance was up from 27,434 to 29,280 following an increase in stadium capacity to 30,000 by filling in one corner. One of the lowest revenues in the top flight, linked to Stoke’s cheap tickets.
#SCFC average attendance of 29,280 was the 13th highest in the Premier League in 2017/18, around 4,000 more than the next club, Crystal Palace 25,063. Prices for 2018/19 tickets have been frozen, which means that they have been held at the same level for an incredible 11 seasons.
#SCFC wage bill rose 11% (£9m) from £85m to £94m, as the club “invested significantly in its playing squad”, including the loan signings of Kurt Zouma and Jese, and other staff increased from 224 to 235. In 4 years wages have grown 56% (£34m), while revenue only up by 29% (£29m).
Although #SCFC £94m wage bill is a record high for the club, it was still only the 13th highest in the Premier League. This was around the same level as West Ham’s 2016/17 wages, but £18m lower than Southampton and Crystal Palace.
Following the reduction in revenue, #SCFC wages to turnover ratio increased from 62% to 74%, which would have been the 3rd highest (worst) in 2016/17 (behind Crystal Palace and Swansea City). To be fair, thus is not as bad as the 79% Stoke reported in 2016 – or 91% in 2013.
#SCFC player amortisation, the annual charge to expense transfer fees over the length of a player’s contract, continued to rise, up 14% (£3m) to £27m, as a result of player recruitment. This expense has more than doubled from only £12m in 2015.
Despite the increase, #SCFC player amortisation of £27m is firmly in the bottom half of the Premier League. For some perspective, big-spending Manchester United and Manchester City report around £135m for this expense, about 5 times as much as Stoke.
#SCFC booked a £29m impairment charge after reviewing the value of the playing squad in the balance sheet. This is fairly common for clubs relegated to the Championship, e.g. Sunderland £14m in 2017 and Villa £35m in 2016, as allowable FFP losses are higher in Premier League.
#SCFC had £58m of player purchases in 2017/18, including Kevin Wimmer, Badou Ndiaye, Bruno Martins Indi and Moritz Bauer, following £36m the previous season and £51m in 2015/16. Also committed to £52m acquisitions this season. So money has been spent, but perhaps not wisely.
After a marked slowdown in 2014 and 2015 (annual average only £2m), #SCFC net spend has shot up in the last 4 years to an average of £24m (gross spend £44m, sales £20m). 2018/19 recruitment includes Benik Afobe, Tom Ince, Oghenekaro Etebo, Sam Clucas and James McClean.
#SCFC gross debt significantly increased by £47m from £76m to £123m, all ultimately owed to the Coates family. So Stoke have no bank debt, but “friendly” debt with their owners in the form of interest-free loans with no fixed repayment term.
#SCFC gross debt of £123m is pretty large for a club of Stoke’s size and was actually the fifth highest in the Premier League last season, only behind Manchester United, Arsenal, Tottenham Hotspur and Liverpool. Contingent liabilities were down from £7m to £600k.
However, the #SCFC debt picture is a little misleading, so long as the Coates family continues to provide support. The fact that their loans are interest-free gives Stoke a competitive advantage against a number of their rivals, who have to pay interest on their loans.
In addition, #SCFC had £22m of cash as at 31st May, up from £12m the previous season. This might be much lower than the likes of Manchester United £242m and Arsenal £180m, but it’s still a positive.
That said, it is noticeable how #SCFC are once again hugely reliant on the Coates family, as they put in a further £47m in 2018. The funding had been cut to just £2m for the two years 2015 and 2016, but it’s now back with a bang. The owners have put in £148m since 2009.
Since 2009 #SCFC have had available cash of £245m: (a) £148m from owners’ loans; (b) £96m from operating activities (negative for the first time in ages in 2018). Almost all of this has been used to improve the squad with £217m (89%) spent on player investment.
As a club, #SCFC has experienced a lot of changes in the last 18 months (players, managers, league status). The financial support of the Coates family will be more important than ever if they want to make a rapid return to the Premier League.
