Thread by @SwissRamble

“Revenue is vanity, profit is sanity, but cash is king.” I thought it might be interesting to look at where Premier League clubs source their money and what they spend it on by reviewing the clubs’ cash flow statements over the last decade. Some thoughts in the following thread.

In the 10 years between 2008 and 2017 Premier League clubs had over £8 bln of available cash with more than half (£4.3 bln) generated from their own operating activities and a further £3.4 bln from their owners (loans £1.8 bln and shares £1.6 bln) plus £0.3 bln external loans.

54% of cash came from operations (revenue less expenses +/- movements in working capital) with another 42% from owner financing and 3% from external loans. There was no need for any of the PL clubs to generate cash via (net) player sales or indeed dip into existing cash balances.

Unsurprisingly, the Big Six clubs have enjoyed by far the most cash: #MUFC £1.6 bln, #MCFC £1.4 bln, #THFC £837m, #AFC £754m, #LFC £645m and #CFC £607m. However, these clubs have very different business models, e.g. #MUFC £1.3 bln from operations, #MCFC £1.3 bln from owners.

So three of the Big Six clubs have been largely financed by cash generated from operations: #AFC 100%, #THFC 81% and #MUFC 80%. In contrast, others have been much more reliant on owner financing: #MCFC 90% and #CFC 86%. #LFC is more balanced: operations 53%, owners 40%.

To illustrate #MUFC amazing ability to generate cash, their £1.3 bln over the last decade is almost twice as much as the next highest #AFC £754m, followed by #THFC £675m, then another big gap to #LFC £341m. The majority of Premier League clubs produced between £60m and £150m.

In contrast, #MCFC have benefited from £1.3 bln of owner financing, much more than the next highest #CFC £0.5 bln. Worth noting how important this has been to some smaller clubs, e.g. #LCFC £257m (71% of total cash), #SAFC £189m (66%), Stoke £106m (50%) & Bournemouth £73m (93%).

Few Premier League clubs have needed to secure external loans from banks with the main exceptions driven by stadium development, e.g. #THFC £148m and #LFC £48m. The next largest was #SAFC £33m after Ellis Short became fed up of putting money in.

Almost half of the £8.1 bln Premier League cash 2008-17 has been spent on purchasing players £3.8 bln – and that’s net of sales. A further £1.6 bln has gone on capital expenditure, largely stadium and training ground, while £1.7 bln has been used for loan and interest payments.

In addition, an incredible £785m has simply been used to increase cash balances. Smaller sums have been spent on dividends £92m, tax £87m and acquisitions & investments £51m, though these amount to less than 3% of total expenditure.

The amount spent by each club is equivalent to the amount of available cash (including increase in cash balance), so the Big 6 clubs again lead the way in expenditure. Shows the importance of finances in football, as a club like #MUFC has had 8 times the firepower of, say, #EFC.

The largest element of expenditure for most Premier League clubs has been investment in the playing squad, though there are some notable exceptions, e.g. #MUFC and #AFC have spent more on loan and interest payments, while #THFC have invested more in infrastructure.

#MCFC have spent by far the most (net) on players with £906m, followed by #MUFC £528m, #CFC £393m, #LFC £351m and #AFC £236m. #THFC have only spent £98m on their squad, while Stoke will be disappointed with the return on their £190m investment (6th highest).

On the other hand, #THFC have invested nearly £0.5 bln in their new stadium and training ground, much more than #MCFC £333m, #LFC £209m, #AFC £104m, #CFC £103m and #MUFC£98m. Other Premier League clubs have spent relatively little on infrastructure.

Perhaps fortunately for the rest of the league, #MUFC have paid a hefty price for the Glazers’ ownership with £0.8 bln of loan and interest payments over the decade. That’s over £500m more than #AFC, though the Gunners have had to shell out £278m for the Emirates mortgage.

In addition, #MUFC paid £53m dividends (plus an additional £22m in 2018), while #WBA paid £27m to their parent company in 2016. The only other Premier League clubs to pay dividends in this period were #THFC £7m and Swansea City £4m.

Very few Premier League clubs paid tax, but the Inland Revenue should be happiest with North London, as the largest payments were from #AFC £30m and #THFC £24, followed by #MUFC £14m and #WBA £11m.

A combination of huge TV deals and wage controls have meant that most Premier League clubs have significantly increased their bank balance over last 10 years, especially #MUFC £131m & #AFC £106m. #THFC £172m is misleading, as it is mainly due to loan advances for the new stadium.

There are some caveats to this analysis: (a) not all clubs produced cash flow statements over the period; (b) some clubs spent some of the period covered in the Championship; (c) the cash flow format is different for some clubs, requiring some interpretation.

Nevertheless, the main conclusion is clear, namely the Premier League is the place to be to generate cash. This helps explain the attraction to so many overseas investors. It’s a very different story lower down the English pyramid.