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Queens Park Rangers 2017/18 financial results covered a season the club described as one “of rebuilding and reflection”, as they finished 16th in the Championship, after which manager Ian Holloway left to be replaced by Steve McClaren. Some thoughts in the following thread #QPR
#QPR loss significantly increased by £32m from £6m to £38m, largely due to booking a £20m FFP fine (for previous misdemeanours); a £15m reduction in the parachute payment driving a £17m (35%) decrease in revenue from £48m to £31m; and profit on player sales down £7m to zero.
All three #QPR revenue streams were down. As well as broadcasting slumping £15.1m (43%) to £20.2m, due to the lower parachute payment, commercial fell £1.2m (17%) to £6.3m, while gate receipts were £0.3m (6%) lower at £4.9m.
Despite the large decrease in revenue, costs did not fall accordingly. In fact, the wage bill was unchanged at £30.7m, while other expenses were also flat at £12.5m. Player amortisation was however cut by £2.2m (19%) to £9.1m.
There was also an £11m improvement in net interest payable from £6m charge last year to £5m credit this year: (a) owner loans from Ruben Gnanalingam are now interest-free, saving £6m; (b) £5m amortised cost credit for the FFP fine in 2017/18.
#QPR £38m reported loss is not the worst in the Championship, as it is just below Cardiff City’s £39m (including £23m promotion payments), though it is obviously significantly impacted by £20m exceptional item for the FFP settlement: a fine of £17m plus the EFL’s £3m legal costs.
#QPR 17/18 loss would be “only” £18m if the FFP fine is ignored. However, the reported £10m loss in 13/14 would have been £70m, i.e. the highest ever in the Championship, if £60m boost to accounts for the write-off of a shareholder loan were excluded (as the EFL did).
#QPR received no benefit from player sales, actually posting a £137k loss compared to a £7m profit the prior year. It’s not always appreciated, but clubs relegated from the Premier League have an advantage here, as seen by large profits at #NCFC £48m, #HCAFC £31m and #AVFC £27m.
Although “the board’s primary aim is to implement strategic plans to ensure that the club is self-sustainable in the near future”, #QPR have consistently lost money. Total losses since Tony Fernandes took over in August 2011 are £198m (£258m if £60m loan write-off is excluded).
Traditionally, #QPR have made hardly anything from player sales. It had looked like that was changing with the club averaging £10m profit in the previous two seasons, but then no gains in 17/18. They will have to do much better here if they want to break-even in future.
#QPR EBITDA (Earnings Before Interest, Depreciation and Amortisation), considered as cash operating profit, as it strips out player sales, non-cash items & exceptional items, fell from £5m to £(12)m, but this is still much better than the horrific negative £47m in 2013 and 2014.
In fairness, very few Championship clubs manage to generate positive EBITDA (only #NCFC £9m, #HCAFC £8m and #Boro £7m to date in 2017/18), but #QPR £(12)m is firmly in the lower half of the table. That said, it’s less than half of #BCFC awful £(30)m.
#QPR revenue has fallen £55m from £86m in the last season in the Premier League in 2014/15 with £31m being the lowest since 2011. Worth noting the importance of parachute payments, down from £31m to £17m in 2017/18. This season will also be £17m, but they then stop in 2019/20.
Despite the decrease, #QPR £31m revenue is still in the Championship top 10, though only around half as much as clubs recently relegated from the top flight: #AVFC £74m (2016/17), #Boro £62m and #NCFC £62m. The top club not benefiting from parachute payments was #LUFC £34m.
Revenue is greatly influenced by Premier League parachute payments. #QPR have received £74m over the last 3 years, but only got £17m in 2017/18, which was a lot lower than some others: #HCAFC, #Boro and #SAFC got £42m, followed by #AVFC and #NCFC £34m.
#QPR TV income fell 43% (£15m) to £20m, due to lower parachute payment, but still more than most clubs who only get £8m (mainly £4.5m solidarity payment & £2.3m EFL distribution). Amounts in top flight (£150m for 1st, £95m for 20th) explain why many Championship owners spend big.
#QPR match day revenue fell by 6% (£0.3m) to £4.9m, due to lower attendances and one home game less. This is 40% lower than £8.4m peak in 2011/12 and only around half the £10-11m earned by the highest earning clubs in the Championship: #AVFC, #LUFC and #SWFC.
The club itself noted “the attrition in attendance due to a third season in a row the club was not participating in the Premier League”. In fact, #QPR crowds have fallen by around 4,000 (20%) from 17,800 to 13,928 in that period. Ticket prices frozen for 4 seasons in a row.
#QPR 13,928 attendance was 19th highest in the Championship last season, a long way behind the top two (#AVFC 32,097 & #LUFC 31,525). Nevertheless, club wants a new stadium. CEO Lee Hoos: “This club is not financially sustainable in the long-term while we remain at Loftus Road.”
#QPR commercial income fell 17% (£1.2m) from £7.5m to £6.3m. In 2017/18 online casino Royal Panda replaced Smarkets as shirt sponsor, while Errea became the new kit supplier after Dryworld deal was terminated early.
Few Championship clubs earn big money commercially, but #QPR £6m is only around mid-table for the division. In fact, four clubs managed to earn twice as much: #LUFC £16m, #NCFC £13m, #AVFC £13m and #DCFC £12m.
Despite revenue falling by over a third, #QPR wage bill was held at the same level of £31m, though number of players, managers & coaches rose from 111 to 119, thus increasing the wages to turnover ratio from 64% to 98% - still much better than the 195% of the Redknapp era.
To give some colour to those free spending days, #QPR’s £75m wage bill in 2013/14 is the second highest ever in the Championship, only surpassed by #NUFC £80m in 2016/17, but way ahead of the next clubs, #AVFC 2016/17 £61m and #NCFC 2016/17 £55m.
#QPR £31m wage bill is still comfortably in the Championship top 10, though nowhere near those boosted by parachute payments, e.g. #AVFC £61m and #Boro £49m. Should come down after many departures last summer, e.g. Smithies, Robinson, Onuoha, Mackie, Washington, Perch and JET.
Despite the worsening of #QPR wages to turnover ratio to 98%, this is actually not too bad for the Championship, where around half of the clubs have a ratio over 100%. This season, Birmingham City lead the way with a scarcely credible 202% (the “Redknapp effect” once again).
#QPR player amortisation fell £2.2m (19%) from £11.3m to £9.1m, around half of the £17.1m peak in 2012/13. Worth noting that Rangers booked £11.6m of player impairment in 2014/15, the season they were relegated from the Premier League.
Even after the decrease, #QPR player amortisation of £9m is still one of the highest in the Championship, as a reminder of past financial sins, though this is a fair way below #Boro and #AVFC both £24m.
#QPR spent just £2m on players in 17/18, one of the lowest in the Championship and a lot less than the previous season’s £15m. As a comparison, #Boro splashed out £66m, while the majority of clubs that have reported to date spent between £12m and £17m.
On a cash basis #QPR gross spend on players has diminished in the 3 years since relegation (annual average from £28m between 2011 and 2015 to £12m) with net spend down from £21m to zero. As part of FFP settlement, club had a transfer embargo in January 2019 window.
#QPR gross debt rose £6m to £56m, as shareholder loan increased by £10m to £56m, but £4m bank loan was repaid. Shareholder loans are now interest free with no fixed payment terms. In July 2018 club capitalised £22m of shareholder loans as yet another part of the FFP settlement.
#QPR debt of £56m was by no means the largest in Championship, e.g. #Boro £101m, #ITFC £89m and Cardiff £74m, and is now down to £34m. That said, it would have been much higher without the owners capitalising £210m of debt and writing-off £60m.
Although debt is high in the Championship, most is provided by owners who charge little or no interest, e.g. #QPR paid just £21k in 2017/18. Despite the exorbitant interest rates on previous shareholder loans, the owners converted interest payable into equity (£5.7m in 16/17).
In 2017/18 #QPR received £10m in shareholder financing (all from Ruben Gnanalingam) and £8m from player sales. They spent £5m on buying players and £1m on capex, repaid the £4m bank loan and covered a £10m operating loss, leading to an overall £2m cash outflow.
Since Fernandes arrived, the owners have pumped nearly a quarter of a billion (£244m) into the club. #QPR spent most of this to cover operating losses (£139m) & on net player purchases (£83m). Only £11m on infrastructure, though will now build new training ground at Warren Farm.
In theory, #QPR reduced losses should remove any future FFP problems, especially as can exclude academy, community & infrastructure (estimated at £4m a year) and the £20m settlement fine. Over the last three-year monitoring period, FFP losses were £23m against the £39m limit.
However, this is the last season that #QPR receive the £17m parachute payment, so they will have to modify their strategy to reduce the reliance on their owners. In particular, they will have to cut the wage bill and focus on youth (partly for more lucrative player sales).
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