Thread by @SwissRamble

Crystal Palace’s 2017/18 financial results covered their 5th consecutive season in the Premier League, when they finished “in a very creditable” 11th place. Roy Hodgson replaced Frank De Boer as manager in September 2017. Some thoughts in the following thread #CPFC

#CPFC posted a £35.5m loss before tax, compared to an £11.8m profit the prior year, mainly due to profit on player sales falling £32m to just £2m, though revenue grew £7.6m (5%) from £142.7m to a club record £150.3m. Loss after tax was £33.4m, thanks to a £2.1m tax credit.

#CPFC £8m revenue growth was very largely driven by broadcasting’s £4m (4%) increase from £117m to £121m, mainly due to increased prize money for finishing 11th, while commercial also increased £3.1m (21%) from £15.2m to £18.3m and match day was up £0.3m (2%) to £10.9m.

Significant investment in the squad led to #CPFC player amortisation rising £13.4m (41%) to £46.9n, while wages increased £5.5m (5%) to £117,3m, mainly due to the change in manager. Prior year benefited from £4m compensation received after the Tony Pulis tribunal.

#CPFC £36m pre-tax loss is the highest reported to date in the Premier League (only #NUFC missing). The Eagles are not alone, as 6 other clubs lost money, including Watford £32m & Stoke £30m, but others were very profitable, e.g. #THFC £139m, #LFC £125m, #AFC £70m & #CFC £67m.

Main driver for #CPFC loss is clear, as they only made £2m profit on player sales “to protect the quality of the playing squad” against £35m prior year (mainly Bolasie to Everton). This was second lowest in PL, in stark contrast to clubs like #LFC £124m, #AFC £120m & #CFC £113m.

#CPFC have now lost money in 2 out of the last 3 seasons, though their profits in the 5 years since promotion to the Premier League in 2013 add up to a healthy £36m, averaging £7m a season.

As a rule, #CPFC do not make much from player sales, so 2016/17 £35m was somewhat of an exception (and more than previous 6 seasons combined). Excluding this (and £4m Pulis compensation), we can see their underlying loss growing in last 3 years. Also no sales of note in 2018/19.

#CPFC EBITDA (Earnings Before Interest, Tax, Depreciation & Amortisation), which can be considered a proxy for cash operating profit, as it strips out player sales and once-off items, fell slightly from £14m to £12m, far below the £30m peak in 2014.

#CPFC EBITDA of £12m was firmly in the bottom half of the Premier League, less than 10% of #MUFC £177m and #THFC £159m. That might not be the most valid comparison, but for more perspective perhaps #BHAFC £36m is three times as much.

#CPFC revenue has grown £48m (48%) from £102m to £150m in the last 2 years. Most of this growth (£43m) was due to new Premier League TV deal in 2017, but commercial is also up £6m (54%), while gate receipts dropped £1m (9%).

#CPFC described £150m as a “significant milestone as the club seeks to become an established and sustainable Premier League member.” This is 12th highest in the top tier, pretty much in line with their league place, though for some perspective it’s £230m below 6th placed #THFC.

More positively, #CPFC revenue of £150m was the 24th highest in the world, up two places in the Deloitte Money League. This was ahead of clubs like Sevilla £146m, Lyon £145m and Benfica £133m plus Champions League quarter-finalists Porto £94m and Ajax £81m.

#CPFC TV money from the Premier League rose £4m from £110m to £114m, despite being shown live only 12 times against 14 in 16/17 (facility fees down £2m), as they finished 11th compared to 14th the previous season (merit payment up £6m),

Consequently, a chunky 81% of #CPFC revenue came from TV (£121m out of £150m), though in fairness it should be noted that no fewer than 12 of the 20 Premier League clubs get more than 75% of their income from this source, with Bournemouth “leading the way” with an amazing 89%.

#CPFC gate receipts increased by £0.3m (2%) to £10.9m, even though they hosted 1 game less. This was 13th highest match day revenue in the Premier League. For some perspective, #SaintsFC & #BHAFC are over 70% higher at £19m. £11.9m in 2015/16 benefited from run to FA Cup Final.

#CPFC attendance dipped slightly from 25,161 to 25,063, but worth noting that crowds have grown from 15,000 just 6 years ago in the Championship. The “strong demand and low relative cost” means that the club is reviewing ticket prices, which most likely means upwards.

#CPFC attendance of 25,063 was the 14th highest in the Premier League, but represented 98.5% of the 26,000 capacity, which helps explain the club’s decision to build a new main stand at Selhurst Park to increase capacity to 34,000.

#CPFC stadium project expected to cost £100m with work beginning end of this season, ready for 2021/22. The club say it “will offer a step change in revenue potential with over 8,300 new seats, up to 3,000 new premium covers and major opportunities for non-matchday revenue.”

#CPFC commercial income rose £3.1m (21%) to £18.3m, the 12th highest in PL, due to an improved shirt sponsorship deal and growth in partnership and LED revenues. Comprises sponsorship & advertising £9.4m, other commercial activities £5.8m and other income £3.1m.

Gaming company ManBetX became new #CPFC shirt sponsor in 2017/18 in a “record breaking” deal worth £6.5m a year, replacing Mansion (£5m). Also signed first sleeve sponsor, Dongquidi. Puma have replaced Macron as kit supplier in 2018/19.

#CPFC wage bill increased £6m (5%) to £117m, which the club attributed to “change of first team management”, i.e. Frank De Boer. They added, “Outside of this, costs remained largely flat”, though wages have shot up £37m (46%) in last 2 years. They were as low as £46m in 2014.

#CPFC £117m wage bill remains the 9th highest in the Premier League, only surpassed by the “Big Six”, #EFC and #LCFC. This raises obvious questions around wage control, despite the club talking about “a lean and efficient approach to its operations.”

#CPFC wages to turnover ratio was unchanged at 78%, which is the highest (worst) in the Premier League for the second year in a row, just ahead of #EFC 77%. It is literally twice as much as #THFC 39%, though in fairness 8 clubs have ratios above the recommended 70% upper limit.

#CPFC highest paid director (presumably Steve Parish) received £1.553m remuneration, down from £2.150m in the prior year. This was the 4th highest in the Premier League, only behind #MUFC, #THFC and #AFC. Accounts emphasised that any bonus has been reinvested into the club.

#CPFC player amortisation, the annual charge to expense transfer fees, surged £13m (46%) from £33m to £46m, reflecting “significant investment in players acquired to reduce the risk of relegation and progress further in other competitions.” Has risen from £1m just 5 years ago.

#CPFC player amortisation of £46m was the 10th highest in the Premier League, ahead of West Ham £41m and FA Cup finalists Watford £38m. However, for some context, it is still only around a third of big-spending #MUFC £138m and #MCFC £134m.

#CPFC made £54m player purchases, including Mamadou Sakho, Jairo Riedewald, Alexander Sorloth and Jaroslaw Jach. This was one of the lowest in the Premier League, though Palace have invested £158m over the last 2 seasons, almost £100m more than £62m in the preceding 2 seasons.

#CPFC transfer spend had been on a rising trend since promotion, but 18/19 only saw £11m expenditure, mainly Kouyaté, though Mayer, Sako and Guaita came in on frees. Parish: “We are not in a situation like many PL clubs where we have a pot of gold to throw around to buy players.”

#CPFC gross debt increased from £16m to £53m, including £29m advances under funding agreement, which was repaid after year-end, but replaced by another advance of £40m. The owners put in a further £7.5m to take their loans to £21m.

Despite the increase #CPFC £53m gross debt is still only the 13th highest in the Premier League, though it will surely further rise as the stadium development progresses. It is worth noting that there is also £49m owed on transfer fees (with Palace only owed £2m by other clubs).

#CPFC paid £0.7m interest in 2017/18, which was nowhere near the highest in the Premier League, though some clubs pay zero. The £359k charged on the parent company loan in 2016/17 was waived last season, as all such loans are now interest-free.

#CPFC cash balance increased from £16m to £18m, which is mid-table in the Premier League. Obviously a long way short of #MUFC £242m and #AFC £231m, but maybe more meaningfully a third of Southampton £57m and half as much as Burnley £34m.

#CPFC generated £12m from operating activities in 17/18, but then spent £41m (net) on players, £2m on ground improvements, £3m on tax and £1m on interest payments, leaving a £34m shortfall. This was funded by £36m of loans: £29m external and £7.5m from the owners.

Since promotion, #CPFC have generated £121m from operations, with £21m provided by the owners (share capital £11m and loans £10m) plus £28m external loans. They spent 3/4 of that (£132m) on players, £16m on infrastructure and £6m on tax, while adding £15m to the bank account.

There have been reports that American businessmen Josh Harris and David Blitzer, who each acquired 18% of #CPFC in December 2015 (the same amount as Steve Parish), might already be looking to sell their stake, but nothing official has been announced as yet.

As a technical aside, this analysis is based on CPFC 2010 Ltd, while ultimate parent company is Palace Holdco UK Ltd. No differences in revenue, wages or other expenses, but depreciation & interest £2.6m higher. Debt £13m more with a further £24m shareholder loan after year-end.

These financials are obviously not great, but #CPFC are paying the price of competing in the Premier League. There’s also the question of how to fund the stadium expansion. Supporters will not like to hear it, but the club does have very saleable assets, e.g. Zaha & Wan-Bissaka.