, 44 tweets, 24 min read
#Ajax 2018/19 accounts cover their most successful season in years when they won the Dutch league and cup double (for the first time since 2002) and reached the Champions League semi-final with a dazzling brand of football. Some thoughts in the following thread.
#Ajax profit before tax shot up from €3m to €69m (€52m after tax), largely due to revenue more than doubling from €93m to a record €199m (thanks to the CL exploits) and profit on player sales rising from €39m to €73m. The price of success was expenses increasing by €74m.
#Ajax €106m revenue growth was very largely due to the Champions League run with all three streams increasing: broadcasting surged €76m from €13m to €89m; match day rose €20m (63%) from €31m to €51m; and commercial was €11m (22%) higher at €60m.
#Ajax wage bill grew €39m (74%) from €53m to €92m, while other expenses rose €20m (41%) to €69m, including €10m increase for European completion costs. Player amortisation also leapt up €14m (55%) from €25m to €39m.
Few clubs in the Eredivisie make big profits, e.g. in 2017/18 the highest was Feyenoord €16m. Therefore, #Ajax €69m pre-tax profit in 2018/19 is something special (though not completely unprecedented), a full €58m more than the closest challenger AZ €11m.
#Ajax are known for a strategy of developing and selling players with 2018/19 benefiting from €73m profit from this activity, €33m up on prior season, mainly Frenkie de Jong to Barcelona and Justin Kluivert to Roma. Next highest profits in the Eredivisie: AZ €24m & PSV €21m.
#Ajax run a sustainable business model, reporting profits in eight of the last nine years (the only loss in 2015/16 was less than €1m). Over that period, they have accumulated €229m profits, averaging €25m a season. Two of the club’s highest ever profits came in last 3 years.
However, #Ajax are still reliant on player sales to make a profit, earning a thumping great €321m from this activity in the last 10 years, averaging €64m a season since 2017. Next year’s accounts will include Matthijs de Ligt’s record sale to Juve plus Kasper Dolberg to Nice.
#Ajax EBITDA (Earnings Before Interest, Depreciation and Amortisation), which strips out player sales and non-cash items to give underlying profitability, improved from minus €9m to €38m in 2018/19 (€111m if player sales are included).
Almost all the Eredivisie clubs have negative (or very low positive) EBITDA with only two clubs generating decent cash in 2018/19, namely #Ajax €38m and PSV €16m. The next highest is Feyenoord with less than €2m.
To highlight how impressive #Ajax growth was last season, their revenue of €199m was €81m (nearly 70%) higher than the club’s previous record of €118m in 2016/17. Growth driven by broadcasting €59m, but also healthy increases in match day €13m and commercial €9m.
As a consequence, #Ajax €199m revenue was the highest in the Eredivisie by far in 2018/19, more than the next 3 clubs combined: PSV Eindhoven €97m, Feyenoord €71m and AZ €25m. Looked at another way, it’s also more than the lowest 15 clubs put together.
In fact, the gap between #Ajax and the two major domestic rivals has never been higher: Feyenoord €129m (previously €65m in 2012) and PSV €103m (previously €43m in 2011). Supports technical director Marc Overmars’ statement, “We need to become the Bayern Munich of our league”
#Ajax €199m 2018/19 revenue would have (just) put them into the Top 20 in the 2017/18 Deloitte Money League, which is a striking achievement, though worth noting this is still far below the elite overseas clubs with the top 8 all earning more than half a billion Euros.
Even after doubling their revenue to €199m in 2018/19, the €653m gap between #Ajax and the top club is virtually unchanged with Barcelona up to an incredible €852m. Overmars again: “It’s like being in Formula 1 and driving a DAF. It’s hard to pass the Mercedes and Ferraris.”
To reinforce the enormous revenue disparity for Dutch clubs, the Eredivisie had €459m revenue in 17/18, just 9% of the Premier League’s €5.4 bln. Also miles behind Germany €3.2 bln, Spain €3.1 bln, Italy €2.2 bln & France €1.7 bln. Below Russia €813m & Turkey €731m too.
#Ajax receive less than €10m a season TV money from the Eredivisie, who signed a 12-year deal with Fox starting in the 2013/14 season. Distribution is based on a club’s historical performance (results over the previous 10 years), so Ajax get the most.
For some perspective, the club finishing top of the Premier League received around €170m, while the bottom club got €109m, i.e. 12 times as much as #Ajax €9m. The Dutch champions only get slightly more than an English Championship club not benefitting from parachute payments.
Based on my estimate, #Ajax earned €81m for reaching the Champions League semi-final: participation €15m, prize money €45m, UEFA coefficient €19m and TV pool €2m. Feyenoord got €30m even though they finished last in their group.
Total Champions League revenue was up 54% in 2018/19 (higher TV rights). Also a new UEFA coefficient payment (based on performances over 10 years), where #Ajax had 16th highest ranking, giving them €19m. This change in distribution rewards the club’s good record in Europe.
#Ajax have earned a chunky €129m from European competition in the last 5 years, which is even more impressive considering they did not reach the group stage of Champions League or Europa League in 2017/18. Next highest for Dutch clubs: PSV €91m and Feyenoord €35m.
The importance of Champions League qualification for #Ajax cannot be overstated. Including €17m gate receipts, they earned €98m in 2018/19, which represented almost half of their total revenue. Even that stat is too low, as it does not include related increases in sponsorships.
#Ajax match day income rose €20m (63%) from €31m to €51m, largely due to 9 more home games: 7 in Europe (up €15m) and 2 in KNVB cup. There was also a 1.4% (indexed) ticket price increase. Much higher than other Dutch clubs with the closest being PSV €32m and Feyenoord €17m.
#Ajax match day income also boosted by the average attendance at the Johan Cruyff Arena increasing from 50,979 to 52,258, a new record. Crowds have therefore grown by 4,400 from the recent low of 47,882 in 2016.
#Ajax average attendance of 52,258 remains the highest in the Eredivisie, around 11,000 more than Feyenoord 41,600. The only other Dutch club above 20,000 is PSV Eindhoven with 34,100.
#Ajax commercial income grew €11m (22%) from €49m to €60m, mainly sponsorship (up €4m to €34m) and merchandising (up €7m to €21m), partly due to CL bonuses. Highest in the Eredivisie, ahead of Feyenoord €45m and PSV Eindhoven €26m.
#Ajax have extended their two main sponsorship deals: (a) shirt sponsor Ziggo, a telecoms provider, to June 2022), worth at least €8m a year; (b) kit supplier Adidas, who have been with the club since 2000, have a new 6-year deal worth around €8m a year until June 2025.
#Ajax wage bill rose by €39m (74%) from €53m to €92m, mainly due to higher payments to players: salaries €13m and bonuses €20m (for sporting success). Other staff and technical staff costs increased by €4m & €1.4m respectively, again linked to performance related bonuses.
Following the increase, the #Ajax wage bill of €92m is by some distance the highest in the Eredivisie, more than twice as much as PSV Eindhoven €45m and Feyenoord €35m. There is then a further big gap to AZ and Vitesse, both around €19m.
However, for #Ajax it is a case of being “a big fish in a small pond”, as their €92m wage bill is significantly lower than the top clubs in the major leagues, e.g. less than 20% of Barcelona €501m. This makes it inevitable that their young stars will move abroad.
Following the steep increase in revenue, #Ajax wages to turnover ratio fell from 57% to 46%, their lowest since 2015 and just about the lowest in the Eredivisie. The Dutch “big three” are quite similar, as PSV Eindhoven are also 46%, while Feyenoord are a bit higher at 49%.
It’s a similar story in Europe, as #Ajax 46% wages to turnover ratio is only bettered among the top 12 Money League clubs by Tottenham’s amazing 39%. It’s much lower than the likes of Juventus 71%, Atletico Madrid 70%, Roma 64%, PSG 61% and Barcelona 59%.
#Ajax’s other staff cost, player amortisation (i.e. the annual charge to write-down transfer fees), has risen considerably over the last few seasons, reflecting their growing investment in the playing squad. It has more than quadrupled from €9m in 2014 to €39m in 2018.
#Ajax player amortisation of €39m is easily the highest in the Eredivisie, ahead of Feyenoord €22m and PSV Eindhoven €15m, then a big drop to AZ €6m. However, to place this into perspective, big spending clubs like #MCFC, #MUFC and Barcelona have €140-150m.
#Ajax have been a selling club for many years, as their financial constraints make it virtually impossible to keep players. In fact, in the last 4 years average annual net sales have risen to €54m, though this disguises purchases increasing to €43m, as gross sales up to €96m.
Indeed, #Ajax two highest ever player sales both came last summer with Matthijs de Ligt moving to Juventus for €86m and Frenkie de Jong to Barcelona for €75m. This is a hidden benefit of CL success. The club’s top 20 transfers have generated more than half a billion Euros.
Every single Eredivisie club has had net player sales over the last 4 seasons, another indicator of the financial position of Dutch football, though #Ajax have the highest figure by some distance with €215m, well ahead of AZ €64m and PSV Eindhoven €51m.
However, on a gross basis #Ajax have spent more than any other Dutch club on players over the last 4 seasons with their €170m nearly twice as much as PSV Eindhoven €90m, followed by Feyenoord €40m and AZ €23m. Every other club’s gross spend was less than €10m.
#Ajax have virtually zero financial debt, while their cash rose €50m from €12m to €62m. They have enjoyed surplus net funds for many years.
#Ajax transfer fees debt (due to stage payments) further increased from €21m to €65m in 2019, but the amount owed to them by other clubs also rose from €48m to €63m, giving net transfer payables of just €2m.
However, it is worth keeping an eye on #Ajax total liabilities, the broadest possible definition of debt, which have grown from €62m in 2016 to €177m in 2019, including a €76m increase last season alone.
In fairness, #Ajax total liabilities of €177m are still very low compared to other major European clubs. The only Money League Top 12 club with a lower balance is Borussia Dortmund €145m, while Barcelona and #MUFC have amassed €1.2 bln liabilities.
#Ajax are clearly a well-run club, but their business model is very reliant on 2 factors: (a) qualification for the Champions League; (b) player sales. They have the best financial resources in the Eredivisie, but are still a long way behind their elite European rivals.
So, it is likely that we shall continue to see #Ajax having to sell their best young talents, due to the financial weakness of the Dutch league, which means they constantly need to rebuild. That’s a tricky challenge, but it is one that they have successfully met in the past.
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