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#BristolCity recently published their 2018/19 financial results, covering a season when they finished 8th in the Championship, their highest position for 11 seasons and just 4 points off a play-off position. Some thoughts in the following thread.
#BristolCity reported £11m profit before tax, a significant improvement on the prior season’s £25m loss, mainly thanks to profit on player sales surging from hardly anything in 2017/18 to £38m last season. Owner Steve Lansdown described the results as “a milestone” for the club.
#BristolCity revenue also rose by £4m (16%) from £26m to £30m, mainly due to commercial income increasing £4.6m (39%) to £16.1m, though broadcasting was also up £0.4m (5%) to £8.1m. On the other hand, match day income fell £0.7m (10%) to £6.0m.
The #BristolCity wage bill grew £3.4m (12%) to £30.6m, while other expenses also continued to rise, by £1.9m (14%) to £15.2m. The £1m (14%) increase in player amortisation to £7.8m was offset by no repeat of previous season’s £1m impairment. Net interest almost tripled to £1.4m.
This analysis is based on Bristol City Holdings Ltd, which owns two significant subsidiaries: Bristol City Football Club Ltd (profit before tax £12.7m) and Ashton Gate Ltd, which operates the stadium facilities (loss before tax £1.7m).
#BristolCity £11m profit would have been 3rd highest in the 2017/18 Championship, only behind #NCFC £18m & #DCFC £15m (though the latter included £40m stadium sale profit). This is very good, considering most clubs lose money in this ultra-competitive division.
However, this great result was only achieved because of the substantial £38m profit on player sales, including Lloyd Kelly to #AFCB, Bobby Reid to Cardiff, Aden Flint to #Boro & Joe Bryan to #FFC plus add-ons from Kodjia sale to #AVFC. Only #NCFC surpassed this figure in 2017/18.
This is the first time that #BristolCity have delivered a profit under owner Steve Lansdown, following their highest ever loss of £25m in 2017/18. In fact, the club’s losses added up to £124m in the previous 10 seasons before the 2018/19 turnaround.
Player trading has become increasingly important at #BristolCity with £52m profits in the last 3 years, compared to only £6m in the preceding 7 years. Lansdown: “Without being mean, players are a commodity. They come and go, they have a value and we need to realise that value.”
#BristolCity profits boosted by selling Academy players, whose transfer fees are pure profit in the books. As Lansdown said, player trading “is all part and parcel of the process” of making the club sustainable. Indeed, 2019/20 will include Adam Webster’s £20m sale to #BHAFC.
#BristolCity EBITDA (Earnings Before Interest, Tax, Depreciation & Amortisation), which can be considered as a proxy for cash operating profit, fell slightly to £(15)m in 2018/19. This was around break-even back in 2008, but has been steadily declining since then.
#BristolCity £(15)m EBITDA is firmly in the bottom half of the table, but to be fair only 4 clubs in the Championship managed to generate positive EBITDA with #hcafc being the highest at £14m. The board says this loss is “within their expectations”. Only half Birmingham’s £(30)m.
#BristolCity revenue has more than doubled since their first season back in the Championship, from £14m in 2016 to £30m in 2019. Most of that growth is commercial, which has nearly tripled from £5.6m to £16.1m. There were also increases in broadcasting £3.4m and match day £2.1m.
Despite the growth, #BristolCity £30m revenue is still only 10th highest in the Championship, less than half of some of the clubs benefiting from parachute payments in 2017/18: #AVFC £69m, #SAFC £64m, #Boro £62m and #NCFC £62m. Average for the division is around £32m.
Championship revenue is hugely influenced by Premier League parachute payments with 8 clubs benefiting from these in 2018/19, led by #SCFC, #Swans and #WBA receiving £43m, followed by #hcafc, #Boro and #SAFC (all £35m), then QPR £17m and #AVFC £16m.
If parachute payments were to be excluded, it would be a very different story. In this case, #BristolCity £30m would be the 4th highest revenue in the Championship, only £11m below the leader (#LUFC £41m), which would give them a very decent chance of making the play-offs.
#BristolCity broadcasting income rose by £0.4m (5%) to £8.1m, due to increases in the Premier League solidarity payment & EFL pool. The lucrative TV deal in the top flight (with clubs receiving between £95m and £150m) helps explain why so many Championship clubs “go for it”.
#BristolCity match day income fell 10% (£0.7m) to £6.0m, as the FA Cup run to the 5th round did not fully compensate for reaching the Carabao Cup semi-final the previous season. This put them around mid-table in the Championship, earning half as much as #AVFC £12m.
#BristolCity attendances have significantly increased since promotion from League One, rising 80% from 11,681 to 20,949. The redevelopment of the Ashton Gate stadium (capacity 27,000), shared with Bristol rugby club and also used for major concerts, has helped generate revenue.
That said, #BristolCity average attendance of 20.949 was only the 12th highest in the Championship, around 15,000 less than Leeds United. The club did have a record number of season ticket sales for 2018/19, despite some controversy over the pricing scheme.
#BristolCity commercial income rose 39% (£4.6m) to £16.1m, which would have placed them in a very impressive 2nd place in the Championship in 2017/18, only behind #LUFC £22m. Growth driven by further expansion of Ashton Gate usage, e.g. conferences, summer concerts.
#BristolCity shirt sponsor is online casino company Dunder, while the kit is made by their own company Bristol Sport. There was a record number of shirt sales in 2018/19.
#BristolCity wage bill rose £3.4m (12%) to £30.6m in 2017/18, which means that it has increased by £13.2m (76%) since the first season after promotion from League One in 2016. The wages to turnover ratio slightly improved from 105% to 101%
Despite the significant growth #BristolCity £31m wage bill is still firmly in the bottom half of the Championship, a long way below the likes of Aston Villa £73m, Fulham £54m (both with parachute payments) and Wolves £51m (including promotion bonus).
Although #BristolCity wages to turnover ratio of 101% is obviously far from ideal, it is not uncommon in the Championship. In fact, more than half the clubs have ratios over 100% with Birmingham City 202% and Reading 197% “leading the way”. The Robins’ are down from 170% in 2013.
#BristolCity directors’ remuneration increased from £109k to £145k, but this was still on the low side for the Championship, especially compared to the likes of Sunderland £2.0m, Cardiff City £1.4m, Reading £1.4m and Fulham £1.2m.
#BristolCity other expenses rose £1.9m (14%) to £15.2m. This is the fifth year in a row that this cost category has grown – from less than £4m in 2014. No details provided by the club, though likely to include costs associated with commercial growth.
#BristolCity player amortisation, the annual expense to write-down transfer fees, increased by £1.0m (14%) to £7.8m. This charge has significantly grown from just £0.9m in 2014, reflecting some major investment in the squad in recent years.
Despite the growth, #BristolCity player amortisation of £7.8m is still only mid-table in the Championship, around a third of big-spending Middlesbrough and Aston Villa, both £24m.
#BristolCity had £10m player purchases, including Webster, Weimann, Hunt, Eisa and Watkins. Lower than previous seasons (17/18 £12m, 16/17 £14m), but £36m over last 3 seasons much more than £8m in preceding 3 seasons. Still massively outspent by #Boro £66m and #FFC £31m.
In the last 3 seasons #BristolCity have substantially increased annual average spend on players to £10m, but sales have also grown to £10m, leading to break-even. This is a marked change in approach from the previous 7 seasons (gross £2.2m, sales £1.3m), though net is similar.
#BristolCity gross debt fell £2m to £70m, comprising £50m bank loan (for stadium redevelopment), guaranteed by the owners, £19m loan from Pula Sports Ltd (Steve Lansdown’s company) and £1m overdraft. Club also owes £6m on transfers, but is itself owed £27m from other clubs.
#BristolCity gross debt of £70m is quite large for a club of their size, but many other clubs in the Championship have larger debts. The debt is not an issue, so long as Steve Lansdown remains a friendly owner, as he demonstrated when converting £37m of debt to equity in 2013.
Although debt is high in the Championship, most of it is provided by owners who charge little or no interest. Lansdown’s loan is indeed interest-free, but #BristolCity £1m interest payment on the bank loan (LIBOR + 0.9%) would have been the 6th highest in the division in 2017/18.
In fact, Lansdown provided a further £10m of funding via share capital in 2018/19. This support is essential, as #BristolCity do not generate cash from operations, losing £11m last season alone. Received £6m from (net) player sales, but spent £1m on capex and £1m interest.
Since 2012 #BristolCity had available cash of £152m: (a) £77m from loans; (b) £75m from issuing share capital. 60% has been used to cover operating losses £88m, £56m on capital expenditure (mainly the stadium), £3m on interest and just £4m on (net) player investment.
As the accounts state, #BristolCity is dependent on funding from Lansdown, the co-founder of financial services firm Hargreaves Lansdown. I estimate that he has put in around £145m to date (capital £124m, loan £21m) with little sign of the need for this funding going away.
#BristolCity have no problems with Profitability & Sustainability rules. The reported £21m losses over the 3-year monitoring period less estimated £14m allowable deductions for academy, community and infrastructure take their FFP losses to £7m, easily within the £39m target.
As #BristolCity CEO Mark Ashton said, “This is an encouraging set of results for this football club in showing a profit”, though the significant positive impact of player sales should not be ignored. Without these, the club would again have reported a large loss.
#BristolCity are lucky to have a benevolent owner in Steve Lansdown, but this is unfortunately pretty much a necessity for those Championship clubs that are not in receipt of sizeable parachute payments, if they wish to compete for promotion.
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