Aberdeen’s 2018/19 financial results covered a season that “ended with the disappointment” of a 4th place finish in the SPFL Premiership, while they reached the League Cup final & Scottish Cup semi-final, losing to Celtic on both occasions. Some thoughts in the following thread.
Aberdeen’s loss widened from £0.4m to £5.0m, almost entirely due to the £4.3m impairment of Pittodrie stadium. However, revenue rose £0.5m (3%) to another club record of £15.9m, though profit on player sales was unchanged at £0.3m. 
Aberdeen’s revenue growth was driven by gate receipts, which increased £0.6m (13%) to £5.4m, due to the cup runs, and commercial income, up £0.5m (7%) to £7.4m, despite a reduction in sponsorship. Broadcasting fell £0.6m (17%) to £3.1m – lower league place and UEFA prize money.
Aberdeen’s wage bill climbed £0.7m (8%) to £9.2m, while other expenses (including the cost of loan players) rose £0.5m (7%) to £7.1m. On the other hand, player amortisation nearly halved from £0.8m to £0.5m.
Aberdeen have announced significant further investment of £5m from Dave Cormack, Tom Crotty, Roger Lee plus new investor, AMB Sports & Entertainment (who own MLS club Atlanta United). In addition, Deeside Trust will convert £3.3m debt into capital, bringing the total to £8.3m.
Following this deal, Cormack will replace Stewart Milne as chairman after 22 years. Worth noting that Cormack, an Aberdonian and lifelong Dons fan, has already provided £11.2m funding since June 2017.
Aberdeen’s reported loss of £5m is the second worst in the SPFL Premiership, though less than half of Rangers’ £11.4m. If the £4.3m stadium impairment were excluded, the loss would be cut to £0.7m. Highest profits reported by Celtic £11.3m and Hearts £2.9m.
Aberdeen’s profit on player sales was flat at £0.3m, mainly Adam Rooney to Salford City, Archie Mair to Norwich City and a sell-on fee for Jayden Stockley. The only club in Scotland to generate sizeable profits from this activity was Celtic £17.7m, followed by Rangers £3.1m.
Aberdeen have only managed to post an overall profit once in the last decade - £7.2m in 2015, which was largely due to a £6.6m debt write-off. In fairness, most of the losses in this period have been relatively small, so the total deficit over the decade is only £8.7m.
Furthermore, Aberdeen’s bottom line has been adversely impacted by exceptional items in last few years, including £9.1m stadium impairment: £7m for Pittodrie following a lower valuation, linked to a drop in property prices, and £2.1m for the canceled Loirston Loch project.
Aberdeen have made very little money from player sales, actually only £3.3 profit from this activity in the last 10 years. Most departures have been free transfers with the highest profit probably coming from the £1.3m sale of Jonny Hayes to Celtic on 2017.
Aberdeen’s EBITDA (Earnings Before Interest, Tax, Depreciation & Amortisation), considered cash operating profit, as it excludes player sales & exceptionals, fell to £(0.4)m, though it had been positive for previous 5 years in line with “policy of breaking-even over medium term”.
As noted by long-standing chairman, Stewart Milne, Aberdeen “have more than doubled revenue from around £7.8m in 2013 to almost £16m today.” The £8.1m growth has been spread around the three revenue streams: gate receipts £3.2m, commercial £3.1m and broadcasting £1.7m.
Interestingly, Aberdeen’s largest revenue stream is commercial with 47% share, though this is down from 55% in 2013. Over the same period, gate receipts have increased from 28% to 34%. Broadcasting is only 19%, highlighting the small TV deal in Scotland.
The good news is that Aberdeen’s £16m revenue is the third highest in Scotland, but the bad news is that they are miles behind the big two Glasgow clubs. They are around a fifth of Celtic’s £83m and less than a third of Rangers’ £53m.
The revenue gap between Aberdeen and Rangers has been increasing, as their rivals progressed up the Scottish leagues. Compared to Celtic, the difference is around the same as it was in 2013, but that is a hefty £67m.
SPFL chief executive Neil Doncaster described the latest domestic TV deal as “the highest prize fund in the history of the Scottish game”, but Aberdeen’s 4th place in the SFPL Premiership was only worth £1.8m. League winners Celtic received £3.4m.
For some perspective, English Championship clubs receive more than twice as much (£7m), while those with parachute payments get £45m in the first year after relegation. It’s a completely different ball game in the Premier League, where payments range from £97m to £152m.
Aberdeen’s gate receipts rose £0.6m (13%) to £5.4m, despite average attendance falling from 15,775 to 14,872, as the club staged 3 more cup games at home. This was the 4th highest match day income in Scotland, but Celtic £36m and Rangers £32m are significantly higher.
Aberdeen’s average attendance of 14,872 is around 43,000 lower than Celtic and 35,000 less than Rangers. Also below the Edinburgh clubs: Hearts 17,553 and Hibernian 17,474. Season ticket prices were frozen for everyone in 2018/19 and “the vast majority” in 2019/20.
Aberdeen have been looking for a new stadium since 2009, but now have the site at Kingsford, where the training facility was opened last month. Milne admits that it will be a challenge to secure £45m funding required for the stadium, though some would come from sale of Pittodrie.
Aberdeen’s commercial income rose £0.5m (7%) to £7.4m, comprising commercial £5.8m and sponsorship & advertising £1.6m. Around a quarter of Celtic £32m, but quite close to Rangers £10m. Shirt sponsor is Saltire Energy (longest in club’s history), while kit deal is with Adidas.
Aberdeen’s wage bill increased £0.7m (8%) to £9.2m, due to continued investment in the playing squad. Wages to turnover ratio worsened from 56% to 58%, though “still within accepted industry norms and compares favourably to other clubs.”
Following the increase, Aberdeen’s £9m wage bill is the third highest in Scotland, ahead of Hearts £8m. Rangers £34m is more than three times as much, while Celtic £56m is an incredible six times as much as the Dons.
Despite the increase in Aberdeen’s wages to turnover ratio to 58%, this is still better than Celtic 67% and Rangers 65%, though is higher than Hearts 54%. It is also the highest (worst) reported by the Dons since 67% in 2013.
Milne has pointed out the difficulties of maintaining a competitive squad, particularly with rising wages in the English market, as evidenced by Adam Rooney’s move to 5th tier Salford City for a higher salary. Aberdeen’s £9m wage bill is lower than all English Championship clubs.
Aberdeen’s player amortisation, the annual expense to write-down transfer fees, dropped from £0.8m to £0.5m, but this is still the second highest in the last decade, reflecting the higher level of investment in new players.
As a rule, Scottish clubs do not pay big money to sign players, meaning that their player amortisation charge is normally very low. In fact, Celtic £10m and Rangers £6m are the only clubs that booked more than Aberdeen’s £450k in 2018/19.
Even though Aberdeen have spent more on bringing in new players, they still had only £0.4m player purchases in 2018/19. The only clubs that splashed the cash last season were Rangers £10m and Celtic £6m. Those sums are also not enormous, but everything is relative.
In fact, Aberdeen have only spent a total of £3.1m on bringing in players in the last 10 years, though the annual average has increased from £0.1m to £0.7m since 2017. In the same period, they have had player sales of £3.2m, thus breaking-even in the transfer market.
Aberdeen’s gross debt rose from £0.7m to £7.2m, very largely related party loans of £6.9m from the Directors (£5.8m) and the Aberdeen FC Community Trust (£1.1m). The vast majority of the debt has been converted into shares since the accounting year-end.
Aberdeen’s £7.2m debt was the second highest in Scotland, only behind Rangers £14.5m, though most has since been converted into capital. Would have been much higher without Willie and Elaine Donald clearing £14.5m in 2015 (£8m equity conversion, £6.5m loan waiver).
Aberdeen’s cash balance was unchanged at £2m. Of note here is that Celtic’s £34m cash is 2.5 times as much as the other 11 SPFL Premiership clubs combined (which amounts to £13m). Rangers only had £1m in the bank.
Aberdeen lost £1m from operations in cash terms in 2018/19, then spent £6.1m on infrastructure, mainly the new training facilities at Cormack Park. This was funded by £6.6m new loans from the directors and a £0.5m increase in share capital. Player purchases and sales broke-even.
In the last 10 years Aberdeen have had £13m of available cash, very largely from owner financing £11.4m (loans £6.7m and share capital £4.8m) with £1.2m from operations and £0.2m from (net) player sales. Vast majority £11.6m spent on infrastructure with £1.6m interest payments.
These are interesting times at Aberdeen. As new chairman Dave Cormack said, “The new investment and this partnership with Atlanta will allow us to punch above our weight, trying to level the playing field against significantly higher income generated by Celtic and Rangers.”
