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Brighton and Hove Albion’s 2018/19 accounts cover their second season in the Premier League, when they finished 17th, just avoiding relegation, though they did reach the FA Cup semi-finals. Graham Potter replaced Chris Hughton as coach after season ended #BHAFC
#BHAFC swung from a £12m profit before tax to a £22m loss (£21m after tax), a £34m deterioration, as the cost base increased significantly following further squad strengthening. Revenue rose £4m (3%) from £139m to £143m, while profit on player sales was up £2m to £5m.
#BHAFC £4m revenue growth was very largely driven by broadcasting’s £3.2m 3%) increase to £113.5m, mainly due to the FA Cup run, though commercial also rose £0.7m (7%) to £11.4m. Match day was unchanged at £18.5m.
#BHAFC wage bill shot up £24m (31%) to £102m, while player amortisation was also up £14m (72%) to £33m and other expenses were £2m (6%) higher at £27m. Included the cost of changing the management team. No repeat of prior season’s £1.9m property impairment.
Despite the huge profits posted by some clubs in the Premier League (#THFC and #LFC both above £125m), quite a few still lose money. That said, only 3 clubs reported a larger loss than #BHAFC £22m in 2017/18, namely #CPFC £36m, Watford £32m and Stoke City £30m.
Although #BHAFC profit on player sales increased by 55% from £3.4m to £5.2m, this was still a long way behind the mega profits that others made in the prior season: #LFC £124m, #AFC £120m and #CFC £113m. Included Baldock to Reading, Goldson to Rangers and Norwood to #SUFC.
#BHAFC are no strangers to losses. In fact, they have only reported profits twice in the last 12 years (2008 and 2018). In that period, the club has accumulated £135n of losses, averaging £11m a year, mainly in the pursuit of promotion.
#BHAFC have made very little from player sales. In fact, they have reported just £26m profit from this activity in the last 10 years, only twice going above £5m. Few big money moves to date in 2019/20, though Knockaert’s loan to Fulham could be made permanent.
To place this into perspective, #BHAFC £17m profit from player sales over the last five years was the lowest of the clubs in the Premier League in the 2017/18 season. In stark contrast, Chelsea made £337m over this period, though Southampton’s £216m is perhaps more relevant.
One key element of #BHAFC strategy is more clearly seen by the club’s alternative presentation of the profit and loss account, which highlights the increase in the football budget (£95m since 2012), while administrative and operational costs have hardly grown at all.
#BHAFC EBITDA (Earnings Before Interest, Tax, Depreciation & Amortisation), considered a proxy for cash operating profit, as it strips out player sales and exceptional items, fell from £36m to £14m, though this is still much better in the Premier League than the Championship.
As a consequence, #BHAFC EBITDA of £14m is firmly in the bottom half of the Premier League, around the same level as Bournemouth. For some perspective, it’s less than 8% of Manchester United’s amazing £186m.
To illustrate the huge difference in the Premier League, #BHAFC £143m revenue is nearly 4 times as much as the £29m reported in the Championship promotion season. Almost all of the £114m growth is from TV (£105m), though commercial £5m and match day £4m are also up.
#BHAFC 2018/19 revenue of £143m is the 13th highest in the Premier League, just behind Crystal Palace £150m (2017/18 figure). The only other clubs that have reported to date are #MUFC £627m and #MCFC £535m, who are in a different league (at least financially).
Amazingly, following promotion to the Premier League, #BHAFC revenue of £139m placed them 29th in the 2017/18 Deloitte Money League, which ranks clubs globally. This means they were just behind Lyon, but ahead of Benfica.
#BHAFC TV money rose £3m to £113m, though the Premier League distribution dropped £2m to £106m, mainly due to finishing two places lower in the league, partly offset by higher overseas TV deals. Boosted by the FA Cup run to semi-final.
A massive 79% of #BHAFC revenue comes from TV, though in fairness this is not uncommon in the Premier League with no fewer than 12 clubs getting more than 75% of their money from broadcasting in 2017/18 with Bournemouth “leading the way” with an astonishing 89%.
#BHAFC match day income was “static” at £18.5m with average attendance slightly increasing from 30,403 to 30,426. This was around mid-table in the Premier League, ahead of Everton £16m, Leicester £13m and Crystal Palace £11m.
Since the move to the Amex, #BHAFC attendances have been steadily rising from the 7,352 in the last season at the Withdean to around 28,000 in the Championship and 30,000 in the Premier League, as the new stadium has finally met latent local demand for tickets.
Despite “sell-out crowds”, #BHAFC attendance of around 30,000 was “only” the 13th highest in the Premier League, though Seagulls fans will note that it is 5,000 more than Crystal Palace. Ticket prices have increased 4 years in a row. Have 8,000 on season ticket waiting list.
#BHAFC commercial income rose 7% (£0.7m) to £11.4m. This revenue stream has risen 70% since promotion, but is still one of the lowest in the top flight, only ahead of Huddersfield and Bournemouth (2017/18 figures). For context, #MUFC and #MCFC generate £275m & £227m respectively.
#BHAFC American Express shirt (and stadium naming rights) sponsor is currently the lowest in the Premier League at £1.5m a year, though a new £100m 12-year deal (£8.3m a year) has been announced. Kit supplier Nike have extended to 2020, while sleeve sponsor is JD Sports.
#BHAFC wage bill increased by £24m (31%) from £78m to £102m, due to “strengthening of playing squad and increased wages required to be competitive in the Premier League.” More than tripled since promotion – last season in Championship £31m. Includes cost of change in management.
Following the growth, #BHAFC wage bill of £102m is now more competitive in the top flight though it is still firmly in the bottom half of the Premier League. Obviously, miles behind the elite clubs, e.g. #MUFC £332m was more than three times as much.
#BHAFC wages to turnover ratio increased (worsened) from 56% to 71%, which is just above the 70% upper limit recommended by UEFA. For some context, only seven clubs had a higher ratio in the Premier League in 2017/18.
#BHAFC highest paid director, chief executive Paul Barber, saw his remuneration increase from £1.407m to £1.496m, which is the fifth highest in England, only behind #MUFC, #THFC, #AFC and, er, Crystal Palace.
#BHAFC non-cash expenses have also been on the rise with player amortisation and depreciation increasing from just £600k in 2010 to £39m (up £15m in 2019 alone), reflecting the club’s investment in the playing squad and infrastructure (stadium and training ground).
Despite #BHAFC player amortisation rising from £19m to £33m, this is still one of the lowest in the Premier League. For some perspective, big-spending #MUFC £127m and #MCFC £126m are around four times as much.
#BHAFC depreciation increased from £5.3m to £5.9m in 2018/19, representing the annual charge to write-off the cost of the stadium and the training ground. This is actually the 7th highest in the Premier League, only behind the “Big Six”.
#BHAFC other expenses rose by 6% (£1.6m) from £25.7m to £27.3m, mainly due to higher stadium maintenance and security costs, together with increased investment in women’s football. Also includes the travel subsidy for rail and bus transport to the stadium.
#BHAFC made £78m player purchases, a record for the club and more than the previous two seasons combined. Included Jahanbakhsh, Bissouma, Bernardo, MacAllister, Montoya, Andone, Button and Burn. Around mid-table for expenditure in the Premier League.
There has been a clear increase in #BHAFC transfer spend in the Premier League with an annual net spend average of £62m over last 3 years, compared to just £10m in the preceding 2 seasons. Last summer included big money signings of Maupay, Webster and Trossard.
#BHAFC gross debt further increased by £57m from £223m to £280m. This is very largely provided by owner Tony Bloom in the shape of an interest-free, unsecured loan of £272m. There was also a new £8m bank overdraft.
#BHAFC £280m gross debt is the 3rd highest in the Premier League, only behind #MUFC £511m and #THFC £466m, though the loans from Bloom can be considered as the friendliest of debt (he has converted £30m of debt to equity in the past). Club also owes £23m in transfer fees.
#BHAFC debt is undoubtedly very high for a club of their size, though it is not an issue, so long as Bloom continues to provide support. The fact that his loan is interest-free gives Brighton a competitive advantage against those rivals that have to pay interest on their loans.
That said, #BHAFC also have the lowest cash balance in the Premier League with just £700k. At the other end of the spectrum, Manchester United have £308m, though their fans would probably prefer to see more of that spent reinvigorating their squad.
The cash flow statement reveals that even in the Premier League Tony Bloom had to provide another £49m in 2018/19. Although #BHAFC generated £14m cash from operations, they spent £72m (net) on players and £8m on infrastructure) mainly the training ground.
This means that Bloom has now provided an incredible £360m of funding to #BHAFC though £272m of loans and £88m of share capital (including the £30m loans converted into equity). Subsequent to the year-end, he has provided further capital.
The majority of Bloom’s funding (£176m) has gone on investment into the stadium and the training ground, though a hefty £137m was also spent (net) on new players for #BHAFC, while £47m was used to cover operating losses. Capital commitments of £22m after year-end.
Bloom said, “Our continued Premier League status is really important in helping us establish a longer term stronger financial footing”, though the new vision “to be a top ten club in the PL is designed to set our sights higher than just survival in the top leagues.”
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