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Wolverhampton Wanderers 2018/19 financial results covered a “successful” season, when they finished 7th in their first season back in the Premier League since 2012, reached the FA Cup semi-final and qualified for the Europa League. Some thoughts in the following thread #WWFC
Since being bought by Chinese investment group Fosun International in July 2016, #WWFC is a club transformed, helped by a close relationship with super-agent Jorge Mendes. Under charismatic manager Nuno Espirito Santo, Wolves can realistically compete for European qualification.
#WWFC swung from £57m loss before tax in the Championship to £20m profit in the Premier League, a £77m improvement, as revenue surged from £26m to a club record £172m and profit on player sales was up £4m to £12m, though costs also increased significantly in the top flight.
#WWFC £146m revenue growth was very largely driven by broadcasting’s £125m increase from £8m to £133m, due to much higher TV money in the Premier League, while commercial also rose £17m from £11m to £28m and match day was up £3.7m (47%) from £7.8m to £11.5m.
This was partly offset by substantial cost growth, following investment in the squad, as wages shot up £41m (82%) from £51m to £92m and player amortisation/impairment increased by £21m to £38m. Other expenses rose £8m (36%) to £30m and interest payable was up £1.5m to £2m.
#WWFC £20m profit is the second highest reported so far in the 2018/19 Premier League, only surpassed by #MUFC £27m. This is impressive, given that half of the 8 Premier League clubs that have published accounts have lost money, including huge losses above £100m at #EFC and #CFC.
#WWFC profit on player sales increased by £4m to £12m, mainly Afobe and Batth to Stoke City, Douglas to #LUFC and Marshall to #NCFC, but this is firmly in the bottom half of the Premier League. For some context, #CFC made £60m profit in 2018/19 and #LFC £124m in 2017/18
#WWFC were very prudent under former owner Steve Morgan, making profits 6 times in 7 years. In contrast, Fosun’s strategy of “strong investment into the squad” led to £80m of losses in the Championship, but the gamble paid-off with promotion and a return to profits in the PL.
#WWFC results have been impacted by exceptional items, especially a £28m player restructuring provision booked in 2013 following two successive relegations. Similarly, the hefty 2018 loss included (reported) £20m of promotion payments, while 2019 was hit by £5m player impairment.
#WWFC have rarely made big money from player sales, only averaging £5-7m a year over last decade with profit above £10m just 3 times. Club says has made £2.6m since these accounts, though excludes Cavaleiro’s January sale to #FFC and Costa’s loan to #LUFC made permanent in July.
#WWFC EBITDA (Earnings Before Interest, Tax, Depreciation & Amortisation), considered a proxy for cash operating profit, as it strips out player sales and non-cash items, improved from £(27)m, excluding estimated £20m promotion bonuses, to £50m.
#WWFC £50m EBITDA is currently the 7th best in the Premier League, which is an impressive achievement, though many clubs are yet to publish 2018/19 accounts. This is ahead of #CFC £43m – and miles better than #EFC £(15)m.
To illustrate the huge difference in the Premier League, #WWFC 2018/19 £172m revenue is more than the previous 6 seasons in the Championship (and League One) combined. Furthermore, revenue is £112m higher than last time in Premier League in 2012 with £91m due to new TV deals.
Following the increase, #WWFC £172m revenue is 11th highest in the Premier League, just below #LCFC £176m. However, the gap to the Big Six is still enormous: they are £220m behind 6th placed #AFC £393m, while #MUFC £627m is almost 4 times as much as Wolves.
As a sign of how far #WWFC have come in the past couple of years, their £172m revenue means that they are 25th in the Deloitte Money League, which ranks clubs worldwide by revenue. They are only just behind Champions League semi-finalists Ajax £176m and Benfica £174m.
#WWFC £133m TV money included £127m from the Premier League: £83m equal payment (50% domestic deal, 100% overseas & commercial) plus £27m merit payment (based on league position) and £18m facility fee (based on number of times shown live). Boosted by prize money from FA Cup run.
Although a substantial 77% of #WWFC revenue comes from broadcasting, this is far from unusual in the top flight. In fact, 13 of the clubs in the Premier League earn more than 70% of their total income from TV.
#WWFC 2019/20 revenue will benefit from playing in the Europa League, where they have so far reached the last 32. For an idea of how much they could receive, last season the two English representatives, #CFC and #AFC, earned £41m and £35m respectively (though both got to final).
However, this is small change compared to the money available in the Champions League, where the English clubs earned between £80m and £100m last season. Little wonder that the #WWFC board has made no secret of its aspirations to qualify for Europe’s premier tournament.
#WWFC gate receipts rose 47% (£3.7m) from £7.8m to £11.5m, despite 3 fewer home games, as ticket prices were increased by up to 30% on the return to the Premier League. However, still in the bottom half of the income table, sandwiched between #LCFC £13m and #CPFC £11m.
#WWFC average attendance increased from 28,298 to 31,030, which was almost 2,700 (9%) more than the previous Premier League peak of 28,366 in 2009/10. The upturn in the club’s fortunes on the pitch has firmly reversed the declining crowds in the lower leagues.
#WWFC only had the 12th largest crowds in the Premier League with 31,030, but they sold their maximum number of season tickets (22,500). There was a further price increase for 2019/20 of up to 14%, though prices for U-17s were frozen.
#WWFC are in discussions with the local council about the possibility of increasing capacity at their Molineux stadium to as many as 50,000, though executive chairman Jeff Shi said that there was no agreed time frame.
#WWFC commercial income rose £17m (161%) from £11m to £28m, thanks to a raft of new sponsorship deals, including £1m from the owner Fosun for training ground naming rights. This was the 10th best in the top flight, but a long way behind the Big Six, e.g. #MUFC £275m.
#WWFC have a new shirt sponsor in 2019/20, as ManBetX has replaced W88 after just one year, increasing payment from £5m to £8m. Adidas also replaced Puma as kit supplier in a 4-year deal that started in 2018/19. Sleeve sponsor CoinDeal extended their deal to 2019/20.
#WWFC wage bill increased £41m (82%) from £51m to £92m, partly due to “contractual terms exercised upon competing in the Premier League”, though wages to turnover ratio significantly improved from 192% in the Championship (including promotion bonuses) to only 53%.
Despite the increase, #WWFC £92m wage bill is one of the smallest in the Premier League, only above Watford £84m in 2018/19 (though many clubs have not yet published accounts for last season). As interesting comparisons, #EFC and #WHUFC were £160m and £136m respectively.
Similarly, #WWFC wages to turnover ratio of 53% is one of the lowest (best) in the Premier League, only higher than 4 clubs: #MUFC 53%, #NUFC 52%, #HTAFC 50% and #THFC 39% (though the latter 3 are all 2017/18 figures).
The remuneration of the #WWFC highest paid director increased by 28% from £366k to £470k, though this is one of the lowest in the Premier League.
#WWFC player amortisation, the annual charge to write-down transfer fees over the life of a player’s contract, increased from £13m to £33m. Up from just £3m three years ago “driven by investments in the first team squad”. Club also booked £5m player impairment (£3m in 2018).
Even after this increase, #WWFC player amortisation of £33m was one of the lowest in the Premier League, around the same level as Watford and #BHAFC. For some perspective, it is £135m less than big-spending #CFC £168m.
#WWFC splashed out £11m on players, including Jonny, Adama Traoré, Rui Patricio, Diogo Jota, Willy Boly, Joao Moutinho and Ruben Vinagre. This was more than #MUFC £103m and #MCFC £87m. That makes a striking £168m in the last 3 seasons since Fosun’s arrival.
#WWFC gross transfer spend has surged since Fosun’s takeover, and is much more than the club spent when last in the top flight. The accounts note they have spent a further £95m since these accounts, including Jimenez, Neto, Cutrone, Dendoncker & Jordao (but excluding Podence).
#WWFC debt rose £56m from £75m to £131m. All of this is owed to Fosun with no interest charged and no fixed repayment date. In addition, the club owed £56m for transfers (up from £23m) and had £14m of contingent liabilities (depending on appearances and success on pitch).
#WWFC £131m gross debt is the 8th largest in the Premier League. Since year-end, the club has secured additional financing facilities of £50m from Macquarie Bank, comprising £25m loan expiring in August 2022 and a £25m revolving credit facility expiring in August 2021.
Although #WWFC debt is on the high side, it is not an issue so long as Fosun continue to provide support. The fact that their loans are interest-free gives Wolves a competitive advantage against those rivals that have to pay interest on their borrowings, e.g. #WHUFC £6.8m.
#WWFC generated an impressive £46m cash from operations, boosted by £56m of loans from Fosun, then spent a net £66m on players and £11m on updating facilities at the stadium and training ground. The remainder simply increased the cash balance by £26m.
In the last 10 years #WWFC had £167m of available cash with the vast majority (£131m) being funding from Fosun plus £35m from operations (largely in 2019). Most of this (£105m) has been spent on players (net) with £50m going on infrastructure (stadium redevelopment and academy),
#WWFC cash balance rose from £2m to £28m, the 9th highest in the Premier League. However, for some context, this is miles lower than #MUFC £308m and #AFC £231m, though these have since come down.
#WWFC MD Laurie Dalrymple said, “While we have come a very long way in three seasons under the ownership of Fosun, we are still only at the beginning of our journey”, as club aims to consistently challenge for Europe. The financials are solid, but need to keep an eye on the debt.
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