Queens Park Rangers 2018/19 financial results covered a season when they finished 19th in the Championship and reached the FA Cup 5th round. Manager Steve McClaren was replaced by Mark Warburton in June 2019. Some thoughts in the following thread #QPR
#QPR loss significantly decreased from £38m to £10m, largely due to no repeat of the previous season’s £20m FFP fine, though there was also operational improvement: revenue rose £3m to £35m, profit on player sales was up from zero to £3m, while expenses were cut by £7m. 
All three #QPR revenue streams were higher. Main increase was in Broadcasting, which rose £1.8m (9%) to £22.0m, due to slight uplift in parachute payment and FA Cup run. Commercial was up £0.9m (15%) to £7.2m, while gate receipts were £0.5m (10%) higher at £5.4m.
#QPR started to prepare for end of parachute payments by cutting wage bill by £6.7m (22%) to £24.0m and player amortisation by £4.7m (51%) to £4.4m. However, other expenses up by a third (£4.1m) to £16.6m and interest went from £5m receivable to £1m payable (FFP fine accounting).
Following the improvement, #QPR £10m loss was nowhere near the worst reported in the Championship. Very few clubs manage to make money in this extremely competitive division, though largest losses often from promoted clubs – including hefty promotion bonuses.
#QPR profit on player sales was only £2.5m, though that was actually better than prior season’s £137k loss, mainly thanks to Alex Smithies to Cardiff City. In fairness, Championship clubs don’t often make big money from player trading – except those relegated from the top flight.
#QPR have consistently lost money over the years. Since Tony Fernandes arrived in August 2011, total losses have been £209m – or £269m if we exclude the £60m loan write-off that was questioned by the EFL. To be fair, underlying losses have been smaller in the last 4 years.
FFP has significantly impacted #QPR figures in last few years. Not only was the 2014 loss reduced by a £60m write-off of a shareholder loan, but 2018 was hit by the £20m fine (partly offset by £5m accounting adjustment in finance income), while last season had £1m finance cost.
Player trading will be important for #QPR going forward. This was emphasised by Ferdinand: “The simple fact is every single one of our players is up for sale. That’s where the club is at this moment in time. If we receive the right offer, then they will go.”
#QPR EBITDA (Earnings Before Interest, Depreciation and Amortisation), considered a proxy for cash operating profit, as it strips out player sales and exceptional items, improved from £(12)m to £(6)m, much better than the horrific negative £47m in 2013 and 2014.
In fairness, only three clubs in the Championship managed to generate positive EBITDA, so #QPR £(6)m was actually one of the better performances, placing them in the top ten. To put this into perspective, six clubs reported EBITDA worse than £(20)m.
Following relegation from the Premier League in 2015, #QPR revenue has fallen by a hefty £51m from £86m to £35m. The decline has been cushioned by parachute payments, though these have fallen from £31m in 2017 to £17m in 2019 and will stop in 2020.
Thanks to those parachute payments, #QPR £35m revenue is still in the Championship top 10, though this is only around half as much as those clubs recently relegated from the top flight, e.g. Stoke City £71m and Swansea City £68m.
Obviously, #QPR benefited from £17m parachute payments, which makes a total of £91m over the last 4 years. However, other clubs received much more, so Stoke City, Swansea City and WBA got £43m, while Hull City, Middlesbrough and Sunderland got £35m; and Aston Villa £16m.
#QPR TV income rose £1.8m (9%) to £22.0m, due to slightly higher parachute payment and the FA Cup run. This was still a lot more than the £8m most Championship clubs received, including £2.5m EFL central distribution and £4.6m Premier League solidarity payment.
#QPR match day revenue rose by 10% (£0.5m) to £5.4m, mainly due to two more home games in the FA Cup, but this is still firmly in the bottom half of the Championship. It’s also around a third lower than the £8m they earned in the Premier League.
#QPR attendance fell slightly from 13,928 to 13,866, but crowds have decreased by around 4,000 (22%) from 17,800 in the Premier League. Ticket prices have been frozen for four seasons in a row.
#QPR 13,866 attendance was 19th highest in the Championship. Nevertheless, the club has been looking for a new ground for some time. CEO Lee Hoos: “This club is not financially sustainable in the long-term while we remain at Loftus Road” (now Kyan Prince Foundation Stadium).
#QPR commercial income rose 15% (£0.9m) to £7.2m, comprising sponsorship & advertising £1.9m, commercial income £2.3m, sales of inventories £1.0m and other income £2.0m. This was mid-table in the Championship, but miles behind the likes of Leeds United £22m and Bristol City £16m.
#QPR 2018/19 shirt sponsor Royal Panda was replaced by BetUK in January 2020 (both are part of the Leo Vegas group), while the kit supplier deal is with Errea. The club’s owners paid £300k for “sponsorship agreements relating to certain areas in the stadium”.
#QPR wage bill was cut by £7m (22%) to £24m, reducing the wages to turnover ratio from 98% to 69% - significantly better than the 195% of the Redknapp era. As Sir Les said, “We have got rid of all the high earners.” Should fall further after last summer’s departures.
#QPR £24m wage bill has fallen into the bottom half of the Championship, less than half of the recently relegated Stoke City £56 and Swansea City £48m (much higher parachute payments) and Norwich City £51m (promotion bonuses).
#QPR wages to turnover ratio of 69% is very good for the Championship, where more than half of the clubs have ratios over 100%, with Reading 197% “leading the way”. However, it is likely to rise this season with no parachute payments boosting income.
No remuneration was paid to #QPR directors. This can be quite high at other clubs, e.g. just under a million at Birmingham City and Nottingham Forest in 2018/19; and over £2m at Sunderland in 2017/18.
#QPR player amortisation, the annual charge to expense transfer fees, was more than halved from £9.1m to £4.4m, which is significantly lower than the £17.1m peak in 2012/13.
Following this decrease, #QPR player amortisation of £4m is one of the lowest in the Championship, just ahead of Preston North End. For more perspective, Stoke City £29m and Swansea City £28m were seven times as much.
As part of the FFP settlement, #QPR had a transfer embargo in the January 2019 transfer window. In fact, they spent nothing on signing new players in 2018/19 and their outlay for the last two seasons is only £2m. At the other end of the spectrum, Stoke City spent £67m in 2018/19.
In the four seasons since relegation from the Premier League, #QPR have basically broken-even on transfers, a big reduction from the £21m annual net spend in the preceding four years (on a cash basis).
#QPR gross debt fell £11m from £56m to £45m, all of which is from shareholders (interest free with no fixed payment terms). In July 2018 the club capitalised £22m of shareholder loans as yet another part of the FFP settlement.
#QPR debt of £45m was mid-table in the Championship, far below the likes of Stoke City £141m, Middlesbrough £101m, Birmingham City £97m and Ipswich Town £96m. That said, it would have been much higher if the owners had not capitalised £215m loans and written-off £60m of debt.
Although debt is high in the Championship, most is provided by owners who charge little or no interest, i.e. #QPR paid nothing in 2018/19. Previous shareholder loans had exorbitant interest rates, but the owners converted interest payable into equity (£5.7m in 2016/17).
#QPR had a cash operating loss of £13m in 2018/19, which was covered by another £11m of shareholder financing and £3m from player sales (net). This resulted in a small overall cash inflow of £1m.
Following this increase, #QPR £4m cash balance is actually one of the highest in the Championship, only surpassed (in 2018/19 to date) by Swansea City £19m, Hull City £10m and Stoke City £6m.
Since Fernandes arrived, the owners have pumped over a quarter of a billion (£255m) into the club. #QPR spent the majority covering operating losses £152m and on net player purchases £80m. Only £12m on infrastructure, though will now develop new training ground at Warren Farm.
In theory, #QPR reduced losses should remove any future FFP problems, especially as can exclude academy, community & infrastructure (estimated at £4m a year) and the £20m FFP fine. Over the last three-year monitoring period, FFP losses were £26m against the £39m limit.
However, it is worth noting that there is still £9.6m owing for the FFP fine. #QPR will be paying £1.7m a year (net of discounting adjustment) over the next 8 years as part of the settlement agreed with the EFL.
FFP still informs #QPR strategy. Ferdinand: “With the regulations which everyone in the Championship has to abide by now, most clubs are the same: you have to bring in managers who can coach to get the best out of young players, because at times you have to sell your assets.”
This is why #QPR were so angry at the rule change that allowed clubs to sell their stadiums to themselves, effectively getting around FFP. This loophole has benefited Derby County £40m, Sheffield Wednesday £38m, Birmingham City £17m and Aston Villa (as yet unknown).
#QPR strategy appears to be based around youth, as many academy products have flourished in the first team, most evidently Eberechi Eze and Ilias Chair. If they succeed on the pitch, that is obviously a good thing, but at some stage they are likely to become profitable sales.
#QPR have done very well to get costs under control, but will need to do even more to compensate for the lack of parachute payments in the future, reducing reliance on their owners. Last words to Ferdinand: “We had to take a couple of steps backwards before going forwards.”
