Aston Villa’s 2018/19 financial results covered a season when they finished 5th in the Championship, but were promoted to the Premier League after beating Derby County in the play-off final under manager Dean Smith, who replaced Steve Bruce in October. Some thoughts follow #AVFC
In July 2018 NSWE SCS, owned by billionaire businessmen Nassef Sawiris and Wes Edens, bought a controlling stake from Dr. Tony Xia after #AVFC “experienced significant liquidity problems”, including a missed tax payment to HMRC. Xia’s minority share bought out in August 2019.
#AVFC loss widened by £33m from £36m to £69m, as revenue dropped £14m (21%) to £54m and profit on player sales fell £5m from £16m to £11m. Operating expenses increased by £15m, while £46m promotion payments were offset by stadium sale £36m and HS2 land compensation £14m. 
#AVFC £14m revenue fall was mainly due to lower parachute payment, which meant broadcasting was £18m (45%) down at £22m. Partly offset by increases in commercial, up £4.2m (31%) to £17.6m, and gate receipts, up £0.9m (8%) to £12.7m, though player loans fell £1.4m to £1.6m.
#AVFC wage bill, excluding £11.7m promotion bonuses, shot up by £10m (14%) from £73m to £83m, while player amortisation rose £2m (7%) to £26m. Other expenses increased £2m (9%) to £25m, but interest payable dropped from £0.9m to £0.6m.
#AVFC profit on player sales fell from £16m to £11m, including Amavi, Gollini, Gil and Traoré sell-on. This is still pretty good (4th highest to date in 18/19 Championship), but a fair bit lower than the large profits made elsewhere, e.g. Bristol City £38m and Swansea City £30m.
NSWE Stadium Ltd now owns Villa Park, though the ground has been leased back to the football club. The sale is within EFL rules, but this is undoubtedly some fancy financial footwork by #AVFC, especially after they reduced the stadium value by £45m in 2016.
The large 2019 loss was nothing new for #AVFC, as the club has consistently lost money, posting total losses of just under £400m in the last decade, including £81m in the Premier League in 2016 (though impacted by £45m stadium revaluation and £35m player impairment).
2019 #AVFC figures were again impacted by exceptional items. As well as £36m stadium sale profit, Villa received £14m compensation for HS2. On the other hand, there were £46m promotion-related payments: £16m bonuses plus £30m to former owner, Randy Lerner, after Xia defaulted.
Although #AVFC £69m reported loss would have worsened to £105m without the benefit of the £36m profit from the stadium sale, if we were to exclude all the other exceptional items (i.e. £14m compensation, less £46m promotion payments), then the loss would be “only” £64m.
#AVFC have increasingly relied on player sales, averaging £22m annual profit in the last 4 seasons, compared to just £1m in the preceding 3 seasons. However, the profit has declined each year (2016 £35m, 2017 £27m, 2018 £16m and 2019 £11m) and 2020 also likely to be low.
#AVFC EBITDA (Earnings Before Interest, Tax, Depreciation & Amortisation), considered as a proxy for cash operating profit, as it strips out player sales and non-cash items, fell from £(27)m to £(54)m. Down from a peak of £19m in the Premier League in 2014.
#AVFC revenue decreased £63m (54%) from the £117m peak in the 13/14 Premier League to £54m, mainly TV £50m and commercial £8m. Revenue has fallen 5 years in a row. The importance of parachute payments is evident, down from £41m in 2017 to £16m in 2019.
Despite the decrease, #AVFC £54m revenue is still third highest reported to date in the Championship, only behind Stoke City £71m and Swansea City £68m, though likely to be overtaken by WBA and Middlesbrough when they publish 2018/19 accounts.
Obviously, #AVFC benefited from £16m parachute payments, which makes a total of £90m over the last 3 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 QPR £17m.
#AVFC TV income fell £18m (45%) to £22m, almost entirely due to the parachute payment dropping from £34m to £16m. 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.
#AVFC average attendances held up quite well in the Championship and increased by 12% from 32,097 to 36,027 in 2018/19. This is the highest since 2013/14 (in the Premier League), but still a fair bit below the recent high of 40,000 in 2008. Villa capped season tickets at 30,000.
#AVFC had two new sponsorship agreements in 2018/19 (shirt 32Red, kit Fanatics), but these were then replaced by “record-breaking” deals following promotion: shirt sponsor is W88; kit supplier is Kappa; and BR88 is the club’s first-ever sleeve sponsor.
Despite the revenue reduction, #AVFC wage bill rose by £10m (14%) from £73m to £83m, excluding £12m of promotion-related payments, which gives the £95m reported in the club’s accounts. Wages to turnover ratio worsened from 107% to 154% (175% including bonuses).
Whichever way you look at it, #AVFC wage bill is by far the highest in the Championship. The “clean” wages figure of £83m is around 50% more than the next highest, Stoke City £56m. If £12m bonuses are included, to give reported £95m, the gap would be around £40m.
Even excluding promotion bonuses of £12m, #AVFC wages to turnover ratio of 154% is the highest (worst) to date in the 2018/19 Championship. In fairness, more than half of the clubs in this division have ratios over 100% (10 over 135%).
#AVFC directors remuneration increased by 22% from £438k to £534k with the majority presumably going to chief executive, Christian Purslow, the self-proclaimed “Fernando Torres of finance”. Much lower than some other clubs, e.g. just under a million paid at Birmingham City.
#AVFC player amortisation, the annual charge to write-down transfer fees over the life of a player’s contract, rose £2m (7%) to £26m. This is actually higher than the last 4 seasons in the top flight, reflecting the determination to secure promotion by spending on new recruits.
As a consequence, #AVFC player amortisation of £26m was one of the highest in the Championship, only surpassed by recently relegated Stoke City £29m and Swansea City £28m.
#AVFC spent £31m on player purchases in 2018/19, a figure in between the £2m in the previous season and the £88m investment in 2016/17. Arrivals included Kalinic, Guilbert, McGinn and Nyland. Only really outspent last season by Stoke City £67m, though others still to report.
On a cash basis, #AVFC annual net spend in the Championship £11m was very similar to the Premier League £12m. Interestingly, gross spend was higher in the second tier (£41m) than last 7 years in PL (£29m), though sales are much higher (£30m vs. £17m).
#AVFC gross debt has been slashed from £50m two years ago to just £300k, as the new owners have repaid the old loans. Debt has significantly reduced from the £190m high in 2013 following £90m loan waiver & £89m conversion into equity.
#AVFC £6m gross debt is now just about the smallest in the Championship, far below the likes of Stoke City £141m, Middlesbrough £101m, Birmingham City £97m and Ipswich Town £96m. In reality, this debt is not an issue – so long as the owners continue to provide support.
Although debt is relatively high in the Championship, most is provided by owners who charge little or no interest. #AVFC interest fell from £940k to £641k, but this small sum was actually the 7th highest in the division. Owner loans are interest-free and unsecured.
#AVFC had £18m net cash inflow in 18/19, but only because NSWE provided £106m of new capital, allowing the club to remain debt-free. This covered a £55m loss from operating activities and funded £15m of player purchases (net), £17m on infrastructure and £1m interest.
Following this increase, #AVFC £22m cash balance was actually the highest in the Championship, ahead of Swansea City £19m, Hull City £10m and Stoke City £6m.
Dean Smith said that Sawiris and Edens “have invested a lot of their own money to set this club on a good footing, so we can go and compete at the highest level in the Premier League.” The owners put in £175m up to May 2019 plus £87m subsequent to year-end, so £262m in total.
In the last 10 years #AVFC owners (old and new) have provided £333m of funding (share capital £223m plus loans £110m). Just under half (£149m) has covered operating losses with £115m spent on players (net), £40m invested in infrastructure and £16m on loan/interest payments.
#AVFC said they “submitted a compliant return” for EFL FFP regulations in 2018/19. FFP is assessed over a 3-year period with a total allowable loss of £39m. Can exclude £39m for academy, community & infrastructure and £46m promotion related costs from £119m reported loss.
Having excluded £85m of allowable costs, #AVFC FFP loss over 3 years is reduced to £34m, which is £5m within the maximum £39m loss. However, they would have failed FFP by £32m if they had not sold Villa Park to the owner for £36m profit.
“That was then, this is now.” The new owners have given #AVFC fans cause for optimism, though they still have to provide considerable financial support. If Villa do get relegated, they would be in better shape than before, but likely that they would have to sell some top players.
