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AFC Bournemouth’s 2018/19 financial results covered a season when they finished 14th in the Premier League, securing a fifth consecutive year in the top flight. Some thoughts follow #AFCB
#AFCB loss before tax almost tripled from £11m to £32m, very largely due to higher staff costs and a small £4m (3%) drop in revenue from £135m to £131m, though profit on player sales rose slightly from £1.3m to £3.1m.
#AFCB £4m revenue fall largely due to broadcasting income dropping £3.6m (3%) to £116m, due to a lower finish in the league, though match day also fell £0.3m (6%) to £5.0m, partly offset by commercial rising £0.2m (2%) to £10.2m. Other income (player loans) up £2.8m to £8.0m.
#AFCB investment in the squad saw wage bill rise £9m (9%) from £102m to £111m, while player amortisation was up £9m (35%) to £36m. Benefited from a £2m (10%) fall in other expenses to £21m, but interest payable rose £3.6m to £5.4m. No repeat of prior year’s FFP provision release.
#AFCB £32m loss is obviously not great, but 8 of the 14 Premier League clubs that have published 2018/19 accounts have lost money (fairly typical in the third year of the broadcasting deal). Two clubs actually posted losses above £100m, namely #EFC and #CFC.
#AFCB profit on player sales increased from £1.3m to £3.1m, which is the second lowest in the 2018/19 Premier League to date, only ahead of Cardiff. The lack of profit here helps explain the club’s overall loss and is in stark contrast to #CFC £60m, #LCFC £58m and #LFC £45m
#AFCB have now reported losses two years in a row, having made money in their first two seasons in the Premier League. Before that they posted 4 consecutive years of losses, amounting to £69m, including a hefty £39m deficit in the 2014/15 promotion season.
#AFCB prior season benefited from £2.6m exceptional items, mainly a £2.9m release from the £7.6m provision previously booked for the FFP settlement with the EFL, as final payment was only £4.75m. Also included £250k for contribution to PL CEO Richard Scudamore’s “golden goodbye”.
#AFCB have not made much money from player sales (including losses in 3 of the last 7 years), averaging only £3m a season since promotion to the Premier League. This will increase to £23m in 2019/20, mainly Tyrone Mings to #AVFC and Lys Mousset to #SUFC.
#AFCB 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 £15m to £7m, though still a lot better than the losses in the Championship and League One.
Following this decrease, #AFCB EBITDA of £7m was one of the lowest in the Premier League, only ahead of #EFC and #LCFC, who both had a negative performance. For some perspective, #MUFC £186m is 25 times as much, thanks to their impressive ability to generate cash.
This is the second year in a row that #AFCB revenue has fallen, from £136m in 2017 to £131m in 2019. However, still 10 times as much as £13m in the Championship 4 years ago. The £118m growth is almost entirely due to TV money (£111m) with commercial & match day up £6m and £1m.
#AFCB £131m revenue is the second lowest reported to date in the 2018/19 Premier League, only ahead of Cardiff City £125m (though Burnley, Fulham and Huddersfield are still to publish). For some perspective, only around a fifth of Manchester United’s £627m.
A couple of years ago, #AFCB featured in the Deloitte Money League, which ranks clubs globally by revenue, as 28th highest in the world. They have since dropped out of the top 30, around £23m lower than Crystal Palace.
#AFCB TV money from Premier League fell £3m from £111m to £108m, due to finishing 14th compared to 12th the previous season (merit payment £4m lower) and being shown live 10 times against 11 in 2017/18 (facility fees £1m lower), partly offset by £2m increase in overseas rights.
Despite this decrease, an amazing 88% of #AFCB revenue comes from TV (£116m out of £131m), which is the biggest dependency in the top flight, though it should be noted that no fewer than 13 of the 20 Premier League clubs are above 70%.
If relegated, #AFCB TV income would fall significantly in 2020/21, though will be cushioned by a £43m parachute payment in year 1, which is much higher than the £4.6m solidarity payment that most Championship clubs receive. Parachutes then fall to £35m (year 2) and £16m (year 3).
#AFCB match day fell £0.3m (6%) to £5.0m, despite staging 1 more game in the Carabao Cup. This was second lowest in the Premier League, just ahead of #htafc. For some context, #MUFC & #AFC earn more from this revenue stream in 2 games than Bournemouth do in an entire season.
#AFCB average attendance dropped slightly from 10,641 to 10,532, so has now decreased every year in the Premier League. The board has put proposed new stadium on hold, as they do not want to “take away our ability to perform at our strongest levels on the pitch.”
#AFCB attendance of 10,532 is by some distance the lowest in Premier League, though close to 11,329 capacity. It’s around half of the next smallest, Watford 20,016, and incredibly is below all but 3 of the clubs in the Championship. Ticket prices frozen for three years in a row.
#AFCB commercial revenue rose £0.2m (2%) to £10.2m, comprising sponsorship & advertising £7.1m, hospitality & events £1.5m, shop merchandise £1.2m and other income £0.3m. Nevertheless, #AFCB revenue from commercial operations is still the lowest in the Premier League.
#AFCB have extended their shirt sponsor M88 in a “club record deal”, reportedly rising from £4m in 2018/19 to £5m in 2019/20. Also have kit supplier Umbro (5-year deal from 2017/18), sleeve sponsor Mansion and Vitality Stadium naming rights.
#AFCB wage bill rose £9m (9%) from £102m to £111m, as “club offered competitive remuneration packages to attract and maintain the calibre of playing and team management staff necessary to allow the club to compete in the league.” Up £39m (55%) from 2017 (11 months accounts).
Following the growth, #AFCB £111m wage bill was the 12th highest in the top flight, just behind Southampton £115m, but comfortably ahead of #BHAFC £102m, #WWFC £92m and Watford £84m. This should be enough to meet the club’s stated aim of “maintaining Premier League status”.
#AFCB wages to turnover ratio increased from 76% to 85%, which is the second highest (worst) in the Premier League, only behind #EFC 85%, though Everton’s accounts covered 13 months. Still much improved from the horrific 230% in the Championship (partly due to promotion bonuses).
#AFCB highest paid director saw his remuneration increase by 41% from £1.3m to £1.9m, which seems a little strange, give the club finished lower in the Premier League and posted a significantly higher loss. This was fourth highest in England, only behind #MUFC, #THFC and #CFC.
After two years of significant growth from just £7m in 2016 to £29m, #AFCB other expenses have now fallen two years in a row to £21m with no real explanation of the movements.
#AFCB player amortisation, the annual charge to expense transfer fees over the length of a player’s contract, rose by £9m (35%) from £27m to £36m, almost 10 times as much as £4m in the Championship in 2014/15, reflecting much higher investment in players in the Premier League.
After this increase, #AFCB player amortisation of £36m is now the 13th highest in the Premier League. For some perspective, it was more than Watford, #BHAFC and #WWFC, but is only around a fifth of big-spending #CFC £168m.
#AFCB player purchases rose from £56m to a club record £94m, including Lerma, Solanke, Rico, Mepham and Brooks. This was actually higher than #MCFC £87m and just below #MUFC £103m and #AFC £99m. Club spent just under a quarter of a billion (£229m) in last 4 years.
As might be expected, #AFCB average annual gross transfer spend has substantially increased as the club progressed up the leagues: £3m in League One; £6m in the Championship; and £35m in the Premier League. £35m spent since accounts: Billing, Danjuma, Kelly and Stacey.
#AFCB gross debt shot up by by £31m from £69m to £100m (actually £109m less “imputed” interest). This is all owed to the club’s owner, Russian Maxim Demin’s company AFCB Enterprises Ltd, repayable: £33m on demand, £41m August 2020 and £26m January 2024.
#AFCB £100m gross debt is by no means the largest in the Premier League, but it has increased from £8m in 2012, plus a new £16m loan from Macquarie Bank in September 2019. Transfer fees debt also increased from £38m to £81m, while contingent liabilities up from £30m to £40m.
The #AFCB debt picture is a little concerning, but is manageable – as long as the owner continues to provide support. Their interest-free loans give them a competitive advantage against some of their rivals, who have to pay interest, e.g. West Ham £6.8m and Watford £6.2m.
#AFCB made a small £2m cash loss from operating activities, but then spent a net £36m on player recruitment (£47m purchases less £11m sales), which was funded by £40m of new loans from the owner. Money will be needed for new training ground at Canford Magna.
As a result, #AFCB cash balance rose by £2m from £8m to £10m, though this is still one of the smallest in the Premier League, only above Cardiff City £2m and #BHAFC £1m to date. This is far below the likes of #MUFC £308m, #AFC £167m and #MCFC £130m.
In 8 seasons since Maxim Demin arrived, #AFCB main source of funds has been £130m from owners (£109m loans & £21m preference shares) with £18m from operations. Most of this (£121m) has been spent (net) on players with £17m on infrastructure, and a £10m increase in cash balance.
In January 2019 Demin once again took full ownership of #AFCB by buying back the 25% shareholding that he had sold in November 2015 to Peak6 Football Holdings, an American investment firm based in Chicago.
#AFCB CEO Neill Blake said, “focus was to consolidate our position in the Premier League through targeted expenditure on assets and expertise in the playing squad and supporting infrastructure.” This is a big challenge with their limited finances, so owner support still required.
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