Thread by @SwissRamble

Fulham’s financial results for 2018/19 cover a season when they were relegated back to the Championship after just one year in the Premier League (finishing 19th). They dismissed two managers: Slavisa Jokanovic in November & Claudio Ranieri in February. Some thought follow #FFC

#FFC reduced their loss from £45m to £20m. However, the club still lost money, despite revenue rising £100m from £38m to £138m following promotion, as competing in the Premier League increased expenses by £63m, while profit on player sales fell £11m to £3m.

The main driver of the #FFC £100m revenue increase was broadcasting, which rose £87m from £22m to £109m, due to the significantly more lucrative Premier League TV deal, though commercial also grew £8m (88%) to £18m, while gate receipts were up £3.7m (53%) to £10.7m.

However, #FFC revenue growth was partly offset by higher costs, as wages shot up 70% (£38m) from £54m to £93m, player amortisation more than doubled from £19m to £43m and other expenses rose £5m (30%) to £21m. On the other hand, player impairment reduced by £5m to £1m.

As a technical note, #FFC £20m post-tax loss was further increased by £21m to a £41m net loss (“Total Comprehensive Expense”) following a reduction in stadium value after the former Riverside Stand was decommissioned pending future redevelopment.

While #FFC £20m loss is not great, it should be noted that over half (9) of the 17 Premier League clubs that have so far published 2018/19 accounts lost money. In fact, Fulham’s loss is actually the smallest reported, significantly better than #EFC and #CFC (both above £100m).

#FFC profit on player sales fell from £14m to just £2.5m, mainly David Button to #BHAFC and Cauley Woodrow to Barnsley. This is the second lowest profit from this activity to date in the 2018/19 Premier League, miles below the likes of #CFC £60m, #LCFC £58m and #LFC £45m.

Losses are nothing new for #FFC, as the last time they made a profit was in 2011. In fact, they have only made money twice in the last 22 years. Losses have accelerated since Shahid Khan bought the club in July 2013, amounting to £160m in the last 6 years (averaging £27m a year).

The #FFC bottom line has been adversely impacted by significant exceptional charges of £56m in the last 10 years, in particular the write-down of asset values, also known as impairment: players £48m and stadium £8m.

#FFC have only averaged £8m a year profit from player sales in the last 6 years. This had looked to be on the rise with £17m in 2017 and £14m in 2018, but dropped to just £3m in 2019. That said, profit will be higher in 2020 after the sale of Ryan Sessegnon to #THFC.

#FFC 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 £(18)m to £24m, much better than the £2m the last time they were in the Premier League in 2014.

Despite the improvement, #FFC £24m EBITDA was still firmly in the bottom half of the Premier League, around the same level as West Ham, though in fairness miles better than the likes of #EFC £(15)m and #LCFC £(6)m.

#FFC revenue obviously grew significantly after promotion (by £100m to £138m), but it was also around 50% (£47m) more than last time they were in the Premier League in 2014 (£91m), due to TV deal. Will dramatically fall in 2019/20 to around £65-70m, despite parachute payment.

Despite the significant growth, #FFC £138m revenue was one of the lowest in the Premier League, though ahead of #AFCB £131, Cardiff City £125m and #HTAFC £119m (Burnley £139m in 2017/18 still to publish). For some perspective, #MUFC £627m was almost half a billion higher.

#FFC TV money included £102m from the Premier League. Received £83m equal payment (50% domestic deal, 100% overseas & commercial) plus £4m merit payment (25% domestic, based on league position) and £16m facility fee (25% domestic, based on number of times shown live).

As a result, 79% of #FFC revenue came from broadcasting, though to be fair this is far from unusual in the top flight. In fact, 13 of the clubs in the Premier League earn more than 70% of total income from TV and 7 clubs were even more reliant than Fulham on this revenue stream.

#FFC TV money will significantly fall in 2019/20, though will be cushioned by £43m parachute payment, which is much higher than £4.6m solidarity payment that most Championship clubs receive. Will only get 2 years of parachutes, as they were relegated after just one season in PL.

#FFC gate receipts rose by 53% (£3.7m) to £10.7m, despite 5 fewer home games, as average attendance increased from 19,910 to 24,371. Revenue still only 15th in Premier League, but was boosted by relatively high (London) ticket prices.

Unsurprisingly, #FFC crowds much lower in Championship, but 2019 was also around 1,000 below last time in Premier League in 2014. Club held PL prices at same level for most season ticket holders, but some unrest following steep increases for new ST holders and match day tickets.

#FFC 24,371 attendance was only 16th highest in the Premier League, around 6,000 below 14th placed Southampton. Work started on expanding Riverside Stand at Craven Cottage at end of the season, which will increase capacity from 25,700 to around 30,000, at a cost of £80m.

#FFC commercial income rose 88% (£8.5m) from £9.6m to £18.1m, though this includes £0.4m “compensation”. This increase placed Fulham 13th in the Premier League, which is pretty good going, though Big Six earned between £275m and £111m. Will shrink in Championship.

#FFC signed a “record” 2-year shirt sponsorship deal with Dafabet in 2018/19 (reportedly worth £3m a year), replacing Grosvenor Casinos, while the kit deal with Adidas has been extended until 2023. Also had a new sleeve sponsor in the Premier League with trading firm ICM.

#FFC wages shot up 70% (£38m) from £54m to £93m, though prior year was inflated by “substantial” promotion bonuses, so the underlying increase was even higher. Furthermore, the wage bill was actually £24m (35%) more than the last time Fulham played in the Premier League in 2014.

#FFC £93m wage bill was 15th highest in the Premier League (compared to 17th highest for revenue). Interestingly, just above #WWFC £92m, who enjoyed a much better season on the pitch. Will decrease in Championship following departure of some high earners and relegation clauses.

#FFC wages to turnover ratio dropped (improved) from 142% to 67%, the club’s lowest for many years (it was 75% in the Premier League in 2014). However, this was still 8th highest (worst) in the top flight, though considerably better than #EFC and #AFCB, both 85%.

The remuneration for #FFC highest paid director, presumably chief executive Alistair Mackintosh, increased by £400k (42%) from £954k to £1.354m, which made him the seventh highest paid director in the Premier League, just above Peter Moore at #LFC (£1.329m).

Following “significant investment in the summer of 2018”, #FFC player amortisation, the annual charge to write-down transfer fees over the life of a player’s contract, more than doubled, rising from £19m to £43m. They also booked £1m player impairment, down from £6m prior year.

As a result of this increase (“to prepare the squad for the Premier League”), #FFC player amortisation of £43m was the 11th highest in the top flight. For some perspective, this was still miles below consistently big-spending clubs like #CFC £168m, #MCFC £127m and #MUFC £126m.

#FFC spent an amazing £120m on player purchases, which was not only a club record by some distance, but was the 4th highest in the Premier League. Also more than Fulham spent in the previous 6 years combined. Signings included Seri, Anguissa, Mawson, Bryan, Fabri and Le Marchand.

On a cash basis, #FFC net spend of £49m in 2018/19 was almost 5 times as much as the annual average for the previous 4 years in the Championship (and 10 times as much as the preceding 5 years in the Premier League).

#FFC gross debt is less than £1m, despite Shahid Khan loaning an additional £49m in 2019, as he converted this into equity. An incredible £424m of debt has now been “written-off” in this way in the last 8 years: £212m by Khan plus £212m by former owner Mohamed Al Fayed.

#FFC debt of £0.3m was the second smallest in the Premier League, with only Burnley owing less. This is much lower than many other clubs, though many of these have taken on debt for new stadiums or training grounds, e.g. #THFC £466m, #BHAFC £280m, #AFC £217m and #LFC £129m.

However, there has been huge growth in #FFC transfer debt, which has risen from just £2m in 2016 to £80m, only offset by £6m owed to Fulham by other clubs (so net £74m). This means that much of the player recruitment was done on credit with £35m payable in 12 months.

As a result of converting all their debt to equity, #FFC paid no interest, which gives them a competitive advantage, as some other clubs have had to pay substantial sums, e.g. #MUFC £19m, #THFC £14m, #AFC £11m, #WHUFC £7m and Watford £6m.

#FFC generated £21m cash from operating activities in 2019, though then spent £49m (net) on player purchases and £12m on capital expenditure (stadium and training facility), which was funded by Khan’s £49m loan.

As a result, #FFC cash balance rose £9m from £8m to £17m. However, this was still one of the lowest in the Premier League, far below the likes of #MUFC £308m, #AFC £167m and #MCFC £130m.

In the last decade, virtually all of the #FFC £232m available cash has come from the owners’ pockets with £115m used for player purchases (net), £52m on infrastructure, £39m to cover losses and £16m on loan/interest payments. Cash balance increased by £11m.

Looking at the accounts of Cougar Holdco London Limited, the #FFC holding company, Khan has now provided the club with £332m, split between £288m loans and £44m new shares. That’s an awful lot of money to preside over two relegation campaigns.

#FFC are “mindful” of FFP regulations. Based on last 3 years, they are fine, despite £87m losses, as can exclude £15m promotion bonuses and £7m a year for academy, community & infrastructure. That gives £51m FFP loss against £61m limit (Championship £13m x 2 years plus PL £39m).

It is worth noting that #FFC have a £99m capital commitment for the development of the Riverside Stand and the BBC sports ground (a new training facility). The stadium build is targeted to be ready in time for the 2021/22 season.

#FFC finances show that promotion to the Premier League is not always a panacea, as they still contrived to lose £20m (albeit less than £45m loss they made the year before in the Championship). Relegation is clearly not good news, but they should be fine with the owner’s support.