Thread by @SwissRamble

Huddersfield Town’s 2018/19 financial results accounts cover a season when they finished 20th in the Premier League, so were relegated after 2 years in the top flight. Manager David Wagner was replaced by Jan Siewert in January 2019. Some thoughts in the following thread #HTAFC

After these accounts closed, chairman Dean Hoyle sold a 75% controlling ownership stake to Pure Sports Consultancy Limited, a previous shirt sponsor, owned by lifelong #HTAFC fan Phil Hodgkinson. Danny Cowley was appointed manager in September, assisted by his brother Nicky.

#HTAFC profit before tax fell £26m from £30m to £4m, as revenue decreased £6m (5%) from £125m to £119m, profit on player sales halved from £6m to £3m and expenses rose £17m. After tax, prior season’s £26m profit was down to £3m, as the tax charge dropped from £4.1m to £0.5m.

#HTAFC £6m revenue fall was almost entirely driven by broadcasting’s £6m (5%) decrease from £110m to £104m, due to lower finishing position in the Premier League, while commercial also dropped £0.5m (5%) to £10.0m. However, match day slightly rose by £0.2m (2%) to £5.0m.

Small increases in #HTAFC wage bill, up £2m (2%) to £64m, and other expenses, up £2m (9%) to £22m, but player amortisation shot up £15m (86%) to £32m. However, player impairment and depreciation decreased, by £0.8m and £0.4m respectively. Net interest payable up £0.9m to £1.3m.

#HTAFC £4m pre-tax profit was not huge, but it is very creditable, given that half of the clubs in the Premier League have lost money, including two clubs above £100m (#EFC and #CFC). Ironically, if Town had stayed up, they would have made a loss, due to performance bonuses.

#HTAFC profit is all the more impressive, given they made just £3.4m from player sales (down from £5.9m), mainly Tom Ince to Stoke City. To highlight how important player trading can be, #CFC earned £60m from this activity, followed by #LCFC £58m, #LFC £45m and #MCFC £39m.

#HTAFC have been profitable in both their Premier League seasons. Before promotion, the last time they made money was back in 2006 – and that was less than £100k. Usually posted small losses except 2016/17, when the £20m loss was impacted by estimated £12m promotion bonuses.

Hodgkinson noted, “Give our relative size, we will always be a trading club”, though #HTAFC have rarely made much profit from player sales, the highest being just £7m in 2013 and 2016. However, this year’s figures will benefit from the club record sale of Philip Billing to #AFCB.

#HTAFC EBITDA (Earnings Before Interest, Depreciation and Amortisation), considered a proxy for cash operating profit, as it strips out player sales and exceptional items, fell from a club record £44m to £36m. Much better than the negative £7-8m in the Championship.

Despite the decrease, #HTAFC EBITDA of £36m was actually mid-table in the Premier League, around the same level as Burnley £37m and Watford £35m, and not far behind Chelsea £43m. Miles better than the likes of Everton £(15)m, Leicester City £(6)m and Southampton £(4)m.

Even after this year’s fall, #HTAFC £119m revenue is still £103m higher than £16m generated in season before promotion. Also more than twice as much as last 5 years in the Championship combined (£60m). Will dramatically fall in 2019/20 by around £60m, despite parachute payment.

#HTAFC £119m revenue was easily the lowest in the Premier League with the closest clubs being Cardiff £125m and #AFCB £131m. In truth, it was a great achievement to survive more than one year in the top flight. For some perspective, #MUFC £627m was over half a billion higher.

#HTAFC broadcasting income fell £6m (5%) from £110m to £104m, including £97m from the Premier League TV distributions. The merit payment was £8m smaller, as Town finished four places lower in the league (20th vs. 16th), partly offset by £2m growth in overseas TV rights.

An amazing 87% of #HTAFC 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, though only #AFCB were more reliant than Town on this revenue stream.

#HTAFC TV income will significantly fall in 2019/20, though will be cushioned by a £43m parachute payment, which is much higher than £4.6m solidarity payment that most Championship clubs receive. Will get three years of parachutes (unless promoted), worth around £93m in total.

#HTAFC match day revenue rose by 2% (£0.2m) to £5.0m, despite staging 3 fewer home games in the cups. However, this was still the lowest in the Premier League, behind #AFCB £5.0m and Burnley £6.3m, as Town fans enjoyed the lowest ticket prices in the division.

#HTAFC average attendance dropped from 24,032 to 23,203, though this was still over 10,000 more than 12,631 three years ago, thanks to a combination of promotion to the Premier League and cutting prices (a season ticket costs only £249).

#HTAFC 23,203 attendance was the 17th highest in the Premier League, ahead of Burnley, Watford and Bournemouth. Ticket prices frozen for last two seasons. As Hoyle said, “This club prides itself on looking after its loyal supporters as well as possible.”

#HTAFC commercial income fell £0.5m (5%) to £10.0m, mainly due to retail dropping £0.6m. This was the lowest in the Premier League, just behind #AFCB £10.2m, Cardiff City £10.4m and #BHAFC £11.4m. Likely to fall further in the Championship.

#HTAFC shirt sponsor in 2018/19 was OPE Sports, reportedly worth £1.5m a year, the lowest in the top flight. Replaced since then by Paddy Power in “largest club deal” outside the Premier League. Umbro 4-year kit deal from 2018/19. Leisu Sports was new sleeve sponsor.

#HTAFC wage bill only slightly grew by £1.6m (2%) from £62.6m to £64.2m, though this masks a bigger underlying increase in the cost of the first team squad, offset by no repeat of prior year Premier League retention bonuses. Wages to turnover ratio increased from 50% to 54%.

As Hodgkinson noted, #HTAFC £64m wage bill was “modest”, actually the second smallest in the Premier League, only ahead of Cardiff City £54m, but £20m below the next lowest Watford £84m. Will fall in Championship following departure of some high earners and relegation clauses.

#HTAFC 54% wages to turnover ratio of 54% was one of the lowest in the Premier League. Fans will wonder if they would have had a better chance of survival if they had spent more. Of the three relegated clubs, it was higher than Cardiff 43%, but lower than Fulham 67%.

#HTAFC highest paid director saw his remuneration cut by 10% from £345k to £311k, as no repeat of Premier League retention bonus. This was one of the lowest in the top flight, much less than the likes of #THFC Daniel Levy £7m and #MUFC Ed Woodward £3.2m.

#HTAFC player amortisation, the annual charge to write-down transfer fees over the life of a player’s contract, increased by £15m (86%) from £17m, to £32m, a new club high, “reflecting investment in the playing squad”. Club also booked £0.7m player impairment, down from £1.5m.

Even after the sizeable increase, #HTAFC £32m player amortisation was still the second lowest in the Premier League, only ahead of Cardiff City £15m. That said, it was very close to #WWFC £33m, #BHAFC £33m and #AFCB £34m.

#HTAFC spent £46m on players, including Kongolo, Diakhaby, Hadergjonaj, Bacuna, Lössi and Grant, which was more than Cardiff £38m, Burnley £33m, #THFC £22m and Watford £21m. Although less than prior season’s £59m, still the second highest in the club’s history.

Unsurprisingly, #HTAFC have spent much more in the transfer market after promotion to the Premier League, averaging £40m in the last 2 years, compared to £2m in the previous 8 years. The largest purchase in 2019/20 was the loan conversion of Isaac Mbenza from Montpellier.

#HTAFC gross debt increased £27m from £50m to £77m. The amount owed to former owner Dean Hoyle fell from £49.4m to £45m, while a new £31m bank loan (covered by future TV money) was taken out. Club argued this was to spread the risk, which seems a little strange.

#HTAFC debt of £77m was still quite low in the Premier League, though it has grown from £11m in 2010. As part of the club sale agreement, a repayment schedule has been agreed for Hoyle’s £45m: summer 2020 £15m; August 2021 £10m; August 2022 £10m; no fixed date £10m.

This means that #HTAFC will have to find £35m to reduce Hoyle’s loan over next two years via “a combination of player trading, operational cash flows and funding from the new controlling shareholder.” Will reduce money available to spend on the squad.

Hoyle’s loans were interest-free, but #HTAFC had to pay £418k interest on new bank loan in 2019. This was a lot less than some clubs in the Premier League, e.g. #THFC £26m & #MUFC £19m, but hardly any interest is paid in the Championship, as most debt is from owner loans.

#HTAFC do not disclose details of transfer debt, but this is also likely to have significantly risen, given the growth in Trade Creditors. These have increased by £25m from £3m in 2017 to £28m. So much of the player recruitment was done on credit with £21m payable in 12 months.

#HTAFC generated £18m from operating activities, though then spent £32m (net) on buying players, while £3m went on stadium/Canalside training complex and £1m on tax. Net £4m was repaid to Hoyle (loaned £12m in year before £16m repaid). Funded by new £31m bank loan.

As a result, #HTAFC cash balance rose £7m to £14m. 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, #HTAFC had £96m available cash, though most was from funding (£46m from Hoyle and £30m from banks) with only £19m from operations. Most of this went on players £65m, while £15m has been invested into infrastructure, mainly the training ground at PPG Canalside.

Due to the COVID-19 crisis, #HTAFC directors and senior management team volunteered to take a salary deferral for two months (April and May), which will enable other members of staff to receive full pay in that period.

#HTAFC deserve praise for reaching the top flight (and surviving 2 seasons) on a very low budget compared to others. They concluded, “Whilst relegation was clearly disappointing, the club is generally in a much better position than it was prior to promotion to the Premier League.