Middlesbrough’s 2018/19 financial results covered a season when they finished 7th in the Championship, just missing out on a play-off position. Former player Jonathan Woodgate replaced Tony Pulis as manager in July 2019. Some thoughts in the following thread #Boro
#Boro improved from a £6m loss before tax to a £2m profit, even though revenue dropped £6m (10%) from £62m to £56m and expenses were £3m higher, because profit on player sales more than doubled from £15m to £33m. 
#Boro £6m revenue decline was very largely driven by broadcasting’s £6m (12%) fall from £47m to £41m, due to a smaller parachute payment, though gate receipts also dropped £1m (15%) from £7m to £6m. Commercial rose slightly by £0.3m (4%) from £8.3m to £8.6m.
#Boro cut their wage bill by £9m (18%) from £49m to £40m, though this was offset by a £9m (unexplained) increase in other expenses from £6m to £15m. Player amortisation rose £1m (5%) to £26m and they also booked £2m player impairment. Net interest payable was down £0.6m to £1.0m.
#Boro are actually one of just four Championship clubs to report a profit to date in 2018/19 with their £2m only behind Bristol City £11m, Hull City £3m and Rotherham £3m. This is a good performance, considering that almost all clubs lose money in this ultra-competitive division.
#Boro have made a profit twice in the last three years after accumulating £112m of losses in the previous six years, including a £32m record deficit in 2016. As Pulis said, “The club has been in a very poor position financially. We’ve eradicated that, we’ve turned that around.”
One way that #Boro have improved their bottom line is by becoming a selling club. They have increased profit on player sales to an annual average of £20m over the past 3 years (2017 £11m, 2018 £15m and 2019 £33m). This season will include sales of Braithwaite, Randolph and Flint.
#Boro EBITDA (Earnings Before Interest, Tax, Depreciation & Amortisation), which is a proxy for cash operating profit, as it strips out player sales and once-off items, fell from £7m to £1m. It had been as high as £38m in the Premier League.
#Boro revenue has fallen by £65m from £121m to £56m since relegation from the Premier League two years ago, and will further decrease in 2019/20 to around £24m after parachute payments stop (clubs only receive 2 years’ payments if relegated after one season).
#Boro £56m is the 4th highest Championship revenue reported to date, only behind the three clubs relegated from the Premier League the previous season, namely WBA £71m, Stoke City £71m and Swansea City £68m, but just above Aston Villa £54m.
If parachute payments were excluded, #Boro £25m would be the 10th highest revenue in the Championship, just behind Nottingham Forest. The gap to the leading clubs, e.g. Leeds United £49m and Aston Villa £43m, would be £18-24m.
#Boro TV revenue fell £6m (12%) from £47m to £41m, due to the lower parachute payment. After this cushion is removed in 2019/20, they will only get the same £8-9m as most other Championship clubs (including £4.6m PL solidarity payment and £2.5m EFL distribution).
Unsurprisingly, #Boro crowds are around 7,000 lower in the Championship compared to the 30,000 they attracted in the Premier League, though attendances are still much higher than most of the seasons when they were last in the second tier.
In 2018/19 #Boro changed both their main sponsors. A “record-breaking three-year partnership” saw online casino 32Red become the new shirt sponsor, though long-standing Ramsdens switched to back-of-shirt, while kit supplier Adidas was replaced by a five-year deal with Hummel.
#Boro wage bill was cut by 18% (£9m) from £49m to £40m, so has now fallen by 38% (£25m) from £65m two years ago in the Premier League. Wages to turnover ratio improved from 79% to 72%. Wages will further decrease in 2019/20 to offset the lack of parachute payment revenue.
#Boro other expenses (i.e. excluding wages, player amortisation and depreciation) increased by £9m (141%) from £6m to £15m, thus wiping out the wages reduction, without any real explanation. That said, last year’s figure looked to be on the low side compared to other years.
#Boro player amortisation, the annual charge to write-down transfer fees over the life of a player’s contract, rose £1m (5%) to £26m, i.e. £2m higher than in the Premier League. This cost has shot up from just £4m in 2015, reflecting owner Steve Gibson’s investment in the squad.
As a consequence, #Boro player amortisation of £26m was the third highest in the Championship, only surpassed by Stoke City £29m and Swansea City £28m. The club also booked £2m impairment to reduce the value of certain players in the books.
#Boro made £11m player purchases, including Aden Flint & George Saville. Significantly less than prior season’s massive £66m, which Pulis described as “the most disastrous transfer window in the club’s history”. Still quite high for the Championship, but miles below Stoke’s £67m.
#Boro net spend took off in 2016-17, averaging £28m a year after being break-even before that. However, in the last 3 seasons, Middlesbrough have become a selling club with net sales averaging £11m. Gross spend still £24m, but sales have surged to £35m.
#Boro gross debt rose £4m to £105m, all of which is owed to the owner. In fact, Gibson’s debt increased £11m, while a £7m bank loan was repaid. Debt would have been even higher had £63m not been converted into share capital, highlighting Gibson’s financial support.
It is also worth noting that #Boro owe £29m in transfer fees (£23m net), though this has fallen from £56m in 2018, suggesting that much of the recent player spend has been on credit. In addition, £7m potential performance-related liabilities, based on appearances, promotion, etc.
#Boro do not include a cash flow statement in their accounts, so we do not know exactly how much interest the club actually paid, though the £971k shown as interest payable in the profit and loss account would place them among the highest in the Championship.
#Boro cash balance fell from £535k to £210k, which is the second smallest in the Championship. In fairness, 15 clubs in this division had less than £2m cash in the bank, so this is not unusual (albeit a bit worrying in the current shutdown).
#Boro have no FFP issues, as they were profitable over 3-year monitoring period, even before deducting allowable expenses (academy, community & infrastructure). Allowable loss of £61m (£35m for 1 Premier League season & 2 Championship seasons at £13m) will be £39m this season.
Gibson has criticised other clubs for creative accounting to get round FFP rules (i.e. selling their stadium to another group company), though others have accused him of hypocrisy, given the significant financial support he has provided to #Boro over the years.
However, Pulis agreed with Gibson, pointing out, “We've sold £40m worth of players, cut the wage bill by a quarter and the playing staff by nine to make sure we meet the (FFP) regulations”, which has clearly impacted #Boro’s ability to compete for promotion.
Gibson is still positive about #Boro: “I am running and investing in a club that is fit for the Premier League. We have the stadium, the training facilities, the Category One Academy that are all evidence of that. We have the fanbase, the desire and expectation to be in the PL.”
However, they face a tough challenge now that parachute payments have ended. Gibson said, “I am completely committed to taking this football club back into the top division.” This is easier said than done with #Boro at the wrong end of the table, so his support remains critical.
