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Crystal Palace’s 2018/19 financial results covered a season when they finished “in a respectable” 12th place under Roy Hodgson. This secured a seventh successive year in the Premier League, their longest ever spell in England’s top division. Some thoughts follow #CPFC
#CPFC improved from a £36m loss before tax to a £5m profit, very largely due to profit on player sales (mainly Aaron Wan-Bissaka’s move to #MUFC) surging from £2m to £46m, though revenue also rose £5m (3%) to a club record £155m. Partly offset by expenses increasing £8m.
All three #CPFC revenue streams grew, led by broadcasting, which rose £3.2m (3%) to £124.4m. There were also increases in commercial, up £1.0m (6%) to £16.4m, and match day, up £0.9m (7%) to £14.6m. Note: this revenue split is taken from the club’s Annual Review.
#CPFC managed to largely restrict cost growth. The wage bill increased just £2m (2%) to £119m, while other expenses actually dropped £1m (5%) to £20m. Player amortisation rose £4m (8%) to £50m and there was a £2m impairment charge. Interest payable doubled from £1.1m to £2.3m.
#CPFC £5m profit may not be huge, but this was actually the 8th best financial performance in the Premier League. No fewer than 9 clubs posted a loss, including two above £100m, namely #EFC £112m & #CFC £102m. This is a far cry from prior season, when Palace had the largest loss.
The main reason for #CPFC improved bottom line is profit on player sales, which significantly improved from a very low £2m to £46m, mainly due to the lucrative Wan-Bissaka transfer. This was 3rd highest in the Premier League, only surpassed by #CFC £60m and #LCFC £58m.
After promotion to the Premier League in 2013, #CPFC have made money in four of the six seasons since then. Over that period, their aggregate profit was £6m, i.e. £1m a season (essentially break-even), which is not too shabby, given the need to compete with bigger spending clubs.
#CPFC have not been greatly impacted by exceptional items. The last item formally noted was the £4m income resulting from the Tony Pulis arbitration in 2017. That said, last year’s wage bill included a charge for Frank de Boer’s departure.
#CPFC have made £83m from player sales in the last three seasons. Excluding £46m from this activity in 2018/19, the club would have lost £41m. As chairman Steve Parish said, “We would prefer to hold onto our key players, but compliance with FFP is a major consideration.”
#CPFC EBITDA (Earnings Before Interest, Tax, Depreciation & Amortisation), considered a proxy for cash operating profit, as it strips out player sales and once-off items, rose from £12m to £17m. This has improved from £6m three years ago, but is far below the £30m peak in 2014.
Despite the improvement, #CPFC EBITDA of £17m was firmly in the bottom half of the Premier League, around the same level as their great rivals #BHAFC. For some perspective, #MUFC £186m and #THFC £168m generate more than 10 times as much as Palace.
#CPFC revenue has grown by £54m (53%) in the last 3 years from £102m to £155m. Most of this growth (£46m) can be ascribed to the new Premier League TV deal in 2017, but worth noting that commercial is also up £7m (60%), while match day is essentially flat.
#CPFC £155m revenue is the 12th highest in the Premier League, exactly in line with their final league position. However, for perspective it’s £240m below the Big Six (#AFC £395m) and only around a quarter of #MUFC £627m. More pertinently, it’s £17m less than 11th placed #WWFC.
Looked at more positively, #CPFC revenue is 30th highest in the world per the Deloitte Money League, though this is six places lower than their ranking in 2017/18. Their £154m (slightly lower than the figure in the club accounts) is just behind Porto and Zenit Saint Petersburg.
#CPFC Premier League TV money was unchanged at £114m, as the £2m reduction in merit payment (for finishing one place lower in the league) was offset by a similar size increase in overseas TV rights. Palace have earned £561m TV money from their 6 years in the PL.
Although a substantial 80% of #CPFC revenue came from TV (£124m out of £155m), this is far from unusual in the Premier League, as no fewer than 13 of the 20 clubs are above 70% with Bournemouth “leading the way” with an amazing 88%.
#CPFC match day increased by £0.9m (7%) to £14.6m, which was 12th highest in the Premier League. Long way below #MUFC £111m, but ahead of #EFC £14m. Note: classification here not always the same between clubs, e.g. Palace gate receipts were £10.6m.
#CPFC attendance increased 2% from 25,063 to 25,455. It is worth noting that crowds have grown by more than 8,000 (47%) since promotion from the Championship six years ago. There were small increases in ticket prices in 2018/19 after many years frozen.
#CPFC attendance of 25,455 was the 15th highest in the Premier League, but nearly 100% of capacity, which helps explain the club’s decision to build a new main stand at Selhurst Park to increase capacity from 25,486 to 34,000.
#CPFC stadium project expected to cost £130m. Probably only ready for 2022/23 season, given COVID delays. The club say it “will offer a step change in revenue potential with over 8,300 new seats, up to 3,000 new premium covers and major opportunities for non-matchday revenue.”
As Steve Parish said, the stadium development “is a long-term plan for the future of the football club. To be competitive, we need as much revenue as possible and other Premier League clubs have £20m-£30m more revenue than #CPFC.”
#CPFC commercial income rose £1.0m (6%) to £16.4m, mainly due to sponsorship deals. This revenue stream has grown by two-thirds in the last 3 years, but is still only 15th highest in the Premier League, sandwiched between Burnley and Watford.
Gaming company ManBetX became new #CPFC shirt sponsor in 2017/18 in a “record breaking” deal worth £6.5m a year, replacing Mansion (£5m). Puma replaced Macron as kit supplier in 2018/19. Palace have had a sleeve sponsor since 2017, namely All Football (Dongquidi).
#CPFC wage bill increased just £2m (2%) to £119m, though last year included “change of first team management” (Frank De Boer), so the underlying increase was higher. Wages have grown by £39m (48%) in the last 3 years, pretty much the same rate as revenue.
Interestingly, #CPFC also break out player wages, which actually fell £1m to £85m. Including social security and agents’ fees, total player compensation was £102m, which equates to 66% of turnover. It would be very useful to us analyst types if other clubs did the same.
#CPFC £119m wage bill is the 10th highest in the Premier League, only surpassed by the Big Six plus #EFC, #LCFC and #WHUFC. This is higher than might be expected, given that the club’s revenue is 10th highest, but not wildly out of line.
#CPFC wages to turnover ratio decreased (improved) slightly from 78% to 77%, which is 5th highest (worst) in the Premier League, though a fair way below #EFC 85%. Palace are one of 7 PL clubs with ratios above UEFA’s recommended 70% upper limit.
Remuneration for #CPFC highest paid director, Steve Parish, increased from £1.6m to £2.6m, 3rd highest in the Premier League, only behind #THFC and #MUFC. Like prior year, club explained that any payment in excess of basic salary has been reinvested into the Academy development.
#CPFC player amortisation, the annual charge to write-down transfer fees over the life of a player’s contract, increased by £4m (8%) from £46m to £50m, rising from just £1m in the Championship in 2013. Also a £2.3m impairment charge to reduce the value of certain players.
#CPFC player amortisation of £50m is mid-table in the Premier League, just behind Southampton £51m, but surprisingly ahead of #THFC £48m. However, for more context, it is still only around a third of big-spending #CFC £168m.
#CPFC had £19m player purchases, mainly Kouyaté, though Mayer, Guaita and Sako came in on frees. This was the lowest in the Premier League, way below #CFC £281m, #LFC £223m and #EFC £146m. However, Palace have still spent nearly a quarter of a billion (£239m) in last 5 years.
Parish described this as “prudent and opportune acquisitions were made, bolstering the squad at relatively low cost.” #CPFC transfer spend had been on a rising trend following promotion, but this has dropped in the last two seasons, including 2019/20.
It is also worth noting that a lot of cash was used to pay stage payments from previous years’ transfers, thus significantly reducing transfer debt from £49m to £17m (further cut since year-end). #CPFC in turn owed £23m from other clubs, mainly the AWB deal.
This is important for clubs in the COVID-19 crisis, so it is good that #CPFC only have “relatively small deferred transfer payments outstanding”. Some other clubs had much more transfer debt, e.g. #MUFC £188m, #LFC £167m and #CFC £139m (both estimated at 90% of Trade Creditors).
#CPFC gross debt increased from £53m to £84m. The owners put in further £25m long-term, interest-free loans to take their balance due to £45m. The £37m funding facility was repaid after year-end in December 2019, so the club had no external debt at that point.
Despite the increase, #CPFC £84m gross debt is still only 12th highest in the Premier League, though it will surely further rise as the stadium development progresses. No fewer than 9 clubs have debt above £100m, including #THFC £658m, #MUFC £511m, #EFC £337m and #BHAFC £280m.
#CPFC paid £2.3m interest, up from £0.7m prior year, almost entirely on the loan from Aldermore bank. This was nowhere near the highest in the Premier League (#THFC £26m and #MUFC £19m), but maybe the best comparison is #WHUFC, whose owners charged £7m.
#CPFC generated £16m from operating activities in 18/19, but then spent £53m (net) on players, £2m on ground improvements and £2m on interest payments, offset by a £3m tax rebate. This was partly funded by £32m of new loans: £24m from the owners (net of fees) and £7m external.
As a result, #CPFC cash balance decreased from £18m to £12m. This is one of the lowest in the Premier League, but last month Palace took on new external debt in response to the COVID-19 outbreak “to have as much liquidity as possible to see us through this challenging period.”
Since promotion to the PL, #CPFC have generated £137m from operations, with £46m provided by the owners (loans £35m and share capital £11m) plus £36m external loans, giving £218m total funds available. Most (£185m) can be seen on the pitch, while £18m went on infrastructure.
Club will continue to focus on the Academy, seeking to ensure that “the next generation of Wilfred Zahas and Aaron Wan-Bissakas choose #CPFC as the place to develop their talents.” They have secured a long-term lease and planning approval for the Beckenham site.
There have been some media reports that American businessmen Josh Harris and David Blitzer, who each acquired 18% of #CPFC in December 2015 (the same amount as Steve Parish), might already be looking to sell their stake, but nothing official has been announced.
Parish noted, “the outlook for every business is uncertain and football clubs are no different”, due to the COVID crisis Ticket holders will be entitled to a refund for remaining 19/20 games, though supporters also have the option of helping the Academy or Foundation instead.
#CPFC have come a long way since administration in 2010 and are 10th longest serving club in the Premier League. The prudent approach in last two years may not have enthused fans, but it will help protect the club during the pandemic, though player sales continue to be important.
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