Thread by @SwissRamble

Now that all the Premier League clubs have published their 2018/19 financials, we can compare the results, but we will do this a little differently by separating the analysis into two parts, as the numbers are so different for: (1) the Big Six clubs; and (2) the Other 14 clubs.

Today’s thread will focus on the 2018/19 financial results for the Big Six Premier League clubs #AFC #CFC #LFC #MCFC #MUFC #THFC. Clearly, there will be a significant impact on these numbers in 2019/20 following the COVID-19 lockdown, but how did it look before the pandemic?

Big 6 Premier League clubs generated £3.0 bln of revenue, but £3.1 bln of expenses (including £1.7 bln wages and £0.7 bln player amortisation) meant a £97m operating loss. This was improved by £193m profit on player sales, offset by £23m interest, giving £33m profit before tax.

After adding back amortisation and working capital movements, Big 6 had £840m operating cash flow, but spent £498m on players (purchases £965m, sales £467m), £505m capex, £56m interest and £4m tax. The £235m shortfall was covered by over £400m loans, giving £149m net cash inflow.

Although Big 6 had overall £33m profit before tax, there is a wide divergence in profitability. #THFC led the way with £87m profit, followed by #LFC £42m, #MUFC £27m and #MCFC £10m, but #CFC posted a huge £102m loss, while #AFC slumped to a £32m loss (their first since 2002).

However, the decline in profitability is striking, with the prior season’s £439m profits crashing to just £33m. Four clubs reported steep decreases: #CFC £169m, #AFC £102m, #LFC £83m and #THFC £52m. The two Manchester clubs were basically flat against previous year.

All the Big 6 look good in terms of EBITDA, (Earnings Before Interest, Tax, Depreciation & Amortisation), a proxy for cash operating profit, as it excludes player sales and exceptional items. Four clubs were above £100m with #MUFC best at £186m, though #CFC was only £43m.

The most impressive improvement in EBITDA among the Big 6 came at #LFC, who were up £29m. Most clubs had little movement in this metric, though #CFC suffered a £50m fall (over 50%).

The Big 6 had a £97m operating loss in total, but this was a mixed bag with 3 profitable and 3 losing money. Leading the way were #THFC with £96m, followed by #MUFC £24m and #LFC £1m. In stark contrast, #CFC had a £163m loss, while #AFC and #MCFC lost £33m and £22m respectively.

However, it’s not all gloom and doom for #AFC and #MCFC, as they both posted smaller operating losses than prior year. #LFC and #MUFC had slightly reduced operating profits. The big outlier was #CFC, whose operating loss more than tripled, increasing by £116m from £47m to £163m.

The Big 6 bottom line was boosted by £193m profit on player sales. This has been a major element of #CFC business model, so it’s no surprise to see them leading the way with £60m, followed by #LFC £45m. The North London duo #AFC and #THFC only had £12m and £11m respectively.

However, much lower profits on player sales was the main driver of reduced profitability in the Big 6, as they fell by £294m from prior season’s £487m to £193m. Large decreases at #AFC £108m, #LFC £79m, #THFC £62m and #CFC £53m. Only increase was #MUFC, up £8m to just £26m.

Big 6 had £3.0 bln revenue with #MUFC leading the way with £627m, followed by #MCFC £535m, #LFC £533m and #THFC £461m. The latter two had around £80m growth, due to reaching Champions League final. On the other hand, the Europa League finalists #CFC and #AFC barely grew at all.

The Big 6 were all in the Deloitte Money League, which ranks clubs globally by revenue, ranging from #MUFC in 3rd place to #AFC in 11th. However, only #THFC improved their position, up 2 places to 8th, overtaking both #CFC and #AFC. #MCFC also dropped a place to 6th, behind PSG.

Most important revenue stream in the Big 6 is broadcasting £1.4 bln (46%), followed by commercial £1.1 bln (37%), then match day £0.5 bln (16%). Revenue grew £240m (9%) with the largest increases due to TV £162m (mainly Europe £118m) and commercial £72m, while match day was flat.

Four of the Big 6 had more than £240m broadcasting revenue with #LFC £261m ahead of #MCFC £253m. Due to their commercial prowess, only 38% of #MUFC total revenue is from TV. Significant growth for Champions League representatives (around £40m), due to new deal in 2018/19.

The importance of European participation, especially the far more lucrative Champions League, has never been more evident, as the domestic Premier League TV deal is split fairly evenly with only £10m between the top 6 (#LFC £152m and #AFC £142m).

The four English representatives in the Champions League earned between £82m (#MCFC quarter-final) and £98m (#LFC winners), which was considerably more than Europa League finalists #CFC £41m and #AFC £34m. YoY growth shows the higher CL increase, while #CFC went from CL to EL.

Reaching the Champions League final was worth £90m in TV money for #THFC. It is worth noting the new UEFA coefficient, based on performances in Europe in last 10 years, so #MUFC got highest payment here. Far lower sums in Europa League, but enough to keep Big 6 ahead of rivals.

Although match day is smallest revenue stream for Big 6, it is still important. #MUFC £111m and #AFC £96m lead the way, but there has been good growth at #LFC (new stand) and #THFC (new stadium) in recent years. Contributes 24% of #AFC revenue, the most in Money League Top 20.

#MUFC 74,500 is still highest attendance in the Premier League, followed by #AFC 59,900. #THFC 54,200 represents the weighted average for Wembley and their new stadium (last 5 games). The odd one out here is #CFC, whose average of around 40,000 is due to no stadium development.

Commercial is particularly important for #MUFC £275m (44% of total revenue) and #MCFC £227m (42%), but the largest growth in 2019 was elsewhere: #LFC £34m, #THFC £26m and #CFC £15m. #AFC will improve in 2020 with new Adidas and Emirates deals.

Based on latest announced shirt sponsorships, #MUFC have the best deals: Adidas £75m and Chevrolet £64m. At the end of the season, #LFC Nike deal will replace New Balance £45m with a base £30m plus 20% royalty on net merchandising (usually 7.5%) worth an estimated £70m.

Three clubs have a wage bill over £300m (#MUFC £332m, #MCFC £315m and #LFC £310m), followed by #CFC £286m. A gap is beginning to develop to the 5th and 6th ranked clubs, namely #AFC £232m and #THFC £179m. In particular, Arsenal’s wages only grew by £8m last year.

Big 6 wages to turnover ratios were all below UEFA’s recommended 70% limit, though overall this rose from 52% to 55%. #CFC were highest with 64% (up 9% YoY), followed by #MCFC 59% (up 7%). At the other end of the spectrum, #THFC had an amazingly low 39%, followed by #MUFC 53%.

Highest paid Premier League director was #THFC Daniel Levy, who trousered a cool £7m (including £3m bonus for completing the stadium), followed by #MUFC Ed Woodward £3.2m. #MCFC do not detail this in the football club, though £5m total for key management in the holding company.

Player amortisation, the annual charge to expense transfer fees over the length of a player’s contract, reflects transfer market spend. As a result, #CFC have the highest with £168m, followed by #MCFC £127m and #MUFC £126m. The lowest by far is #THFC with just £48m.

#THFC depreciation increased from £11m to £25m, due to their major investment in the new stadium. This is by far the highest charge in the Premier League, £10m more than #AFC £15m (similar Emirates stadium cost), followed by #MCFC and #MUFC, both £13m.

Other operational expenses (everything except wages, player amortisation and depreciation) can be quite meaty at a football club, amounting to over £100m at 5 of the Big 6 with #CFC £118m and #THFC £114m the highest. Unfortunately, these costs are not detailed in the accounts.

Two of the Big 6 made substantial exceptional payments as a result of managerial changes: #CFC £27m and #MUFC £20m. Although the lion’s share would have gone to the managers (Antonio Conte and Jose Mourinho), this also covers others in the coaching staff.

Big 6 spent £814m on player purchases, ranging from #CFC £281m to #THFC £22m, though recouped £243m from player sales, with highest being #CFC £66m and #LFC £60m. As a result, highest net spend was #CFC £215m, followed by #LFC £163m and #AFC £81m. #THFC essentially broke-even.

Big 6 had £1.7 bln of gross debt with the highest at #THFC £658m (new stadium), #MUFC £511m (Glazers’ leveraged buy-out) and #AFC £209m (Emirates stadium). #CFC £79m is the debt in the football club, though they do owe £1.4 bln to Roman Abramovich in the holding company.

Big 6 paid £64m in interest in 2019, mainly at 3 clubs: #THFC £26m, #MUFC £19m and #AFC £11m. Despite the recent debt refinancing, interest payments will still prove a burden to Spurs going forward. Worth noting that #MUFC also paid £23m dividends (the only PL club to do so).

Big 6 looked good from a cash perspective with around £800m. #MUFC led the way with £308m, followed by #AFC £167m, #MCFC £130m and #THFC £123m. However, this will now be significantly lower with little revenue coming in during the lockdown, e.g. United down to £90m in March 2020.

Big 6 also owed £744m in transfer stage payments (highest #MUFC £188m), but were in turn owed £349m from other clubs (highest #CFC £141m), meaning net transfer debt of £395m. The highest by far was #MUFC £170m, though cut to £76m in March 2020.

We will soon publish another thread with similar financial analysis for the “Other 14” Premier League clubs #AFCB #BHAFC #BurnleyFC #CardiffCity #CPFC #EFC #FFC #HTAFC #LCFC #NUFC #SaintsFC #WatfordFC #WHUFC #WWFC