2019 FINANCIAL FORECAST - Off The Pitch

 
2019 FINANCIAL FORECAST - Off The Pitch
PREMIER LEAGUE
FINANCIAL
FORECAST
2019
2019 FINANCIAL FORECAST - Off The Pitch
OFF THE PITCH PREMIER LEAGUE FINANCIAL FORECAST 2019 | CONTENTS

Table of contents

         INTRODUCTION                                                                           01

         BASIS OF PREPARATION                                                                   02

         PREMIER LEAGUE 2018/19 AT A GLANCE                                                     03

         PREMIER LEAGUE CLUBS                                                                   06

         PROMOTED CLUBS 2019/2020                                                               66

         COMPARISONS AND RANKINGS                                                               75

Edited by                             All photos in this publication:            Copyright © 2019 by Off The Pitch
Mads Meisner Christensen              Getty Images                               All rights reserved. This publication or any
                                                                                 portion thereof may not be reproduced or
Authors                               Graphic design: emotion.dk                 used in any manner whatsoever without
Magnus Albertsen, analyst                                                        the express written permission of the
Mads Christian Fogt Jensen, analyst   Off The Pitch                              publisher.
                                      Telephone: +44 (0) 20 3696 6683
November 2019                         71-75 Shelton Street, London, WC2H 9JQ
                                      www.offthepitch.com
                                      contact@offthepitch.com
2019 FINANCIAL FORECAST - Off The Pitch
OFF THE PITCH PREMIER LEAGUE FINANCIAL FORECAST 2019 | INTRODUCTION

Introduction

Welcome to Off The Pitch’s very first edition of
Financial Forecast. This report aims to examine the
major happenings in the Premier League’s 2018/19
season, with the purpose of estimating the key
financials for the participating clubs.

As the financial situation might heavily affect the current      therefore we have made it part of our business analysis
and future conduct of a football club in terms of strategic      initiatives to give an overview of the financial landscape
decisions, ownership, transfer behaviour and so forth, we        by estimating the results of the 2018/19 season for each
believe that stakeholders should be informed about the           of the Premier League clubs.
current condition of clubs competing in the English top
tier.                                                            Whilst turnover is expected to increase for most of the
                                                                 clubs, the profitability differs significantly, which sheds
The financial year for the majority of English football clubs    light on the complex task of running a football club in an
reflects the football season running from June to May.           increasingly competitive environment.
Despite having their accounts approved by the auditors in
the autumn, most of them, however, publish their annual          Enjoy the reading!
accounts in the spring of the following year. Thus, when                                                      Mads Meisner
the accounts of the 2018/19 season are published, we’re                                                 Co-founder and CEO
almost done with the 2019/20 season and can hardly
remember what happened the year before.                                                                        Authors:
                                                                        Mads Christian Fogt Jensen and Magnus Albertsen
At Off The Pitch, we strive to keep our customers up
to date with quality news and in-depth analysis, and

                                                                                                                               01
2019 FINANCIAL FORECAST - Off The Pitch
OFF THE PITCH PREMIER LEAGUE FINANCIAL FORECAST 2019 | PREPARATION

Basis of preparation
HOW WE DID IT                          players and managerial changes. It is    tion derived from various publicly
The forecasting method is based        assumed that the wages of players        available sources or directly from the
on incremental changes from the        on loan are paid by the loaning club,    respective clubs.
previous accounting year. Thus, for    unless otherwise stated.
each forecast we use the respective                                             For the purpose of comparability, the
2017/18 figures adjusted for what-     Player amortisations are based on        prize money distributed by UEFA,
ever changes happened throughout       straightline amortisation of transfer    which is officially reported in euro,
the accounting year of 2018/19.        fees over the period of the contract.    has been converted to pound sterling
                                       In case of player departures, their      using the following exchange rate:
Turnover estimates are based on the    released amortisation is deducted.       £1 = €1.1289.
officially reported Premier League,    In case of contract extensions, the
FA and UEFA payments, as well as       remaining booked value is amortised      DISCLAIMER
values of e.g. new sponsorship deals   over the period of the new contract.     All forecasts have been sent to their
reported from reliable sources.        Player impairments are not expected      respective clubs prior to publication
                                       to recur.                                with the opportunity for them to
The football clubs typically break                                              respond with any corrections or
down their revenue into three main     The profit on player sales is based on   feedback.
categories, namely matchday, broad-    the initial transfer fees paid for the
casting and commercial income.         departing players, the booked value      No verification has been performed
Matchday revenue largely consists      calculated in accordance with the        in relation to the information used
of income derived from ticket, food    abovementioned player amortisa-          in this publication. Thus, Off The
and beverage sales on matchdays.       tions, and the transfer fees received    Pitch won’t give any assurance,
Broadcast income is payments and       for selling the player. The net loan     whatsoever, on the accuracy of the
prize money received from parti-       fees receivable are included in the      forecasts compared to the actual
cipating in domestic and European      profits on player sales.                 figures recorded in the 2018/19
competitions. Commercial income is                                              annual reports. In turn, no further
derived from sponsorships, licensing   In case subsequent events and their      dependence should be placed upon
and merchandising as well as various   financial impacts are reported in the    the estimated forecasts.
other commercial activities.           financial statements, they overrule
                                       any given estimates made by Off The      The information included is selective
Matchday revenue is estimated          Pitch or constitute the baseline of      with no purpose of containing all
based on developments in average       further adjustments.                     the information that investors may
matchday attendance and the                                                     require. Off The Pitch, its directors,
number of matches played at home       Manchester United released their         employees and the authors of this
ground.                                2018/19 annual accounts on 24th          publication disclaim liabilities of any
                                       September. Hence their actual            kind due to errors or omissions from
Income derived from sources other      figures are reported in this publica-    this publication.
than those mentioned above is          tion
assumed to remain stable. I.e. we                                               The publication is based on the
haven’t analysed developments          SOURCES OF INFORMATION                   information available at the time of
in e.g. a club’s property trading      The financial figures up until           preparation. Off The Pitch has no
portfolio.                             2017/18 are derived from the clubs’      obligation to update or revise the
                                       financial statements reported to         publication in case new information
Wages are estimated based on           Companies House. Forecast figures        becomes publicly available subse-
newly signed contracts, departing      for 2018/19 are based on informa-        quent to publishing.

                                                                                                                     02
2019 FINANCIAL FORECAST - Off The Pitch
Premier League 2018/19
       at a glance
The 2018/19 season had excite-      The 20 participating clubs in               Total Premier League
ment to the very last matchday,     2018/19 have contributed to a
as Liverpool and Manchester         record-breaking turnover that is
                                                                                turnover (£m)
City fought a desperate battle      estimated to be around the £5 billion                                         5,148 (est)
for the title. The trophy became    mark for the first time ever. Never-
                                                                                5,000
the crowning achievement of an      theless, the overall profitability of the
astonishing 14-win streak that      clubs looks to decrease significantly                                 4,823

yielded Manchester City their       by 67 per cent, which emphasises
                                                                                                  4,575
second league title in a row.       the level of investment made in
The popularity of the Premier       the squads in order to fight for the
League has reached record           top spots - or even just to retain
heights, and so has the cash        Premier League status. Let’s take a
                                                                                4,000
flowing around in the clubs. This   closer look at the key drivers of this
has put massive pressure on         development.
the clubs, not only to perform                                                                          3,642
on the pitch, but also to run a     TURNOVER
responsible, financially sustain-   The total turnover for the clubs                            3,363
able business in order to remain    participating in the respective                     3,254
competitive on a long-term          Premier League seasons has                  3,000
basis.                              increased progressively for the last                2014 2015 2016 2017 2018 2019

                                                                                                                           03
2019 FINANCIAL FORECAST - Off The Pitch
OFF THE PITCH PREMIER LEAGUE FINANCIAL FORECAST 2019 | AT A GLANCE

six years, with an average yearly        is also somewhat reflective of their            Total profit on player
growth rate (CAGR) of 10 per cent.       performance in the league. The
                                         three relegated clubs, for example,
                                                                                         sales (£m)
                                                                                                                     836
This is primarily a result of the        are estimated to record the smallest
growing international popularity of      turnover.
the Premier League, demonstrated
by the value of the broadcasting         WAGES
rights, which was the key driver for     As the staff and players create the
                                                                                                              551
the almost exponential growth from       show, they also claim a fair and
2016 to 2017. Whilst the domestic        proportionate share of the income
                                                                                                                             424
broadcasting deal has stalled, the       generated. In turn, the development                                                (est)
value of the new overseas broad-         in overall Premier League wages
casting rights for 2019-2022 has         follows the development in turnover                           297
                                                                                         271    289
allegedly risen 35 per cent to a total   quite precisely, reflected by a CAGR
of £4.4 billion.                         of 9 per cent applying to wages.

From 2017/18 to 2018/19 the              Compared to 2017/18, the overall
turnover is estimated to increase by     wages are estimated to rise four
six per cent, which is partly a result   per cent, equal to an increase of
of the 39 per cent increase in prize     £125 million. The top-six clubs will            2014   2015   2016   2017   2018   2019
money distributed by UEFA due to         account for 53 per cent of the total
the beginning of a new broadcast         wage bill, meaning that their average           PROFIT ON PLAYER SALES
cycle. This, indeed, favours the         wages are 167 per cent above the                Looking at the profits generated
top-six clubs, and the gap between       average of the remaining Premier                from player sales, the Premier
them and the rest of the league is       League clubs.                                   League clubs are estimated to face
hard to overlook, as they’re esti-                                                       a significant reduction in 2018/19.
mated to account for 59 per cent of                                                      After having experienced significant
the overall revenue earned by the 20                                                     growth for the last two years, the
clubs in 2018/19.                                                                        profits are now expected to fall 49
                                         Total Premier League                            per cent compared to 2017/18. By
Manchester United, whose 2018/19         wages (£m)          2,941                       nature, the profits from player sales,
figures have been published already,                                             (est)   along with player amortisations,
                                                                         2,816
are set to keep pole position,                                                           increase in accordance with the
primarily because their commercial                               2,500                   inflation in the football industry.
business is worth almost twice the                                                       Apart from that, extraordinary sales
                                                         2,242
average of the rest of the top-six                                                       can contribute additionally, which
                                                 2,030
clubs. Tottenham and Liverpool,          1,888                                           was indeed the case in 2017/18 as
however, lead in terms of growing                                                        the likes of Coutinho, Lukaku and
their overall income on a year-                                                          Van Dijk generated huge profits for
on-year basis with an estimated                                                          Liverpool, Everton and Southampton,
increase of 18 per cent and 15 per                                                       respectively.
cent, respectively, primarily due to
both clubs making it to the Cham-                                                        The Premier League clubs appeared
pions League final. As the distribu-                                                     to be more focused on acquiring
tion of Premier League payments                                                          than selling players in 2018/19. Eden
is partly based on the achieved                                                          Hazard might, however, change the
league positions, the breakdown of                                                       picture, should his sale be excluded
Premier League turnover by clubs                                                         in the 2018/19 accounts, as he is
                                         2014    2015    2016    2017     2018   2019

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2019 FINANCIAL FORECAST - Off The Pitch
OFF THE PITCH PREMIER LEAGUE FINANCIAL FORECAST 2019 | AT A GLANCE

estimated to generate a profit of £87   Total profit before tax                         total pre-tax profit generated by the
million for Chelsea.                                                                   Premier League clubs is estimated to
                                        (£m)         564.9                             be more than halved.
PROFIT/LOSS BEFORE TAX
The overall profitability of the                                       470.8           Evaluating the data on club level, it
Premier League clubs varies                                                            appears that Tottenham continue
considerably from season to season,                                                    their impressive effort from 2017/18
reflected by the change in pre-tax                                                     - their pre-tax profit is estimated to
profit of £659 million from 2016 to                                                    grow a further eight per cent to a
2017, which is primarily due to the                                                    total of £150 million.
broadcasting deal that came into        201.7
                                                                               151.8
effect in 2017. Despite following the                                          (est)   Manchester City are set to record
development in turnover, the fact               114.7                                  the greatest positive year-on-year
that wages are based on contracts                                                      growth: 406 per cent with an
suggests a delayed effect, meaning                                                     estimated pre-tax profit of £53
that the increasing turnover in                                                        million. Everton seem to be facing
2016/17 is likely to be reflected in                                                   huge financial problems as their
the wages of 2017/18, when most                                                        focus on building a competitive
contracts were renegotiated. This                       -94.5                          squad, one capable of challenging
might explain the large profits in      2014    2015    2016    2017    2018    2019   the top-six clubs, hasn’t paid off yet.
2016/17, as turnover grew 25 per                                                       Consequently, their pre-tax loss is
cent while wages only grew 11 per                                                      estimated at £109 million, which
cent.                                                                                  would be the largest loss incurred in
                                                                                       English football for at least the past
Looking at 2018/19, the combined        to the year before. Despite the                five years.
total profit before tax for all 20      increasing turnover, the rising cost
Premier League clubs is estimated       of wages and player amortisations,
at £152 million, which is equal to a    along with the decrease in profit              But let us now take a look at each
decrease of 68 per cent compared        from player sales, means that the              Premier League club.
2019 FINANCIAL FORECAST - Off The Pitch
OFF THE PITCH PREMIER LEAGUE FINANCIAL FORECAST 2019 | CLUBS | AFC BOURNEMOUTH

                                                               Following a 16th place finish and a busy transfer window, AFC Bourne-
                                                               mouth’s chairman, Jeff Mostyn, is set to publish a bigger loss.

AFC Bournemouth
Following AFC Bournemouth’s                                    been increasing rapidly as a                           highest-ever league finish a
promotion to the Premier League                                result of broadcasting payments.                       ninth place in 2016/17 (£136.5
in 2015, their total revenue has                               It peaked following the club’s                         million) and took a minor dip the
                                                                                                                      following year as a result of a
                                                                                                                      12th place finish (£134.9 million)
   £140m

   £120m                                                                                                              As many other mid-level clubs in
   £100m                                                                                                              the Premier League, Bournemouth’s
                                                                                                                      revenue depends strongly on the
   £80m
                                                                                                                      tv-money. Bournemouth made a loss
   £60m                                                                                                               of £11 million last year and are likely
                                                                                                                      to record an even bigger one this
   £40m
                                                                                                                      season following a 16th place finish
                                                 15.1
                                                        12.0

   £20m                                                                                                               in the Premier League and a busy
              134.9
                      134.8

                               101.9
                                       104.9

                                                                    26.9
                                                                           37.7

                                                                                           2.4
                                                                                     1.3

   0                                                                                                                  transfer window.
                                                                                                              -29.8

   -£20m
                                                                                                                      TURNOVER
                                                                                                      -10.9

   -£40m                                                                                                              A small decrease is expected for
                                                                                                                      Bournemouth’s turnover, mainly
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                                                                                                                      last season. For 12th place in the
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                                                                                                                      2017/18 season, Bournemouth
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                                                                                                                      received £111.3 million in broad-
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                                                                                                                      casting payments, which will be
                                       2017/18            2018/19 (Estimate)                                          lowered to £108.1 million in the

                                                                                                                                                            06
2019 FINANCIAL FORECAST - Off The Pitch
OFF THE PITCH PREMIER LEAGUE FINANCIAL FORECAST 2019 | CLUBS | AFC BOURNEMOUTH

recently closed financial year, despite
an 1.5 per cent increase in the overall
Premier League payments.                        Bournemouth: Premier
Bournemouth didn’t sign with
any new major sponsors coming.
                                                League payments (£)
However, they extended their
partnership with the Gibraltar-based
betting company Mansion for an                   Equal share                             34,361,519
undisclosed fee. With their continued            Facility Fees                           12,198,828
presence in the Premier League
                                                 Merit Payment                           19,185,180
a further increase of £2.5 million
should be reachable. All things                  International TV                        43,184,608
considered, Bournemouth’s total                  Central Commercial                      4,965,392
revenue is estimated to be £134.7
                                                 Total Payment                           113,895,527
million, primarily as a result of their
lower league position.

Bournemouth’s matchday revenue
was the lowest among Premier
League clubs in 2018 at £7m due to        biggest from 2016/17 to 2017/18,           tions were acquired for a total cost
a stadium capacity of only 11,329         when an increase of over £30 million       of £73.4 million, including associated
which shows how well the the south        could be observed. However, that           costs. In relation to this, the average
coast club are doing to survive.          increase is predicted to stagnate.         contract length of newly acquired
Average attendance fell slightly,         Bournemouth acquired five players,         players was 4.2 years, meaning an
but with one more home game this          and despite Jermain Defoe out on           additional amortisation of £17.5
season it is likely matchday revenue      loan, a slight increase of £3 million in   million per year. The departures of
will remain at £7m.                       the overall salary bill is expected.       Benik Afobe, Lewis Grabban and
                                                                                     Max Gradel will release a yearly
WAGES                                     PLAYER AMORTISATIONS                       amortisation of £6.6 million, which
From 2016 to 2018 Bournemouth             In the annual report of 2017/18,           will consequently lead to an increase
saw an increase of over 70 per cent       Bournemouth mention that after the         of £10.5 million. The amortisations
in their wage bills. The increase was     reporting period new player registra-      are estimated to add up to a total of
                                                                                     £37.7 million in the recently closed
                                                                                     financial year.

                                                                                     PROFIT ON PLAYER SALES
                           Benik          Lewis
 Player name                                               Max Gradel     Total      Bournemouth had player sales
                           Afobe          Grabban
                                                                                     amounting to £18.2 million and
 Acquisition price (£m)    12.0           8.4              9.0            29.4
                                                                                     spent £29.4 million on buying three
 Contract length (years)   4.5            4                4                         players. Despite those figures, the
 Years at club             2.5            3                3                         total profit on players only added
                                                                                     up to £2.4 million, according to a
                                                                                     note in the 2017/18 annual report.
 Amortisation (£m)         6.7            6.3              5.6            18.6       Max Gradel was the only player
                                                                                     Bournemouth didn’t make a profit on.
 Selling price (£m)        10.3           6.1              1.8            18.2       Despite only having two years left
                                                                                     on his second contract at the club,
                                                                                     meaning the acquisition price was
 Pro t on player sale                                                                almost fully amortised, the club sold
                           4.9            4.0              -1.58          7.4
 (£m)

                                                                                                                          07
2019 FINANCIAL FORECAST - Off The Pitch
OFF THE PITCH PREMIER LEAGUE FINANCIAL FORECAST 2019 | CLUBS | AFC BOURNEMOUTH

him for a loss of £1.58 million. Benik   income, which is not expected to         upon the rules. The charge had a
Afobe and Lewis Grabban were both        happen in the next financial year.       value of £7.6 million in 2014/15 and
sold for less than their acquisition     Instead, Bournemouth are set to          the settlement amounted to £4.75
price, however, profit was still made    pay £4.75 million to the EFL. The        million, which we estimate will be
on these two players.                    dispute was about Bournemouth not        paid in the 2018/19 financial year.
                                         following FFP rules in the 2014/15
EXCEPTIONAL ITEM                         season, however, the EFL acknowl-
In 2017/18, Bournemouth received         edges that Bournemouth did not
a total of £2.6 million in exceptional   take any drastic actions to infringe

RECAP:
Bournemouth are expected to make a bigger loss than last year.
This is mainly due to the club’s growing amortisations and their
lower league position. Also, the feud with the EFL came to an end,
resulting in additional costs for the tight-budgeted Bournemouth.
The loss before tax is estimated to be £30 million.
OFF THE PITCH PREMIER LEAGUE FINANCIAL FORECAST 2019 | CLUBS | ARSENAL

Owner Stan Kroenke (R) and the club’s chairman, Chips Keswick (L), must be disappointed that Arsenal are set for a
financial blow - posting losses for the first time since 2002.

                                                      Arsenal
                                                      The 2018/19 season was Arse-                   When Arsenal disclosed their annual
                                                      nal’s first without Wenger. But it             accounts for the 2017/18 season,
                                                      was not only on the pitch history              they showed a massive profit of
                                                      took place – financially Arsenal               £70.2 million but also revealed
                                                      are set to post the first pre-tax              decreasing revenue. Despite posting
                                                      loss since 2002.                               a profit, the accounts did not look
                                                                                                     healthy in the long run for Arsenal.
                                                                                                     They had an operating loss of £42
    £450m
                                                                                                     million, which was only saved by the
    £400m                                                                                            profit on player sales of £120 million
    £350m                                                                                            with Alex Oxlade-Chamberlain and
    £300m                                                                                            Alexis Sánchez as the biggest.

    £250m
                                                                                                     In the 2018/19 season, when Lucas
    £200m
                                                                                                     Pérez was the biggest outgoing
    £150m                                                                                            transfer with a value of £4 million,
    £100m                                                                                            the departures were sloppier.
                                                                                                     Looking further into the transfers,
    £50m
                                                                                                     it is therefore very unlikely that the
               403
                     422

                            223
                                  230

                                                                         120

                                                                                              -29
                                            83
                                                 95

                                                           92
                                                                97

                                                                                         70

    0
                                                                                                     profit on player sales will save them
                                                                               -3

    -£50m                                                                                            from publishing their first pre-tax
                                                                                                     loss in over 16 years.
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                                                                                                     Arsenal finished one spot higher
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                                                                                                     than the season before. However,
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                                                                                                     only 25 matches were shown on
                                  2017/18         2018/19 (Estimate)                                 live TV in the UK, three matches less

                                                                                                                                          09
OFF THE PITCH PREMIER LEAGUE FINANCIAL FORECAST 2019 | CLUBS | ARSENAL

than the year before and therefore
Arsenal’s prizemoney remained at
£142 million. Going a round further               Arsenal: Premier
                                                  League payments (£)
in the FA Cup Arsenal will gain an
estimated £135,000 in FA Cup
payments.

Looking at the prize money from
UEFA, Arsenal played in Europa                     Equal share                           34,361,519
League in 2017/18 as well as                       Facility Fees                         28,985,373
2018/19, and achieved success in
                                                   Merit Payment                         30,696,288
both seasons, reaching the semi-
final in 2018 and the final in 2019.               International TV                      43,184,608
Despite being the runner-up in                     Central Commercial                    4,965,392
2018/19, it is expected that the
                                                   Total Payment                         142,193,180
overall UEFA payments will drop by
£1.4 million as a result of a smaller
share of the market pool.

The overall broadcasting revenue            and Arsenal will thereby earn an         WAGES
is estimated to be £179 million, £1         extra £10 million per season. Arsenal    Arsenal are ranked fifth in wages
million less than the year before.          allegedly also signed the largest        in the Premier League, just behind
Arsenal’s matchday revenue was              sleeve sponsor deal in Premier           Chelsea, and £75 million ahead of
£99m in 2017/18 and has been                League history with the Rwanda           Tottenham Hotspur. The £223.3
fairly stable around £100 million           Tourist Board - the deal is estimated    million wage bill – excluding the
since 2014 which we expect would            to be worth £30 million over a three-    exceptional costs of £16.8 million
continue. Maybe we would see a              year period. In total, we expect the     from Wenger compensation
slight increase due to reaching the         commercial revenue to increase by        package - from the 2017/18 season
Europa League final.                        £20 million.                             is expected to increase by £7 million
                                                                                     mainly due to an extended deal with
Arsenal signed two new major                All-in-all, we estimate revenue to see   Mesut Özil, which is reported worth
sponsorship deals. The partnership          a growth of £19.9 million to £422.2      £18.2 million on a yearly basis.
with Fly Emirates was extended to           million.                                 Bernd Leno, Lucas Torreira, Mattéo
2024 with a value of £200 million                                                    Guendouzi and Sokratis were all
                                                                                     acquired during the summer, which
                                                                                     will increase the wage bill as well.
                           Lucas        Joel                                         Overall, wages are expected to rise
 Player name                                              Chuba Akpom     Total
                           Perez        Campbell
                                                                                     to £230 million.
                                                          Academy
 Acquisition price (£m)    18.0         0.9                               18.9
                                                          Player
                                                                                     PLAYER AMORTISATIONS
 Contract length (years)   4            8                                            Arsenal reveal in their 2017/18
 Years at club             2            7                                            accounts that the club had a
                                                                                     net spending of £61.4 million in
                                                                                     2018/19. During that season, they
 Amortisation (£m)         9.0          0.8                               9.8        sold Lucas Pérez, Joel Campbell and
                                                                                     Chuba Akpom for a total of £6.2
 Selling price (£m)        4.0          1.4               0.9             6.2        million, which means that Arsenal
                                                                                     spent £67.6 million on the acquisi-
                                                                                     tion of Leno, Torreira, Guendouzi and
 Pro t on player sale                                                                Sokratis.
                           -5.0         1.2               0.9             -2.9
 (£m)

                                                                                                                        10
OFF THE PITCH PREMIER LEAGUE FINANCIAL FORECAST 2019 | CLUBS | ARSENAL

The average contract length
between the four players is 4.3
                                         RECAP:
years, which means that £15.7
million is likely to be added to the
                                         Financially, the 2018/19 season will
overall amortisations. However, £4.6     most likely be one to forget for Arsenal.
million in amortisations was released
from the departures in the season,       Even though the club increased their total
and with impairments of £5.9 million,
we estimate the overall increase         revenue, Arsenal are expected to reveal a
to be £5.2 million. As a result, the
estimated total amortisations is £97
                                         loss before tax of £29 million. The loss is
million.                                 mainly due to the decrease in profit from
PROFIT ON PLAYER SALES                   player sales, where their income took a
Player sales of £6.2 million is £133
million less than the year before,       £123 million dive compared to the season
which will be a significant factor in
Arsenal’s 2018/19 annual report.
                                         before.
Lucas Pérez was sold for £4 million,
however, he was bought for £18
million just two years earlier, which
means that only half of his £18
million price tag was amortised.

Therefore, it is expected that Arsenal
will make a loss on the departure
of Lucas Pérez of £5 million. As a
consequence, Arsenal are expected
to reveal a loss on player sales of
£2.9 million - a decrease of almost
£123 million compared to the season
before.

EXCEPTIONAL COSTS
Gunners said goodbye to long-time
manager Arsene Wenger and
signed a contract with Unai Emery
in 2017/18, which had a cost of
£17.2 million. No exceptional costs
is expected in the 2018/19 annual
accounts.
OFF THE PITCH PREMIER LEAGUE FINANCIAL FORECAST 2019 | CLUBS | BRIGHTON

                                                           Brighton were very active in the transfer window and as a result the club’s
                                                           owner, Tony Bloom, is looking at posting a loss before tax.

Brighton & Hove Albion
                                                                                                                 The 2017/18 season was the
                                                                                                                 first season back in the Premier
                                                                                                                 League for Brighton, ending a
                                                                                                                 34-year absence from the top.
£160m
                                                                                                                 In that same season, the club
£140m                                                                                                            posted a record revenue of
£120m                                                                                                            £139.4 million, which led to a
                                                                                                                 profit of £12 million.
£100m

£80m                                                                                                             To avoid the so-called “Second
                                                                                                                 Season Syndrome,” Brighton were
£60m
                                                                                                                 very active in the transfer period,
£40m                                                                                                             when the club spent a club-record of
                                                                19.3

                                                                                                                 £79.5 million on player additions. But
                                                                                                  12.1

£20m
           139.4
                   142.5

                                                                                       7.1

                                                                                                         -13.4

                                                                                                                 Brighton barely survived relegation,
                            77.6
                                   87.6

                                             34.1
                                                    41.2

                                                                       37.6

                                                                                 3.4

0
                                                                                                                 dropping two spots from their posi-
-£20m                                                                                                            tion the season before and manager
                                                                                                                 Chris Hughton lost his job.
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                                                                                                                 As a result of the lower league
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                                                                                                                 ranking and an active transfer period,
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                                                                                                                 before tax.
                                   2017/18            2018/19 (Estimate)

                                                                                                                                                    12
OFF THE PITCH PREMIER LEAGUE FINANCIAL FORECAST 2019 | CLUBS | BRIGHTON

TURNOVER
Despite a 1.5 per cent increase in the
overall Premier League payments,                Brighton: Premier
                                                League payments (£)
Albion got £2 million less compared
to the year before due to their lower
league position - all in all, £105.7
million. Brighton had a successful
FA Cup run, which led to an addi-
tional £2.1 million of the prize pool.            Equal share                           34,361,519
That means we are estimating the                  Facility Fees                         15,556,137
Seagulls to have a small decrease
                                                  Merit Payment                         7,674,072
in broadcasting payments of £0.1
million.                                          International TV                      43,184,608
                                                  Central Commercial                    4,965,392
Brighton didn’t sign any new major
                                                  Total Payment                         105,741,728
sponsorship deals, however they
survived another season in the
Premier League, and the trend
from last year is expected to be
seen again. With survival bonusses
Brighton’s commercial are expected
to be around the £12 million mark.
Brighton have an impressive              continued presence in the Premier          2017/18, they are estimated to see a
matchday revenue for a club their        League.                                    big increase to £97 million.
size, and we expect it should remain
at a similar mark of £19 million,        WAGES                                      The expected increase is likely
considering the club had 22 home         Having signed 14 new players,              to put pressure on the overall
games once again.                        Brighton’s wages are expected to           annual accounts, and with only
                                         take a big leap. The overall wages in      a small increase in total revenue,
Brighton are therefore estimated to      the Premier League are growing at a        EBITDA will take a hit compared to
have an increase in overall revenue      fast pace, and with Brighton having        2017/2018.
of £3 million, mainly due to their       one of the lowest wage-bills in
                                                                                    PLAYER AMORTISATIONS
                                                                                    Brighton spent £79.5 million on
                     Sam       Connor       Mathias           Other                 player additions, which is a club
 Player name                                                            Total
                     Baldock   Goldson      Normann           players               record. The 14 new additions have
 Acquisition price                                                                  an average contract length of four
                     2.3       0.8          1.3               3.4       7.7         years, thereby a further £19.9
 (£m)
                                                                                    million is expected to be added to
 Contract length
                     4         4            3                                       the existing player amortisations.
 (years)
                                                                                    However, Brighton also sold players
 Years at club       4         3            1.5
                                                                                    during the season, whose amorti-
                                                                                    sations should be subtracted. We
 Amortisation
                     1.9       0.5          0.6               2.5       5.5         estimate player amortisations to
 (£m)                                                                               £37.6 million.

 Selling price (£m) 3.5        3.1          1.5               4.0       12.1        PROFIT ON PLAYER SALES
                                                                                    Albion sold players for £12.1 million.
                                                                                    The biggest departures were Sam
 Pro t on player                                                                    Baldock and Connor Goldson, each
                     3.1       2.8          0.9               3.1       9.9
 sale (£m)

                                                                                                                         13
OFF THE PITCH PREMIER LEAGUE FINANCIAL FORECAST 2019 | CLUBS | BRIGHTON

sold for a fee over £3 million. Four    EXCEPTIONAL COSTS                        hired on a four-year contract. The
other players were sold as well,        Chris Hughton were laid off after        change of management during the
but for less than £2 million each,      the last match of the season against     last couple of months of the fiscal
and with each player almost fully       Manchester City. Hughton had             year will be a costly activity and
amortised, the profit on player sales   two years left of his contract. As       could therefore worsen the loss.
is estimated to be £9.9 million.        a replacement, the club leaned
                                        towards Graham Potter, who were

RECAP:
Brighton’s revenue is expected to see a slight increase and
their wages are estimated to be increasing by over 12 per cent.
Therefore, the £12 million pre-tax profit of last year is expected to
be exchanged to a loss of £13.4 million. An active transfer period
and wages are to blame for this development.
OFF THE PITCH PREMIER LEAGUE FINANCIAL FORECAST 2019 | CLUBS | BURNLEY

                                                           Chairman Mike Garlick (L), seen here with the club’s manager, Sean Dyche,
                                                           faces a significant drop in the club’s profit before tax.

                                                           Burnley
                                                                                                                 After some rather turbulent
                                                                                                                 years with promotions and
                                                                                                                 relegations, Burnley finally seem
                                                                                                                 to have found solid ground in the
                                                                                                                 Premier League, with the fourth
£140m
                                                                                                                 consecutive season recently
£120m                                                                                                            secured by reaching 15th place.

£100m                                                                                                            Compared to the seventh place
                                                                                                                 achieved in 2017/18 and securing
£80m                                                                                                             a preliminary spot in the Europa
                                                                                                                 League, however, this declining
£60m                                                                                                             performance is expected to be
                                                                                                                 reflected in the annual accounts. The
£40m
                                                                                                                 club reported record-high profits
                                                                                                                 of £45 million in 2017/18, but with
£20m
                                                                                                          11.1

                                                                                                                 both decreasing turnover and profits
           139.0
                   131.9

                                                                                        7.2
                            81.6
                                   78.1

                                             44.0
                                                    40.4

                                                                27.8
                                                                       34.7

                                                                                 30.7

                                                                                                   45.1

0                                                                                                                on player sales, the pre-tax profits
                                                                                                                 are estimated to drop to £11 million.
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                                                                                                                 TURNOVER
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                                                                                                                 Burnley’s broadcasting payments
                                   2017/18            2018/19 (Estimate)                                         from the Premier League payments

                                                                                                                                                    15
OFF THE PITCH PREMIER LEAGUE FINANCIAL FORECAST 2019 | CLUBS | BURNLEY

will decrease by £12.4 million, which
is offset a tiny bit by the prize money
received from UEFA and FA Cup.                  Burnley: Premier
                                                League payments (£)
Consequently, the broadcasting
income is estimated to decrease
by £11.5 million, equal to a total of
£110 million.

By playing the Europa League                     Equal share                            34,361,519
qualification matches, Burnley had               Facility Fees                          13,317,931
three additional home matches. With
                                                 Merit Payment                          11,511,108
an average matchday income of
£190,000 in 2017/18, the matchday                International TV                       43,184,608
income is therefore estimated to                 Central Commercial                     4,965,392
increase by £0.6 million, equal to a
                                                 Total Payment                          107,340,558
total of £6.2 million. A small amount
due to the disappointing failure to
make the groupstage.

Burnley have seen commercial
revenue more than double since            Overall Burnley had a disappointing       bonuses paid to both players and
promotion. In 2018/19 the club had a      season and that will have negative        coaching staff for their seventh-place
new sponsorship deal with Laba360         impact on revenue. Even though            finish. Sources close to the club have
allegedly worth £5 million per year,      increasing matchday and commer-           revealed to Off The Pitch that wages
thus doubling their previous deal         cial income will slightly offset the      will return towards 2016/17 levels.
with DafaBet. However, Burnley            downfall in broadcasting payments,        However, with several signings, that
didn’t land a shirt sleeve sponsor        the total turnover is expected to         of Joe Hart in particular, as well as
deal. As Burnley are presence in the      decrease by £7 million to £132            numerous contract extensions with
Premier League for the third consec-      million.                                  the likes of Ben Mee and James
utive season, commercial deals are                                                  Tarkowski, we estimate the wages
expected to increase. Consequently,       WAGES                                     to only decrease by £3.5 million to a
we estimate the commercial income         Burnley’s wages rose by £20 million       total of £78 million.
to increase by £4 million to a total of   from 2016/17 to 2017/18 which,
£16 million.                              according to the 2017/18 annual           PLAYER AMORTISATIONS
                                          report, was partly attributable to the    Burnley signed Ben Gibson, Matej
                                                                                    Vydra and Joe Hart in the summer
                                                                                    transfer window of 2018 at a total
                                                                                    fee of approximately £30 million.
 Player name                                        Sam Vokes                       Based on their respective contract
 Acquisition price (£m)                             0.57                            lengths, the additional amortisations
                                                                                    generated amount to £9 million
 Contract length (years)                            9
                                                                                    per year. However, by letting Chris
 Years at club                                      7                               Long go at a free transfer as well
                                                                                    as signing contract extensions
 Amortisation (£m)                                  0.57                            with Tarkowski, Ashley Barnes and
                                                                                    Steven Dafour, the amortisations will
                                                                                    be offset by £2.3 million. We expect
 Selling price (£m)                                 7.2                             amortisations to rise by £7 million to
                                                                                    £35 million.
 Pro t on player sale (£m)                          7.2

                                                                                                                        16
OFF THE PITCH PREMIER LEAGUE FINANCIAL FORECAST 2019 | CLUBS | BURNLEY

PROFIT ON PLAYER SALES                   player sold, at a price of £7.2 million.   by £23 million, which has a heavy
Burnley had a record-high profit on      As he was acquired in 2012, the            impact on the bottom-line.
player sales in 2017/18 as Michael       initial transfer fee of £0.5 million was
Keane and Andre Gray were sold for       almost fully written off and the £7.2
a total fee of £44 million, generating   million will in turn be considered pure
a profit of £30 million. Looking at      profit. Compared to 2017/18, profits
2018/19, Sam Vokes was the only          from players sold will decrease

RECAP:
Following a year with record-high turnover as well as profits,
Burnley are facing a year with lower profits. This is primarily a result
of decreasing turnover as broadcasting payments from the Premier
League depend on league performance, which has declined
severely since 2017/18. Furthermore, higher player amortisations
from new signings as well as decreasing profits from players sold
contribute to the declining pre-tax profits which, consequently, are
estimated to land at £11 million.
OFF THE PITCH PREMIER LEAGUE FINANCIAL FORECAST 2019 | CLUBS | CARDIFF

Cardiff’s owner, Vincent Tan, had a disappointing season with the quick relegation to the Championship.

    £140m

    £120m

                                                                                                   Cardiff
    £100m

    £80m

    £60m

    £40m

    £20m                                                                                           The 2018/19 season was the
                    128

                                                                                                   first in five years for Cardiff back
                                                          5
               33

                           48
                                55

                                                61

                                                              13

                                                                                           38

    0
                                                                       2
                                                                            0

                                                                                                   in the Premier League.
                                          -27

                                                                                     -39

    -£20m

    -£40m                                                                                          Sadly, the tragic death of
                                                                                                   Emiliano Sala seems to be
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                                                                                                   Cardiff’s season in the top tier,
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                                                                                                   which ended with relegation.
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                                                                                                   So, just like in the 2013/14 season,
                                2017/18          2018/19 (Estimate)                                the perks of playing Premier League

                                                                                                                                       18
OFF THE PITCH PREMIER LEAGUE FINANCIAL FORECAST 2019 | CLUBS | CARDIFF

                                             Cardiff: Premier
                                             League payments (£)
                                              Equal share                            34,361,519
                                              Facility Fees                          14,437,034
                                              Merit Payment                          5,755,554
                                              International TV                       43,184,608
                                              Central Commercial                     4,965,392
                                              Total Payment                          102,704,107

were short term, although the club     payment of £102 million will be          WAGES
still look forward to parachute        received from the Premier League.        When promoted to the Premier
payments worth around £80 million                                               League, clubs usually pay promotion
over the following two seasons.        Commercially, Cardiff agreed on          bonusses to staff and players, which
                                       a shirt-sleeve partnership with          amounted to £23 million for Cardiff
Nevertheless, their presence in        JD during their Premier League           in 2017/18. Despite that these costs
the Premier League have Cardiff        campaign. Together with the £3           won’t recur, the arrival of players
looking to record a much-needed        million allegedly received from their    like Josh Murphy and Bobby Reid,
profit following three seasons with    main shirt sponsor, Visit Malaysia,      together with general pay raises due
an accumulated pre-tax loss of £70     Cardiff are expected to increase their   to promotion, means that Cardiff’s
million.                               commercial income by £4 million to a     wages are predicted to increase by
                                       total of £10 million.                    £7 million, bringing their total wage
TURNOVER                                                                        bill to £55 million.
Primarily by taking a share of the     Finally, even though fewer home
sky-high broadcasting payments         games are played in the Premier          PLAYER AMORTISATIONS
in the Premier League, Cardiff         League compared to the Champion-         According to their annual report of
are looking to triple their income     ship, Cardiff are estimated to double    2017/18, Cardiff City spent £35.4
compared to the previous season.       their matchday income. The rising        million in the summer transfer
Despite losing the parachute           matchday ticket prices from playing      window, of which £2.6 million was
payments received for the last         in the Premier League, along with        contingent on the club surviving the
four seasons, contributing £16.6       a 50 per cent increase in average        first season in the Premier League.
million in 2017/18 alone, Cardiff’s    matchday attendance, are expected        As this wasn’t the case, £32.8 million
broadcasting income is estimated to    to result in growth of around £5         should be amortised over the period
increase to £86 million. This being    million, leading to a total matchday     of the player contracts. Note that
a result of the fact that two-thirds   income of £10 million. To summarise,     this excludes the transfer fee of
of the Premier League payments         Cardiff City are estimated to increase   Emiliano Sala, as no agreement had
are shared equally amongst the         their overall income by £95 million,     been reached between Cardiff and
clubs, and thus have no relation to    leading to a total of £128 million.      Nantes. Using a weighted average
performance. Consequently, a total                                              relative to the reported transfer fee

                                                                                                                    19
OFF THE PITCH PREMIER LEAGUE FINANCIAL FORECAST 2019 | CLUBS | CARDIFF

of the respective players, the average
contract length of the new arrivals
                                         RECAP:
is calculated to be 3.93 years. Thus,
the additional yearly amortisation       Cardiff are set to make the most of their
amounts to £8 million, bringing them
to an estimated total of £13 million.    one season back in the Premier League,
This is equal to an increase of 160
per cent compared to the £5 million      as their turnover is estimated to increase
player amortisations in 2017/18.
                                         threefold while wages and amortisations
PROFIT ON PLAYER SALES
Cardiff only had players leaving on
                                         will only increase relatively slightly. Despite
free transfers, and no profits were      not generating any profits from player sales,
therefore recorded from player sales.
Thus, the incremental change will        Cardiff are estimated to turn their 2017/18
be minus £2.4 million - equal to the
total profit on player sales that was    pre-tax loss of £39 million into a pre-tax
recorded in 2017/18.
                                         profit of £38 million.
OFF THE PITCH PREMIER LEAGUE FINANCIAL FORECAST 2019 | CLUBS | CHELSEA

Despite winning the Europa League, Chelsea’s owner, Roman Abramovich, will see a downfall of £19 million in prize
money from not playing in the Champions League.

Chelsea
Chelsea enjoyed a fine season on                                League, thus safely securing a spot                        Chelsea have been heavily affected
the pitch, reaching third place in                              in the Champions League for the                            by playing Europa League instead
the league and winning the Europa                               coming season. Financially, however,                       of Champions League due to the
                                                                                                                           disappointing 2017/18 season.

    £450m
                                                                                                                           Furthermore, with increasing wages
    £400m                                                                                                                  and player amortisations, the profit is
    £350m                                                                                                                  estimated to fall significantly, only to
                                                                                                                           be saved by the potential inclusion of
    £300m                                                                                                                  the sale of Eden Hazard this summer.
    £250m                                                                                                                  If not included Chelsea will report
                                                                                                                           a huge loss after a season ending
    £200m
                                                                                                                           with the departure of Sarri, leading
    £150m                                                                                                                  to club legend Frank Lampard taking
                                                                                                                           the reins.
    £100m
                                                                                                                    34.0

    £50m                                                                                                                   TURNOVER
               443.4
                       445.6

                                244.1
                                        265.1

                                                                     125.6
                                                                             154.4

                                                                                        113.0
                                                                                                121.3
                                                  94.0
                                                         75.1

                                                                                                             67.5

    0                                                                                                                      Chelsea reported a record-high
                                                                                                                           turnover of £443 million in 2017/18,
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                                                                                                                           in the Champions League and the
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                                                                                                                           general increase of 47 per cent
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                                                                                                                           payments from 2016 to 2018.
                                        2017/18            2018/19 (Estimate)                                              However, as the club played Europa

                                                                                                                                                                21
OFF THE PITCH PREMIER LEAGUE FINANCIAL FORECAST 2019 | CLUBS | CHELSEA

League in 2018/19, the prize money
will drop significantly. Despite
lifting the Europa League trophy, a              Chelsea: Premier
                                                 League payments (£)
downfall of £19 million is expected
from not playing in the Champions
League. Furthermore, the club won
the FA Cup in 2017/18, generating
£3.4 million in prize money, while
they were eliminated in the fifth                Equal share                            34,361,519
round, worth only £0.3 million.                  Facility Fees                          28,985,373
                                                 Merit Payment                          34,533,324
This is offset by an increase of £4.3
million in payments from the Premier             International TV                       43,184,608
League, primarily as a result of                 Central Commercial                     4,965,392
reaching third place, compared to
                                                 Total Payment                          146,030,216
fifth place in 2017/18. Consequently,
the total broadcasting income is
expected to decrease by £17.8
million.

Chelsea agreed to a £40 million          playing Europa League instead of           Antonio Conte, who was fired in July
sleeve sponsorship deal with             Champions League. As a result, the         2018. The total increase in wages is
Hyundai, running until 2022 and          turnover is estimated to increase          therefore estimated at £21 million,
generating an additional commercial      by £2 million, bringing the total to       bringing the wage bill to a total of
income of £10 million per year.          £445.6 million.                            £265 million.
With other major deal signed in
pre-season and expected bonusses         WAGES                                      PLAYER AMORTISATION
from a top 3 finish, the Blues might     Chelsea sold Thibaut Courtois, but         By bringing in the above-mentioned
witness an additional £10 million in     acquired players like Kepa, Christian      players, the amortisation pool
commercial revenue.                      Pulisic and Jorginho. Consequently,        increases as well. The signing of
                                         the player wages are expected to           Kepa alone, allegedly for a fee of
Despite playing two additional home      increase by £12 million compared to        £80 million, will generate a yearly
matches, the matchday income is          2017/18. Besides that, Chelsea paid        amortisation of £11 million over his
estimated to remain stable due to        £9 million in compensation fees to         seven-year contract. With additional
                                                                                    amortisations of £10.5 million
                                                                                    and £10.3 million from Pulisic and
 Player name                  Thibaut Courtois       Eden Hazard      Total         Jorginho respectively, the three sign-
                                                                                    ings generate a total of £32 million in
 Acquisition price (£m)       8.1                    35.5             43.6
                                                                                    amortisations for 2018/19.
 Contract length (years)      8                      8
 Years at club                7                      7                              This is partly offset, however, by
                                                                                    Courtois’ released amortisations,
                                                                                    but as he was in the club for eight
 Amortisation (£m)            7.7                    32.7             40.4
                                                                                    years, his transfer fee was almost
                                                                                    fully amortised, releasing only a £0.3
 Selling price (£m)           31.5                   90.0             121.5         million amortisation bill. Chelsea also
                                                                                    released Cesc Fabregas on a free
                                                                                    transfer in January 2019 - conse-
 Pro t on player sale (£m)    31.2                   87.2             118.3
                                                                                    quently, they didn’t have to recognise
                                                                                    the remaining £3 million amorti-

                                                                                                                        22
OFF THE PITCH PREMIER LEAGUE FINANCIAL FORECAST 2019 | CLUBS | CHELSEA

sation bill. As a result, Chelsea’s     from start-July to end-June and the       profit generated from the sale of
player amortisations are expected to    sale took place in mid-June 2019. As      Courtois.
increase by £29 million to a total of   the table shows, the sale of Courtois
£154.4 million.                         and Hazard brings in a profit of          Chelsea had also several players
                                        £118 million as both players were         loaned out, which generated loan fee
PROFIT ON PLAYER SALES                  almost fully amortised with one year      receivables of £21 million. However,
Chelsea recorded a player profit of     remaining on their contracts. Yet, the    by bringing in Gonzalo Higuaín on
£113 million in 2017/18, with Diego     club were able to sell the players for    loan, Chelsea had to pay an £8.1
Costa, Nemanja Matic, Nathan Aké,       reasonable amounts: £31.5 million         million loan fee. As a result, the net
Juan Cuadrado, Asmir Begovic and        and £90 million, respectively.            loan fee receivables are estimated at
Bertrand Traoré leaving the club.                                                 £13.5 million, which is an increase of
The 2018/19 player profit might         Should Hazard’s transfer fee instead      £2.9 million compared to 2017/18.
well reach the same height, if          be recognised in the 2019/20              This brings the profit on player sales
it turns out that Eden Hazard’s         accounts, Chelsea would record a          to a total of £121 million, which is an
transfer fee is recognised in the       huge loss as his £87 million player       increase of £8 million.
2018/19 accounts. This is possible      profit would be moved, leaving the
as Chelsea’s accounting year runs       club with only £31 million in players

RECAP:
With the decreasing turnover as well as increasing wages and
player amortisations, the pre-tax profit is highly dependent on
whether Eden Hazard’s transfer profit will be recognised in the
2018/19 or 2019/20 accounts.
If the profit is recognised in 2018/19, Chelsea’s profit is estimated
at £34 million, which is £33 million less the year before. But if the
profit is recognised in 2019/20, Chelsea will instead record an
estimated pre-tax loss of £53 million.
OFF THE PITCH PREMIER LEAGUE FINANCIAL FORECAST 2019 | CLUBS | CRYSTAL PALACE

                                                            After a year during which the club did not sell any players to offset rising
                                                            wages, Crystal Palace’s co-owner, Steve Parish, has to deal with another loss.

                                                            Crystal Palace
                                                                                                                   Following two years with solid
                                                                                                                   growth in total revenue, Crystal
                                                                                                                   Palace faced stagnation in the
                                                                                                                   recently closed financial year.

£160m
                                                                                                                   Crystal Palace recorded an all-time-
£140m                                                                                                              high revenue of £150.3 million in
£120m                                                                                                              2017/18. However, grooming wages
£100m                                                                                                              resulted in an operating loss of £36.9
                                                                                                                   million and profit on player sales did
£80m
                                                                                                                   not prevent a pre-tax loss as it did in
£60m
                                                                                                                   2016/17.
£40m
                                                                                                                   With this trend in mind, Crystal
                                                     13.7
                                              12.4

£20m
           150.3
                   155.9

                            117.3
                                    121.5

                                                                                                                   Palace are looking to be the second
                                                                 46.0
                                                                        48.5

                                                                                  2.4
                                                                                        0.0

0
                                                                                                                   year in a row with a pre-tax loss.
                                                                                                   -35.5
                                                                                                           -39.2

-£20m
                                                                                                                   The Eagles had another decent year
-£40m                                                                                                              on the pitch but no players were
                                                                                                                   sold, Wilfried Zaha’s contract was
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                                                                                                                   June 30th could result in a profit
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                                                                                                                   if included in the 2018/19 annual
                                    2017/18            2018/19 (Estimate)                                          accounts.

                                                                                                                                                       24
OFF THE PITCH PREMIER LEAGUE FINANCIAL FORECAST 2019 | CLUBS | CRYSTAL PALACE

TURNOVER
Finishing 12th resulted in a slight              Crystal
                                                 Palace: Premier
decrease in Premier League broad-
casting payments of £0.1 million

                                                 League payments (£)
to £114.2 million, even though the
overall broadcasting payments rose
with 1.5 per cent.

Reaching the quarter-finals in the FA
Cup resulted in £0.7 million, while              Equal share                          34,361,519
no prize money was received for the              Facility Fees                        14,437,034
Eagles’ third-round exit in 2018. We
                                                 Merit Payment                        17,266,662
therefore expect Crystal Palace’s
broadcast revenue to hit £121.7                  International TV                     43,184,608
million – almost the same as the year            Central Commercial                   4,965,392
before.
                                                 Total Payment                        114,215,215

The matchday revenue is only
expected to see a slight increase due
to two more home matches in the FA
Cup.

Crystal Palace signed a new kit deal
with Puma. The value of the deal is      the season of 2015/16. Total is          million, which means they spent
still unreported; however, we have       expected to increase again, mainly       £10.3 million on the acquisition of
estimated the value of the deal to       due to an extension with Wilfried        Cheikhou Kouyaté and on the loan
be £4 million annually - the latest      Zaha, and newly acquired Max             fee of Michy Batshuayi. Max Meyer
Macron deal was worth £1 million.        Meyer. The new signing from West         was acquired on a free transfer, as
Due to their continued presence          Ham, Cheikhou Kouyaté, is also           was Bakary Sako. Kouyaté is the
in the top flight, an additional £2      expected to impact the wage bill         only new signing that needs to be
million of commercial revenue is         significantly. Crystal Palace’s wage     amortised over the following years
reasonable to expect meaning a total     bill is estimated to increase by £4      and added to the existing amorti-
commercial revenue of £15.2 million      million to £122 million.                 sations. Kouyaté’s contract length
is predicted.                                                                     is four years, which will result in a
                                         PLAYER AMORTISATIONS                     yearly amortisation of £2.6 million.
All in all, we estimate that Crystal     Crystal Palace mention in the annual     The sale of Aaron Wan-Bissaka,
Palace’s revenue will increase to        report of 2017/18 that the sum of        which could be accounted for in the
£156 million.                            their player purchases and sales         2018/19 fiscal year, will not affect
                                         resulted in a net cost of £10 million    the player amortisations, due to
WAGES                                    in 2018/19. The only activity in         his status as a homegrown player.
Crystal Palace have seen their wage      player sales was Alexander Sörloth       Hence, the player amortisations are
bills increase by almost a third since   on a loan deal with a value of £0.3      expected to be increasing to a total
                                                                                  of £48.5 million.
 Player name                                 Cheikhou Kouyaté
                                                                                  PROFIT ON PLAYER SALES
 Acquisition price (£m)                      10.3
                                                                                  As mentioned, Crystal Palace didn’t
 Contract length (years)                     4                                    sell any players. The only activity
                                                                                  was the loan deal for Alexander
                                                                                  Sörloth to Trabzonspor. It is worth
 Amortisation per year (£m)                  2.6

                                                                                                                      25
OFF THE PITCH PREMIER LEAGUE FINANCIAL FORECAST 2019 | CLUBS | CRYSTAL PALACE

mentioning Aaron Wan-Bissaka         front with an additional £5 million      with Manchester United starting 1st
though because he was sold just      payable based on appearances and         July 2019. We therefore expect that
a few days prior to 30th June. The   achievements. He is not included         he will be included in the 2019/20
fee was reported at £45 million up   in our forecast due to his contract      annual accounts.

RECAP:
Even though the total turnover is expected to be a new all-time
high for Crystal Palace, they are estimated to post a loss for a
second consecutive year. The increase in wages and amortisations,
as well as not producing a profit on player sales, will result in an
estimated pre-tax loss of £39 million. That loss could be turned
into a £4 million profit if the Wan-Bissaka deal is included in the
2018/19 accounts.
OFF THE PITCH PREMIER LEAGUE FINANCIAL FORECAST 2019 | CLUBS | EVERTON

It could be necessary for Everton’s owner, Farhad Moshiri, to invest further in the club after another financial loss.

Everton
The annual accounts of 2017/18                                Hidden beneath this reasonable                            Looking at the player sales in
revealed a rather turbulent year                              loss, though, was an operating loss                       2018/19, it’s unlikely that these
for Everton. The club recorded                                amounting to £98 million, meaning                         profits will save them again, espe-
an all-time-high turnover of                                  that the pre-tax loss would have                          cially taking the continuous spending
£189 million (2017: £171                                      been significantly higher, had it not                     on new players into account.
million), yet had their pre-tax                               been for the £88 million reported
profit of £31 million in 2016/17                              profit on player sales, primarily                         TURNOVER
replaced by a loss of £13 million.                            stemming from the sale of Romelu                          A slight decrease of £14 million in
                                                              Lukaku.                                                   turnover is expected for Everton as
                                                                                                                        a result of the club missing out on
                                                                                                                        European football. By reaching the
    £200m
                                                                                                                        group stage of Europa League in
                                                                                                                        2017/18, Everton received £12.6
    £150m
                                                                                                                        million in prize money from UEFA.
    £100m                                                                                                               Furthermore, the club reported a
                                                                                                                        £2.2 million increase in matchday
    £50m                                                                                                                income, largely due to the European
                                                                                                                        campaign, which will be missing as
              189.2
                      179.3

                               145.5
                                       150.5

                                                                   75.1
                                                                          82.5

                                                                                     87.8
                                                                                            8.6
                                                 6.9

    0                                                                                                                   well.
                                                                                                               -108.6
                                                       -8.0

                                                                                                       -13.1

    -£50m
                                                                                                                        This will be slightly offset by an
    -£100m                                                                                                              additional £0.6 million to be received
                                                                                                                        in broadcasting income compared to
    -£150m                                                                                                              2017/18, due to a general increase
                                                                                                                        of 1.5 per cent in Premier League
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                                                                                                                        Everton signed a number of new
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                                                                                                                        sponsorship agreements, so the
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                                                                                                                        commercial income is expected
                                       2017/18           2018/19 (Estimate)                                             to increase with £4 million to £47

                                                                                                                                                             27
OFF THE PITCH PREMIER LEAGUE FINANCIAL FORECAST 2019 | CLUBS | EVERTON

million. Consequently, their turnover
is estimated to decline from £189
million to £179 million.                            Everton: Premier
WAGES
Everton saw their wage bill rising
                                                    League payments (£)
tremendously in 2017/18 - by 39 per
cent to £145.5 million - placing them
almost on a par with Tottenham’s                    Equal share                           34,361,519
wages of £147 million. Despite                      Facility Fees                         21,151,652
the release of top-earning Wayne
                                                    Merit Payment                         24,940,734
Rooney, Everton’s player wages are
expected to increase a further £5                   International TV                      43,184,608
million to a total of £150.5 million.               Central Commercial                    4,965,392
This is primarily a result of bringing
                                                    Total Payment                         128,603,905
in Richarlison, Bernard, Lucas Digne
and Yerry Mina, as well as having
Andre Gomes and Kurt Zouma on
season-long loans from FC Barce-            spent £107 million on acquiring           Everton incurred £8 million in player
lona and Chelsea, respectively.             Richarlison, Mina, Digne and              impairments in 2017/18, which is
                                            Bernard.                                  not expected to recur. Consequently,
PLAYER AMORTISATIONS                                                                  the total amortisations are expected
Everton mention in their 2017/18            As the average contract length of         to increase by £7 million to a total of
annual report that the net amount           these players is 4.75 years, these        £82 million.
payable for purchase and sale of            acquisitions will generate additional
players totalled £82.7 million. Selling     player amortisations of £22.5 million.    PROFIT ON PLAYER SALES
Davy Klaasen, Funes Mori and Tyias          However, the departures of Klaasen,       As mentioned, Everton had player
Browning brought in £24 million,            Mori and Browning release a yearly        sales amounting to £24 million.
which in turn means that Everton            amortisation of £7 million. Finally,      However, on 7th June the club
                                                                                      announced that their financial year of
                                                                                      2018/19 would be extended by one
                                                                                      month, thus running from the start of
                                                                                      June 2018 to the end of June 2019.
 Player          Davy        Ramiro Funes     Tyias
                                                            Nikola Vlasic   Total     By doing this, Everton made it
 name            Klaassen    Mori             Browning
                                                                                      possible to include early player sales
 Acquisition                                  Academy
                 24.3        11.6                           9.7             45.6      from the recently ended summer
 price (£m)                                   player
                                                                                      transfer window. The mid-June sale
 Contract
                5            5                              5                         of Nikola Vlasic is therefore assumed
 length (years)
                                                                                      to be recognised in the 2018/19
 Years at club   1           3                              2
                                                                                      accounts, contributing an additional
                                                                                      £10 million in player sales.
 Amortisation
                 4.9         7.0                            3.9             15.7
 (£m)                                                                                 Despite sales worth £38.5 million,
                                                                                      the profit on player sales is only esti-
                                                                                      mated at £8.6 million due to the loss
 Selling price
                 12.2        8.1              4.1           14.1            38.5      on Davy Klaasen, who only spent
 (£m)
                                                                                      one year in Everton, thus having a
                                                                                      carrying value £7 million higher than
 Pro t on                                                                             the £12 million he was sold for.
 player sale     -7.3        3.5              4.1           8.3             8.6
 (£m)

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