West Brom manage the drop in status well… and wait
Posted on May 21, 2020
WHEN the ball stopped rolling, West Bromwich Albion were sitting in second place in the Championship, one point behind leaders Leeds United and six points clear of third-placed Fulham with nine games to go.
Understandably, there will be a sense of injustice among their fans should the “Baggies” not get promoted back to the Premier League they left in 2018. Hence they are eager for the campaign to be completed and insist the Hawthorns is “ready to go” for behind closed doors games.
Although they’ve been out of the Premier just a short while, Albion’s financial position has obviously changed, underlining the power of English football’s top division. The club’s revenues fell by 43% in 2018-19 to £ 70.8 million, the highest in the Championship, and they posted a net loss of £ 7 million for the second successive season, despite cutting expenses by 43%. Albion’s wage bill reduced by 49% to £ 46.8 million, a dramatic fall on the £ 92.2 million paid out in 2018-19, but the fifth highest in the Championship.
Predictably, the revenue streams most affected by relegation were broadcasting (down 48% to £ 52.8 million) and commercial (30% lower at £ 10.7 million). Matchday revenues were only marginally down, hardly surprising given attendances were just 1.5% lower, with the average gate amounting to 24,148 (2018 – 24,520). Albion’s fans demonstrated their loyalty in 2018-19 by buying more season tickets than in their last Premier season (17,750). Up until lockdown, crowds at the Hawthorns averaged 24,053 in 2019-20.
Albion sold some players after relegation to ease wage outlay, but after 2018-19, players like Jay Rodriguez, Salomón Rondón and Craig Dawson were released, bringing in more than £ 35 million in transfer revenue. In 2018-19, Albion generated £ 10.1 million in player trading, an increase of 73% on 2017-18. Other the past two seasons, player amortisation has been £ 25 million and £ 23 million respectively.
To counter the lost income, Albion received around £ 43 million in parachute payments, but despite still having one of the highest wage bills in the Championship, they missed out on promotion in the play-offs, losing to Aston Villa (wage bill £ 83 million) on penalties in the play-offs. The pressure being placed upon clubs who have invested heavily in order to compete at the top is now creating difficulties, said Cardiff Chairman Mehmet Dalman, who added that a dozen Championship clubs could be up for sale owing to the Coronavirus.
Football finance expert Gerard Krasner warned that clubs with foreign ownership could face additional problems in the near future should owners have to reassess their investments held overseas. Notwithstanding the economic downturn on the horizon, they may consider football clubs are no longer viable interests in the post-crisis world.
But Albion’s situation is fairly reasonable compared to some clubs that have suffered relegation in recent years. Aston Villa, for example, lost £ 69 million in their first post-drop campaign. Albion’s wage-to-income ratio is 66%, some 40 percentage points lower than the Championship’s outrageous average. Albion are also unlikely to get extravagant in the transfer market should they go up, and will avoid the cash-happy antics of some recently promoted clubs.
It was notable in the 2018-19 accounts that Chief Executive Mark Jenkins received a significant pay increase but he has received plaudits for the way he has managed Albion’s transition from Premier League to Championship. Since then, however, Jenkins has taken a 100% pay cut during the lockdown period.
Two years after he returned to the Hawthorns, admitting that he was shocked at the state of Albion’s accounts, Jenkins insists the club is financially stable. Like all clubs, they have seen revenues dry-up, but they are due £ 10 million in transfer income representing the latest instalments from the sales of Dawson, Rodriguez and Rondón, which should ease some of the discomfort. Meanwhile, the “Baggies” are waiting to see how the 2019-20 season will be settled and whether they will return to the Premier League any time soon.