Crystal Palace aim to be liquid in a crisis
Posted on June 1, 2020
CRYSTAL PALACE, at long last, made public their financial performance for 2018-19 and underlined a relatively conservative approach to keeping their house in order. Palace, who are in their record-breaking seventh consecutive season in the top flight, made a pre-tax profit of £ 5.4 million on the back of best-ever revenues totalling £ 155.4 million.
This places Palace in a mid-table position from a financial perspective, although it should be noted the club has a very high reliance on Premier League broadcasting income, which accounts for some 80% of the club’s overall revenue generation. A look back over the past half dozen years emphasises how important TV money is to Palace – in 2013-14, the club’s first after promotion, revenues went up from £ 14.5 million to £ 90.4 million in one swoop, attributable to a rise of more than £ 70 million in broadcasting fees.
Retaining Premier League status is therefore vital to Palace, particularly as the club wants to redevelop Selhurst Park and increase its capacity from 25,500 to 33,000. Palace have only ever averaged more than 30,000 once for home games, in their debut top flight campaign in 1969-70 (average 30,167). At present, they have a stadium utilisation rate of almost 100%, their average in 2018-19 was 25,455. Matchdays contribute around 9% of revenues, with commercial activity accounting for 11%.
Palace’s profit for the season is a turnaround from 2017-18 when they made a loss of £ 34.6 million. Aware of tip-toeing into Financial Fair Play trouble, the club has used the proceeds from the sale of full back Aaron Wan-Bissaka to Manchester United for £ 50 million to stave off another loss and also service existing bank debt. This allowed the club to book a £ 46 million profit on player trading, one of the highest in the Premier and bettered only by Chelsea and Leicester City.
Given Palace’s need to sell their top talent, despite Chairman Steve Parish’s hope that they can hold onto their best players, the next likely departure is Wilfried Zaha, who is valued at around £ 70 million. He’s under contract until June 2023, but interested clubs are already circling the 27 year-old and his agent, Pinhas Zahavi.
Player wages continue to rise at Palace and climbed to £ 119.3 million in 2018-19, representing 77% of income, the lowest since 2014-15, but only marginally less than the past few years. This remains one of the worst ratios in the Premier, making Palace vulnerable to a liquidity crisis. The club’s wage bill is the 10th highest in the division but only 35% of Manchester United’s £ 336 million.
While Palace declare in their financial review the club has no external debt, that claim is now incorrect as the coronavirus lockdown has prompted them to take on some debt to ensure they can remain liquid during the crisis. This is logical given the plans for the stadium, which have already been delayed, are expected to cost up to £ 100 million with completion currently aimed for the summer of 2023. The club needs to buy some of the properties in the surrounding area and the project has to meet with Section 106 requirements which means Palace have to make improvements to the local community.
The club envisages the new-look Selhurst will create a big upturn in non-media revenues and elevate the status of Crystal Palace. The establishment of a new academy will also attempt to tap-into a rich vein of football talent that circulates the London area.
And what of the immediate future for the club? At the tail-end of 2019, Palace were allegedly being “hawked for sale” with an asking price of more than £ 200 million. Furthermore, the prospectus calculated the club could be worth up to £ 700 million within five years. That’s all gone very quiet, unsurprisingly, but when football resumes, the rumours will surely return. In the meantime, Palace – who look secure for another Premier season in 2020-21 – continue to make progress.