West Brom manage the drop in status well… and wait

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.


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Nottingham Forest wage bill underlines Championship problem

NOTTINGHAM Forest may be in the Championship play-off zone this season, but off the pitch, the club is still paying-out too far much money in wages.

Although this year’s performances may have justified the big outlay, Forest’s wage-to-income ratio is a very worrying 143%, not the highest the club has run up over the past decade but still an indication of Championship clubs’ willingness to gamble on gaining promotion to the promised land of the Premier League. The average wage-to-income ratio in the division has regular been in excess of 100%.

Forest’s turnover in 2018-19 increased by 11% to £ 25.3 million, but their wage bill totalled £ 36.3 million as expenses went up by 34% to £ 51.4 million. While turnover has risen by 72% over a 10-year period, wages have grown by 132% during that timeframe and by 31% in 2018-19.

Forest finished ninth in the Championship last season, their highest placing since 2013, with an average attendance of 28,144 – a figure that was higher than six Premier clubs in 2018-19. Season ticket sales reached 20,000. In 2019-20, Forest’s crowds have gone down slightly, but the positive momentum has continued with the team.

The club continues to make operating losses, the 2018-19 season saw them generate a £ 34.4 million deficit, which translated into an overall loss of £ 25.1 million, a jump of 448% on 2017-18’s loss of £ 5.6 million. Only once in the last 10 years have Forest made a profit and that came after £ 40 million of debt was written off. Operating losses have trebled in size since 2009-10.

The club is not worried about breaching Financial Fair Play rules, though, despite the size of their losses. “The owners remain committed to the long-term future of the club and its funding…the level of losses sustained by the cub are within those provided for by the rules, and the club will control losses in future years in order to ensure continue compliance with the rules,” the club said in its announcement.

On a more upbeat note, Forest have made significant progress in growing their revenue streams. Sponsorship and advertising went from £637,000 to £ 1.8 million and media rose by 34% to £ 805,000. With Forest’s attendances up by 14%, ticket sales increased by 34% to £ 7.2 million.

Strangely, Forest’s Chief Financial Officer, Samantha Gordon, left the club on the eve of the recent announcement concerning the financials. Apparently, her departure was “amicable”, although there was a certain irony in the timing.

Forest have plans to improve the City Ground which includes rebuilding the Peter Taylor stand and adding another 10,000 to the stadium’s capacity, along with a shop and museum. These plans have changed from the original project to include a tower block.

Forest were last in the Premier in 1999 and since then, they spent three years in League One. After losing 0-3 at home to Millwall, the club’s chance of automatic promotion this season looks slim, although a play-off place is still very realistic.

There was more negative news when it was revealed the club’s majority shareholder, Evangelos Marinakis has contracted the Coronavirus. Forest’s players and staff have all been tested and the results were negative, but like all Championship clubs, Forest’s season is now in suspension. If football resumes, and there has to be some doubt whether we shall see the conclusion of the 2019-20 campaign, they will be looking to continue their push for promotion. But with the current environment becoming increasingly uncertain, City Ground regulars may have to wait for their return to the top flight.


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Italian football clubs still lagging the leaders

ONCE UPON a time, Italian clubs ruled Europe, not just on the pitch but also through their purchasing power, attendances and in players wages that attracted some of the world’s top stars. Serie A was the envy of most European leagues, notably in England where people became fascinated by the glitz, glamour and smoke bombs of Italy’s Calcio.

Between 1989 and 1996, an Italian club won a major European prize in all bar one season and in the year they didn’t take a trophy back to Italy (1992), Sampdoria and Torino were runners-up in the European Cup and UEFA Cup respectively.

Top 10 highest revenue-generating football clubs 2018/19 (in £) Infographic PA Graphics

Today, Italian clubs have substantial debts, they struggle to compete in the UEFA Champions League and financially, they trail behind Europe’s leaders. While Juventus have made a good fist of hanging onto the tails of the Real Madrids and Barcelonas, their financial model doesn’t produce enough in revenues to go seriously nose-to-nose with the Spanish giants.

The Deloitte Football Money League 2020 underlines, once more, the gulf between Italy’s top clubs and their European peers. Furthermore, they don’t seem to be making up much ground on the elite, even though some clubs look like they have plateaued in terms of revenue generation: Real Madrid (+0.7%), Manchester United (+7%), Bayern (+5%), Chelsea (+1.3%) and Arsenal (+1.6%).

Juventus’ revenues went up by 16% to € 460 million and they moved back into the top 10. La Vecchia Signora continue to dominate Serie A, strengthened by the arrival of Cristiano Ronaldo in 2018-19. They clinched their eighth consecutive Scudetto, finishing 11 points ahead of Napoli. But Juve regularly field the most experienced team in Serie A with an average age of over 29 – something which should concern their fans. Their wage bill is also high, more than 70% of income – not a healthy figure.

Juve, for all the progress they have made – their commercial revenues of € 186 million, buoyed by lucrative sponsorship deals, are substantially more than their Italian rivals – are still way behind the leading Spanish and English clubs. But Juventus still represent Italy’s only credible Champions League contender even though in 2019 they fell at the quarter-final stage, surprised by a young and vibrant Ajax team.

Juventus’ nearest contender is Inter (placed 14th by Deloitte) in terms of revenues. Showing signs of resurgence after the fresh impetus of hiring Antonio Conte as coach, Inter saw income go up by 30% to € 365 million. They are also the best supported by average attendance, with crowds close to 59,000 at the San Siro.

AC Milan cannot claim to be in particularly good shape after making a big loss in 2018-19 and slipping out of the Deloitte top 20. Milan are actually generating less money than they were 15 years ago, despite having average gates of 55,000. They recently signed Zlatan Ibrahimovic for the second time, a transfer that was arguably aimed at giving the club a morale boost. It’s sad to see a club with such a colourful history struggling to adapt, but it also – in many ways – underlines the decline of Italian football. And it is also a reminder that reliance on a controlling individual for financial support – a la Berlusconi – is not an optimal way to run a club.

Italy desperately needs competition for Juventus, but clubs need to become more profitable for that to happen

Inter and AC Milan are hoping to have a new arena that can make them more competitive on and off the field. Juventus have shown that stadium ownership can bring many benefits, but there is opposition to demolishing the very symbolic San Siro.

Roma (16th) and Napoli (20th) complete the five-team representation in the Deloitte report, although Roma’s revenues are around 50% of Juve’s and Napoli’s are on par with AC Milan.

Game of the People has said it before, but Italy desperately needs competition for Juventus on the field, but this will only happen if Italian clubs can become more profitable. This is a country with some of the most iconic clubs in the world, names that helped shape pan-European football. Juventus didn’t catapult themselves to the forefront through inflated investment by a rich oil-man, it was done on the back of long-term strategic thinking and a relaunch of the club. That sort of approach is available to anyone with the business skills and patience to preside over a transformation. Right now, clubs like AC Milan badly need that if they are ever going to become a major force once more.

Photos: PA