Finance & Business – GAME OF THE PEOPLE

AJAX were beaten 6-1 at home by Napoli on UEFA Champions League matchday three, a disastrous result for a club that needs to be part of Europe’s top club competition. The Dutch champions’ latest financials reveal that income from Europe remains a vital component of their business model, but the Napoli game suggested Ajax will be exiting at the group stage this season, and therefore in a year’s time, the effect will be felt.

In 2021-22, Ajax made a pre-tax loss of € 31.7 million, a 171% rise on the previous campaign’s loss of € 11.7 million. Given all main revenue streams increased, the increased deficit can be partly attributed to higher expenses which included an € 8 million settlement with the family of Appie Nouri, the young player who has been left paralysed after a cardiac arrhythmia attack in a pre-season game in Austria in 2017. Ajax, who are hugely dependent on player trading, also saw their profit on sales drop by 56% to € 37.8 million.

In 2021-22, the most notable sale was David Neres to Shakhtar Donetsk, which yielded a fee of € 12 million. The previous campaign had seen Ajax receive over € 100 million from the sale of, among others Hakim Ziyech, Quincy Promes, Donny van der Beek and Sergiño Dest. In 2022-23, Ajax received more than € 200 million in transfer fees, including a total of € 152 million from the sale of Antony and Lisandro Martínez to Manchester United. This should ensure Ajax return to profit for the first time since 2020.

At a glance

€m	2021-22	2020-21	2019-20	2018-19	2017-18
Revenues	189	125	162	199	93
P&L pre-tax	(32)	(12)	27	69	3
Wages	109	95	92	92	53
Net Debt	126	129	128	(62)	(12)

Source: Swiss Ramble

Ajax’s total revenues for the season were € 189.2 million, a 51% increase on the covid-affected 2020-21. The two main sources of the rise from € 125.2 million were matchday and broadcasting. Given the heavy impact that near-negligible matchday earnings had on Ajax in 2021, it was no surprise that a return towards normal operating conditions resulted in a 1674% rise in matchday monies from € 1.9 million to € 34.2 million.

Although Ajax’s main rivals, PSV Eindhoven and Feyenoord have yet to publish 2021-22 figures, they will be some way behind. Ajax’s total of € 34.2 million would have been higher if the league did not have a capacity restriction. They averaged 35,000 at the Cruyff arena when under normal circumstances, they would attract 50,000-plus.

The club’s broadcasting monies were also up, by 34% to € 73.8 million. Almost 86% of this total was received from UEFA after Ajax reached the last 16 of the Champions League in 2021-22 – the Dutch league has been tied to a 12-year deal with Fox, signed in 2013, a move they probably regret today.

The importance of UEFA money is such that it contributes a third of the club’s overall turnover. In the past five years, the club has earned well over € 200 million from UEFA, giving them a huge competitive advantage over their domestic rivals. It is little wonder that Ajax are dominating Dutch football once more, with four consecutive league titles and a revitalised player development programme that has seen them sell top talent to clubs like Barcelona, Juventus, Chelsea and Manchester United.

Ajax are also the leading commercial business among football clubs in the Netherlands, a very identifiable brand with strong partnerships. Most of their Eredivisie stablemates only earn a fraction of the € 81.2 million generated in 2021-22. Indeed, this figure is a record for the club and 19% up on 2020-21. Their current shirt sponsor, Ziggo, and kit provider, Adidas, have deals running to 2025. Despite being the biggest draw in the Eredivisie, Ajax’s commercial stream is dwarfed by the top clubs in Europe.

Equally, Ajax are able to pay the highest wages in the Eredivisie, their 2021-22 bill coming to € 109 million, which equates to 58% of income. In 2020-21, the ratio went up to 76%.

Ajax remain one of the clubs who operate on the fringe of the elite but their track record in Europe (four European Cup/Champions League titles) and their reputation for nurturing talent rightly earns them a place at the table. They will forever be a big fish in a small pond, which will always make them extremely successful at home, but they will forever be running to stand still in Europe.

ON THE field of play, Manchester City overtook their neighbours United almost a decade ago, but in 2020-21, they became the first Premier League outfit to earn more than the team from Old Trafford. City’s revenues for 2020-21, totalling £ 569.8 million, were a club record, but they also topped United’s income by more than £ 70 million.

The 2020-21 season saw City win their fifth Premier title since 2011-12 and their 13^th trophy since 2010-11. Since they were taken over by Abu Dhabi, City have won more than anyone else, including Chelsea, who have won 12 pieces of silverware in that timeframe. They have also finished above United nine times in 13 seasons. In 2020-21, they also won the EFL Cup and reached the final of the Champions League and semi-finals of the FA Cup. No surprise the club called it a “very special season”. Their win rate across the campaign was 77%.

City have become a sporting multinational that has more depth and reach than virtually every other footballing institution worldwide. They have arguably the best, most balanced squad in Europe, the most sought-after coach, a good stadium, an admirable style of play, a decent community presence, growing commercial operation and they have the fourth best brand in football (source: Brand Finance). City have also enjoyed a 47% growth in social media interaction and have around 80 million followers across the three main platforms.

In short, Manchester City’s owners have not just built a good team with a top coach, they have aimed to create what looks like a solid, corporate structure that can ensure success is self-perpetuating.

At the same time, the club is much-envied and disliked by many opponents and their success has often been dismissed as the product of limitless piles of money from the middle east. But what sets them apart from many monied projects is the long-term view they seem to have taken. Whether this is good for the competitive balance of the Premier League is a matter for debate. Already in Europe the Bundesliga and Ligue 1 have been monopolised by Bayern Munich and Paris Saint-Germain respectively, the Premier could be next.

City, after making a net loss of £ 126 million in 2020, moved back to a small profit of £ 2.4 million. Nevertheless, this was an impressive swing to the positive of more than £ 128 million. Net debt was also reduced significantly, largely due to an increase in cash of £ 27.3 million.

The revenue mix was dependent on commercial activity and broadcasting, more than compensating for the loss of matchday income. Broadcasting increased by 56% to £ 297.4 million, largely due to City’s run to the Champions League final, while commercial was up by 10% to £ 271.7 million.

City generated a £ 68.6 million profit on the sale of players, almost £ 30 million more than 2019-20 and the highest in the past decade. The club’s outlay in 2020-21 amounted to £ 155 million (only Chelsea spent more in the Premier), but they recouped £ 51.7 million. The biggest signings were Rúben Dias (£ 62 million, Benfica), Nathan Ake (£ 40 million, Bournemouth) and Ferran Torres (£ 20.7 million, Valencia). Among the players sold was Leroy Sané, who moved to Bayern Munich for £ 54.8 million.

Over the past decade, City have spent £ 1.37 billion on players, versus Chelsea’s £ 1.32 billion. Their income from sales is much lower, £ 465 million compared to £ 870 million. One notable feature of City’s transfer activity is that they make fewer mistakes than some of their peers, but if things don’t work out they are quick to move them on.

The 2021 current squad cost more than £ 800 million. The wage bill reached a record high, £ 354.7 million, representing 62.2% of income, more than 10 percentage points lower than the previous season. Since 2008, City’s wages have risen by 654%.

They have also made a strong commitment to women’s football and are one of the top clubs in the Women’s Super League. In 2021, they were runners-up and had extended runs in every major competition.

One prize eludes Pep Guardiola and his City project – the UEFA Champions League. It was clear to many people that Guardiola slipped-up in 2021 in his approach to the final and Chelsea deserved their victory. Despite this setback, they are the only English club to play in every Champions League for the past 10 years and they are in this season’s last 16.

Nobody should forget this is a club in a privileged position, but so much of what they do is not about short-termism. Admittedly, they are, to quote David Conn’s book title, “richer than God”, but it will be interesting to see how Newcastle United approach their new found status. If they are sensible, they will look at Manchester City.