Parachute eases the discomfort for Huddersfield Town

HUDDERSFIELD Town, in their first post-Premier campaign in 2019-20, might have suffered greater financial challenges had it not been for their first parachute payments after relegation.

The Terriers made a pre-tax loss of £ 8.2 million in 2019-20 but their operating loss for the year was £ 22.7 million, a movement of around £ 24 million from 2018-19’s operating profit of £ 1.2 million. 

Nevertheless, Huddersfield’s turnover, at £ 52.7 million, was the third highest in the Championship in 2019-20 with only Leeds United (£54.2m) and West Bromwich Albion (£53.7m) higher. Whereas Leeds and Albion both won promotion in 2020, Huddersfield finished 18th in the Championship and they went on to finished two places lower in 2021.

The club’s turnover fell by 55.8% to £ 52.7 million, ending a two-year period where income was well over £ 100 million. The biggest revenue loss was in broadcasting/media, which dropped by 57% from £ 104.3 million to £ 44.7 million. Although this is a dramatic decline, they still generated the highest media income in the Championship, clearly boosted by the parachute payments, which should exceed £ 90 million over a three-year period.

Huddersfield’s wage bill for 2019-20 was £ 30.3 million, with the wage-to-income ratio 57%, the second lowest in the Championship. Rotherham United was the lowest at 56%. This compares very favourably to most of the club’s rivals, notably Reading (211%), Brentford (186%) and Wigan (168%). 

In 2019-20, only five clubs had a wage-to-income figure of less than 100%. When Huddersfield were last in the Championship, their wages regularly went above total revenues, notably in 2017 when staff costs were 137% of turnover, but since relegation, they have knocked more than £ 30 million per season off their staff costs.

The operating loss was eased by £ 18.1 million profit from player sales, thanks to the transfers of Philip Billing (£15m to Bournemouth), Tommy Smith (£4m Stoke) and Aaron Mooy (£3m Brighton). Since leaving the Premier League in 2019, Huddersfield have spent £ 12 million in the market and received £ 54 million for player disposals. At the same time, the club has increasingly tried to tap into players produced by its academy.

Relegation doesn’t appear to have affected public appetite for Huddersfield Town too much, though. Their average gate before covid-19 stopped football as a spectator sport was just 6% down on 2018-19.  The club’s social media following across Facebook, Instagram and Twitter is in excess of 600,000.                                               

The club, sensibly, is aiming to become debt free, but at present, owes former chairman Dean Hoyle £ 34 million and there is almost £ 24 million due to other lenders. Cash at bank totalled £ 10.6 million for 2019-20 versus £ 13.8 million in 2018-19.

Huddersfield fans have been disappointed with the club’s performance on the field since rejoining the Championship, particularly as their wage bill is more reflective of a mid-table team. 

The concerning thing is that the 2020-21 accounts may not make good reading given the Terriers, like all clubs, have gone through an entire season with very little income from matchday. Huddersfield will not be the only club facing challenges, but in the meantime, prudence and careful decision-making will be a prerequisite as football braces itself for the financial impact of covid-19 in 2020-21.

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Photo: Alamy

Championship survival the short-term objective for Huddersfield Town

HUDDERSFIELD TOWN will restart their 2019-20 Championship campaign behind closed doors on June 20 against Wigan Athletic, hoping they can successfully avoid a second successive relegation. The Terriers are three points from the drop zone and have nine games remaining to save themselves, including that definite “six-pointer” against Wigan, who are one point and two places behind them in 20th position.

Another relegation would be a disaster just 12 months after the club lost its Premier League status, both financially and psychologically, but there are much bigger issues at stake for the Championship and the divisions below. Huddersfield’s owner, Phil Hodgkinson, has predicted that as many as 60 clubs could disappear if the coronavirus crisis does not end soon. Indeed, with talk of the government forbidding large gatherings until a vaccine is found, football as we know it may be some way off. This will impact broadcasters, sponsors and clubs and hit at the very financial structure of the game.

Huddersfield had two seasons in the top flight and the financial rewards of being part of English football’s elite were more than apparent in the club’s latest financial statements. The 2019-20 accounts, when they do emerge next year, will underline the cost of relegation and also the impact of the virus. They will probably not make pretty reading for most clubs.

Meanwhile, the 2018-19 financials have been published and, as always when a “small” club breaks into the upper echelons, the economic gulf between the Premier and Championship becomes very obvious. Huddersfield’s turnover in their two Premier campaigns totalled almost a quarter of a billion (£ 245 million) and they made a pre-tax profit of £ 3.9 million (£ 29.7 million 2017-18). In 2018-19, they declined slightly to £ 119.3 million of which 87% came from broadcasting revenues, a remarkably high percentage that creates a high level of concentration risk. In Huddersfield’s promotion season of 2016-17, their broadcasting income amounted to £ 7.5 million – a year later, it was £ 109 million.

If Hodgkinson’s worry becomes a reality and football is decimated by the virus, TV revenues may not be quite so generous and with that, any chance smaller clubs have of competing in the Premier – already near impossible – will disappear altogether.

Certainly, players will not earn the sort of money that even Huddersfield could pay their squad in their brief flight in business class – £ 64.2 million in 2018-19, representing 54% of income and the second lowest in the Premier. Huddersfield’s wage-to-income ratio was actually fairly modest compared to some clubs and only five clubs had a better ratio. Ten years ago, Huddersfield’s wage bill was just £ 6 million, which was still 105% of total revenues. Unsurprisingly, the wage bill for 2019-20 is higher than in 2016-17, but Huddersfield will receive parachute payments of around £ 91 million over three years.

Buying and selling players is one way smaller clubs can enhance their revenues and Hodgkinson said “we will always be a trading club”. However, Huddersfield’s profit on player sales was only £ 3 million in 2018-19, compared to the £ 60 million accrued by the likes of Chelsea. The three relegated clubs – Fulham and Cardiff City joined Huddersfield – made £ 8 million between them.  Huddersfield have never made more than £ 7 million in profits from transfer market activity in the past decade. The club did spend heavily in their two Premier seasons, almost £ 100 million, although they recouped around £ 17 million.

Huddersfield’s matchday income in 2018-19 was just £ 5 million, the lowest in the division and over £ 100 million less than Manchester United’s total, illustrating the huge imbalances in the Premier League. The Kirklees Stadium has a capacity of just 24,121 so the club’s average gate of 23,203 almost filled the ground. Huddersfield kept their ticket prices frozen for two seasons, which obviously meant they could not make much more from their home fixtures.

One eyebrow-raising aspect of the accounts is the club’s net debt of £ 62.9 million. While some clubs have higher amounts of debt – Stoke, Middlesbrough and Blackburn have over £ 100 million – Huddersfield owe around £ 45 million to former owner Danny Hoyle, £ 15 million of which is due in the summer of 2020.

Huddersfield thought they had a Klopp-lite manager in the charismatic David Wagner (he had a beard, glasses, baseball cap and a Dortmund connection after all) and for a while, he was very popular. But with Huddersfield relegation-bound, Wagner’s contract was terminated in January 2019 and in his place came another German, Jan Siewert. Huddersfield started the 2019-20 season poorly and in September, Danny Cowley was appointed as manager with a very clear brief – to save Huddersfield from relegation. Cowley’s meteoric rise has seen him take gradual steps of elevation in the football pyramid, from non-league to the Championship. When he took over, Huddersfield were next to bottom in the league, but in 31 games, Huddersfield have won 41 points and climbed out of the bottom places.

People have confidence in the progressive methods of Cowley and his brother and should Huddersfield retain their Championship status, expectation will surely rise for 2020-21. Even with the controversial parachute payments – the future of which may soon become the topic of heated debate once more – relegation will have cost Huddersfield around £ 50 million per season. The logical time to try and push for promotion is in the three-year parachute window, but in the Championship this invariably comes with an unsustainable hike in player wages. In the uncertain world that will emerge from the crisis, who will be willing to speculate on the status quo being restored, let alone an expensive shot at promotion?

 

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Photo: PA