Phil SumblerThe stark reality of running a Championship football club was laid bare yesterday when Bristol City announced a pre-tax loss of more than £38m in their annual accounts covering the year to 31st May 2021.
Naturally the period covered twelve months when football was played behind closed doors but it was not that figure which turned a previous £10m loss into one almost four times that it was the reduction of profit through player sales that had the biggest impact with that particular figure down year on year by almost £20m.
That particular fact will be something that should alert Swans fans given the fact that in previous years we have seen the likes of McBurnie, James and Rodon disappear from the Swans and part of the reason why the likes of Jamal Lowe and Connor Roberts left back in the summer – the balancing of books at Championship level is one of the toughest tasks that anyone at a football club can do.
Bristol City also converted more than £26m of debt to equity during the financial period which again will be something Swans fans will be more than aware of given the options for our owners to do exactly that from their loans last season which will almost certainly be turned into equity and calls from Julian Winter for more of the same this time around.
As you would expect for clubs during this period there was a significant reduction in income (more than £10m) driven by the gates to games being closed but it did not prevent the wage bill rising by more than £2m which highlights just how little football did react in line with other industries during the lockdown periods.
Always interesting to look at in these accounts is the number of employees which – as you would expect – dropped significantly year on year (562 from 797) but again playing wise they saw a rise from 83 to 97 people on the playing side of things. Football administration staff also rose by almost 20%.
Bristol City CEO Richard Gould said “Operating without crowds for a whole season has not only had a huge negative effect on revenue but has also resulted in crashing the transfer market and player trading, upon which we have been heavily reliant.
“We remain ever thankful for the support of the Lansdown family, particularly as we feel the financial effects of COVID.
“We are obviously very conscious of the impact this loss will have on compliance with the EFL’s Profitability and Sustainability Rules and we continue to work through this, including the dispensation for losses occurred as a result of COVID.”
The accounts also show an eye watering more than £100m worth of creditors almost a third of which is due within twelve months.
Accounts of any Championship club should always be of interest but maybe more so for a club like Bristol City who can have many comparisons to the Swans, part of which completely highlights the reliance that clubs at this level have on profits from player sales. And these accounts clearly show what happens when those profits reduce significantly.
The strategic report references some strong aspects of the club – including the new training facilities and the investment that they are making in developing their youth sides which will benefit them long term – they hope – on and off the pitch.
The same strategic report references the impact of the pandemic and the knock on effect on finances will continue to be felt in years to come. The impact of the current increase in cases will have a negative impact for many on the current transfer window and is likely to increase the chances of the market becoming a buyers market with the buyer often able to dictate the market value of a player.
There are not necessarily lessons to be learned from the accounts published but it certainly should give football fans a wake up call everywhere that the balance at this level is really difficult to obtain and that should always be remembered. Particularly at the start of a transfer window.
