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Who are the financial winners and losers of Season 23/24?

Most club’s financial statements for season 23/24 won't be published until April/May 25, 10 months after the season finishes. However, at...

Most club’s financial statements for season 23/24 won't be published until April/May 25, 10 months after the season finishes. However, at Matchday Finance we provide our estimates for the season so we can get an early indication of all the financial metrics. Let’s look at our predicted highlights. Turnover We are predicting overall premier league revenue to be very similar to season 22/23. Manchester City still leading the way. Big gap remains between the big 6 and the rest, although Newcastle made some headway with entry into Europe and a new shirt sponsorship deal. Figure 1: Estimated total revenue season 23/24 Some individual clubs will show good increases in Matchday revenue, Liverpool with additional capacity, Newcastle and Arsenal with European matches and ticket price increases will lift revenue for many clubs. However, newly promoted clubs have much lower matchday revenue than those they replaced such as Luton’s predicted £6m against Leeds previous £30m. We assume that total Broadcast revenue distributed from the premier league will be similar to 22/23. European distribution will drop as the success of 22/23 (Man City, West Ham for example) was not repeated. Commercial revenue is hard to predict, but we expect further growth for the big clubs. Manchester United a possible exception as performance did not meet the target of their sponsors. Also, Newcastle with a new shirt sponsor and entry in the Champions league will benefit commercially. So overall, not much change. Staff Costs The vastly different cost bases of the promoted clubs to those relegated will contribute to an overall drop in Staff Costs before profit on player sales. For example, our estimate for Luton is only £40m, whereas Leicester and Leeds were both running at over £200m. This will be offset by an increase in amortisation for specific clubs following heavy spending in 22/23 (Chelsea for example). Staff costs before profit on player sales we predict will drop by around £200m. Chelsea will again lead the pack and there is still a gap between the big 6 and the rest (Luton’s total staff costs would be a mere rounding error in Chelsea’s books!), but Newcastle and Aston Villa are not far behind. There are also several clubs with high costs relative to turnover, which will need to be addressed if the new salary cap rules come into play. Figure 2: Estimated staff costs (before profit on player sales) and cost as % of turnover season 23/24. Interesting looking at figure 2 we estimate that 9 of the top 10 spenders finished in the top 10. Everton (under achieved) and Crystal Palace (over-achieved) the only exceptions (although removing Everton's points deduction would have almost corrected this). Profit on Player sales we estimate to jump from £694m (which was already a record) in 22/23 to a new record of £1B. Big gains again for Brighton (thanks Chelsea!), plus Chelsea (Mason Mount and others), Tottenham (Harry Kane) and West Ham (Declan Rice) also reporting big gains. Figure 3: Estimated profit on player sales season 23/24. So, combined total staff costs we estimate will drop by over £500M reducing the overall cost as a % of turnover from 85% in 22/23 to around 75%. Profit and Loss The league will still be loss making but should show an improvement on last year although we are still only predicting 6 clubs will make a profit. We estimate a combined loss of all clubs at around £380m (against £700m prior year). Interesting the main driver of our estimate is profit on player sales which we think will jump by over £300m, so probably best not to get carried away with any profit improvement as it may in part be a grab for profit to stay within PSR rules. Looking at the clubs, profit on player sales is driving profits again at Brighton and at West Ham. Arsenal with European entry should be profitability and Man City will be just through their scale. The very different financial models of the promoted clubs will contribute to the improvement with Luton alone making a potential £70m which would be one of the highest operating profits from recent years (excluding profit on player sales and other exceptional items). Although this will reverse next season with all three being relegated. Those weighing the profit league down will again be Chelsea (but they may have exceptional items up their sleeve), Manchester United (high-cost base), Tottenham (even after the sale of Harry Kane) and Aston Villa (high staff costs). Figure 4: Estimate profit before tax season 23/24 Player Trading 22/23 was a crazy year for player trading with overall net trading (player acquisitions less sales) exceeding £2.3B. That’s money flowing out of the premier league! To put that in perspective the prior three years sat around £1.2B. 23/24 will come back closer to history although we are still predicting net trading at over £1.4B. Chelsea again driving this at £340m. Several clubs earned more from transfers than they spent. Wolves (sale of Nunes, Neves and Collins) and again Brighton the standouts, but also Everton (obvious reasons) and West Ham (with the sale of Declan Rice). Figure 5. Estimate player acquisitions and disposals season 23/24. Football Net Debt In season 22/23, Football Net Debt (which includes loans less cash plus amounts owed to other clubs for outstanding transfer fees) jumped an unprecedented £1.5B to around £5.5B. £1B of that increase was in transfer fees owed to other clubs, the result of very high player trading. In season 23/24 we estimate a small increase to an overall debt of about £5.7B. There will be a shift in the source of debt, as transfer debts get settled (£1B of the transfer debts from 22/23 were due in 23/24) so this will have to be funded. Tottenham leads the way in terms of debt (around £1B) but this is long term, and they have a brand-new stadium to show for it. We estimate that Chelsea will increase debt the most with Everton, Manchester United, Liverpool and Notts Forest all having to source new funds. Brighton, if they so choose, will be able to reduce debt further (as they did in season 22/23) and Bournemouth will benefit from a sizable share issue. Figure 6: Estimated total debt season 23/24 Cash Flow Cash flow gets little press when premier league finances are discussed in the media, but we see it as critical in the sustainability of clubs. Put simply many clubs do not generate enough cash from their ordinary activities to support the level of investment they make in players. In fact, some clubs regularly make negative cash flow (Everton for example) before they even consider investing in players and facilities. In 22/23, six clubs had negative operating cash flows and we predict similar in 23/24, although to note, this can vary depending on payment terms negotiated by clubs. Figure 7: Estimated operating cash flow season 23/24 If cash from operating activities is negative or does not cover the amount invested in players and facilities, then new funding is required. This is generally through either new share issues or new debt. In 22/23 there was £1.3B in new funding (£500m from shares and the rest in debt) and we predict a similar amount required in 23/24. Chelsea, Bournemouth, Aston Villa and Newcastle have issued new shares in 23/24 so we assume the rest will be financed from debt. Figure 8: Estimated cash from new financing season 23/24. Summary In summary the financial dynamics of the league are unlikely to change much in 23/24. Profit will improve but driven by change in club mix (which will reverse) and profit from player sales (which is not sustainable). The big 6 will still earn and spend more, there will be lots of debt, high staff costs, and new funds required to keep clubs operating at these levels. Figure 9: Estimated consolidated financial results for premier league season 23/24 The financial estimates in this article are based on information available at the time. To see the detail behind these number sign up to the Matchday Finance platform.

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