Seagulls Over Burwash Article – May 2024
Profit and Loss, Steady Ship and FFP
It is claimed that professional football is a business and, according to the Collins Dictionary, a business is “a particular area of work or activity in which the aim is to make a profit”. There certainly is a lot of money changing hands in football and a few people do become extraordinarily rich. However, these lucky few are generally the employees of the business not the business itself. Most of the companies (i.e. the clubs) don’t appear to recognise the ‘to make a profit’ part of the above definition. In the Premier League, the richest league in world football, only three of the twenty clubs made a profit last season. In any other line of ‘business’, the board of directors of the other seventeen businesses would be sacked, the staff made redundant, and the liquidators would have been called in. Only in the crazy world of football could a company make a loss of £150 million and stay trading, as has been the case with Manchester United following the 2022-23 season.
So, which of the Premier League football clubs are viable, profitable businesses? Based on last season’s books, Bournemouth made a pre-tax profit of £44 million, an excellent achievement for a relatively small club. Premier League, FA Cup and Champion’s League winners Manchester City posted a profit of £80 million but that included £294 million in prize money. And, top of the profitability charts (insert drum roll as appropriate)…….. Brighton and Hove Albion! Yep, little old Brighton finally beat all competition by making a whopping profit of £133 million! That is a record profit for an English football club in any one season.
Given that The Seagulls have yet to win a major competition, have a maximum stadium capacity of only 31,000 and are not huge commercially in terms of sponsorship, advertising and merchandise, how did they manage to make so much money while other, more illustrious clubs lost fortunes? Well, put simply, the club is a well-run business. A sizeable portion of Brighton’s income in 2022-23 was generated by their performances on the pitch and the ability to make a profit by selling players who arrived for much smaller fees. The team achieved their highest ever finish in the league (6th) and reached the FA Cup semi-final. This increased the club’s income from prize money and broadcasting revenue from £126.2m to £155.2m. On top of this, there was shrewd business in the transfer market. Four players that were brought into the club ‘on the cheap’ as relatively unknown quantities were developed into top class players at Brighton and were subsequently sold for a profit of £121.4 million. Then, when the Albion’s manager, Graham Potter, was poached by Chelsea (hummm, that went well…), there was a clause in his contract that brought the club another £23 million in compensation.
It has to be acknowledged that such transfer profits cannot be expected every season (although the balance for the current season will include over £125 million for the sale of Moises Caicedo and Robert Sanchez to Chelsea) and the underlying principles of the club are to keep financially sustainable. As a result, Brighton and Hove Albion have the cheapest squad of players in the Premier League, bought for £164 million which, although it is unimaginable amounts for normal folks like you and I, pales into insignificance compared to the £1,077 million (yes, that’s over a billion!) that Manchester City paid for theirs. Also, the club do not let wages get out of hand and drain the piggy bank and the players average wage is one of the lowest in the Premier League. Last season, 62 % of Brighton’s income was spent on staff wages, while Leicester, who were relegated, and Fulham spent more on wages than they received in income. So, beyond the sale of players, Chairman, Tony Bloom and CEO, Paul Barber, run a tight ship.
The only financial aspect that does not look so good for the Seagulls is their total debt. The club has the third highest in the Premier League, although it is nearly half that of Manchester United and Spurs. As of the end of last season, Brighton owed £391 million to Tony Bloom who owns the club. These are interest-free loans that enabled the club to build the Amex Stadium and the Lancing training ground, or, more correctly, the Elite Football Performance Centre. It is this investment from Mr Bloom that has enabled the club to progress and achieve the success it has. Fortunately for Brighton supporters, Bloom is a life-long fan of the club and, unlike many investors in football clubs, is not after a personal profit, although, following the recent profits for the club, £20 million has been knocked off that debt.
After many years of cogitation and procrastination, the Premier League has finally started to enforce the UEFA Financial Fair Play (FFP) rules, otherwise known as the Profit and Sustainability Rules (PSR). In brief, for the Premier League, clubs are not allowed to make a loss of more than £105 million over any three-year period. Exceedances of this will result in points deductions, such as those meted out to Everton and Nottingham Forest this season. Manchester City and Chelsea are also being investigated currently with City facing over 100 charges. Will the Premier League be brave enough to sanction the most successful clubs in recent history? We will see. But whatever happens to them, if Brighton and Hove Albion follow their current business model, FFP will be irrelevant to the progress of the Seagulls.
Brighton and Hove Albion is rightly lauded for being very well run and that, as mentioned above, is due largely to Tony Bloom and Paul Barber. As Barber put it on Talk Sport recently, they work very well together, “Tony’s very clever and I’m not and Tony’s good on the numbers and I’m better with the words”. Despite his self-deprecating comments, we are very lucky to have Barber at the helm and it is surprising that he has not been poached by Chelsea along with all the coaching staff and players that have headed to Stanford Bridge over the last year or so. After 12 years as CEO, he has signed another contract with the club that runs until 2030. So, hopefully, the progress of the last decade will continue for the rest of his tenure.
Oh yes, I suppose I should mention how the team’s results have been on the pitch. Hit and miss. We’ll leave it at that until we have had some good results to gloat about.
For further information on joining Seagulls Over Burwash and details of forthcoming events, meetings or coach travel, please visit our website at www.seagullsoverburwash.co.uk or email me at simon.forster@seagullsoverburwash.co.uk. Alternatively, please feel free to contact our Chairman, Mr Teskey O’Neil, on 01435 884344 or tesbar80@btinternet.com.
Simon Forster