By Paul Nicholson
March 5 – Manchester United may sit on top of the money league as the world’s most value sports club, but their colleagues in the Premier League are finding it much tougher to compete at their level, both on the pitch and off it.
Liverpool and Aston Villa announced results yesterday that were an improvement on previous years, but which were still losses, and losses of chunky proportions.
Liverpool reported a loss of £40.5 million ($61m) from August 2011 until May 2012. This was lower than the previous year which was £49.3 million ($74.3m). Although commercial revenue rose during the period, debt rose from £65.4 million ($98.5m) to £87.2 million ($131.4m).
The club puts this down to the seasonal nature of spending coming before revenue, but even so, the investment in a new squad is taking its toll on the balance sheet.
Liverpool is still a premium international brand despite not having been a significant challenger for the Premier League for a number of years. However, new sponsorships with Warrior, Garuda and Chevrolet are expected to push up the revenues going forward.
Aston Villa were big Premier League club to announce reduced losses of £17.7million for the year ending May 31, 2012. This is a big reduction from losses of £53.9m for the previous year – and achieved despite a fall in turnover of £11.6m.
Villa’s poor on pitch performance has hit all their revenue lines from match attendance dropping 10%, poor cup runs and hence no incremental revenue, and a consequent reduction in TV appearances
In response Villa have reduced their costs and sold their top players – Ashley Young to Manchester United and Stewart Downing to Liverpool.
Villa’s approach has been to build from the bottom up, with a younger first team squad. But currently sitting in the Premiership relegation zone may prove an even more costly strategy if they do end up going down to the Championship with a Premiership cost base.
Operating expenses were reduced by £20.3m to £138.4m and player trading resulted in increased profit by £8.1m from £18.8m to £26.9m, with Ashley Young and Stewart Downing both sold during this period for a combined figure of around £35m.
Villa’s chief financial officer Robin Russell said: “Our objectives remain to compete strongly on the pitch and to achieve sustainability as well as compliance with both UEFA’s and the Premier League’s Financial Fair Play requirements.” But the question remains, can you compete on the pitch in this league without the money off it? In Villa’s case it would seem to be a struggle.
And in Scotland, Rangers losses may be a step forward
Financially troubled Rangers who have recently exited liquidation to raise £22m ($33.4m) through a stock market flotation, reported a loss of £7m ($10.5m) for the last seven months of 2012. Results to December 31 show revenue of £9.5m ($14.3m), with operating expenses of £16.6m ($25m).
Chairman Malcolm Murray said: “In my 30 years’ investment experience, I have never seen a business move from the liquidation of one company to another’s successful flotation in such a short space of time. This could only have been achieved by the outstanding efforts of management, staff, advisers and fans. This unity and sense of purpose has, rightly, been admired internationally.”
Spring could be reviving old flowers in Scottish football.
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