LEICESTER POSTS £67M PRE-TAX LOSS

[Babylon]

13 minutes ago, Heymister2015 said:

Tottenham made £70m extra from concerts/American football and hospitality in the one season they managed to host. So if Leicester could even make £20m extra from those kind of revenue streams as well as being a future World Cup/euro venue they’d quickly make back there short term expenditure 

I know Spurs as looked at as a bit of a joke at times, but if you look at their income and potential for even more income, once their infrastructure is paid off they are going to have a huge amount of cash available to invest in players and wages. Their wage bill is only fractionally bigger than ours!!

[turlo]

1 hour ago, Golden Fox said:

OK, its a bit sad, but I'm genuinely intrigued by how a company can go from being profitable 4 years in a row to suddenly making a £67m loss, so I've done done more analysis on the last 5 years (the 6th year back when we were in the Championship is a different ballgame altogether):

 

And time for a bit of humble pie: In a deeper dive into the accounts, player transfers are quite misleading: the fees to buy players actually show as amortisation within COS, but the fees we receive go on the face of the P+L as transfers, which is why it looks like we are making a massive profit on them each year - once you match the 2 off against each other, the losses don't look as bad, and the numbers start to make more sense. I've looked at my original post & the headline comment that the business is spending £272m on a turnover of £150m. Taking out transfers, the business is only spending £194m on non-transfers, so adding in the covid deferred income for a turnover of £182m is a very different scenario.

 

 

	2020	2019	2018	2017	2016
"Normalised" turnover *	182,350	178,429	158,881	162,890	128,715
Actual turnover	149,450	178,429	158,881	233,013	128,715
Wages	157,479	149,512	119,013	112,555	80,352
Other costs	36,609	39,291	25,138	34,847	22,625
Transfer writedown (amortisation)	78,273	63,979	48,807	29,701	18,059
Net Transfer income	63,088	58,396	38,330	38,830	10,793
Net transfers	(15,185)	(5,583)	(10,477)	9,129	(7,266)
Book pre-tax & pre-interest profit	(59,823)	(15,957)	4,253	94,740	18,472
"Normalised" pre-tax pre-tfr profit *	(11,738)	(10,374)	14,659	15,488	25,738
Actual pre-tax profit	(59,823)	(15,957)	4,253	94,740	18,472
Current (liabilities)/assets	(186,036)	(65,790)	(31,205)	8,863	166,711
* Figures exclude Champions league turnover of £70.1m in 2017 but add Covid-deferred turnover of £32.9 in 2020

So if you exclude the impact of transfers, the Champions League windfall, but add back in the Covid  money lost from March '20-May '20, we have gone from making a £25m profit in 2016 to a £12m loss in 2020.

 

The root cause of this is wages: turnover has increased pretty much every year from £129m to £182m, while at the same time, wages have increased from £80m to £157m - so wages have increased by £24m more than profit, which is the big driver.

 

So actually, I will take back my previous comment that a year in the Champions League won't return us to profitability or that it would take more than a player sale: £12m underlying loss is not big in the scheme of things: and with the £33m Covid deferral, the £15m net transfers and £7m interest I can see how you get to a £67m loss.

 

Having lived through this before and ended up in administration (plus having mates who support Bury and Darlington), I am very nervous about chasing the dream, and I am very nervous about the trend in net assets/liabilities with a swing of £352m in 5 years, but I do now think this is being done in a much more controlled manner following a deeper dive into the numbers & a re-evaluation of the way the transfers are reported.

 

Therefore, having set out to have a good read through the 2020 accounts, there is a lot more of a story to it, and I think the football club does look to be in pretty good shape considering we are punching our way into the top 6.

 

it would be interesting to see the what the main driver behind the year on year increase in turnover has been over the past 5 years? Is this mainly down to increases in commercial revenue or from the EPL TV deal/prize money?

[Golden Fox]

4 minutes ago, turlo said:

it would be interesting to see the what the main driver behind the year on year increase in turnover has been over the past 5 years? Is this mainly down to increases in commercial revenue or from the EPL TV deal/prize money?

Mainly broadcasting.	2020	2019	2018	2017	2016
Broadcasting income	135,200	127,865	124,152	120,696	94,677
Europe			71	70,123
Gate receipts	13,081	14,686	12,869	16,458	11,567
Other income (commercial/sponsorship)	34,069	35,878	21,789	25,736	22,471
Total	182,350	178,429	158,881	233,013	128,715

 

(Kept 2020 adj for Covid timing, but have put back in the CL money from 2017)

 

What is interesting is

- how small the gate receipts are. Adding another few thousand seats won't really make much odds.

- how big the Europe money is. (Basically make or break for a bigger cost base than ours. If only you could find a way to guarantee a Champions League place...)

[Ric Flair]

1 hour ago, Heymister2015 said:

Tottenham made £70m extra from concerts/American football and hospitality in the one season they managed to host. So if Leicester could even make £20m extra from those kind of revenue streams as well as being a future World Cup/euro venue they’d quickly make back there short term expenditure 

I wasn't aware they'd made that much from it, fair play to them. 

[dynamark]

The gate money thing less than 10% of total is interesting in that we could probalby manage for ever with no fans and extra seats do not make a deal of difference unless you can do some serious corporate and money generating stuff alongside.Tv is the money !!

[Foxy-Lady]

30 minutes ago, dynamark said:

The gate money thing less than 10% of total is interesting in that we could probalby manage for ever with no fans and extra seats do not make a deal of difference unless you can do some serious corporate and money generating stuff alongside.Tv is the money !!

It was highlighted a few years ago that the revenues from gate receipts at most PL clubs are now almost inconsequential to the overall sustainability of most clubs.

 

However, what COVID has emphatically shown is that the absence of fans from stadiums significantly detracts from the excitement of the product from a TV perspective and the absence of fans would almost certainly have an adverse impact on future TV revenues and negotiations.....and that would have a very serious effect on the business models of most PL clubs.

 

Just a thought but.....

If anything, COVID has re-enforced how important fans and atmosphere at stadiums are to the financial well being of the game.   Possibly presents a strong argument for ticket prices to be reduced to ensure stadiums are always full as the impact on match day revenues would be minimal but the value in terms of TV revenues would be life supporting.....just like the ticket pricing policies at many of the leading Bundesliga clubs (ie Bayern Munich and Dortmund) who offer 'social' ticket pricing to ensure affordability for those who are financially less well-off

 

Edited 31 March 2021 by Foxy-Lady

[Analysethis]

1 hour ago, Babylon said:

I know Spurs as looked at as a bit of a joke at times, but if you look at their income and potential for even more income, once their infrastructure is paid off they are going to have a huge amount of cash available to invest in players and wages. Their wage bill is only fractionally bigger than ours!!

For years, Tottenham have had a wage cap, play hard ball on transfers and always sell there best players (Berbatov, Bale, Carrick, Modric etc) and have managed one trophy (League cup) in the 2000s. They are the least successful club from the so called big 6. Looking at there squad today (not including loanees), its no surprise to me they aren't doing so well (and are largely playing crap football)

 

Yes they have a billion pound stadium which was meant to cost around £400m when plans were submitted, and they apparently need to repay over 1b including interest although I cant find that article (I can only find the one from last year https://www.thesun.co.uk/sport/football/11676596/tottenham-stadium-loan-repayments/ )

 

They will continue to be talked about due to their London post-code and the fact they did achieved plenty in yesteryear, including the double. To me, they are a very average club with an amazing stadium and thats it. Living in London I am surrounded by delusional Spurs fans who talk like they are Real Madrid! They are not all that and IMO, not that smart a club when you look at their trophy cabinet.

[Foxy-Lady]

16 minutes ago, Analysethis said:

For years, Tottenham have had a wage cap, play hard ball on transfers and always sell there best players (Berbatov, Bale, Carrick, Modric etc) and have managed one trophy (League cup) in the 2000s. They are the least successful club from the so called big 6. Looking at there squad today (not including loanees), its no surprise to me they aren't doing so well (and are largely playing crap football)

 

Yes they have a billion pound stadium which was meant to cost around £400m when plans were submitted, and they apparently need to repay over 1b including interest although I cant find that article (I can only find the one from last year https://www.thesun.co.uk/sport/football/11676596/tottenham-stadium-loan-repayments/ )

 

They will continue to be talked about due to their London post-code and the fact they did achieved plenty in yesteryear, including the double. To me, they are a very average club with an amazing stadium and thats it. Living in London I am surrounded by delusional Spurs fans who talk like they are Real Madrid! They are not all that and IMO, not that smart a club when you look at their trophy cabinet.

Spurs are like Real Madrid in some ways......they both play in white shirts in their capital cities.....and they both have Gareth Bale on their books.    And there, the similarities end...!

 

(PS they both also have huge trophy cabinets........except one of them is empty!!)

[Babylon]

33 minutes ago, Analysethis said:

For years, Tottenham have had a wage cap, play hard ball on transfers and always sell there best players (Berbatov, Bale, Carrick, Modric etc) and have managed one trophy (League cup) in the 2000s. They are the least successful club from the so called big 6. Looking at there squad today (not including loanees), its no surprise to me they aren't doing so well (and are largely playing crap football)

 

Yes they have a billion pound stadium which was meant to cost around £400m when plans were submitted, and they apparently need to repay over 1b including interest although I cant find that article (I can only find the one from last year https://www.thesun.co.uk/sport/football/11676596/tottenham-stadium-loan-repayments/ )

 

They will continue to be talked about due to their London post-code and the fact they did achieved plenty in yesteryear, including the double. To me, they are a very average club with an amazing stadium and thats it. Living in London I am surrounded by delusional Spurs fans who talk like they are Real Madrid! They are not all that and IMO, not that smart a club when you look at their trophy cabinet.

I agree to a point, but the point was the ability to massively increase their wage bill and start spending should come. Now, that doesn't mean they will loosen the purse strings. But they are going about things the way we are in some respects, putting in all the ground work, incredible training complex and stadium. 

[WigstonWanderer]

4 hours ago, Golden Fox said:

OK, its a bit sad, but I'm genuinely intrigued by how a company can go from being profitable 4 years in a row to suddenly making a £67m loss, so I've done done more analysis on the last 5 years (the 6th year back when we were in the Championship is a different ballgame altogether):

 

And time for a bit of humble pie: In a deeper dive into the accounts, player transfers are quite misleading: the fees to buy players actually show as amortisation within COS, but the fees we receive go on the face of the P+L as transfers, which is why it looks like we are making a massive profit on them each year - once you match the 2 off against each other, the losses don't look as bad, and the numbers start to make more sense. I've looked at my original post & the headline comment that the business is spending £272m on a turnover of £150m. Taking out transfers, the business is only spending £194m on non-transfers, so adding in the covid deferred income for a turnover of £182m is a very different scenario.

 

 

	2020	2019	2018	2017	2016
"Normalised" turnover *	182,350	178,429	158,881	162,890	128,715
Actual turnover	149,450	178,429	158,881	233,013	128,715
Wages	157,479	149,512	119,013	112,555	80,352
Other costs	36,609	39,291	25,138	34,847	22,625
Transfer writedown (amortisation)	78,273	63,979	48,807	29,701	18,059
Net Transfer income	63,088	58,396	38,330	38,830	10,793
Net transfers	(15,185)	(5,583)	(10,477)	9,129	(7,266)
Book pre-tax & pre-interest profit	(59,823)	(15,957)	4,253	94,740	18,472
"Normalised" pre-tax pre-tfr profit *	(11,738)	(10,374)	14,659	15,488	25,738
Actual pre-tax profit	(59,823)	(15,957)	4,253	94,740	18,472
Current (liabilities)/assets	(186,036)	(65,790)	(31,205)	8,863	166,711
* Figures exclude Champions league turnover of £70.1m in 2017 but add Covid-deferred turnover of £32.9 in 2020

So if you exclude the impact of transfers, the Champions League windfall, but add back in the Covid  money lost from March '20-May '20, we have gone from making a £25m profit in 2016 to a £12m loss in 2020.

 

The root cause of this is wages: turnover has increased pretty much every year from £129m to £182m, while at the same time, wages have increased from £80m to £157m - so wages have increased by £24m more than profit, which is the big driver.

 

So actually, I will take back my previous comment that a year in the Champions League won't return us to profitability or that it would take more than a player sale: £12m underlying loss is not big in the scheme of things: and with the £33m Covid deferral, the £15m net transfers and £7m interest I can see how you get to a £67m loss.

 

Having lived through this before and ended up in administration (plus having mates who support Bury and Darlington), I am very nervous about chasing the dream, and I am very nervous about the trend in net assets/liabilities with a swing of £352m in 5 years, but I do now think this is being done in a much more controlled manner following a deeper dive into the numbers & a re-evaluation of the way the transfers are reported.

 

Therefore, having set out to have a good read through the 2020 accounts, there is a lot more of a story to it, and I think the football club does look to be in pretty good shape considering we are punching our way into the top 6.

 

We should also bear in mind that during this 5 year period we have absorbed losses on some of the biggest transfer mistakes the club has ever made, Silva, Slimani, and to a much lesser extent Ghezzal. They cost a total of what, over 60m plus wages? Contributed very little (maybe Slimani in the CL to some extent early on).

Edited 31 March 2021 by WigstonWanderer

[coolhandfox]

4 hours ago, Babylon said:

I know Spurs as looked at as a bit of a joke at times, but if you look at their income and potential for even more income, once their infrastructure is paid off they are going to have a huge amount of cash available to invest in players and wages. Their wage bill is only fractionally bigger than ours!!

It going to take them a while I think they are looking a 15-30 years to pay it in full!

[Babylon]

1 hour ago, coolhandfox said:

It going to take them a while I think they are looking a 15-30 years to pay it in full!

Have you looked at their turnover compared to wages? Without the COVID mess they’d be ploughing into the debt. Everyone has debt pretty much, wouldn’t have taken long to bring it down to manageable levels.

[Heymister2015]

Exactly

5 hours ago, Ric Flair said:

I wasn't aware they'd made that much from it, fair play to them. 

exactly! So Even if they did a £200m development and made half of what spurs make it could be paid off within 4/5 years. So fans panicking about spreadsheets all looks a bit silly when revenue streams could be huge 

[Heymister2015]

Even if they just built apartments or some apartments! They could rent them out £700 each a month. Hotel, matchdays etc they’ll make it back in no time! 

[coolhandfox]

4 hours ago, Babylon said:

Have you looked at their turnover compared to wages? Without the COVID mess they’d be ploughing into the debt. Everyone has debt pretty much, wouldn’t have taken long to bring it down to manageable levels.

In March 2020 Tottenham had pre-tax profit of £87.4million, Tottenham’s total debt is projected to be £1.17billion. 

 

If they made that every year and paid no tax it would take 11 years......

 

No CL football this season and next season isn't going to help. 

[Grebfromgrebland]

Which ever why we like to dress it up, clubs like spurs are going to be way ahead of us money wise with the extra revenue they can generate through their stadium and now almost guaranteed champions league qualification.

 

We need to make the most of these next 2 years because the odds are going to be stacked against us after that and the premier league will cease to be a competition where clubs are awarded prize money on merit, instead they'll get champions league revenue through the back door.

 

It's going to be very hard for a club like ours to maintain the drive for European places going forward. 

[CrispinLA in Texas]

The only reason Spurs made profits for the last several years cos Poch wasn't given any cash in the transfer market for acouple of years. Not forgetting the 200m bailout they got from the UK government last year.

[Foxxed]

15 hours ago, Ric Flair said:

 

The most important thing is we are a club that harbours ambitions and so far seem to back it up, that's all fans can hope and ask for surely?

As long as those ambitions include breaking even eventually. It doesn't feel prudent to be reliant on a monarchy granting a monopoly.

[Ric Flair]

8 minutes ago, Foxxed said:

As long as those ambitions include breaking even eventually. It doesn't feel prudent to be reliant on a monarchy granting a monopoly.

Hence the owners are diversifying considerably in recent years.

[Foxxed]

1 hour ago, Ric Flair said:

Hence the owners are diversifying considerably in recent years.

I'd still like the club to be self-sufficient. From what I've read about it seems like CL football, no matter how rotten it is, seems one of the few ways.

[WigstonWanderer]

3 hours ago, CrispinLA in Texas said:

The only reason Spurs made profits for the last several years cos Poch wasn't given any cash in the transfer market for acouple of years. Not forgetting the 200m bailout they got from the UK government last year.

What happened?

[CrispinLA in Texas]

11 minutes ago, WigstonWanderer said:

What happened?

Spurs found it hard to pay the loans it took to cover there stadium build costs, and the UK government gave me them the money at virtually zero interest, because they were seen as making profits year in year out. Football clubs will make a profit if they don't spend much in the transfer market, like in the Pochettino era at Surs

[sacreblueits442]

6 hours ago, CrispinLA in Texas said:

Spurs found it hard to pay the loans it took to cover there stadium build costs, and the UK government gave me them the money at virtually zero interest, because they were seen as making profits year in year out. Football clubs will make a profit if they don't spend much in the transfer market, like in the Pochettino era at Surs

...was that a Freudian moment!!!

[Ric Flair]

9 hours ago, Foxxed said:

I'd still like the club to be self-sufficient. From what I've read about it seems like CL football, no matter how rotten it is, seems one of the few ways.

This is more a general dilemma for us all rather than in direct response to you but if our fans want to see us being wholly self sufficient then somethings got to give.

 

Currently our fan base heavily dislike us selling a key player each season, they yearn for more new players each season than we tend to bring in and they also want new contracts given to our successful players to fend off point 1 and/or ensure they don't enter the final 2 years of their contract and diminish in value.

 

So to pay for all of the above, baring in mind we already have wages at nearly 100% turnover (if you add back to the deffered payments to the 2019/20 accounts). Where do our fans think the funds required to give Tielemans, Soyuncu, Ricardo, Barnes and Iheanacho new contracts is going to come from? There's also an argument that Ndidi needs a new one soon too. Are our fans content just to fund those increases as well as not posting a significant loss to the accounts that we'd need to sell a high value asset too and probably not spend that money on replacements. 

 

If fans aren't happy with that scenario then what gives? Do fans then turn a blind eye to being propped up by the owners or do they demand that commercial revenue increase by 30-50% to pay for all this, baring in mind we failed to make much progression in this regard even after winning the league and our CL exploits. We've become the poster club for upsetting the elite and yet we still don't have global companies throwing multi million pound contracts at us. 

 

Obviously qualifying for the CL or at least getting EL football each season will massively help us but in order to achieve this consistently we have to push it to the max to challenge. So once again, what gives? Should we be self sufficient as a rule and then try and to challenge within that but accept that we can only go so far at doing that, or do we try and seize the momentum and foundations that we have built with the long term goal of increasing all revenue streams through success and in return be less reliant on our owners?

 

I trust our owners and its a privilege to support us during this golden period. We are incredibly fortunate and in Susan Whelan we have one of the shrewdest CEO's out there.

 

CL qualification and an FA Cup win please and let's see where we go from there 🤪

[Babylon]

15 hours ago, coolhandfox said:

In March 2020 Tottenham had pre-tax profit of £87.4million, Tottenham’s total debt is projected to be £1.17billion. 

 

If they made that every year and paid no tax it would take 11 years......

 

No CL football this season and next season isn't going to help. 

Their revenue is nearly £500m in a normal season, with wages not much higher than ours. That money will be servicing the loans, they just have to bring it down a bit to something more comfortable. 

 

Even if it took 15 years, the point is when it is brought down they've got room to make a lot of signings and increase wages.