Season review
AFC Wimbledon participated in its fourth consecutive season in League One in the 2019/20 season.
As has been the case throughout this period, the club has battled relegation and despite a tough start that saw Walley Downs depart, the club managed to retain its League One status after the season was curtailed and decided based on points-per-game, with the club finishing 20th.
There was no magical FA Cup run this year with AFC Wimbledon exiting both major domestic cups in the first round, having reached the FA Cup fifth round in 2018/19.
Despite the disappointing campaign on the pitch, the opening of its new stadium at Plough Lane brings about a new dawn for the club and much excitement.
AFC Wimbledon saw its revenue fall 19% as a result of the outbreak of COVID-19 and the lack of FA Cup progress, however due to significant grant income and cost cutting measures, AFC Wimbledon recorded a profit before tax of £13m.
A small loss would have been incurred without this grant income, however given the circumstances this appears a good result as the club look to manage its finances following significant expenditure on the new stadium.
Revenue
Overview
Revenue fell 19% due to COVID-19 and the lack of FA Cup progress. With the full effects of COVID-19 felt in 2021, where revenue is likely to fall further.
Matchday & Broadcast
AFC Wimbledon records its matchday and broadcast revenue as one. Combined, these streams fell 23% as the club missed out on four home games following the early curtailment of the season, while a run to the FA Cup fifth round was not replicated in 2020, following a first round exit.
With a full season behind closed doors in 2021, matchday revenue will be non-existent, while the club fared slightly better in the 2021 FA Cup, there will be a drop in revenue which will be difficult for the club to absorb.
Commercial
Commercial revenue was down 11% as the club was unable to effectively activate sponsorship opportunities during COVID-19 and the club’s lack of FA Cup progress played a role too.
Commercial revenue in 2021 is likely to also be impacted by COVID-19.
AFC Wimbledon are not alone in experiencing a significant revenue decline and will need to brace itself for further revenue generation difficulties in 2021 which will make it difficult to remain profitable.
Operating costs
Overview
AFC Wimbledon knew that to fund its new stadium and remain in good financial health, cost cutting measures were necessary.
The club achieved this admirably while retaining its League One status, reducing costs by 21% as they managed its budgets to ensure the club’s financial sustainability.
Wages
AFC Wimbledon ambitiously reduced wages 22% in order to achieve these cost savings, knowing this could severely impact its on-pitch performance. While the club has struggled, it has managed to remain in League One which is the primary goal during this period.
The Dons also reduced its wages to revenue ratio from 80% to 77% in a period where most teams’ ratio has increased, testament to the good job being done off the pitch.
COVID-19 has added a further complication to its budgeting following the stadium construction. The club may look to cut wages further but are aware of the dangers this may have on its relegation prospects.
Other costs
Non-player amortisation and depreciation costs decreased significantly as the club wrote off some fixed assets following its stadium move.
Other operating costs increased 14% to £2.0m as the club incurred stadium related costs.
AFC Wimbledon knows it must manage its cost well to avoid running into financial difficulties that can occur following stadium projects. To date it has done so successfully but will be wary of the financial impact of COVID-19 on its finances.
Transfers
Overview
AFC Wimbledon do not tend to spend significant sums on transfer purchases, relying on the free transfer market and its academy.
The academy has proved fruitful, with players graduating to the first team and playing their part in the club retaining its League One status, but also generating significant sums in the transfer market as larger clubs purchase some of its best talent.
Amortisation
Player amortisation charges fell 17% to £0.12m as the club spent nil on player transfers. This was the case in 2021 as well so it is likely this amortisation charge will fall to zero in the coming years.
Profit on player sales
AFC Wimbledon proudly noted the sale of two of its academy graduates for a profit on player sales of just under £0.5m, with Toby Sibbick (£0.3m) and Castledine (£0.2m to Chelsea) both departed, with the club also noting significant transfer clauses which may pay dividends in the years to come.
The club did not see any significant outgoings in players in 2021, however may still benefit from player transfer clauses should any be activated.
AFC Wimbledon take great pride in its academy which often bears fruit in first team players and transfer fees which assist the club tremendously in reaching its goals. This will remain important as the club looks to manage its financial health.
Profitability
Operating profit / loss before player trading
AFC Wimbledon are a well-run club which has helped put it in a position to build a new stadium with a mixture of external and internal funding. A significant grant to assist its stadium build led the club to a significant operating profit before player trading of £12m (2019: £3.9m).
Without this grant (of £13m), AFC Wimbledon would have been in a slight loss-making position which given the circumstances, was a good result.
Operating profit / loss after player trading
After player trading, the club’s operating profit increased to £13m (2019: £4.0m) as a result of the sales of two of its academy graduates and limited player amortisation charges.
Profit / loss before tax
The picture before tax is relatively similar, with the club having limited financial expenses (which may be due to change – see assets / liabilities).
AFC Wimbledon without its grant income for the stadium build would be loss-making but this is an okay result given COVID-19 and the costs involved in building a stadium. It will now be interesting to see how the club manages its finances with the need to repay the debt element of its stadium financing.
Assets / Liabilities
Overview
As a result of the completion of Plough Lane, AFC Wimbledon saw its net assets increase from £4.4m to £22m.
Cash flow
AFC Wimbledon’s cash reserves were very healthy at June 2020, increasing from £2.5m to £9.9m compared to the same time last year.
Capital expenditure of £14m was offset by the grant income of £13m which saw cash inflows from its operations of £11m compared to outflows of £2.2m in 2019. Player transfer cash inflows of £0.2m contributed little while the club generated financing of £10m of which £5.2m came from ownership, £4.9m in equity financing and £0.2m from banks.
Debt
Debt levels increased significantly but mainly from club ownership (increasing from £0.6m to £5.8m), with minimal bank debt (£0.2m).
The club funded the stadium from a mixture of grant funding, debt funding and equity funding. The club innovatively used crowdfunding to raise £2.3m in equity financing, while also raising £5.3m in ownership funding from a bond raise.
Looking forward the club completed its stadium finance externally agreeing a 10% equity stake in the company which holds the stadium for £2.5m and short-term debt from MSP Capital of £4.1m which will need to be refinanced.
Net debt
With a large portion of the financing being from grants and equity sources, AFC Wimbledon saw its net cash position increase to £3.9m. This is likely to swing into net debt once it refinances the MSP Capital loan.
Final Remarks
AFC Wimbledon has done a great job in building its new stadium and remaining in League One. However, the battle is not over – AFC Wimbledon must now begin repaying its debts which will increase finance costs and mean remaining profitable will be a challenge.
There has been managerial upheaval at the club as they usher in a new dawn which fans will hope will be successful both on and off the pitch
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