Season review
Aston Villa were back in the Premier League for the first time since 2015/16 and were well and truly backed by its ambitious owners, spending a record sum on transfers for a promoted side.
It nearly ended in disaster as the club narrowly avoided relegation in 17th place, but the investment has since begun to pay off with improved performances in the league.
Off the pitch, the club saw a significant rise in revenue to £110m even while being suppressed by COVID-19. This did not result in a profitable year, far from it. Aston Villa recorded an eye-watering £99m loss because of its lavish spending and the financial impact of COVID-19 which have not been kind to its owners’ pockets.
Revenue
Aston Villa more than doubled its revenue from £53m to £110m (110%) as the club began receiving its Premier League riches although subdued due to COVID-19.
Matchday
Matchday revenue fell from £13m to £11m (13%) as the Villains played its final six home games behind closed doors. The club were on course for a matchday rise due to greater attendances however stated that it lost approximately £1.3m in matchday tickets sales and a further £2.7m from season ticket refunds.
Matchday revenue will be close to nil in 2021 with no fans in attendance, leaving an £11m hole in its finances.
Broadcast
Broadcast revenue sky-rocketed from £22m to £78m, with the club seeing a substantial portion of its revenue (£36m) deferred into 2021 due to its year end being 31 May 2020, before the season finished. This will mean that 2021 will be a bumper year for its revenue which will therefore rise significantly.
Aston Villa also shared £6.9m of the Premier League broadcast revenue, with £3.0m deferred into 2021 (a net £33m of broadcast revenue was hence deferred into 2021).
Commercial
Commercial revenue rose from £18m to £22m (22%) following new main sponsor deals with Kappa (£3m, kit), W88 (£6m, shirt) and BR88(£1m, sleeve). Commercial revenue is likely to rise further following the club retaining its Premier League status and improved performance in 2021.
Aston Villa are set to feel close to the full benefit of its return to the Premier League with a full year of broadcast revenue and the addition of the deferred revenue from 2020. There will be a hole left by an empty stadium, however this is more than offset by the rise expected in broadcast revenue.
Operating costs
Aston Villa saw its operating costs fall from £159m to £145m (8%), however this does not paint the full picture with £46m of costs in 2019 being exceptional costs associated with promotion to the Premier League (£30m relates to a promotion payment to former owner Randy Lerner as part of the sale of the club).
Wages
Wages rose from £95m to £109m (15%) following the club’s investments in its playing squad. The 2019 wages were eye-wateringly high for a Championship club and led to an astronomical 181% wages to revenue ratio. This has fallen to a still high 99% but should fall further next season due to revenue rises that will move it closer to a more sustainable level.
With significant playing squad investment again in 2021, wages are likely to grow, but at a lower rate than revenue.
Other operating costs
Aston Villa saw its other operating costs double from £18m to £36m following the higher costs associated with competing in the Premier League.
Aston Villa have a high costs base which makes profitability a challenge without significant revenue rises which following promotion, can only be achieved by competing in Europe which appears its overall aim in the coming years.
Transfers
The Villains returned to the Premier League with a bang, spending a record sum on transfers for a promoted side.
Entering Villa Park were Wesley (£23m), Mings (£20m), Luiz (£15m), Targett (£14m), Konsa (£12m), Nakamba (£11m), Samatta (£9.5m), Trezeguet (£9.0m), El Ghazi (£8.1m), Heaton (£7.9m), Engels (£7.2m), Peleteiro (£4.1m), Hause (£3.1m) and Reina on loan (£0.4m) for a combined £144m.
The only departure was Kodija for £2.7m, resulting in a net transfer spend of £141m. Despite this spend, initial success was hard to come by with the signings proving a mixed bag. Since narrowly avoiding relegation a few of the signings have kicked on and proved to be solid additions.
Amortisation
Player amortisation charges nearly tripled from £26m to £71m following the significant investment in the playing squad. Having invested heavily again ahead of the 2020/21 season, this number will continue to rise.
Profit on player sales
Aston Villa recorded a loss on player sales of £0.4m following the solitary sale of Kodija at a loss, a rare occurrence among clubs. With no major outgoings in the 2020/21 season, this number will have limited impact on the financial results of the club in 2021.
This is however not going to the case for the 2021/22 season…
Transfer debtors / creditors
Following the significant spending, Aston Villa owe £69m in transfer fees to other clubs while only being owed £3.1m, a net creditor position of £66m.
This has not halted investment in the 2020/21 or 2021/22 seasons, although the sale of Jack Grealish will go a long way to balancing its books.
Aston Villa has not returned to the Premier League to make up the numbers, spending large sums to move the club up the table and challenge in the top half.
While this investment does not make for a pretty picture financially at the moment, the long-term hope appears to be to push the club towards Europe and/or recoup larger fees from sales in the coming years from its successful signings.
Profitability
Aston Villa has recorded huge operating losses over the past five seasons totalling £668m before player trading following its devastating relegation from the Premier League and this has not stopped following its promotion.
Operating profit / loss before player trading
2020 saw Aston Villa record an operating loss before player trading of £32m (2019: £55m). It is worth noting that had it not been for COVID-19 and the deferral of its broadcast revenue into 2021, Aston Villa would have recorded an operating profit before player trading.
Operating profit / loss after player trading
Despite this, the heavy spending of the club meant it was nowhere near an operating profit after player trading, recording a huge loss of £100m (2019: £68m). This is not likely to change for the 2020/21 financial accounts following further investment but may do so after the sale of Grealish ahead of the 2021/22 season.
Profit / loss before tax
Aston Villa have limited finance costs and hence, losses before tax were £99m (2019: £69m).
Summary
Aston Villa has recorded cumulative losses before tax of £300m over the past five years in what has been a challenging time financially for the club and required deep pockets to fund these losses from its owners.
At some point its finances will need to be improved and stabilised to avoid an ugly moment where its owners may no longer wish to fund these losses without seeing a return on its investment.
Assets / Liabilities
Aston Villa are heavily reliant on its owners to fund its huge spending and ambitious plans. This was again the case with the owners digging deep into its pockets to fund another year of significant losses.
Cash flow
Cash levels fell from £22m to £13m with Aston Villa’s owners injecting £126m in cash to absorb cash outflows from its operations (£17m), transfers (£108m), and capital expenditure (£11m), with the majority evidently used to fund its transfer spending.
Debt
Despite this huge cash injection, Aston Villa’s debt remains low (increasing to £2.5m) due to the funding being provided via equity which the owner will only be able to realise a return upon by selling the club (or a stake in it) in the future.
Net debt
Aston Villa are therefore in a net cash position of £11m due to its limited owner debt and having no external debt financing either and with minimal debt, the main risk is therefore the owners no longer wishing to fund the losses of the club, which does not appear to be an issue.
Final Remarks
Aston Villa are an ambitious club with ambitious owners, looking to get back to its position in the late 2000s. The owner has so far backed the club significantly, providing over £230m in funding in the last two years.
While he is starting see the dividends of this investment, there is still a long way to go until the club is consistently competing for European places in the Premier League.
A word of caution: While the owners are willing and evidently backing the club now, Aston Villa will want to get to a more financially stable position to reduce the risk of financial troubles should the owners purse slam shut.
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