Season review
Ajax won its third successive Eredivisie league title in 2020/21. The club completed a domestic double by triumphing in the KNVB Cup too.
While Ajax was successfully domestically, the club failed to reach the UEFA Champions League (UCL) knockout stages for the second successive season.
Financially, Ajax recorded a loss (€12m before tax) for the first time since 2016 as it dealt with the financial ramifications of COVID-19 and the lack of fans throughout the season.
This article analyses the 2021 finances of Ajax.
Revenue
Ajax felt the full financial impact of COVID-19 in 2021. Revenue fell from €162m to €125m (23%), largely due to the lack of fans at the stadium.
Matchday
Matchday revenue fell from €26.2m to €1.2m (95%) as games were played behind closed doors.
With restrictions still in place in the Netherlands in 2021, matchday revenue will not fully recover until next season.
Broadcast
Broadcast revenue fell from €73m to €58m (20%). In an act of solidarity with Dutch football, Ajax agreed to pay €3m of its UEFA distributions to the Eredivisie for redistribution among the Dutch football pyramid. This was in keeping with its choice not to engage in European Super League discussions with its European peers.
In addition, Ajax suffered a fall in its UEFA ranking. This led to reduced distributions from UEFA for its participation in the UCL and UEFA Europa League (UEL).
With the club top of its UCL group after three games and three wins, qualification for the knockout rounds will have a sizeable boost on its broadcast revenue if achieved.
Commercial
Commercial revenue increased from €63m to €66m (4%). This doesn’t tell the full story as this includes COVID-19 aid received which if not included would result in a decline.
The decline in ‘actual’ commercial revenue is driven by compensation paid to partners due to no fans at stadium etc.
Ajax did however negotiate an extension to its Ziggo deal on improved terms which will boost commercial revenue going forward.
Ajax is likely to see revenue rise following the return of fans to the Johan Cruijff ArenA. The size of this rise will be dependent on success in the UCL. Qualification for the knockout phase alone could net Ajax more than €10m in broadcast revenue.
Operating costs
Despite falling revenue, operating costs (specifically wages) are largely fixed. As a result Ajax saw its operating costs increase 4% to €158m, hurting profitability.
Wages
Ajax’s wage bill remained relatively flat, increasing 3% to €95m. This saw the club’s wages to revenue ratio increase from 57% to 76%.
UEFA recommend a maximum ratio of 70% as financially sustainable which Ajax is still in the region of despite COVID-19. This cannot be said for a lot of clubs so should not be a worry.
Other costs
Other costs fell from €73m to €64m (12%) as competition related costs fell.
Ajax cost control is good and therefore it is unlikely operating losses will spiral despite COVID-19’s impact on revenue. While costs may rise this year, revenue growth is likely to outpace this and improved profitability.
Transfers
Ajax was busy as usual in the transfer market as it once again received significant sums for its talent.
In came Haller (€22.5m), Antony (€15.8m), Klaassen (€11.7m), Kudus (€9.0m) and Klaiber (€4.3m) for a combined €63m.
Departing the Johan Cruijff ArenA were Ziyech (€40m), Van De Beek (€39m), Dest (€21m), Promes (€8.5m) and Veltman (€1.0m) for a total of €110m. Ajax therefore had a net transfer income of €46m.
Amortisation
Player amortisation charges rose from €53m to €61m (15%) following spending in the year. Lower spending in 2021/22 will likely see these charges fall.
Profit on player sales
Ajax had another strong player trading year, recording a profit on player sales of €86m (2020: €85m).
This was a success especially when considering the timing. It is however a different story so far in 2021/22 with sales to date being low. Edwin Van Der Sar acknowledged this and warned it could have a significant impact on profitability at the end of the year.
Transfer debtors / creditors
Ajax is unsurprisingly a net transfer debtor, being owed more in transfer fees than it owes other clubs. In 2021, Ajax was owed €116m in transfer fees while only owing €39m, a net debtor position of €77m. Cash flow will not be a problem!
Transfer sales are a significant part of the business model operated by Ajax. The fact it has not been as lucrative in the current season will hence have a sizeable impact on profitability. This is however likely only a short term issue with the squad still containing valuable talent that will be realised in due course.
Profitability
The impact of COVID-19 saw Ajax record its first loss since 2016.
Operating profit / loss before player trading
Before player trading, operating losses rose from €3.1m to €33.2m due to a €37m drop in revenue. With revenue likely to rise in 2021/22, this situation will be improved but likely still loss-making.
Operating profit / loss after player trading
After player trading, while losses improved, player trading could not prevent Ajax seeing a €28.8m profit turn into a €7.6m loss. This is despite similar player trading results in both years with the loss almost entirely due to the revenue reduction.
With player trading nowhere near as strong as the past two years, unless the club has a particular strong winter transfer window losses will rise.
Profit / loss before tax
Ajax recorded a €12m loss before tax (2020: €27m profit) due to net finance costs of €4.1m.
Final Remarks
A first loss since 2016 is bruising for Ajax however a return to profitability will occur in the near future. When is the question and if it is to happen this season Ajax will need a strong winter transfer window and UCL campaign. It is clear that this two things clash with a sale of its top talent reducing the chances of a strong campaign in the knockout rounds, however just qualification to the knockouts before Christmas will be a boost. We shall see…
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