Season review
Bristol City celebrated its 125th anniversary in the most peculiar of years. The club was aiming for a play-off challenge in its fifth consecutive season in the EFL Championship.
After a strong first half to the season, its challenge fell away following the resumption of the season and a 12th placed finish was achieved.
There were no positives in the cups following early exits compared to runs to the FA Cup fifth round and League Cup semi-finals across the past two seasons.
Despite strong player sales, Bristol City returned to a loss-making) as the impact of COVID-19 was felt.
This article analyses the 2020 finances of Bristol City.
Revenue
Bristol City’s revenue declined from £30.3m to £27.2m (10%) as it started to feel the financial impact of the pandemic.
Matchday
Matchday revenue fell from £6.0m to £4.8m (21%) as five home games were played without fans. With the 2020/21 season played behind closed doors, Bristol City will likely see minimal matchday revenue in 2021.
Broadcast
Broadcast revenue rose from £8.1m to £8.6m (6%). This was despite worsened league and cup performance. This is likely due to a combination of TV appearances, Premier League solidarity payments and the success of the EFL iFollow platform.
Commercial
Bristol City saw its commercial revenue fall from £16.1m to £13.9m (14%). This is largely due to need to compensate its commercial partners as a result of its inability to meet contractual obligations during the pandemic.
With Bristol City agreeing a new kit partner (Hummel) and shirt sponsor (MansionBet) from the 2020/21 season, the club may see its commercial revenue rise.
Bristol City can expect revenue to decline further in 2020/21 as it deals with the fallout of COVID-19. The lack of fans at Ashton Gate will be heavily felt both on and off the pitch.
Operating costs
Bristol City like many clubs suffered from revenue declining but have a relatively fixed (specifically wages) cost base. Operating costs rose from £44.9m to £51.4m (14%), hurting profitability as revenue fell.
Wages
Bristol City’s wage bill rose from £30.9m to £33.5m (9%) as it invested in its playing squad. You will notice its wages to revenue ratio now stands at 123%. This means Bristol City is already loss-making after deducting just wages from revenue, before taking into account any other costs. This results in a dependency on ownership funding which is not particularly financial sustainable.
Other costs
Other operating costs rose from £14.2m to £18.0m (27%). Bristol City provide little information on the reason for this rise.
Bristol City, like many Championship clubs, are loss-making as a result of high-cost bases (wages) that exceed its revenue. This creates a reliance on ownership funding which can cause issues should the owners willingness to fund wane. With revenue likely to decline again, Bristol City will likely need to find a way to reduce its costs to some extent.
Transfers
Bristol City had a busy season from a transfer perspective. The Robins agreed the club sale of Adam Webster to Brighton for £20m. In addition, the club sold Kelly (£13.3m), Brownhill (£9m), Eisa (£0.8m) and Pack (£0.7m) for a total of £43.9m.
This was largely reinvested as Kalas (£8.1m), Massengo (£7.2m), Wells (£4.3m), Palmer (£3.4m), Dasilva (£2.2m), Bentley (£2.0m), Nagy (£1.8m) and Szmodics (£0.7m) arrived at Ashton Gate for a combined £30m.
Bristol City hence recorded a net transfer income of £13.9m as it looked to challenge for promotion.
Amortisation
Player amortisation charges rose from £11.1m to £11.7m (5%) following increased investment. Lower investment in 2021 will likely see this number fall.
Profit on player sales
Profit on player sales fell from £38.2m to a still impressive £25.6m (33%). This is largely due to the timing of the Lloyd Kelly sale which was recognised by Bristol City in 2019. This drop in profit is however the major reason for a return to a loss. With subdued transfer activity in 2021, Bristol City will see an even larger decline in profit on player sales and profitability overall.
Transfer debtors / creditors
Bristol City is unsurprisingly a net transfer debtor, being owed more in transfer fees than it owes other clubs. The Robins are owed £27.2m in transfer fees and only owe £5.5m, a net debtor position of £21.7m.
Bristol City has been very successful in the last couple of seasons in the transfer market. COVID-19 and the more cautious approach operated by clubs during the pandemic has resulted in lower player sales and value. Bristol City has been a victim of this, and significantly lower player sales will have a huge financial impact on its finances in 2021.
Profitability
Bristol City was loss making again in 2020 after breaking a long streak of losses with a profitable 2019 season.
Operating profit / loss before player trading
Before player trading, Bristol City saw its losses grow from £14.1m to £22.5m (67%) as the impact of COVID-19 was felt. With revenue likely to fall again in 2021, it is likely losses will rise unless significant cost cutting measures are actioned.
Operating profit / loss after player trading
After player trading, significant player sales in 2019 saw a profit of £12.3m recorded. Despite significant player sales in 2020, a loss of £9.1m was recognised as the club could not offset its operating losses.
With much lower player sales in 2021, this will only get worse.
Profit / loss before tax
A £10.1m loss was recorded before tax due to £1.0m in net finance costs.
Bristol City is in for a tough 2021 as losses rise due to lower player sales and the continued impact of COVID-19. This likely to mean significant support is required from its owners.
Assets / Liabilities
Bristol City had a very similar year to 2019 from a balance sheet perspective.
Cash flow
Cash levels rose from £0.3m to £0.8m. Outflows from operations of £11.1m and capital expenditure of £1.4m were offset by player transfer cash inflows pf £6.5m and equity financing from its owners of £8.6m.
Debt
Debt levels remained relatively similar, increasing from £72.4m to £73.8m. Stephen Lansdown refinanced a £50m bank loan with ownership debt in addition to the equity financing of £8.6m. This shows the continued financial commitment by one of the richest men in Britain.
Net debt
Net debt now stands at £73m and may increase following the significant losses I anticipate in 2021. Either through equity or debt there is likely to be a need for financial support, although outstanding transfer receipts of £27m to be received may be enough.
Final Remarks
Bristol City has enjoyed lucrative transfer windows in recent times. This has offset its losses to a large extent but following the financial impact of the pandemic this is not currently the case. The club will need to review its cost base and may need to make changes if it is to become more financially sustainable. At the moment, it does however seem in safe hands with its long-standing owners and their support.
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