Season review
Bologna competed in its sixth successive season in Serie A in 2020/21. The season mirrored its predecessor, with the club finishing 12th and exiting at the fourth round stage of Coppa Italia.
Bologna has firmly consolidated its status as a mid-table club in recent season and will be hoping to push on and reach the top half going forward.
From a financial perspective, it was another tough year as the club recorded a loss of €30m, taking losses to €70m since the outbreak of COVID-19.
This article analyses the 2021 finances of Bologna.
Revenue
Bologna saw its revenue increase from €50m to €72m (44%) as revenue deferred from the 2019/20 season was recognised.
The club also recorded other income of €4.1m (2020: €2.5m) which includes grants and rental income among other smaller items.
Matchday
Bologna recognised no matchday revenue in 2021 as all games were played behind closed doors. A return of fans in 2021/22 will see this figure increase towards its previous €5m mark.
Broadcast
Bologna has a year end of 30th June and therefore, games played after 30th June 2020 in respect of the 2019/20 season were recognised in 2021.
This amounts to 10 games and is the main driver of broadcast revenue rising from €34m to €63m (85%). Broadcast revenue is therefore likely to fall in 2022 due to no such carry over being present.
Commercial
Commercial revenue fell from €11.5m to €9.3m (19%) due to a season behind closed doors. Bologna will be hoping the return of fans will help boost this number as they look to expand commercially.
Bologna saw a boom in revenue as a result of the 2019/20 revenue deferred into 2021. It is worth reviewing the two years together, where average revenue was €61m, a similar level to 2019. The return of fans and ‘normalcy’ may lead to further revenue growth, particularly via matchday revenue.
Operating costs
Bologna’s operating costs growth was much lower than its revenue growth, improving profitability. Operating costs grew from €71m to €76m (7%).
Wages
Bologna saw its wage bill rise from €51m to €58m (12%). This was partly driven by players waiving a month of salary in 2020 to aid the club. In addition, players agreed to defer some of their wages into 2021 which also influenced the level of wages.
As a result of the significant revenue growth, Bologna’s wages to revenue ratio fell to 80%, which is still slightly above UEFA recommendations (70%). Bologna will be conscious that revenue is likely to fall in 2022 and therefore its wages to revenue may creep back towards 100%.
Other costs
Other operating costs remained relatively flat at €18m.
Bologna will have to manage its costs in line with its normal levels of revenue to avoid incurring significant losses going forward. With wages being the main driver of its costs, it will be a challenging balance between its wage bill and performance on the pitch.
Transfers
Bologna was a victim of the more subdued transfer market ahead of the 2020/21 season. Clubs in general approached the market with caution with transfer activity significantly reduced overall. Bologna purchased Hickey (€1.7m), Vergani (loan – €0.8m), Antov (loan – €0.2m), Soumaora (loan – €0.2m), Breza (€0.2m) and Binks (€0.1m) for a combined €3.2m.
Mattia Bani (€5m) was the only departure for a transfer fee. Bologna therefore recorded a net transfer income of €1.9m.
Amortisation
Player amortisation charges fell from €36m to €31m (13%) as a result of lower transfer purchases as the club faced the financial reality of the pandemic.
Increased spending in 2021/22 to date will likely see this figure rise.
Profit on player sales
Bologna recorded a profit on player sales of only €1.4m, down from €16.4m in 2020.
The significant sale of Tomiyasu to Arsenal on transfer deadline day will see Bologna’s profit on player sales significantly higher in 2022.
Transfer debtors / creditors
Bologna was a Modest net transfer creditor, owing more in transfer fees than it is owed by other clubs. In 2021, Bologna owed €5.5m in transfer fees while being owed a similar amount of €4.7m, a net creditor position of €0.8m.
The main receivables relate to amounts owed by Rangers and Bristol City.
This may be slightly more pronounced in 2022 following transfer activity to date in 2021/22.
Bologna typically generates double digit profit on player sales, averaging €18m in the preceding three seasons. The quieter transfer market put a stop to that and contributed to the losses incurred in the year.
Profitability
Bologna has incurred cumulative losses (before tax) of €89m in the last three seasons as it deals with rising costs and the impact of COVID-19.
Operating profit / loss before player trading
Before player trading, Bologna broke even, recording a profit of €0.02m (2020: €19m loss). This was driven by the rise in revenue as a result of deferred 2019/20 revenue and therefore Bologna is likely to return to a loss-making position in 2022.
Operating profit / loss after player trading
Bologna recorded a loss of €29m (2020: €37m) after player trading as subdued trading conditions damaged profitability. While higher player sales are anticipated in 2021/22, this will merely offset the fall in revenue and overall profitability is unlikely to improve.
Profit / loss before tax
Bologna recorded a loss before tax of €31m (2020: €39m) after net finance costs of €1.1m.
Bologna is a loss-making club and its investment in the playing squad has resulted in losses rising considerably in the last few years. The Club will continue to require external funding whilst operating in its current manner.
Assets / Liabilities
Bologna operates as a loss-making club and therefore requires funding to continue operating, with the majority coming via bank debt and shareholder capital injections.
Cash flow
The reserves of Bologna increased significantly in 2021, rising from €2.8m to €12.1m. Cash outflows from player transfers (€22.4m) and capital expenditure (€2.5m) were swallowed by cash inflows from operations (€4.9m), other investing activities (€2.2m) and financing support (€27.1m).
This financing support came from a new capital injection (not included as debt) from its owners of €17m, a €5m shareholder loan and new bank debt of €12m, with some debt being repaid during the year.
Debt
As a result, debt levels rose from €18m to €28m, with club requiring additional support to operate.
Net debt
Bologna’s net debt hence rose slightly from €15m to €16m.
Final Remarks
Bologna will be hoping to become a more financially sustainable club with the club currently operating at significant losses. Whilst this is partly driven by COVID-19, losses were already starting to rise in 2019 with the pandemic worsening the issue. As Bologna strive for a top half position, financial sustainable should also be high on the priority list.
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