This article analyses Sporting CP finances in respect of the 2020/21 season.
Season review
Sporting CP enjoyed its finest season in recent memory in 2020/21. Having endured a disappointing 2019/20, the club completed a domestic double, winning the league for the first time since 2002.
The only blemish on a triumphant season was a poor European campaign, exiting in the qualifiers. While this is easily forgiven by fans following the historic title win, its financial impact was stark. Sporting CP incurred its third loss in four years, driven by the loss of matchday revenue, poor European performance, but mostly due to lower player sales.
Sporting CP Finances – Revenue
Revenue fell from €66m to €57m (13%) as the club lost almost all its matchday revenue. Sporting CP did however see its other income rise from €1.6m to €6.9m following the sale of its car park business at the Estádio José Alvalade. Who knew car parks could be so lucrative!
This meant that while revenue was down, total income only fell 5% to €64m.
Matchday
Matchday revenue was virtually non-existent, plummeting from €12.5m to €1m (92%). The return of fans in greater numbers (still restrictions) means that a significant chunk of matchday revenue should be recovered in 2022.
Broadcast
Broadcast revenue remained relatively stable, increasing from €30m to €31m. This was due to counteracting effects of a steep decline in UEFA distributions from €9.1m to €0.3m after failing to reach the UEFA Europa League (UEL) group stage. This was balanced by €4.2m of revenue from the 2019/20 Primeira Liga season being recorded in the 2021 financial year. This is due to the end of the 2019/20 season falling into July, with Sporting’s 2020 financial year ending in June. Sporting CP also benefitted from a €5m increase in domestic television rights. This was driven by a contractual increase rather than its title win.
Sporting CP will see a major boost in its broadcast revenue in 2022. The club qualified for the UEFA Champions League (UCL) knockout phases, guarantee the club over €35m in revenue from UEFA distributions already, compared to the €0.3m secured in 2021. A last 16 draw against Manchester City will be a challenging task but financially the club has already made bank.
Commercial
Commercial revenue rose from €23m to €26m (14%), likely due to bonuses for its domestic success. Its 2021/22 UCL success may also lead to bonuses, while new deals with Betano and Nike will also drive growth.
Sporting CP Finances – Revenue summary
Sporting CP missed its fans in 2021 as did all clubs, especially as it limited celebrations of its historic title win in its stadium. Revenue was hit hard by this and a poor UEL campaign, however the return of fans and a successful UCL campaign will see revenue rise to over €100m, possibly to its highest ever levels.
Sporting CP Finances – Operating costs
Operating costs fell from €107m to €92m (14%) as it reduced its costs in-line with falling revenue, slightly improving operating profitability in the process.
Wages
Sporting CP’s wage bill remained relatively flat, rising from €61m to €62m (2%). This was however driven by €2.5m in bonuses for winning the league. The club has estimated that UCL bonuses in 2022 will be at least €3.5m, highlighting the incentive for success.
Sporting CP’s wages to revenue ratio hit 109%, meaning it is spending more in its wages than the revenue it is generating. This is however driven by the loss of matchday revenue and with that returning in 2022 and the UCL financial boost, the wages to revenue ratio should look a lot healthier in 2022.
Other costs
Other operating costs fell from €47m to €30m, driven by matchday savings. It is also due to the settlement of its dispute with Sinisa Mihajlovic who had a very short tenure at the club, and it was found that payment was due by the club for all of his contract. These costs were in 2020 and are not present in 2021.
Sporting CP Finances – Operating costs summary
Sporting CP will be pleased with its cost management in a financially challenging year for all. With revenue rising significantly in 2022, cost management may not be as high a priority however the club will want to stay level-headed to help achieve a profitable year.
Sporting CP Finances – Transfers
Sporting CP relies on transfer sales as part of its business model and were affected more than most by poor selling conditions. The absence of a Bruno-sized sale was evident in its bottom line, almost entirely explaining the large loss incurred.
Sporting signed Paulinho (€16m), Goncalves (€6.5m), Tabata (€5m), Feddal (€3.8m) and Santos (€3.8m) for a combined €35m. Departing the club were Wendel (€20m), Acuna (€11m), Pereira (€8.3m), Vietto (€3.5m), Borja (€3m), Ristovski (€1m) and Rosier (Loan – €0.2m) for a combined €48m. This led to a net transfer income of €13m.
Amortisation
Player amortisation charges rose from €23m to €25m following investment in the playing squad. Lower investment to date in 2021/22 may see this figure fall slightly.
Profit on player sales
Sporting saw a profit on player sales of €89m in 2020 reduce to only €28m (69%). It was also going to be a challenge to replicate the Bruno sale in 2021. This €61m reduction in profit on player sales is the main reason for a profit of €12m swinging to a loss of €34m.
An even quieter 2021/22 to date will mean a minimal financial boost from player sales.
Transfer debtors / creditors
Sporting CP is a net transfer creditor, owing more to clubs (and agents) than it is owed in transfer fees. The club owe a large €70m in transfer fees while only being owed €9.6m, a net transfer creditor position of €60m. This may explain the low spending in recent years. Of this €70m creditor balance, over half (€37m) is owed to agents, highlighting the interesting ownership models operated in Portugal. The largest balance owed to a club is Braga at €8.4m.
Sporting CP Finances – Transfers summary
Player trading is a core part of Sporting’s business model, contributing hugely to its finances. The club is a talent hub, and the club are excellent at developing and spotting talent. However, reduced sales in the past two seasons will cause a hole in its finances for 2022 which the club will be hoping its UCL success fills.
Sporting CP Finances – Profitability
Profits have been hard to come by for Sporting CP in recent years due to inconsistent European performance and player sales. 2021 was no different.
Operating profit / loss before player trading
Before player trading, operating losses improved from €40m to €28m (30%) due to successful cost management to mitigate revenue decreases. Boosted broadcast revenue from its UCL campaign could see the club reach break-even in 2022.
Operating profit / loss after player trading
After player trading, a profit of €27m turned into a €25m loss as Bruno Fernandes saved the day in 2020. With this marquee transfer not replicated in the last two seasons, it is likely the losses after player trading will remain, albeit likely smaller in 2022 due to UCL revenue.
Profit / loss before tax
Sporting CP recorded a loss of €34m before tax due to finance costs of €10m. This compares to a €12m profit in 2020.
Sporting CP Finances – Profitability summary
UCL performance is going to be crucial to profitability in the next couple of years for the club unless a significant player sale is achieved. This season should result in reduced losses and may even result in a profit if costs are managed well and/or the club achieves some player sales in the winter transfer window.
Sporting CP Finances – Assets / Liabilities
Despite the losses incurred, the club did not require any additional funding to operate.
Cash flow
Sporting CP’s cash reserves fell from €15m to €10m as the club saw minor outflows across its core operations (€0.7m), capital expenditure (€2.3m) and financing (€5.3m). This was partly offset by a €2.3m inflow on player transfers.
Debt
Sporting CP’s debt as at 30 June 2021 stood at €156m, up from €151m. This was largely due to accrued interest costs.
Nearly half (€66m) of this debt relates to transfer fee factoring. This is due to Sporting getting cash advances on transfer fees owed (i.e. Bruno Fernandes) from a third party. The remaining balance relates to bank financing (€37m), a bond issue (€25m), related party debts (€18m) and leases (€8m).
Sporting will want to reduce this debt as it is currently costing the club on average around €11m p.a.
Net debt
Net debt now stands at €146m, up from €136m.
Sporting CP Finances – Final Remarks
Sporting CP is looking forward to a huge financial year following its UCL exploits. This marks a couple of successful sporting years for the club that it will be hoping sees a return to profitability. This will however be predicated on cost management and any additional player sales in 2022.
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