This article analyses AZ Alkmaar finances in respect of the 2020/21 season.
Season review
AZ Alkmaar competed in its 23rd successive season in the Eredivisie in 2020/21. It was a relatively average season for the club, with AZ finishing 3rd in the league. Domestically, Ajax proved too strong in the league and the cup, knocking AZ out in the round of 16. The club struggled in Europe too, failing to qualify for the UEFA Champions League (UCL) group stage. It did not fare much better in the UEFA Europa League (UEL), exiting at the group stage.
AZ Alkmaar finances were hit hard by the pandemic and the loss of matchday revenue. The club recorded its first loss since 2015, although a relatively unconcerning €1.1m.
AZ Alkmaar Finances – Revenue
AZ’s revenue declined from €30.6m to €21.8m (29%) as playing behind closed doors hurt the club. Other income more than halved from €11.0m to €4.3m (61%). This was largely due to 2020 including €10m of insurance payouts for the roof damage that occurred.
Total income therefore fell from €41.6m to €26.1m (37%), hurting profitability significantly.
Matchday & Broadcast
AZ Alkmaar record some of its matchday and broadcast revenue together, and therefore we have recorded this as one income stream. This revenue stream declined from €20.9m to €15.4m (26%), largely due to games behind closed doors.
The return of fans should help boost this number, however the club’s participation in the UEFA Europa Conference League (UECL) may see UEFA distributions fall unless the club reach the latter rounds of the competition.
Commercial
Commercial revenue fell from €9.7m to €6.3m (35%) as games being played behind closed doors impacted commercial opportunities. The return of fans should help boost this revenue stream in 2022.
AZ Alkmaar Finances – Revenue summary
AZ’s revenue was hard hit by the loss of matchday revenue. Some of this should be recovered in 2022, however the club risks another year of revenue in the €22m range following failure to progress in the UEL. A poor season so far in the league risks further revenue declines in 2023 if it misses out on Europe entirely.
AZ Alkmaar Finances – Operating costs
Operating costs fell from €40.6m to €28.6m (30%) as AZ managed to reduce its operating costs in-line with its revenue to mitigate the profitability impact of the revenue reduction.
Wages
AZ Alkmaar’s wage bill fell from €21.5m to €16.2m (25%). This was due to government subsidy support (NOW) which was deducted from wages. This may not be available in 2022 and therefore wages could increase significantly.
The wages to revenue ratio of 74% is only slightly above the recommended maximum stated by UEFA of 70%. Therefore, wages should not be considered a problem for the current revenue profile of AZ.
Other costs
Other operating costs fell from €19.1m to €12.4m. This was largely due to matchday costs savings from games being without spectators.
AZ Alkmaar Finances – Operating costs summary
The reduction in operating costs was required to avoid a large loss. However, a large portion of this reduction was achieved by government subsidy and therefore the club will need to review its costs again to avoid operating losses accumulating.
AZ Alkmaar Finances – Transfers
It was a quieter transfer market for most than usual, and AZ was no different. The only major transfer in recorded was Karlsson for €2.6m. Departing the club were Idrissi (€12m) and Mihalik (€0.9m) for a combined €12.9m. This resulted in a net transfer spend of €10.3m.
Amortisation
Player amortisation charges fell from €6.5m to €6.2m (5%) on the back of this limited investment. Increased investment in 2021/22 to date should see this figure rise slightly.
Profit on player sales
AZ Alkmaar recorded a profit on player sales of €8.2m, down from €13.3m in 2020. This decline contributed to the small loss recorded, highlighting the importance of sales to AZ’s business model. The significant sales in 2021/22 of Boadu, Stengs and Koopmeiners will be a huge financial boost which should lead to a large 2022 profit.
AZ Alkmaar Finances – Transfers summary
Billy Beane, the famous Moneyball executive is a minority shareholder of AZ Alkmaar. It is therefore no surprise that player trading is a core part of AZ’s business model, contributing hugely to its finances. The club strives to develop and spot talent. Reduced sales were hence a cause of its 2021 loss; however, the sale of Boadu, Stengs and Koopmeiners will more than reverse this.
AZ Alkmaar Finances – Profitability
AZ Alkmaar recorded its first loss since 2015. However, it was only €1.1m and is due to be short-lived, with a bumper 2022 expected following player sales.
Operating profit / loss before player trading
Before player trading, AZ Alkmaar recorded an operating loss of €2.5m. This compares to a €1.0m operating profit in 2020. This was largely driven by the absence of its 2020 insurance payout and the loss of matchday revenue.
With revenue not anticipated to grow significantly more than costs in 2022, it appears unlikely a operating profit (before player trading) will be achieved.
Operating profit / loss after player trading
After player trading, AZ recorded an operating loss of €0.2m. This compares to an operating profit of €8.1m in 2020. The higher player sales in 2020 were the major reason for this.
With player sales significant in 2021/22, AZ is likely to record a large operating profit (after player trading).
Profit / loss before tax
Net finance costs of €0.9m resulted in a loss before tax of €1.1m. This compares to a profit before tax of €7.7m in 2020.
The significant sales will likely see AZ record a substantial profit in 2022 of at least €20m.
AZ Alkmaar Finances – Profitability summary
AZ Alkmaar has typically run as a profitable operation, with this being its first loss since 2015. A combined profit over the past two years, despite the challenges faced is testament to this. The sales of Boadu, Stengs and Koopmeiners will result in a significant profit which may rival some of the largest in its history.
AZ Alkmaar Finances – Assets / Liabilities
The roof damage that occurred in 2020, combined with worse trading conditions meant the club required external funding.
Cash flow
AZ Alkmaar’s cash reserves fell from €13.0m to €6.7m. This was largely a result of a major cash outflow of €20.4m in respect of capital expenditure. In addition, AZ incurred cash outflows from operations of €4.9m. This was funded by cash inflows from player transfers (€9.7m) and financing (€9.3m).
While the club did receive an insurance payout of €10m, the cost of the roof repairs appears to have exceed this. AZ Alkmaar also took it as an opportunity to improve facilities and increase capacity.
Debt
AZ Alkmaar’s debt rose from €9.8m to €18.4m. The club took out new loans to fund the stadium repairs and improvements, while also helping with its cash flow in the short term.
The sales of Boadu, Stengs and Koopmeiners will make repayments comfortable, however there will be calls from fans to reinvest a significant chunk of this in the squad given current domestic struggles.
Net debt
Therefore, net debt now stands at €11.7m, a €14.9m swing from a net cash position of €3.2m in 2020.
AZ Alkmaar Finances – Final Remarks
AZ Alkmaar appears a very well-run club, spending within its means and frequently profitable. The big sales in 2021/22 will lead to a major profit in 2022. However, it highlights the balance between financial health and sporting performance with the sale of these key players contributing to its poor form in 2021/22. AZ will likely need to reinvest or hope for improved performance, both domestically and in Europe. Such improvements would lead to revenue increases which would reduce the need for future sales.
Thanks for reading our article, for a FREE summary of the key data from AZ Alkmaar’s 2021 finances, please click the button below.
We would also love to hear any feedback on this article, our website or if you would like to contribute! Please use the form below and have a great day.
