This article analyses FC Midtjylland finances in respect of the 2020/21 season.
Season review
The 2020/21 season was a historic season for FC Midtjylland. The club participated in the UEFA Champions League (UCL) group stages for the first time in its history.
Domestically, FC Midtjylland were unable to retain its Danish Superliga crown, finishing second in the league. The club’s Danish Cup campaign ended at the semi-finals stage, concluding a trophyless season.
FC Midtjylland finances were heavily boosted by its UCL campaign and despite no fans, recorded a DKK 25m (€3.4m) profit.
FC Midtjylland Finances – Gross profit
Unfortunately, FC Midtjylland does not disclose its revenue figures, instead, providing gross profit. This is its revenue, less some direct costs. This therefore makes comparisons a bit trickier, however as it is consistent across years it is still useful to analyse.
Gross profit rose from DKK 124m (€28m) to DKK 208m (€17m) (67%) as the club benefitted from its UCL participation.
Matchday
Matchday revenue would have been minimal due to games behind closed doors. With fans returning this should recover to a large extent, offsetting some of the lost UCL revenue (see below).
Broadcast
Broadcast revenue was the main driver of revenue growth in 2021, with the club competing in the group stages of the UCL for the first time in its history. FC Midtjylland exited at the UEFA Europa League (UEL) qualifiers stage in 2019/20, receiving minimal distributions. Just entering the UCL group stages generated €15m in revenue for the club, more than half of its 2021 gross profit. Failure to qualify for the 2021/22 UCL group stages will hence have a huge impact on its revenue (and gross profit). FC Midtjylland has qualified for the UEFA Europa Conference League (UECL) knockout phases; however, this competition is significantly less lucrative than the UCL and even UEL.
Commercial
The club has had the same main sponsors in Nike and Arbejdernes Landsbank for the past few seasons and therefore commercial growth is likely limited. UCL qualification may have resulted in bonuses which would have boosted commercial revenue.
FC Midtjylland Finances – Gross profit summary
UCL qualification was game changing financially for FC Midtjylland and it will be hoping to return to the competition this season by winning the league and its UCL qualifiers next season. The return of fans in 2021/22 will absorb some of the lost revenue however it pales in comparison to the riches on offer in the UCL.
FC Midtjylland Finances – Operating costs
Operating costs rose from DKK 106m (€20.3m) to DKK 151m (€14.3m) (42%) as it prepared for the UCL. This rise in costs was lower than its gross profit increase and therefore profitability rose significantly.
Please note that gross profit includes some costs and therefore operating costs is understated compared to other clubs we analyse.
Wages
FC Midtjylland’s wage bill was the main driver of rising costs. Wages rose from DKK 103m (€13.8m) to DKK 148m (€19.9m) (42%). This was driven by investment in new players and bonuses for UCL qualification and winning the league in 2019/20. These costs are likely to fall in 2022 because of a trophyless season.
Given that revenue is not disclosed, a wages to revenue ratio is unavailable. However, the wages to gross profit ratio of 71% indicates a wages to revenue ratio even lower than this. UEFA recommend a wages to revenue ratio of less than 70%, and therefore FC Midtjylland is well below that figure.
Other costs
The majority of other operating costs is included within gross profit apart from non-player depreciation and amortisation. This fell from DKK 3.1m (€0.4m) to DKK 2.6m (€0.4m) (16%).
FC Midtjylland Finances – Operating costs summary
Operating costs are likely to fall in 2022 as FC Midtjylland see a steep decline in revenue without UCL football.
FC Midtjylland Finances – Transfers
It was a relatively quiet transfer window for FC Midtjylland in 2020/21. In came Sisto (€2.5m) and Pfeiffer (€1.5m) for a combined €4.0m (DKK 30m). Departing the club were Dovbyk (€0.5m) and Schwartz (€0.2m) for a combined €0.7m (DKK 5m). This led to a net transfer spend of €3.3m (DKK 25m).
Amortisation
Player amortisation charges rose from DKK 37m (€m) to DKK 44m (€m) (19%). Further investment in 2021/22 to date will see this number rise further.
Profit on player sales
Unfortunately, FC Midtjylland include profit on player sales within its gross profit figure. The sales of Onyeka and Dreyer were significant and will boost its finances in 2022, given minimal sales in 2020/21. This will help fill the financial hole left by its UCL absence.
Transfer debtors / creditors
FC Midtjylland is a net transfer debtor, being owed more in transfer fees than it owes. The club is owed DKK 81m (€11m). The club has included all its trade payables together, however this totals DKK 78m (€11m) which is still below transfer debtors. The net transfer debtor figure is likely to be larger in 2022 following the significant player sales.
FC Midtjylland Finances – Transfers summary
FC Midtjylland is a well-run club that often utilise the transfer market to boost its finances. Player sales hence form a critical part of its business model and the recent sales of Onyeka and Dreyer will be a timely financial boost given no UCL football in 2021/22. UCL group stage participation is worth a minimum of €15m so the player sales of c.€22m will more than cover this shortfall.
FC Midtjylland Finances – Profitability
FC Midtjylland immediately bounced back from the 2020 financial loss as UCL football paid dividends.
Operating profit / loss after player trading
Usually, we look to separate operating profit before and after player trading. Unfortunately, as mentioned player sales income is included in gross profit, making this challenging.
After player trading, a loss of DKK 20m (€2.5m) turned into a profit of DKK 13m (€1.7m). This profit is entirely due to UCL football with player sales at a minimum in 2021.
In 2022, operating profits are likely to be much smaller before player trading due to no UCL football. However, operating profits after player trading may in fact grow given the significant sales in 2021/22.
Profit / loss before tax
The club has minimal finance costs and therefore the profit before tax was DKK 13m (€1.7m). This compares to a DKK 20m (€2.6m) loss in 2020.
FC Midtjylland Finances – Profitability summary
FC Midtjylland are typically a profitable club. This is usually due to strong player sales, however 2021 was due to success on the pitch and UCL football for the first time. Going forward, FC Midtjylland will be looking at how it can achieve both at the same time to supercharge growth, starting with the 2021/22 season.
FC Midtjylland Finances – Assets / Liabilities
The profitability of FC Midtjylland did not stop the club requiring a capital injection as it increased its cash reserves but remained relatively debt free.
Cash flow
FC Midtjylland’s cash reserves rose from DKK 24m (€3m) to DKK 169m (€23m). This was driven by the only cash outflows being from capital expenditure (DKK 3m) and other investing activities (DKK 43m). This was swallowed by cash inflows from financing activities (DKK 125m), operations (DKK 34m) and player transfers (DKK 32m).
Debt
FC Midtjylland debt levels remain low. Debt fell from DKK 1.4m (€0.2m) to DKK 1.0m (€0.1m). The debt relates to amounts owed to the bank and in respect of finance leases. The owners provided DKK 125m (€17m) via a capital injection (equity) which is not therefore repayable.
FC Midtjylland Finances – Final Remarks
FC Midtjylland has a strong business model that yields profits in the majority of years. Despite the disappointment of no UCL this season nor UEL knockout qualification, finances remain strong via player sales which are a critical part of its business model. The club is currently top of the Danish Superliga and will dreaming of lucrative UCL football again in 2022.
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