This article analyses Bristol City finances in respect of the 2020/21 season.
Season review
Bristol City competed in its sixth consecutive season in the EFL Championship in the 2020/21 season. It was however its most challenging, with the club finishing 19th, its lowest position during its current Championship stay. This ultimately led to the sacking of Dean Holden and hiring of Nigel Pearson. A run to the FA Cup fifth round was one of very few positives in the season.
Bristol City finances took a sizeable hit as the loss of much needed gate receipts and lower player sales saw losses rise to £38m, the highest in its history.
Bristol City Finances – Revenue
The Robins saw its revenue plummet, falling from £27.2m to £16.7m (39%). This was due to significant falls in matchday and commercial revenue. This was its lowest revenue since 2016 (its first year back in the Championship).
Other income rose by £1m to £1.6m which partly offset this revenue reduction. What compromises ‘other income’ is not disclosed in the accounts.
Matchday
Matchday revenue fell from £4.8m to £0.7m (85%). Bristol City lost all its gate receipts and only retained a portion of season ticket revenue. This is a common theme across football, however, has disproportionally impacted EFL clubs, with matchday revenue accounting for a higher portion of revenue the further down the pyramid you go.
The return of fans in 2021/22 will see much of matchday revenue recovered (subject to any further restrictions imposed in the second half of the season).
Broadcast
Broadcast revenue fell from £8.6m to £8.2m (5%). This was due to a reduction in distributions received from the EFL, with the ‘Football League Pool’ reduced by £0.7m. This was partly due to the impact of COVID-19 but also the worsened performance of Bristol City in 2020/21.
Bristol City will be hoping to increase broadcast revenue slightly in 2021/22, however performances to date suggest this is unlikely. Broadcast revenue is not likely to rise or fall significantly in 2022.
Commercial
Commercial revenue fell from £13.9m to £7.7m (44%), the largest decline across all revenue streams. The expiry of its Bristol Sport sponsorship may have been a major cause of this reduction, with the company connected to owner Steve Lansdown. Dunder was also replaced with Mansion Bet as its shirt sponsor, which may have been on reduced terms. This was compounded by the impact of government restrictions which would have impacted the ability to sale merchandise and activate commercial opportunities.
Commercial revenue is likely to rise in 2022 following the easing of restrictions.
Bristol City Finances – Revenue summary
It was a challenging year for Bristol City with revenue hit hard by the absence of fans, which hurt both matchday and commercial revenue. Revenue is likely to recover back to over £20m in 2022, however will likely remain some way below 2020 levels given commercial revenue is unlikely to be fully recovered.
Bristol City Finances – Operating costs
Operating costs fell from £51.4m to £49.2m (4%). This reduction was significantly less than that of revenue, adversely impacting the profitability of Bristol City.
Wages
Bristol City’s wage bill rose from £33.5m to £35.3m (6%). The was largely due to general wage inflation, with a handful of new free signings and contract renewals took place. The reduction in revenue and wage growth saw Bristol City’s wages to revenue ratio reached 212% (2020: 123%). This meant that for every £1 generated in revenue in the 2020/21 season, the club spent £2.12 on wages, before taking into account any other costs. This is far from sustainable, with UEFA recommending a ratio of 70% as a MAXIMUM. Bristol City should see this ratio fall back below 200% in 2022 as matchday revenue recovers, however significant wage restructuring would be necessary to reduce it to below 100%. Wage restructuring would be an onerous task given the competitiveness of the league and highlights the whole issue around finances in the EFL at present.
Other costs
Other operating costs fell from £18m to £13.8m, driven by matchday cost savings.
Bristol City Finances – Operating costs summary
Bristol City has a very high wages to revenue ratio which makes achieving any level of profitability virtually impossible. The club hence requires significant funding from its owner or from external sources (i.e. banks). While this is the case for the majority of EFL clubs, should this funding no longer be accessible, issues such as those faced by Derby may occur if costs are not reduced to more self-sustainable levels across the league.
Bristol City Finances – Transfers
It was a quiet season from a transfer perspective for Bristol City, with no signings for a fee in 2020/21. Departing Ashton Gate were Eliasson (£2.7m) and Szmodics (£1.0m) for a combined £3.7m.
Amortisation
Player amortisation rose from £11.1m to £12.4m (11%) despite limited playing squad investment. This was due to a £0.7m impairment expense in respect of players the club believe have a lower value than its net book value.
The club has invested around £1.5m in player purchases so far in 2021/22. It is therefore unlikely player amortisation will change significantly, potentially reducing should no impairments be recognised.
Profit on player sales
Profit on player sales fell from £25.6m to £6.2m (76%) due to significantly lower player sales. Bristol City had two seasons of significant player sales which it has been unable to replicate in 2020/21 or 2021/22. Due to this and falling revenue, losses have surged. Bristol City has sold no players for a transfer fee in 2021/22. Therefore, unless any significant sell-on fees are triggered, there will be minimal profit on player sales in 2022. This will make it even harder for the club to control its mounting losses.
Transfer debtors / creditors
Bristol City is a net transfer debtor, meaning it is owed more in transfer fees than it owes. Bristol City is owed £11.5m in transfer fees while it owes £7.4m. Therefore, on a net-basis, it is owed £4.1m in transfer fees.
Bristol City Finances – Transfers summary
Bristol City is coming off two years of significant player sales. The absence of these sales in 2020/21 and 2021/22, has led to higher financial losses which are expected to continue unless revenue rises significantly (unlikely) or costs are cut significantly (difficult). The Robins are likely to have a continued reliance on Stephen Lansdown in the coming years unless player sales are revived.
Bristol City Finances – Profitability
Bristol City recorded its highest ever loss in 2021 as it counted the costs of significant lower revenue and player sales.
Operating profit / loss before player trading
Before player trading, operating losses rose from £23.5m to £30.9m (4%). This was due to the £10m reduction in revenue as the club felt the absence of fans. The return of fans and of the associated matchday revenue and commercial opportunities should result in this loss lowering in 2022.
Operating profit / loss after player trading
After player trading, operating losses ballooned from £9.1m to £37.1m (309%). This highlights the importance of player trading to Bristol City in the past two years, which masked the poor operating results previously. With no players sales of note in 2021/22 to date, it is unlikely that losses will reduce significantly.
Profit / loss before tax
Net finance costs of £1.3m resulted in a loss before tax of £38.4m, over triple the £10.1m loss recorded in 2020.
EFL profitability and sustainability
Without going into the EFL’s financial regulations in too much detail, Bristol City should still be just within the limits even with another sizeable loss in 2022. The EFL rules allow for a loss over a three-year period of £39m. For 2021/22, this combines a) the 2022 result (?); b) the average of 2020 and 2021 (£24m); and c) the 2019 result (£11m). As Bristol City recorded a profit in 2019, this gives some breathing room, especially considering these profit/loss figures do not include various adjustments the EFL allows that typically reduce losses. It does however potentially only delay the inevitable, should losses continue in this vein.
Bristol City Finances – Profitability summary
Bristol City is one of the earliest Championship clubs to report its 2021 finances. It is not a pretty picture and is likely to be followed by many more examples of significant losses as a season behind closed doors exposed the already fragile nature of many clubs’ finances. Bristol City will look to reduce costs to stem losses, however the current financial picture means most Championship clubs are a long way away from self-sustainability of any sort.
Bristol City Finances – Assets / Liabilities
Record losses for Bristol City required significant funding from its owner as he reached further into his pockets.
Cash flow
Bristol City’s cash reserves rose from £0.9m to £1.3m. This was due to cash inflows from financing activities (£20.4m) and player transfers (£7.8m), being offset by cash outflows from its operations (£13.1m) and capital expenditure (£13.5m). In what perhaps has proved poor timing, Bristol City completed the construction of its new training facilities in Failand. Bristol will be hoping this investment pays off, although the mounting loss may not have been foreseen when construction began.
Debt
The cash inflows from financing activities (£20.4m) largely relates to funding received from its owners. Steve Lansdown provided £14.1m via a capital injection (i.e. not repayable). £6.2m was received from the EFL as a loan to cover its tax liabilities and is repayable in six, semi-annual payments. This has taken his total investment into the club to over £200m since purchasing, showing his long-term loyalty to the club.
This increased Bristol City’s debt levels from £72.8m to £79.1m.
Net debt
The net debt of the club hence now stands at £78m, up from £72m in 2020.
Bristol City Finances – Final Remarks
It was a challenging season on and off the pitch for The Robins. Record losses and its lowest Championship position since its return were not what the club had hoped for. The mounting losses mean there is a significant reliance on Steve Lansdown, in addition to risks around the EFL’s financial regulations, should losses continue in this vein. The losses will need to be managed, however as long as Steve Lansdown funds them, and the club stay within the EFL financial regulations, the clubs should be okay (subject to performance on the pitch). It is likely other clubs are in a similar position, which will be interesting to see, and we look forward to reporting on these too!
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