This article analyses Brentford finances in respect of the 2020/21 season.
Season review
Brentford competed in its seventh consecutive season in the EFL Championship in the 2020/21 season, looking to bounce back from its 2020 play-off pains. The club once again missed out on automatic promotion, finishing in 3rd. Fortunately, history did not repeat itself as The Bees secured promotion to the Premier League for the first time. Brentford also had a magical League Cup run as it reached the semi-finals.
2020/21 also marked the opening of its new Brentford Community Stadium. It was not the opening planned as the impact of COVID-19 meant the club were limited to three matches in front of its fans (with restrictions).
Brentford finances are due to take off following promotion, however before these riches are received, the club recorded a £8.5m loss despite significant player sales as it paid out £12m in promotion bonuses.
Brentford Finances – Revenue
Revenue rose from £13.9m to £15.3m (10%) as revenue associated with its sporting performance absorbed the loss in matchday revenue. Other income rose from £0.9m to £1.1m (18%).
Matchday
Matchday revenue fell from £3.1m to £0.2m (95%) as matchday revenue was almost non-existent in 2020/21. The club has sold 11,000 season tickets for its Premier League debut as matchday revenue recovers in 2. Despite this, the club will see little of this from a cash perspective as 94% of fans deferred 2020/21 season tickets paid for into 2021/22 so the cash has already been received.
Broadcast
Broadcast revenue rose from £6.4m to £8.4m (31%). Brentford deferred a portion of its broadcast revenue related to the 2019/20 season due to the delays of the season past the 2020 financial year. In addition, the club’s League Cup run would also have boosted broadcast revenue.
2022 broadcast revenue will rocket to over £100m as the club debuts in the Premier League.
Commercial
Commercial revenue rose from £4.4m to £6.8m (53%), the largest increase across the three revenue streams. This is likely due to bonuses payable in respect of its promotions from Utilita (shirt) and Umbro (kit). The return of fans and its Premier League status will create lucrative commercial opportunities which will see commercial revenue rise significantly.
This has already been evidenced by its Hollywood Bets shirt sponsorship and its first ever sleeve sponsor, SafetyCulture.
Brentford Finances – Revenue summary
Brentford’s 2021 revenue is almost irrelevant when looking at the bigger picture following promotion. The Bees are now in the big leagues and huge revenue is to follow with revenue likely to grow by over £100m in 2022.
Brentford Finances – Operating costs
Operating costs rose from £37.6m to £58.1m (55%). This was primarily driven by promotion related bonuses ahead of its Premier League debut.
Wages
Brentford’s wage bill rose from £25.9m to £41.4m (60%). The was driven by £12m in promotion bonuses, almost 50% of its 2020 wage bill. 2021’s wage bill also included £4m in deferred wages from the 2019/20 season, suggesting an underlying wage bill of c.£25m in 2021.
The wage deferral and promotion bonuses resulted in a wages to revenue ratio of a dizzying 270%. This meant that for every £1 generated in revenue in the 2020/21 season, the club spent £2.70 on wages, before taking into account any other costs. While this is unsustainable in the extreme, it should be of little concern due to it primarily being a timing difference ahead of receiving its Premier League riches. If you exclude the above exceptional items from its wages, the wages to revenue ratio is around 167%. This is still well above levels recommended by UEFA (70%).
Wages are likely to rise significantly following summer spend and wage rises for existing players as it prepares for life in the Premier League.
Other costs
Other operating costs rose from £11.7m to £16.6m, driven by costs associated with its new stadium.
Brentford Finances – Operating costs summary
Brentford’s operating costs would be a concern IF the club was still a Championship side. However, a significant portion of these costs were as a result of promotion, for which they will generate significant revenues from in 2022.
Brentford Finances – Transfers
It was a busy season from a transfer perspective for Brentford, with significant sales helping reduce its losses in 2020/21. Arriving at the club were Toney (£5.0m), Goode (£1.0m) and Janelt (£0.5m) for a combined £6.6m (rounding). Departing the Community Stadium were Watkins (£30.6m), Benrahma (£24.8m, including loan fee), Yearwood (£0.5m) for a combined £55.8m (rounding). This resulted in a net transfer income of £49.2m
Amortisation
Player amortisation rose from £11.5m to £13.3m (11%) following the investment in the playing squad. Following £33m in spending so far in 2021/22, amortisation will rise significantly.
Profit on player sales
Profit on player sales rose from £24.9m to £44.3m (78%) due to the sales of Watkins and Benrahma. Brentford model has been praised significantly in recent years following the successes of its scouting system and player recruitment. This has led to strong profit on player sales in recent years averaging £23m per year over the last six seasons despite only spending £11m on average per season and gaining promotion at the same time. The club has hence relied significantly on player sales for profitability (or reduced losses).
However, 2021/22 has seen limited player sales as it looks to retain its stars for its Premier League battle. This leaves a huge financial hole which the club will absorb via its Premier League distributions.
Transfer debtors / creditors
Brentford is a net transfer debtor, meaning it is owed more in transfer fees than it owes. The club is owed £38.9m in transfer fees while owing £19.4m. Therefore, on a net-basis, it is owed £19.5m in transfer fees.
Brentford Finances – Transfers summary
Brentford has generated significant income from player sales in the last few years. The club has managed to balance selling some of its best players with gaining promotion to the Premier League. The contribution to its finances has been huge however the lack of player sales in 2021/22 will leave a financial hole which should be absorbed by Premier League distributions. It remains to be seen whether the departure of influential Rasmus Ankersen (to Southampton) will be a huge blow to its business model.
Brentford Finances – Profitability
Player trading saved the day for Brentford, as it managed to limit losses in its promotion winning season before it receives its Premier League riches.
Operating profit / loss before player trading
Before player trading, operating losses rose from £22.7m to £41.6m (83%). This was driven by the increased wages due to deferred wages (£4m) and promotion bonuses (£12m). The Bees’ Premier League debut will completely change this position as the club sees its revenue balloon past £100m.
Operating profit / loss after player trading
After player trading, operating losses remained relatively stable falling from £9.2m to £9.0m (2%). This was due to the increase in player sales following the sales of Watkins and Benrahma. Despite limited player sales in 2021/22, such is the increase in revenue from playing in the Premier League that the club is likely to be profitable in 2022.
Profit / loss before tax
Net finance income of £0.5m resulted in a loss before tax of £8.5m. This compares to a loss before tax in 2020 of £9.1m.
Brentford Finances – Profitability summary
Brentford’s strong player sales meant that it recorded a loss of only £8.5m despite significant promotion related costs and payments. Excluding these costs, Brentford would have been profitable in 2021, which is a good result. This is one of the lowest losses recorded by a recently promoted team for context. Due to riches generated from being in the Premier League, the club is likely to be profitable despite limited player sales.
Brentford Finances – Assets / Liabilities
As the club awaited its Premier League riches, Brentford required some additional bank funding to see it through.
Cash flow
Brentford’s cash reserves halved from £16.0m to £8.0m. This was due to cash inflows from financing activities (£13.2m), player transfers (£7.2m) and other investing activities (£2.5m), being dwarfed by cash outflows from its operations (£23.6m) and capital expenditure (£2.4m).
Brentford also has restricted cash relating to a court case in respect of its stadium development of £4.9m. This means it is unable to use this cash until the court case verdict is made.
Debt
The cash inflows from financing activities (£13.2m) largely relates to funding received from three sources:
- An EFL loan of £7.9m (interest free) which was secured against its first payment from the Premier League so is now repaid;
- £4.9m loan from its sister club FC Midtjylland attracting a 1% interest charge; and
- £0.7m loan from its owner via Bees United, another group company.
Mr Benham also provided another £1m in shareholder loans, taking his debt position to £60.7m.
The club also frequently factors its transfer debt such that it sells it at a discount of c.7% to third parties to receive the cash immediately. This stood at £6.5m at 30 June 2021 (2020: £14.6m).
This increased Brentford’s debt levels from £74.2m to £80.6m.
Since the end of the financial year (30 June 2021), the club has. Also taken out a £20m credit facility with Barclays.
Net debt
The net debt of the club hence now stands at £72.6m, up from £58.2m in 2020.
Brentford Finances – Final Remarks
It was a great season for Brentford as it finally achieved Premier League promotion after heartbreak in 2020. The club is set to see its finances rocket into another stratosphere following promotion with the goal now to consolidate as a Premier League side. The club looks set to avoid relegation in the current season as it sits mid-table at the halfway stage and will want to continue to enjoy its newfound riches while remaining true to its business model.
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