FFP

[Dante Lavelli]

Id say our cost base has increased since then though. Let’s see.

True. We also have a hole to fill from years 1 and 2 of the rolling 3 year cycle.

[AV82EC]

Our accounts are now available on the Companies House website. We have c£250m in wages and c£100m in transfer fees amortisation so a base cost of £350m to cover.

I believe we will need to cash in on a few players in the summer (Watkins, Bailey and McGinn spring to mind). Even so I am nervous that with no Champions League football our current wage bill in unsustainable.

The stated revenue last year was £276m, so doesn’t the extra CL money pretty much cover the gap?  I’ve seen £70m mentioned…

Heck has stated a month or so back he thinks the revenue/turnover figure for this season will land around the £360-£370m mark. I think it may be slightly higher as we’ve since progressed to CL Qtrs and FA Cup semi and are higher up the league so maybe another £10-20m. However as lovejoy has just stated I’m sure costs on the other side of that equation have gone up as well but by nowhere near as much as the increase in CL revenue would be my guess. Of course the figures above don’t include player trading profit or loss so may be considerably higher or lower depending on what we do transfer wise.

[Tuscans]

Aston Villa’s accounts explained: £86m loss, PSR problems to solve, player sales needed

By Jacob Tanswell and Chris Weatherspoon

Aston Villa’s senior figures acknowledge selling key players is par for the course.

Raising additional funds is critical for the overall running of the business, especially after a £119.6million post-tax loss in the 2022-23 season and now, following the 2023-24 campaign, an £85.9m post-tax deficit. Across two seasons, Villa have suffered post-tax losses of more than £200m ($254m).

Staying in line with profit and sustainability rules (PSR) will remain a constant challenge and is determined by Villa’s appeal on the pitch. The more success, the more revenue and transfer spend.

From Villa’s standpoint, deep investment was required to generate significant change — as shown in Unai Emery’s tenure, transforming a relegation-threatened side to a Champions League one — with hefty losses seen as inevitable. The hope is that, in time, the success Emery has led will bridge the gap. Whether Villa can do it all within a PSR timeframe is the more pressing matter.

Regardless of whether Villa secure Champions League football for another campaign, staying in line with PSR — which dictates teams cannot incur losses of over £105m over a three-year period — requires players to be sold. Villa accept this given that with costs higher than current revenues, the deficit will need to be covered by transfer departures this summer.

Here, The Athletic takes a look at some of the key talking points.

What are the headline figures?
Villa lost £85.9m pre-tax last season, which, though a £34.4m (29 per cent) improvement on 2022-23, was still the club’s third-worst financial result in history. It takes their pre-tax loss since the July 2018 takeover by Nassef Sawiris and Wes Edens to £411.4m.

The duo injected £148.2m in equity funding last season, taking their total funding at the helm beyond the £600m mark. A further £94m was provided in the second half of 2024.

That funding has often — though not always — gone on improving the playing squad. Villa spent £167.6m on new players — the fourth time in five years they have topped £100m. The cost of assembling their squad sat at £503.1m at the end of last June, which was the eighth highest in England but did trail seventh-placed Newcastle United by more than £100m.

By contrast, Villa’s wage bill was £252m last season, topping Newcastle and Tottenham Hotspur. That marked a club record and was England’s sixth-highest wage bill, which still meant finishing fourth was an overachievement. The wage bill — up 30 per cent on 2022-23 — included bonuses for achieving Champions League qualification.

What do these accounts tell us?
The immediate threat of PSR may not be quite as relenting as last year, but for a club whose revenues are not comparable to the top European-calibre teams Villa want to compete with and against, it will remain the elephant in the room.

In the previous set of accounts where Villa posted the worst financial result in Europe — according to UEFA’s Club Finance and Investment Landscape report — they had the ninth-highest revenue in the Premier League (£217.7m), behind teams such as West Ham United (£236.7m) and Newcastle (£250.3m).

Though Villa’s revenue has markedly improved, owing to unlocking Champions League riches, a major issue impacting this is their stadium capacity. West Ham, for example, boast a ground that holds 20,000 more spectators than Villa Park’s 42,640.

It is not lost on senior figures that their desire to transform the club is much harder and slower than in the age before PSR, where the likes of Chelsea and Manchester City could accelerate progression with few spending limits.

What are the positive signs and what should cause worry?
Villa are taking steps to increase revenue streams and break beyond its ceiling. In December, they announced a regeneration project at Villa Park, which includes a 3,500-seater venue for “year-round entertainment”, larger areas outside the stadium and a plaza that connects the stadium with the club shop. Investment in infrastructure does not impact the bottom line (at least not until it is built and generating income), which means Villa can invest in methods that will grow revenue and ease PSR longer term.

Villa’s income is rising, up 27 per cent in a year and 145 per cent in the past decade. All three income streams grew in 2023-24 and the club were able to increase gate receipts by nearly 50 per cent to £28m. That is still well behind Newcastle (£50.1m) and West Ham (£44.6m).

Arguably more impressive was commercial income, where Villa’s takings rose to £63.3m. Commercial revenues are up £24.2m in just two years and should rise again in 2024-25 following new deals with Adidas and Betano, alongside an upgrade in the sleeve sponsor agreement with Trade Nation.

Despite rising revenues, Villa’s costs have generally grown faster. A record wage bill meant wages as a proportion of turnover hit 91 per cent — the worst of any Premier League club last season. Those European bonuses will have impacted the figure, but the club’s surge from the Championship to the Champions League has come at a cost.

The cash lost from day-to-day operations worsened last year to £47.7m and was the second-highest operating cash outflow in club history after the 2018-19 Championship promotion season.

The hope is operating cash flow will improve with sustained forays into the lucrative Champions League, but it’s clear why Sawiris and Edens have been so loose with the purse strings to date. On top of operating cash outflow, Villa’s net cash transfer payments topped £100m last year, too.

Though redeveloping Villa Park’s North Stand was shelved in late 2023, Villa have not shirked infrastructure investment under Sawiris and Edens. They spent £16.4m cash on capital expenditure last season, taking the tally since their takeover to £69.4m. In the six years before their arrival, that figure was £12.9m.

Are they close to breaching PSR?
Villa were deemed compliant with last year’s accounts but did not soften their frustration towards current PSR guidelines. In June, Sawiris said he was considering taking legal action against PSR rules.

Around this time, Villa had proposed to raise the maximum permitted losses from £105m to £135m last year, but that was rejected at the Premier League’s annual general meeting.

Villa are skirting trouble with — and are expected to incur a considerable fine from — UEFA’s PSR limits, which restricts spending on “player and coach wages and transfers and agent fees to 70 per cent of the club’s revenue” from the 2025-26 season onwards. This year, Villa have to fall below 80 per cent, having been above the 90 per cent limit in the 2023-24 campaign.

Domestically, last season’s accounts lay bare how tight things became, too. Across the 2022-24 PSR cycle, Villa’s pre-tax loss was £205.8m, meaning the club needed £100m in deductible expenditure to hit the £105m PSR limit.

Conveniently, and unlike just about every other club in the land, Villa disclose key deductibles in their accounts. Across the last three seasons, they spent £48.1m on youth development costs, £14.6m on community development and a further £13.3m on their women’s team. Combined with depreciation on fixed assets, this reduced Villa’s pre-tax loss by around £90m — though that still leaves them £11m shy of compliance.

The Premier League brought no new charges following Villa’s 2023-24 financials, so we know they complied last season. They extended their accounting period, ostensibly to book sufficient player sales in 2023-24 to avoid a PSR breach, but clubs still have to calculate their PSR result over a 36-month period.

To that end, extended accounting periods, like Villa’s 13-month 2023-24 accounts, have to be prorated. It isn’t as simple as just taking 12/13ths of that year’s figures. It’s unclear, but the likelihood is this prorating resulted in Villa coming in under the £105m loss limit — just.

What is clearer is that the last-minute deal, in an accounting sense, to sell Douglas Luiz to Juventus last June spared Villa from a PSR charge. Douglas Luiz departed for Turin for €50m, with Samuel Iling-Junior and Enzo Barrenechea coming the other way. Without the profit booked on the midfielder’s sale — around £40m — and the £10m earned from Everton in a similar deal that saw Villa sell Tim Iroegbunam and acquire Lewis Dobbin, the pre-tax loss in the last PSR cycle would have topped £250m.

Going forward, Villa will benefit from a huge increase in broadcast money this season. Their Champions League run has earned them an estimated €80m-plus in Champions League prize money.

Yet they will suffer from 2021-22, when they made a £0.4m pre-tax profit, falling off their PSR calculation, as well as another expected increase in the underlying wage bill and continued squad improvements.

The accounts disclose Villa’s net spend between July 1 and October 9 was positive at £27.3m, which doesn’t include the £19.4m spent on Donyell Malen in January or any costs involved in the arrivals of Marcus Rashford, Marco Asensio and Axel Disasi. The £64.3m sale of Jhon Duran to Al Nassr looks to have been required work from a PSR perspective.

How will it impact their transfer planning this summer?
Villa have large assets, with the current standing and Champions League campaign meaning they can ask for significant fees. This happened with Duran in the recent transfer window; had Villa been a mid-table side and Duran had not scored the goals he did in the Champions League, they would not have commanded that level of fee.

There are several players with suitors. Villa have informed Boubacar Kamara they wish to extend his contract, but he is on other teams’ shortlists, as well as Jacob Ramsey, Morgan Rogers, Leon Bailey and Ollie Watkins.

Should Villa qualify for the Champions League again, Emery will want a similarly big squad and will intend to acquire top-level pedigree. Throughout, however, consideration must be given to who leaves.

Will Champions League riches help? As Villa sources, speaking on condition of anonymity to protect relationships, point out, financial success always comes after on-pitch success.

For context, last season’s Conference League campaign, which ended in the semi-finals, raised €16.2m. Now in the quarter-finals of the Champions League, Villa will make more than €100m from prize money and improved gate receipts.

If they come through a fairly daunting quarter-final with Paris Saint-Germain, it won’t just provide on-pitch glee. A further €15m in prize money awaits.

Sources who share existing knowledge of recent deals have told The Athletic that commercial agreements with Villa include ‘kickers’. This means the club will receive additional revenue every time they qualify for the Champions League.

Other recent commercial partnerships, such as with new front-of-shirt sponsor Betano, have incentivised clauses: Villa will unlock a new amount of sponsorship money from the betting company upon qualification. The same is true with existing shirt sleeve sponsor Trade Nation, with Villa using its better position to negotiate a more lucrative agreement for next season.

[Rigadon]

Would selling Bailey cover it?  If so, I approve this strategy. 

[Percy McCarthy]

Would selling Bailey cover it?  If so, I approve this strategy.

I suppose it will all be based on where we finish at the end of the season. But even in a best case scenario we’ll be looking to get rid of Dendonker and Coutinho first.

[DB]

Would selling Bailey cover it?  If so, I approve this strategy.

I suppose it will all be based on where we finish at the end of the season. But even in a best case scenario we’ll be looking to get rid of Dendonker and Courinho first.

Add Buendia too.
We will be ok without selling any of our first choices I reckon.

[IFWaters]

I wonder if some of our longest serving players might go? Mings and McGinn both now over 30, Ollie and Digne ?

I could see McGinn at Celtic to finish his career.

Not pleasant but they will move on some time.

[Dave]

Obviously the wages of Digne / McGinn / Buendia / Coutinho / Dendoncker coming back into the coffers don't hurt, but I'm pretty sure they're not the sort of thing that keeps the PSR wolves from the door.

To make that spreadsheet work, accepting a big loss on Buendia or Coutinho's transfer fee and just losing their wages from next years books doesn't really move the dial. The thing that moves the dial is buying an interesting young Colombian for £12m and selling him for £70m. Or getting a similarly panicky club to buy a 19 year old youth player for £20m and we buy one of theirs for £20m. it's the profit bit that needs to go up, not making the wages for next year go down a bit less.

So if people who know stuff are talking about selling players for PSR reasons, saving £70k per week next year for Dendoncker isn't the way we're doing that. My money is still on Watkins to Arsenal.

[Dante Lavelli]

Using the Buendia example above, Most of his £30m fee will have been amortised over the X years he has been here, so the fee would not need to be massive (or in excess of the original fee) to register a profit.

[Dave]

Using the Buendia example above, Most of his £30m fee will have been amortised over the X years he has been here, so the fee would not need to be massive (or in excess of the original fee) to register a profit.

It'll register a profit - but it won't register a "fix our PSR problems" profit.

[paul_e]

No, but 4-5 sales like that might be enough to mean we can sell Bailey instead of Ramsey, for example.

[Toronto Villa]

We will try to shift as much of the dead salary as possible and sell those who don’t play. But it’s almost inevitable we will move on someone we just don’t want to and probably replace him with someone another club doesn't want to sell. Possibly for the exact same reason.

[Percy McCarthy]

Using the Buendia example above, Most of his £30m fee will have been amortised over the X years he has been here, so the fee would not need to be massive (or in excess of the original fee) to register a profit.

It'll register a profit - but it won't register a "fix our PSR problems" profit.

You never know. Without reading the anrticle  again, I think there was some mention of an £11m shortfall previously. So at about that level it might do the job.

I think Cash will go, which will be more or less pure profit, maybe McGinn and Watkins as they would be too.

[Beard82]

I think well see someone go - its all an accountancy game - so maybe selling Watkins, but bringing in Rashford (for example).  Not that in any real-terms it puts us financially better off but lets us off. 

I think Bailey will be cashed in on.  Maybe Luca Dinge.  Getting Dendonker, Olsen and Courtinhio off the books would be good due to there salaries. 

Maybe some of the youngsters?  One thing I dont get - is the value we add to players doesnt get accounted for.  i.e. our balance sheet must be stronger as (for example) Rogers has increased in value by 80m

[Beard82]

Using the Buendia example above, Most of his £30m fee will have been amortised over the X years he has been here, so the fee would not need to be massive (or in excess of the original fee) to register a profit.

It'll register a profit - but it won't register a "fix our PSR problems" profit.

You never know. Without reading the anrticle  again, I think there was some mention of an £11m shortfall previously. So at about that level it might do the job.

I think Cash will go, which will be more or less pure profit, maybe McGinn and Watkins as they would be too.

Cant see McGinn generating much.  Watkins will either go this summer or not for years