In this series, we provide updates on the club's financial status, including our latest estimates for the season 2023/24.
Note: this analysis is primarily based on current estimates and should be used as a guide to the expected financial outcomes of the club for the 2023/24 season.
Although last season didn’t quite match the heights of 2022/23 on the pitch, Brighton still achieved a respectable 11th place finish. They also made history by participating in European football for the first time, reaching round of 16 in the Europa League - a significant achievement.
In season 2022/23 (their most recent published accounts) Brighton topped the profit league with a record £133 million profit, primarily driven by player sales. Season 2023/24 appears to be a similar story as once again they will benefit from highly effective player trading, marked by savvy acquisitions and even better sales. Our predictions for the season 2023/24:
Record turnover due to European participation, tempered by the lower premier league finish.
Record profit on player sales, with sales of Caicedo, Mac Alister and Sanchez generating an estimated £140 million in profit.
Higher staff and operating cost due to European participation.
Profit before tax could top £100 million for the second season in a row. Expected to be the highest in the premier league.
Strong cash flows will give further opportunity to reduce debt.
Turnover
The 2023/24 season should see a slight increase in turnover. European participation is expected to bring in around £15 million. However, this will be offset by lower distributions from the premier league due to a drop of five places. With premier league merit payments at £3.1 million per league position, this will reduce revenue by £15.5 million.
European participation should boost matchday revenue to around £31 million, with four European home matches and an expected increase in revenue per fan per match. At approximately £40, Brighton has the highest revenue per fan per match outside the 'Big 6', just ahead of Newcastle and Fulham.
Commercial revenue is harder to predict but we expect it to increase in line with their success. The main sponsorship deal with American Express is long term, but there will be gains in merchandise sales and other commercial deals.
Overall, we estimate turnover to increase to around £216 million, up £11 million from the previous year. This would make Brighton’s revenue the 10th largest in the premier league.
Staff Costs
Brighton have achieved success on a relatively modest wages budget. Impressively, in season 2022/23 when Brighton finished sixth, their staff costs before profit on player sales of £160 million was the third lowest in the league with only Bournemouth and Brentford lower (two other overachieving clubs). Factoring in profit on player sales, the £160 million reduces to just £39 million, by far the lowest in league, with the next lowest being Brentford at £124 million.
Even more impressive is that they are expected to repeat this in 2023/24. Whilst we anticipate increases in staff salaries due to recent success and higher amortization from recent player acquisitions, profit on player sales will again bring the overall staff costs to a similar level. The sales of Caicedo, Mac Alister, Sanchez and others should contribute around £140 million in profit, resulting in predicted net staff costs of around £35 million, once again the lowest in the league.
In summary, we estimate staff costs before profit on player sales to be around £180 million (15th highest in the league), and staff costs after profit on player sales to be only £35 million (lowest in the league).
Profit and Loss
The profit from player sales should result in another bumper profit year for Brighton. Whilst it is challenging to predict precisely, we expect it to be slightly down on the previous season. but at around £118 million, still the highest in the league by a significant margin. It’s worth noting that in 2023/23 Brighton had one-off income of around £25 million due to compensation for Graham Potter and staff moving to Chelsea.
Player Trading
It is not surprising that Brighton’s player trading last season will result in a net income, as player sales exceeded new acquisitions. This was also the case in the previous year, which is a remarkable results considering they achieve 11th and 6th placed finishes.
In fact, if you look at the seasons since they were promoted, Brighton has only spent marginally more on players than they have received, with the last three seasons netting them £380 million.
Debt
Brighton’s success has not come out of nowhere. It is the result of over a decade of significant investment from owner Tony Bloom. By the end of 2022/23 season, the club’s debt to Mr. Bloom stood at £373 million. This loan is interest free and repayable on demand.
We can see below this debt has been steadily accumulated since the takeover, peaking at £400 million plus additional £95 million issued as equity. Initially, the funds were directed towards facilities and then into players. This strategic approach now appears to be paying off. In 2022/23 the club used strong cash flows from player sales to reduce the loan by around £25 million.
To put this in perspective, at the end of season 2022/23 Brighton's debt was the fourth highest in the league and the second highest 'friendly' loan after Everton.
There is no indication that the loan needs to be repaid in the short-term. However, with potential changes to Associated Party Transactions (APT) due to the recent Manchester City case, Brighton may have to recognize ‘fair value’ interest on this loan for Profit and Sustainability calculations. This would be a material amount (e.g. £26 million at 7%), but Brighton has ample breathing space, so it should not be a concern.
Cash Flow
With such strong player sales, what does Brighton cash flow look like? Unlike several clubs, they typically generate a modest cash flow from operations (cash from the normal operations of the business before any investment or new financing). Considering this they will see strong cash flows from their recent player sales over the next few seasons as clubs settle their transfer debts over time.
At the end of 2022/23 they were owed £135 million from other clubs. Of this amount, £98 million was due in 2023/24, which will contribute to a strong cash balance.
Outlook and Season 24/25
The financial outlook for Brighton looks very promising. Another change of manager, but they have successfully navigated that before. With cash in the bank, they can invest strongly, as we have seen in the latest transfer window. This has seen a complete reversal, making them the biggest net investor in players, compared to previously being the biggest seller.
With no European competition, revenue is likely to drop, However, if they continue their early season success, Premier League distributions will offset this somewhat. Whilst not as significant as the previous two seasons, player sales will still contribute, with approximately £28 million from the sales of Undav and Gilmore completed in the summer window.
Whilst their substantial returns from the last two seasons are unlikely to be repeated, Brighton appears to have a sustainable financial model. They may just need another Caicedo or Mac Allister to provide an extra boost.
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