Aston Villa had a remarkable season, achieving Champions League qualification for the first time. Their performance on the field has been outstanding. What impact has this had off the field? Whilst season 2023/24 financials are not published until next year. in this blog we provide our estimates of their financial position for this historic season.
Historically, Villa has operated at a loss, with high staff costs relative to turnover. The only breakeven year in the last five was 2021/2022, primarily due to the sale of Jack Grealish.
Season 2023/2024 is expected to see a significant increase in turnover. EPL broadcast distribution is estimated to rise by around £18 million due to their 4th-place finish. Qualification for the Europa Conference League should contribute approximately £15 million from UEFA’s broadcast distribution and matchday revenue will be boosted by six additional home games.
Overall, estimated turnover will increase to around £258 million from the previous season’s £218 million.
Regarding costs, it’s worth noting that Aston Villa extended their financial year to 13 months by shifting their closing date from May 31st to June 30th. This adjustment likely facilitated the completion of crucial player sales within that extended financial period.
We anticipate that Aston Villa’s staff costs will remain very high compared to their turnover. The impact of player acquisitions will lead to increased amortization expenses. Additionally, we assume that players will receive substantial bonuses following the club’s impressive 4th-place finish. As a result, we estimate that staff costs before factoring in profits from player sales will be approximately £330 million and possibly more —making Villa the 7th highest in the league. This figure represents a significant increase from the previous season’s £287 million. If our estimate holds true, staff costs before player sales will account for 128% of turnover, which is among the highest ratios in the league. This will be concerning if new profit regulations come into effect.
To counterbalance these high costs, Aston Villa strategically offloaded players such as Kellyman, Archer, and Ramsey during the season, resulting in a robust profit on player sales of £68 million. It’s important to note that this calculation assumes that the sales of Kellyman and Iroegbunam were successfully completed before the end of June.”
In addition to the high staff costs, we anticipate that other day-to-day operational expenses—the essential running of the business—will also rise. Factors contributing to this increase include the additional number of home matches, the extended 13-month financial year, and inflationary pressures.
Our estimation indicates that Aston Villa will continue to operate at a loss, with an estimated deficit of £88 million. However, this represents an improvement compared to the £120 million loss from the previous season. The positive trend is primarily driven by substantial growth in turnover.
Aston Villa remained committed to strengthening their squad by acquiring players such as Diaby, Torres, and adding Dobbin and Maatsen in June, resulting in an estimated expenditure of approximately £167 million, including agent fees. However, this investment was partially offset by player sales amounting to £69 million, leading to an expected net transfer spend of £99 million. Interestingly, when we analyze their net transfer spending over the last three years, Villa ranks 11th in the league, trailing behind clubs like West Ham, Bournemouth, and Crystal Palace. This demonstrates the impressive trajectory they’ve had in recent seasons.
Debt is not an issue for Aston Villa. The only debt they have is transfer debt, which we assume is around £50 million.
Given Aston Villa’s consistent financial losses, their cash flow is impacted. As a result, the club frequently requires fresh financial capital. Villa stands among the few clubs that consistently make negative operating cash flows (i.e., cash before any investments or new financing). Consequently, they continually seek new funds to cover this and any investments.
Over the past five seasons, Aston Villa has raised approximately £450 million in new capital. Season 23/24 will follow a similar pattern, with an additional £150 million of share capital needed to sustain the club’s operations at this level. This situation raises questions about the long-term sustainability of their financial model and how they will navigate the scrutiny of profit and sustainability regulators.
As we look ahead to this season, Aston Villa’s outlook is shaped by several factors. Here’s what we anticipate:
Entry into the Champions League will undoubtedly boost turnover further. However, the extent of this growth will depend on their performance in both European and domestic competitions.
Despite the Champions League windfall, Villa may not have significant funds available for player investment. There has been plenty of summer transfer window activity, but this will likely rely in part on selling players to raise capital,
One critical challenge remains for Villa, their very high staff costs relative to turnover. As this ratio may become a benchmark by which their financial sustainability is evaluated and addressing this issue will be crucial for their long-term stability.
In summary, while Villa’s entry into the Champions League is a significant achievement, managing costs and ensuring financial sustainability remain key priorities.
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