Friday Dump 🥟 - EPL clubs financial woes, Man U's earnings, NWSL living its best life

Author

Michael Sheinfeld
January 19, 2024

Back at it again with the Friday Dump 🥟

If you missed last week, each Friday we’ll breakdown 3 sports business stories that have caught our eye throughout the week. Look for them to be assembled in the following format:

🔴 - Stories that make us stop, think, and question what could happen next.

🟡 - Stories with a hint of risk and unpredictability.

🟢 - Stories that make us feel good to go and empowered.

Let’s get after it shall we…

Nick Potts/PA

🔴 Premier League clubs caught sautéing the books. Two more Premier League (EPL) clubs: Everton (second time in one year 😬) and Nottingham Forest have been charged with breaching Profitability and Sustainability Rules (PSR) after the 2022-2023 season. This is only one year after Manchester City and Chelsea were charged with numerous alleged breaches of financial rules, dating back to 2009. But hey, we don’t know anything about PSR and you probably don’t either, so get out your calculator and follow along:

  • The point of PSR, introduced in 2013, was to keep clubs from overspending and risking their financial futures to maintain their places in the EPL and avoid relegation.

How does this work?

  • Each club calculates their own annual reports. They are only allowed to lose a maximum of £105m over three seasons (£35m a season). This occurs all on a rolling basis and deductions can be included in expenditures such as: community schemes, academy and women’s teams, infrastructure projects, and the impact of the Covid-19 pandemic (Should I collect my CPA now or after we’re done reading?).

    • This is on the condition that £90m is covered by “secure funding” from owners (i.e. buying up more shares instead of giving their clubs a loan).

    • Therefore, clubs can only lose £15m of their own money across those three years. In simpler terms, the club cannot exceed £15m on expenses like transfer fees, player wages, paying off former managers compared to their income from TV revenue, season tickets, selling players, etc. (Everyone still with me? No? Great, let’s get to the juicy part)

Why does this matter?

  • Forest is under scrutiny for having spent around £250m on new signings after their promotion into the EPL. While Everton is under the microscope, again, for losses associated with hiring a new manager and they suspended new stadium naming rights and jersey sponsorships with Russian companies after the Ukraine invasion.

  • These clubs could be in some serious hot water — as mentioned, Everton has now been charged twice over the span of one year. After their first charge, they were docked a league record 10 points (which they’re currently appealing) from the standings (aka “table” if you want to sound like you know the sport).

    • These charges could not have come at a worse time for Everton. Their current owner, Farhad Moshiri, announced the sale of the club last year to American private investment company, 777 Partners. Because of these charges, the sale could be in danger of going through.

  • To make matters worse for all parties involved, docking points is a serious penalty because of “the R-word”…relegation 🤫.

    • If found guilty, this increases the risk that Everton and Forest could face “the R-word” from the EPL at the end of the season. Forest currently sits in 15th place in the 20-team EPL, two spots above Everton. If a point penalty is assessed, that would immediately drop both into the bottom three places (you guessed it, “the R-word”).

  • Relegation = BIG TIME Financial Jeopardy (Loss of star players + loss in TV broadcast revenue + loss in club sponsorships + loss of ticket sales 🤮)

  • For now, fans will have to wait and see with extreme levels of anxiety on how the commission will rule for both clubs.

🟡 Red Devils focusing more on profits, not product. Alright show of hands: who knew the EPL soccer club, Manchester United, was a publicly traded company? Under the New York Stock Exchange ticker symbol: $MANU you can buy and sell that bad boy whenever your heart desires. That’s right, for the low price of $20.32 you can own 1 whole share of a Red Devil (This is not financial advice — infomercial officially over).

We’ll let you decide because, Man United released its Q1 earnings, and shockingly revenue increased by nearly 10%. It was the highest Q1 earnings in the history of the club, driven by record ticket sales and commercial revenue. But…Man United is currently 7th in the EPL standings, couldn’t make it out of group play in the UEFA Champions League, and they haven’t won a league title in over a decade.

What gives?

Table 1

🟢 Women’s soccer gaining steam. Last week, the National Women’s Soccer League (NWSL) recently signed TV agreements with CBS (~20 games), ESPN (~20 games), Amazon Prime (~30 games), and Scripps Sports (~50 games). The deal will net $240 million over four years, which will allow the NWSL to explore the market again after the 2027 World Cup. On top of that, over one-third of the league’s games will air on a direct-to-consumer service from the NWSL (LFG ladies!!!).

Question: Could it get any better? Answer: Uhhh hell yeah!

  • The first-ever labor agreement was negotiated between the NWSL and the player’s association.

  • The league increased the team salary cap this season by 40% to ~$3 million due to the new TV contract.

  • The Chicago Red Stars signed one of the biggest stars in women’s soccer, Mallory Swanson, to the richest contract in the history of the NWSL for 5-years worth more than $2.5 million guaranteed. This keeps her in Chicago where her husband, Dansby, is signed through 2029 with the Cubs 😊.

    • The previous high was set last month by María Sánchez, of the Houston Dash, for 4-years worth $1.5 million.

  • Just a few years ago teams were selling for about $2 million; now the average franchise is worth $66 million (I mean my goodness 📈).

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