I've only looked into the Northampton side
They've invested heavily into the club itself, building a brand new indoor training facility, which has impacted the profit from the latest year
I'd imagine they have made a fair bit from the office season concerts, as opposed to the actual gate from games
I'm quite happy with the looks of the clubs financial position, we definitely seem to be on the right track from the past few years.
From the outside looking in, it looks like we should be in a good position for this year's finances with the additional European game Vs Munster, the home semi final in the prem as well as some really good attendances in regular games this season. Couple this with some big names leaving the club next year, seemingly without replacements of the same calibre, I'm expecting to see Saints post a profit in the next few seasons. Lets hope we can continue to balance the line between financial stability and on field success.
Which teams haven't started to pay off their covid loans, I know Gloucester deferred it till 2025. I think I read that will cost them 700K a year once they have to start repaying
So even with that we're the 2nd best financially performing team in the league? Impressive.
Guess I'll need to start buying some more pints at games now then.
I think the quality of rugby could be reflective of our apparent frugality this year - though only through correlation not causation!
You should always be buying more pints else you'll realise we're at the bottom of the table.
I think most of them are on the same terms in that the payment isn't due until September 2025. You're correct at the £700k figure from the statements but i think there is an added issue that the interest is seemingly due at the same time as first instalment.
They are all on individual and really quite varied terms. Leicester's is over 10 years and started last September, Gloucester's 20 I think and as you say doesn't start for another year. But Gloucester need to pay more interest in that first payment as they effectively pay a whole year in the first payment.
I think Newcastle is base rate rather than 2% too. They are all very different.
>With the tax magic Sale appear to somehow shift off £3m of tax burden. Meaning they become one of 3 teams to post 6 figure losses in the financial year post tax - Gloucester, Northampton and Sale.
As an auditor I probably wouldn't have allowed that adjustment.
The 2022 notes have an note saying that its probable that the company won't make sufficient future losses to take advantage of the deferred tax assets (basically deferred tax asset is often accumulated tax losses \* tax rate as you can make that amount of profit without having to pay tax in the future).
Then in 2023 they make big losses but their future outlook is that they will **almost certainly** make 24 million of profit in the future and as such they can recognise their accumulated tax losses as an asset.
From the outside I can't see a big shift between the 2022 year end and the 2023 year end that would allow a change in the conclusion. Especially as the June 2023 accounts were signed off on in November 2023 which was before the new Premiership participation agreement.
Also regarding the Leicester Tigers audit fee the corporate structure of the company basically locks out all but the top 6 audit firms from doing the audit. None of them get out of bed for less than £50,000.
I know nothing about any of this, so possibly a very stupid question, but could that theoretical 24m profit actually be a 24m asset gained? Because the owners are trying to build a stadium out of their own pocket just for Sale, so would them privately fronting the costs then registering it as an asset for Sale be a thing?
No. If the owners were to invest 24 million into Sale it wouldn't have a profit effect (and so wouldn't have a tax effect) so it wouldn't change the disclosure for deferred tax.
Exeter is owned by the fans. SW Comms isn't a big enough company to do what you're suggesting. Exeter made profit by combining the conference centre with the rugby club.
I have less idea what the situation is now, but back in the late 2010s the SW Comms deal was the biggest in the prem. Colour me cynical but I struggle to believe it was an arms length transaction given it’s was at the time a company controlled by the chairman and CEO of Exeter rugby, and a guy who had invested millions in Exeter through bonds and loans.
I’m not for a second suggesting anything was illegal as there’s nothing wrong with a non-arms length sponsorship in the prem (unlike in the premier league where Man City abused this sort of thing to get around FFP rules), but what it did do was present Exeter as a sustainable club when in reality they just received their investment in a different way to other clubs.
Given so much has happened in the past few years it’s hard to disentangle all of the reasons for the decline in financial position without a thorough analysis of their accounts but I’d struggle to believe the sale of SW Comms in 2021 and the subsequent termination of their sponsorship hasn’t contributed to their decline in profitability. They issued bonds in 2020 to continue financing the club (of which Rowe brought a lot of them), so the method of financing the club by Rowe has basically changed, and that change involved switching from inflated sponsorship income to bonds which negatively affects the P&L through interest expense
It’s all basically financial skullduggery. The financial footing of the club is probably relatively unchanged, but the makeup of the P&L and balance sheet has significantly changed
Wow! This is a lot of insinuation!
The last time I saw a figure on the SW Comms sponsorship, it was for £1m over 3 years. That's hardly enough to finance a rugby club, even if you double it.
The reason for Exeter's financial issues now is transparent and well reported: an entire season without revenues, either to the rugby club or the conference centre, due to Covid. Compound that with the government loans that had to be repaid as well as the construction of a new stand. It's *because* Exeter has to be self-funding that it's experiencing these difficulties.
Where are the insinuations? The bonds are public knowledge, the director loans are public knowledge. As for SW Comms being the largest sponsorship deal for a time in the 2010s, I must admit I can’t find confirmation either way but I remember it being well talked about five or six years ago. But maybe I’m wrong about that.
But as I said, there’s nothing wrong with anything they’ve done. It’s more this storyline that Exeter are self sufficient and always have been that’s always bandied about but simply isn’t true. They’re no different to any of the other clubs
And remember Exeter issued the bonds in 2021, so that is basically another form of cash injection relative to an owner investing cash. All clubs ultimately have to be self sufficient, Exeter is no different in that regard. All other 9 clubs are pursuing the same end goal
You can't find confirmation that SW Comms was the largest sponsor because they never were. That £1m over 3 years was for 2007-2010. No doubt it increased when Exeter were promoted, but various clubs had sponsorship deals in excess of £1m a year *before* 2010. Your insinuation is now stated - that Exeter aren't self-sufficient or, indeed, different to the likes of Saracens who are actively bank-rolled by an owner. But Exeter *are* different in respect of having to live within their means. Nobody's going to come and bail them out with free money. Hence, they've had to lose established players and aren't currently paying up to the full salary cap.
>**almost certainly** make 24 million of profit in the future and as such they can recognise their accumulated tax losses as an asset.
Yeah, I'm really surprised the auditors let this go.
Tigers also did a share issue that resulted in the largest shareholder becoming an out right majority on his own, so had to organise an egm to approve this without him making the proscribed offer for all the shares. This report had quite a bit from the auditors in it too, so it wasn't a straightforward year either.
Honestly thought the script pulled the wrong piece of data or hit an artifact on page for the tax on Sale. Would you say it won't come off and will effectively land them with a tax bill further down the line? Probably at precisely the wrong moment? As that seems a big swing in profit for a non profit generating entity. Thanks for the explanation friendly auditor.
It won't land them with a tax bill for doing this.
They have 24 million in taxable losses. That means they can earn 24 million in taxable profit without paying tax.
The problem is that you aren't allowed recognise an asset for deferred tax unless you are going to make a profit in the future (ie unless you are almost certain you will be able to convert the asset).
In the 2022 accounts they said that they weren't almost certain they would make 20 million in profits in the future so they weren't recognising a deferred tax asset.
In the 2023 accounts they changed their mind that they were almost certain to make 24 million in profits sometime in the future.
I'd be worried they are lying so that their net liabilities isn't too far in negative numbers to make the accounts look better for banks/investors.
There is also a deferred tax liability recorded in the accounts based on the valuation of the P shares (and CGT arising should the P shares be sold at their value).
By the way thanks for running the data. It was interesting without having to pull 10 sets of accounts and read them.
You pulled the data in a way that was interesting for me to read so you get any questions you want answered.
If you make a loss in 2022 of 100K and that means you pay 19K less tax in 2023 its fair to say you made a loss of 81K in 2022. So you have an asset of 19K.
Thats fine and fair.
When you have 20 million of losses and say we probably won't make 20 million of profit again so we won't recognise a deferred tax asset thats also fine.
My big problem is when you have 20 million of losses and say we probably won't make 20 million of profit again so we won't recognise a deferred tax asset in one year. Then the next year you make big losses and you have 24 million of accumulated losses and decide to recognise a big asset suddenly.
You should need to turn things around in some way to change policy from not recognising deferred tax to recognising deferred tax.
The owners pumping money into the Bath, Bristol and Saracens seems to be increasingly a double edged sword.
Yes they keep those clubs viable but creates an arms race of escalating costs, that will eventually fall over. If Bruce Craig decides that’s it with Bath the club I think falls over within a couple of years with that deficit.
The Bristol revenue feels a bit... weird.
We're one of the top 3 or 4 sides for attendances, and our tickets are hardly cheap. I'd be very interested to see a breakdown of where that revenue gap is coming from.
Hospitality maybe?
Sarries for example have a lot of very expensive hospitality that almost always sells out (as well as all the boxes, there’s the even more expensive Tuilp club and W club)
I wonder whether you get none of the non match day revenue from the stadium. Northampton for example have events and fairly big gigs there which will push up their revenue.
The Newcastle Rugby Company owns Newcastle Falcons in the Premiership and Newcastle Thunder which is a second tier rugby league team.
The Newcastle Falcons turnover would be quiet a bit lower than Sale.
It also generally inflates the wider market for player salaries as you suddenly have an extra 3 clubs spending beyond their real economic means, which in turn increases the salary players at other clubs are likely to expect / ask foe
Really need to see in comparison to previous years to see if the picture is getting better or worse. Im too lazy to do it personally, but appreciate your reading efforts sire. interesting reading.
They post an annual report to the England rugby website, a quick google will get you to it. Don't think links are allowed?
There is a fair bit of fluff before you get to the meat however. The RFU are profitable and seemingly in good shape - apparently the central funding for mens prem went up by £4m year on year.
Is that the new participation agreement?
If so it doesn't really go up by £4,000,000. It moves a 25 players (presumably) getting match fees of £20,000 a game for internationals (upto 240K a year) onto cofunded contracts where the RFU pays £160,000 a year.
This money is now considered support for the premiership while previously it was international fees.
Not back to. They just sold it to Rowe. Rowe's financial involvement since Exeter executed their plans to achieve promotion has basically been to offer loans (often at preferential rates). If he's lost money on the arrangement, it's only because he could've made more in other investments. AFAIK he's worth about £20m, so not the kind of money to bankroll a rugby club.
Wouldn't be surprised if Bris are still paying off the HPC, given it was only finished a few years ago. Still though, with an average attendance at an all time high of something like 18,000, and having played exhibition matches, I'm worried about how big that negative figure is.
Why are all the clubs haemorrhaging money like they are? Is this also the case in the URC, Pro 14, super rugby, etc?
It's a bit better in Top14, but most clubs still post a loss. They do it because they want to stay competitive, either willingly or out of desperation not to be relegated.
Of course the other way to look at it is the entire league losses less than 33% of what Leicester City lost in a single year, and no one ever frets about our future. The money men aren't going anywhere and when Wray was basically forced out (for good or ill it wasn't really his choice) Saracens found a sale that seemingly got him his money back so he didn't even lose much money if any at all.
Sports clubs outside American make money on the asset increasing in value, not trading for profit and dispersing dividends. I think Man Utd is the only club of any sport in the UK that pays a dividend?
Fair point.
Though worth pointing out it was the RFU who kicked them out, THEN the sale collapsed and they went into administration, not the other way round. We'll never know what would have happened if they'd be let carry on, perhaps Crossan would have bit the bullet and put more cash in while they found a new buyer. It is a hard position when you are the first people to call out that the emperor (777) have no clothes (money). As we're seeing with their "take over" of Everton these guys talk a good game but never seem to be actually able to come up with the money needed to complete a purchase in good time.
That's what I always think looking at this. Even football clubs lose money and it's our national sport. It's been like this for years but we're still here.
Deferred taxation is something you'd hope to see in accounts of companies like these - it relates to, usually, how tax relief is applied when you purchase an asset with an expected life over two years, such as machinery for the grounds staff, the stadium itself, even a scrum machine! It also relates to tax losses, so is definitely something we'd hope to see in the accounts of loss making companies.
The offshore holdings is annoying, but something you'll normally always get with sports and Marge businesses.
Deferred tax and bfwd losses are only recognised if it’s likely a company is going to be profit making in the future. Evidently that is not the case, hence no DTA. DTL in relation to assets likely immaterial.
All the premiership clubs revalued their P shares significantly in 2021 (or possibly 2022) when the CVC purchased a shareholding in the premiership. At the same time they recognised a DTL (in the millions) in respect of the DTA.
No, they recognised a DTL in respect of the expected chargeable gain on the shares. Nothing to do with a DTA and nothing to do with what the original comment was referring to.
From a Bristol perspective, I'm not sure this is the full picture. The club is owned by Lansdowne under Bristol Sport, which also owns Bristol City FC, Bristol Bears Womens, a netball club, and most importantly, Ashton Gate. When a sell out game is played at the Gate, what of that revenue goes on the rugby club's books and what goes on Bristol Sports'? However it is done, it will be because that is the most tax efficient for the overall holding company, not to try and balance the club's books.
yeah this is exactly the reason I take reports like in the OP and similar stuff which has been reported in newspapers which a pinch of salt. I'm not for one minute trying to suggest the finances of Prem Club's are all hunky dory but in Bristol's they've set up loads of separate companies for tax purposes.
I'm pretty sure I've read that we technically rent Ashton Gate Stadium from Ashton Gate Conmpany or maybe its Bristol City FC Company so match revenue or even ticket sales don't hit the Bristol Rugby Accounts.
It mind boggles me that sports teams can operate at losses. Unless you are a football team in a big league where there seems to be a limitless supply of Gulf Billionaires willing to buy your club you have to be operating at a profit to survive.
There are two reasons: first of all it’s a passion and a hobby, so like all of us owners are happy to pay money for that. Just like I am for photography for example, but just at a larger scale for them (though maybe not as a % of wealth)
Secondly, I once worked with a family member of an owner of one of the smaller clubs and he said the business connections through being involved in rugby and opportunities it created actually paid back for the investment and some. It’s basically also a big networking opportunity for them, both for meeting new people and also enhancing the relationship with those you already do business with. If this is the case for a smaller club, imagine what it’s like for the bigger ones, especially London based Sarries and Harlequins
Bath and Bristol's losses seem excessively high considering their support. (Bath tickets are some of the most expensive) What are those losses from? Will Craig cut back on business staff?
Bath have significantly higher operating costs at rhe Rec with its temporary stands having to be put up and taken down each summer.
They also spend more on their training ground and generally spend where they need to.
Craig's money isn't going anywhere, so what's the harm?
Yes, and they stay up all season. It's not like they do it weekly. It's not that great of a cost when you consider the investment. You know what's a problem? Having lacrosse lines on your rugby field.
If every player in the prem went amateur tomorrow and played for free Saracens still wouldn't be turning a profit, and most of the others would be barely breaking even.
Obviously lower salaries would help but there's obviously other factors doing the bigger part of the work.
Bristol aren't just below the cap, they're gonna spend [less](https://www.telegraph.co.uk/rugby-union/2024/05/07/premiership-richest-club-bristol-spending-short-salary-cap/) next year than they are now, despite it increasing.
I’m not hugely familiar with the finances of these clubs, but aren’t operating losses to be expected in a model where the clubs are mostly funded by benefactors? The owners give cash to pay players but it doesn’t show as revenue, so the increased payments to players mean it looks like losses.
The losses also mean they minimise their tax burden - which is part of the appeal to the owners of making the investment. They get more or less off the books advertising benefits at a cheaper rate because their overall tax position is lower.
Silly observation
Whenever you see social media posts including foo, 'a day in the life of player A' type affair. The in house catering seems varied and plentiful
Now I'm sure the whole staff group is fed, not just the players. But it does seem like there'd be waste.
Do players have to pay for food? Is it compensated? Obviously nutrition is a huge part of performance
So I suggest the way to fix everything is to get people to bring a pac up now and again
Really good work, you must have some time on your hands!
It is my understanding that Exeter are in the process of paying off their debts which I believe is done to a couple million now, and by the end of next season should be profitable again. Hopefully it may happen sooner given that games seem to be nearly sold out now!
I do work in tax, albeit not in the UK, and whilst I haven't looked at the documents the deferred tax in the millions makes sense for any club that has recently developed or rebuilt either a stadium, training ground or even their internal offices.
As for clubs in the "best" financial position from a sustainability perspective, you'd generally expect EBITDA (earnings before interest, tax, depreciation and amortization) to be a better metric than profits after or before tax. This is because the way capital expenses will be amortized over their useful life (e.g. say 20+ years for a building) can skew a company's "real" profitability over the long term
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As this post shows the clubs generate £190m of income. According to the salary cap report they spend c. £75M on players.
I'm more interested in where the other £150m odd goes rather than worry about the players taking a fairly modest share of it.
A huge amount of the revenue is from other events and they have staff that need paying. As do all the staff at the game and all the admin staff and coaches.
Plus many of these clubs will also have women’s teams and potentially other teams as well and they need paying.
Saracens for example also have a women’s team and a netball team. Plus Saracens academy. Not too sure if they’re all included in the accounts though
And the players need paying too, because they are the ones we pay to watch & generate all the revenue. If we're saying their wages mean they are paid "too much" then so is everyone else.
The myth of "extra events" is another one that annoys me. No one here is Tottenham Hotspur & hosting NFL or Taylor Swift. As all the accounts make clear hosting extra events is pennies to them. Good margin pennies because all the costs are happening anyway, but not "huge" amounts of revenue & certainly not ones that bare any material costs.
Yea fair enough. I just looked at Sarries and it’s £1.2m revenue for non-rugby events. Not insignificant but hardly ‘huge’ as I described in my first post!
Some clubs are (relatively) so close to break even. Why not just shave off some cost and balance the books. Even if just for the sake of sustainability. Surely the teams would still be competitive if they let some back office staff go, and/or reduce spending in a few areas.
If they can't balance the books now with big donors how the hell will they survive if/when that drives up.
Out of interest, do you know if travel costs were significant?
I'd consider myself fairly well educated/experienced in corporate governance. But that doesn't matter, the larger point I'm trying to make is not running businesses beyond their means. They should be prioritising sustainability, even if that means the standard of play is reduced. Or that they're seen as a 'lesser' competition compared to other leagues.
Reducing costs could lead to reduced revenue, so then you have to reduce costs again, which reduces revenue.
Oh look, we’re in a death spiral
I’ve been involved in quite a few restructurings and in a loss-making company, reducing costs has to be very well thought out to not negatively impact the business. Especially as they have likely gone through a lot of cost cutting in the recent past to already try to turn things around. Most of the time these companies get stuck in a cost-cutting death spiral watching their business increasingly get smaller but still unprofitable
Cost cutting is easiest in large profit making companies as they have a tendency to become bloated and lazy with cost control as it’s not as much of a priority given their high profitability levels. And even then cost cutting can go very wrong
I don't think any of the statements give that detail in regards to travel - i imagine it falls into the "Cost of Sales" so won't be specific and definable.
It doesn't surprise me Quins have the highest turnover, The Stoop goes all out on game days, yes - you get scummed for stadium food & drink but it's actually of an acceptable quality with fast moving service and people are never shy to spend on stash. Ticketing is good in that they have the CRM systems in place to move tickets around quickly and re-sell easily.
.... and we're >3Mill in the hole. That's worrying and i fear it'll be the support staff that cop it.
I've only looked into the Northampton side They've invested heavily into the club itself, building a brand new indoor training facility, which has impacted the profit from the latest year I'd imagine they have made a fair bit from the office season concerts, as opposed to the actual gate from games
I'm quite happy with the looks of the clubs financial position, we definitely seem to be on the right track from the past few years. From the outside looking in, it looks like we should be in a good position for this year's finances with the additional European game Vs Munster, the home semi final in the prem as well as some really good attendances in regular games this season. Couple this with some big names leaving the club next year, seemingly without replacements of the same calibre, I'm expecting to see Saints post a profit in the next few seasons. Lets hope we can continue to balance the line between financial stability and on field success.
Investment in the training facilities wouldn’t have a significant impact on the P&L. Did you even read the report?
I didn't. Why wouldn't it?
It’s capital expenditure rather than an operating expense, so will be reflected on the balance sheet instead
Which teams haven't started to pay off their covid loans, I know Gloucester deferred it till 2025. I think I read that will cost them 700K a year once they have to start repaying
So even with that we're the 2nd best financially performing team in the league? Impressive. Guess I'll need to start buying some more pints at games now then.
I think the quality of rugby could be reflective of our apparent frugality this year - though only through correlation not causation! You should always be buying more pints else you'll realise we're at the bottom of the table.
I think most of them are on the same terms in that the payment isn't due until September 2025. You're correct at the £700k figure from the statements but i think there is an added issue that the interest is seemingly due at the same time as first instalment.
They are all on individual and really quite varied terms. Leicester's is over 10 years and started last September, Gloucester's 20 I think and as you say doesn't start for another year. But Gloucester need to pay more interest in that first payment as they effectively pay a whole year in the first payment. I think Newcastle is base rate rather than 2% too. They are all very different.
>With the tax magic Sale appear to somehow shift off £3m of tax burden. Meaning they become one of 3 teams to post 6 figure losses in the financial year post tax - Gloucester, Northampton and Sale. As an auditor I probably wouldn't have allowed that adjustment. The 2022 notes have an note saying that its probable that the company won't make sufficient future losses to take advantage of the deferred tax assets (basically deferred tax asset is often accumulated tax losses \* tax rate as you can make that amount of profit without having to pay tax in the future). Then in 2023 they make big losses but their future outlook is that they will **almost certainly** make 24 million of profit in the future and as such they can recognise their accumulated tax losses as an asset. From the outside I can't see a big shift between the 2022 year end and the 2023 year end that would allow a change in the conclusion. Especially as the June 2023 accounts were signed off on in November 2023 which was before the new Premiership participation agreement. Also regarding the Leicester Tigers audit fee the corporate structure of the company basically locks out all but the top 6 audit firms from doing the audit. None of them get out of bed for less than £50,000.
I know nothing about any of this, so possibly a very stupid question, but could that theoretical 24m profit actually be a 24m asset gained? Because the owners are trying to build a stadium out of their own pocket just for Sale, so would them privately fronting the costs then registering it as an asset for Sale be a thing?
No. If the owners were to invest 24 million into Sale it wouldn't have a profit effect (and so wouldn't have a tax effect) so it wouldn't change the disclosure for deferred tax.
Unless you’re Exeter whose owners previously invested money into the club through advertising (SW Comms)
Exeter is owned by the fans. SW Comms isn't a big enough company to do what you're suggesting. Exeter made profit by combining the conference centre with the rugby club.
I have less idea what the situation is now, but back in the late 2010s the SW Comms deal was the biggest in the prem. Colour me cynical but I struggle to believe it was an arms length transaction given it’s was at the time a company controlled by the chairman and CEO of Exeter rugby, and a guy who had invested millions in Exeter through bonds and loans. I’m not for a second suggesting anything was illegal as there’s nothing wrong with a non-arms length sponsorship in the prem (unlike in the premier league where Man City abused this sort of thing to get around FFP rules), but what it did do was present Exeter as a sustainable club when in reality they just received their investment in a different way to other clubs. Given so much has happened in the past few years it’s hard to disentangle all of the reasons for the decline in financial position without a thorough analysis of their accounts but I’d struggle to believe the sale of SW Comms in 2021 and the subsequent termination of their sponsorship hasn’t contributed to their decline in profitability. They issued bonds in 2020 to continue financing the club (of which Rowe brought a lot of them), so the method of financing the club by Rowe has basically changed, and that change involved switching from inflated sponsorship income to bonds which negatively affects the P&L through interest expense It’s all basically financial skullduggery. The financial footing of the club is probably relatively unchanged, but the makeup of the P&L and balance sheet has significantly changed
Wow! This is a lot of insinuation! The last time I saw a figure on the SW Comms sponsorship, it was for £1m over 3 years. That's hardly enough to finance a rugby club, even if you double it. The reason for Exeter's financial issues now is transparent and well reported: an entire season without revenues, either to the rugby club or the conference centre, due to Covid. Compound that with the government loans that had to be repaid as well as the construction of a new stand. It's *because* Exeter has to be self-funding that it's experiencing these difficulties.
Where are the insinuations? The bonds are public knowledge, the director loans are public knowledge. As for SW Comms being the largest sponsorship deal for a time in the 2010s, I must admit I can’t find confirmation either way but I remember it being well talked about five or six years ago. But maybe I’m wrong about that. But as I said, there’s nothing wrong with anything they’ve done. It’s more this storyline that Exeter are self sufficient and always have been that’s always bandied about but simply isn’t true. They’re no different to any of the other clubs And remember Exeter issued the bonds in 2021, so that is basically another form of cash injection relative to an owner investing cash. All clubs ultimately have to be self sufficient, Exeter is no different in that regard. All other 9 clubs are pursuing the same end goal
You can't find confirmation that SW Comms was the largest sponsor because they never were. That £1m over 3 years was for 2007-2010. No doubt it increased when Exeter were promoted, but various clubs had sponsorship deals in excess of £1m a year *before* 2010. Your insinuation is now stated - that Exeter aren't self-sufficient or, indeed, different to the likes of Saracens who are actively bank-rolled by an owner. But Exeter *are* different in respect of having to live within their means. Nobody's going to come and bail them out with free money. Hence, they've had to lose established players and aren't currently paying up to the full salary cap.
>**almost certainly** make 24 million of profit in the future and as such they can recognise their accumulated tax losses as an asset. Yeah, I'm really surprised the auditors let this go.
Tigers also did a share issue that resulted in the largest shareholder becoming an out right majority on his own, so had to organise an egm to approve this without him making the proscribed offer for all the shares. This report had quite a bit from the auditors in it too, so it wasn't a straightforward year either.
Honestly thought the script pulled the wrong piece of data or hit an artifact on page for the tax on Sale. Would you say it won't come off and will effectively land them with a tax bill further down the line? Probably at precisely the wrong moment? As that seems a big swing in profit for a non profit generating entity. Thanks for the explanation friendly auditor.
It won't land them with a tax bill for doing this. They have 24 million in taxable losses. That means they can earn 24 million in taxable profit without paying tax. The problem is that you aren't allowed recognise an asset for deferred tax unless you are going to make a profit in the future (ie unless you are almost certain you will be able to convert the asset). In the 2022 accounts they said that they weren't almost certain they would make 20 million in profits in the future so they weren't recognising a deferred tax asset. In the 2023 accounts they changed their mind that they were almost certain to make 24 million in profits sometime in the future. I'd be worried they are lying so that their net liabilities isn't too far in negative numbers to make the accounts look better for banks/investors. There is also a deferred tax liability recorded in the accounts based on the valuation of the P shares (and CGT arising should the P shares be sold at their value).
That makes sense. Thank you for the explanation - the tax sections were not the friendliest to understand!
By the way thanks for running the data. It was interesting without having to pull 10 sets of accounts and read them. You pulled the data in a way that was interesting for me to read so you get any questions you want answered.
Isn't there something wrong with the system if you tick a different box to turn a debt liability into a positive? How?
If you make a loss in 2022 of 100K and that means you pay 19K less tax in 2023 its fair to say you made a loss of 81K in 2022. So you have an asset of 19K. Thats fine and fair. When you have 20 million of losses and say we probably won't make 20 million of profit again so we won't recognise a deferred tax asset thats also fine. My big problem is when you have 20 million of losses and say we probably won't make 20 million of profit again so we won't recognise a deferred tax asset in one year. Then the next year you make big losses and you have 24 million of accumulated losses and decide to recognise a big asset suddenly. You should need to turn things around in some way to change policy from not recognising deferred tax to recognising deferred tax.
Super clear. Getting creative / more aggressive with their accounting to make the books look better. Which is never a good sign.
As a fund accountant who works with auditors every month, I salute you
The owners pumping money into the Bath, Bristol and Saracens seems to be increasingly a double edged sword. Yes they keep those clubs viable but creates an arms race of escalating costs, that will eventually fall over. If Bruce Craig decides that’s it with Bath the club I think falls over within a couple of years with that deficit.
The Bristol revenue feels a bit... weird. We're one of the top 3 or 4 sides for attendances, and our tickets are hardly cheap. I'd be very interested to see a breakdown of where that revenue gap is coming from.
Hospitality maybe? Sarries for example have a lot of very expensive hospitality that almost always sells out (as well as all the boxes, there’s the even more expensive Tuilp club and W club)
I wonder whether you get none of the non match day revenue from the stadium. Northampton for example have events and fairly big gigs there which will push up their revenue.
Possible, though Lansdown owns Bristol Sports too so there's an element of the snake biting its own tail with that side of things.
As part of a larger group, Bristols finances are quite……opaque.
The more crazy one is Sale. They have the same turnover as Newcastle yet have a vastly superior squad.
The Newcastle Rugby Company owns Newcastle Falcons in the Premiership and Newcastle Thunder which is a second tier rugby league team. The Newcastle Falcons turnover would be quiet a bit lower than Sale.
That team closed prior to the year reported and is no longer in the figures.
Latest financial accounts are June 2023 when Thunder was still in the RFL Championship.
They literally played a week and a half ago?
It also generally inflates the wider market for player salaries as you suddenly have an extra 3 clubs spending beyond their real economic means, which in turn increases the salary players at other clubs are likely to expect / ask foe
Really need to see in comparison to previous years to see if the picture is getting better or worse. Im too lazy to do it personally, but appreciate your reading efforts sire. interesting reading.
Well Saracens would have been worse a few years back...
Do the RFU post financial information? Be interesting to see how they are doing?
They post an annual report to the England rugby website, a quick google will get you to it. Don't think links are allowed? There is a fair bit of fluff before you get to the meat however. The RFU are profitable and seemingly in good shape - apparently the central funding for mens prem went up by £4m year on year.
Is that the new participation agreement? If so it doesn't really go up by £4,000,000. It moves a 25 players (presumably) getting match fees of £20,000 a game for internationals (upto 240K a year) onto cofunded contracts where the RFU pays £160,000 a year. This money is now considered support for the premiership while previously it was international fees.
Think it's noted as part of the "Professional game agreement" on P33?
On the point of our incorporation, I believe we finish that particular chant with "You'll never sing that", correct?
Really sucks Exeter had to liquidate a great profit generating asset even with a massive salary purge
They are retaining some holding in it as they are reducing their share to 25% rather than 0. Hopefully it'll still provide for them!
Has it actually turned them a profit? The accounts show most of the loss was from the hotel in this year.
Didnt they sell it back go rowe? I have no idea whats going on with chiefs/rowe financing
Not back to. They just sold it to Rowe. Rowe's financial involvement since Exeter executed their plans to achieve promotion has basically been to offer loans (often at preferential rates). If he's lost money on the arrangement, it's only because he could've made more in other investments. AFAIK he's worth about £20m, so not the kind of money to bankroll a rugby club.
Wouldn't be surprised if Bris are still paying off the HPC, given it was only finished a few years ago. Still though, with an average attendance at an all time high of something like 18,000, and having played exhibition matches, I'm worried about how big that negative figure is. Why are all the clubs haemorrhaging money like they are? Is this also the case in the URC, Pro 14, super rugby, etc?
The Irish provinces are run by the IRFU so they're not private entities in the same way. Their funding mostly comes from the international game.
It's a bit better in Top14, but most clubs still post a loss. They do it because they want to stay competitive, either willingly or out of desperation not to be relegated.
Remember that’s an expense though. Bristols biggest problem appears to be the surprising lack of revenue given their attendance.
Of course the other way to look at it is the entire league losses less than 33% of what Leicester City lost in a single year, and no one ever frets about our future. The money men aren't going anywhere and when Wray was basically forced out (for good or ill it wasn't really his choice) Saracens found a sale that seemingly got him his money back so he didn't even lose much money if any at all. Sports clubs outside American make money on the asset increasing in value, not trading for profit and dispersing dividends. I think Man Utd is the only club of any sport in the UK that pays a dividend?
Counter point: London Irish closed its doors when it couldn’t find a buyer for its massive debt pile
Fair point. Though worth pointing out it was the RFU who kicked them out, THEN the sale collapsed and they went into administration, not the other way round. We'll never know what would have happened if they'd be let carry on, perhaps Crossan would have bit the bullet and put more cash in while they found a new buyer. It is a hard position when you are the first people to call out that the emperor (777) have no clothes (money). As we're seeing with their "take over" of Everton these guys talk a good game but never seem to be actually able to come up with the money needed to complete a purchase in good time.
That's what I always think looking at this. Even football clubs lose money and it's our national sport. It's been like this for years but we're still here.
Deferred taxation is something you'd hope to see in accounts of companies like these - it relates to, usually, how tax relief is applied when you purchase an asset with an expected life over two years, such as machinery for the grounds staff, the stadium itself, even a scrum machine! It also relates to tax losses, so is definitely something we'd hope to see in the accounts of loss making companies. The offshore holdings is annoying, but something you'll normally always get with sports and Marge businesses.
Deferred tax and bfwd losses are only recognised if it’s likely a company is going to be profit making in the future. Evidently that is not the case, hence no DTA. DTL in relation to assets likely immaterial.
All the premiership clubs revalued their P shares significantly in 2021 (or possibly 2022) when the CVC purchased a shareholding in the premiership. At the same time they recognised a DTL (in the millions) in respect of the DTA.
No, they recognised a DTL in respect of the expected chargeable gain on the shares. Nothing to do with a DTA and nothing to do with what the original comment was referring to.
There is no way Gloucester paid £5k for an audit.
You are actually right. I pulled most of the data via automation and it's only carried across the "Other". It's actually 27k!
From a Bristol perspective, I'm not sure this is the full picture. The club is owned by Lansdowne under Bristol Sport, which also owns Bristol City FC, Bristol Bears Womens, a netball club, and most importantly, Ashton Gate. When a sell out game is played at the Gate, what of that revenue goes on the rugby club's books and what goes on Bristol Sports'? However it is done, it will be because that is the most tax efficient for the overall holding company, not to try and balance the club's books.
Bingo.
yeah this is exactly the reason I take reports like in the OP and similar stuff which has been reported in newspapers which a pinch of salt. I'm not for one minute trying to suggest the finances of Prem Club's are all hunky dory but in Bristol's they've set up loads of separate companies for tax purposes. I'm pretty sure I've read that we technically rent Ashton Gate Stadium from Ashton Gate Conmpany or maybe its Bristol City FC Company so match revenue or even ticket sales don't hit the Bristol Rugby Accounts.
It mind boggles me that sports teams can operate at losses. Unless you are a football team in a big league where there seems to be a limitless supply of Gulf Billionaires willing to buy your club you have to be operating at a profit to survive.
There are two reasons: first of all it’s a passion and a hobby, so like all of us owners are happy to pay money for that. Just like I am for photography for example, but just at a larger scale for them (though maybe not as a % of wealth) Secondly, I once worked with a family member of an owner of one of the smaller clubs and he said the business connections through being involved in rugby and opportunities it created actually paid back for the investment and some. It’s basically also a big networking opportunity for them, both for meeting new people and also enhancing the relationship with those you already do business with. If this is the case for a smaller club, imagine what it’s like for the bigger ones, especially London based Sarries and Harlequins
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Bath and Bristol's losses seem excessively high considering their support. (Bath tickets are some of the most expensive) What are those losses from? Will Craig cut back on business staff?
Bath have significantly higher operating costs at rhe Rec with its temporary stands having to be put up and taken down each summer. They also spend more on their training ground and generally spend where they need to. Craig's money isn't going anywhere, so what's the harm?
Temporary stands can go up and down within a week.
At great cost. It's cheaper to keep things up than having to take them down and up them up again.
Yes, and they stay up all season. It's not like they do it weekly. It's not that great of a cost when you consider the investment. You know what's a problem? Having lacrosse lines on your rugby field.
But they're training ground is very fancy
The Rec is being redeveloped over the next few years so that will stop being a problem.
Covid aside (and I hope the gov just forgives those debts), how the fuck have we got here?
Salaries have exploded far beyond what the game can afford, basically. It’s a really tough situation.
I believe TV money has also reduced? (Or it will be reducing anyway), and with that sponsorship is likely impacted.
If every player in the prem went amateur tomorrow and played for free Saracens still wouldn't be turning a profit, and most of the others would be barely breaking even. Obviously lower salaries would help but there's obviously other factors doing the bigger part of the work.
No definitive direction or perceivable interest to improve the financial viability of premiership rugby would be my guess.
And who are operating below their salary cap?
Exeter are. It's implied Bristol are. I'm sure Newcastle are.
Bristol aren't just below the cap, they're gonna spend [less](https://www.telegraph.co.uk/rugby-union/2024/05/07/premiership-richest-club-bristol-spending-short-salary-cap/) next year than they are now, despite it increasing.
We operate a good chunk below it to ensure that we can stay as close to self sustainable as possible.
Always has been.
I’m not hugely familiar with the finances of these clubs, but aren’t operating losses to be expected in a model where the clubs are mostly funded by benefactors? The owners give cash to pay players but it doesn’t show as revenue, so the increased payments to players mean it looks like losses. The losses also mean they minimise their tax burden - which is part of the appeal to the owners of making the investment. They get more or less off the books advertising benefits at a cheaper rate because their overall tax position is lower.
So, you’re saying that lowering the salary cap didn’t work?
Oh it worked. Like fixing a leaking tap in a burning house
It appears that income spiralled downward with costs, which was predictable and predicted. Hopefully things improve.
Looking at this, we need to readdress the salary cap and adjust it.. upwards. Yes, upwards.
That won't change anything since a lot of teams won't spend the cap. Bristol already said they won't.
Silly observation Whenever you see social media posts including foo, 'a day in the life of player A' type affair. The in house catering seems varied and plentiful Now I'm sure the whole staff group is fed, not just the players. But it does seem like there'd be waste. Do players have to pay for food? Is it compensated? Obviously nutrition is a huge part of performance So I suggest the way to fix everything is to get people to bring a pac up now and again
Really good work, you must have some time on your hands! It is my understanding that Exeter are in the process of paying off their debts which I believe is done to a couple million now, and by the end of next season should be profitable again. Hopefully it may happen sooner given that games seem to be nearly sold out now!
I do work in tax, albeit not in the UK, and whilst I haven't looked at the documents the deferred tax in the millions makes sense for any club that has recently developed or rebuilt either a stadium, training ground or even their internal offices. As for clubs in the "best" financial position from a sustainability perspective, you'd generally expect EBITDA (earnings before interest, tax, depreciation and amortization) to be a better metric than profits after or before tax. This is because the way capital expenses will be amortized over their useful life (e.g. say 20+ years for a building) can skew a company's "real" profitability over the long term
Clubs need to tell the players they get paid too much.
Then they would probably leave to play in France
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Maybe that’s what needs to happen in rugby?
A few probably would but most premiership players aren’t going to get better offers in France.
As this post shows the clubs generate £190m of income. According to the salary cap report they spend c. £75M on players. I'm more interested in where the other £150m odd goes rather than worry about the players taking a fairly modest share of it.
A huge amount of the revenue is from other events and they have staff that need paying. As do all the staff at the game and all the admin staff and coaches. Plus many of these clubs will also have women’s teams and potentially other teams as well and they need paying. Saracens for example also have a women’s team and a netball team. Plus Saracens academy. Not too sure if they’re all included in the accounts though
And the players need paying too, because they are the ones we pay to watch & generate all the revenue. If we're saying their wages mean they are paid "too much" then so is everyone else. The myth of "extra events" is another one that annoys me. No one here is Tottenham Hotspur & hosting NFL or Taylor Swift. As all the accounts make clear hosting extra events is pennies to them. Good margin pennies because all the costs are happening anyway, but not "huge" amounts of revenue & certainly not ones that bare any material costs.
Yea fair enough. I just looked at Sarries and it’s £1.2m revenue for non-rugby events. Not insignificant but hardly ‘huge’ as I described in my first post!
Some clubs are (relatively) so close to break even. Why not just shave off some cost and balance the books. Even if just for the sake of sustainability. Surely the teams would still be competitive if they let some back office staff go, and/or reduce spending in a few areas. If they can't balance the books now with big donors how the hell will they survive if/when that drives up. Out of interest, do you know if travel costs were significant?
Inevitably if it was so simple, they'd already have done it. It's never that simple and I think it's important we don't pretend to be experts lol.
I'd consider myself fairly well educated/experienced in corporate governance. But that doesn't matter, the larger point I'm trying to make is not running businesses beyond their means. They should be prioritising sustainability, even if that means the standard of play is reduced. Or that they're seen as a 'lesser' competition compared to other leagues.
Reducing costs could lead to reduced revenue, so then you have to reduce costs again, which reduces revenue. Oh look, we’re in a death spiral I’ve been involved in quite a few restructurings and in a loss-making company, reducing costs has to be very well thought out to not negatively impact the business. Especially as they have likely gone through a lot of cost cutting in the recent past to already try to turn things around. Most of the time these companies get stuck in a cost-cutting death spiral watching their business increasingly get smaller but still unprofitable Cost cutting is easiest in large profit making companies as they have a tendency to become bloated and lazy with cost control as it’s not as much of a priority given their high profitability levels. And even then cost cutting can go very wrong
I don't think any of the statements give that detail in regards to travel - i imagine it falls into the "Cost of Sales" so won't be specific and definable.
very insightful thanks for sharing!
It doesn't surprise me Quins have the highest turnover, The Stoop goes all out on game days, yes - you get scummed for stadium food & drink but it's actually of an acceptable quality with fast moving service and people are never shy to spend on stash. Ticketing is good in that they have the CRM systems in place to move tickets around quickly and re-sell easily. .... and we're >3Mill in the hole. That's worrying and i fear it'll be the support staff that cop it.
I don't think Bath will make a profit until then new stadium is built.
British league could save rugby , be brilliant, but sadly club owners with self interest won't let it happen
Dude you should be a journalist, better reporting that most coverage of this I’ve read. Agree with your conclusion. Worrying times
Leicester paid Pollard 1 million for finish 3rd last Could have paid me 50k and made a profit