Bristol City released their accounts on Thursday afternoon which revealed losses of £28.5m for the 2021/22 financial year.
The figure is £10m better off than last year which included the return of supporters to stadiums following the pandemic and the reduction of player wages that decreased from £35.3m to £30.3m. The collapse of the transfer market is still having a major impact on revenue with City raising just £1.3m through player sales.
City are heading in the right direction, albeit slowly, but there can be positives to take from the latest accounts with the Robins set to avoid a points deduction. Although it doesn't hide the fact that the club have racked up losses of £439,000-a-week for the last decade.
Football finance expert Kieran Maguire, author of 'The Price of Football: Understanding Football Club Finance', has reviewed the latest accounts and spoke to Bristol Live to provide his take on the situation.
Firstly, what's your assessment on the severity of Bristol City's losses?
Whilst Bristol City's losses look pretty horrendous, I think the general trend is that there are some positives in this. Revenue is rising, they are starting to monetize the stadium on more than the 20/30 days a year that we see from the first team playing through the use of hospitality, conference facilities and the wage bill is starting to decline slowly.
It will take a while longer yet as contracts come to an end.
Commercial revenue figures: £15.8m (2022), £7.7m (2021), £13.9m (2020)
In your opinion, what was the most striking figure from the financials?
The most striking figure is that Steve Lansdown has put £240m into Bristol City and it could be argued that he hasn't had a huge return on his investment, in the respect that the club is still in the Championship. I think it's indicative of the challenges that having a club in the EFL brings and having a benevolent owner such as Steve.
He is effectively a local lad who wants the best for local sport and that is something that fans should be very appreciative of.
How close are City to falling foul of the EFL's profit and sustainability regulations?
I think City had benefitted from the temporary rules which have been reduced by the EFL which effectively spreads losses over four seasons rather than three. Therefore they've still got some of the benefits from the sale of Adam Webster to Brighton (£20m) to bring into the equation overall.
They made losses for the last three seasons based on my calculations of around £66m which is considerably higher than the £39m allowed under traditional FFP rules but the allowances and the flexibility of the interim Covid adjustments that have now been brought into the equations have helped the club significantly.
The club will have to work hard to ensure that there's not a breach in 2023/24 if they continue to mount up significant losses on a season-by-season basis.
City CEO Richard Gould eased fears of a points deduction last month, can supporters continue to feel relaxed about the situation?
Reading the strategic report the CEO has made it clear that in the opinion of the club, they are compliant with Financial Fair Play. One can only presume that has been said after some form of communication with the EFL because otherwise, it would look somewhat foolhardy.
I think fans can breathe a sigh of relief, especially following some of the stories that arose earlier in the year where the club itself genuinely seem to feel that FFP compliance was going to be a challenge.
I've just calculated the FFP losses using the EFL averaging rules and I reckon they are around £12m in the limit so they have a fair amount of flexibility for the season.
How much profit would City need to make next year to avoid an FFP breach?
Because FFP is normally calculated over a rolling three-year period, this will include the season 2020/21 which was significantly impacted by Covid. Therefore, I think we'll have some adjustments which work in favour of City.
I don't think they necessarily have to make a profit but they certainly need to reduce losses from the levels we have seen in the accounts that have been published yesterday.
Do you believe City will need to cash in on one of their main assets in January or can they afford to wait until the summer?
City don't need to sell in January. The accounts are prepared to the 31st May, so it could be that if they haven't achieved their objectives by the end of 2022/23 and perhaps getting into the playoffs or promotion there would still be a window of opportunity to sell a player and bring in some money should, at that stage, they fear they are going to be non FFP compliant.
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