New West Brom club accounts reveal £11million loss as costs rise
A loss of £11million has been recorded in Albion's latest set of financial accounts.
The filings, submitted to Companies House and dated for 12 months to June 2023, show a loss after profits had been reported in two years previously.
The loss is after a pre-tax profit of £5.4m recorded to June 30, 2022 and a small profit of £100,000 to June 2021. Championship clubs are currently permitted no more than £39m losses over three years.
Albion's turnover also decreased by almost £10m from £65.4m in 2022 to £56.7m. This includes the second and final year of parachute payments. Turnover will drop significantly in the next set of accounts, for the period to June 2024, as Albion operated without any Premier League parachute payments for the 2023/24 Championship campaign.
Fees paid for player registrations during the period are £11.4m, down from £12.6m. These relate to fees paid during the 12 months, such as to Huddersfield Town for Karlan Grant and West Ham United for Grady Diangana, rather than new signings.
Fees received totalled £9.8m, down from £17.8m in 2022 – some of which remains from the 2021 sale of Matheus Pereira to Al Hilal. Callum Robinson was also purchased by Cardiff during the period.
Defender Dara O'Shea's £7m exit to Burnley before the end of last June was accounted for in these figures and offered the club breathing room last year.
There was an increase in staff costs from £42.4m to £45.9m. The rise included new signings – those who checked in during the summer of 2022, including free agents Jed Wallace, John Swift and Okay Yokuslu and fees paid for Brandon Thomas-Asante and Nathaniel Chalobah – and the decision to sack Steve Bruce and replace with Carlos Corberan in October 2022, plus other staff.
The figure reduced last summer as a handful of senior out-of-contract players departed and will decrease further this summer. A significant number of first-team players are out of contract at the end of June as Albion look to balance the books.
Club accounts differ from figures for West Bromwich Albion Group, Albion's parent company now belonging to owner Shilen Patel's Bilkul Football WBA following the American's takeover, completed at the end of February.
Group posted a loss of £7.6m, £3.4m less than club, and the differences owe to the recently repaid £5m – plus significant interest – Wisdom Smart loan received to Group from Bilkul Football, as well as the loan extension of a further £8m to cover overheads received from equity firm MSD Holdings at the end of last November – Albion previously received £20m from the lender. The Wisdom Smart loan had been impaired in previous accounts.
A King's Counsel investigation is continuing into an historic 2014 taken from Albion, which was novated from Guochuan Lai's former West Bromwich Albion Holdings to Bilkul Football WBA within the takeover.
Patel took on the club's debts in his £60m overall takeover, including running costs, from Lai just over a month ago.
Patel's Bilkul Football WBA – owned alongside his father Dr Kiran Patel – acquired 87.8 per cent shareholding of Group from Lai after the latter's near-eight year tenure, which had brought severe financial uncertainty to the club due to a lack of investment.
While Albion's losses are relatively small, the club could face a challenging period ahead to comply with current financial fair play (FFP) regulations, if they remain in place moving forward.
Existing profit and sustainability rules (PSR) state Championship clubs can record losses of no more than £39m across three years – an average of £13m per season.
EFL records are taken from Group level (£7.6m loss) but losses in the next set of accounts, to June 2024, are expected to be significantly worse.
That could pose a challenge to the club moving forward to remain in line with figures. Several first-team players are out of contract this summer and head coach Carlos Corberan, along with new chairman Patel, will address how to balance the books, while retaining a sufficiently-sized and competitive squad.
The picture will become clearer for Albion once they discover which division they will compete in next season, with promotion to the Premier League still a possibility via the play-offs. A return to the top flight brings with it sizeable increase in revenues, as well as differing regulations.
