Kieran Maguire is a football finance expert in the University of Liverpool’s Management School.
As the 2017/18 season comes to an end, all but one Premier League (EPL) club has submitted their accounts for publication for the previous season and that has allowed us to estimate how much each club is worth.
A new three year £5.1 billion TV deal kicked in for the 2016/17 and combined with cost control due to the EPL’s wage restraint in the snappily named Short Term Cost Control rules, which restrict wage rises to £7 million per club, plus any additional money they can generate from now broadcasting sources.
The total value of EPL clubs has risen over 30% from £12.1 billion in June 2017 to £15.8 billion a year later.
Values are based on the Markham Multivariate Model (MMM) devised by Dr Tom Markham, a graduate of the University of Liverpool’s Football Industries MBA programme. Tom is now head of Strategic Business Development at Sports Interactive, the producers of Football Manager as well as an advisor to many clubs.
The model takes into consideration the key drivers of financial value for a club, including total income, profitability, net assets, proportion of potential seats sold and wage control.
The model has been slightly adjusted from our 2016 analysis to smooth out the volatility caused by one off gains from player sales, which is why some of the comparative figures from 2016 are different to those published last year.
The average value of a club in the EPL is now £791 million, up from £607 million the previous season. This helps explain why teams in the EPL remain so attractive to investors globally, and why so many are also willing to gamble on buying clubs for far less money in the Championship, in the hope of winning the golden lottery ticket that has allowed the likes of Huddersfield and Brighton to sit at the top table in 2017/18.
The formula assumes that the club will continue to be in the EPL for at least five years so this should be borne in mind when looking at values. If the club is relegated, then values in the Championship (and for Sunderland League One) are probably 15-20% of the EPL figures.
1: Manchester United £2,463 million (2016 £2,402 million)
United have consolidated their position at the top of the table because of higher broadcast & commercial income and making profits of £11 million compared to losses of £10 million on player sales in 2016.
2: Chelsea £ 2,062 million (2016 £1,837 million)
Chelsea’s ability to continually sell players at a profit (£159 million in three years), bonuses for winning the EPL & new kit deals pushed them into second position. Biggest constraint is matchday income, only £65m compared to over £100m for United and Arsenal
3: Manchester City £1,979 million (2016 £2,139 million)
A bit of a slide for City, as the investment in new players and wages under Pep meant profits fell from £20m to £1m despite higher income & wage control percentage rose from 50% to 56%. Profitability is an irrelevance to the owners, but an increase is on the cards for 2018.
4: Arsenal £1,822 million (2016 £1,269 million)
Arsenal’s ability to extract money from fans is very impressive, their matchday income is second only to Manchester United. Lower wages than Liverpool, the Manchester clubs & Chelsea along with profits up from £2m to £35m helped too. Lack of Champions League participation in 2017/8 will restrict growth this season.
5: Spurs £1,445 million (2016 £1,169 million)
Champions League income & tight control over wages, which are £80-£140 m less than the other ‘Big Six’ clubs mean Spurs value is higher than expected for a club that has not won the league for nearly 60 years.
6: Liverpool £1,129 million (2016 £626 million)
It might upset Reds’ fans to see their club sixth, but remember the owners only paid £300 million for the club a few years ago. The club’s value increased by over £500 million in 2017 & expect to see another big jump in 2018 due to the Coutinho sale and Champions League success.
7: Leicester £955 million (2016 £339 million)
Leicester’s value nearly trebled due to participation in the Champions League & earning more from the competition than winners Real Madrid due to the formula used to award prize money. Expect to see a big fall in 2018 though.
8: Southampton £508 million (2016 £299 million)
For a club that was sold for £260 million little over a year ago this looks impressive. Gains on player sales of £112 million in three years is a driving force, and the sale of Van Dijk in 2018 is likely to keep this figure high this season.
9: Everton £440 million (2016 £107 million)
New owner Farhad Moshiri wiping off the club’s debt, a reversal from being loss to profit making, better wage control & the sale of John Stones were the major drivers of Everton’s quadrupling of value this year.
10: West Brom £381 million (2016 £165 million)
If something looks too good to be true, it’s probably not true, and the Baggies valuation is a classic example of this. The club had underinvested in players for a few years up to 2017 & survived until then. Whilst good for profits (£32m in 2017) it meant that it was a high risk for relegation if any new recruits failed to deliver, as the club found out in 2018.
11: West Ham £368 million (2016 £142 million)
West Ham’s value shot up mainly due to income rising far quicker than wages, substantial gains on player sales and debts being paid off after the controversial sale of the Boleyn Ground, although the club mysteriously seemed to make no profit from this sale.
12: Burnley £352 million (2016 Championship)
The EPL’s best run club? No frills in the boardroom or the dressing room meant that promoted Burnley made a substantial profit, pay out just over half their income in wages and are debt free. A formula for success in terms of value for a club on gates of 20,000. Value likely to be maintained/improved in 2018 with a 7th place finish.
13: Bournemouth £344 million (2016 £143 million)
Flying under the radar as they have done since promotion to the EPL. £124million of broadcast income, money, quadrupled profits, wages under tight control & owners who lend interest free mean that AFCB can thrive on gates of 11,000.
14: Middlesbrough £312 million (2016 Championship)
Boro’s lack of ambition in the EPL transfer market in terms of trying to survive meant that whilst they were very profitable, and wages dropped from £149 for every £100 of income in the Championship to £53 in the EPL, their value of £312 million will have plummeted in 2018 following relegation.
15: Stoke £300 million (2016 £132 million)
Stoke are a textbook beneficiary of the new TV deal. Wage control improved from 79% to 62%, income rose by nearly a third & the club has no external debt. Whilst the value is likely to hold in 2018 that ignores the impact of relegation, so expect the value to fall in 2019.
16: Watford £283 million (2016 £184 million)
Another club who cope well with a relatively small stadium. Wages kept under control, the Hornets generate modest profits. Sales of Ighalo & Vydra helped boost results in 2017. Could be attractive to a buyer in their present state as close enough to London to command a premium.
17: Hull £257 million (2016 Championship)
Recent Yo-Yo club, value in Championship likely to be about £40-50 million following relegation as TV accounted for 80% (£94m) of their income in 2017.
18: Sunderland £216 million (2016 £128 million)
The only EPL club last season to lose money after player sales, Sunderland are about to be given away for nothing as they face League One. Daft transfers, boardroom payoffs and a revolving door in the manager’s office. The last club run this poorly was the Haçienda in Manchester in the 80’s. Owner Ellis Short may have lost over a quarter of a billion pounds from his involvement with the Black Cats.
19: Swansea City £183 million (£108 million in 2016)
Swansea are bottom due to paying out a higher proportion of income as wages than nearly any other EPL club. Value would be lower but saved to an extent by sales of Ayew & Williams which boost profits in short term. Value likely to be about £40 million in Championship.
20: Crystal Palace £142 million (£142 million in 2016)
Small London club Crystal Palace shouldn’t really be bottom of the table, but for reasons best known to themselves they have chosen to not submit their accounts to the registrar, even though the due date was 31 March. Would expect value to be closer to £300 million if our estimates for 2016/17 are close to the actual figures when they are finally published.
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