High cost of Prem relegation revealed
THE Bluebirds fought valiantly to stay in the top flight last season but, ultimately, Premier League survival was just out of reach for Neil Warnock’s side.
But, just by virtue of being in the Premier League, the Bluebirds’ club value soared to £223m, according to research undertaken by Liverpool University’s Centre for Sports Business Group.
This, of course, was reflected by the huge injection of TV cash the Welsh capital club enjoyed last season, which was seen in their annual club accounts. The accounts revealed City made a marginal pre-tax profit last year, which included £19m worth of provisions should they have to pay for the transfer of Emiliano Sala.
But the chasm between the top two tiers in English football is laid bare in the analysis by football finance lecturer at Liverpool University, and host of the Price of Football podcast, Kieran Maguire.
Maguire suggests that City’s lofty valuation of £223m of 12 months ago will have dropped by as much as two-thirds to around £75m today.
“Cardiff effectively took an ‘air shot’ in respect of their season in the Premier League. Revenue increased as a result of promotion, but the wage bill was by some distance the lowest in the Premier League,” Maguire said.
“Research constantly there is a positive correlation between final league positions and wage levels. It is therefore no surprise that the two clubs with the lowest wage bills in the Premier League were relegated and two of the three highest-wage expenses were incurred by the winners and runners-up.
“Cardiff made a profit before tax of less than £3m, but this was after taking into consideration the full cost of the transfer of Emiliano Sala, the young man tragically killed shortly after signing for the club in January 2019. Cardiff also wrote down other transfer fees by nearly £12m to further depress profits.
“Cardiff ’s main achievement was promotion from the Championship the previous season under Neil Warnock despite negative net spends on players in that division for four seasons.
“Realistically their value will have fallen by about two-thirds at least following relegation.”
It should be stressed that this analysis does not take into consideration the financial impact of coronavirus.
The report states that clubs’ values could further depreciate by 25 to 30 percent in the aftermath of the Covid19 pandemic.
It serves only to highlight the precarious nature of football’s finances and the uncertain future ahead of us could further hit City in the pocket.
Just last week, chairman Mehmet
Dalman warned that the club will be hit hard during these difficult times and that any heavy spending in this summer’s transfer window is off the table.
The Bluebirds’ heavy reliance on owner Vincent Tan was highlighted in their accounts for last season, which has seemingly prompted a push for the club to become more sustainable in the future.
That includes being more savvy in the transfer market than in previous years and also a view to leaning more heavily on the academy and investing in the young talent coming through,.
“Cardiff City financially is going to take quite a lot of pain,” Dalman told BBC Sport Wales. “We do have a wealthy owner whose business isn’t doing great because it is leisure and retail back in the Far East.
“So there has to be a knock-on effect, it will have to change our attitude what our spending power will be like in the next season. These are just realities of finance.
“I don’t think he (Neil Harris) should worry about spending, he should worry about what he is going to have to raise because we will not have the financial ability to go out there and buy four or five new players.”
City’s valuation of £223m last season was ranked 16th in the Premier League, above Bournemouth, Huddersfield Town, Brighton and Hove Albion and Crystal Palace.
Tottenham surprisingly topped the charts at more than £2.5bn, closely followed by both Manchester City then Manchester United, both of whom are also valued over £2bn.