PANDEMIC AND RELEGATION PLAY BIG PART IN CITY FIGURES

STOKE City posted an £87.2m loss for last season, new figures show,

The football club was rocked financially in 2019/20 by a cocktail of the coronavirus pandemic and the after effects of relegation from the Premier League. Turnover was down £27.8m to £54.2m as parachute payments designed to help teams navigate the drop from the top flight fell sharply. Parachute payments will stop entirely next season, Stoke’s fourth back in the Championship. Expenses, meanwhile, were £141.4m.

A big chunk of that comes from writing down the value of the squad.

There is £31.9m in amortisation – the automatic devaluation of a player over the course of their contract, so an £8m player on a four-year deal is worth £6m on the balance sheet after one year, for example – and £43m in what is described as ‘an impairment review’. Impairment is where a player is marked down as a balance sheet, on top of amortisation, to give a more realistic appraisal of their value.

The figures are particularly stark because of the impact of the pandemic on the transfer market. Accounts from bet365 say Stoke came to the figure in accordance to guidance from the English Football League. Amortisation and impairment do count towards Financial Fair Play – and clubs in the EFL are only allowed to post a loss of £39m over a three-year period. Crucially, however, losses that can be directly attributed to Covid-19 can be added back. The figures highlight the challenge that Stoke face with profit and sustainability and the club has made it no secret that they think the rules should be changed. It also emphasises the club’s reliance on the Coates family, whose bet365 business’s revenue was £2.81bn, with an operating profit of £194.7m. The exact debt to the owners will be outlined in further detail when the club’s full accounts are published soon. Co-chairman John Coates said last week: “The (2020 accounts) will show a higher amount (of debt to the Coates family than £170m). “It doesn’t make great balance sheet reading to have a huge debt like that. However, it is an interest free loan that is provided and we remain totally committed to the club.”