Football finance experts are divided over whether the announcement of significant losses for the Hillsborough-based club in the 2020/21 season represents a ‘step in the right direction’ or is ‘alarming’.
The publication of Wednesday’s annual accounts may have given fans cause for concern this morning, with headlines from the report indicating losses of half-a-million pounds per week and an increase in overall losses to more than £25million.
Kieran Maguire, an expert in football club finance and author of the Price of Football, said of the release this afternoon: “The headline numbers are quite alarming in the sense that the club lost half a million pounds a week as well as the fact that wages are more than double the amount of money the club managed to generate through revenue.
“That’s for a club that ended up being relegated so it couldn’t even say ‘Well we overspent because we were gambling we were trying to achieve promotion’. So that is a cause for concern.”
The account release showed the wages bill at the club had decreased by £9m with the departure of high-cost players such as Steven Fletcher and Kieran Lee.
In addition, the accounts represent a season in which all football was played behind closed doors due to the pandemic and only show an increase in total yearly losses of £1m on the previous year.
Dr Dan Plumley, Senior Lecturer in Sport Business Management at Sheffield Hallam University, said there were significant positives to take from the report.
“It’s important to remember that these accounts are for the 2020/21 season,” said Dr Plumley. “We are still seeing the impact of Covid so things are going to get worse before they get better. There was always going to be a drop in turnover, but it’s not necessarily as bad as it looks.
“With the wage bill coming down it is definitely a step in the right direction.”
Sheffield Wednesday are due to play the first leg of their play-off semi-finals against Sunderland on Friday and promotion could mean a boost to the club’s financial viability.
Owls’ boss Darren Moore. Credit: Derby Telegraph.
“You’re always better off in a higher league,” said Dr Plumley. “There’s an increase of £8m getting out of League One as the exposure is greater and the TV revenue will increase.”
Moving up to a higher league would enable Wednesday to boost match-day takings with the draw of bigger away followings as well as hospitality revenue. Money will also come from greater TV coverage in the higher league if Wednesday were to advance.
Last year club owner Dejphon Chansiri indicated a change in financial direction for the club after his significant investments in players since buying the club in 2014. There has since been a clear effort to cut costs and reduce the wage bill.
Mr Maguire, however, was sceptical about the plan’s potential for success: “Losing £25 million in a year isn’t sustainable. There’s no doubt about that.
“What we don’t want to happen should Wednesday qualify and be successful as far as the playoffs are concerned is Dejphon Chansiri going back to the position that we saw when he originally acquired the club.
“As an outsider you’ve got to wonder, why did wages go from £13 million in 2015 to £42million three years later? Was he placing his faith in advisors who just saw him as an easy meal ticket? Has he learned his lesson from that? I hope he does, but we genuinely don’t know.”
Wednesday will travel to the Stadium of Light on Friday in their bid to win promotion back to the Championship after beating Portsmouth 4-1 on Saturday.
