I read an article on Friday about the profit and losses made by Premier League clubs, and an interesting view on ticket pricing. In the article, the author made the point of explaining the true cost of match tickets if match day ticketing was to be the sole way of recouping the recent club losses.
Of course, such an analysis is a tad unrealistic as there are multiple ways to make money – sponsorships, partnerships, and other financial schemes – but it does go to show that, despite the complaints of some fans about match day ticket prices, it could be a lot worse at Villa Park than it is now.
The true cost of losses per game and per ticket
For example, the losses posted by Aston Villa over the past three years give a total profit/loss between 2008 to 2011 of £137.8m, leaving Villa with the third highest subsidised cost of a ticket. At an average loss of £45.9m per season, the article serves to show that Villa are losing a colossal £2.418m per game based on a three year average attendance of 38,526.
Breaking this down to the individual level, this would mean that the club are losing £63 per ticket on average per game, or a season ticket loss of £1,192 per season ticket. If these figures were adjusted in line with these losses, it would leave Villa’s most expensive ticket at £110, and the top standard season ticket at £1,787 for a seat in the most expensively priced standard seated area of the ground.
If we are to compare this to the real costs, £47 and £595 respectively, it is clearly evident that Randy Lerner is subsidising the club heavily. Lerner has translated some of the existing club’s debt into capital, leaving him with a £133m share value in the club due to the increased club value since his purchase of Villa from Doug Ellis.
Existing debts and how Lerner is actually helping Aston Villa massively
However, the club also has additional debts payable to the Lerner family trust (from where the club is funded in terms of cash liquidity) to the tune of £130m. Had Lerner not exercised the conversion of existing debt to shares, this would have left the Midland club over a quarter of a billion pounds in debt – and yet some fans questioned the recent austerity measures made by the board.
For this investment, Lerner receives £6m in interest payments annually, roughly equivalent to 12,000 average priced season tickets. That’s right – twelve thousand – just above half of the average spend by Villa fans who have accounted for roughly 22,000 season tickets sold.
Some might think that this payment of £6m is money that could otherwise be invested in other areas of the clubs – wages, player transfers etc – but £6m in the grand scheme of things is very little. On the monetary debt of the club, £6m equates to an interest rate of ~4.62%, though based on the true debt of the club to Lerner – factoring in his £133m share exchange – this gives an interest rate charge of 2.28%, a value insignificant in the face of the money the American has tied up in mostly illiquid assets.
Randy’s committed – in real terms – financially
After all, Lerner is locked into these debts due to the nature of the club. Barring a sale, one that would have to recoup over £250m worth of equity – over three years worth of turnover, never mind profit – Lerner is most certainly committed to the club in financial terms with his share capital actually at less value than the losses made by the club in the three year period between 2008 and 2011 alone.
Think about that for a second. Three years of losses that were the result of a failed attempt to bring Champions League football to the club equate for over half of the total debt of the club, and more than the total monetary debt of Villa overall – when people debated as to whether the money spent in the Martin O’Neill era was sustainable, here is stark evidence to suggest it most certainly wasn’t.
Does it shock you? It should.
With those figures in front of you, along with the additional financial analyses I have included above, fans should be feeling shock, even after well-known and widespread knowledge of the club’s austerity measures. That Villa are third in per ticket sale losses over a three year period should bring sharply into focus the need for Gerard Houllier’s successor having his hands tied financially, and the value of Paul Lambert’s search of the lower leagues for talent.
With the right financial direction, the club will return to profit in the medium term, with the monies coming from both Genting, Macron, and other deals improving the bottom line.
For those that wanted a “big name” manager with a big budget, above is the evidence on why it would never have happened, and why Lambert’s transfer ethos, whether it is he or any other manager in charge in the next five to ten years, is integral to the club’s continued operation.
Here’s to Randy Lerner – without him, we’d be in real trouble
So, with all this in mind, take a step back and raise a glass to our quiet American owner. He may well have caused massive uproar with his hiring of McLeish last season, but the figures state it clearly – without Lerner, Aston Villa would have been in deep trouble following the legacy of the three years between 2008 and 2011.
To read the article, one that goes into far less depth about Aston Villa but does cover the general topic of the Premier League’s money worries, you can click here.
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