Part One: EPL Season Closes, Time to Focus on Finances
Top Six Clubs and the "new" kid on the block, Newcastle United
Introduction
It has been a week since the 2022/2023 English Premier League (EPL) season came to a close with Manchester City crowned champions for a third successive year. The 2023/2024 season would be the first transitional year of UEFA’s newly introduced regulation, the Financial Sustainability Regulation. The Squad Cost Ratio (SCR) is the novelty of the regulation and requires clubs to ensure that their SCR numerator (transfer fees and wages of qualifying personnel) does not account for more than 70% of their SCR denominator (traditional income of clubs). I analysed the regulation in a previous article and you can view its extended details here. It is important to note that the 70% threshold comes into full effect in the 2025/2026 season. The threshold for the 2023/2024 and 2024/2025 transitional seasons are 80% and 90% respectively. In this first part of a two-part article, I analyse seven clubs' 2022 financial results – which cover their 2021/2022 performances – using the SCR framework. The seven clubs in the article are the traditional top-six EPL clubs (Arsenal, Manchester United, Chelsea, Manchester City, Liverpool, and Tottenham) and Newcastle United whose performances this season seem to indicate that they would be disrupting the established order in the EPL. The second part of this article covers their 2022/2023 on-field performances and the outlook for each club.
SCR Denominator (The higher, the better)
In 2022, Manchester City topped the SCR denominator (SCRD) table below and generated the highest revenue for any club globally. By winning the EPL and reaching the Semi-Final of the UEFA Champions League (UCL), City generated £249m in broadcast revenue, second only to Liverpool who reached the UCL Final and generated £261m broadcast revenue. City’s SCR denominator position was strengthened by the club generating £309m in commercial revenue, £51m more than their local rivals Manchester United, who are regarded as one of the most commercially-minded clubs. Manchester United ranked third in the SCRD table following a less than impressive season where it finished in sixth place in the EPL and was knocked out from the UCL in the round of sixteen. Furthermore, Manchester United generated £15m from selling players, only £4m more than Newcastle United, who ranked the lowest in profit from player sales.
On the other hand, Chelsea generated £98m from selling players, the highest in the 2022 SCRD ranking. Nevertheless, Chelsea’s commercial revenue was £6m less than London city rivals Tottenham despite Chelsea’s recent success in European football. Arsenal ranked sixth place in the SCRD table following a season without European football and finishing the 2021/2022 EPL season in fifth place. At £31m, Arsenal generated the third-highest profit from player sales. However, the club’s commercial revenue was the lowest of the traditional top-six clubs. Newcastle United’s SCRD was £191m, less than half of Arsenal’s £400m, following an eleventh-place finish in the 2021/2022 EPL season – Newcastle United survived despite an early relegation scare.
Matchday Revenue Per Stadium Attendance (The higher, the better)
Football clubs’ stadiums are a constant and sacrosanct asset that rarely change – though regular maintenance is carried out and once in a blue moon, wholesale changes are made. A club’s success or otherwise, is in part, displayed in its stadium. Matchday revenue per stadium attendance (MRSA) measures how much a club generates from tickets, hospitality, catering, sale of magazines and renting out its stadium for non-footballing events. The factors that determine MRSA include stadium size, competitions played in and progress in the competition, club location and ticket prices. For example, London-based clubs generally charge higher ticket prices than clubs located up north. From the chart below, Tottenham generated the highest MRSA at £1,888 mainly due to its London location and non-footballing events (such as NFL games and boxing events) that took place at the club’s newly constructed 63,000-capacity stadium.
The other London-based clubs, Chelsea and Arsenal ranked second and fifth respectively. For Chelsea, competing in the UCL with a relatively small stadium capacity of 41,900 (average match attendance of 37,812) and being based in London was responsible for their impressive MRSA of £1,829. Arsenal’s absence from Europe and a stadium capacity of 60,300 (average match attendance of 59,763) was responsible for their low MRSA of £1,328.
Liverpool earned £1,635 MRSA, £124 more than Manchester United, despite Liverpool’s stadium capacity being 21,900 less than Manchester United’s Old Trafford (similarly, Liverpool’s average attendance was 20,089 less than Manchester United’s). The difference between both club’s MRSA demonstrates the importance of performing well in competitions a club participates in – Liverpool came second in the EPL and reached the UCL Final while Manchester United finished sixth in the EPL and was knocked out of the UCL in the round of sixteen.
Similarly, Newcastle United with a stadium capacity of 52,300 and an average attendance of 51,487, generated £535 MRSA which is the least of the clubs in the ranking. This isn’t surprising as Newcastle United did not compete in any European competition and is located up north. Finally, Manchester City’s 2022 MRSA of £1,032 was the lowest of the big-six clubs, despite the club’s impressive run in the UCL and 55,000-capacity stadium (average attendance of 52,774). Though located in the north of England, Manchester City’s MRSA indicates that their match ticket prices are very low compared to other clubs because the club reached the UCL Semi-Final. For context, Manchester United was knocked out two rounds before Manchester City in the UCL and finished four places below them in the EPL but their MRSA was £479 more than Manchester City’s.
SCR Numerator (The lower, the better)
Tottenham’s SCR numerator (SCRN) of £289m is the least of the traditional top-six. Tottenham played in the UEFA Conference League in 2021/2022 and qualified for the 2022/2023 UCL with the lowest wage bill of the top-six clubs. In contrast, despite Manchester United having the highest wage bill at £384m (£175m more than Tottenham’s wage bill), the club did not qualify for the 2021/2022 UCL.
Chelsea’s annual transfer fees was the highest, making its SCRN rank the second worst (or highest). Similarly, Chelsea’s wage bill was the highest for London-based clubs who seem to generally pay their players less than their counterparts up north. With wages correlating with on-field success, it isn’t surprising that seven of the last ten EPL trophies have been won by a north-based club, with two of the remaining three won by Chelsea. Finally, Newcastle United’s transfer fees spending and wage bill are almost three times less than Manchester United’s.
SCR % (The lower, the better)
SCR is the percentage of the SCRN divided by the SCRD. Essentially, this represents the percentage of income spent on player transfers and the wages of qualifying personnel. Manchester United’s significant wage bill negatively impacted their SCR which at 90%, is the highest of the top-six clubs. In contrast, Tottenham’s frugal and lean structure saw the club having an SCR of 63%, the lowest of the clubs analysed and the only club below UEFA’s stipulated 70%.
Liverpool and Manchester City’s runs in the UCL, final EPL positions, and profit generated from selling players has placed them as second and third respectively on the SCR table. In contrast, Arsenal’s European football absence and fifth-place finish in the EPL placed them fourth with an SCR of 84%. Chelsea’s significant transfer activities, relatively high wage bill, and low matchday revenue resulted in an 87% SCR. Finally, Newcastle United’s 116% SCR is due to the club’s absence from Europe and their eleventh-placed finish in the EPL.
Conclusion
Based on the above and assuming the 2021/2022 season was the first transitional year for the FSR, none of the top-six clubs would have exceeded the 90% threshold set by UEFA. As a caveat, it is important to note that the above calculations might slightly differ from the actual SCR because some components might differ. For example, I have taken the total wages (all staff) in the club’s financial statements but UEFA’s regulation states that only wages for relevant persons (Players and the Head Coach) would be included in the SCR calculation. However, the above calculations would largely represent the actual results. In part two of this series, I analyse the clubs’ 2022/2023 performance and give an outlook for each club.
"Kindly note that the financial information used in this article were hand-collected and analysed by the author from the clubs’ publicly available financial statements”