The club we have analysed reported a loss before tax of £104.2m for the year to 31 May 2025, against a profit of £57.2m the year before. That is a swing of roughly £161m in twelve months, at a business whose total revenue was £227.6m.
Nothing catastrophic happened operationally. The stadium was still nearly full, averaging over 62,000 per home game. The team stayed in the top division for a fourteenth straight season. Sponsors renewed. What changed is far more instructive for an investor: the club simply stopped selling players at the rate it had before.
This is the single most important line in the accounts, and it is the reason this business deserves a closer look than the loss number alone suggests.
Revenue fell 15.6% because of one league placing
Turnover dropped from £269.7m to £227.6m, a fall of £42.1m. Almost all of it came from two sources: a lower finishing position in the league, and the absence of European competition after qualifying the previous season.
The breakdown shows how concentrated the risk is:
Broadcast and central distributions came in at £132.4m, down from £167.0m. That single line is 58% of total revenue, and the club does not control it. It is set by where the team finishes, how many of its matches are chosen for live coverage, and whether it qualifies for continental competition. Matchday income was £39.3m, down £5.3m purely because there were no European fixtures to sell tickets for. Retail fell £2.5m to £13.7m, following the mood of the season. Commercial income was the only line that held, edging up £0.3m to £42.2m on the back of multi-year partnership contracts.
For an investor, the takeaway is uncomfortable and useful in equal measure: around three-quarters of this business's revenue is contractually visible before the season starts, but the swing factor — broadcast placement — is decided on a football pitch by eleven employees, not in a boardroom.
The cost base did not follow revenue down
Employment costs rose from £161.0m to £175.9m, an increase of 9.3%, in a year when revenue fell 15.6%. Wages as a share of turnover jumped from 59.7% to 67.2%.
That gap is the whole story of the loss. Player contracts are multi-year, fixed, and largely unresponsive to results. Revenue is annual, variable, and highly responsive to results. When the two move in opposite directions, the operating result collapses — which it did, from a £53.3m operating profit before player trading to a £5.4m operating loss. Read that again, because it is the number most casual commentary misses. Before any player is bought or sold, this club loses money. The underlying operating business is not self-funding.
Player trading is not a side activity — it is the profit engine
Profit on player sales was £20.0m, down from £96.3m. That £76m reduction is the direct cause of the swing from profit to loss.
At the same time, the cost of owning the squad went up. Transfer fees are capitalised as an asset and written off over the length of each player's contract. That write-off charge — a real economic cost, even though it is not a cash payment in the year — rose from £83.5m to £99.4m, following £132.6m of new signings during the summer window. The squad on the balance sheet is carried at £223.2m.
So the model is: spend more each year to keep the squad competitive, carry a rising annual write-off charge, and rely on selling players at a profit to cover the gap. When the selling side pauses for a single season, the structure is exposed immediately.
An investor should treat player sale profits here not as exceptional or one-off items to be stripped out, but as core recurring revenue — because that is functionally what they are. The question then becomes whether that revenue stream is sustainable, and at what reinvestment cost.
The balance sheet has turned negative
Shareholders' funds fell by £103.6m during the year, moving from £99.2m of net assets to a net deficit of £4.3m. Net current liabilities widened from £38.9m to £165.5m.
Cash at the year end was £0.5m, down from £33.1m. Cash generated from operations was £0.7m, against £77.8m the previous year.
Those three figures together describe a business operating with effectively no liquidity buffer of its own at the reporting date.
Follow the transfer debt — it is bigger than the bank debt
Conventional net debt looks modest at around £20.3m. That number is misleading and any serious buyer will say so.
The larger obligation is money owed to other clubs for players already signed: £110.9m falling due within a year and £84.9m thereafter, roughly £196m in total on a discounted basis, and about £211m on an undiscounted basis. Against that, amounts owed to the club by other clubs for players sold had fallen to under £4m.
The reason that receivable is so small is important. During the year the club sold £71.7m of future transfer instalments to a finance provider on a no-recourse basis, converting future cash into present cash. A further receivable was accelerated after the year end, raising £12.0m against a £12.7m face value.
This is legitimate and common. It is also, in substance, borrowing against future income at a discount — and it means the cash that would have arrived in FY26 and FY27 has already been spent. That is a material adjustment to any forward cash flow model.
The cost of all this financing is now visible in the profit and loss account: interest and similar charges of £22.0m against £13.3m the prior year, of which £15.2m relates to the implied interest cost of paying transfer fees in instalments.
Funding has been rebuilt, but on a clock
After the year end the club renewed a £40m overdraft to July 2026 and put in place a new £124m five-year facility repayable in 2030, of which £89m had already been drawn by the time the accounts were signed. It also committed a further net £62.3m to transfer fees in the following window.
The directors' own going concern assessment states plainly that, on the base case and before mitigating action, the group forecasts a liquidity shortfall in summer 2026. The mitigations identified are further player sales, further factoring of receivables, or shareholder funding — with certain owners signing a letter of support. Under a relegation scenario, the accounts state that additional shareholder funding would be required.
This is the single most important disclosure in the document for anyone considering an equity or debt position. It is not a distress signal — clubs of this size routinely operate this way, and the auditors reported no material uncertainty. But it does mean the equity story is inseparable from the willingness of the current owners to keep writing cheques.
The regulatory overlay compresses the options
Under the governing body's own accounting basis — which caps the write-off period for transfer fees at five years — the loss rises to £108.0m and net liabilities to £8.2m. Squad cost ratio rules coming into force will directly limit wages plus transfer amortisation as a percentage of revenue. With wages alone already at 67.2% of turnover and amortisation adding a further £99.4m, headroom is thin.
The practical effect is that the two obvious fixes — spend more to climb the table, or accept a lower position and cut costs slowly — are both constrained. The club states that any forecast breach would be managed through player sales and spending reduction, which returns us to the same lever the business is already leaning on. Other items a buyer would price
A tax authority compliance investigation into agents' fees, open since 2017, remains unresolved with no provision made. A £14.0m transfer payment owed to a foreign club is legally blocked by sanctions. Contingent transfer top-up payments of up to £7.5m are unprovided. Operating lease commitments total £409.6m, reflecting a long-dated stadium arrangement running for decades. And £50.7m of deferred tax assets sit unrecognised on the balance sheet — real value, but only if the business returns to sustained profitability.
The investment view
This is a high-revenue, brand-strong, structurally loss-making asset whose equity value depends almost entirely on two variables: league position, and the ability to keep generating gains from player trading faster than the squad depreciates.
The FY25 accounts do not show a broken business. They show a business that had a bad year on the pitch and, in the absence of its usual player-sale cushion, had nowhere to absorb it. That is a fragility worth understanding precisely, because the same dynamic works powerfully in reverse when results improve.
For a buyer, the questions are: what is the true cash cost of maintaining the current squad; how much future income has already been sold forward; what does the model look like without shareholder support; and what is the enterprise value once the £196m of transfer obligations is properly treated as debt?
This insight is based entirely on publicly filed statutory accounts for the financial year ended 31 May 2025. It is research and commentary, not investment advice, and no recommendation to buy, sell or hold any security or asset is made or implied. Readers should take their own professional advice before acting.