Stoke City's staggering weekly loss since relegation as Coates' investment goes unrewarded
Stoke City have lost an average £676,000-a-week since relegation from the Premier League as a football finance expert admits performance compared to investment is frustrating for supporters and baffling to outsiders.
Stoke have recorded a £30 million loss for the 12 months up to the end of March 2024, which has been revealed in new accounts from then owners bet365.
A lot of that money will not count towards Financial Fair Play calculations, from which spending in infrastructure and the academy is excluded, while the £15m sale of Harry Souttar which largely bankrolled an £18m transfer spree was in the previous year.
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Most Championship clubs are losing cash at a spectacular rate as they try to get anywhere near the Premier League, which is in a different financial orbit, but Stoke’s inability to even finish in the top half of the Championship since 2018 while the Coates family has pumped in hundreds of millions of pounds makes them a sorry case.
Kieran Maguire - an author, podcaster and academic on money in football - said: “I think there is a big difference between spending money and spending it well. Nobody can doubt the degree of support that the Coates family have given Stoke City Football Club in terms of funding to improve for players, improve facilities for fans and also, from a fans’ perspective most of all, to put money into the playing budget to, in theory, make them competitive. And they should be far better higher up the Championship over the course of the last six or seven seasons than what has manifested.
“Stoke fans must have a bittersweet humour. ‘What are we aiming for this season? Fifteenth, oh the same as last season.’ And again and again, keep changing the manager, keep changing the squad and it keeps being repeated again and again despite these losses.
“I’ve calculated that since Stoke City were relegated, on average they have lost £676,000 a week. That’s from 2018 onwards, which is an incredible amount of money and I think a lot has been wasted.”
Clubs in the Championship are allowed to post losses of £41.5m over a rolling three-year period to avoid sanctions from the EFL.
But Stoke’s £30m investment in upgrading the bet365 Stadium and Clayton Wood training ground do not count towards profit and sustainability rules (PSR) and neither does spending on the women’s teams nor academy.
They work furiously to stay on the right side of the line but Maguire suggests that these kind of numbers in most other industries would probably persuade the decision makers to draw a line under it all and shut down shop.
He said: “We should be a little bit cautious (about making PSR assumptions) because these accounts go up to March 31, 2024 and the PSR calculations will be based on the year to June 30.
“All money which is put into infrastructure is excluded from PSR and all money that is put into the academy as well is excluded from PSR. If the club wants to grow organically I think they are going down the right path there. That may be a function of necessity because their ability to spend money in the transfer window will be curtailed as they have to do something to curtail these losses. You either sell an existing talent or it’s restricting your ability to buy new players.”
He added in an interview for Radio Stoke: “I don’t know enough about the club but I would imagine they have had to shift people off the payroll and looking to move players on because it’s difficult to see how the club can be in a comfortable position from a PSR perspective.
“They did sell the football ground a few seasons ago, which helped, and they’ve had huge write-offs of debt from bet365. It’s difficult to work out how that will be treated.
“But these losses are spectacular. To lose more than £30m when you’ve only got £23m or £24m coming into the club – in any other business you’d say let’s call the whole thing off.”
The stadium and training ground are back under Stoke’s ownership after chairman John Coates took the club on solely from family business bet365 last summer. bet365 wrote off £118m to clear debts as part of the demerger.
The players’ wage bill has been slashed since the Premier League days but Stoke’s problem is being caught in a vicious cycle, trying to make the squad better with less to spend on transfers and salaries than they had spent previously.
Maguire said: “Once you’ve had losses for a couple of years then you are always on the back foot. Your first aim is to cut your costs and the wage bill is less than a third of the numbers we saw in the Premier League. There has been significant cost cutting.
“If you take a look at the value of the squad, when Stoke City went down it cost something in the region of £196m while in the most recent season it was down to far less than £20m. There has been a significant sea change in terms of the culture of the club but those losses are still spectacular.
“The wages aren’t particularly high by Championship standards, they’re about average, but even so you would expect over the course of a few years you would expect maybe one below average season, average in another and perhaps above average in another.
“That’s not been the case at Stoke and given the backing they get from bet365, which is an incredibly smart organisation – these accounts are part of bet365’s overall profits and they have made profits of around £4bn, which is sensational – (they have) not been able to utilise all the algorithms, all the programmes, all the smart technology for the benefit of the club. Tony Bloom does that at Brighton and he was involved in the gambling industry, Matthew Benham does exactly the same at Brentford and you’ve got two clubs there who are the poster boys for how to run a club successfully on and off the pitch.”
He added: “I’m a teacher, an academic, and I’m looking for patterns. We always say that to be successful in business you need to manage three things: resources, opportunities and decision making.
“Stoke City have got the resources because they’ve got bet365 behind them, they’ve got the opportunities because they’ve got a good stadium and a really solid fan base, and then there’s the third issue and something must have been going wrong as far as decision making is concerned.
“You’ve got all of these positives and yet season after season it’s one of punching below their weight. That is frustrating of course if you’re a Stoke City fan and baffling from an outsider’s point of view.”
