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Published online by Cambridge University Press: 20 December 2023
The first step towards understanding football finances is being able to decipher a set of club accounts. This can be an overwhelming task as they may consist of many pages of technical jargon and so are best broken down into their key components. There are three main financial statements published by all businesses, including football clubs, typically contained in what is usually referred to as an annual report, and consist of:
1. The balance sheet, which shows the financial position of the club in terms of what it owns in the form of assets and what it owes to both outside parties (liabilities) and owners (equity, also referred to as capital);
2. The profit or loss account (sometimes called the income statement), which deals with revenues, costs and profit; and
3. The cash flow statement, which shows where cash has come from and how it has been spent. The most common mistake made by those unfamiliar with finance is to assume that cash and profit are the same, which is not the case in practice.
Most football clubs in the UK are limited liability companies, which are legally obliged to submit their financial statements to the government agency Companies House. The great thing for anyone interested in the finances of the club they support is that this information is freely available to access and download from the Companies House website. Rules vary in other countries as to the extent of financial information in the public domain according to local legislation. The amount of detail shown in the accounts sent to Companies House varies according to the size of the club. There are supporting footnotes that must be prepared as well as the main financial statements. The extent of these is again dependent upon the size of the club's finances. Manchester United plc's annual report for the year ended 30 June 2020 consisted of 782 pages when it filed its accounts with the US authorities, whereas those of Mansfield Town Football Club Limited, currently in League Two of the English Football League, were just four pages of financial information from start to finish.
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