Aston Villa under Christian Purslow: Continued heavy losses and extravagant transfer spending underwritten by generous owners – but goal of Premier League safety achieved

In late May 2019, Aston Villa and Derby County met in the EFL Championship play-off final. At stake for each was a return to the Premier League – and a predicted €200 million windfall.

Three years later, Villa, the victors that day, are embarking upon their fourth successive season in the top flight. Derby find themselves in English football’s third tier, having skirted with liquidation through a lengthy period in administration following financial meltdown.

Villa’s victory at Wembley marked the culmination of Christian Purslow’s first season in post as the club’s CEO. Formerly of Liverpool and Chelsea, Purslow celebrates his fourth anniversary in the Midlands this week.

On the surface, his time at the club has been a success – after tumbling out of the Premier League in 2016, the Villains survived relegation on the final day of their first season back and have since enjoyed two years of relative safety. But does that constitute a job well done? Or could Villa have been expected to do even better than they have since 2018?

Improved revenues – but scope for plenty more growth

Relegation in 2016 saw club revenues plummet, in keeping with wider trends. Yet while parachute payments cushioned the blow to broadcast turnover – Villa were promoted in the season of their third and final tranche of such income – it was in the commercial sphere that revenue tumbled the most.

From 2016 to 2017 the club’s commercial income fell by 58 per cent, and it has yet to recover to those 2016 levels. In 2021, the club’s second season back in the Premier League, commercial revenues totalled €29.6 million, the 11th-highest figure in the division.

That contrasts sharply with them having the highest commercial income outside the ‘big six’ during that relegation season six years ago. Since his appointment as CEO, Purslow has overseen commercial growth of 60 per cent. That’s evidence of solid growth, but that the revenue stream remains €12 million behind 2016 levels suggest there’s plenty of room for more.

Assessing Villa’s gate receipts is trickier, given the last season unaffected by Covid was one where they found themselves in the Championship. Matchday income that season totalled just €14.5 million, which was actually the highest in the second tier.

Yet even an uplift upon promotion leaves Villa lagging far behind those at the top of the Premier League. To make progress on that front, Purslow and the club announced plans in June for over €100 million in stadium redevelopments. Work due to begin in 2023 will add 7,400 seats to take Villa Park’s capacity over 50,000, and the club intends to extend that figure to 60,000 in the not-too-distant future.

Villa’s overall revenue in 2021 topped €200 million, though around a fifth of that was broadcast income deferred from the 2020 season, following the pandemic delaying that season’s end (Villa have a May 31st year-end date). Adjusting for that gives a smoothed revenue figure of €165 million – still the highest in the club’s history.

That puts Villa 12th in the EPL for total income, which isn’t bad for a side not long out of the second tier. Yet Villa fans and Purslow alike will be all too aware of the club’s loftier standing in recent times; in 2010 they had the 7th-highest income in the division, and its likely that’ll be a target the club now has its eyes on once again.

Huge wages in the Championship – and player spending has only increased further

If the club’s income under Purslow has grown steadily, expenditure has significantly outstripped it. The 2019 promotion season saw the Villa’s wages-to-turnover metric hit an eye-watering 175 per cent, and was still at 154 per cent once promotion bonuses were stripped out.

If we apply the smoothed revenue figure outlined above (a more reliable measure given Covid-induced deferrals are a quirk of timing and little more) to 2021, wages-to-turnover sat at 94 per cent, a high figure for an EPL club and well beyond the 70 per cent threshold long vaunted by UEFA.

Purslow and co. will doubtless argue the club’s hefty wage bill has been worth it. After all, it got them promoted and has kept them in the top tier since. Yet it’s also worth highlighting that in each of Purslow’s first three seasons at the club, Villa underperformed relative to their wage bill.

In that 2019 promotion-winning season, their total bill of €108 million is the largest single-season salary cost in Championship history – and remains so even when promotion bonuses are removed. Their previous two seasons in the division already had had the club occupying two of the top four spots in that regard. Instead of reeling expenditure in, Purslow doubled down.

Indeed, so vast was Villa’s spending during their time in the Championship that speculation was rife they would fail the EFL’s Financial Fair Play (FFP) Profit and Sustainability rules. Even after that victory at Wembley, there were very real fears the club might face a points deduction, ones only assuaged nearly a month after promotion was achieved.

Villa booked a loss upon promotion of €78 million, taking their total in the previous three seasons to €136 million, well beyond the FFP limit across that term of around €45 million. Deductions, including promotion-related payments totalling €52 million (€34 million was due to former owner Randy Lerner and deemed disallowable for FFP purposes), took them to around €6 million under the FFP limit, yet that was only achieved by exploiting a loophole since closed by the EFL.

In 2019, Purslow’s first year at the helm, the club sold Villa Park to NWSE Stadium Limited, an entity owned by the club’s joint owners Nassef Sawiris and Wes Edens. Sold for around €64 million, the club booked a profit on sale of their ground of nearly €41 million.

Without this tactic, Villa would have failed FFP by around €35 million. Instead, they spent heavily and achieved promotion. Purslow has since argued against the potential over-regulation of English football, which is interesting, given impending regulatory changes would likely seek to ensure club’s grounds remain in the hands of the clubs themselves and cannot be sold from their control.

Even 2019’s huge wage bill was only enough for the club to finish fifth in the Championship, with victory in the play-offs required to ensure that money didn’t go to waste. In their first season back in the top tier Villa finished 17th, an achievement in plenty of eyes but one obtained with the 13th-highest wage bill in the division that season. In 2021 they underperformed again, albeit by only one spot, finishing 11th with the 10th-highest wage bill.

So vast were the salaries doled out to that promotion-winning squad that Villa didn’t actually pump up their wage bill too much in 2020. Carrying too many Championship players in their first-team may explain their underperformance that year.

The club increased their wage bill by only 15 per cent upon promotion; of the nine clubs promoted between 2017 and 2020 only two, West Bromwich Albion and Cardiff City, boosted theirs by a smaller proportion, and both were relegated in their first season back in the top flight.

Where they did spend heavily was on transfer fees. In that first season back in the Premier League, Villa spent €132 million on the likes of Wesley, Tyrone Mings, Douglas Luiz, Ezri Konsa and plenty more in an attempt to ensure their stay in the top tier wasn’t a short one. They achieved as much, and then spent in excess of €100 million in each of the following two seasons as well.

In all, across Purslow’s reign, Villa have spent an estimated €480 million on incoming transfers across the last five seasons. For his first three seasons they did so with almost nothing coming the other way – the club’s net spend from 2019 to 2021 was €254 million.

That figure has climbed to around €280 million at the time of writing, and it is only because Villa have recouped some chunky fees in the last year or so that it isn’t up nearer the gross figure.

The sale of Jack Grealish for around €118 million last summer represented a significant departure from the norm for Villa. In the three seasons prior, the club booked a total profit on player sales of just €13 million, a tiny amount given how clubs are increasingly turning to the transfer market to bolster top-line revenues.

Purslow cited “Covid-19 related transfer market suppression” when unveiling the 2021 results, but that figure still pits Villa way behind their Premier League rivals. In fairness, the sale of Grealish alongside some bigger sales this summer - €19 million from Chelsea for academy graduate Carney Chukwuemeka, just under €18 million from Newcastle United for Matt Targett – does show improvement on the club’s behalf in this regard.

Yet a look over their transfer record in recent years shows little in the way of obvious successes. Hardly any of the players Villa have spent large sums on under Purslow have left for more than they were bought for; even Targett, who did, went for minimal profit, and the club had already spent more than they’d receive for him this summer on replacement Lucas Digne.

Villa’s two most notable sales in recent years, Grealish and Chukwuemeka, were bred in the club’s academy. That reflects well on the club’s youth development, but hardly shows their transfer dealings in glowing terms.

Enormous losses have funded Premier League consolidation

The upshot of hefty transfer spending in recent years is that Villa have posted some of English football’s biggest losses. Across Purslow’s first three years in charge (accounts for 2022 are not yet available), Villa posted pre-tax losses of €234 million. Only Everton, Chelsea and Arsenal can claim higher losses in English football over the same period.

Go back a little further and the picture looks even worse. Across the last decade, Villa have posted over half a billion Euros worth of losses. That’s an astonishing amount given the club only really has that play-off final win to show for it, though the club may argue it’s helped consolidate them as Premier League club. Whether that’s true or not remains to be seen; most outside the top six are only one bad year away from a relegation battle.

Of course, those losses aren’t wholly attributable to Purslow and the current ownership. Yet it’s notable that rather than look to build the club more sustainably, Purslow has embarked upon a spending spree designed to force the club back into the upper echelons of English football.

In some ways it has worked – yet it’s also not hard to wonder if the club might soon reach a point where more efficient spending is not only desired but required. Certainly, as more stringent financial rules loom on the horizon, and the club looks to break into European competition, the need to improve revenues and control costs will rise.

Ultimately, Villa’s recent activity has only been made possible by the generosity of Sawiris and Edens. The duo have injected an enormous €487 million in funds in the last five years, all in equity, leaving the club just about debt-free. Add in the €64 million spent on buying Villa Park in 2019 and the mooted €100 million of improvements to the ground to come, and that figure becomes higher still.

Aston Villa aren’t the only club to benefit from rich and generous owners, but it’s an interesting ploy given the club came very close to administration before Sawiris and Edens’ 2018 takeover. Under their employ, Christian Purslow has been given vast scope for spending to ensure the club stays away from the Championship, and while that has been achieved to date it is hard to make an argument the business has been ran especially impressively given the resources to hand.

Purslow, as mentioned, has been a fairly outspoken critic against the idea of increased financial controls and regulatory oversight in football. His argument is that doing so would diminish the Premier League’s appeal, causing lower profitability and reducing the incentive for people to invest in English football. Moreover, he’s argued it could disadvantage Premier League clubs against their European counterparts.

He may have a point, though it seems a tad hypocritical for him to cite profitability concerns given the largess and loss he’s overseen since taking over at Aston Villa. What’s more, worries about the ability of English clubs to compete against European rivals look somewhat fatuous when set against the backdrop of the current transfer window, in which English clubs have far outspent those on the continent.

Purslow’s most relevant concern might be how investable English clubs can remain. Few football club owners make money from their clubs while actually in charge of them; most hope for a chunky profit on sale instead. In order to achieve that, clubs need to grow, either by being smart with what they have or seeking help from above and outside.

Christian Purslow is right to worry about any further restrictions on club’s finances – without the vast sums sent his way by the club’s ownership, his time in charge of Aston Villa would have looked very different indeed.