Player sales is the lifeline of Dutch football as financial divide widens

The Dutch Eredivisie has captured attention this season due to Ajax's initial struggles both on and off the pitch. However, the 36-time league champions have made a remarkable recovery and are once again contending for the coveted European qualification spots.

Traditionally, the league has been dominated by a triumvirate consisting of Ajax, Feyenoord, and PSV. Yet, the current season has seen other clubs emerge to challenge this established hierarchy.

Although it remains unlikely that these sub-top clubs will vie for the top or even second place in the foreseeable future, Ajax’s recent difficulties have injected a sense of optimism that the dominance of the big three is not impregnable.

Thus, it becomes fascinating to delve into the financial landscape of Dutch football, as unveiled in the latest financial reports from a range of clubs for the 2022/23 season. These insights will shed light on how the smaller teams stack up financially against the three powerhouses.

Rising turnover with one club clear at the top

Analysing the financial data from nine Dutch clubs for the 2022/23 season reveals a consistent upward trend, with each club experiencing a rise in turnover compared to the 2021/22 season. On average, a notable 21.1 per cent increase in turnover was observed, with FC Twente and AZ Alkmaar showcasing the most significant improvements.

FC Twente's turnover surged by nearly 50 per cent, reaching €39.6 million, buoyed by their return to European football for the first time since the 2013/14 season. Similarly, AZ Alkmaar leveraged their European success from the previous season by advancing to the Conference League semi-finals in 2022/23, which resulted in a 40 per cent increase in their turnover to €49.5 million.

For the fifth consecutive fiscal year, Ajax retained their status as the highest earner in the league, boasting a turnover of €196.3 million. Their closest rivals, Feyenoord and PSV, reported turnovers nearly €100 million lower. Feyenoord's turnover stood at €99.1 million, attributed to their title-winning campaign, whereas PSV recorded a turnover of €97.6 million.

Despite trailing behind these two clubs in the 2022/23 season, Ajax distinguishes itself as the only Dutch club with the financial clout to compare with Europe's elite teams. 
It is crucial to note that the figures mentioned exclude earnings from player sales.

Including transfer income, Ajax's total revenue for the 2022/23 fiscal year escalated to €354.8 million. In contrast, Sparta Rotterdam's total income of €18.5 million starkly highlights the financial disparities within Dutch football.

Transfer income plays a significant role

Ajax's esteemed academy and astute recruitment strategies have culminated in a remarkable €551.2 million generated from player sales since the 2017/18 season. In contrast, PSV, AZ Alkmaar, and Feyenoord collectively amassed approximately €480 million from player sales over the same period.

In the 2022/23 season, Ajax's player sales soared to €158.5 million, a figure bolstered by the record-breaking sale of Antony, marking the highest transfer fee in the history of Dutch football. PSV and Feyenoord also made significant sales, fetching €77.4 million and €50 million, respectively.

On average, player sales accounted for 29.5 per cent of the total income among the nine clubs, encompassing revenue primarily from matchday, commercial activities, and broadcasting. Ajax, once again, stood out by generating 44.7 per cent of its total income from player sales, with PSV closely behind, where player sales constituted 44.2 per cent of their €175 million total income for the 2022/23 season.

Sparta Rotterdam and FC Twente reported the lowest percentages of total income derived from player sales, at 12 per cent and 14 per cent respectively, translating into approximately €2.2 million for Sparta Rotterdam and €6.4 million for FC Twente in transfer income.

For most clubs, the primary sources of revenue were transfer income and commercial earnings. Moreover, income from broadcasting exhibited significant disparities among the clubs. Ajax, for example, reported €55.6 million from broadcasting, starkly contrasting with the €3.5 million reported by Sparta Rotterdam, who finished 6th in the league.

This substantial financial disparity is largely due to Ajax's participation in the Champions League and subsequently the Europa League during the season, which significantly bolstered their financial position. Excluding the additional UEFA broadcasting revenue, domestic broadcasting income stood at €10.5 million for Ajax.

The other European participants in the 2022/23 season, Feyenoord and PSV, reported total broadcasting revenues of €29.2 million and €28.5 million, respectively, with €7.8 million and €10.1 million stemming from domestic broadcasting. This highlights the financial disparities and the impact of European competition on Dutch clubs' revenues.

Dutch football has a sustainable issues

The reliance on income from player sales by Dutch clubs has not only been remarkable in recent years but has also become essential for reducing losses or achieving profitability. This dependency underscores a longstanding issue where, in the absence of profits from player transfers, most clubs record an operating loss—a trend predating the COVID-19 pandemic.

Ajax disclosed an operating loss of €51.2 million, while PSV and Feyenoord reported losses of €42.1 million and €37.6 million, respectively. Among the nine clubs reviewed, the average operating loss was €20 million. This figure illustrates that, on average, the clubs would need to match this amount in profits from player sales to transition towards a sustainable business model.

FC Twente distinguishes itself as the solitary team to report an operating profit, underscoring their resilience and strategic management. Notably, FC Twente are also the last club outside the traditional big three—Ajax, PSV, and Feyenoord—to win the Eredivisie, achieving their inaugural title in the 2009/10 season. 

Following a period of struggle that culminated in relegation during the 2017/18 season, FC Twente's subsequent promotion has seen them consistently perform as one of the top contenders, securing 5th place in the 2022/23 season, merely three points adrift of AZ Alkmaar. This achievement highlights FC Twente's commendable recovery and their competitive stature within Dutch football.

Widening financial gap

When examining EBIT (Earnings Before Interest and Taxes), which includes profits from player sales, six out of the nine clubs presented positive outcomes. Nevertheless, Utrecht and Heerenveen found themselves at the less favourable spectrum, each reporting EBIT losses exceeding €5 million. Sparta Rotterdam also faced a slight setback, with a reported loss of €0.5 million.

The sale of key players Antony and Lisandro Martinez to Manchester United significantly boosted Ajax's financial performance, catapulting them to an impressive EBIT result of €62 million, a stark turnaround from losses in the two preceding seasons.

Trailing Ajax, PSV recorded an EBIT of €19 million, with Feyenoord not far behind, posting €9.5 million. Along with FC Twente, these clubs were the sole entities to document an enhancement in their EBIT relative to the previous year.

AZ Alkmaar experienced the most pronounced decline, with their EBIT plummeting from €23.7 million in the 2021/22 season to just €1.2 million in the latest fiscal period.

This significant downturn is largely attributable to a decrease in profits from player sales, dropping from €41.4 million in 2021/22 to €13.9 million in 2022/23. FC Groningen, which faced relegation, witnessed a considerable fall in their EBIT, reporting a reduction of €9.1 million to settle at €2.1 million.

This illustrates the volatile nature of football finance, where changes in player sales can markedly impact a club's financial health and operational success.

Could the financial dynasty of Ajax be over?

The recent financial disclosures from Dutch clubs underscore the growing economic chasm between Ajax and its domestic rivals. In the ongoing 2023/24 season, Ajax have persisted in its strategy of selling key players, such as Mohammed Kudus and Jurrien Timber, for cumulative fees reportedly exceeding €150 million. This strategy is set to further amplify the financial disparity between Ajax and other Dutch clubs in the current fiscal year.

Ajax have also continued its approach of scouting and investing in promising talents across Europe to replenish its squad. Yet, for the first time in recent years, the drawbacks of this strategy have become evident with their challenging start to the 2023/24 season. 

This development has thrust Ajax into the spotlight of Dutch football discourse, prompting speculation about the sustainability of their model, especially if they were to deplete their reservoir of marketable players. Given their recent history of operational losses, Ajax's reliance on player sale profits to achieve a positive financial outcome is starkly evident.

Moreover, Ajax's financial stability is heavily contingent on qualifying for European competitions, with a significant portion of their broadcasting revenue stemming from their participation in these tournaments. 

Failure to secure European qualification could jeopardize this crucial income stream. Conversely, this scenario could present a golden opportunity for other clubs to access the substantial financial rewards of European football.

However, with PSV and Feyenoord currently securing the Champions League spots for the season, the competition for the remaining European qualifications is fierce. While these funds could provide a substantial financial uplift for clubs outside the traditional top five, the limited availability of European spots may perpetuate the existing disparities within Dutch football. 

This dynamic threatens to solidify the entrenched hierarchy, making it increasingly difficult for lower-ranked clubs to challenge the dominance of the established elite.