Southampton find themselves at a worrying financial crossroads — and it could get worse before it gets better.
That is according to finance expert and new Football Insider columnist Kieran Maguire, speaking exclusively correspondent Adam William after Southampton released their annual financial reports.
The club posted net losses of £76million for the fiscal year ending June 2020, compared to the £41m losses they suffered in 2019.
That downturn is due almost entirely to the financial implications of the pandemic.
But the figures only take into account three months (March-June) of pandemic-related losses and the situation could look much bleaker when the Saints have endured a full financial year in the Covid economic sphere, Maguire explained
Asked to clarify the financial situation at St. Marys’, he told Football Insider: “Their income dropped by £23million in 2020, partly due to rebates to broadcasters and less people coming through the turnstiles. They are probably going to take another hit of £15-20m this year.
“I think the challenge for Southampton is that they’ve got someone very good players, so they can’t then go to those players and negotiate wage cuts.
“Last year, for every £100 they earned, £90 was going out in wages. That’s not sustainable, and it’s going to get worse this season. They’ve borrowed money from a specialist lender, but they’re paying interest at a huge rate, over 9%.
“Arsenal and Spurs have borrowed at about 0.1% on similar loans. Manchester United are borrowing at 1-2%, as are Spurs when it comes to the cost of the stadium.
“For Southampton to be borrowing at such high rates is indicative of the fact that lenders don’t feel hugely comfortable and are reflecting that in the interest rates.”
While these are worrying times for Southampton in the balance sheets, on the pitch things are looking much rosier.
They currently sit 7th in the table, three points outside the Champions League places.