Aston Villa made a £69m loss last season when winning promotion from the Championship under their new investor-owners, the club’s published accounts have revealed. That loss would have been much greater, and possibly breached the limits of the EFL’s financial “profit and sustainability” regulations, if the owners had not bought Villa Park for £56.7m via another of their companies.
The accounts of the overall Villa holding company, Recon Group UK Limited, for the year to 31 May 2019, record a £36m profit on the sale of Villa Park, so without it, the club’s loss could have been £105m. The Land Registry record for the stadium notes the £56.7m sale to NSWE Stadium Limited, owned by Villa’s joint owners Nassef Sawiris and Wes Edens, was completed on 21 May, just 10 days before the financial year end.
The practice of clubs’ owners buying the stadium and leasing it back to the club has been seriously controversial in the Championship, as some other clubs see it as a device to stretch the limits of the EFL’s profit and sustainability regulations, which set a maximum permitted loss of £39m over three seasons if covered by an owner.
In January Derby County were charged with breaching the regulations over the £81.1m sale of Pride Park to the club’s owner Mel Morris on 28 June 2018, two days before the club’s accounting year end. Derby have strongly denied any such breach, arguing that they obtained an independent valuation for the stadium which was previously approved by the league.
In November Sheffield Wednesday were charged with misconduct over the arrangements relating to the £60m sale of Hillsborough in June 2019 to a company owned by the club’s owner, Dejphon Chansiri, which was recorded in the 2017-18 financial year accounts. Wednesday have denied any wrongdoing and also argued the arrangements were approved by the league in advance.
Senior figures at Villa have made it clear that the club obtained three independent valuations for Villa Park before the sale to Sawiris and Edens was completed at the £56.7m price, and that the EFL was kept informed throughout. In a statement announcing the publication of the accounts, Villa said that over the three-year period to 31 May 2019: “The club complied with the EFL’s Profitability & Sustainability Rules. After promotion, The Premier League reviewed and confirmed compliance in accordance with their own policies and procedures.”
The statement noted that £45.8m costs were incurred when the club were promoted via a 2-1 victory over Derby in last season’s Championship play-off final, including £11.7m paid in bonuses, and £30m due to the former owner Randy Lerner under the terms of his sale to Tony Xia in 2016.
Sawiris, a billionaire Egyptian industrialist and shareholder and supervisory board member of adidas, and Edens, a US investor and owner of the Milwaukee Bucks NBA franchise, took Villa over from Xia in July 2018 and invested heavily to win promotion to the Premier League. The owners injected £105.7m into the club in capital during the year, the club’s statement said, and after promotion was won, Villa spent £132m net on a spree of new players including Tyrone Mings, Matt Targett, Douglas Luiz and Mbwana Samatta, in an effort to stay in the Premier League.
They are currently in the relegation zone, in 19th place, two points behind Watford in 17th and with a game in hand.