The price of football clubs trying to buy their way into the Premier League was highlighted on Thursday when Sheffield United and Loftus Road, owner of Queens Park Rangers, announced heavy annual losses.
Both clubs play in the First Division and spent relatively heavily on players last season. The spending, which failed to lift either of the two into the Premiership, left both clubs in the red.
Sheffield United lost 5.9 million on turnover of 8.9 million in the year to June 30, while Loftus Road - whose figures included a contribution from Wasps, the professional rugby union club owned by the company - lost 7.1 million on turnover of 7.5 million in the 12 1 /2 months to May 31.
In both cases, transfer payments contributed significantly to the losses. The two clubs have added to their playing staffs since the start of the current financial year.
The Loftus Road results were particularly revealing because they illustrated the cost of relegation to a club. After falling out of the Premiership, QPRs turnover dropped from 7.2 million to 5.7 million last year.
Its losses before transfers and group expenses were 206,000. The group as a whole also suffered from the cost of investing in the rugby side of the business, where revenues do not cover the costs of paying the top players. Wasps lost 540,000 before transfers and group expenses on turnover of 1.6 million - despite the teams success in winning the league championship.
Loftus Road was floated on Aim in October last year, but its failures on the pitch have subsequently seen the shares fall from their issue price of 72p to Thursdays close of 44p, down 1p on the day.
Loss per share was 20.1p. Stephen Oakley has become chief executive. Sheffield United, which reversed into the Conrad group in January, also had a disappointing season last year, just failing to win promotion to the Premiership.
However, the clubs share of turnover grew slightly to 4.9 million (4.3 million) and a previous years pre-transfer loss 75,000 was turned into a 91,000 profit.
Charles Green, chief executive, said the clubs revenues should grow to 6 million-7 million this year because of higher attendances and merchandising sales.
The groups results included an exceptional loss of 2.4 million on the writing back of goodwill on the sale of a business previously owned by Conrad. Loss per share was 20.08p. Thursday the shares fell 4p to 53 1 /2p. Neither company paid a dividend.
