Wrexham’s annual turnover more than doubled in their first season back in the EFL to a record £26.7million — but the League Two runners-up still posted a loss of £2.7m.
The deficit for the year to June 30, 2024, takes total losses across the three full seasons with Ryan Reynolds and Rob McElhenney at the helm to almost £11m ($14.2m).
However, the sizeable loan owed to the RR McReynolds Company — belonging to the two Hollywood stars and owner of the majority of the club’s shares — has since been paid off, according to the strategic financial report accompanying the latest figures.
By the time this was settled in the current financial year, the loan had reached £15m. The club is now free of all shareholder loans.
In terms of outgoings in 2023-24, the three-page report accompanying the accounts — seen by The Athletic before publication at Companies House next week — confirms an increase in the wage bill to £11m (up from £6.9m in 2022-23).
This helps partly explain Wrexham’s latest financial loss despite that soaring turnover, which is believed to be a League Two record by some distance.
Other significant outlays for Wrexham during the period covered include stadium maintenance and upgrade (£2.8m), administration and office costs (£2.5m) and legal and professional costs (£5m).
Retail costs, including buying saleable stock from suppliers, accounted for £2.6m but was more than covered by overall retail income of £4.5m (up from £3.4m the previous year).
The big driver of the 155 per cent rise in total revenue — from £10.4m in 2022-23 to £26.7m as Phil Parkinson’s side finished second in League Two — was sponsorship.
Lucrative deals with United Airlines (shirt) and SToK Cold Brew Coffee (stadium) kicked in during the 12 months covered by the latest financial figures, helping sponsorship income soar from £1.8m in 2022-23 to £13.1m last season.
This underlines the value of the Welcome to Wrexham documentary, a spotlight that has made the club hugely attractive to blue-chip sponsors.
A crew filming players for Welcome to Wrexham (Tom Jenkins/Getty Images)
The Emmy-award winning show, the fourth series of which is being filmed, has built a global fanbase — for the first time, the UK market is responsible for less than half of the club’s annual turnover at 47.5 per cent (compared to 74.8 per cent in 2022-23).
The rest of the world, primarily North America, was responsible for 52.1 per cent (up from 24.6 per cent) of turnover, while Europe made up the balance.
Matchday revenue in 2023-24 rose to £5m (up from £3.1m) during a campaign that saw the opening of a temporary stand at the Kop end in December, which lifted the stadium capacity by a little over 2,000 to 12,868.
Here, The Athletic offers a detailed assessment of the figures, including what they mean going forward for a club currently bidding for an unprecedented third straight promotion, which would take them into the Championship.
First up, what period are we talking?
The latest accounts cover the club’s first season back in the EFL. Wrexham finished as runners-up in League Two to clinch promotion for a second consecutive year.
These figures do not include any of the club-record transfers involving Ollie Rathbone, Mo Faal and Sam Smith, the latter becoming Wrexham’s first seven-figure transfer earlier this year.
Nor do they include the New York-based Allyn family coming on board as minority investors or any costs entailed in the recent redesign of the new 5,500-capacity Kop stand.
Let’s talk about that club-record turnover. How have Wrexham done it?
It’s a continuation of a trend that started in the first full season of the Reynolds and McElhenney era (2021-22), when annual turnover soared by 404 per cent to almost £6m.
This increased to £10.4m in their second year and now £26.7m. Turning a previously provincial club into a global entity via the Welcome to Wrexham documentary, which first aired in the autumn of 2022, has been key.
North America has become a huge market, both in terms of attracting supporters and delivering those all-important lucrative sponsorship deals. Such is Wrexham’s appeal on the opposite side of the Atlantic that SToK pays handsomely for stadium-naming rights despite not selling their product in the UK.
Pre-season tours are a big part of that strategy. The year covered by these financial figures saw Wrexham embark on their first trip to the States to play four matches — including sold-out games against Chelsea and Manchester United — in North Carolina, Los Angeles, San Diego and Philadelphia.
Wrexham fans in California in 2023 (Katharine Lotze/Getty Images)
How much did the club make from the documentary?
The show has clearly been fundamental to the club’s growth but they earned the precise some of nothing from series two and three, which were broadcast during the autumn and spring of the 2023-24 financial year.
Wrexham have never received a penny from it, at least not directly. Instead, the intention of the owners and advisor-turned-director Shaun Harvey from the beginning was to use the global exposure to drive the club’s commercial operations, be that sponsorship, selling shirts or whatever.
Sponsorship increasing seven-fold to £13.1m is why the show has long been considered “the club’s biggest commercial asset” despite the Racecourse coffers not benefiting directly.
The success of series one meant Wrexham were in a strong position when negotiating those sponsorship deals — shirt, stadium and so on — for the 2023-24 season.
How does Wrexham’s turnover compare to EFL peers?
In terms of League Two, it is unprecedented. Current leaders Walsall posted revenues of £6.7m in the same financial year as Wrexham pocketed £26.7m, while Bradford City — the division’s best-supported club in terms of attendances — brought in £8.5m during 2022-23, the last set of accounts available for the Yorkshire club.
It’s a similar situation in League One, with Portsmouth posting an annual turnover of £13.6m en route to lifting the title last season.
Even well-established Championship clubs such as Preston North End (£16.9m) and Hull City (£21.2m) pale in comparison, while Sheffield Wednesday’s turnover for their first season back in the Championship stood at £26.3m. The average crowd at Hillsborough in that same 2023-24 season was 26,762.
Considering this record-breaking income, why did Wrexham post a loss?
Fair point. Certainly, the club — in the strategy report accompanying the 2022-23 accounts — had been hoping to at least break even. “The financial losses suffered by the club since the takeover shouldn’t be repeated,” it read, “with income generated by the club now sufficient to meet the operational costs of the club going forward.”
An increased wage bill to £11m (up from £6.9m in 2022-23) during a season when the women’s team turned semi-pro for the first time was a factor in why that hope did not materialise.
There was also an additional £824,000 incurred as a cost of achieving promotion from League Two, namely bonus payments to players and staff, and promotion clauses included in some transfer deals.
Stadium maintenance proved a further drain at £2.8m. A decent chunk of this went on erecting the temporary Kop stand in December, an outlay the club insisted at the time would not be covered by subsequent ticket sales.
Wrexham fans at the Racecourse Ground this month (Carl Recine/Getty Images)
Legal and professional costs also came to £5m in the 12 months covered by the latest accounts. This includes monies paid to Maximum Effort and More Better Industries — companies owned by Reynolds and McElhenney respectively — for the considerable work that went into securing big sponsorship deals and then maintaining those partnerships.
“Payments made to both More Better Industries and Maximum Effort are consistent with those that would be made to other agencies who could offer similar services,” reads the report that accompanies the 2023-24 accounts.
A marketing contribution to Welcome to Wrexham was also made via Wrexham Holdings LLC, the club’s parent company, in recognition of how important its continued success is going forward.
Other major costs included the academy (£757,000).
What about this loan to the RR McReynolds Company that was repaid?
The loan helped fund the purchase of the Racecourse Ground and stadium improvements.
The amount owed then rose further in the financial year to June 30, 2023, from £3.7m to £8.9m as overall losses mounted amid the push to escape the National League. By the time the loan was repaid this current financial year (2024-25), Wrexham owed £15.02m.
Previous accounts have revealed interest was set at three per cent over the Bank of England base rate, which in June 2024 stood at 5.25 per cent. This meant the interest paid on the loans as the 2023-24 financial year ended will have been 8.25 per cent.
The loan being repaid in full is significant for two reasons. First, the club is no longer paying interest. And, second, Wrexham will now be a more attractive proposition to other lenders, should future money be required for, say, stadium development or building a new training ground.
What will the balance sheet look like this season?
Similar in terms of profit and loss, albeit with an increased wage bill to reflect Wrexham’s League One status, not just on the field but also off it, with several appointments to the club’s leadership team having been made in recent months following chief executive Michael Williamson’s arrival last May.
These off-field appointments are expected to reduce the reliance on outside parties to work on commercial deals and the like.
Income is also likely to increase due to raised central payments from the EFL to reflect that third-tier status, along with increased solidarity payments from the Premier League. The EFL’s new four-year TV deal will also further boost the coffers.
Then, there’s the growing U.S. market, with hundreds of fans making the trip each month, most taking in at least one match in the process.
A fan poses for a picture in Wrexham in 2023 (Tom Jenkins/Getty Images)
And next season?
Much will depend on whether Wrexham can clinch that third consecutive promotion. If they do, then there will be another surge in income thanks to the increased payments due to Championship clubs.
The difference between a place in the third and second tiers is worth in the region of £8m, once both the EFL central and Premier League solidarity payments are taken into account.
One income stream likely to fall next season, however, is matchday revenue, as work begins on the long-awaited new Kop stand. This will mean a season-long return to a three-sided stadium, reducing the capacity back to around 10,000.
Finally, how are Wrexham looking for the league’s financial rules?
Well, they certainly complied in that first season back in the EFL. Under the salary cost management protocol (SCMP) employed in the bottom two tiers, League Two clubs can spend a maximum 55 per cent of annual revenue on wages and Wrexham came in at 41.3 per cent last season.
Now in League One, the threshold has been raised to 60 per cent but, again, this should not cause any problems. As for the possibility of promotion and what this will mean if Wrexham are to kick off next season in the Championship, clubs are subject to profit and sustainability Rules (P&S) rather than SCMP.
From next season, it means second-tier clubs can now lose up to £41.5m across a rolling three-year cycle.
Should Phil Parkinson’s side go up in May, year one of that reporting period will be 2023-24 and year two the current ongoing season. If, say, Wrexham repeat last season’s £2.7m loss again in 2024-25, then that would leave the club with a potential loss of around £36m to play with in the 2025-26 campaign.
That’s not to say they’ll be wanting to necessarily test that limit. But it does offer plenty of headroom should Reynolds, McElhenney and the Allyn family want to push on again towards the ultimate ambition of delivering Premier League football to north Wales.
(Top photo: Rob McElhenney at a Welcome to Wrexham event in Los Angeles in 2024; by Frazer Harrison via Getty Images)
