Aston Villa suffered a reduced loss of £17.7million for the year ending May 31, 2012, the club have confirmed.
This compares with a deficit of £53.9m made by the midlands club for the previous 12 months.
Villa brought about this sizeable reduction despite a fall in turnover of £11.6m.
A 16th-placed finish in the Barclays Premier League, fewer live TV matches, lower crowds and early exits from both domestic cup competitions accounted for the turnover reduction.
The average league attendance fell from 37,220 in 2010-11 to 33,873.
But operating expenses were reduced by £20.3m to £138.4m and player trading resulted in increased profit by £8.1m from £18.8m to £26.9m.
Ashley Young and Stewart Downing were sold during this period for a combined figure of around £35m.
In addition chairman Randy Lerner waived interest on loans totalling £107.1m made by him to Villa, which created a one-time benefit to the club of £20.3m.
Villa's chief financial officer, Robin Russell, said: "By managing costs effectively, the club managed to cut losses by more than half during a period which continued to be challenging economically both globally and especially in the west midlands.
"In this respect, despite a disappointingly low performance level on the pitch in the 2011-12 season, these financial results represent a further step towards the club's objective of long-term sustainability."