A case for treading water

[Gritty]

It appears Derby are looking for investment. 

I find it odd that an investor would want to invest right now in Derby. Due to years of very well intentioned, but ultimately unsuccessful, investment to get Derby into the Premier League we are now heavily constrained by FFP.  FFP works over a 3 year average. You can lose £39mn over 3 years.

Let's hope we avoid a points deduction due to the stadium chicanery (and I personally think we may well get one but that's another topic).  The sale of the stadium in 17/18 helped for the seasons 17/18, 18/19, 19/20 on a 3 year rolling average. From next season it won't help.   In 17/18 Derby's operating loss (i.e. ignoring stadium sale) was over £30mn.  And if losses in 18/19 and 19/20 are anything like that, I cannot see how on earth we won't bust the £39mn rolling 3 year FFP limit next year.  Lots of fans go on about money received from Rowett and Lampard moving on etc but fundamentally this is all very small beer. The issue is that the wage bill is 130% of income.   The squad size (and presumably wage bill) in 18/19 was similar to 17/18.  We have cut the squad a bit this year, but just when I thought we were reigning things in we go and splurge £10mn on Bielik which means we will at best be tight on FFP next year and I can't see how we won't breach it. A sale of Bogle and maybe Marriott is inevitable I fear.

So even if Mel is bought out by Qatar or Red Bull, they won't be able to invest loads next year because FFP won't let them.

So what's the solution in my view? Well, we need to create room in FFP by completely 'right sizing' our cost base.  That is going to require getting the wage bill drastically lower for 2-3 years to create room in FFP so that we can then have another go at investing but this time hopefully a bit more wisely with the benefit of experience. That means not buying Bieliks each year (or paying the massive loan fees for Mounts, Wilsons etc) and keeping FFP incredibly tight. It means treading water for 2-3 years and bringing the youngsters through as Cocu has started to do, finding out which are good enough and which aren't. Hopefully by the end of those 3 years some of those youngsters will have shown they are good enough for the first team and that means when we do come to invest we invest in fewer positions (i.e. can spend money on 2-3 positions not 6-7)

This all requires fans to have patience and accept that for 2-3 years we may not compete at the top end of the table (we should aspire to do our best but accept it may not be possible).  And if we do that there'll be loads of room in FFP to then invest properly in 2-3 years time

I don;t think most fans will accept that.  And I really fear we'll spend each and every season trying to juggle things, at best skirting with the FFP rules (complying with letter and not spirit) and at worst getting a heavy points reduction (which could even lead to relegation). I think we need to stop being so short termist in our outlook and look more strategically.

I appreciate this is a gloomy post.  Help convince me that I am wrong!

[RamLad1884]

It's my understanding that everything you've just mentioned has already taken place over the summer. 

Big earners such as Johnson and Butterfield gone, replaced with modest earners like Shinnie (you'd assume) as well as youth players. I'd be very surprised if by the time accounts come out for this current season we are still on that brink. 

[RamNut]

2 hours ago, Gritty said:

It appears Derby are looking for investment. 

I find it odd that an investor would want to invest right now in Derby. Due to years of very well intentioned, but ultimately unsuccessful, investment to get Derby into the Premier League we are now heavily constrained by FFP.  FFP works over a 3 year average. You can lose £39mn over 3 years.

Let's hope we avoid a points deduction due to the stadium chicanery (and I personally think we may well get one but that's another topic).  The sale of the stadium in 17/18 helped for the seasons 17/18, 18/19, 19/20 on a 3 year rolling average. From next season it won't help.   In 17/18 Derby's operating loss (i.e. ignoring stadium sale) was over £30mn.  And if losses in 18/19 and 19/20 are anything like that, I cannot see how on earth we won't bust the £39mn rolling 3 year FFP limit next year.  Lots of fans go on about money received from Rowett and Lampard moving on etc but fundamentally this is all very small beer. The issue is that the wage bill is 130% of income.   The squad size (and presumably wage bill) in 18/19 was similar to 17/18.  We have cut the squad a bit this year, but just when I thought we were reigning things in we go and splurge £10mn on Bielik which means we will at best be tight on FFP next year and I can't see how we won't breach it. A sale of Bogle and maybe Marriott is inevitable I fear.

So even if Mel is bought out by Qatar or Red Bull, they won't be able to invest loads next year because FFP won't let them.

So what's the solution in my view? Well, we need to create room in FFP by completely 'right sizing' our cost base.  That is going to require getting the wage bill drastically lower for 2-3 years to create room in FFP so that we can then have another go at investing but this time hopefully a bit more wisely with the benefit of experience. That means not buying Bieliks each year (or paying the massive loan fees for Mounts, Wilsons etc) and keeping FFP incredibly tight. It means treading water for 2-3 years and bringing the youngsters through as Cocu has started to do, finding out which are good enough and which aren't. Hopefully by the end of those 3 years some of those youngsters will have shown they are good enough for the first team and that means when we do come to invest we invest in fewer positions (i.e. can spend money on 2-3 positions not 6-7)

This all requires fans to have patience and accept that for 2-3 years we may not compete at the top end of the table (we should aspire to do our best but accept it may not be possible).  And if we do that there'll be loads of room in FFP to then invest properly in 2-3 years time

I don;t think most fans will accept that.  And I really fear we'll spend each and every season trying to juggle things, at best skirting with the FFP rules (complying with letter and not spirit) and at worst getting a heavy points reduction (which could even lead to relegation). I think we need to stop being so short termist in our outlook and look more strategically.

I appreciate this is a gloomy post.  Help convince me that I am wrong!

Absolutely spot on. 

The bielik fee will be spread over 5 years which helps but its certainly odd to blow that much on one player. And just when we're trying to get the wages down, we go all Viv Nicholson and sign Wayne Rooney? Crackers. Personally i think we could be doing a bit more to develop the younger players in the first team. Only bogle made the team v Luton. 

When we seem to hit the ffp limits on wages alone, then its hard to invest in new players.

[Mucker1884]

I... and others... appear to be of the understanding that any outgoings relating to Rooney are/have been covered by extra income?  This effectively make 0% difference to FFP/P&S/Whatever it's now called! 

Did Viv Nicholson spend only what she had (rather quickly!) or did she spend more than she could afford?

[Reggie Greenwood]

3 hours ago, Gritty said:

It appears Derby are looking for investment. 

I find it odd that an investor would want to invest right now in Derby. Due to years of very well intentioned, but ultimately unsuccessful, investment to get Derby into the Premier League we are now heavily constrained by FFP.  FFP works over a 3 year average. You can lose £39mn over 3 years.

Let's hope we avoid a points deduction due to the stadium chicanery (and I personally think we may well get one but that's another topic).  The sale of the stadium in 17/18 helped for the seasons 17/18, 18/19, 19/20 on a 3 year rolling average. From next season it won't help.   In 17/18 Derby's operating loss (i.e. ignoring stadium sale) was over £30mn.  And if losses in 18/19 and 19/20 are anything like that, I cannot see how on earth we won't bust the £39mn rolling 3 year FFP limit next year.  Lots of fans go on about money received from Rowett and Lampard moving on etc but fundamentally this is all very small beer. The issue is that the wage bill is 130% of income.   The squad size (and presumably wage bill) in 18/19 was similar to 17/18.  We have cut the squad a bit this year, but just when I thought we were reigning things in we go and splurge £10mn on Bielik which means we will at best be tight on FFP next year and I can't see how we won't breach it. A sale of Bogle and maybe Marriott is inevitable I fear.

So even if Mel is bought out by Qatar or Red Bull, they won't be able to invest loads next year because FFP won't let them.

So what's the solution in my view? Well, we need to create room in FFP by completely 'right sizing' our cost base.  That is going to require getting the wage bill drastically lower for 2-3 years to create room in FFP so that we can then have another go at investing but this time hopefully a bit more wisely with the benefit of experience. That means not buying Bieliks each year (or paying the massive loan fees for Mounts, Wilsons etc) and keeping FFP incredibly tight. It means treading water for 2-3 years and bringing the youngsters through as Cocu has started to do, finding out which are good enough and which aren't. Hopefully by the end of those 3 years some of those youngsters will have shown they are good enough for the first team and that means when we do come to invest we invest in fewer positions (i.e. can spend money on 2-3 positions not 6-7)

This all requires fans to have patience and accept that for 2-3 years we may not compete at the top end of the table (we should aspire to do our best but accept it may not be possible).  And if we do that there'll be loads of room in FFP to then invest properly in 2-3 years time

I don;t think most fans will accept that.  And I really fear we'll spend each and every season trying to juggle things, at best skirting with the FFP rules (complying with letter and not spirit) and at worst getting a heavy points reduction (which could even lead to relegation). I think we need to stop being so short termist in our outlook and look more strategically.

I appreciate this is a gloomy post.  Help convince me that I am wrong!

Thought the sale was of the stadium was this year 2018/2019 ,not 17/18 so not affected our FFP until this season ?

[Gritty]

Announced this year but it was for accounts 17/18 as they were released at end of 18/19 season

1 hour ago, Reggie Greenwood said:

Thought the sale was of the stadium was this year 2018/2019 ,not 17/18 so not affected our FFP until this season ?

 

[lagavulinram]

Make all the players play for free.

Charge 80k per seat per game.

Sell the stadium imediately for 100 tn.

Revive peter shilton to replace roos.

Charge £100 per pie.

Phew. I think im done. 

[Millenniumram]

Yay let’s have more transition seasons.... our transitions gonna take longer than the bleeding Brexit negotiations at this rate, been going on since about 2016!

[Gritty]

18 minutes ago, Millenniumram said:

Yay let’s have more transition seasons.... our transitions gonna take longer than the bleeding Brexit negotiations at this rate, been going on since about 2016!

My point is that sooner or later we'll get a points deduction and relegation if we carry on the way we are.  At that point, a few years transition would seem to be better. 

We need to take a step back for a couple of years to enable us to then take 2 steps forward. 

[RamNut]

We expect too much. 

Just accept that we are always the bridesmaid and never the bride. We're the ugly bird in a threesome. The lotto winner who lost their ticket. Runner up in the knobbly knees. If We were a racehorse, they'd have shot us. 

 

[Millenniumram]

18 minutes ago, Gritty said:

My point is that sooner or later we'll get a points deduction and relegation if we carry on the way we are.  At that point, a few years transition would seem to be better. 

We need to take a step back for a couple of years to enable us to then take 2 steps forward. 

I get your point mate in all seriousness, just does seem to take a very long time to get anything sorted. Then again, I’m not very patient.

[ram59]

8 hours ago, RamLad1884 said:

It's my understanding that everything you've just mentioned has already taken place over the summer. 

Big earners such as Johnson and Butterfield gone, replaced with modest earners like Shinnie (you'd assume) as well as youth players. I'd be very surprised if by the time accounts come out for this current season we are still on that brink. 

Also gone since the 17/18 season, are the likes of Shackle, Bent, Blackman, Vydra, Jerome, Wiemann, Baird, Carson, Nugent and Bryson. That is a huge amount off the wage bill in the 19/20 season.

It's not just the wage bill either, their transfer fees are also spread over the length of their contracts. It wouldn't surprise me to learn that these 12 were costing us £25m per year between them.

[Reggie Greenwood]

1 hour ago, Gritty said:

My point is that sooner or later we'll get a points deduction and relegation if we carry on the way we are.  At that point, a few years transition would seem to be better. 

We need to take a step back for a couple of years to enable us to then take 2 steps forward. 

I think you are way off the beam here , no chance of this happening.

[The Scarlet Pimpernel]

2 hours ago, Gritty said:

My point is that sooner or later we'll get a points deduction and relegation if we carry on the way we are.  At that point, a few years transition would seem to be better. 

We need to take a step back for a couple of years to enable us to then take 2 steps forward. 

What are you on about? Our finances have been brilliantly managed whilst continuing a realistic challenge. What makes you think that won't continue? 

[europia]

4 hours ago, RamNut said:

We expect too much. 

Just accept that we are always the bridesmaid and never the bride. We're the ugly bird in a threesome. The lotto winner who lost their ticket. Runner up in the knobbly knees. If We were a racehorse, they'd have shot us. 

 

A lot of fans were thinking such things before Jim Smith arrived and got things going. Actually many were very negative about Jimmy getting the DCFC job. Anyhow my point is, you never know what can happen in football. 

[RamNut]

2 minutes ago, europia said:

A lot of fans were thinking such things before Jim Smith arrived and got things going. Actually many were very negative about Jimmy getting the DCFC job. Anyhow my point is, you never know what can happen in football. 

True but i doubt whether we could do what jim did now.

he already had quite a few players from roy macs team that finished around 7th from memory ...hoult, nicholson, yates, wassall, carsley, simpson, gabbiadini, sturridge, trollope, 

Jim had another two big players - craig short and paul williams - who he sold for big money, bringing in flynn, rowett, van der laan, daryl powell, and ron willems.....then he subsequently signed ward, chris powell, stimac and carbon for more big money: £1.5m stimac, £800k powell, £1m for ward....what would they cost now? At least 5x that? Thats £16.5-17m

so assumng that we are losing 13m just on wages, we'd then have to spend another £17m - a total of £30m in one season?

we'd get busted.

 

 

 

[Ghost of Clough]

6 hours ago, Gritty said:

My point is that sooner or later we'll get a points deduction and relegation if we carry on the way we are.  At that point, a few years transition would seem to be better. 

We need to take a step back for a couple of years to enable us to then take 2 steps forward. 

Carry on as we have been over the past couple of seasons and the wage bill will be at a very sustainable level. 

[Leeds Ram]

It'd be a big gamble as there is a risk that treading water leads to dwindling crowds which then leads to an inability to attract the players and management we might need to get out of the division due to a much tighter financial position. Crowd revenue is much more important in this division than it is in the premier league. We can't spend our way out of the league but as far as I'm aware this isn't the strategy of what we're trying to do atm. We're starting to ship out the higher earners, slim the squad down and mix in a more youthful array of players such as Lowe, Buchanan and Bogle.  A mixed strategy which provides for exciting football is probably the best chance we have of finally getting out of the league. 

[Gritty]

3 hours ago, The Orange Pimpernel said:

What are you on about? Our finances have been brilliantly managed whilst continuing a realistic challenge. What makes you think that won't continue? 

No they haven't.  We're so far over ffp we had to sell the stadium to our owner to circumvent the rules.  That's not well managed.  We've wasted countless millions on players who've not cut the mustard. 

You may think my post is too apocalyptic in terms of consequences and I think that's a fair challenge. 

But there's no way our finances have been "brilliantly" managed. They're a mess. We aren't even close to being sustainable.  We're entirely reliant on Mel writing off losses year after year.

I appreciate his generosity in doing so.  But let's be clear.  He's bailing us out each year precisely because we're making big losses. 

[Gritty]

5 hours ago, Reggie Greenwood said:

I think you are way off the beam here , no chance of this happening.

We had to sell our stadium in 17/18 to avoid one.  And next year the stadium sale won't impact the accounts as it will be more than 3 seasons ago. 

We've just signed Wayne Rooney and paid 10mn on Bielik. 

I hope you're right.  But I think there is a chance we're in trouble next season