Ghost of Clough Posted January 15, 2021 Share Posted January 15, 2021 There's no doubt about our club's spending habits in the recent past. We've wasted a lot of money on transfer fees, and wasted even more on players' wages, just for them to sit at home or play for another team. But is being profitable as easy as some people think - paying out a specific percentage of revenue to wages? Well, non-Covid revenue in 17/18 was the £29.6m (would be slightly more now given the Rooney sponsorship money). Wages, social security and pensions = £40.5m Amortisation = £6.5m Profit on players and managers = £16.2m What this means is that before we spend a penny on wages or transfers, our £30m revenue is only £16m profit. Our academy spend reduces this by a further £5m. £11m is a figure bottom 3 sides rarely stick to for wages AND social security. Burton spent less that £10m in their seasons in this League, Barnsley in 17/18 spent £10.5m, Luton wouldn't have been too far off last season, and that's just about it in recent times. For reference our wages had dropped to £12.1m in 12/13. To put this into perspective, a side with top 3 non-parachute revenue can only afford bottom 3 wages if it's to be profitable without selling players for profit! So where does the rest of the money go? £3.5m was depreciation, the majority of which would be on the stadium. The rest (about £10m) is on 'admin/other' expenses. The reality is we're in a pandemic with reduced income. Revenue will be roughly halved, meaning the club is making a loss even without paying out anything on wages and no transfer money being exchanged. Link to comment Share on other sites More sharing options...
roboto Posted January 15, 2021 Share Posted January 15, 2021 Link to comment Share on other sites More sharing options...
Millenniumram Posted January 15, 2021 Share Posted January 15, 2021 Think you’d have to be totally deluded if you expect to turn a profit in the Championship. It simply isn’t possible, without cutting costs to such an extent that relegation is a guarantee. That’s always been the case, even before the recent financial issues. Hopefully our prospective new owners aren’t under any illusion that making money will be easy. The only way to get us to start making a profit is to invest enough money to get us promoted. Only in the Premier League would your income reach levels high enough to turn a profit. Link to comment Share on other sites More sharing options...
BIllyD Posted January 15, 2021 Share Posted January 15, 2021 I don't think anyone expects us to be on profit do they, not that I've seen anyway. You did post yesterday though that you was "certain" we would be this year if it wasn't for COVID. I'm therefore assuming that as we had a c6m net spend on transfers, that's the figure we need to hit from now on to make a profit ? Would that be right ? Link to comment Share on other sites More sharing options...
RoyMac5 Posted January 15, 2021 Share Posted January 15, 2021 Are there clubs without parachute payments that make a profit in the Championship? Brentford? Just need to balance the selling and playing, they've obviously not quite got it right. Link to comment Share on other sites More sharing options...
Andicis Posted January 15, 2021 Share Posted January 15, 2021 Quote £3.5m was depreciation, the majority of which would be on the stadium I assume with this you mean in terms of P&L, rather than where the money is going? Link to comment Share on other sites More sharing options...
Andicis Posted January 15, 2021 Share Posted January 15, 2021 Whoops. Link to comment Share on other sites More sharing options...
europia Posted January 15, 2021 Share Posted January 15, 2021 3 hours ago, Millenniumram said: Think you’d have to be totally deluded if you expect to turn a profit in the Championship. It simply isn’t possible, without cutting costs to such an extent that relegation is a guarantee. That’s always been the case, even before the recent financial issues. Hopefully our prospective new owners aren’t under any illusion that making money will be easy. The only way to get us to start making a profit is to invest enough money to get us promoted. Only in the Premier League would your income reach levels high enough to turn a profit. I assume that Mr Morris was convinced that if you threw enough money at ch'ship club, promotion could be achieved. He is obviously a clever and successful businessman to be worth over £500m. However that strategy proved to be flawed and Mr Morris has decided to cut his losses. It's beginning to look like the only prospective buyer may actually have less net worth than our current owner. With that in mind, I really don't understand how this prospective buyer is motivated. It's obviously not emotional, and certainly not an investment likely to yield profit. I have some acquaintances involved in setting businesses up in the middle east. With the right contacts, there is big money to be made in wholesale / retail in that region. It wouldn't be too ambitious to suggest that with funds circa £60m, an investor could get a fantastic return on his money and pay very little in corporate taxation. In contrast, buy a football club in the EFL Ch'ship and lose your money, or someone else's in the bargain. This begs the question; what is the ulterior motive?? Link to comment Share on other sites More sharing options...
jono Posted January 15, 2021 Share Posted January 15, 2021 3 hours ago, Millenniumram said: Think you’d have to be totally deluded if you expect to turn a profit in the Championship. It simply isn’t possible, without cutting costs to such an extent that relegation is a guarantee. That’s always been the case, even before the recent financial issues. Hopefully our prospective new owners aren’t under any illusion that making money will be easy. The only way to get us to start making a profit is to invest enough money to get us promoted. Only in the Premier League would your income reach levels high enough to turn a profit. This is the thing that makes FFP P and S such a laugh. .. you have at any one time between 6 and 9 teams with parachute payments .. so if they have drawn up decent relegation clauses in their players wages they get a free hit on the FFP regs .. they just don’t apply. Then you say to the remainder .. sod your sugar Daddy .. go to war with these 3-9 clubs but we are rationing your bullets so we can play fair ... play fair with who ? The teams on Parachute payments or the teams with skint owners .. make your minds up EFL... and in the back ground is the EPL .. dangling a carrot for those wanting to mortgage their house to a pay day loan company and provide plucky cannon fodder for the elite . FFP ? .. garbage. we have to have a choice ... regulate the entire industry correctly or let’s have a free for all so the market can decide .. FFP isn’t sport, it isn’t regulation it’s pure market manipulation .. hiding under a false flag .. it’s dishonest Link to comment Share on other sites More sharing options...
Millenniumram Posted January 15, 2021 Share Posted January 15, 2021 23 minutes ago, europia said: I assume that Mr Morris was convinced that if you threw enough money at ch'ship club, promotion could be achieved. He is obviously a clever and successful businessman to be worth over £500m. However that strategy proved to be flawed and Mr Morris has decided to cut his losses. It's beginning to look like the only prospective buyer may actually have less net worth than our current owner. With that in mind, I really don't understand how this prospective buyer is motivated. It's obviously not emotional, and certainly not an investment likely to yield profit. I have some acquaintances involved in setting businesses up in the middle east. With the right contacts, there is big money to be made in wholesale / retail in that region. It wouldn't be too ambitious to suggest that with funds circa £60m, an investor could get a fantastic return on his money and pay very little in corporate taxation. In contrast, buy a football club in the EFL Ch'ship and lose your money, or someone else's in the bargain. This begs the question; what is the ulterior motive?? Yeah that was definitely Mel’s plan to start with, he’s said as much multiple times. And it could have worked. But sadly we’ve gone the opposite direction because he’s made numerous poor decisions. He obviously can’t keep funding the losses in the Championship, which is fair enough, no one can. Which, like you say, begs the question as to why BZI would even be interested in taking us on. They’re going to lose so much money whilst trying to get us back challenging, because we’re years off at the moment. Maybe they’ll eventually make a profit, but will they be able to keep going in the mean time? The way they’re struggling to fund 60m, I’m not convinced. Link to comment Share on other sites More sharing options...
Millenniumram Posted January 15, 2021 Share Posted January 15, 2021 43 minutes ago, jono said: This is the thing that makes FFP P and S such a laugh. .. you have at any one time between 6 and 9 teams with parachute payments .. so if they have drawn up decent relegation clauses in their players wages they get a free hit on the FFP regs .. they just don’t apply. Then you say to the remainder .. sod your sugar Daddy .. go to war with these 3-9 clubs but we are rationing your bullets so we can play fair ... play fair with who ? The teams on Parachute payments or the teams with skint owners .. make your minds up EFL... and in the back ground is the EPL .. dangling a carrot for those wanting to mortgage their house to a pay day loan company and provide plucky cannon fodder for the elite . FFP ? .. garbage. we have to have a choice ... regulate the entire industry correctly or let’s have a free for all so the market can decide .. FFP isn’t sport, it isn’t regulation it’s pure market manipulation .. hiding under a false flag .. it’s dishonest Yeah 100% with you here, I absolute despise FFP. I hate any sort of restriction they put in place which stops clubs spending what they want to - FFP, wage caps or whatever else. Who are the EFL to decide what owners want to do with their money?! And they claim it’s financial fair play. There isn’t a thing fair about it. Just keeps the status quo, by giving relegated sides a huge advantage in getting back to the Premier League. All whilst punishing clubs like ours when we dare to try to keep up. Load of utter baalocks. Many things rile me up, but FFP is right toward the top of the list ? Link to comment Share on other sites More sharing options...
Van der MoodHoover Posted January 16, 2021 Share Posted January 16, 2021 34 minutes ago, Millenniumram said: Yeah 100% with you here, I absolute despise FFP. I hate any sort of restriction they put in place which stops clubs spending what they want to - FFP, wage caps or whatever else. Who are the EFL to decide what owners want to do with their money?! And they claim it’s financial fair play. There isn’t a thing fair about it. Just keeps the status quo, by giving relegated sides a huge advantage in getting back to the Premier League. All whilst punishing clubs like ours when we dare to try to keep up. Load of utter baalocks. Many things rile me up, but FFP is right toward the top of the list ? You're conflating 2 separate issues. FFP was originally conceived as a way to stop dodgy owners loading a club up with debt and then walking away and allowing the club to go insolvent, thus transferring the losses from owner to creditors. Look at Leicester c.2003. Its not about fairness BETWEEN different clubs, but between each club and society. The parachute arrangements are completely separate and are indeed iniquitous. Should be means tested and effectively restricted to just the amount needed to honour existing contractual wages (thus removing the capacity for the relegated club to outbid everyone else as they are effectively restricted to their turnover and ffp limits). Link to comment Share on other sites More sharing options...
Millenniumram Posted January 16, 2021 Share Posted January 16, 2021 11 minutes ago, Van der MoodHoover said: You're conflating 2 separate issues. FFP was originally conceived as a way to stop dodgy owners loading a club up with debt and then walking away and allowing the club to go insolvent, thus transferring the losses from owner to creditors. Look at Leicester c.2003. Its not about fairness BETWEEN different clubs, but between each club and society. The parachute arrangements are completely separate and are indeed iniquitous. Should be means tested and effectively restricted to just the amount needed to honour existing contractual wages (thus removing the capacity for the relegated club to outbid everyone else as they are effectively restricted to their turnover and ffp limits). I get that they’re two separate issues, but I think they’re very much connected. Teams with parachute payments are almost immune from FFP if their outgoings aren’t too big, because they’re bringing in way more money than most other teams. And that creates the unfairness in FFP. FWIW, I agree with the concept of stopping clubs going too far in debt and ending up bankrupt. We need to protect clubs somehow. But I disagree with how they’ve gone about it. There must be a better way. The current regulations appear to stop owners investing money, even if they never intend to get it back. That’s not what we need to stop. It’s their choice to put the money in, the league shouldn’t be stopping them. The regulations should focus more on debt, rather than the balance sheet imo. Link to comment Share on other sites More sharing options...
Shaftesbury Street Posted January 16, 2021 Share Posted January 16, 2021 Ignore FFP and spend a fortune like Leicester,Bournemouth, QPR and villa? Sorry unpopular opinion. ??♂️ Link to comment Share on other sites More sharing options...
jono Posted January 16, 2021 Share Posted January 16, 2021 8 hours ago, Van der MoodHoover said: You're conflating 2 separate issues. FFP was originally conceived as a way to stop dodgy owners loading a club up with debt and then walking away and allowing the club to go insolvent, thus transferring the losses from owner to creditors. Look at Leicester c.2003. Its not about fairness BETWEEN different clubs, but between each club and society. The parachute arrangements are completely separate and are indeed iniquitous. Should be means tested and effectively restricted to just the amount needed to honour existing contractual wages (thus removing the capacity for the relegated club to outbid everyone else as they are effectively restricted to their turnover and ffp limits). But the two issues are entirely bound together. Teams wouldn’t need to be so potentially profligate if parachute pavements weren’t there. Those payments artificially inflate salaries in the championship. Honouring salaries ? .. it’s simple .. player contracts should have relegation clauses that adjust salaries accordingly. For me it should be a free for all with automatic relegation if you go in to administration because you can’t fulfill your obligations to your staff and other teams in the league. Loading up with debt ? It’s a business and if owners do that sort of thing they face the usual sanctions that directors face in the real world. They could only do it once, it’s a small industry. Calling it a society thing ? then really you might as well say limited liability shouldn’t be allowed in any sphere. ... alternatively there shouldn’t there be jet pack payments to none promoted championship teams, dependant on league position ? if you eff up in the prem and get help then why shouldn’t you get help if your bold punt at success fails too ? Link to comment Share on other sites More sharing options...
Van der MoodHoover Posted January 16, 2021 Share Posted January 16, 2021 3 minutes ago, jono said: Those payments artificially inflate salaries in the championship. That was not their intention and comes about because they are fixed in nature rather than being linked to the liabilities (the contractual salaries) they were designed to protect. Doing away with them entirely would further increase the gap between newly promoted and "established" league clubs. Hence the concept is reasonable, but the execution is not. When you have fixed payments but the club is able to sell the players earning the Premier league salaries, or reduce salary levels (unlikely, or players wouldn't sign) then the system creates windfall profits for clubs which can be used to distort the EFL market. 14 minutes ago, jono said: Loading up with debt ? It’s a business and if owners do that sort of thing they face the usual sanctions that directors face in the real world. Ie none provided you act legally. Invoke a cva, creditors lose, rinse and repeat. When the creditors are small suppliers is that desirable? It's certainly legal. You appear to believe reputational risk is an effective control in football. I disagree. Football has proven incapable of self regulating and the law is not sufficient on its own. So again, ffp is trying to address a real issue, but is poorly constructed and therefore ineffective. Link to comment Share on other sites More sharing options...
jono Posted January 16, 2021 Share Posted January 16, 2021 6 minutes ago, Van der MoodHoover said: That was not their intention and comes about because they are fixed in nature rather than being linked to the liabilities (the contractual salaries) they were designed to protect. Doing away with them entirely would further increase the gap between newly promoted and "established" league clubs. Hence the concept is reasonable, but the execution is not. When you have fixed payments but the club is able to sell the players earning the Premier league salaries, or reduce salary levels (unlikely, or players wouldn't sign) then the system creates windfall profits for clubs which can be used to distort the EFL market. Ie none provided you act legally. Invoke a cva, creditors lose, rinse and repeat. When the creditors are small suppliers is that desirable? It's certainly legal. You appear to believe reputational risk is an effective control in football. I disagree. Football has proven incapable of self regulating and the law is not sufficient on its own. So again, ffp is trying to address a real issue, but is poorly constructed and therefore ineffective. I can’t disagree with the intent of FFP, but if it doesn’t work, - it doesn’t - and it’s been broken since it’s inception then it needs changing. Defending its intent in these circumstances is way more meaningless than relying on bona fides and reputation in business. Like ... I need my car to go to work, it looks lovely but it doesn’t start and hasn’t started for years. The dealer who sold it to me insists it is great and still is despite all evidence to the contrary... so I complain, they send me a painter and decorator to fix it, then when it’s painted a different colour and still won’t start they send me a bill and lend my neighbour a car. Then I try and fix it myself and they send me another bill for being awkward. Link to comment Share on other sites More sharing options...
RamNut Posted January 16, 2021 Share Posted January 16, 2021 £40m on wages is absolutely ludicrous the only way we could afford that would be to charge £60 a ticket. We need to halve that wage bill. young players on lower wages is therefore the way to go. The rest just aren’t worth the money. every penny spent on transfers also has to be recouped on sales. A sad fact. Link to comment Share on other sites More sharing options...
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