Mel Morris: an example

[Day]

5 minutes ago, Andicis said:

I believe even Brentford were, yes. Seems a pretty bleak look for our league that even well run clubs can't turn over profits and the only question is one of how much of a loss you are making. It's no wonder teams are gambling on the Premier League, that's the only way to get return on your investment from an owner's perspective. Wages and transfer fees simply aren't sustainable for the revenue streams of Championship clubs, something will have to give at some point. 

Brentford operating loss of £53.1m before player trading, £34.1m the year before. They turned a profit of £44.3m on player trading, £24.9m profit the season before.

So £19m, £1.5m loss per month. 9.2m the year before, 760k per month.

That will be seen as the model to aspire to I guess, but it’s still a loss and they could have been seriously screwed had it not been for the player sales. 

https://www.brentfordfc.com/news/2022/january/brentford-fc-2021-annual-accounts/

[DarkFruitsRam7]

10 minutes ago, David said:

Brentford operating loss of £53.1m before player trading, £34.1m the year before. They turned a profit of £44.3m on player trading, £24.9m profit the season before.

So £19m, £1.5m loss per month. 9.2m the year before, 760k per month.

That will be seen as the model to aspire to I guess, but it’s still a loss and they could have been seriously screwed had it not been for the player sales. 

https://www.brentfordfc.com/news/2022/january/brentford-fc-2021-annual-accounts/

To be fair, Brentford's model is literally built on player trading. I know it's risky because you can't guarantee a new signings will result in a profit, but you can't just remove their core business model when talking about profits and losses.

Edited February 3, 2022 by DarkFruitsRam7

[Andicis]

1 minute ago, DarkFruitsRam7 said:

To be fair, Brentford's model is literally built on player trading. I know it's risky because you can't guarantee a new signings will result in a profit, but you can't just remove their core business model when talking about profits and losses.

They are still making losses overall though - I agree with your point that you can't discount that, but ultimately even with one of the most successful models, they are still not turning profits. 

[Day]

Just now, DarkFruitsRam7 said:

To be fair, Brentford's model is literally built on player trading. I know it's risky because you can't guarantee a new signings will result in a profit, but you can't just discount that when talking about profits and losses.

I haven’t discounted it, just as you say it’s risky, the risk paid off for them and I’m happy for their fans, they will be loving life right now. Christian Erikson, ok had it not been for the heart issues they probably wouldn’t have been able to sign him, but still. 

[twinkletoes]

3 hours ago, David said:

As of today, we are still requiring funding of around £1m per month to keep the lights on for a team that without points deduction would be sat in  16th.

One place above a club that's losing over 400k per week.

So before we even think of bringing players into the club to rebuild, we're looking for an owner(s) that are willing to lose a minimum of £12m a year, on top of the purchase price and the stadium.

The minute they walk through the doors, they will have fans in the summer asking for a 20 goal a season striker, a keeper, a centre back, some creative players.

If we pull off the impossible and manage to stay up this season and have any Premier League ambitions?

We have to compete with clubs which could be given up to £45m in the first season they are relegated.

Not impossible, but a tough ask.

So kiss goodbye to the Premier League payday whilst waiting for the next owner to get tired of losing £12m a year for mid table Championship football.

Realise this post isn't exactly on topic, but it's a stark reminder of what we're currently looking for....a benefactor.

Football finances needs to be looked at, stop being seen as unique businesses where it's accepted they lose millions per year.

As @Anon said, player wages, that has to be the starting point. You have Lingard on over £100k a week at United and can't get a game.

That's more than the average household would bring in per year, can Lingard look at himself in a mirror and say the work he has done this week is worth £100k?

Those kind of wages have a trickle down effect into the Championship, it just can't continue any longer and until the world of football comes together and puts a stop to it, Derby County will not be the only club to find itself in this situation.

We need a global wage cap per club and that has to be based on a percentage of turnover, it's unrealistic to ever have a level playing field, Man United can't have the same wage budget as Crystal Palace to get any kind of agreement.

The EFL needs to move first on this, the PL won't as the clubs won't be able to compete in Europe.

Players would be forced to accept lower wages outside the Premier League or find themselves out of work or moving their families abroad. 

72 clubs under it's control, show the football league a sustainable 3 league model and others will follow. 

Whilst we're there, clubs paying agents fees needs to be outlawed, if a player wants an agents services, they pay them directly out their own pocket.

Stoke paid over £5.5m on agent fees between February 1st 2019 and January 31st 2020.

They have also just reported losses of over £90m. 

One morning the Coates family could wake up and pull the plug, what are they gaining from owning Stoke City? The fans are on their backs for poor managerial appointments, signings etc.

Anyway, the tl;dr is football is broken.

Please dont come on here speaking truth and accuracy this is the internet, its not the place to do this we want crazed no factual anger only

 

thanks in advance

 

Twinkle

[RoyMac5]

4 minutes ago, twinkletoes said:

Please dont come on here speaking truth and accuracy this is the internet, its not the place to do this we want crazed no factual anger only

 

thanks in advance

 

Twinkle

Most football fans know the 'truth' of owning a football club. I'm sure all the owners/potential owners do.

They don't all end up in the financial mess we're in. 

[Foreveram]

1 hour ago, Tyler Durden said:

I would suggest there weren't any takers for the club for one of the following reasons-

Morris was asking too much money for the club

The amount of money Morris was asking for the club was too much

No one would pay the amount of money Morris was asking as it was too much

Take your pick 

Can you narrow it down.

[i-Ram]

3 hours ago, David said:

As of today, we are still requiring funding of around £1m per month to keep the lights on for a team that without points deduction would be sat in  16th.

One place above a club that's losing over 400k per week.

So before we even think of bringing players into the club to rebuild, we're looking for an owner(s) that are willing to lose a minimum of £12m a year, on top of the purchase price and the stadium.

The minute they walk through the doors, they will have fans in the summer asking for a 20 goal a season striker, a keeper, a centre back, some creative players.

If we pull off the impossible and manage to stay up this season and have any Premier League ambitions?

We have to compete with clubs which could be given up to £45m in the first season they are relegated.

Not impossible, but a tough ask.

So kiss goodbye to the Premier League payday whilst waiting for the next owner to get tired of losing £12m a year for mid table Championship football.

Realise this post isn't exactly on topic, but it's a stark reminder of what we're currently looking for....a benefactor.

Football finances needs to be looked at, stop being seen as unique businesses where it's accepted they lose millions per year.

As @Anon said, player wages, that has to be the starting point. You have Lingard on over £100k a week at United and can't get a game.

That's more than the average household would bring in per year, can Lingard look at himself in a mirror and say the work he has done this week is worth £100k?

Those kind of wages have a trickle down effect into the Championship, it just can't continue any longer and until the world of football comes together and puts a stop to it, Derby County will not be the only club to find itself in this situation.

We need a global wage cap per club and that has to be based on a percentage of turnover, it's unrealistic to ever have a level playing field, Man United can't have the same wage budget as Crystal Palace to get any kind of agreement.

The EFL needs to move first on this, the PL won't as the clubs won't be able to compete in Europe.

Players would be forced to accept lower wages outside the Premier League or find themselves out of work or moving their families abroad. 

72 clubs under it's control, show the football league a sustainable 3 league model and others will follow. 

Whilst we're there, clubs paying agents fees needs to be outlawed, if a player wants an agents services, they pay them directly out their own pocket.

Stoke paid over £5.5m on agent fees between February 1st 2019 and January 31st 2020.

They have also just reported losses of over £90m. 

One morning the Coates family could wake up and pull the plug, what are they gaining from owning Stoke City? The fans are on their backs for poor managerial appointments, signings etc.

Anyway, the tl;dr is football is broken.

As you know David I am not a big fan of Mel Morris, but the points you make above are compelling. He has to be cut some slack, because he did blow at least £150m of his fortune to achieve the dream, the fan’s dream, of the Club being a potentially strong player in the upper reaches of the Premier League.

Where I think we diverge are his motives, and perhaps his decision making. I think he bought the Club to be ‘Mr Derby’, and that most of his decisions were short term and knee jerk to get to the promised land asap. He developed an unsustainable model that just ran out of control. Let’s not reflect on his player/manager choices, I am thinking more net-transfer and wages dealings. We were a financial train out of control in 2018 and I think he knew that, but still backed Lampard (or did he back himself?) that he could ultimately win big with his investment (or gambling as I would less charitably call it). He was taking tremendous risks with our Club in my opinioneven at that stage. When he realised in 2019 that he had a) either had enough, or b) had insufficient funds, he should have put his hand up then, and attempted to sell the club and stadium for a few pennies, rather than the c£100 which he was touted as wanting. In my opinion his ego, and his desire to claw back as much as he could, prevented that, but in hindsight he would have been far better off taking that damage limitation view.  COVID was unforeseen and again I have sympathy for him here; given the position he found himself in that was just rank bad luck. But again even at that time in my opinion he still didn’t want to be seen as a failure, and was still mooching around with chancers who might have paid him some proper money. It is because he kept holding out for a return on his investment that things got worse, because that is when with apparently no more funds he wanted to invest he turned to short term moneylenders and HMRC to fund his cash flow difficulties.

I don’t think the guy a fraudster, or indeed anything too derogatory. He has however one way or another taken a well organised Club to the absolute brink of extinction, and no Derby fan should ever forgive him for that.

[Day]

3 minutes ago, i-Ram said:

As you know David I am not a big fan of Mel Morris, but the points you make above are compelling. He has to be cut some slack, because he did blow at least £150m of his fortune to achieve the dream, the fan’s dream, of the Club being a potentially strong player in the upper reaches of the Premier League.

Where I think we diverge are his motives, and perhaps his decision making. I think he bought the Club to be ‘Mr Derby’, and that most of his decisions were short term and knee jerk to get to the promised land asap. He developed an unsustainable model that just ran out of control. Let’s not reflect on his player/manager choices, I am thinking more net-transfer and wages dealings. We were a financial train out of control in 2018 and I think he knew that, but still backed Lampard (or did he back himself?) that he could ultimately win big with his investment (or gambling as I would less charitably call it). He was taking tremendous risks with our Club in my opinioneven at that stage. When he realised in 2019 that he had a) either had enough, or b) had insufficient funds, he should have put his hand up then, and attempted to sell the club and stadium for a few pennies, rather than the c£100 which he was touted as wanting. In my opinion his ego, and his desire to claw back as much as he could, prevented that, but in hindsight he would have been far better off taking that damage limitation view.  COVID was unforeseen and again I have sympathy for him here; given the position he found himself in that was just rank bad luck. But again even at that time in my opinion he still didn’t want to be seen as a failure, and was still mooching around with chancers who might have paid him some proper money. It is because he kept holding out for a return on his investment that things got worse, because that is when with apparently no more funds he wanted to invest he turned to short term moneylenders and HMRC to fund his cash flow difficulties.

I don’t think the guy a fraudster, or indeed anything too derogatory. He has however one way or another taken a well organised Club to the absolute brink of extinction, and no Derby fan should ever forgive him for that.

Make no mistake, I’m not here to defend Mel, also have no real opinion on his motives for owning the club.

Saw it as nothing more than a topic which I could pour my thoughts out on football ownership across the Championship. I can’t figure out why anyone would own a club be it this or any other and as much as I love this club, if I ever came into serious money I wouldn’t touch it with a barge pole.

He took a risk, failed. Beat Villa and the story takes another path. Same with Brentford, they don’t sell their players and it’s a £50m loss in a year, for them it paid off.

If my auntie had wheels she would be a bike I know, but 90 minutes at Wembley, Marriott starting, who knows.

He’s lost a poo load of money being in your words “Mr Derby” and walked away from the table, possibly the most hated man in the city and a £20m loan on a stadium that without a football club is wasted. 

Great intentions, poorly executed, picked a battle with the EFL that cannot seemingly be won and either lost the desire or ran out of money to continue. There was also a minor issue of a global pandemic which no club would have written into their business plan for the following 2 years. That’s really where I’m at with it now. 

I hope no potential owner is reading this, as we’re looking for another owner to take a risk, gamble on us.

We as a fanbase need to move past how much wonga do they have as the most important question, and do they have the right team around them, they are worth more to a club than any sum of money on a Forbes rich list.

[Ghost of Clough]

1 hour ago, RoyMac5 said:

I think that previously @Ghost of Cloughhas given examples of playing 'spend and save' in the P&S cycle.

As to what makes owners invest in football clubs well ask around because there's plenty of clubs not making a profit.

Not so many in administration currently. 

That's the most sustainable way for a Championship club without parachute payments to go about it. Sustained attempts at just reaching the playoffs results in clubs being in the situation Derby and Bristol find themselves in.

The Brentford model, what Bristol hoped they could emulate, is reliant on ever increasing play values. If the market crashes, so does the business plan. By the way, the Brentford model say them make a £13m loss over the past 2 years despite almost £70m worth of profit on players.

The spend and save cycle your refer to would be something like losses of £5m, £13m and £21m. Slowly build up a squad worthy of competing, sell off the star players if your fail, then start again.

Want to see what a sustainable club looks like? Here's a list of current Championship clubs who have posted profits since 14/15:

• Luton - 2 seasons in profit
• Barnsley - 2 seasons in profit
• Bristol - 1 year in profit, £81.3m of losses since the start of 14/15
• Preston - 1 season in profit
• Coventry - 1 season in profit (£12,605)
• Hull - posted an accounting profit for 5 of the last 7 years, 2 in PL, 2 with parachute payments and only 1 was without parachute payments.
• Stoke - 3 seasons in profit, all in PL
• Bournemouth - 2 seasons of making a profit, both in the PL
• Huddersfield - 2 seasons of making a profit, both in the PL
• Sheffield Utd - 1 season in profit, in PL
• Swansea - 3 seasons in profit, 2 in PL, 1 with parachute payments
• Boro - 2 seasons of making a profit. 1 was in the PL, 1 with parachute payments.
• Reading - 1 season in profit, with parachute payments
• Birmingham - 1 season in profit, with parachute payments
• Cardiff - 1 season in profit, with parachute payments

Notice a pattern? Bristol are the only team in that list who haven't spent time in the PL, L1 (or lower), or been in receipt of parachute payments. 

1 hour ago, Norman said:

Do we actually lose 1 million a month or have things like depreciation etc not been factored in?

Basically, do we lose 1 million in cash? 

I'm guessing we don't. 

DCFC cash losses in September through to November were about £1.25m per month

[Day]

8 minutes ago, Ghost of Clough said:

The spend and save cycle your refer to would be something like losses of £5m, £13m and £21m. Slowly build up a squad worthy of competing, sell off the star players if your fail, then start again.

And you say the cash losses are currently £1.25m a month, so with this squad that’s £15m loss a season without factoring in the sales, which we’re looking at between £1.5m and £2m depending on what we brought in for Williams.

Wages won’t be down massively, only Shinnie’s and with Lawrence out of contract in the summer, we would shave some more off, but it’s a grim outlook in terms of rebuild to keep the losses at £5m for year 1. 

Free agency and loans, although loans don’t allow for building a squad. 

[Ghost of Clough]

For Derby to be sustainable...

Use Preston as the base model. Their turnover is about £11m. If they did no player trading they'd lose £8-9m. So, to be like Preston, you need a £20m budget. Slap our £5m academy budget on top, taking total spend to £25m per year
Derby's revenue should be about £30m, so there's a little bit of play room for transfer fees, wages, etc..

[SillyBilly]

6 hours ago, duncanjwitham said:

The problem is, by that argument, nobody should be allowed to own a company unless they can personally cover the entire companies operating costs themselves.  If you want to start a company, you basically need to be richer than the company can ever possibly be before you're allowed to start/own it.

So if you start a little bedroom company, and you get to the stage where you're doing well and have got a few employees etc.  Congratulations, the company is now potentially going to cost you more than your entire personal wealth if anything bad happens (like a global pandemic, maybe?). Should you be forced to close the company?  

Like it or not, Limited companies exist for very good reasons, and the upsides of having them far outweigh the risks.

And as for penalties on Morris, there won't be any (as long as hasn't done anything outright illegal, like stole from the pension fund or something, which I don't believe he has).  That's literally the point of limited companies.

If you want to start arguing that football clubs shouldn't be limited companies, then there's maybe some mileage there. But I guarantee you, we would have no bidders at all if the new owners were required to personally guarantee any future losses.  And neither would a lot of clubs.

Quite. I own an SME. With actual liquid cash to hand I could personally fund it for about 4 days before I'd run out of money given the numbers involved. If I was to liquidate everything I have (not actually possible within a short time frame), maybe a month. There is a point where a company becomes far bigger than the owner, where if the income drops off and the costs remain the wealth of a owner pales into an insignificance. Maybe not so the case with Mel here but the general point of why limited company exists is for this reason. And as unpalatable as it sometimes can seem it is this way for a reason.

[europia]

2 hours ago, i-Ram said:

As you know David I am not a big fan of Mel Morris, but the points you make above are compelling. He has to be cut some slack, because he did blow at least £150m of his fortune to achieve the dream, the fan’s dream, of the Club being a potentially strong player in the upper reaches of the Premier League.

Where I think we diverge are his motives, and perhaps his decision making. I think he bought the Club to be ‘Mr Derby’, and that most of his decisions were short term and knee jerk to get to the promised land asap. He developed an unsustainable model that just ran out of control. Let’s not reflect on his player/manager choices, I am thinking more net-transfer and wages dealings. We were a financial train out of control in 2018 and I think he knew that, but still backed Lampard (or did he back himself?) that he could ultimately win big with his investment (or gambling as I would less charitably call it). He was taking tremendous risks with our Club in my opinioneven at that stage. When he realised in 2019 that he had a) either had enough, or b) had insufficient funds, he should have put his hand up then, and attempted to sell the club and stadium for a few pennies, rather than the c£100 which he was touted as wanting. In my opinion his ego, and his desire to claw back as much as he could, prevented that, but in hindsight he would have been far better off taking that damage limitation view.  COVID was unforeseen and again I have sympathy for him here; given the position he found himself in that was just rank bad luck. But again even at that time in my opinion he still didn’t want to be seen as a failure, and was still mooching around with chancers who might have paid him some proper money. It is because he kept holding out for a return on his investment that things got worse, because that is when with apparently no more funds he wanted to invest he turned to short term moneylenders and HMRC to fund his cash flow difficulties.

I don’t think the guy a fraudster, or indeed anything too derogatory. He has however one way or another taken a well organised Club to the absolute brink of extinction, and no Derby fan should ever forgive him for that.

All said and done, it's gross negligence on the part of the former owner. 

[Gritstone Ram]

Here are a few snippets of MM

Sack your manager and then re-employ him a year later. Sign players (who never play) on large contracts with optional extensions.
Pay Paul Inces missus to give a recommendation that Messi would be a good signing.  
 

Sack more managers.

Give a player, on loan to a rival, a pay rise while playing for them.

Cancel a training session in Dubai after playing crap one game.

Sack another manager.

I think if he owned Forest we’d be pissing ourselves.

[i-Ram]

8 minutes ago, Gritstone Ram said:

Here are a few snippets of MM

Sack your manager and then re-employ him a year later. Sign players (who never play) on large contracts with optional extensions.
Pay Paul Inces missus to give a recommendation that Messi would be a good signing.  
 

Sack more managers.

Give a player, on loan to a rival, a pay rise while playing for them.

Cancel a training session in Dubai after playing crap one game.

Sack another manager.

I think if he owned Forest we’d be pissing ourselves.

No we wouldn’t. We would be taking the mick. Yeah we might offer a few glib platitudes to @Red_Dawn but really, I doubt we would give it much thought, other than having a good laugh when the next funny thing happened, like liquidation. It’s a funny old game.

[Leeds Ram]

Morris mismanaged the club to a degree rarely seen before in the history of this institution which is quite an achievement. He spent too much money too early, then when he wanted out he wanted to recoup as much as his investment as possible he couldn't find a buyer. You add in covid and his willingness to walk away never to be seen or heard from again and you've got Mel Morris. I think certain people got won over with his schtick especially with small group discussions or 1 on 1 which is easily done. I believe @David once mentioned Mel had given him a call to make sure he was okay, so I'm sure there's some residual loyalty and even affection there but I may be wrong and if so please correct me. Personally, I think leaving the club where he has is absolutely shameful as is his unwillingness to have actual communication since it all started going south. He was everywhere when we were doing well and now apparently he's ducked off to America which for me shows the character of the bloke. I hope he never steps foot in the city again. 

[Gordamn]

3 hours ago, i-Ram said:

As you know David I am not a big fan of Mel Morris, but the points you make above are compelling. He has to be cut some slack, because he did blow at least £150m of his fortune to achieve the dream, the fan’s dream, of the Club being a potentially strong player in the upper reaches of the Premier League.

Where I think we diverge are his motives, and perhaps his decision making. I think he bought the Club to be ‘Mr Derby’, and that most of his decisions were short term and knee jerk to get to the promised land asap. He developed an unsustainable model that just ran out of control. Let’s not reflect on his player/manager choices, I am thinking more net-transfer and wages dealings. We were a financial train out of control in 2018 and I think he knew that, but still backed Lampard (or did he back himself?) that he could ultimately win big with his investment (or gambling as I would less charitably call it). He was taking tremendous risks with our Club in my opinioneven at that stage. When he realised in 2019 that he had a) either had enough, or b) had insufficient funds, he should have put his hand up then, and attempted to sell the club and stadium for a few pennies, rather than the c£100 which he was touted as wanting. In my opinion his ego, and his desire to claw back as much as he could, prevented that, but in hindsight he would have been far better off taking that damage limitation view.  COVID was unforeseen and again I have sympathy for him here; given the position he found himself in that was just rank bad luck. But again even at that time in my opinion he still didn’t want to be seen as a failure, and was still mooching around with chancers who might have paid him some proper money. It is because he kept holding out for a return on his investment that things got worse, because that is when with apparently no more funds he wanted to invest he turned to short term moneylenders and HMRC to fund his cash flow difficulties.

I don’t think the guy a fraudster, or indeed anything too derogatory. He has however one way or another taken a well organised Club to the absolute brink of extinction, and no Derby fan should ever forgive him for that.

Probably the fairest summary I have seen and less emotional than anything I have posted!

[Stagtime]

@David I am hoping you are feeling a bit better this morning mate. I took that statement the same way as you saw it but your reply was a lot more passionate and eloquent  than how I would have replied.

[jimtastic56]

Festy is another one gone - But none of this mess is down to Mels leadership!