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spyinthesky

By spyinthesky,
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Saintandy666

Saintandy666

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As a percentage of income they are worse!

 

Correct. But because we are in different leagues and the fact our restructuring was not complete, it's irrelevant. There's a massive difference between league 1 and the Premier League as you well know.

 

I'll be interested to see the figures for this year and then the next.

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shurlock

shurlock

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I'm not arguing against it Young Andy, I'm merely pointing out that that we have been dependant on wealthy owners and writing off debt as well to get to where we are and will continue to for a few years yet I'd imagine. The very thing you were saying was the wrong course of action. Whilst some, like yourself, blindly trot out the mantra that we have no debt and are superbly run, when the fact of the matter is we are dependant on our owners right now and have recorded large losses every year since Cortese has been here.

 

Pull your foam finger out of your a**e, Turkish. All investments entail a degree of risk, so yes we might get burnt but there's a world of difference between buying youngsters who have potential resale value (us) and Chelsea, City and others who buy players in their prime with little or no resale value. Take City's recent write down on De Jong and he's hardly the worst case. Players are assets and I'm sure they're treated as such for accounting purposes.

 

The same goes for the academy. Of course others are making similar investments but our track record shows we not only know how to make the most of this kind of investment but we are also willing to give youngsters a chance (admittedly in part because we're a smallish club and not chasing trophies).

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CB Fry

CB Fry

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Cortese's method is way better than the shove a few hundred million at it on players method of Abramovich and co. It's unsustainable and leaves teams like Chelsea with staggering losses every year.

 

 

 

Abramovic and co have been talking about being sustainable for some time. Really very little difference between them and us, except scale.

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Saintandy666

Saintandy666

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What have we done in order to become a self sustaining business?

 

Investment(paying off debts/better business plan etc)/restructuring. We would not go bust if the Liebherr's left tomorrow although of course we wouldn't be in this position without the Liebherrs. Therefore, we can sustain ourselves. Chelsea would go bust if Abramovich left.

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Turkish

Turkish

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Posted
Investment(cancelling of debts)/restructuring. We would not go bust if the Liebherr's left tomorrow although of course we wouldn't be in this position without the Liebherrs. Therefore, we can sustain ourselves. Chelsea would go bust if Abramovich left.

 

So when Abramovich writes off debt it's the wrong course of action and not something we should be doing, yet when Cortese does it it's planning to be self sustaning, yes?

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hypochondriac

hypochondriac

Posted
Posted
Investment(paying off debts/better business plan etc)/restructuring. We would not go bust if the Liebherr's left tomorrow although of course we wouldn't be in this position without the Liebherrs. Therefore, we can sustain ourselves. Chelsea would go bust if Abramovich left.

 

Its not on the same scale certainly but how are we self sustaining considering what our last accounts said?

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Saintandy666

Saintandy666

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So when Abramovich writes off debt it's the wrong course of action and not something we should be doing, yet when Cortese does it it's planning to be self sustaning, yes?

 

It's a different kind of debt writing off though. The Liebherr's have provided structured investment of £34m(somewhere around there) so far to buy us and cancel our debts etc etc with the view to being sustainable.

 

Next year, Chelsea would have been written off to the tune of £700m by Abramovich with no end in sight to the imbalance. As someone else said above, there is clearly a difference in our strategy from Chelsea.

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Turkish

Turkish

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It's a different kind of debt writing off though. The Liebherr's have provided structured investment of £34m(somewhere around there) so far to buy us and cancel our debts etc etc with the view to being sustainable.

 

Next year, Chelsea would have been written off to the tune of £700m by Abramovich with no end in sight to the imbalance. As someone else said above, there is clearly a difference in our strategy from Chelsea.

 

How so? Chelseas turnover is around 17 times what ours was last accounts. They have also invested in infrastructure with their youth system and training ground. We've so far since our last lot of debt was written off spent £30m on transfers, £5m on a training ground and academy work and untold amounts on wages, running costs etc. When is the end in sight to our imbalance? Obviously their debt is on a higher level, but they also have far more income. They are also investing in young players, Oscar, Hazard etc. I'm struggling to see the difference, except with the scale of it.

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Saintandy666

Saintandy666

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How so? Chelseas turnover is around 17 times what ours was last accounts. They have also invested in infrastructure with their youth system and training ground. We've so far since our last lot of debt was written off spent £30m on transfers, £5m on a training ground and academy work and untold amounts on wages, running costs etc. When is the end in sight to our imbalance? Obviously their debt is on a higher level, but they also have far more income. They are also investing in young players, Oscar, Hazard etc. I'm struggling to see the difference, except with the scale of it.

 

Last accounts was in League 1. There's a whole world of difference between League 1 accounts and then this years and next years(if we stay in this league's accounts). Our strategy is very different to Chelsea's as another poster pointed out above.

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Turkish

Turkish

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Last accounts was in League 1. There's a whole world of difference between League 1 accounts and then this years and next years(if we stay in this league's accounts). Our strategy is very different to Chelsea's as another poster pointed out above.

 

How? They are spending on young players, investing in infrastrcture and writing off debt. Isn't this exactly the same stategy that we have?

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hypochondriac

hypochondriac

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Well, we shall see in the next 2-3 years how it pans out. Neither of us properly knows the figures beyond our league 1 days so we'll have to wait a few years to see.

 

So maybe a bit silly to make statements like saying we are self sustaining when in reality you have no idea and our last piece of available evidence suggests we were a long way from that scenario.

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Saintandy666

Saintandy666

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How? They are spending on young players, investing in infrastrcture and writing off debt. Isn't this exactly the same stategy that we have?

 

I still maintain if the Liebherr's left tomorrow, we would be fine, but if Abramovich left Chelsea tomorrow, they would go bust. We really are going round in circles here and neither of us is going to change the others mind!

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Turkish

Turkish

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I'm still struggling with the concept that Abramovich writing off Chelsea's debt which went on players, infrastructure and wages is a different type of writing off debt to the Liebherrs who are writing off debt on infrastructure, players and wages. Perhaps you could explain?

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Saintandy666

Saintandy666

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Posted (edited)

So I actually decided to get some figures into this argument.

 

In 2010-2011 which is the latest figures I can find, the average turnover excluding the big 6 clubs(Man U, Man City, Liverpool, Arsenal, Tottenham and Chelsea), all who had income way way way beyond everyone else, the average turnover per year was £70m. The total turnover for the Premier League was £2.28bn

 

Just to emphasise how different the Premier League is to League 1, the Premier league took 78% of the £2.9bn the whole of the 92 club football league made in 2010-2011. Now, I don't have figures for 2011-2012, but I can tell you that total premier league income between 2009-2010 rose about 7% from that year to the next. However, there was a 4.2% increase in the TV deal which equates for about 2/3's of a clubs turnover... so 0.66*4.2 is about 3%... so that tells me that without the new TV deal growth of about 4% would have occurred. Assuming this 4% annual increase is sustainable growth for this year, we can assume that average turnover minus those exceptions of clubs much larger than us would be about £73m.

 

There's also a new TV deal next year which should add £14m per club to turnover... so if we are aiming to be the 'average' premier league club, we can look at Turnover approaching £90m by next year. Will our operating expenditure exceed that? I do not know that answer, maybe someone with some figures could help on that.

 

Just to add some context to the debate! Make of that what you will.

Edited by Saintandy666
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Saintandy666

Saintandy666

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Posted (edited)
So you've established premier league clubs have more income than L1 clubs. Well done.

 

I've established that our income(and we were a big League 1 club) will have probably multiplied 7.5 times by next year since then and thus the statement that we were unsustainable in League 1 holds no relevance anymore.

 

Edit: I see you added an extra question in your post. Our strategy is different from Chelsea as said by another poster already and me. We aim for different types of player and don't have significant write downs etc

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Turkish

Turkish

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I've established that our income(and we were a big League 1 club) will have probably multiplied 7.5 times by next year since then and thus the statement that we were unsustainable in League 1 holds no relevance anymore.

 

Edit: I see you added an extra question in your post. Our strategy is different from Chelsea as said by another poster already and me. We aim for different types of player and don't have significant write downs etc

 

Hazard, Oscar, Ramirez. Can't see too many differences. All young talented players Who will have large sell on fees.

 

Anyway, Our income may have grown by 7.5 times but how much will our expenditure have grown? Our training ground is costing more than our turnover in our league one days! We spent around £5m on transfers on our league one days, weve spent 6 times that in one window this season. I would hazard a guess that Rodriguez and Ramirez are on more money than an entire first team in our first season in league one. It's not just income that increases young Andy.

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Saintandy666

Saintandy666

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Hazard, Oscar, Ramirez. Can't see too many differences. All young talented players Who will have large sell on fees.

 

Anyway, Our income may have grown by 7.5 times but how much will our expenditure have grown? Our training ground is costing more than our turnover in our league one days! We spent around £5m on transfers on our league one days, weve spent 6 times that in one window this season. I would hazard a guess that Rodriguez and Ramirez are on more money than an entire first team in our first season in league one. It's not just income that increases young Andy.

 

Oh I know that! Now we have estimated figures on income, the expenditure will be interesting to see.

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Frank's cousin

Frank's cousin

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If we go back to when Markus and NC took over they stated the AIM was to be self sustaning in the prem. They also stated that 'provision' had been made to get us to that point - eg MOney set aside to be injected as (equity conversion?) into teh club to faciliate the promotions necessary and to get us to teh point where our academy + some annual additions meant we were competitive in the top tier within our revenue stream.

 

We do not know a) what level of 'provision' was set aside (although to date its clear some 33mil has been invested INCLUDING the original 'purchase fee of around 13mil), b) over how many years that 'provision' is being spread - baring in mind the time it will take to get 50% of 1st team as academy graduates... c) how much of it is left!

 

My GUESS is that there are funds Markus set aside to ensure that we had an academy with the potential to produce a conveyor belt of talent (nothing is guarranteed) and with teh understadning that it would take several years at least, and funds to ensure we could buy in young talent ready for first team, to ensure we make a reasonable start to the project - I suspect taht one of the reasons we spent 20mil over the last two seaons (gross and before the OXO money was factored in) was that it became clear we could reach the pre in 3 years not 5 so the investment level was probably higher in these years for a lower leagues than we would have anticipated?

 

Turkish is right in that in principle having an owner who is, undrwriting teh annual budget whether to 10mil or 70 mil is the same - and Its also clear Abramovic is thinknig about reducing hjis annual ;'subsidy' - But I think the difference is in our case - and this is speculation- is that we have a finite amount set aside by ML at the start of the project and reconfirmed by the family on his passing (which was hinted at by NCs comment that should the family feel they diod not want to continue with their late father;'s plans, he new invester willing to step in). By the time that cash is spent, we must be self sustaining. So the theory is that we will eventually get there, and that any/all subsidies are in effect equity convertable amounts - possibly a total in line with what the club would be worth when we get there (possibly 80-90 mil as a top 10 prem club, with all infrastructure in place and young talent squad and academy)

 

That's just my guess mind, but dont think its far from the truth.

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Saintandy666

Saintandy666

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I've just looked into expenditure for same season. What I have found is that the average wage bill for that season was about £50m. I also found out that last year, the average wage to turnover percentage was 70%, though this includes teams like Man City. The average for normal clubs seems to be between 55% and 65%. Assuming that our Turnover does reach that of an 'average premier league club season 2013-2014'(£90m), we could therefore expect to spending anywhere in the region of between £50m and £60m on wages each year, leaving between £30m and £40m for all other expenditure. We do know also that Cortese does have a wage structure in place.

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Saintandy666

Saintandy666

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What's your gut feel? Still dependant on our owners or self sufficient?

 

Having looked into the figures in more detail, we obviously weren't self-sufficient in the lower leagues... but I was never claiming we were. I was arguing that we could be in the Premier League here and now(specifically next season). I still maintain that if Liebherr's left tomorrow we would be fine(albeit some expansion would have stop I'd imagine), and I still think that within the next year or two once the significant investment in training facilities is complete we will be completely self-sufficent.

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Turkish

Turkish

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I've just looked into expenditure for same season. What I have found is that the average wage bill for that season was about £50m. I also found out that last year, the average wage to turnover percentage was 70%, though this includes teams like Man City. The average for normal clubs seems to be between 55% and 65%. Assuming that our Turnover does reach that of an 'average premier league club season 2013-2014'(£90m), we could therefore expect to spending anywhere in the region of between £50m and £60m on wages each year, leaving between £30m and £40m for all other expenditure. We do know also that Cortese does have a wage structure in place.

 

So with £30-£40m left for everything else and us already spent more than that on transfers and the training ground who's cover the difference?

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Saintandy666

Saintandy666

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I do not believe we are currenmtly self sufficient - but then dont have an accurate idea of how big the Prem revenue is likely to be this year - or our cost base. That said I also dont belive that any subsidy from the 'provision' pot will be classified eventually as 'debt' but as equity... I hope

 

Thus far, it's been classified as the latter. It makes business sense really for when they sell us. If we are debt free, that should raise our price on the market.

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Saintandy666

Saintandy666

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So with £30-£40m left for everything else and us already spent more than that on transfers and the training ground who's cover the difference?

 

We won't have that £30m to £40m this year... but next(once the big increase in TV rights comes into play), though our wages may be lower for this year than the average Premier League club. And of course, the estate of Mr. Liebherr will cover the difference, but I was saying within the next year or two. And I also included within my argument that some expansion would have to stop, but that we would be fine without the Liebherrs. Unlike Chelsea.

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Turkish

Turkish

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We won't have that £30m to £40m this year... but next(once the big increase in TV rights comes into play), though our wages may be lower for this year than the average Premier League club. And of course, the estate of Mr. Liebherr will cover the difference, but I was saying within the next year or two. And I also included within my argument that some expansion would have to stop, but that we would be fine without the Liebherrs. Unlike Chelsea.

 

So just like Chelsea our owners are footing the bill. Something you don't approve of.

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Frank's cousin

Frank's cousin

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Andy, I think you may need to be careful with the figures - the way Sky income is calculated, it depends on many things including finishing position - IMHO the good news is that teh Liebherr estate appear to be following Markus's wishes and providing ..so far.. the necessary additinal cash we need to REACH a self sustaining model in teh future - a point at which tehir TOTAL investment/injection, will probably be equal to what the club is worth.

 

Where the whoe thing becomes more difficult is that we may need to 'stretch things' a little these first couple of prem seasons in order to ensure we stay up - but given the value of our younger players, relegation would at least not be mare financially, but it would potentially set back the project several years.

 

We simply can not get to a point where we ae competitive with home grown talent without substantial additional cash from ML's estate - the figures dont add up in my head

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Frank's cousin

Frank's cousin

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So just like Chelsea our owners are footing the bill. Something you don't approve of.

 

I think though teh diffrence is that this is a finite plan and will be limited to the value of the club - rathaer than teh Man City/Chelsea route which has so far been about 'whatever it costs' - but in theory 'fair play rukle' should reign that in - although teh big clubs will find a way to get around that probably...

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Saintandy666

Saintandy666

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Andy, I think you may need to be careful with the figures - the way Sky income is calculated, it depends on many things including finishing position - IMHO the good news is that teh Liebherr estate appear to be following Markus's wishes and providing ..so far.. the necessary additinal cash we need to REACH a self sustaining model in teh future - a point at which tehir TOTAL investment/injection, will probably be equal to what the club is worth.

 

Where the whoe thing becomes more difficult is that we may need to 'stretch things' a little these first couple of prem seasons in order to ensure we stay up - but given the value of our younger players, relegation would at least not be mare financially, but it would potentially set back the project several years.

 

We simply can not get to a point where we ae competitive with home grown talent without substantial additional cash from ML's estate - the figures dont add up in my head

 

I based the sky income stuff off this article! http://www.guardian.co.uk/media/2012/jun/13/premier-league-tv-rights-3-billion-sky-bt Says that it will add at least £14m to each club, could be more I guess if we do better. Apparently, the bottom placed team will earn more than Man City earned for winning last year under the new system according to telegraph http://www.telegraph.co.uk/sport/football/teams/england/9332446/Euro-2012-Premier-Leagues-new-3bn-TV-deal-means-that-footballs-rich-kids-just-got-even-richer.html

 

And yes, so far Cortese has shown great restraint in not breaking our wage system or budget plans for anything(but we have been in easier leagues)... I do hope he keeps to that, but as you say things may need to be stretched.

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Saintandy666

Saintandy666

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I think though teh diffrence is that this is a finite plan and will be limited to the value of the club - rathaer than teh Man City/Chelsea route which has so far been about 'whatever it costs' - but in theory 'fair play rukle' should reign that in - although teh big clubs will find a way to get around that probably...

 

Exactly. Different strategies.

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Turkish

Turkish

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Posted (edited)
I based the sky income stuff off this article! http://www.guardian.co.uk/media/2012/jun/13/premier-league-tv-rights-3-billion-sky-bt Says that it will add at least £14m to each club, could be more I guess if we do better. Apparently, the bottom placed team will earn more than Man City earned for winning last year under the new system according to telegraph http://www.telegraph.co.uk/sport/football/teams/england/9332446/Euro-2012-Premier-Leagues-new-3bn-TV-deal-means-that-footballs-rich-kids-just-got-even-richer.html

 

And yes, so far Cortese has shown great restraint in not breaking our wage system or budget plans for anything(but we have been in easier leagues)... I do hope he keeps to that, but as you say things may need to be stretched.

 

Apologies young Andy. I had no idea you had access to information as to what our budgets and wage system is. Would you mind sharing them? Or at very least confirming that Ramriezs rumoured wages of anything between £35-£60k a week fit within those systems.

Edited by Turkish
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