Minority Report 2019-20 - Talking Finance (2)

i do not disagree but the plan has us sign numerous younger players. The plan could have reduced quantity for a smattering of experience.

I fully understand the need to live within our budget given the owners approach but maybe a hint of flexibility would help.

 

That statement literally makes no sense. The current owners haven’t been here for 54 years. I will be patient 2, 3, 4, 5, 6 years, 20 years however long it takes but the definition of patience is that you are are waiting for an intended goal. What is the goal? What is going to happen in the future that you are waiting for? What is the plan that these owners are taking is us towards? It doesn’t haven’t to be that ambitious. I’d settle for us being a mid table championship team but that will never happen under these owners until something changes. It is impossible to be a competitive championship team with a team of 21 year olds.

So what do I want to see happen. One of two things.

1. The owners put some of their own money in

Or

2. And this is my preferred option. They generate more money for the club so better sponsorship deals and marketing using their international connections

We were told that the second would happen once the existing deals ended and we were back in the championship. It never happened.

I will be patient if i saw a sign of something changing but it isn’t

If you are waiting at the bus stop and your bus is delayed for an hour then yes be patient. If you are stood randomly in the middle of nowhere were no bus passes hoping that miraculously one does then you aren’t being patient you are being very naive.

 

Something tells me these investors will expect to attain Return On Investment (ROI) some time before 54 years.

 

The level of resources required for stability in the Championship would require us to spend about the average - if you look at the table with costs/net profit there is a column called "total pay incl players" . This gives you an idea on what other teams are spending on wages, the only team we spent more than in the previous year were Charlton - and they were in League one then. Both Wigan and Blackburn spent more and they were also in League one. If we look at it, we would need to probably find 5 million in wages from somewhere to even make us respectable bottom 3rd spenders in the league on wages - and thats an extra 5 million every year - so 15/20 million in the cycle of a set of 3-4 year contracts - and this is two years ago, so its probably even more now.

So - if you are arguing for that level of spending, then yes, its unrealistic - if you think that the coach can beat the wage system which is stacked against us, then that is down to getting someone who is better then 80% of managers currently in or out of work - not easy to find,

 

The gap between League 1 and the Championship is huge now. I have tried to illustrate that in this thread by comparing Player Pay in the Championship (£7m) with that in League 1 (£4.8m maximum with a turnover of £8m i.e. £8m x 60%). If you then go on to compare the wages paid at all Championship clubs (admittedly wages for all employees and not just players) it will be clear just how far behind everyone else we are. In the light of those figures, it will be quite clear that your mid-table ambition is a very big ambition indeed. I went to a lot of trouble to extract that sort of information from published accounts in the hope that readers would understand just what a huge step promotion is these days, and I recommend that you read it all again.

If the owners put money in, the only way that they can do it and expect (in theory) that they will get their money back is through a loan. This is exactly the sort of indebtedness that makes the Championship so badly run.

We all wish the our owners could find another source of turnover, but it is not easy.

 

Me too.

 

I just want to add a point to this. Its possible, at some clubs, though not all, that wages have actually fallen in this latest financial year as soft and hard transfer embargos have bitten for those clubs who have breached FFP. It may not be material, it may not even be the case, but if you just consider Wednesday as example, they've got rid of quite a few of their top earners (though not all) and looked for a short term fix in the ridiculous ground sell off to try and prevent another embargo.

It may be that we look back at this season and see a harmonising of wage budgets as clubs struggle with very high debt levels and a lack of owners willing or able to write off literally hundreds of millions of pounds of historic debt.

Time will tell.

 

My analysis of the Championship convinced me that it was the Wild West, and that no owner in their right mind would want to try try compete there. It will not be a popular view, but we may just be better off in League 1 until one or two Championship clubs have gone bust, and the rest start to put their houses in order. It really is that bad.

 

It was pretty bad in the late 90s when I saw the ridiculous spending of a football club at first hand at transactional level. Its gotten worse year by year since then and the authorities just don't seem to be concerned about protecting the structure properly.

I think when it goes, it goes in style.

 

And yet loans could be the least of expenses, free or not to free (ha ha).

 

So your analysis is that our level is a top end league 1 club. I can accept that. Expect the ceo in an interview to sky sports a couple of weeks ago said that the aim was the premier league. As you have pointed out this is a crazy goal with the current level of investment.

Again you are correct saying it is not easy to find other sources of turnover. Again I agree, it’s not easy, for the likes of you and me. But for an international consortium with links in France, America, Germany, China surely it can’t be that difficult. Again I take you back to what the owners have said, they would strengthen our international brand and attract sponsorship from overseas using their connections. They said that.

I totally agree with your analysis, it’s spot on. But this isn’t what the owners are saying. They are telling us things that are extremely unlikely to happen or they don’t have the ability to make happen. So asking for patience in the hope that something might change is a bit of a silly thing to say. Unless you are saying “be patient, these owners will leave one day” in which case I will be patient for that, as I have little alternative

 

Things have come to a head now because of the sacking but it would have come to this sooner or later when we were bottom of the table at Christmas. Stendel might have got more flack the longer the season went on but I think the majority of fans would have stayed with him and turned their anger elsewhere

 

Can't disagree with that.

 

It is many many year since I was told that I have said a silly thing, so this is already a good day.

As you have pointed out, what is the alternative to patience. If jumping up and down and claiming the things that have been claimed over the last week in the alternative, then I genuinely believe that patience wins.

I am retired now, but I worked in a number of senior positions in established companies. In my experience, it was never difficulty to establish that something was wrong, or that the company needed to do things differently, even. All the difficulty came in devising an alternative strategy that had some chance of being better than the strategy that was currently being used. On many occasions, the company kept doing the same old stuff, simply because no better idea ever came up. This sort of stuff is not easy, but talking about it is, whether you are outside the process, or in the middle of it. That is why I ask for patience. It is tough to do better.

 

very good

 

I will be patient. I accept our club is owned by people who are either liars, incompetent or living in a Walter Mitty fantasy world, and will continue to patiently hope that they see the light.

 

I'm far from financially literate neither do I have much understanding of balance sheets. But I'd like to know whether there are still cash reserves at the club which have been accrued from our player sales in the past few years. Going off the widely reported figures, I reckon it adds up to about £40million income since Wilson's relegation season. Obviously a lot of this has been eaten up by keeping the club afloat and reinvesting in transfers. But is there surely not some left? Could some not be held in the bank to raise the wage structure and fund competitive pay to retain and attract better players?


It just doesn't seem to add up to me. Making out our transfer budget comes from proceeds from player sales is fair enough. But not only does it seem that not everything is reinvested, but it seems there must be a surplus from TV money, ticket sales and media subscriptions, merchandise sales, matchday income and sponsorship minus operating costs & wage bill. Where does that money go or does running a football club really cost that much?

 

Strategising isn't such a complex thing. Implementation tends to be the issue and often as a result of people, barrier to entry, cost, lack of transition planning and so on.

The problem we have is that really, football shouldn't be a business. Its a sport. One that's only recently had a commercial supercharge. yes, you can account and make all sorts of plans off the pitch,

But ultimately destiny can end up being a gust of wind, an incorrect decision, an injury, a slip, a moment of unexpected brilliance or a poor error of judgement.

Yes, money and what we see as overspending can tip the field one way, but there are more clubs that have failed than ones that have succeeded, and surprisingly, quite a few clubs who have succeeded, despite not being the ones to have spent and lost the most.

Its an inexact science.

 

One one the problems with my analysis is that it covers the 2017/18 season, and much will have happened since. It is just not possible to say what the financial position is at this moment. However, there are a few broad lessons that can be established from looking at the past. The first of those is that Barnsley FC loses about £1m per year before player trading whilst it is in the Championship. I suspect that it loses more than that in League 1. Therefore, some of the money from player sales has to be used subsidise trading losses. However, I suspect the reason for the sales last summer is more complicated than that. It is the subject for the next Minority Report.

Transfers (both in and out) are not paid for up front. Therefore, part of any sums not yet used for the acquisition of replacement will be held in a bank account, and part will be held in debtors. I hope that some of that will be used in January, but I suspect it will be yet more youth. The owners continue to believe that youth is the way to go, for a number of very logical reasons and we just have to be patient whilst the policy runs it course.

Sorry that I cannot be any more helpful, or any more definitive.

 

I agree, but one thing must always be central to any plan. Just do not run out of cash.