Minority Report 2019-20 - Talking Finance (2)

Review of the most recently published accounts of all Championship Clubs


Problems


Firstly, let me put my cards on the table. Companies House does not expect companies to file their Annual Financial Statements until 9 months after their year-end. A football club financial year ends roughly when the season ends (May, June, or in one case July). Therefore, a club is not expected to file its accounts until the end of February the following year at the earliest. Therefore, the most recent accounts are for the 2017/18 season.


That is not the end of my problems. Although the format of a set of accounts is laid down in the Companies Acts, there is plenty of wriggle room, and most companies take full advantage of that wriggle room. In a lot of cases that makes detailed comparison very difficult and uncertain. I have changed the format of some Balance Sheets in order to try to put them all on a more similar basis, but occasionally, the information just is not available if I am to be certain that the comparison is valid. Sometimes, I have made guesses in order to fill in some of the gaps. In some cases, I have just had to give in.


Yet another factor in making the comparison is the EFL Financial Fair Play regulations. It is quite obvious that some football clubs have played fast and loose with company law in order to generate false profits and by doing so, save themselves from fines resulting from breaking the limits for the amount of losses allowed under FFP over a 3 year period (£39m). Many clubs are still spending recklessly in the chase for a Premier League place, and in my opinion, the EFL are going to have to look at their rules again if they are going to stop the cheating by rich owners, because it is spoiling the game.


When things go wrong the fans are fond of making allegations about the directors taking money out of clubs. I am going to reiterate some points that I made in a previous Minority Report 2019-20 Talking Finance. The company that owns Barnsley FC is a totally different entity to either the shareholders or the directors. The directors/shareholders cannot take money out of the company or put money into the company without it being recorded. The companies act stipulates what information has to be published in a set of accounts, and transactions involving directors are all recorded in the notes that accompany a set of accounts. Provided you understand a set of accounts (and I am going to save you going to the bother), that information is crystal clear. By law, companies must have their accounts audited by an auditor with the appropriate qualifications. Auditors can be liable for misstatements in the accounts that they have audited, so there is little incentive for them to act in concert with directors to falsify accounts.


Which clubs?


The review is looking at all 24 clubs in the Championship this season. However, some of those clubs were in different leagues for 2017/18 season. A major constituent of club turnover is the EFL distribution of TV monies. Turnover totals are vastly different from league to league as a result. As a direct consequence of the changes to turnover, total player pay will also have moved up and down in response. However, player contracts do not fully reflect the reduction in turnover which results from a relegation. Players must be sold, not only to generate more revenue, but also to reduce ongoing pay costs. How quickly a club can do this or will want to do this will reflect in its Balance Sheet and Profit Statement. This is true in spite of the effect that Premier League parachute payments have in offsetting the immediate effects of relegation to the Championship.

It is important that we acknowledge right away which clubs were in a different league in season 2017/18, so due allowance can be made for the different circumstances and environment governing their management. Clubs in the Premier League are governed by FFP, but in the Premier League, clubs are allowed to lose £105m over a 3 year period, assuming they have a suitable source of replacement cash to cover the losses. Clubs in the Championship are allowed to lose £39m in a 3 year period. Clubs which changes leagues as a result of promotion and relegation from the Premier League have a 3 year allowance built up of £13m for every year that they spent in the Championship, and £35m for every year that they spent in the Premier League. Clubs promoted from League 1 are controlled by a much stricter regulatory environment, which is not governed by the level of their losses as shown in company Financial Statements. Instead SCMP has yearly breaks and it sets limits for the relationship between pay and total turnover (60% for League 1 and 55% for League 2). Even so, total turnover can include donations from the club’s owner, which some will argue denies fair play, even in the lower leagues. The gap between League 1 and the Championship is now as difficult to bridge as that between the Championship and the Premier League. SCMP does not allow clubs to plan in advance for a promotion, because the club must conform to SCMP rules until the end of the promotion season. That means that preparation for competing in the Championship cannot begin until the season ends, and the transfer window reopens. If to that you add the lack of chance to build up financial resources whilst in League 1, it means that promoted clubs must try to catch up with established members of the Championship whilst keeping to the same FFP rules.


The clubs not in the Championship for 2017/18 season were:

Blackburn Rovers (League 1)

Charlton Athletic (League 1)

Huddersfield Town (Premier League)

Luton Town (League 2)

Stoke City (Premier League)

Swansea City (Premier League)

West Bromwich Albion (Premier League)

Wigan Athletic (League 1)


The other 16 clubs (including Barnsley) were in the Championship for 2017/18 season.

 

Review of the most recently published accounts of all Championship Clubs (page 2)

Method of Review


Initially, I intend to concentrate on Balance Sheets, only referring to Income Statements at the end of the review when principles of ownership had been established or where explanation of the figures requires it. Of course, a Balance Sheet is written in a foreign language to many, even if they could muster any interest what-so-ever in the subject. I intend to explain what all the figures mean as we go along on. However, my review will not be on a line by line basis. It would be pointless to discuss things that are not interesting or significant. Even so, there are some things that I need to explain, even before we get that far.


The Historical Cost Convention


When I was a kid, the Balance Sheet was just a listing of historical costs. It was not intended to reflect the current worth of a company, which is the amount of money that the marketplace is prepared to pay for all the share capital of the company which owns the club. It was simply a historical record. That has now changed a little. Now companies are allowed to revalue their assets if their current value is materially different from the historical cost, just so long as that revaluation is applied to all assets and all liabilities, and just so long as that revaluation is undertaken by a professional valuer. In practice, only Land & Buildings are being revalued, because it is only the value of Land & Buildings that will have changed to a material extent. But, this is where I have an issue with the idea of revaluing Land & Buildings. It is indisputable that a city centre office block will have increased in value because that hypothesis can be tested quite easily, by putting it up for sale. But a football stadium can only be used for watching a sport played out in a space approximately 100 metres by 75metres. That narrows potential uses down to either football or rugby. However, most football stadia are far bigger than any rugby team would require or could afford, so a stadium can effectively only be used for football. Who else in a particular town/city would be in the market for buying a football ground? No-one! And in that case, why then is the stadium worth more than its historical cost. Unless the new owner intends to demolish the stadium and build something else, there are no grounds to value the stadium for any more than the cost of the land, less the cost of demolishing the stadium that stands upon it. And yet many clubs have revalued their grounds, in some cases, more than just once.


So what is gained by revaluing your ground? Well, the banks will take no notice. They are no longer prepared to loan money to a club based solely on the value of its Land and Buildings. Too many of them were caught in that trap in the past. They know that football club land & buildings are not a saleable asset. However, the club’s net worth has been increased by the revaluation, and if you are an owner who wants to put the club on the market, that could be important. However, anyone with an ounce of nous will be unconvinced.


What is a Balance Sheet?


A Balance Sheet is a summation of the historical cost of all the assets and liabilities of a company collected together under specific headings. Because of double entry bookkeeping, the difference between total assets less total liabilities is always represented by Shareholder Funds (total shareholder permanent investment), whether that be through purchase of share capital, or through the accumulation of profits and losses over the life of the company (Capital and Reserves), because at least in theory, past profits belong to shareholders, even though they are left in the company. Barnsley does not pay share dividends. Of course, there should always be a surplus of assets over liabilities. Otherwise, the company is being funded by its creditors and it is technically insolvent. For this exercise, I have moved away from the standard format for presentation of Balance Sheets. Loans are supposed to be shown as creditors, but I have elected to show loans from related parties (Other Group Companies, Major Share Holders or Owners) under the heading, Capital and Reserves, because I think that it more accurately reflects the true situation at many clubs. Many clubs continue to exist purely because they are funded through loan capital (rather than share capital) by their owners/companies controlled by owners. Those owners are probably not going to walk away and leave the club insolvent. They are not going to demand repayment of their loans at short notice. Indeed, Patrick Cryne did not demand repayment of his loan when he sold our club. He effectively capitalised it as Share Capital (Share Premium).

 

Most clubs reluctantly sell their better players when they're relegated. We gleefully sell them when we're promoted!

 

Review of the most recently published accounts of all Championship Clubs (page 2)

Balance Sheet Comparison


The first heading on a Balance Sheet is Fixed Assets. These are assets with an expected life that exceeds just 1 year. Their original cost is written off against profit over the expected life of that class of asset through depreciation or amortisation. The value stated on the Balance Sheet used to be cost less accumulated depreciation. However, in cases where the asset has depreciated faster than expected, the value of a fixed asset can be written down more quickly using an impairment write down. As I stated in my opening remarks, Land and Buildings are sometimes revalued to take account of a permanent increase in value. Frankly, I am sceptical for reasons detailed above. Hopefully, the EFL do not allow revaluations to land and buildings to be included in annual net profit, The legal case involving Middlesbrough and the EFL suggest that this is the case, but that is also why Derby County had to sell their ground to a related party in order to release its increase in value into Net Profit legitimately, rather than simply revaluing it and confining the adjustment within the Balance Sheet, as Middlesbrough had done. For the record, I do not think that Middlesbrough can win. The EFL will simply claim that they are applying the rules of FFP that were agreed between the clubs, and that the rules make no mention of a club selling its ground to a connected party (an owner or a company owned by an owner).



Although Intangible Assets can include other things like purchased Goodwill (the difference between the book value of an asset/business and the amount paid for it), for my purposes, the phrase Intangible Assets means the amount paid to acquire the services of a player from another club. The amount paid in respect of each player is amortised over the length of his contract and the total of all players’ net sums is shown as the Amortised Value above. From that brief description, it should be obvious that this figure is not intended to represent the current value of all the players registered to a football club. It does not include any revaluation to cover the increase in the player’s current value over and above the unamortised proportion of his original fee. Neither does it include any current value attributed to a player who came up through the club’s academy system, and who therefore, has never had any value attributed to his services in the club’s Balance Sheet. Nevertheless, the figures are interesting not only for the current unamortised value of players bought from other clubs, but also because the Balance Sheet notes give figures for the total original investment in those players.




So what can we understand from these figures?


Firstly, Barnsley total player acquisition costs were the 6th lowest in the Championship, and if teams that were resident in lower leagues during 2017/18 season are excluded, they would have been 2nd lowest. Our team was trying to compete in a league with the second lowest overall transfer expenditure. Unfortunately, clubs are not required to publish information about player wages separately, but I believe the story would be similar for that statistic as well. Can it be any surprise that our team was relegated at the end of the 2017/18 season? Is it right that fans have blamed Hecky and Morais for our demise, when they were clearly fighting an uneven fight? Why are they sticking by Stendel, who is caught in exactly the same trap, but who so far has been reluctant to change his modus operandi.



Our owner does not want to be caught up in a cycle of overspending, and as this analysis proceeds, readers will see the effects of overspending on the Balance Sheets of all clubs. Nevertheless, refusing to step on the gravy train has its consequences in the short term, and unfortunately those consequences mean that our season by season performances tend to be cyclical in nature. That is fine by me, because I understand how risky an alternative strategy could be. I can type these words into my word processor in the knowledge that I have neither the finance, nor the influence to do anything about it anyway. But equally, I know that others are not quite so sanguine under those same circumstances. Our owners believe that their policies will pay dividends in the longer term if they are patient, but I am not so sure. My difficulty comes from the fact that I have no alternative suggestions for a viable strategy that offers any greater chance of success for the same overall cost, and if I cannot suggest any alternative, I have no cards in my hand.



The huge differences in the levels of investment from club to club in the Championship suggest that £10m would be but a drop in the ocean. A £10m investment on players signed on 3 year contracts sees only £3.3m hit the Profit Statement each year, and that looks affordable. However, we need to add the increase in players’ wages to that figure, say another £3m. We have presumably also assumed an amendment to our policy of buy young improve and sell on. That has generated an average contribution to profit of £5m per year over the last 3 years. So the new investment and the changes in policy associated with it have increased our losses by over £11m in the first year. If that investment was repeated in a 2nd and 3rd years, which it would need to be in order to try and catch up with the general level of player investment, we add another £11m in the second year and a 3rd £11m in the 3rd year. After 3 years, we have spent an additional £66m (£11m + £22m + £33m), even though only £20m of it is transfer fee amortisation. Assuming that we currently break even, that means that we lost £66m over a 3 year period, and we have exceeded the £39m allowed under FFP rules. We are in trouble, but at the end of the 3rd year, the players we bought in the first year can leave for free and we have no alternative but to invest again in order to protect what we have already done. We have also breached the FFP rules and have to find new ways around that or we incur the wrath of the EFL and a £20m fine. It is not so easy to consolidate in the Championship, is it?


This is exactly how other clubs built up the huge amount of debt that they have. This is how they have placed themselves at risk from unexpected falls in turnover resulting from relegation. This is why we must not risk it all, as others have done, but which some have disguised through the sale of their ground to a connected party. Consider very hard before you demand that our owner places us in the same parlous position as the rest of the clubs in the Championship. I know that you are frustrated, but are you sure that it is really worth that risk?

 

Review of the most recently published accounts of all Championship Clubs (page 3)

 

Review of the most recently published accounts of all Championship Clubs (page 4)

I have extracted Land & Buildings from the rest of Tangible Assets because this is the area that is currently being used in order to defeat the EFL FFP rules and I wanted to explain exactly what is happening.


Barnsley FC does not have any Land & Buildings. When Patrick Cryne bought the football club from the Administrator back in 2002, he decided to share the ownership of the Land & Buildings with BMBC. They are actually owned by another company and that company is owned jointly by the Cryne Family and BMBC. The club pays a lease to that company of £150k per annum for the privilege of using the ground for business purposes. You see, there is no reason why a football club must own its own ground, and there is no reason either why the ground should not be owned by some other person, even the club owner. I am not sure whether the amount paid by Barnsley FC represents a commercial leasing rate, but the fact that Barnsley MBC is involved suggests it probably does. But is there any reason why other owners would need to charge a commercial rent. After all, they already subsidise the club in other ways. The fact is that not doing so adds to club profits, or at least cuts down on its losses and directly affects the club’s FFP calculation. This is why it is difficult to be categorical about what is right and what is wrong when drawing up the rules for FFP, and before our fans get too self-righteous about things, the last time we were promoted Patrick Cryne donated £400k to the club to ensure it did not fall foul of SCMP. OK, the sum is much less than the sums we are currently talking about, and donations are allowed under SCMP rules. I only mentioned it to set my following remarks into context



Now let me explain what has happened.



Clearly, there are a number of clubs (12) who are not carrying enough cost in their Balance Sheets to cover the cost of building their grounds. They are


Barnsley

Bristol City

Derby County

Fulham

Huddersfield Town

Hull City

Luton Town

Preston North End

QPR

Reading

Sheffield Wednesday

Stoke City


Given that it is not unusual for a ground to be owned by another person, why the furore?


In the cases of Derby, Reading and Sheffield Wednesday, the sales of the ground has come at a time when the clubs were being investigated by the EFL in connection with a possible breach of FFP rules. Let us have a look at each club’s Balance Sheet to see what additional information it gives. We must bear in mind that Clubs pay Corporation Tax on Capital Gains (the difference between the historical cost of Land & Buildings and the Selling Price. We must also bear in mind that although tax losses are calculated on a slightly different basis to the way that Financial Accounts do it, the fact that those clubs are being investigated for possible breaches of FFP rules suggests that past Tax Losses far exceed the amounts of any possible Capital Gain.


Derby County


Derby County made a profit of £39,940,387 on the sale of Pride Park. When included in the Derby County Profit and Loss Statement, a loss for the year of £25,368,759 became a profit of £14,571,628. The fact that the Balance Sheet shows a Debtor owed by Group Undertakings to Derby County of £74,573,478 suggests that the agreed sale price was still unpaid at the Balance Sheet Date (30 June 2018). A cynic might suggest that the transaction happened after the year end and paperwork was constructed to support the view that it actually happened before the year end. Frankly, the auditors would not have looked into the matter too deeply for fear they may find something that did not add up. There is no corresponding loan from any related party against which the debt could be contra’d.



Reading


Reading have made a profit of £6,518,222 on the sale of the Madejski Stadium. When included in the Reading Profit and Loss Statement, a loss for the year of £27,471,090 was reduced to a loss of £20,952,868. There is no debtor balance owed to the Owner/an Owner Controlled Company, so planning for dealing with the consequences of breaking FFP regulations was considerably more advanced at Reading, than it was at Derby. Nevertheless, there is an amount of £10,108,724 on the Profit and Loss Statement that is described in the notes as, “Grants Received”. I cannot come up with any more credible explanation for this item other than that it is a donation from the owner, made to avoid the consequences of FFP, because without both this sum, and the profit on the sale of the Madejski Stadium, the club lost £37,579,814 and broke FFP regulations in a single year. The question is, is it financially more effective to give the club £10m, or should you risk an FFP punishment. The QPR experience suggests that the alternative is a fine of £20m, so there is your answer.



Sheffield Wednesday


If the above clubs are good examples of clubs cheating in order to avoid the consequences of poor financial management, this last one can be classed as outstanding.


For a start, the Sheffield Wednesday owner had to extend the club’s financial year by 2 months in order to give him the time to sort out the mess. I am quite confident that that is not allowed by either FFP or Company Law.



Like Derby County, Sheffield Wednesday have made a profit on the sale of their ground to their owner. In the case of Sheffield Wednesday, Hillsborough, is a ground that is in dire need of modernisation in order to bring it up to modern standards. It is a ground that still bears the stigma of the Hillsborough disaster. Yet, it was sold for £38,061,000 above book value. When included in the Sheffield Wednesday Profit and Loss Statement, a loss for the year of £35,485,000 became a profit of just £2,576,000. Once again, the Balance Sheet shows a Debtor owed by Group Undertakings to Sheffield Wednesday of £75,000,000 suggesting that the agreed sale price was still unpaid at the Balance Sheet Date (31 July 2018), 14 months after the end of the previous year-end. Once again, a cynic might suggest that the transaction happened after the year end and paperwork was constructed to support the view that it actually happened before the year end. Frankly, in this case the auditors ought to be ashamed of themselves. The only thing to say in their favour is that at least they did not try to cover up the transaction by setting it off against the amount owed to the owner/his group of companies by the club (£77,694,000).




It should be obvious from these notes that rich owners are willing to do almost anything to avoid the consequences of breaking FFP rules. But the rules exist to stop rich owners doing just what they have done, using their great wealth to spoil our great game by competing unfairly. If these clubs cannot be punished because the rules did not foresee what rich owners were prepared to do in order to win, then the rules should be scrapped, and the EFL must start again. These owners are laughing at FFP and at the EFL as well. They have to be bought to account, otherwise a place in the Premier League can be bought and sold, and the game is no more.


Having said all that, the Championship could have adopted rules similar to SCMP, but the clubs have chosen not to. Why could that be? Well the cynic in me would suggest that the owners wanted more flexibility than was allowed by SCMP. That they wanted to be able to buy their way into the Premier League. That they never expected the practice to become so wide spread as to be common practice. That eventually, there would be no advantage to overspending, because almost every club was doing it.

 

Review of the most recently published accounts of all Championship Clubs (page 5)

3. Bank Overdraft


With the amount of cash that is being spent in the Championship, most readers would expect huge bank overdrafts throughout the league. In actual fact, bank overdrafts are very rare in the Championship and I have made the point already as to the reason. Banks are not convinced that a football ground is a good security for a loan. They have reached this conclusion through bitter experience. The only clubs with bank overdrafts, overdrafts which will be guaranteed by the owners rather than secured against assets are:


Blackburn Rovers £11,665,643

Bristol City £3,665,158

Cardiff City £2,302,000

Derby County £3,000,000

Middlesbrough £7,075,000

Nottingham Forest £4,731,000

Swansea City £856,456

Wigan Athletic £4,000,000

 

Review of the most recently published accounts of all Championship Clubs (page 6)

 

Review of the most recently published accounts of all Championship Clubs (page 6)

Clubs do not buy players for cash. Whilst ownership of a player’s contract passes when the deal is struck and the deal has been secured by payment of a deposit (say 50%), the rest of the total amount agreed is phased over a period of up to 2 years. Even though the player is not yet paid for, his full fee (plus certain other costs) is capitalised in Intangible Assets. The following list is a summary of amounts owed/owing to each club of account of players bought/sold. Some clubs do not publish this information separately.


What should have been the first thing that Derby County, Reading and Sheffield Wednesday have done when they realised that they may have a problem with FFP. Well, if it had been Barnsley, we would have sold our better players in order to generate a profit which we could have used to offset our losses. We would also have been careful not to have spent as much on any replacement. If we had done that, we would have also reduced our outgoings on player wages and we would have reduced our amortisation costs on player transfer fees as well. So what did the 3 afore mentioned clubs do? They sold their grounds to their owners.


Derby County

Derby owed almost £13m at the year end and were owed just over £2m. According to note 1, they had acquired players for a combined transfer fee of over £15m during the year and had generated just £3.7m in profit on players sold. Player trading (including amortisation and impairment) cost Derby £61,820,614 during the financial year.


Reading

Reading owed almost £7m at the year end and were owed virtually nothing. According to note 1, they spent over £19m on new players during the year. Like Derby, they lost money on player trading, but the sum of £6,894,472 was very much lower than the Derby loss.


Sheffield Wednesday

Sheffield Wednesday owed just under £2m. According to note 1, they spent nearly £13m on new players, so most of that must have been paid up front. However, player trading cost the club £19,650,000 in total.


None of these clubs have actively sought to avoid the consequences of breaking FFP guidelines, which was what was intended when the rules were drawn up. They have all chosen to avoid the consequences of breaking FFP rules dishonestly. If FFP is no deterrent, if it does not point the way towards honest competition, it is not worth having.

 

Review of the most recently published accounts of all Championship Clubs (page 7)

 

Review of the most recently published accounts of all Championship Clubs (page 7)

Companies are financed through Share Capital, Other Reserves (Capital Redemption Reserve and Property Revaluation Reserve), Loan from Owners and Related Companies and Past Profits retained within the company. The total of Share Capital, and Reserves is equal to the total of Fixed Assets and Current Assets less Current Liabilities. If Land and Buildings have been revalued, instead of adding the notional profit to Retained Profits, it is show separately as a Revaluation Reserve. Share Capital and Reserves are summarised above.


Some of the numbers in this table are mind boggling. The most mind boggling figure of all are the cumulative losses suffered by most clubs. As I said earlier, the usual situation is that most companies will be financing their Net Assets partly through accumulated profits. Only 3 clubs comply with the expected norm, and in the case of Barnsley Football Club, that is partly because the company only began in 2002, and partly because of the player sales/profits in January 2016. In most industries, 21 of the 24 clubs would be insolvent. As it is they keep going only because their owners have guaranteed that they will continue to support them financially. That is, they have reassured the club’s auditors that they will not walk away, leaving the club to swim, or more likely, to sink.


The gravy train for the players had to stop, or at least, it had to slow down. FFP should have been the catalyst that allowed that to happen. If the rules had been applied rigorously, it would have imposed a small degree of financial discipline. As we can see from the Derby, Reading and Sheffield Wednesday examples, the clubs just cannot be trusted not to cheat, rather than reform. It is so depressing. Some of the clubs listed have lost almost a third of a billion pounds in the lifetime of the company. And these figures are not some fictitious sleight of hand. That money has had to be found and the companies re-financed by their owners. Owners have ultimately been picking up the tab for the losses of these football clubs. And what have they got to show for it. Well, in many cases, they are no nearer the Premier League than we are. How can a club like Barnsley, with its stated policy of living within its means, hope to compete in the same league with such clubs? Especially when their owners are willing to cheat on weak rules like FFP. Frankly, how can we hope to attract owners who are prepared to cheat in the epic way that many have done?


The numbers are mind boggling. If our owners offered to give the club to its fans (10,000 of us) on the proviso that we each contributed £1,000 via loans to be used for working capital, then the club’s total working capital would be just £10m. Many of these owners have been willing to loan clubs more than £100m, and in many cases, the pit has not been bottomed yet.

 

Review of the most recently published accounts of all Championship Clubs (page 8)

 

Review of the most recently published accounts of all Championship Clubs (page 8)

Whilst Total Turnover is accurate, this is one area where the rules allow flexibility about the analysis of the total. With the exception of Luton Town, Sheffield Wednesday and Wigan Athletic, where no analysis is given, I am confident that the figures for EFL Distributions including TV Cash and Match Day will be accurate.


This analysis makes it very clear what effect TV cash has had upon the game. We all talk about the support that teams command (Home Gates), and I think that we all assume that there is a need for bigger grounds, capable of holding more fans. However, when you look down the ‘Match Day’ column, and you compare total revenues by club. Then you deduct the costs of putting on a match day, the cost of policing the stadium, the cost of insuring the stadium and public liability insurance, the cost of building the stadium and keeping it in good repair (costs which rise exponentially with the capacity of the stadium), and finally the interest cost on the money that had to be borrowed in order to finance the building of the stadium. If you were then to compare the net figures on a club by club basis, I guess that you would see a very different picture. You see, it has been my opinion for some time that the fans are no more than an ornament that decorates the modern game for TV audiences. The real money is that from TV subscribers to SKY and the rights to English football that SKY sell on to customers both in the UK and abroad. It is a depressing thought that I am no longer important to the team that I have supported for more than 50 years. That my season ticket money is insignificant as compared to that of a disinterested SKY subscriber. That my club simply acts as a conduit to distribute the wealth collected by SKY into the pockets an international brigade of footballers, who do not care about the colour of the shirt that they wear, just so long as the money keeps coming in.


The EFL distributions column allows us to see the difference between revenues generated by SKY depending upon the league in which the team played. Premier League teams had EFL distributions in excess of £100m. Those with parachute payments show incomes in excess of £40m (1st year) and £20m (2nd year). Teams with Championship income only had EFL revenue in excess of £7m and those from League 1 had incomes of under £2m. The loss of income from relegation and the gain in income from promotion are clear from this table. Nevertheless, profits are far from guaranteed by a promotion to the Premier League, as can be seen from Table 8. Not one of the relegated teams registered a profit before Extraordinary Items.


There are huge differences in amounts received in respect of advertising and sponsorship. Whilst no sponsor would wish to be associated with a losing team, in some cases, it looks like teams are being sponsored for more than the market rate, possibly yet another way of getting cash into club Profit Statements in order to frustrate FFP. The lengths to which some owners will stoop should not be under-estimated.


I am conscious that the tone of this review has turned cynical, but as a supporter of my football club, I used to think that I meant something to it. Now, I feel caught between a mega rich media giant, mega rich club owners and mega rich footballers. About the only party to all of this who is not mega rich, is me, a mere fan. And yet I keep turning up and handing over my money thinking that I count for something. Deluded!

 

Review of the most recently published accounts of all Championship Clubs (page 9)

 

Review of the most recently published accounts of all Championship Clubs (page 9)

Extraordinary Items are, first of all non-recurring items. A club cannot sell its ground every year. Most items are trying to convince the casual reader that things are better than they are. However, QPR were fined £20m for breaking FFP rules, and it must be pretty galling to both the club and their fans that others are escaping punishment for exactly the same offense.


The first column is reserved for the profit that the club generated by selling its ground to its owner. Some owners have written off their loans, and unlike Patrick Cryne, they added the loan write off to profit because it was required in order to stave off an FFP investigation. The last column contains details of property revaluations. These sums affect the Balance Sheet only, whilst all others affect both the Profit Statement and the Balance Sheet. I have already gone into great detail about my thoughts on these.


This table shows the extent that many owners will go to in order to stay on the Championship gravy train (and avoid FFP) and have a chance of joining the Premier League gravy train. These owners seem willing to do anything and everything and our owners are very wise in refusing to get drawn into the mess. A club like Barnsley could be ruined in short order if they chose the wrong time to join battle with some of these monsters. It does cause me to wonder once more why any foreign owner would want to become involved in English football.

 

Review of the most recently published accounts of all Championship Clubs (page 10)

 

Way too much information RR. A post and discussion by club, or by balance sheet section would have been much better.

Theres lots of information and nuance in there and many lines of potential topic. I think with so much data, you'll struggle to spark detailed debate just because many will suffer from sensory overload.

 

Review of the most recently published accounts of all Championship Clubs (page 10)

This is the final table and it completes my comparison of club finances. A previous table (Table 6) showed how important SKY revenue is in the modern game, and this table shows (by inference) how the main beneficiary of all that money is the players. I hope that I have shown what a thoroughly corrupt industry our club is part of, even though it plays only a tiny part in that corruption. There are those who believe that the only way for our club to be successful is for it to behave as corruptly as the rest. That when you are in the company of thieves, there is no alternative but to become a thief yourself. In order to do that, we would need an owner who agrees with that philosophy, and who is prepared to play with the huge stakes that are required, and be prepared to lose their initial investment and lots more, and who are prepared to lie and cheat to cover their dishonesty from the EFL and its FFP rules. You now have all the facts, and you can make your own minds up, even though you will need to find new owners if you disagree with how they are managing our club currently. Personally, I would rather cycle between the Championship and League 1 if the alternative is to run with this band of thieves, join their gravy train, and risk losing everything.


As for the EFL FFP rules. They are as effective as the Championship Clubs want them to be, by that I mean, not at all. They are there in order to create a façade of fair play, without actually delivering anything like it. The fans should place absolutely no reliance on anything resembling a level playing field, and if they do that, they will not be disappointed.




Please feel free to ask questions. I will not have all the answers, but I will do my best to answer your questions as well as I am able.

 

You are right. It is a huge amount of information. There will not be another Minority Report until after the Swansea game. It is up to individuals if they are interested in what I have presented, or not. I will quite understand if no-one is interested. However, it is information that I had painstakingly collected, and I decided to put it in the public record so that readers could make up their own minds about it, if they wanted to wade their way through it. Over to you!