Brentford Accounts FY20/21

Discussion in 'Bulletin Board' started by Loko the Tyke, Jan 17, 2022.

  1. Loko the Tyke

    Loko the Tyke Administrator Staff Member Admin

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    Thought this was worth starting a thread on as many a supporter put Brentford on a pedestal in terms of their model being similar to ours, but ultimately being far better than ours. Usually without the knowledge that they're £100 million in debt to their owner and wages WERE in previous years around 130% of their revenue. Also interesting to look at their player trading over the last nine seasons.

    If I've understood the detail correctly, then essentially their wages last season were 270% of their revenue and they had a wage bill, which at £41m, was three times the size of ours (as £12m was promotion bonuses). This was an EFL record high.

    Losses before player sales of £1 million A WEEK and total losses since 2013 are £197 million. Over those nine seasons they've made £141 million on player trading so the net loss is £56m for that period. Since promotion to the Championship in 2014 they've spent £95m on players.

    Would this bubble have completely burst had they not got promotion last season? Surely the wage bill was unsustainable? At least we can stop with the Brentford comparisons now as this feels like an incredibly risky strategy - albeit their player trading has been hugely successful and they deserve credit for that. However much easier to get it right when you're able to overspend on wages to bring these talented players in early.

    Paging @Sheriff and @Archerfield for any inaccuracies on my part.

     
    Last edited: Jan 17, 2022
  2. She

    Sheriff Well-Known Member

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    Haven't looked in any detail, but I suspect that the profit on player trading is built into their forecasting, so a simple calculation of wages as a percentage of turnover is likely to be misleading here.

    Based on the summary data alone, they reported a loss of £8m for the year, after taking into account £12m of promotion bonuses having been paid. On that logic, no promotion = £4m pre-tax profit.

    Their player trading record is second to none, and it shows exactly what is possible when done well. Cumulatively, you grow the investment in players based on the profits you've generated (i.e. invest progressively more with each cycle and generate increased profits each time). Even without income from the ownership this was something we had the opportunity to do previously, e.g. with the John Stones monies. Our failing comes from a continued inability to generate proper value for most of the outgoing transfers (which pre-dates PMG, but has continued under them).

     
  3. Loko the Tyke

    Loko the Tyke Administrator Staff Member Admin

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    Would it be safe to assume though that if they're paying out promotion bonuses in these accounts that they've also received similar bonuses as well? I imagine there's prize money for winning the Playoff Final but no idea how much, plus sponsor payments for that season due to success and other benefits that come in before the big riches hit?

    Would you be comfortable with Barnsley going as high as 200% of income even with the forecasting you mention built in? Seems incredibly high - especially when this Brentford number is an EFL record as all teams will build the forecasting in won't they?
     
  4. She

    Sheriff Well-Known Member

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    The bonuses will have been possible based solely on the windfall that a single season in the Premier League will provide. The play-off final is called the £150m game (or whatever the figure is) precisely because of this.

    On the wages query, it's a hypothetical question, as the 200% figure quoted would be an unfair representation of the situation if we'd generated £20m of player trading profits in that accounting period, all of which would be excluded from turnover, and hence the wages/turnover ratio. As long as those running the company were comfortable that the overall picture was cash generative, and that we didn't fall foul of any EFL rules (e.g. if there was a wages/turnover limit that we would exceed, based on the flawed calculation) then I'd have no issue with it provided that the club was being run in a sustainable way.

    I'm also not saying that Brentford are the model that we should be following, as they've benefitted from their owner's generosity over several years. However, you can't fault their general cycle of player profits = more reinvestment in the squad = stronger squad = improved league postion = increased player profits (rinse and repeat until promoted to the Premier League in their case).

    Perhaps they could do it better than other clubs because they had a safety net of an owner who could stand the cost of it going tits up in the short-term. 5 years of net player trading profits out of 6 and Premier League promotion is difficult to argue with as a highly effective strategy.
     
  5. She

    Sheriff Well-Known Member

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    Just thinking about this point a little more. Look at the players they retained as a result of promotion who they could have sold if they'd not made it. Toney alone would have brought in an 8-figure fee.

    In all likelihood they'd have repeated the cycle from when Ollie Watkins was sold and taken another shot at promotion this season.
     
  6. Loko the Tyke

    Loko the Tyke Administrator Staff Member Admin

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    I guess what I'm getting at is how long can you afford those wages when the pressure is two fold; secure promotion for the riches of the Premier League or make sure we have one sizeable and saleable asset each season. All hypothetical I know but if the signing of Toney didn't work out, or he got injured, and they finished 8th, what would that do to the long term sustainability of the football club? Other players are available to trade, which in turn would reduce the wage bill, but what if a couple of £30k a week Pontus Janssons' can't be moved on?

    It feels like a nervous tightrope when you're only just completing your first season in a new stadium that only allowed you to sell another 5,000 tickets (plus increased sponsorship opportunities).
     
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  7. Arc

    Archerfield Well-Known Member

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    I love a set of accounts. In some ways Brentford are similar to us, in others worlds apart. The key difference is an owner who is, as @Loko the Tyke states, willing to underwrite the risk with his own money.

    Similar turnover and season ticket sales to us but that’s about where the similarities stop.

    I note that they deferred their season pass holders to the following season. In other words they kept the money but allowed fans to watch for free the following season.

    Operating loss of £53.1m is, according to the accounts narrative, up from the £34.1 because of Covid and promotion bonuses. Later the accounts state the Covid impact was around £2.8m. Those bonuses were pretty dam chunky at a 50% uplift of salary.

    Worth noting that the impact of covid on BFC should be a lot less as the club kept season ticket money and had lower operating expenses. However, they did miss out on away ticket sales.

    The big story of Brentford is the player sales profit. I suppose the simple analysis is that their approach to identifying talent works and they are doing it with a bigger budget. Despite the success of player sales brentford have lost, over the last six years, £5.4m despite the player sales. Another similarity!

    Matthew Benham has still invested over £104m in loans and equity. A far cry from the BFC model.
     
  8. Sopwith Camel

    Sopwith Camel Well-Known Member

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    Have a look at Oldham's wages mate. Be more relevant to us than Brentfords.
     
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  9. Loko the Tyke

    Loko the Tyke Administrator Staff Member Admin

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    Not from this perspective. I've not seen our fans look over at Oldham, green with envy, screaming 'I wanna be like them'.
     
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  10. stairfoot.red

    stairfoot.red Well-Known Member

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    What league are Brentford in again???? Speculate to accumulate I think the phrase is. They have a very rich owner who is prepared to under right those loses. We have owners who whether they are very rich or not have decided to invest nothing and seem prepared to just let us sink into L1 without a whimper never mind a fight. I'd say we are more likely to enter admin in the next couple of seasons with our owners then Brentford are with theirs.
     
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  11. Loko the Tyke

    Loko the Tyke Administrator Staff Member Admin

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    What if he gets bored with his investment and identifies a new field of opportunity where he thinks he can make more money? They're all in the accounts as loans so someone needs to pay him back at that stage (or buy the club for £200 million).

    Hate the owners, the mob, whatever you normally call them. But at least be realistic about what's a good way of running a football club and what isn't, rather than turning everything in to a way to repeat your opinion.
     
  12. ley

    leythtyke Well-Known Member

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    I think Wigan were running on a similar model, on a smaller scale, and it led to them going into administration. Their sale of Antonee Robinson to Milan fell through in January, and the owner pulled the plug in July, even though he could've waited 6 weeks and sold Robinson, Moore, Joe Williams etc to balance the books without administration.

    A big difference to my admittedly unqualified eye between our model and Brentford and previously Wigan is we sell first, then spend, rather than commit to a spend in the hope we can recoup the money with player sales in future.
     
  13. stairfoot.red

    stairfoot.red Well-Known Member

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    What if ours get bored with us what's the difference well apart from the obvious. Right they've got to the PL with their way of doing it, we got onto the L1 express with ours. They have a new ground and several players probably now in the tens of millions category and at worst can look forward to a parachute payment of more than £100 Million next season. We're not sure which ground we'll be playing at next season have players it would seem nobody else wants and are probably going to be down at least £7 million next season. Whilst theirs might not be the ideal way to run a football club it looks a dam sight better than our way at the moment. You didn't reply to my commemt about admin so I'll ask the question who do you think is more likely to enter admin in the next two seasons Barnsley FC or Brentford FC ??????
     
    Last edited: Jan 17, 2022
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  14. Loko the Tyke

    Loko the Tyke Administrator Staff Member Admin

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    If ours get bored they just have to find a buyer and we don't owe them any money?

    The majority of their ground was funded by their owner to the tune of £71 million.
     
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  15. stairfoot.red

    stairfoot.red Well-Known Member

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    The question remains which club is more likely to enter admin in the next two seasons Barnsley FC or Brentford FC
     
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  16. Loko the Tyke

    Loko the Tyke Administrator Staff Member Admin

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    Neither. I don't buy in to the risk of admin for us at all. I understand some of the discussion, but I personally don't see it as a real possibility or eventuality.
     
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  17. SFOTyke

    SFOTyke Well-Known Member

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    When I read all these stories about teams making year-over-year multi-million pound losses, even when being underwritten by a rich owner, the gambles taken to reach the utopia of the Premier League, the disproportionate advantage the multi-year parachute payments make, etc. I just realize that the EFL with all their so called Fair Play rules and meagre punishments for non-conformity, have zero intention of trying to create a level playing field (pardon the pun).
     
  18. ley

    leythtyke Well-Known Member

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    I think relegation could make it a possibility, if not a probability. If we have players on contracts that means we cannot offload them, then wages could go beyond our income, and that gap would have to be bridged somehow.
     
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  19. Dan

    DannyWilsonLovechild Well-Known Member

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    I'm not sure there is a football body fit for purpose in terms of protecting the integrity of their competitions.

    But then if you look at it dispassionately, most businesses have forms of debt. Businesses that grow in just about every environment you wish to mention have some form of credit raise. Whether through equity or lending.

    I could ultimately see some form of legal challenge, whereby uber rich owners successfully overturn the limitations put on them through financial fair play.

    You have to hand it to the owners of Brentford, he's been hugely successful n what he's done for the club he loves. I would certainly be fearful of anyone trying to do that here, and it could easily go wrong. You only need to look at the League 1 table to see a significant list of last chance salooners.
     
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  20. stairfoot.red

    stairfoot.red Well-Known Member

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    So whose funding the £7 million shortfall then? Don't forget the last time we went into admin we had liabilities of around half that figure and owned the ground.
     
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