Minority Report 2019-20 Talking Finance 5

Yup, it's all ok asking for patience to give the plan chance to work, but everything boils down to 11 blokes on a field.

Football is why we turn up. It's the reason we have a club for the owners to buy.

Football can't become an afterthought.

Supporters that accept what's on offer in hope that it'll get better in years to come play into the owners hands.

 

It was refreshing to read that article with Bobby because it gave an actual glimpse behind the curtain. I think DSLRed put it best today in a different thread when saying last season it felt like we were as connected as we've ever been and this season it's gone the other way completely. Communication is vital. Even if it's not always what we'd like to hear as supporters, it makes us feel part of it. Right now, lots of fans are feeling disenfranchised and whilst I'm not fully subscribed to all that's levelled at the club, even I'm dumbfounded by what seems to be their plan - to ignore it and hope it goes away.

 

Imho the board have committed too many errors in their management so far to be considered worthy to carry our club forward.
Fortunately for them, the fans paid their hard earned season pass money upfront.
This long term plan......i really dont think there is one, not from their actions ......its too smash n grab....worry about the consequences later attitude.
As we know, football is a results business, we are no further forward now, than when they first took the reigns.
I think they will be gone at the end of this season. We can tben look back at "their plan".
I guess like Nice, we will be left fuming.

 

It could be argued that we've gone backwards.

We're currently one of only 3 teams in the whole league that's only won 1 game. Watford and Southend being the other two, but Watford have played less games.

We're in a right hole.

 

To try and compete in this league without any real investment and relying on asset stripping the club each window is showing a complete lack of respect to the standard of the division and to the supporters who pay their hard earned money to support it

This recycling of the team doesn’t work as you lack continuity and all you are doing in essence is loaning these players. Because all you are doing is nurturing their development until such time they know they are onto a move elsewhere- then you are back to square route one

What is needed is to retain the core of the better players on longer term deals and build a young team round them- who’s to say they can’t have long and fruitful careers with us?

But like you say red rain- that involves the owners digging into their own pockets- which won’t happen

 

Firstly, thanks for taking the time to post (again) your views. They are thought provoking.

I don't believe though that most of the calls for flexibility I've seen are calls for a new plan. My view is that what people want (and I'm definitely one of them) is an adjustment to the plan. I get the value in signing young players to develop and sell at a profit which can then be reinvested, and agree with it. Just not virtually every player. If we'd made just two experienced signings this summer (and my preference would have been a centre back and a striker) I believe the conversation on here would be very different right now. I think that because I believe we'd have more points and because even if that wasn't the case the owners would have been able to point to having delivered on the managers requirements and being flexible in the implementation of the plan. My view would certainly be different.

I have thought about what that would have cost us. Taking the figures from one of your earlier posts suggesting that wages for a 28 year old would be double i.e. £400k rather than £200k, assuming a 4 year contract that would result in an additional £1.6m over the 4 year period. Assuming we'd paid an £800k fee and received no fee when they leave that would mean an additional £1.6m i.e. total £3.2m in cost. And I understand from your example that we could also lose money because there's no resale value in them. I think you suggested £1.6m based on the young player increasing in value and being sold for £3m with one year left on their contract. Applying this logic the total difference would be £6.4m.

But these are extreme examples. It wouldn't be common sense to give the older players a 4 year contract. Let's assume they're given 2 years. The wage difference then becomes £400k per player. If we were to take them on loan (others in this thread have suggested loans) for just 1 season it's smaller still. I'd also question whether it's necessary to pay anywhere near £800k for many players. During the last window Matt Smith, Patrick Bauer, David Nugent, Sammy Ameobi, Martin Cranie, Frazier Campbell, Danny Simpson (to name but a few in the positions I mentioned) were apparently signed for free. I understand some may not like those players (although I'd argue every one would be a regular starter right now and would improve the team - in addition of course to the added value many people think they'd add in bringing the young players along). I also understand that some may say that their wages would be more than £400k. I highly doubt that for some of those players. Danny Simpson is the one I'd question most but he was without a club until Huddersfield signed him,so I think it's unlikely that he'd have stayed unattached if there was a £400k 2 year contract offer on the table. Anyway, that removes a further £1.6m from the calculation. So over two seasons the additional cost for those two players would be £800k. I know we lose the potential resale value but it's highly unlikely that all of the young players we've signed will increase in value and be sold for £3m. We won't know for another 2 or 3 years but I believe some of them will be sold on cheaply and we'll actually make a loss on them. So as others have suggested, sign a couple of older players, sign 3/4 fewer younger players, increasing the 'confidence threshold' for those you do sign.

Do you see this as a different plan or some flexibility in the current plan?

For what it's worth, my view is that the owners are simply unwilling to consider signing an older player because of the additional cost over a young player. But they are forgetting / choosing to ignore that some of the young players won't make it and we'll lose money when they leave. And that the likelihood of the team being relegated and the associated loss of income, is higher as a result of the lack of experience. The exclusive focus on the long term and unwillingness to even consider any short term, tactical measures is certainly driving fans away right now and I'd argue is a direct cause of our current abysmal on-pitch performance. The unwillingness appears to be driven by the potential loss of income in 2/3 years time, even though it's far from certain it'll materialise.

There's been some debate on the BBS recently about the "greedy b*stards" chant but I think this illustrates why it's happening. And with some justification in my view.

 

Talking Finance comes in 5 quite large bites. Those articles build on each other. Together they make a case for my eventual conclusions. I try to stay away from any specific individuals, but try to illustrate my remarks through examples. My starting point was to point out the differences between the owners, the directors and the company. Although that was my starting point for this series, it was not where I began thing. My starting point was the analysis of the most recent financial statements (season 2017/18) of the members of The Championship this season. Frankly, I was appalled.

FFP is supposed to limit losses in The Championship to £39m over 3 years. That is a huge sum. Far more than I would expect our current owners to finance (on past ones from that matter). Yet, that was not enough for many. Three clubs sold their grounds to their owners thereby generating a profit which could be used to offset FFP losses and save the clubs from the fate that befell QPR, a FFP fine of £20m. The next line that I was interested in was total wages. Now that is total wages and not just player wages, but in that year we paid £3m less than our next lowest in the league, and we still only broke even. The distance that we have to make up in order to be able to compete in The Championship is huge. It would involve our owners in subsidising the club to at least the same extent as every other team, and I could not find a way around that.

That was my starting point. What strategy could we employ that would give us a fighting chance of establishing in The Championship that does not involve spending huge amounts of someone else's money. The more I thought about it, the more I became convinced that buy younger, keep longer and sell was the right strategy. Talking Finance 1 to 5 attempts to explain why I reached that conclusion.

 

Sorry Red Rain, I genuinely don't follow.

My point was that a new plan isn't required. Small adjustments made to the current plan could be accommodated should the owners wish to do so. Unless I'm missing something signing two more experienced players rather than 4 younger ones needn't be more expensive in the short term. We might forego the longer term income, but that's in any case a gamble? The owners' exclusive focus on potential future value and sod the present is what's driving the plan.

 

My reasoning is this. You may be able to put together a team for the same budget that we have now, but is that budget enough to build a team capable of holding its own in The Championship when every other club is spending way more than we are.

You are not the first to suggest that the answer is a modicum of experience, but those suggestions do not specify the players involved, and because of that there is no evidence that the team would be doing any better than they are presently. We would still be trying to compete with wages that 25% less than the next lowest. That suggests to be that the rest of the league has better players than we do, even if we swap 4 young players for 2 experienced ones.

 

The suggestions "do not specify the players involved"? My suggestion did just that. You're right, there is no evidence that we'd be doing any better but it's impossible to provide evidence of a future outcome. Applying that criterion would mean that we'd never sign any player because there's no evidence we'd perform better with them in the team. One thing is for sure though, it couldn't be much worse than it is right now! And the implication of your point about wages is that there's no point even trying.

But overall what I wanted to challenge was your statement that the flexibility that people have suggested isn't actually flexibility at all, it's a new plan. I think most people do want the flexible, minor change approach.

 

There is a great little book called "The Present" which spends considerable time outlining the value of thinking in the here and now.

If all we ever do is focus and concern ourselves with the future, the day to day, the here and now will be neglected. The irony is often those who focus solely on the future, rarely create the future they so wish.

Assemble, dissemble, sack, hire, sack, hire, sell, assemble again, sack some more, get relegated, lose huge incomes, gain moderate sales proceeds, spend 95% on foetuses... assume promotion is easy for a promotion bounty to offset losses...

Before you know it you've wasted decades and regressed, just by looking at what tomorrow might bring rather than whats right before your nose in the present.

 

I do not believe that there is no point in trying. I believe that if we are to compete with that huge disadvantage, we must try to do so in a different way. This series of articles has been about the search for a different way. I believe the plan offers that. I believe that investing in the technology and people to search for undiscovered talent, and hopefully finding that talent before others offers our club its best change of competing on a very uneven playing field. If we stick with the plan for long enough, we may find out for certain.

 

There is also no future in ignoring the elephant in the room.

 

The elephant in the room is our owners are following a blind ideology, entrenching their views to hubris extremis in the face of all evidence showing it will get us relegated and incur massive losses with no guarantee of recovering them while having players on long term contracts we cant get rid of.

 

Thanks DWL - I'll get hold of it for a read.

I have to say that I understand Red Rain's view that the focus has to be more on the future than the present. I'm reminded of blogs I wrote in the past expressing my view that extreme short-termism in the form of prioritising achievement of short term targets has been a key factor in most of the business collapses / scandals in recent times e.g. PPI (and other examples of mis-selling), the Financial Crisis (Lehmann Brothers, RBS etc) but it can't be just about the future either, there has to be a balance and we're just not seeing it (or its implementation is negligent) right now.....

 

Absolutely agree. The same is if you dwell in the past, you don't act properly in the here and now and the future fails to be delivered how you wish. all actions are now.

I think there are also some assumptions that ought be considered.

1. IF (massive if at this stage) this new extreme ideology started to look like it may work in 3-5 years time... whats to stop better equipped, more ruthless, better resourced competitors from outdoing us? So we lose competitive advantage. The barrier to entry is very low, and when you consider the amount of competitors in this country and all across Europe (if we buy from Europe, could political factors play a part, and, we open up more competition because of willingness to move... very few brits tend to have roaming tendencies and those who do rarely tend to do that well). The ideology may well only work very short term before others better placed outdo us. So what happens then? A race to the bottom? Younger and younger? Less and less statistics to base a model? Cheaper and cheaper as existing avenues are overfished and become saturated.

2. IF (a more likely if this time), we are relegated in May, and IF (more likely than last time I'd argue) we fail to win promotion back to the championship... what does that do to the ideology? We've seen teams struggle in league 1 who people thought would do well. What guarantees are there that a team shed of its experience and better players are able to amass a ridiculously young squad with enough confidence to win promotion?

I can't stress enough this ideology is among the outliers of extreme with very high risk. Its easy to copy should it work, and massively limits options if it fails, and through the highlighting of owners unwilling to truly "invest", failure can bring catastrophic loss.

I think most people understand self sufficiency, I don't think anyone is asking to lose £39m over 3 years. But I don't think anyone is endorsing such a radical series of uncaring choices that smack of hubris rather than knowing and risk short term, mid term and long term.

The choices should be about making a team that is as competitive as we can, to try and maintain the highest standard of play that we can, while conforming to the parameters we set (self sufficiency). The choices should not be solely around profit at all costs, irrespective of the dangers that brings.

 

I fully respect your right to right to that view. And you may be right.

But by the same token you have to respect others right to have an opinion. And that they too may be correct.

In these threads you have sometimes been selective in which bits of replies you choose to respond to and which you don't - all in defence of your view. It appears (to me at least) that you are determined to prove that you are right and those with an alternative view are wrong, but using your previous point about evidence, you'll never be able to do so as there cannot be any. It can only be a judgement. To be fair I might feel the same too had I done the huge amount of work you've done on it but I think your insistence that others' views are invalid / wrong doesn't serve your purpose. You've provided a very articulate and well reasoned case but to say that there is simply no alternative is not true.

 

I am simply debating in support of a view that I hold, and I would expect others to do the same with any view that they hold.

I am in a minority and I accept that. So far, I have converted no-one, and I accept that also. It is something that I feel is interesting, something that I thought others might be interested in, even if they did not agree with me. I have provided lots of evidence in support of those views, evidence that I have made freely available to others. That is what Minority Report is supposed to do. It is supposed to raise interesting topics that others may wish to debate. If I have missed any points, then that was either a mistake, or I felt that I had answered the point many times previously. I try to answer every point at least once, and indeed the hard ones are more interesting because I have to think more. I hope that I am not arrogant, and I certainly try to answer everyone in the right way.

If you have an opinion that you genuinely hold dear, I would urge you to do the same as I do. Hold on to it, and argue your case.

 

Fair play and well said. And I think I (and others) have.

 

Im really sorry if this is old news...and that im not clever enough to put it on here better but i was sent this from twitter....thought id share.