Football Clubs & Debt

[LeazesMag 0]

?

 

I was being serious, progress from here is overtaking 5th and challenging for the CL places. Despite an amazing season and even with significant investment , that's still a big ask.

 

that is the big statement.

 

I'm being serious too, I always have been.

[Brock Manson 0]

Progress would be finishing in the top 6, keeping hold of the current playing staff and building the strength of the squad with some first team-standard signings.

[ewerk 26387]

Keeping hold of players and strengthening the team isn't progress itself. They're actions that may or may not lead to progress.

 

Progress is largely finishing higher in the league next year than this year and that is a big ask.

[Happy Face 29]

?

 

I was being serious, progress from here is overtaking 5th and challenging for the CL places. Despite an amazing season and even with significant investment , that's still a big ask.

 

that is the big statement.

 

I'm being serious too, I always have been.

 

Whatever the pros and cons right now of borrowing money and spending ambitiously/beyond your means (delete as appropriate), the argument is pointless going forward as all clubs are restricted from doing it.

Edited March 27, 2012 by Happy Face

[PaddockLad 14597]

Progress would be finishing in the top 6, keeping hold of the current playing staff and building the strength of the squad with some first team-standard signings.

 

We're selling to buy, so some will go. Other clubs know its open season on our players...pay enough and a deal will be done. We're not the only ones by any means in this situation though. FFP may save us to an extent as well... although if we're looking for top dollar we may price oursleves out of the market. Which will have a knock on effect as to what we can spend. Interesting times, but am encouraged by our recent moves in the market & re-signing off Colo etc.

[ChezGiven 0]

Keeping hold of players and strengthening the team isn't progress itself. They're actions that may or may not lead to progress.

 

Progress is largely finishing higher in the league next year than this year and that is a big ask.

That was the point I was trying to make, we could invest as wisely as Liverpool have and easily finish lower next season.

[Happy Face 29]

That wasnt an explanation, it was more a re-statement of the point of view. First of all, on a basic level FFP is a more competitive model than the current one. That should be ovbvious. The only way it fits with your view is that the current model allows small turnover clubs to be subsidised and loss making to compete with the big clubs. The solution to the inequality of the distribution of wealth in football is, under the current model, to allow private debt to or 'subsidy' to reduce that inequality, which is only good for clubs with access to private subsidies. However, the well-run competitive club without subsidy and lower turnover than the very biggest clubs, now faces a double disadvantage; less income than the big clubs, and no access to private subsidy.

 

Less income and no access to private subsidy amount to the same thing though. No money. You've said matter of factly here that it's obvious FFP is a more competitive model, without explanation (perhaps that follows) but to be competitive a club needs money from somewhere. Money is only earned to the largest extent from success, clubs don't get income that allows them to compete without some consistently high finishes. Initially it requires investment that outstrips income to compete with the big boys....at a risk to the owner who wants to make that push.

 

The whole point of FFP is based on insight into better competitiion in markets. The European enery market is a good analogue. Pre EU competition rules, state owned energy companies in France, Italy, Spain etc could operate inefficiently in their home markets but purchase energy companies abroad through massive state subsidies. Domestic energy companies complained to the EU competition commissioners because the state subsidies meant the public monoliths could out-bid them for rival companies, increasing their monopolistic power of energy supply in the region. This was judged to be bad for everyone.

 

Another way to look at FFP is to think about any highly competitive market (e.g. phone networks) and ask yourself, has competiton regulation ensured that the biggest companies with the highest turnover have cemented their place with the highest market share? Of course not, in any highly competitive market, with many companies with an unequal distribution of income (and market share), the dynamics of competition and market forces over time mean that the dominant players have to work very hard to stay at the front of the pack, many dont and new leaders emerge who have better business models.

 

I'm all for regulation if it ensures the best deal for consumers. Where governments can step in and keep a level playing field I'm all for it, whether it's on behalf of the private companies that lobby them to oppose foreign state owned monoliths or a true political calling to protect the consumers of their nation.

 

If UEFA have done that here, I'll be similarly pleased. But I don't know enough about the rules in those other industries to be convinced by "competition is good and worked here". Could you expand on the analogy to show how the rules introduced in those industries compare to those being introduced here (below) and how they worked? I know nothing about them and am genuinely interested to see how they're the same.

 

1. Clubs will only be allowed to enter European competition if their generated revenues (money from sources such as television rights, gate receipts, competition prize money and sponsorship) is equal to or greater than their expenditure. This rule will come into effect for the reporting period ending 2012, whilst the first season that clubs can be banned from European competition will be 2014-15.

 

2.As of June 1, 2011 clubs will no longer be allowed to owe money to other clubs, players, tax authorities and social service departments.

 

3.Financial investors will be limited in their injection of money into football clubs. For the seasons 2013-14 and 2014-15, the limit will be €45 million. For the seasons 2015-18, the limit will be €30m.

 

 

Just look at Chelsea, ageing squad, lack of coherent direction internally, riven with politics. The private subsidy model will allow them another crack at the top next season if they spend massively. However, they cant spend that massively and under FFP, that spending is limited. They also now have to balance the wage bill as a % of turnover and total outlay on players against a fixed benchmark. If FFP drives this summer's financial planning, then they have less scope to improve their lot. A poor performance next term, some bad management decisions, new purchases dont work out and they are 5th again. The scope to improve reduces again.

 

Chelsea won't be able to overspend to the extent they have done to get into the position they are, but they have already driven their turnover to the third highest in the league, so they can outspend 17 other clubs which gives them much more of a chance than we have, they'll have twice our spending power. The opportunity for our billionaire owner to spend a bit more of his own money to make up that goal difference and overtake them is removed and all that we've invested in building is pointless in the face of that spending power unless they totally fuck up.

 

As for Man City, they can stock up on top quality players now but wont be able to carry on the way they have. The current players will pass their peak soon and will need replacing except next time, they cant go out and blow 100s of millions on new players to re-stock the club. They will need to be more organic and with that, will be less certain of success. Its the reduced certainty, the increased exposure of the club to the vagaries of success and failure which means that those well run clubs, with high performing teams will be more able to compete with the top side.

 

Which is exactly why Man u and Arsenal love these rules. The richest clubs, with incomes built on the back of titles rather than rich owners. You may be right that this puts the new boys (Chelsea & Man City) at risk of not winning titles, but it only cements the places of those other two and helps Liverpool/Spurs compete with Man City/Chelsea. With a turnover half the size of those we're trying to match, let alone those at the very top ,i think it makes it less likely

rather than more likely

that we can challenge for the title again or that anyone can upset the apple cart like Man City have. Which was my very narrow original point.

 

 

On a proper computer rather than a tablet so comments added above.

Edited March 27, 2012 by Happy Face

[PaddockLad 14597]

Keeping hold of players and strengthening the team isn't progress itself. They're actions that may or may not lead to progress.

 

Progress is largely finishing higher in the league next year than this year and that is a big ask.

That was the point I was trying to make, we could invest as wisely as Liverpool have and easily finish lower next season.

 

Liverpool haven't had Europe to deal with and will likely finish lower than they did last season. Ho hum, never mind.

 

Spurs finsihed 4th in 2009/10, but 5th last season when they had champions league football. They took the piss out of the Europa league this season and it will be a surprise if they dont finish in the 4 now, 5 points ahead of us and Chelsea. So we might be better finsishing 6th and staying out of the Europa if we want to progress. I'd love a european campaign but I think we'd suffer in the league. Although Liverpool have shown nothing is a given. But I get the feeling them and us are heading in opposite directions in a few different areas.....

[Christmas Tree 3997]

I think getting into Europe will make a massive difference to how Ashley feels about things and in that lies everything.

 

We don't have to sell if we don't want to and a few sensible additions would make us a much stronger force than this year.

 

Futures very bright IMO. (but when's it not)

[PaddockLad 14597]

I think getting into Europe will make a massive difference to how Ashley feels about things and in that lies everything.

 

We don't have to sell if we don't want to and a few sensible additions would make us a much stronger force than this year.

 

Futures very bright IMO. (but when's it not)

 

Thats a massively contradictory statement. Where do you think the money for Cisse came from?

[ChezGiven 0]

Grows on trees doesn't it?

[Christmas Tree 3997]

I think getting into Europe will make a massive difference to how Ashley feels about things and in that lies everything.

 

We don't have to sell if we don't want to and a few sensible additions would make us a much stronger force than this year.

 

Futures very bright IMO. (but when's it not)

 

Thats a massively contradictory statement. Where do you think the money for Cisse came from?

 

Just the way I think Ashley works.

 

I'm not talking Liverpool type spend btw, but I think he will be more driven by how he (the gambler) feels rather than focussing simply on the bottom line.

[Happy Face 29]

I think getting into Europe will make a massive difference to how Ashley feels about things and in that lies everything.

 

We don't have to sell if we don't want to and a few sensible additions would make us a much stronger force than this year.

 

Futures very bright IMO. (but when's it not)

 

Thats a massively contradictory statement. Where do you think the money for Cisse came from?

 

Just the way I think Ashley works.

 

I'm not talking Liverpool type spend btw, but I think he will be more driven by how he (the gambler) feels rather than focussing simply on the bottom line.

 

 

I think that's the contradiction, the time when Ashley could take a punt has passed...

 

Clubs will only be allowed to enter European competition if their generated revenues (money from sources such as television rights, gate receipts, competition prize money and sponsorship) is equal to or greater than their expenditure. This rule will come into effect for the reporting period ending 2012, whilst the first season that clubs can be banned from European competition will be 2014-15.

 

We were £4m off that target in the last set of accounts. We aren't in a position to spend particularly big without selling, whatever mood you hope suddenly takes Ashley after years of frugal slow building.

[sandman02uk 0]

i think getting into europe would please alot of the players there, even if we as fans think the europa league is a bit pants, i also think MA and DL would start to show more interest in their "toy" if we get into europe and make some progression

[Baggio 0]

Sunderland have recorded an overall loss of £7.8m as they prepare for the implementation of Uefa's financial fair play rules. The loss for the year ended 31 July 2011 represented a 72% reduction (£20.1m) on the figure of £27.9m 12 months earlier.

An increase in operating expenses, largely the result of the addition of 14 players to the first-team squad, contributed to a net operating loss of £31.2m. The chief executive, Margaret Byrne, said: "We have to make sure that we are financially sound and prepare the club for the implementation of financial fair play rules.

"Our financial results show that we are heading in the right direction on both fronts. We have seen significant strengthening of our playing squad with the acquisition of 14 players during the period, culminating in a 10th place finish in the Premier League, which was always our aim.

"We have also seen a growth in our commercial revenue, from areas such as concerts and sponsorship, which is something that is key to us achieving our aims."

Turnover for the period increased by 21% to £79.4m, a rise of £14m. Operating expenses, which include player wages, rose to £110.7m, including player amortisation costs – which reflect the book value of the playing staff – of £29.1m.

Of the 14 players arriving at the Stadium of Light during the reporting period, 10 of them, including Asamoah Gyan, Connor Wickham and John O'Shea, were permanent signings and four on loan.

http://www.guardian.co.uk/football/2012/mar/27/sunderland-losses-uefa-fair-play-rules?newsfeed=true

[Baggio 0]

 

I think that's the contradiction, the time when Ashley could take a punt has passed...

 

Clubs will only be allowed to enter European competition if their generated revenues (money from sources such as television rights, gate receipts, competition prize money and sponsorship) is equal to or greater than their expenditure. This rule will come into effect for the reporting period ending 2012, whilst the first season that clubs can be banned from European competition will be 2014-15.

 

We were £4m off that target in the last set of accounts. We aren't in a position to spend particularly big without selling, whatever mood you hope suddenly takes Ashley after years of frugal slow building.

 

I'm not sure what we spent on the stadium, academy or training facilities but all of that is exempt from the accounts for this.

[Happy Face 29]

I think that's the contradiction, the time when Ashley could take a punt has passed...

 

Clubs will only be allowed to enter European competition if their generated revenues (money from sources such as television rights, gate receipts, competition prize money and sponsorship) is equal to or greater than their expenditure. This rule will come into effect for the reporting period ending 2012, whilst the first season that clubs can be banned from European competition will be 2014-15.

 

We were £4m off that target in the last set of accounts. We aren't in a position to spend particularly big without selling, whatever mood you hope suddenly takes Ashley after years of frugal slow building.

 

I'm not sure what we spent on the stadium, academy or training facilities but all of that is exempt from the accounts for this.

 

We probably spent that on Sports Direct Signage for the stadium...does that count?

[Baggio 0]

I think that's the contradiction, the time when Ashley could take a punt has passed...

 

Clubs will only be allowed to enter European competition if their generated revenues (money from sources such as television rights, gate receipts, competition prize money and sponsorship) is equal to or greater than their expenditure. This rule will come into effect for the reporting period ending 2012, whilst the first season that clubs can be banned from European competition will be 2014-15.

 

We were £4m off that target in the last set of accounts. We aren't in a position to spend particularly big without selling, whatever mood you hope suddenly takes Ashley after years of frugal slow building.

 

I'm not sure what we spent on the stadium, academy or training facilities but all of that is exempt from the accounts for this.

 

We probably spent that on Sports Direct Signage for the stadium...does that count?

 

Yes.

[Christmas Tree 3997]

We all know there will be ways and means around this.

[Kid Dynamite 5923]

I see the Mackems have released their financial figures.

 

Operating Costs - £110mil

Turnvover - £79mil

 

Ouch

 

Thats after getting rid of Gyan and Henderson too, although they will be getting most of the latter in installments I imagine. I hope so anyway or they are in even deeper shit than the figures suggest!

[Kevin Carr's Gloves 3205]

I see the Mackems have released their financial figures.

 

Operating Costs - £110mil

Turnvover - £79mil

 

Ouch

 

Thats after getting rid of Gyan and Henderson too, although they will be getting most of the latter in installments I imagine. I hope so anyway or they are in even deeper shit than the figures suggest!

 

Are they not up til end of July 2011 so should include both the Henderson and Bent money?

[Kid Dynamite 5923]

Aye, but most teams pay in installments. They might have £40mil outstanding on the pair of them

[ewerk 26387]

Whether the money was received or not is irrelevant. If the sale is made during the accounting period then it'll be in the accounts.

[Kevin Carr's Gloves 3205]

Whether the money was received or not is irrelevant. If the sale is made during the accounting period then it'll be in the accounts.

 

So they could have £40 mill in the accounts and still be running at a loss?

[ewerk 26387]

All certain monies should be in there, any part of the transfer fees that are dependent on appearances/goals etc. will not be included.