Andrew Spanton

I don't disagree with any of that. The issue of matching home casual ticket prices with those for away fans was addressed on Saturday and explained as "morally" the right thing to do. It does not necessarily follow that the extra membership revenue was intended to replace lost home casual ticket revenue. They were two separate decisions taken for differing reasons.

Ben Kensell was at pains to explain the financial constraints faced by the club and the need to maximise revenue wherever possible. Memberships were identified as an area that had not previously been fully tapped. The club was prudently planning for another Championship campaign in 2019-20 when the decision was apparently made on the new membership system. It was not clear if the new system would have been introduced in light of additional revenue gained from promotion to the EPL. He apologised for two specific shortcomings, lack of supporter consultation and poor communication of the new membership scheme. Personally I have no issue with the club seeking to maximise revenue wherever possible in order to strengthen the first team and academy. They just have to be very careful to ensure that it is done in a fair and transparent manner. There is no shortage of people out there willing to put their hands in their pockets as was seen with the bond scheme.

The £5m cash flow deficit is not a great surprise but the £21.3m forecast loss for the current year was a bit of a shock. This would suggest that costs remain stubbornly high and it is proving difficult to make savings necessary under the self funding model. The figures as presented in the slides do not give a lot away but the 'other costs' are far too high at £17.1m. When we consider that forecast turnover is £28.9m, this leaves only £11.8m for as a 'football department' budget assuming no profit or loss. I would like to see the football cost to other cost equation the other way around. Player sales will clearly play a part but would we be selling players to boost the playing squad or to pay for non-football related costs? A figure of £1.4m was quoted as player trading costs. This gives us a clue as to whether any player sales are expected. If there were no player sales I would have expected the player trading figure to be approx. £6m, which represents amortisation only. The figure of £1.4m may suggest a profit on disposal of player(s) of c£4.6m has been included in the forecast. Given our current good form it would be nice to think that we could complete this season without having to sell players. Comments from the board/management at the AGM would support this. A worse than expected financial forecast for the current season and specific numbers presented yesterday suggest that player sales may have to happen sooner than hoped. Unless we are promoted of course.

The tax payment was an inevitable consequence of good financial performance. The player write-offs (which are an accounting requirement, rather than a tax ruse) would have helped reduce the tax bill and is another reason why it was a good idea to deal with that issue in the same year as selling Maddison. I agree that paying £5m corporate tax is undesirable in a climate of scarce financial resources but I would expect some of this to be clawed back in the following year (2019), when a large loss may well be reported (ignoring any promotion-related bonuses). On a separate point, whilst there is much focus on profits, cash flow is of greater importance. The accounts suggest that instalment payments from previous player sales and purchases will add £11m to the coffers in the year to June 2019. This is derived from player debtors due within one year per the accounts of £19.8m and £8.7m player creditors outgoing in the same period. This should help relieve pressure to sell any further players during that year. Alternatively the cash could be swallowed up by an unsustainably high player wage bill but I guess we'll only find out next year. On commercial income I hope that Purple is correct. The club has previously reported commercial sales of up to £9.9m (in the 2015-16 Premier League season) so there would appear to be scope for improvement especially if the on-field success continues.

With the AGM fast approaching, now seemed to be a good time to post this. Explanation of some of the key features in the 2018 accounts and also look ahead at the impact of loss of parachute payments. Impairment and Onerous Contracts The two key features in the year ending 30th June 2018 were player cost write-offs and player trading. There are two aspects to the write-offs, ‘impairment’ and ‘onerous contracts’. Both impairment and onerous contract write-offs relate to players that will not feature for the club in future for various reasons such as career ending injury or falling out of favour with management. I would hazard a guess that the players concerned are Steven Naismith, Russell Martin, Nelson Oliveira and Matt Jarvis. Another candidate could be Yanic Wildschut. Impairment means writing off the remaining book value of the player’s original transfer fee. For example if we sign a player for £3m on a 3 year contract an ‘intangible asset’ of £3m is created in the balance sheet and ‘amortised’ over the length of the contract, so amortisation would be £1m per year and the player’s book value would be £2m after 1 year and so on. If the player’s career with the club ends after the second year for example, an impairment entry of the £1m remaining on his book value would be appropriate. The 2018 accounts include an impairment entry of £9,373,000 which represents the remaining book value of the players concerned. Onerous contract write-offs relate to the remaining financial liabilities contained within the contracts of those players deemed to have no future with the club. In simple terms this is the wages remaining on the player’s contract. The 2018 accounts include a £11,228,000 provision for onerous contracts. The combined effect of impairment and onerous contracts on the 2018 profit and loss account is £20,601,000. This is a one-off ‘hit’ and it makes sense to get rid of this bad news in a year in which there are sufficient profits to do so. Getting this out of the way now will help wages to appear more manageable in future as there will be no more costs relating to those players. Player Trading The player trading figure in the accounts is often misunderstood to be the cost of buying players less the income from selling players. This is not the case. The figure reported in the accounts represents book ‘profit’ on player sales less amortisation. The up-front cost of buying players is not included in the accounts ‘player trading’ figure. The 2018 accounts tell us that player trading added £24,027,000 to profit. If we strip out impairment and amortisation (as described above) it leaves us with the book ‘profit’ on player sales of £48,023,000. By ‘book profit’ I mean proceeds from player sales less the residual book value of those players at the time of sale. The accounts tell us that the residual value of players sold was £6,746,000, so we therefore know that the proceeds from player sales in the year was £54,769,000. It is not possible to assign sale proceeds to individual players from the information available but we can break it down a bit more. The post balance sheet events section of the 2017 accounts tells us that the club had sold Andreu, Dorrans, Howson and Jacob Murphy for a combined £16,900,000. That leaves £37,869,000 for the other player sales, which I reckon is Pritchard, Jerome, Watkins, Josh Murphy and Maddison. Further breakdown of these figures is pure speculation but we can compare to sales figures reported in the press. Players sold during year ending 30th June 2018 Estimated sale value £K Proceeds per accounts Notes Andreu 0 Agreed to terminate contract upon agreeing a deal with Coventry Dorrans 900 Reported in EDP 4/7/17 as less than £1.5m Howson 6,000 Reported in EDP 4/7/17 as “£5m chase for the player” Jacob Murphy 10,000 Reported in EDP 19/7/17 as £10m plus £2.5m contingent add-ons Sub-total of players sold per 2017 post balance sheet events 16,900 16,900 Pritchard 9,000 Reported in EDP 12/1/18 as in the region of £11m. Spurs have a sell-on clause. Jerome 1,500 Reported in EDP 16/1/18 as around £2m. Watkins 850 Reported in EDP 15/2/18 as around £1m. Josh Murphy 8,000 Reported in EDP 12/6/18 as worth in excess of £10m. Maddison 18,519 Reported in EDP 20/6/18 as worth up to £24m. Coventry have £2.2m+ sell-on clause. Sub-total of all other players sold in 2017-18 37,869 37,869 Player purchases in 2017-18 The cost of players signed for a fee is reported in the accounts as player registration additions in the intangible assets section of the balance sheet. This cost does not affect the club’s profit and loss other than amortisation as previously described. The 2018 accounts tell us that the cost of player registration additions was £15,450,000. From the post balance sheet note in the 2017 accounts we know that the club had agreed to purchase the registrations of Franke, Hanley, Husband, Raggett, Stiepermann, Trybull, Watkins and Zimmerman for a combined total of £8,800,000. That leaves a balance of £6,650,000 for McLean, Hernandez, Srbeny and Marshall. In summary I would say that the transfer fees received seem to be generally lower than reported and transfer fees paid are higher than reported. There may be reasons for these discrepancies (player signing-on fees, agent fees, etc.) but the oft-quoted payments by instalments is not one of those reasons. Profit & Loss summary 2018 and forecast 2019, 2020 NCFC P&L Actual Forecast Forecast Champ Champ Champ Year ending Jun-18 Jun-19 Jun-20 Championship TV revenue 2100 2600 3536 Premier league solidarity payments 0 4464 4464 Premier league TV revenue 36399 0 0 Gate receipts 9803 9800 9800 Media 223 200 200 Catering 4085 4250 4250 Commercial 7228 7500 7500 UEFA solidarity & prizes 1085 800 800 Other 744 750 750 Total operating turnover 61667 30364 30564 Other operating income 2050 2000 1000 Player wages % of t/o 50% 55% 55% Player wages 30834 16700 17215 Other wages 12191 10500 10500 Onerous contracts (wages w/off) 11228 0 0 Impairment (player cost w/off) 9373 0 0 Net player trading -33430 0 0 Operating expenses 14487 11500 11000 Total costs 44682 38700 38715 JV profit and asset disposals -52 Profit before interest and tax 18983 -6336 -6415 Net Interest (payable)/receivable -502 The 2018 results make good reading. The club’s finances have been well managed in a climate of drastically reducing revenues. The sale of James Maddison in particular transformed the results for the year but if we exclude the ‘exceptional’ items of player-related write-offs and player trading the underlying financial performance is still good. Underlying profit before interest and tax was £6,154,000 without these items. Football staff wages (excluding cost of onerous contracts) reduced from £37.6m to £30.8m and were maintained at 50% of turnover. Non-football wages reduced from £13.1m to £12.2m and operating expenses fell from £18.8m to £14.5m. 2018/19 season and beyond The forecasts for 2019 and 2020 in the above table make the assumption that we will be playing in the Championship (obviously promotion would be a game-changer) and that player wages are maintained at 55% of turnover. The table illustrates just how difficult it will be to balance the books in 2019 and beyond against a background of a further £31m+ reduction in turnover (from £61m to £30m). The player wage budget would need to fall from £31m to less than £17m. Non-player wages and operating expenses would also need to be cut and perhaps £5m of savings could be found as a result. Even with these dramatic cost reductions a loss of £6m would result based on the assumptions made. In other words £6m would need to be generated from player sales in order to be self-funding. Summary The club has done well to manage the first phase of downsizing, which was clearly facilitated by the sale of Maddison, but there is an equally big challenge in the current year and ahead. The player wage budget must have already been reduced to something like £17m for the current season which makes the team’s achievements even more remarkable. Long may the on-field success continue. OTBC

Supposed £7m for Wildschut and £5m for Howson just about sums up our player trading for me. Shocking. I know that these figures are debateable and there are valid reasons for each case but we have put ourselves in this lose-lose situation. I just hope that the new management team learns from the mistakes of the old one.

The numbers bring home the importance of the coming season. Looking at it positively we still have a healthy player wage budget of around £33m which should mean that we are fighting it out at the upper end of the table. This really is our last chance of getting back up for the foreseeable. Failure to do so will prompt savage cuts in all aspects of club running costs (including the academy). We would then be back in the also-rans of the championship if we have no new investment. At least we would still be debt-free though.

Thanks westcoastcanary.

I give up. The picture is there in the preview but not when posted.

Try this.

Without making any comment on how we got to where we are, I thought that it would be useful to put some numbers to the somewhat lacking in substance Archant article. We all know that the club is facing difficult financial decisions, but just how much do we need to trim the wage bill in order to "live within our means"? As I am the kind of saddo who does this kind of thing and there is not a lot to do in the close season, I have attempted to forecast the club''s profit & loss over the next couple of years. In the true spirit of fag-packet accountancy (or spreadsheets as we call them now), you are welcome to dissect the following and draw your own conclusions. Looking at player wages in isolation, we will have to reduce costs by c£11m in the coming year and then by a further c£9m if we are still in the championship in 2018/19. To put it another way our player wage budget will fall from £54m in our prem season to around £14m the season after next if promotion is not achieved. Quite a scary thought! This is just an educated guess of course but interesting for fellow saddos to mull over.

I can''t seem to be able to do that in Chrome. What are you using?

I am well aware of Purple''s prowess on this site. Perhaps the font of all knowledge can shed any light on how to post a table or even a picture of a table????

I tried that but it didn''t allow me to paste the picture in the message. Is there a way of doing that?