"Reality Bites"

[Andrew Spanton 1]

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.

[Andrew Spanton 1]

Try this.

[Andrew Spanton 1]

[Andrew Spanton 1]

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

[westcoastcanary 173]

Andrew''s post -- or at least the best I could do to reproduce it. The table may still not be showing 100% as he intended. (WCC)

"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. 

NCFC P&L	Actual	Forecast	Forecast	Forecast
	Prem	Champ	Champ	Champ
Year ending	Jun-16	Jun-17	Jun-18	Jun-19
Championship TV revenue	0	2100	2100	2100
EPL solidarity payments	0	0	0	4464
EPL TV revenue	70165	40916	33476	0
Gate receipts	11509	11000	11000	11000
Media	139	0	0	0
Catering	4370	4100	4100	4100
Commercial	9955	8000	8000	8000
UEFA solidarity & prizes	825	800	800	800
Other	853	800	800	800
Total operating turnover	97816	67716	60276	31264
Other operating income	2741	500	250	250
Player wages % of t/o	55%	65%	55%	45%
Player wages	53799	44015	33152	14069
Other wages	13394	13000	12500	9000
Net player trading	1160	3500	0	0
Operating ex	86342	75015	59652	33069
JV profit and asset disposals	4
PBIT	14219	-6800	874	-1555

Looking at player wages in isolation, we will have a 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. "

[Andrew Spanton 1]

Thanks westcoastcanary.

[Hairy Canary 696]

Good stuff Andrew! Found that really interesting.

Based on a squad size of 25 players we are looking to reduce our average player wage from around £25k a week this year to £11k a week next. Only averages I know but it gives some perspective and shows why we need to take some unpalatable decisions over players like Jerome and Howson.

Becomes even more acute if we can''t shift Naismith and Jarvis who will be on significantly more than that.

[It's Character Forming 1,160]

Really good analysis Andrew - thanks.  It really shows how our income goes off a cliff at the end of next season. 

 

I hope that our new management is willing to take the tough decisions which we need to get the squad we need for a good shot at promotion next season while being sustainable the season after if we don''t get it.  The signs are promising but plenty of those choices won''t be easy.  The contract that was given to Naismith - if it does mean he''s on full wages for next season and the season after, when we''ll have lost our parachute payments, which people are saying it does - just looks worse and worse every time I think about it.

[Indy 3,297]

When you consider the likes of Bolton, fairly long time in top flight, built up huge wage structure and once struggling they soon got into big debt once relegated.

With the likes of Klose, Naismith, Howson, Jerome, Pinto we have our next season wage budget there alone, if you accept the very good work done above.

Just shows how over paid footballers are! Without TV money just not sustainable, even with it''s not really sustainable without wealthy owners or players happy with a sensible wage.

If we can''t shift these players we could be in a bit of a hole next season.

It just goes to show Naismith has been a liability since he joined and will continue to be our millstone till we can get some other mugs like Rangers to pay his over the top wage!

[Fuzzar 1,702]

Indeed Indy. And just when we''d come back up for air having lost the RvW millstone as well.

I''m all for overpaid, ageing squad trimming. Blood the youngsters and sell them for a profit - a diluted version of the Southampton model is the only way forward for us.

[Indy 3,297]

Agreed fuzz are, I''d love to see some more results from our Cat 1 investment.

Give the youngsters the pitch time, after all we weren''t that great with the journeymen of last year.

[Andrew Spanton 1]

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.

[hogesar 9,657]

Another thing this shows is for all the crying about Delia and co not being ambitious or loosening the purse strings, they actually took some fairly gutsy risks in terms of player contracts considering we were always going to be a relegation possibility .

[norfolkngood 1,086]

Great Table which also shows that is wages alone that will take up all our money and selling players is the only way to fund transfers

what it also highlights to me is i very much doubt we could turn down strong offers for our better players like Murphy''s Klose Pinto etc to reinvest

Jacob or josh could fund 2/ 3 new players alone

i am glad we have Webber who built Huddersfield with cheaper players because it looks like we are going to need him at his best to sort this squad out !!!

[PurpleCanary 5,556]

[quote user="westcoastcanary"]

Andrew''s post -- or at least the best I could do to reproduce it. The table may still not be showing 100% as he intended. (WCC)

"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. 

NCFC P&L	Actual	Forecast	Forecast	Forecast
	Prem	Champ	Champ	Champ
Year ending	Jun-16	Jun-17	Jun-18	Jun-19
Championship TV revenue	0	2100	2100	2100
EPL solidarity payments	0	0	0	4464
EPL TV revenue	70165	40916	33476	0
Gate receipts	11509	11000	11000	11000
Media	139	0	0	0
Catering	4370	4100	4100	4100
Commercial	9955	8000	8000	8000
UEFA solidarity & prizes	825	800	800	800
Other	853	800	800	800
Total operating turnover	97816	67716	60276	31264
Other operating income	2741	500	250	250
Player wages % of t/o	55%	65%	55%	45%
Player wages	53799	44015	33152	14069
Other wages	13394	13000	12500	9000
Net player trading	1160	3500	0	0
Operating ex	86342	75015	59652	33069
JV profit and asset disposals	4
PBIT	14219	-6800	874	-1555

Looking at player wages in isolation, we will have a 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. "

[/quote]

A fine piece of work. The only problem is it will give The Grumpians (copyright Westcoastcanary) more ammunition (not that facts have ever overly bothered them) for their Uber-Miserabilism...To see what the season after next (assuming we don''t go back up) and thereafter might be like I looked at the five seasons up to and including the 2010-11 promotion season to the PL. This includes a season in the third tier but the figures show very little change from the second-tier seasons before and after. The point for this quintet of seasons being that there was no residual parachute-payment money or wage hangover from being in the top flight. So perhaps they indicate what a prolonged stay in the second tier might look like financially.The average turnover was £20.16m, and total staff costs averaged out at 71.2 per cent. The accounts only give the important figure for player wages for the last four of those seasons, in which they average out at 40 per cent of turnover. That 40 per cent figure compares quite well with our PL seasons since, where the average was only 42 per cent, although the money spent was vastly different -  an average of £36.4 in the PL as opposed to £7.9m below.The massive change, which is likely to be repeated if we stay down for long, is in staff numbers, as a way of cutting costs. That season we went up under Lambert there were only 181 staff (actually down from 208 a few years before) with 63 employed on the football side. That compares with 304 in 2015-16, including 138 footballing.As to the specific finances for the potential 2018-19 season, the best indication comes from that 2010-11 promotion season in the second tier. I cannot do a grid but the figures were thus:Turnover: £23.3m; staff costs £18.4m*; staff costs as a percentage of turnover 78%*; player wage bill £10.9m**; player wage bill as a percentage of turnover 47%.*I suspect those two staff costs figure will be comfortably higher. Partly due to a bit of wage inflation but also because, as said, we only employed 181 people then; I doubt the number will have dropped that far, given it was at 304 in 2015-16.**Even though we will have been out of the PL for two seasons I assume player wage inflation will mean that figure will be markedly increased. Your projected figure of  £14m certainly doesn''t look too high to me.As to what this means, leaving Uber-Miserabilism apart, I think it is too easy to be over-pessimistic. I don''t have time to do a survey but two-thirds of the teams that went up this season  had been out of the PL for years. Not going up next season will not automatically consign us to  life outside that worst of all footballing cliches (and that is saying something) - the Promised Land.And Hogesar is right; Smith and Jones have been more ambitious than their detractors allow. Their supposed lack of ambition is as much a myth as the claim that the Tories are better at running the economy...[:P]

[Indy 3,297]

I don''t buy into this Smith & Jones being more ambitious, it''s not like they ploughing their own wealth to sure up the wages! It''s down to Stone, McNally and now Balls and co to manage the finances under the gamble of the promised land.

I''ve seen no end of finger pointing at McNally since his departure for contracts and fees, so sure if he''s the one managing that area till his departure it''s he who is to be praised in taking the gamble and now will be the scapegoat for our financial issues.

Either way it''s tighten belt time and get rid of over paid under achieving journeymen who have been about as much use to our club as a chocolate fire guard.

[Nuff Said 5,113]

The CEO can only spend what is authorised by the board. He/she can''t make an independent decision to spend extra ( or at least not without being called to account by their board, and probably losing his/her job). So the board gave McNally the money to take to the table. He only decided where:when to spend it.

[Indy 3,297]

No I get that, but the budget is set by the position of the club, as long as the club runs on an even keel, then that''s what we have in budgets, it''s not like they''ve added any additional personal contributions to add to the spending.

As now we are having to try and trim the budgets to this season and onto the next year. As long as we run without debt the owners are happy enough.

It''s pretty clear we''ve got to try and run on par, what comes in can be spent on players and wages, that''s to their credit, we''ve got owners who don''t take out the club credit them for that.

[sgncfc 1,226]

Let me be the first to say that I don''t care if we don''t go up to the PL next season.

I hope we are competitive, that we play decent, watchable football, that our players actually look like they are trying, that the fans create a good home atmosphere once again and that we play our youngsters.

I think we might just get all of that under the new structure.

As to where we finish up - honestly, couldn''t give a monkeys.