Sustaining the future

[sonyc 5,481]

The dismissal of Monk, and timing of it, made me think about the desperation behind it, the absolute need to repay the investment. I suggest Pulis is on a big bonus too.

[Jim Smith 2,314]

I had to laugh the other day at Rod Liddle (whose writing I usually quite like and who had assessed the footballing style of our side quite accurately) making comparisons between Delia and Steve Gibson at Middlesbrough in his "you should be grateful" argument.

Steve Gibson has funded Boro to the tune of over £100m during his time as owner of that club and brought them notable success they would not otherwise have achieved (after he initially put them into liquidation incidentally).

Likewise the Huddersfield owner has put in over £40m of his own money and as quoted above Bloom has put in over £280m to Brighton.

It just shows that even clubs that some would cite as being examples of "similar" sized clubs who have succeeded on a more "sustainable" model have in fact only been able to achieve what they have due to considerable proivate financial backing from their owners.

[Jim Smith 2,314]

[quote user="sonyc"]The dismissal of Monk, and timing of it, made me think about the desperation behind it, the absolute need to repay the investment. I suggest Pulis is on a big bonus too.[/quote]

Perhaps a bit more desperation/commercial imperative to succeed is not necessarily always a bad thing.

With Monk/Pulis i suspect Gibson just saw a window to get in a manager he admires.

[Badger 2,404]

Just to point out that neither Huddersfield nor Brighton are safe yet and are certainly not established Premier League teams. Nobody is saying that you might not get a short-term benefit from extra money (although it is by no means certain - look at Birmingham amongst others), but the long term sustainability is in question and the position that the newly relegated team will be in with tens and hundreds of millions of pounds of debt on the balance sheet.Can the extra money - even if it available - defy long term football gravity and what are the consequences if it not? How bright are Birmingham''s, Sunderland''s, Blackburn''s and QPR''s immediate futures?

[king canary 7,558]

@Badger

The long term benefit comes from not having to sell to survive.

Brighton last season were able to reject bids for key players like Lewis Dunk while adding to the squad. Next summer we won''t be able to do the same.

[PurpleCanary 5,553]

[quote user="king canary"]@Purple

For me this part is key...

"What is true is that Brighton''s wage bill was 107 per cent of income."

Without parachute payments I''d assume we need to keep to about the 73% of turnover for the wages, if not a bit lower. I reckon this will put our wage bill as one of the lower in the Championship.

Even last years fairytale story of Huddersfield were running at over 100% wages to turnover apparently, propped up by an owner who could cover that.[/quote]Indeed, and that Brighton figure of wages being 107 per cent of income excludes around 10m of bonuses for promotion. Include those and it gets close to 140 per cent. And the analysis on the Brighton message board rather misses the point when it stresses that Brighton''s wage bill was way less than ours last season. Yes it was, but ours was affordable because it was only 73 per cent of income.

[Jim Smith 2,314]

I never said they were safe Badger and it would not surprise me if one or both of them come down.

I was merely poiting out that these would be (or indeed are) teams that are cited as examples of clubs that have been grown sustainably and have thus acheived success without spending big money (which is true) and yet even they have had to be bankrolled in the background by their owners to a level which is way, way beyond anything Delia has put in to Norwich City or would ever put in.

It just shows how challenging a self funding, sustainable yet debt free future is going to be.

[Jim Smith 2,314]

QPRs future is an interesting one. Their big cloud is of course the FFP fine hanging over them and if that is enforced then they will no doubt struggle.

however, aside from that their future is looking quite reasonable. Fernandes is running them now on a more sustainable basis (having a wealthy owner does not men you still shouldn;t try and run sustainably, it just gives you a comfort blanket/buffer or enables you to take calculated risks) and have plans for a new stadium pretty well progressed. if they can wriggle out of the FFP fine then I could see QPR challenging again in the not too distant future.

[Badger 2,404]

@KCIn the long term they will have to sell to survive - just as Southampton, Swansea etc have had to do. Indeed if you follow the investor model - i.e. the investors expect a return for their investment, you will have to sell more to give the investors their cut.

[Badger 2,404]

Jim - I agree that the QPR situation is an interesting one. From my perspective, theirs is a cautionary tale (amongst several) of growing in an unsustainable way. As you point out they have moved to a more sustainable method of growth and a new stadium could see them really progress. If I were an investor (and unfortunately my ISA savings won''t stretch this far) I would have to say that QPR with a potentially huge catchment area is an attractive investment but I know that this upsets people on this board, who think, for reasons that they have never been able to fully articulate, that we are equally or more "investable."

[Jim Smith 2,314]

Although it would be different if they come down, I don;t think Southampton or Swansea "sell to survive" they sell when their hand is forced because their players attract massive bids from other premier league clubs and the players want to move or or I suppose if they feel they need to invest money from sales into other areas of the team.

In Southamptons case the behind the scenes infrastructure they have got enables them to in part replace these players with youth products (hopefully we cab get to that point) but they do also make quite large money signings using the monies they receive from any sales.

That is markedly different from what we will have to do in the future which literally will be "selling to survive."

[Jim Smith 2,314]

@badger

It depends on the terms required for the investment really doesn;t it. I would imagine that having pout a lot of money into QPR, Fernandes and his consortium would be looking for a significant return were they to sell. I do agree, however, that the possible windfall from redeveloping Loftus Road, their possible new stadium and the population density makes QPR a potentially attractuve investment.

That said, i think our attractiveness to new owners has been downplayed, particularly if Delia were to stick to her word and not seek to make a profit from her ownership of the club. in that scenario we could potentially be very cheap (by football club standards) to acquire and thus an attractive investment opportunity.

as has been commented on other threads, no mug will chuck millions our way to become a minority shareholder but if the majority stake was available for a discounted price i think it woul be very different.

Her prerogative of course to do what she likes with her shares.

[Badger 2,404]

Jim,Southampton would make big losses if they did not sell players + I think that the whole point of what we are trying to do is to develop players.Re a sale of City, the best way imo would not be the sale of existing shares at all but the issue of new equity - in that way ALL the money raised would go into the club and none used to buy existing shares. It would, of course, require the current owners to believe that the new owners had the best long-term interests of the club at heart.

[king canary 7,558]

Sorry Badger but Southampton do not sell to survive.

This season we had to sell the best youngster we''d bought through in years and the money wasn''t reinvested.

If we sell Maddison this summer it isn''t because we are going to reinvest in the squad, it''s because we have to to fill a black hole.

[DDD In The Fine City 1]

Here comes badger with his catchment area nonsense and how teams like Barnsley are much more investable than Norwich because the area and econamy is growing more rapidly, you talk rubbish badger

[Parma Ham's gone mouldy 2,219]

‘Selling to survive’ is also an entirely different negotiating stance to ‘selling when forced by huge offers’.

One means you take what you can get (as that moment) to pay the rent (as it becomes due), the other means you can play genuine hardball and hold out for maximimun money (and at a time of your choosing).

In football double-meaning any club will use the same rhetoric of the 2 scenarios, the truth is that one is very different from the other. Other clubs (and particularly agents) have an excellent grasp of the diametric difference between the two.

Parma

[BigFish 1,986]

[quote user="Jim Smith"]Bloom has put in over £280m to Brighton.

It just shows that even clubs that some would cite as being examples of "similar" sized clubs who have succeeded on a more "sustainable" model have in fact only been able to achieve what they have due to considerable proivate financial backing from their owners.[/quote]That is not sustainable nor is it investment. Bloom has invested £280m to create a club worth £132m. A negative return on investment of >50%.

[king canary 7,558]

I think ''Investment'' is the wrong word.

Return on investment is possible but unlikely in football. Abramovic has ploughed huge sums into Chelsea that he will likely never get back, ditto the owners of Man City.

[Badger 2,404]

KC The club is quite open about its business model. "The club observed that the profit “is driven by sound

underlying business operations supplemented by player trading”, though that

tends to underplay the importance of player trading, which has boosted overall

profits by £76 million in the last two seasons.""In fact, Southampton

are the only club in the Premier League without a positive outlay on players

over the last two seasons, so are bottom of the so-called net spend table."As well as player trading, developing young players is one

of the principal reasons for Southampton’s success with significant investment

being made into this area, as noted in the accounts: “For the advancement of

the player development business model, total expenditure on the Training Campus

is expected to amount to approximately £38 million.” ... "Not only will this enable the club to replace any sold

first-team players from within, but also to sell its graduates for a healthy

profit. A recent study by the CIES Football Observatory showed that Southampton

had the most profitable academy in Europe, based on the sale of graduates like Lallana

and Shaw since 2012."http://swissramble.blogspot.co.uk/2015/11/southampton-with-or-without-you.htmlSouthampton have done very well and remain ambitious. As long as they remain in the premier league, they have a good model, but player trading along with remaining in the Premier league is at its heart. As long as they do the latter, they can chose when to sell, but they do need to sell to remain profitable. They are confident that they can buy better and replace from their own ranks and remain competitive.It really goes back to Parma''s point that he made on one of the masterclasses - if we had a better, more sustainable model like we are moving towards, in place when we had gained promotion in 2011, we would have been in a stronger position than we are now. In all fairness, I should point out that the article is from two years ago - I''m not sure about how things might have changed subsequently, but find it unlikely that they would have abandoned their model.

[king canary 7,558]

That still isn''t selling to survive though.

What we will have to do this summer is selling to survive- we will have a £23m black hole to fill and it has to be filled some way, some how.

If Southampton didn''t sell Van Dyke this January there wouldn''t be a massive hole in their finances to fill.

[Donkey dangler 0]

I thought people use to criticise Chase for player trading?

Given our limited resources there are players NCFC should not have signed, e.g., Naismith (age and high wages), Jarvis (injury record at WHU, age and high wages) , VOO, and why sign players if you are not going to play them in many games? Examples being Andreau, Bamford (loan) and Lafferty.

Money just poured down the drain...........

[Donkey dangler 0]

[quote user="BigFish"][quote user="Jim Smith"]Bloom has put in over £280m to Brighton.

It just shows that even clubs that some would cite as being examples of "similar" sized clubs who have succeeded on a more "sustainable" model have in fact only been able to achieve what they have due to considerable proivate financial backing from their owners.[/quote]That is not sustainable nor is it investment. Bloom has invested £280m to create a club worth £132m. A negative return on investment of >50%.[/quote]

A superb Return on Capital Employed, not!

[Badger 2,404]

[quote user="king canary"]That still isn''t selling to survive though.

What we will have to do this summer is selling to survive- we will have a £23m black hole to fill and it has to be filled some way, some how.

If Southampton didn''t sell Van Dyke this January there wouldn''t be a massive hole in their finances to fill.[/quote]Basically, I don''t think that there is much between us on this KC. Southampton can sustain their position in the short term because of the cash generated by Premier league revenues - I would certainly rather be in their position that ours! [:''(] If they were relegated, however, they would be in difficulty if not immediately re-promoted.Southampton are about £62 million in debt, which they acknowledge is too high for a club their size and have pledged to reduce it.Where did you get the figure for the £23m black hole*? I know we lose about £30m broadcasting revenue, but obviously we have gone some way towards reducing ongoing costs.Btw, not denying that there will be a very challenging summer, definitely requiring (which is your point) some player sales.

[Parma Ham's gone mouldy 2,219]

http://www.bbc.co.uk/sport/football/42542010

Parma

[Sussexyellow 55]

@bigfish

True, but isn’t Bloom about as close to the life long supporting benefactor as you are likely to get.

As a businessman he will be savvy about how the money is spent, he will not just be handing it over, but I very much doubt he will be looking for a return.

[PurpleCanary 5,553]

[quote user="Sussexyellow"]@bigfish

True, but isn’t Bloom about as close to the life long supporting benefactor as you are likely to get.

As a businessman he will be savvy about how the money is spent, he will not just be handing it over, but I very much doubt he will be looking for a return.[/quote]Sussex, that may well be true about Bloom. I think he is a bit of a hybrid - part old-style local-boy fan and part ruthless businessman, and he may not expect a full or even partial return. I did post on another thread:It is a mistake to think all would-be owners

have the same overall  and sole aim, of maximising a profit. Some do,

but there are other, less purely capitalist, motivations.

[Badger 2,404]

Parma Ham''s gone mouldyhttp://www.bbc.co.uk/sport/football/42542010

Parma

Parma - from your article above"Stripping out parachute payments, player sales and lucrative FA Cup ties, Wigan''s annual turnover hovers around £7million.

To

put that into context, in 2015-16 Brentford and Preston were the

Championship clubs with the lowest turnover, at £10.6m. Half of the 24

clubs generated in excess of £20million."

We

will certainly generate well above 20 million in turnover,after our

parachute payments end - indeed nearer 30 million.  We still have a

competitive budget despite all the doom and gloom.

[Sussexyellow 55]

Purple, I would agree.

I recall being in the same carriage as Blom on the train home after the 3- 3 draw a few years back. He comfortably moved amongst supporters laughing, joking and exchanging views.

So man of the people or hard nosed businessman getting customer feedback? Take your pick (but you are allowed to select both).

[Sussexyellow 55]

Bloom!

Edit button still missing!

[PurpleCanary 5,553]

[quote user="PurpleCanary"]

A tilted pitch?But Financial Fair Play is supposed, at least in the Championship, to level the playing-field. Some quick research suggests FFP has been (note the tense) working reasonably well in the Championship. The initial review of the 2015-16 season, the latest for which figures are available, showed all 24 clubs had complied (significantly, a first, as it happens). What tends to get the publicity are not the majority that comply but the few that do not, and particularly those that cheat their way to promotion, such as QPR and Bournemouth, in a cold-blooded calculation that either they won''t get relegated, and so avoid any penalty, or that the profit will outweigh the fine.Whether Championship clubs will carry on keeping to the rules is a question, given the trend outlined above to mega-rich owners, some of which are corporate. A Jack Walker-style fan would understand and accept that their money might not guarantee success. I am not sure some of the new mega-rich owners in our second tier, from a different business culture, will be equally phlegmatic. I am not suggesting Brighton cheated their way up last season (they have a history of complying with FFP) but there was a very pointed quote from their multi-millionaire owner Tony Bloom last autumn, in unveiling a  £25.9m loss for the season  before (clubs can only lose  £39m over three seasons but some bits of losses are allowable) when they got beaten in the play-offs:"Our ambition remains for the club''s teams to play at the highest level possible. As chairman (and lifelong supporter of the club), I will do everything I possibly can to achieve that and remain fully committed. Any Championship club without parachute payments wishing to compete for promotion will inevitably make significant losses. It remains a delicate balancing act for the board as we strive to achieve our ultimate aim."Brighton of course then got promoted, automatically. That may well - seriously - just be a coincidence, given how close they were before. The owner, having contemplated the dilemma he highlighted, may have decided to stay the right side of the law. And I cannot foresee Smith and Jones doing otherwise. But given some of the clubs and their new ownership that are straining to get promoted from the Championship I would not bank on that recent total-compliance record being replicated this season or in those to come.[/quote]

That Brighton loss of  £25.9m for the 2015-16 season was under old FFP rules, by which a club where the owner injects equity could lose a maximum of £13m in any one season. But some parts of losses are allowable, and Brighton said at the time they had stayed within the rules, and obviously had done so.For their promotion season of 2016-17, under the newly introduced rules of a maximum £39m total loss over three years, their loss was £38.893m, but again Brighton have said they kept to the rules. Presumably they must have, even without any allowables, since by the rules (unless previous seasons under the old rules are taken into account) a club can gamble and lose the whole £39m  in one go in the hope of promotion.And, as said before, some owners, with a mega-rich and corporate background, might even gamble and lose £39m one season and then again the next, assuming they will get promoted no later than the second season. Even if that does not happen, the Brighton figures emphasise that we are in a division where clubs can easily afford losses that would bankrupt us.Specifically those Brighton figures should also be borne in mind when contrasting Hughton''s time as a manager at Norwich City and his time on the south coast.