Fair play to Aston Villa

[Badger 2,405]

1 hour ago, Jim Smith said:

Nope. We did not make the signings we needed to make at the start of the season. We did sign Klose and Naismith in January out of desperation but we should not have had to do that had we done proper business in the summer.

When the transfer window opened in January 2016 we were 15th. After spending all the money, largely wasted imo, we finished the season in 19th.

The transfer expenditure seems to have made us worse!

https://en.wikipedia.org/wiki/2015–16_Norwich_City_F.C._season

Edited July 27, 2020 by Badger
Added link

[king canary 7,577]

8 minutes ago, Badger said:

No, you misunderstand the figures. The debt write off cleared the decks from excesses of the past and enabled them to operate on a sustainable basis. They entered the PL, with hardly any debt and a lower wage bill - of course they can afford to spend more.

As to your view that they knew they would be able to pay off any debt - at this stage they didn't even know who their owner was going to be!! Do you really think that the joint owners would be underwriting loans for the other person with whom they were in deep dispute.

I don't misunderstand the figures thanks- I think they just don't paint the story you seem to think they do.

You've talked of Sheffield United being sensible, self sustaining and building a solid financial base- the figures show they've consistently lost money year on year, bailed out by owners and run a wages to turnover figure of 95%! None of this is sensible management and all of it is only possible because they have owners with the wealth to allow them to.

You say they have minimal debt which is true- but that Swiss Ramble thread shows they've lost £20m over the proceeding 4 years. Riddle me this, if you're losing an average of £5m a year but you only have minimal debt, then what is happening to those losses? Clearly someone or something is covering them.

The £20m debt you talk about for us was a short term overdraft to cover the costs of promotion bonuses until Premier League money comes in- again, Sheffield United would have had to do similar (£42m post promotion wage bill with a turnover of £20m) but obviously didn't need the overdraft to cover it. Again, I wonder why?

[Jim Smith 2,314]

16 minutes ago, Badger said:

When the transfer window opened in January 2016 we were 15th. After spending all the money, largely wasted imo, we finished the season in 19th.

The transfer expenditure seems to have made us worse!

https://en.wikipedia.org/wiki/2015–16_Norwich_City_F.C._season

Don;t disagree. I think Klose improved us but Naismith was not needed. It was a strange signing at a time when Mcnally appeared to be undergoing some sort of wobble and in my view his usual judgment was not quite there when he agreed that deal.

We were on the slide though so I am not sure taking January 2016 position is a fair comparison and we had needed a decent centre back all season. 

[Jim Smith 2,314]

15 minutes ago, king canary said:

I don't misunderstand the figures thanks- I think they just don't paint the story you seem to think they do.

You've talked of Sheffield United being sensible, self sustaining and building a solid financial base- the figures show they've consistently lost money year on year, bailed out by owners and run a wages to turnover figure of 95%! None of this is sensible management and all of it is only possible because they have owners with the wealth to allow them to.

You say they have minimal debt which is true- but that Swiss Ramble thread shows they've lost £20m over the proceeding 4 years. Riddle me this, if you're losing an average of £5m a year but you only have minimal debt, then what is happening to those losses? Clearly someone or something is covering them.

The £20m debt you talk about for us was a short term overdraft to cover the costs of promotion bonuses until Premier League money comes in- again, Sheffield United would have had to do similar (£42m post promotion wage bill with a turnover of £20m) but obviously didn't need the overdraft to cover it. Again, I wonder why?

I agree with this. We were not really "in debt" as is claimed when we went up. We took out that overdraft immediately following promotion in order to cover promotion related bonuses and other close season expenditure. it was effectively a bridging loan to tide us over until the first parachute payment (because the owners couldn;t/wouldn't). The accounts were also deceptive because they included all of the "downside" from the end of last season (i.e. those bonuses and extra payments) but none of the upside from promition and significant transfer sums still owed to us. 

The figues you have given for Shef U suggest that they have had fairly significant debts written off by their owners/directors in recent years in a manner that has given them an operational flexibility and spending power that we didn;t/don't have unless prepared to take a "calculated risk" as discussed elsewhere. this really in my mind just makes the point that having wealthier owners has given them an advantage in terms of cashflow on promotion in particular. It gives you more freedom to take calculated risks. Delia and MWJ have written off a bit of interest on loans in the past but have never written off loans or debts of a comparable size. 

[PurpleCanary 5,554]

2 hours ago, king canary said:

Thing is Purple I think we agree on quite a bit really.

I acknowledge the reality of our situation and don't want us doing anything to endanger the future of the club. We just differ in a couple of key areas...

1) I don't think spending £20-30m this summer would have been a long danger to the club.

2) That if spending those sums is a long term danger to the club then I think our owners need to be more proactive about changing that. 

We probably do agree on a fair bit. At a tangent, a few days or weeks back I said that if anti-Delia fans really wanted to attract a new owner they should, instead of a silly stunt like flying a banner,  first put together a website in which they would outline Norwich City's financial position and strategy and how it was holding the club back, and outline their idea of what kind of financial plan and strategy a new owner should have, perhaps using the example of other clubs.

You pooh-poohed the idea, saying how could fans possibly do that without a detailed knowledge of the club's finances. Well, as I said at the time, the accounts are open at anyone anywhere in the world with a computer, and I very much doubt there are any problems hidden from the accounts.

But just look at the kind of arguments being put forward here by several posters, including you in the discussion with Badger. I don't mean this sarcastically but a lack of knowledge of every tiny detail of the club's finances, or those of other clubs, is hardly holding you and others back from identifying the problems caused by the strategy forced on Smith and Jones' by a lack of money, or from giving examples, backed in with considerable financial detail, of ways in which other clubs with richer owners can thrive without being reckless.

All the anti-Delia brigade would have to do to draw up just the kind of Come and Buy Us plea I suggested, and for it to be detailed enough as well as cogently making the case for sensible change, would be to take the arguments from this and other threads. That would be enough to whet the appetite of a prospective buyer. They could then do any more ultra-detailed examinations if they wanted to. It is not the impossibility of  finding a new owner that is holding these fans back from really trying. it is inertia.

[Badger 2,405]

54 minutes ago, king canary said:

I don't misunderstand the figures thanks- I think they just don't paint the story you seem to think they do.

You've talked of Sheffield United being sensible, self sustaining and building a solid financial base- the figures show they've consistently lost money year on year, bailed out by owners and run a wages to turnover figure of 95%! None of this is sensible management and all of it is only possible because they have owners with the wealth to allow them to.

You say they have minimal debt which is true- but that Swiss Ramble thread shows they've lost £20m over the proceeding 4 years. Riddle me this, if you're losing an average of £5m a year but you only have minimal debt, then what is happening to those losses? Clearly someone or something is covering them. 1.

The £20m debt you talk about for us was a short term overdraft to cover the costs of promotion bonuses until Premier League money comes in- again, Sheffield United would have had to do similar (£42m post promotion wage bill with a turnover of £20m) but obviously didn't need the overdraft to cover it. Again, I wonder why? 2.

1. I have already explained that Sheffield Utd used external investment to write down the debt of previous excesses - you seem to have missed this. They had indeed lost money year on year which is why they had accumulated so much debt and why they decided to run a more sustainable strategy. Since then, (the financial restructure) they made a small loss of £1.9 million, which is insignificant. This year, they like us, they made a loss due to promotion bonuses, otherwise they like us, would have made a small loss or a small profit. 

Their turn in fortune was obtained by getting rid of debt - not by acquiring more! By getting out of the debt trap, that you seem to find attractive, they managed to operate in a sustainable way. We have the advantage of having poorer owners, so are unlikely to rackup the levels of debt that Sheff Utd did, which is why we have been more successful prior to the years when Sheffield Utd cleared their debts. It took the a decade in the wilderness to do so though - that's what we risk (again).

2. Please could you provide the evidence that they didn't need an overdraft? I haven't seen any.

[Badger 2,405]

59 minutes ago, Jim Smith said:

We were on the slide though

If you look at the link you will see that we were not on the slide - our position was pretty consistent after the first 10 games of the season. recent form had been quite good.

[king canary 7,577]

9 minutes ago, Badger said:

1. I have already explained that Sheffield Utd used external investment to write down the debt of previous excesses - you seem to have missed this. They had indeed lost money year on year which is why they had accumulated so much debt and why they decided to run a more sustainable strategy. Since then, (the financial restructure) they made a small loss of £1.9 million, which is insignificant. This year, they like us, they made a loss due to promotion bonuses, otherwise they like us, would have made a small loss or a small profit. 

Their turn in fortune was obtained by getting rid of debt - not by acquiring more! By getting out of the debt trap, that you seem to find attractive, they managed to operate in a sustainable way. We have the advantage of having poorer owners, so are unlikely to rackup the levels of debt that Sheff Utd did, which is why we have been more successful prior to the years when Sheffield Utd cleared their debts. It took the a decade in the wilderness to do so though - that's what we risk (again).

2. Please could you provide the evidence that they didn't need an overdraft? I haven't seen any.

Christ, this is starting to read like some absurdisst comedy piece at this point.

Point one is simply incorrect. The debt write off was in 2014. Since then they lost another £20m. This is from the Swiss Ramble thread you shared.

You keep saying they are running are more sustainable strategy- again, there is nothing sustainable about a club that runs 95% wage to turnover. Anyone doing that will make significant losses. United covered that partly through player sales but they have made losses almost every year- they hadn't magically solved that issue. Absolutely nothing in the finances, either from the Atletic article or the Swiss Ramble thread shows a club running on a sustainable model- they clearly show a club running beyond their means (not as far beyond them as others in the Championship but still) who being bankrolled to a certain extent by owners.

The idea our owners lack of funds is an advantage is to close your eyes, stick your fingers in your ears and ignore all the evidence of the last 12 months. 

Re point 2- I'm assuming to a certain extent as if they did need an overdraft it would have shown up as a debt as ours did.

[sgncfc 1,221]

3 hours ago, Jim Smith said:

Nope. We did not make the signings we needed to make at the start of the season. We did sign Klose and Naismith in January out of desperation but we should not have had to do that had we done proper business in the summer. Naismith and Jarvis were just rank bad scouting/judgment. Jarvis due to his injury record and Naismith because he was not the sort of player we needed or were lacking at the time. 

We have never spent what we needed to spend on the players we needed in the summer after promotion from the championship. The one time we got away with it was under Lambert where momentum carried us through. On the other occasions it has cost us. Same happened under Worthy with Dean Ashton signed 5 months too late. 

A selective memory, I think. Jarvis had done well on loan earlier in the season and Neill had chased Naismith all summer - there was no reluctance to spend that money as you suggest, we just couldn't get it done. And as pointed out above, Lambert spent money.

And of course before that there was the famous summer of Chris Hughton with RVW, Gary Hooper and Leroy Fer, among others.

So actually that "one time" you'd like to happen has already happened at least 3 times......and it failed disastrously on two of those occasions.

[king canary 7,577]

18 minutes ago, sgncfc said:

A selective memory, I think. Jarvis had done well on loan earlier in the season and Neill had chased Naismith all summer - there was no reluctance to spend that money as you suggest, we just couldn't get it done. And as pointed out above, Lambert spent money.

And of course before that there was the famous summer of Chris Hughton with RVW, Gary Hooper and Leroy Fer, among others.

So actually that "one time" you'd like to happen has already happened at least 3 times......and it failed disastrously on two of those occasions.

Well not really. As you point out we tried but failed on one occasion and the other one you've pointed out wasn't 'a season after promotion from the Championship' as Jim is talking about.

[nutty nigel 7,509]

4 hours ago, ......and Smith must score. said:

 

A Magical Mystery Tour staying at the Hotel California looks on the cards here 😀

Heaven Knows You're Miserable Now

No change there then🙃

[Badger 2,405]

2 hours ago, king canary said:

Point one is simply incorrect. The debt write off was in 2014. Since then they lost another £20m. This is from the Swiss Ramble thread you shared.

No, but I now understand the source of the misunderstanding. As I explained above (quoted SR) the debt was paid off over a number of years - it was a process not an event. I suspect that you are referring to the loan cancellation but debt was still over 40 million after this. It took several more years to sort it out - until net debt was eliminated in 2017, following a whole series of debt to equity conversions. I suspect that it is precisely because it took so long that the owners were so keen on a sustainable strategy afterwards. Since then they have followed a sensible financial strategy - the debt incurred since they cleared the books has been minimal (except one off costs of last year's promotion, like us.) The £20m you refer to was before  the debt was cleared and a sustainable policy was possible. If I haven't been clear, look at the link again again and you will see.

You keep saying they are running are more sustainable strategy- again, there is nothing sustainable about a club that runs 95% wage to turnover. Anyone doing that will make significant losses. United covered that partly through player sales but they have made losses almost every year- they hadn't magically solved that issue. Absolutely nothing in the finances, either from the Atletic article or the Swiss Ramble thread shows a club running on a sustainable model- they clearly show a club running beyond their means (not as far beyond them as others in the Championship but still) who being bankrolled to a certain extent by owners.

1. The 95% wage to turnover ratio excludes player sales. With player sales taken into account the ratio was a highly respectable 67%. As I quoted above Sheff Utd have made it absolutely clear that:

" ...player trading represents a key element of our strategy to be a self-sustaining club."

Many clubs, I suspect ourselves included, use player sales to finance wages. This is why they made a negligible loss for the year. 

The idea our owners lack of funds is an advantage is to close your eyes, stick your fingers in your ears and ignore all the evidence of the last 12 months. 

How so? We got promoted and despite Covid go down in a strong position financially. Wealthier owners tend to borrow more, saddle their teams with debt and they often experience prolonged periods in the wilderness - there are so many examples. Richer owners are also less likely to promote younger players and develop them them - they want their success fast. You have never been able to provide any evidence that taking on large levels of debt has enabled clubs to perform above their normal position over a sustained period, except in the most exceptional of cases like Chelsea, Man City and possibly, moving forwards, Leicester. It can only work long-term if you have a multi-billionaire, several times over.

Re point 2- I'm assuming to a certain extent as if they did need an overdraft it would have shown up as a debt as ours did.

If I'm honest, I can't claim to know for certain, but I can see no evidence of a capital injection by the owners on the balance sheet and given the war between the two owners would be very surprised if either was willing to loan money to the club, which would, in any case, have to have been declared and would have formed part of net debt - they don't just give the money.

There is no change to the share capital, so I just don't know. I think that I will message SR on Twitter, atm, there is a 2 day boycott over antisemitism, so I am not posting.

 

[Badger 2,405]

1 hour ago, sgncfc said:

So actually that "one time" you'd like to happen has already happened at least 3 times......and it failed disastrously on two of those occasions.

The time when it worked we spent far less!

[Badger 2,405]

6 hours ago, Jim Smith said:

Not manhy bigger clubs than us in that list. Forest and Derby and a couple of others maybe in terms of honours and Shef Weds in terms if fanbase but all the rest are pretty much the same size as us or smaller, certianly in recent times anyway. 

I wouldn't necessarily agree with them but a number of these clubs might argue to be as big or bigger than us - Birmingham City, Blackburn Rovers, Bolton Wanderers, Charlton Athletic, Coventry City, Derby County, Ipswich Town (obviously not!), Middlesbrough, QPR, Sheffield Wednesday, Stoke City, Fulham. 

You would need to define criteria and I'm sure the debate would never be resolved! We tend to forget about clubs like Birmingham, Sheff Wed, Coventry, Nottingham Forest, Derby, even Ipswich and others who have been top league regulars before borrowing too much and consigning themselves to years in the wilderness.

[king canary 7,577]

On 27/07/2020 at 19:31, Badger said:

 

This is going to be my final post on this subject as it is getting hugely tedious but here is my summary.

• Sheffield United were able to spend £40m this summer, we apparently couldn't.
• According to you this is because Sheffield United have followed a model of financial probity to give them a solid finanical base.
• According to their own accounts they've lost money 9 out of the last 10 years and the only profit they've made was due to a huge loan write off by their owner
• Despite constant losses they went up with minimal debt.
• All of this points to one very clear thing- the club is able to do this due to the owners putting money in. From the Swiss Ramble thread on their 18/19 accounts...

#SUFC lost £9m cash from operating activities in 2018/19, though this was compensated by £9m net player sales. They also invested £1.3m in infrastructure (Bramall Lane stadium) and made £0.7m interest payments, which was largely funded by £1.5m from the owners.

Since 2013 #SUFC’s available cash of £46m was split between owner financing £23m and £20m net player sales. Most of this (£29m) was used to cover operating losses, while the club also spent £11m on loan/interest payments, plus £5m on infrastructure investment.

SUFC gross debt increased from £2m to £4m, mainly “soft” loans from the owners. This would have been much higher without the owners writing-off £35m debt and converting £27m of debt to equity. Also only owe £6m in transfer fees (£5m net of receivables).

• So the solid financial base that allows them to spend this season is almost entirely down to owners willing to put in money to cover even small losses by Championship football standards.

[Badger 2,405]

21 minutes ago, king canary said:

This is going to be my final post on this subject as it is getting hugely tedious but here is my summary.

• Sheffield United were able to spend £40m this summer, we apparently couldn't.
• According to you this is because Sheffield United have followed a model of financial probity to give them a solid finanical base.
• According to their own accounts they've lost money 9 out of the last 10 years and the only profit they've made was due to a huge loan write off by their owner
• Despite constant losses they went up with minimal debt.
• All of this points to one very clear thing- the club is able to do this due to the owners putting money in. From the Swiss Ramble thread on their 18/19 accounts...

#SUFC lost £9m cash from operating activities in 2018/19, though this was compensated by £9m net player sales.

So the net effect of this was - er, balanced books. Norwich lost £39.9 million - but we are earlier on our sustainability journey.

They also invested £1.3m in infrastructure (Bramall Lane stadium) and made £0.7m interest payments, which was largely funded by £1.5m from the owners.

Since 2013 #SUFC’s available cash of £46m was split between owner financing £23m and £20m net player sales. Most of this (£29m) was used to cover operating losses, while the club also spent £11m on loan/interest payments, plus £5m on infrastructure investment.

SUFC gross debt increased from £2m to £4m, mainly “soft” loans from the owners. This would have been much higher without the owners writing-off £35m debt and converting £27m of debt to equity (2013 to 2017, as preparation for a shift in strategy to sustainability, which has been so successful). Also only owe £6m in transfer fees (£5m net of receivables).

As you know, the debt write off and debt to equity conversion was 2013 to 17, laying the grounds for their self-proclaimed sustainable strategy, which has seem them prosper after years of being saddled with debt. I have explained this several times - you don't challenge it because you can't (well not without ignoring/ changing the facts.)

• So the solid financial base that allows them to spend this season is almost entirely down to owners willing to put in money to cover even small losses by Championship football standards.

You have not produced a shred of evidence that the owners have put in money to cover championship losses - which were minimal other than promotion costs. You have simply made this up because you want to believe it to be true.

The rest of the  facts look to be essentially correct at first glance and seem to be the same as what I told you in the first place. As I told you, the owners made a concerted effort to clear their debts accrued from previous periods of over-expenditure "chasing the dream."

Having done that they explicitly embarked upon a strategy of being financially sustainable. I gave you the quote from a board member explaining this and saying that to achieve this, player sales would be necessary.

Having decided that that sustainability was the best strategy they experienced all the advantages that this strategy brings, with (generally) careful squad development which has resulted in two promotions and maintenance of the EPL status for at least one year.

It is further proof were it necessary of the importance of following a sustainable financial strategy. It will be interesting to see if the change of ownership impacts upon this. There s a danger that the lessons of the past will be unlearnt and Sheffield Utd start to follow a less sustainable policy, which may see them back with the debt that plagued them for so long.

[Rivvo 257]

Apologies for butting in gents but I don’t get how SU approach is ‘sustainable’ if the owners keep bailing them out every year (like that lot down the road) surely sustainable is the ‘self sustainable’ approach that we are trying relying on income and player trading to cover costs?

[king canary 7,577]

54 minutes ago, Badger said:

The rest of the  facts look to be essentially correct at first glance and seem to be the same as what I told you in the first place. As I told you, the owners made a concerted effort to clear their debts accrued from previous periods of over-expenditure "chasing the dream."

Having done that they explicitly embarked upon a strategy of being financially sustainable. I gave you the quote from a board member explaining this and saying that to achieve this, player sales would be necessary.

Having decided that that sustainability was the best strategy they experienced all the advantages that this strategy brings, with (generally) careful squad development which has resulted in two promotions and maintenance of the EPL status for at least one year.

It is further proof were it necessary of the importance of following a sustainable financial strategy. It will be interesting to see if the change of ownership impacts upon this. There s a danger that the lessons of the past will be unlearnt and Sheffield Utd start to follow a less sustainable policy, which may see them back with the debt that plagued them for so long.

I really did mean the last post was going to my final one but bloody hell...

I have no idea where you've plucked this £9m figure from- SU lost £21m last season, £2m the season before that. 

How a team that have not made a profit in over a decade is further on their sustainability journey than a team who made a £19m profit not long ago is entirely beyond me.

What we don't know with Sheffield United is whether they would have made a loss last season if they hadn't been promoted. They include their bonuses in the wage budget so we don't know but I'd suspect they would have done- player wages were £19m vs a £21m turnover the season before and it wouldn't shocked by if those wages had increased a bit. The apparently made about £9m profit in player sales which may have offset any losses but they also made an £8m profit on sales the season before and lost £2m.

As far as I can tell the main piece of evidence you have for them being sustainable is that they say they are. You claim I'm ignoring the facts but the only person doing that here is you. They may be pursuing a sustainable strategy longer term but I see no evidence that they are 'further down that journey' than we are. I also see no evidence that the stronger financial base you claim they have is down to anything other than rich owners writing off debt and subsidizing losses. 

 

[Trevor Hockey's Beard 526]

SU spent £40 million on transfers last summer and another £20 million in January. With that comes the contract obligations re wages.

It appears a bold move, which has paid off this season, but I am sure that they could only do it because the owner(s) were prepared to underwrite this level of expenditure. In other words this is not "sustainable" and is another example of a club trying to buy success.

Personally I hope we never go down that route. Long live "the Project". 

[Badger 2,405]

1 minute ago, king canary said:

I really did mean the last post was going to my final one but bloody hell...

I have no idea where you've plucked this £9m figure from- SU lost £21m last season, £2m the season before that. 

I got it from you: Direct quote in red (and my previous response below). Please check above, you will see it your post - I wouldn't make things up - I'm not saying I never make mistakes but I wouldn't just invent it - it's from your post this morning.

#SUFC lost £9m cash from operating activities in 2018/19, though this was compensated by £9m net player sales.

How a team that have not made a profit in over a decade is further on their sustainability journey than a team who made a £19m profit not long ago is entirely beyond me.

They had a huge debt from previous attempts at trying to buy success. They cleared it. We had a smaller debt, but more recently, which crucially meant that we had expensive wages still on the books. Our loss on promotion was greater as was our wage bill meaning that we had less room for manoeuvre this year.

What we don't know with Sheffield United is whether they would have made a loss last season if they hadn't been promoted. They include their bonuses in the wage budget so we don't know but I'd suspect they would have done- player wages were £19m vs a £21m turnover the season before and it wouldn't shocked by if those wages had increased a bit. The apparently made about £9m profit in player sales which may have offset any losses but they also made an £8m profit on sales the season before and lost £2m.

Obviously we can't be certain. However, if you look at their expenses they rose from 27.3 to 51.6 million, suggesting a rise of 24.3 million. I think that it is generally accepted that most of this is due to promotion. Their total loss was 21.3 million, which suggests that they would have been broadly neutral if not promoted. It's never going to be exact, as you can never budget down to the last million at this level - cup runs/ crowds etc. But a sustainable level seems to be the plan.

Our loss was of course much larger theirs, but it would have been lower if not for promotion. The board indicated that our loss would have been £10 and £15 million. ("That loss of £38m may seem an alarming drop but club bosses estimate not getting promotion would have meant a loss of between £10m and £15m" https://www.pinkun.com/norwich-city/norwich-city-2018-2019-financial-results-1-6357790)

It's pretty clear to see why they had a financial advantage over us this year.

As far as I can tell the main piece of evidence you have for them being sustainable is that they say they are. You claim I'm ignoring the facts but the only person doing that here is you. They may be pursuing a sustainable strategy longer term but I see no evidence that they are 'further down that journey' than we are. I also see no evidence that the stronger financial base you claim they have is down to anything other than rich owners writing off debt and subsidizing losses. 

To put it simply - who started the year in greater debt - Norwich City. Who started the year with the higher wage bill - Norwich City. They were further down the road because of these facts - lower debt + lower wages. Therefore, given a similar level of funding - who has the greater room for manoeuvre?

I agree (indeed told you) that the owners had previously been generous - they had written off the debts that they accrued during the "chasing the dream years." Since then, all the available evidence shows a move towards more sustainable policies.

BTW - I am also pretty sure that we could have spent more if the right player had become available - but had learnt not to buy donkies just because we had the money.

 

 

[Badger 2,405]

33 minutes ago, Trevor Hockey's Beard said:

SU spent £40 million on transfers last summer and another £20 million in January. With that comes the contract obligations re wages.

It appears a bold move, which has paid off this season, but I am sure that they could only do it because the owner(s) were prepared to underwrite this level of expenditure. In other words this is not "sustainable" and is another example of a club trying to buy success.

Personally I hope we never go down that route. Long live "the Project". 

Actually, I'm not sure that spending 40 million on players is actually unsustainable if you start without major debt and start with a low level of expenses c 30 million, stripped of one-off promotion costs. This gives £100 million + to play with. Obviously player wages will rise but even if they double existing wages, their wage bill on existing players would be under 40 million. The key is starting without debt.

By January, they were more or less assured of a longer stay in the EPL; another year + a longer parachute period if it goes wrong (reducing risk).

[king canary 7,577]

21 minutes ago, Badger said:

Actually, I'm not sure that spending 40 million on players is actually unsustainable if you start without major debt and start with a low level of expenses c 30 million, stripped of one-off promotion costs. This gives £100 million + to play with. Obviously player wages will rise but even if they double existing wages, their wage bill on existing players would be under 40 million. The key is starting without debt.

By January, they were more or less assured of a longer stay in the EPL; another year + a longer parachute period if it goes wrong (reducing risk).

But this is the point you seem to want to studiously ignore.

They lost £21m last season, despite making a £14m profit on player sales. So how does a club lose £21m and not have any debt? Could it be owners covering losses? 

We were debt free pre promotion but lost £38m, mainly as you down to promotion bonuses. We had an overdraft of £18m which covered these costs but had been repaid by the time the accounts were officially released. 

So, again, how do you go up without debt when you have officially lost £21m? 

[Badger 2,405]

3 hours ago, king canary said:

But this is the point you seem to want to studiously ignore.

They lost £21m last season, despite making a £14m profit on player sales. So how does a club lose £21m and not have any debt? Could it be owners covering losses? 

We were debt free pre promotion but lost £38m, mainly as you down to promotion bonuses. We had an overdraft of £18m which covered these costs but had been repaid by the time the accounts were officially released. 

So, again, how do you go up without debt when you have officially lost £21m? 

The player sales is part of the model - it enables higher wages than would otherwise be possible.

Like us, Sheffield Utd made a loss due to their promotion. Had they remained in the Championship they would not have made a loss, but we would - between 10 and 15 million pounds. Their loss, due to promotion was about 12 million less than ours + they also had a lower wage bill (as far as we can tell, although we would have shifted some of the big earners off the wage bill at the end of the season).

The debt that they had should be viewed as a "cash flow" issue as it was incurred in increasing their revenues by over 100 million parts of which would be payable very quickly. Whilst it is a debt for tax purposes it is not a long term debt that they would have to carry forwards in the way that they had in the past. It is not something that they would have regretted in the circumstances as it was a direct consequence of promotion!

[king canary 7,577]

8 minutes ago, Badger said:

The debt that they had should be viewed as a "cash flow" issue as it was incurred in increasing their revenues by over 100 million parts of which would be payable very quickly. Whilst it is a debt for tax purposes it is not a long term debt that they would have to carry forwards in the way that they had in the past. It is not something that they would have regretted in the circumstances as it was a direct consequence of promotion!

That is the exact same as ours though? But according to you that £20m in debt was an issue that stopped us spending.

[Badger 2,405]

3 minutes ago, king canary said:

That is the exact same as ours though? But according to you that £20m in debt was an issue that stopped us spending.

Our debt wasn't 20 million! We lost 33 million after tax - we started form a worse position + had higher wages making it worse still.

[Badger 2,405]

[king canary 7,577]

4 minutes ago, Badger said:

Our debt wasn't 20 million! We lost 33 million after tax - we started form a worse position + had higher wages making it worse still.

Seriously you're like a brick wall at this point.

Of the £24m in debt listed above £20m was an overdraft for the short term cash flow issue caused by promotion, just like you mentioned for Sheffield United.

[Trevor Hockey's Beard 526]

SU's spending is not sustainable IMO as the point I was trying to make was that the level of wages which come with such transfers are a huge risk if they are subsequently relegated in the next couple of seasons. I cannot imagine that they will balance the books this year, and will these signings have relegation clauses?

Whatever happens they will probably be alright because their owner will just absorb the debt, but our owners cannot, so we had to shop at Primark, rather than Marks and Spencer's.

SU like to portray a story of "Plucky little club rises through the ranks to the top half of the Premiership", but in reality it is just another tale of someone buying success.

[Badger 2,405]

2 hours ago, king canary said:

Seriously you're like a brick wall at this point.

Of the £24m in debt listed above £20m was an overdraft for the short term cash flow issue caused by promotion, just like you mentioned for Sheffield United.

Yes but if you look below in the same graphic you will see that SU's debt is 4 million - 20 million less than ours. In other words they had 20 million more "to play with" + their wage bill was lower, which will have given them millions more.

BTW - it does not have to be an overdraft. It does not have to be any cash at all - it all depends upon when liabilities fall due. If you have a bill that falls due in December, you do not have to take an overdraft in June. You are confusing the cash position with the profit and loss, which is historic.

[Badger 2,405]

1 hour ago, Trevor Hockey's Beard said:

SU's spending is not sustainable IMO as the point I was trying to make was that the level of wages which come with such transfers are a huge risk if they are subsequently relegated in the next couple of seasons. I cannot imagine that they will balance the books this year, and will these signings have relegation clauses?

If we started the year debt free (except for promotion costs) we would have been able to spend a similar level - not quite as much because our wages were already significantly higher than SU's. The wages would largely have been covered by parachute payments if they had been relegated. In future years we would be able to make similar commitments once we have permanently flushed out our debt.

Whatever happens they will probably be alright because their owner will just absorb the debt, but our owners cannot, so we had to shop at Primark, rather than Marks and Spencer's.

They didn't shop at M and S though: their purchases were pretty low grade and have largely delivered in a similar way. They got a striker who was surplus to requirements at Bournemouth + a couple of championship players - one of whom who was loaned back. The other big signing - a central striker costing nearly 20 million scored 6 goals from recollection. I have detailed all this earlier.

I know they didn't work out, but our loans looked higher grade - Farhrmann, Amadou, Drmic all had pretty good pedigrees - better than SU's purchases. Their purchases, like ours, have had little impact.

SU like to portray a story of "Plucky little club rises through the ranks to the top half of the Premiership", but in reality it is just another tale of someone buying success.

The January signing (forget name) looked ambitious, but made with the confidence of another year in the prem + 3 years parachute payments. Their promotion did not come from buying success, nor did their good year this year. Moving forwards, who knows - they now have a Saudi price with sole ownership.