Shortfall in player budget

[astrodyne 0]

I''ve been pondering the shortfall in covering the player budget, as Mr Doncaster points out in his latest piece - £8.5m with a break even point of £5m - a shortfall of £3.5m.Now I don''t know too much about business, but it seems to me that this is simply poor budgeting. Working on a gate of 24,000 for every home game, and assuming a few friendlies and home cup games that is 600,000 attendees for the season.So £3.5m divided amongst those attendees puts an average £5.80 on your match day experience. Now before you all bite my head off and say you can''t afford it - note the word average - box owners could pay more so it could mean that the ordinary punter only has to find £3 per match extra.Now surely these player budgets are worked out in advance, and details of these possible increases could have been made public during the close season for people to comment on? So, are my figures wrong, or is it simply poor budgeting by people at the club?

[They need to EARN the right to play us 0]

1. How much in total do the box owners pay now?2. Do you have any evidence at all that the they will be willing to stump up the further £1.7 million per season that you say they will? 3. How much research have you done to determine how price elastic the demand for match tickets it?

[astrodyne 0]

1 - don''t know2 - where have I said that box owners will have to stump up £1.7m - the price increase would also be pushed onto the higher priced seats too.3 - like I have all day to research such a thing - have you? maybe you can enlighten me rather than post a list of points that just creates a smokescreen and doesn''t actually address my original post? 

[They need to EARN the right to play us 0]

1. I know you don''t - it was a rhetorical question.2. Actually you said it just here:"box owners could pay more so it could mean that the ordinary punter only has to find £3 per match extra"3. Of course I haven''t. But the football club who you accuse of poor budgeting have.

[astrodyne 0]

Ok Reg, so in your eyes it appears I''m wrong. So then, do you think its acceptable for the Directors to have to make up the shortfall rather than the supporters and other club interests?

[ellis206 0]

Our season ticket sales don''t even cover our player wages, let alone transfer fees, there is no point in even mentioning cup games because we always get a lowly team at Carrow Road and we get a poor attendance, or we will get someone away and we''ll get knocked out of the cup. We will make a lot of money on food and drink sales but you have to take into account that it costs money to purchase them to be able to sell in the first place, so the profit wouldn''t be as much as you might assume. Unfortunately there is no money in our leagues and not enough (if any) credit has gone to our board for running Norwich City as a business and keeping us out of administration, we need to get to the premiership but won''t do that without funding so we will just go round in circles, there is just no money in our league and because of that we can''t buy players without a rich owner so until that day comes we just have to be sensible and careful with the little money we do have!

[YankeeCanary 0]

[quote user="astrodyne"]I''ve been pondering the shortfall in covering the player budget, as Mr Doncaster points out in his latest piece - £8.5m with a break even point of £5m - a shortfall of £3.5m.

Now I don''t know too much about business, but it seems to me that this is simply poor budgeting. Working on a gate of 24,000 for every home game, and assuming a few friendlies and home cup games that is 600,000 attendees for the season.

So £3.5m divided amongst those attendees puts an average £5.80 on your match day experience. Now before you all bite my head off and say you can''t afford it - note the word average - box owners could pay more so it could mean that the ordinary punter only has to find £3 per match extra.

Now surely these player budgets are worked out in advance, and details of these possible increases could have been made public during the close season for people to comment on? So, are my figures wrong, or is it simply poor budgeting by people at the club?[/quote]

Astrodyne, I realise you mean well but surely the club is in a better position than we are to make judgement about the best way to manage the budget. In any event, with respect to your input isn''t there a simpler way to look at it? Just assume that 20,000 season ticket holders pay an average increase on the season of 150 pounds ( which would generate 3 million pounds ) plus whatever is yielded from the non-season ticket holders that attend matches. Of course this would help the budget deficit but it would probably mean an average increase to supporters of 50%. Not a small increase given how money is tightening up at the moment. Do you think the club has not given this some thought or even done some probing to see how elastic supporters are in this regard? Possibly the SCG has been sounded out on this matter. With respect to your point, if the club had made this public during the close season for supporters to comment on, what do you think the overall feedback would have been? I know what I think the reaction would have been. 

 

[astrodyne 0]

Ellis - I''m talking about finding money that is pure profit. Increasing the cost of tickets will not effect any of the infrastructure that you have mentioned. I take it that you don''t agree that the budgeting has been poor either? So then I ask you the same question as Reg - do you think its acceptable for the directors to fund the shortfall, rather than the supporters and other club interests?

[astrodyne 0]

I don''t know Yankee, we can be a surprisingly generous lot when the chips are down. I''m an Engineer by trade, and always try to see a solution to a problem. How I see it, the club continually comes up with problems - but I don''t see much problem solving going on, and firms that continually run with problems tend to eventually come unstuck. What  is your opinion on my second question I''ve posed to Reg and Ellis, Yankee?

[The Fish Seller 0]

[quote user="astrodyne"]I''ve been pondering the shortfall in covering the player budget, as Mr Doncaster points out in his latest piece - £8.5m with a break even point of £5m - a shortfall of £3.5m.Now surely these player budgets are worked out in advance, and details of these possible increases could have been made public during the close season for people to comment on? So, are my figures wrong, or is it simply poor budgeting by people at the club?[/quote]Is it because the playing budget is more flexible than the banks to whom we need to pay £1m interest and £1m capital sum repayment on the securitisation deal and nearly £3m on the LSE deal alone this year?We are likely to be paying the financiers more than the footballers this year.

[astrodyne 0]

But surely those costs were budgetted for Roedy? If it is the case that the cost of those things has meant a shortfall in money for players wages and fees, then surely the budgetting is wrong as we don''t actually have a team that is ''ours''?

[Mr.Carrow 394]

[quote user="ellis206"]Our season ticket sales don''t even cover our player wages, let alone transfer fees, there is no point in even mentioning cup games because we always get a lowly team at Carrow Road and we get a poor attendance, or we will get someone away and we''ll get knocked out of the cup. We will make a lot of money on food and drink sales but you have to take into account that it costs money to purchase them to be able to sell in the first place, so the profit wouldn''t be as much as you might assume. Unfortunately there is no money in our leagues and not enough (if any) credit has gone to our board for running Norwich City as a business and keeping us out of administration, we need to get to the premiership but won''t do that without funding so we will just go round in circles, there is just no money in our league and because of that we can''t buy players without a rich owner so until that day comes we just have to be sensible and careful with the little money we do have!
[/quote]

In the last accounts (`06-`07) ticket income was £7.7m and player wages £7.4m.  If we assume a similar figure for this year and accept Doncasters statement that a break-even figure is £5m, i`d really like to know what the £2.7m left over is spent on......

[They need to EARN the right to play us 0]

[quote user="Mr.Carrow"]

In the last accounts (`06-`07) ticket income was £7.7m and player wages £7.4m.  If we assume a similar figure for this year and accept Doncasters statement that a break-even figure is £5m, i`d really like to know what the £2.7m left over is spent on......

[/quote]Debt repayment.

[TIL 1010 5,246]

At The NCISA meeting the other night Lisa Q asked a question about the repayment of a £2.5 million land deal loan and ND said that it was to be rolled over.

[Mello Yello 2,572]

[quote user="TIL 1010"]

At The NCISA meeting the other night Lisa Q asked a question about the repayment of a £2.5 million land deal loan and ND said that it was to be rolled over.

[/quote]

Like the fans.....

[T 191]

Football club has a number of other operating expenses other than players wages. The management and coaching costs were 2m for a start last year  so obviously it does not much make sense just to compare player wages and ticket revenue without considering all the other revenues and costs of the club.

[Mr.Carrow 394]

Fair enough T, that`s true.  It did include £600k pay-off for Worthy etc. which is pretty much a one-off (Grant resigned).

[Mello Yello 2,572]

[quote user="T"]Football club has a number of other operating expenses other than players wages. The management and coaching costs were 2m for a start last year  so obviously it does not much make sense just to compare player wages and ticket revenue without considering all the other revenues and costs of the club.[/quote]

Don''t they budget for that?....

[astrodyne 0]

[quote user="Mello Yello"]

[quote user="T"]Football club has a number of other operating expenses other than players wages. The management and coaching costs were 2m for a start last year  so obviously it does not much make sense just to compare player wages and ticket revenue without considering all the other revenues and costs of the club.[/quote]

Don''t they budget for that?....

[/quote]Thats right mello - these things should all have been budgetted for and are just sidetracking the original point. There is a supposed shortfall, and I''m trying to get peoples opinions on why or should this shortfall has been allowed to happen, and what solution is there to this problem. So, does anybody think its acceptable for the directors to fund the shortfall rather than the supporters or other club activities?

[They need to EARN the right to play us 0]

As it stands at the moment we are competing with clubs that have more income than us:6 with parachute payments,At least 2, possibly 4, with owners with very deep pockets,in the past we have had to compete with clubs such as Leeds, Leicester, Southampton, Ipswich Town, Coventry City and Luton Town who have wilfully spent far more than they or their owners could possibly afford to repay (Coventry were spending more than 100% of turnover on wages despite having debts of £30m (or was it £40m?) to service). I bet there are still clubs acting the same way (Cardiff and Plymouth perhaps?).We cannot generate enough money through the club''s various activities to match that: the choice is clear - either someone throws money at it, or we sre unlikely ever to be competitive. Unless I''m missing something obvious the only attraction with Mr Cullum is that he can throw much more money into the playing budget than the current can.As a business model it''s ludicrous - but I don''t see an alternative.

[T 191]

Agreed Mr C the 2m for football mgmt/coaching includes 0.6 pay off to Worthington. All the other income and expenses would be budgeted for leaving 5m as the break-even player budget. A good summary from RP - the whole football financing is crazy - I guess the only way forward to bring some sense would be to have an agreed wage limited a bit like american football, for instance all clubs wages are limited to a percentage of turnover but I dount whether the clubs with more funding from their owners would ever agree to this.

[They need to EARN the right to play us 0]

[quote user="T"] I guess the only way forward to bring some sense would be to have an agreed wage limited a bit like american football, for instance all clubs wages are limited to a percentage of turnover but I dount whether the clubs with more funding from their owners would ever agree to this.[/quote]I think that is what Mawhinney (sp?) is aiming for, but I have to say I don''t like it as an idea.It seems to me that were it to be introduced it would entrench the advantage of teams coming down from the Premier League at that point - since they would have that £11 million or whatever it is boost to turnover.Patrick Barclay was on this morning suggesting that the football side of clubs should not be able to borrow money - I haven''t thought it through but superficially that seems attractive to me.

[astrodyne 0]

So it would appear that unless we get bought by a sugar daddy, or the football league brings in some measure to ease the situation, we are on a very sticky wicket with a business model that doesn''t stack up? Isn''t that a bit dangerous? Isn''t it the job of the financial people at Carrow road to foresee these things and act accordingly?

[T 191]

Agreed that a gernal wage cap would only have a limited to the extent TV money is not shared more evenly but it would at least stop the market being distorted by a few individuals trying to buy suceess irrespective of the ongoing revenue of the club. In terms of debt, I don''t see any problem with clubs loaning money to finance building new facitlities, stands or grounds otherwise they would never happen so not sure how that would work.

[T 191]

astro - I agree with you but most football clubs not just NCFC are run in the way according to the Deloittte report ie the majority of clubs are unprofitable and dependant on cash injections from owners.

Unless there is a wage cap or mega wealthy individuals pull out of football it will continue. I don''t think most fans would want us to reduce wages to a sensible level unless all other clubs follow suit. The problem is I doubt if delia and mwj can afford to keep pumping in 2m every year.

[They need to EARN the right to play us 0]

[quote user="astrodyne"]So it would appear that unless we get bought by a sugar daddy, or the football league brings in some measure to ease the situation, we are on a very sticky wicket with a business model that doesn''t stack up? Isn''t that a bit dangerous? Isn''t it the job of the financial people at Carrow road to foresee these things and act accordingly?[/quote]

Well what do you mean by "act accordingly"? The notion you seem to have that in some way the club can generate another £3.5 million simply by putting up ticket prices, and by stinging the box holders for £1.7 million is risible. I suspect we are close to maximising revenue from match days.Southampton and Crystal Palace are two teams roughly of equal stature to us, on the pitch since we were all relegated their performance has been better than ours, so here''s some figures to illustrate how we actually stack up against our peers:(Season 2004/05 average attendances) as compared to season 2008/09Palace: (24,108) - 14,629Southampton: (30,610) - 16,077City: (24,350) - 24,095Between them Palace and Southampton have lost some 24,000 fans. We have lost 255. That''s 24,000 that aren''t paying to get in, aren''t buying pies, programmes, replica shirts etc. In this regard if none else our business model is working better than other teams.The other option would be that we unilaterally decide to break even by cutting the football budget. That would likely mean relegation, at which point we get into a downward spiral of falling revenues and football expenditure.As it stands football finance in general is ludicrous: our position is probably safer than a lot of other teams. This is not something that Norwich City can address in isolation.

[Mr.Carrow 394]

RP, but the thing is Southampton and Palace have performed better than us despite losing all that support.  They are, admittedly, in a similar quandary to us, but at least their fans can see an obvious reason for it with all the empty seats at home games.  Also we are regularly outspent and outperformed by clubs with half our gates.

If a "working" business model can only give us a lower Champs team, despite having one of the highest gates, then surely that model has to be questioned?  The way crowds have kept up has been amazing, but logically they should have fallen back to 16k-ish by now- i wonder what position the club would be in had this happened? 

IMO the club are guilty of squandering a fantastic position when we were relegated.  Then was the time to use the parachute payments to give us a realistic chance of becoming a yo-yo/bottom half Prem club, but instead we sold off our assets for millions and spent peanuts on monkeys- hence the decline we have witnessed.