FUTURE FINANCE

[PurpleCanary 5,554]

The 2012 accounts have been followed by the AGM which (thanks to ricardo) provided some usefule extra information, and comment. As predicted, the AGM was a (self-) congratulatory affair. Everyone very happy. Well, they should be. Up to a point. But also, if they have been paying attention, a bit confused. Are we (assuming - which I don''t - we stay up) on the verge of being showered with TV gold to spend, spend, spend? Or will we still be strapped for cash? How is it we actually run out of the stuff in the summer? And how come increasing capacity - only a year ago described as financially imperative - is apparently now unaffordable? Or is it just not necessary any more?

A simple place to start is that TV deal, because it is probably the single most important factor, and is the cause of great (unfounded?) optimism. Last season it brought us in £45.6m. This season (the last of the current deal) will be about the same. For 2013-14 and the two seasons after the UK deal has been finalised but not all the overseas bits. Those that have been (in the US, for example) have tended to be above early estimates. The early estimate from the Swiss Ramble site for NCFC for total annual (UK and overseas) income was £70.1m, based on a mid-table league position, wth £7.4m of that from abroad. That last figure may rise, pushing our total towards £75m. So at least £25m more.

To what extent, though, is this really extra money? I have called it "illusory" or "transitory" and would stand by that. The history of the Premier League is a lesson in Gordon Gekko-style greed. Unless action is taken transfer fees will rise. More to the point, players/agents will demand higher wages. It is no accident that some PL clubs - while not using ten dollar words such as illusory or transitory - have been trying to persuade the rest to accept a cap not on wages per se but on annual wage rises. This in additon to rather than instead of Financial Fair Play. I don''t know what the attitude and the NCFC board is, but I can guess. On the other side, Fayed at Fulham is supposedly against. Without a deal it will be a case of spending to keep up with the Joneses and the Fayeds, and the TV money will arrive at Carrow Road one day and the next be lining the pockets of people who have a Bugatti Veyron as their school-run car.

But, if so, how does this fit in with the plan for extra capacity (and I suggest we steer clear of the pro and con arguments)? How come what was heralded as the only way to make the club self-sustaining has now been been kicked into the long grass? Easy. The club has worked out that it doesn''t now need the money from 8,000 more seats because it is counting on the extra TV money being really extra? The trouble is that argument cuts the other way. Having real extra TV cash for (ideally) at least three years is probably the only way the club will ever be able to finance a project now costed (rather oddly but this is not the time to get into that) at £31m. If not now, when? If we are always having to keep up with the Joneses and the Fayeds when will there be money to spend on anything but the squad and youth development?

On balance, the likely explanation is not that the club doesn''t now feel the financial need for extra seats (although it may be hopeful of hanging on to some TV money) but that it has revised its costings and decided it is just too damned expensive. But I also strongly suspect that the directors have more come round to the view (sorry for the immodesty but it is relevant) I have been boringly expressing here ever since the club two years ago outlined a business plan based on filling a 35,000-seat stadium pretty much all the time - that it was a load of tosh, and looked more and more like a load of tosh as the economic news grew (and will continue to grow, particularly next Wednesday) increasingly bad. There is still a strong argument for increased capacity at some point because, as the directors worked out for themselves, in the long run it offers the prospect of unique extra income for decades ahead. Everybody gets the TV money, and we get less than most. But thousands of extra seats (even if the board''s view of how many potential extra fans there are is over-optimistic) equals money, and not just from tickets; catering and commercial too. This is why Craven Cottage is being expanded; why QPR want to move. Of course expansion is expensive, and would put us into debt. But on that basis we would never expand.

Apart, then, from the TV money, what picture do we get from the latest accounts and the forecasts for this season? In 2012 we had turnover (ie revenue) of £74.3m, we paid off £5m of debt, spent about £25m on player wages, and made a post-tax profit of £13.4m. As I said at the time those results were slightly freakish (ie, better than they might have been) in that they reflected a season of PL income but without the full costs, because of a wage structure yet to get in sync with PL norms. Plus we paid off only a third of the remaining debt, leaving two-thirds for this year.

At the AGM finance officer Sam Gordon was reported as giving 2013 figures of £87.8m for spending and £2.8m for profit. Football finances are weird, with players bought and sold on the instalment plan, but if we expect to make a profit of nearly £3m after spending nearly £88m, then commonsense says income will be a bit above £90m, as against income last season of £74.3m. That is some rise, so I am cautious about that £87.8m figure, which is considerably higher than for 2012. There may be special factors at play. Or I may be missing something obvious. Otherwise it is hard to see where the extra £25m of income comes from. TV money will be the same. Catering and commercial brought in a total of £11m, so even a 25 per cent rise there would only produce an extra £2.75m. Ticket sales were at £11.3m, so bump them up by 25 per cent to £13m. Still way short of £25m.

The other intriguing figure Sam Gordon gave was £31m for wages. Now I assume she was talking about player wages, rather than overall staff costs. If so, that is a 24 per cent rise on 2012. Getting more in line with PL norms. Factor that in, and paying off £11m in debt, andit is no surprise that profits will be sharply down. But still in the black is better than the other colour.

As to the 2013-14 season (assuming etc)? No more debt to pay (probably a smidgen but we''ll ignore that) unless Smith and Jones and Foulger want back some or all of their £3.5m. And that TV gold! Or is it iron pyrites? A tentative suspicion is that financially we will be well off that year (rather as with 2012) because it may take a season or so for transfer fees and wages to find their new - higher - level. But that will apply to all clubs. And that level will rise sooner rather than later.

[Gingerpele 0]

Very interesting Purple.

Its easy just to assume our finances are now wonderful, and when we stay up we''ll be able to spend loads of money on transfers.

But really wages are going to be the big issue. You''d assume Bassong is probably now the highest earner, coming in from Spurs, but maybe not. If he''s earning more than others, and there is interest from other clubs for our top players they will want more money, because our wage budget is going to be lower than a lot of other Premiership clubs. Even the likes of Villa would be able to offer someone like Pilks, Ruddy, Johnson more money.

I''d think over the next couple of years our wage budget will increase quite a bit, mostly on current players. Its something that needs to happen to keep them here. We can pretend they all love Norwich and never want to leave, but the truth is you get very few Huckerby types who''d be happy to take a pay cut to stay, only to have the worst manager ever force you to go. Ruddy might love it here, but if Arsenal are interested and say they''d pay him I don''t know, £35k a week, and he''s on £20k here (completely made up guesses) he''s not just going to say, ''sorry Arsenal, I like it at Norwich, £15k extra a week is nice but I don''t need it'' is he... So Arsenal come in with that offer, we would need to not necessarily match it, as they wouldn''t offer him first team football but increase his pay £5k+.

[Beefy is a legend 224]

It seems to me that our position will significantly improve next year. With the majority of the external debt paid off that will give us some £11m that had to used to pay the debt this year, and going forward we no longer have the drag factor of interest payments that have hindered the Club for so long.

We also have the new TV deal kicking in, which looks to add around £25m to current income.

That in itself gives us the ability to increase our wage structure at the Club, which is really the most important factor in being able to attract better quality players.We have started that process already. Of course all the other Prem sides will get the same benefit, but for those newly promoted sides it is all the more challenging to compete and gives us a better chance of establishing ourselves in this division in the mid-term.

As for the ground capacity, I think at the moment from what McNally has said that the Club considers squad investment to establish ourselves as more important than a big investment in the ground which would take several years to pay for itself and start bearing fruit. We want to try to ensure we have a Premier League squad before we start undertaking large off the field investments.

The biggest achievement in the last few years for the Club''s future, apart from Premier League status, is in my view the paying off of the debt. That 20-odd million figure had been with us as far back as I could remember and I really think it has been a noose around our neck and explains a great deal why even similar sized Club''s have had a far larger wage budget to us. It really does set us free and everything we earn can now be used purposefully instead of disappearing into a black hole.

All in all, it''s looking pretty positive IMO.

[nutty nigel 7,513]

Great stuff as ever Purple but I have a slightly different take on the TV income / ticket income debate. For me the two are very closely related in as much as if we no longer got the TV income the demand for tickets would drop to below our present capacity. I believe it''s the exposure of football on TV that and the associated income that has attracted some of the best players in the world to play here. If we lost that the "gravy train" would move on somewhere else with the top players and maybe even the top clubs. I think with the TV exposure moving demand for tickets would drop.

 

 

[lappinitup 629]

[quote user="PurpleCanary"]Apart, then, from the TV money, what picture do we get from the latest accounts and the forecasts for this season? In 2012 we had turnover (ie revenue) of £74.3m, we paid off £5m of debt, spent about £25m on player wages, and made a post-tax profit of £13.4m. As I said at the time those results were slightly freakish (ie, better than they might have been) in that they reflected a season of PL income but without the full costs, because of a wage structure yet to get in sync with PL norms. Plus we paid off only a third of the remaining debt, leaving two-thirds for this year.

[/quote]Excellent post again Purple. Two points I don''t understand, we made a post-tax profit of £13.4m, so why didn''t we pay the outstanding £11m debt off with that, and also, with that profit, why will we run out of cash for two months?

[Jonzey 0]

Thanks Purple, your financial posts are amazing. The above goes some way to prove that no matter what the income of a football club, they will always find a way to spend it, rather than reduce how much an average punters average match costs are. The Gordon Gekko analogy is spot-on.I personally believe as TV income inflates therefore dwarfing match day income, that match day supporters should benefit, based on the assumption that match day income becomes a much smaller percentage on the year end balance sheet. Then, rather than one single fat cat at the top taking insultingly large bonuses should the club turn a proft (as they all should), the money should go perhaps towards a reduction in next years season ticket prices. A bonus for everybody who has contributed towards the success of the club, not just one greedy b*stard. Ergo, the sport is given back to the people by the money men who, quite frankly, have taken the sport, and rinsed it for all it is worth to buy Bentleys. I''m off to whistle into the wind.

[vos 155]

To answer lappintup the profit of £13.4 m was used to substantially reduce the debt for the same year. Assuming they will make a similar profit for next year then they will clear the £11m debt. The only possibility of temporarily running out of cash is purely due to the timing of receipts, in particular Sky Money. The Club already receives a huge cash flow boast in that they will ask for season ticket money in the spring of 2013 for viewing matches which take place up to May 2014.

As regards future income next year we will get about 75m from Sky and ticket receipts - assuming a 5% increase will be below £12m. By the way based on this split Delia was wrong to suggest increases in tickets were necessary to keep up with "premiership wages". In a nutshell premiership football is more or less totally controlled by Sky so that it will probably be not too long when they will arrange for a premiership game to be played every day/night. It brings in more advertising revenue etc. So ticket sales are not a big deal and thats why the Club realises there is no need to increase capacity as its all about money these days.

The big question is how long will the huge worldwide football TV market last ?? It is all massively hyped at the moment although it is my personal opinion that the standard has fallen this year and frankly many games are pretty predictable and boring. But you will never beat a live game when your heroes see off Man United.

[ricardo 7,349]

[quote user="lappinitup"][quote user="PurpleCanary"]Apart, then, from the TV money, what picture do we get from the latest accounts and the forecasts for this season? In 2012 we had turnover (ie revenue) of £74.3m, we paid off £5m of debt, spent about £25m on player wages, and made a post-tax profit of £13.4m. As I said at the time those results were slightly freakish (ie, better than they might have been) in that they reflected a season of PL income but without the full costs, because of a wage structure yet to get in sync with PL norms. Plus we paid off only a third of the remaining debt, leaving two-thirds for this year.

[/quote]Excellent post again Purple. Two points I don''t understand, we made a post-tax profit of £13.4m, so why didn''t we pay the outstanding £11m debt off with that, and also, with that profit, why will we run out of cash for two months?

[/quote]The loan note agreement runs to May 2013 so will show up in next years accounts. Don''t ask me why Lapp but I assume the auditors and accounts do things for a reason.

[ricardo 7,349]

Well I''m gratified to find that I''m not alone in thinking that regularly filling a 35k stadium is a load of tosh. It''s possible for a few big games in the Prem but highly unlikely that we would need over 30k for the rest.The f/cast budget for next season of £87.8 million was fully explained at the AGM so its no mystery. I''m not an accountant so I could only give a rough overview in my report. If you are really desperate to know the ins and outs of these figures Purple, then buy some shares and go to an AGM. You can have one of mine for £120 or perhaps Nutty can sell you a few of his much larger portfolio.[:D]

[Bill 1,788]

[quote user="vos"]

To answer lappintup the profit of £13.4 m was used to substantially reduce the debt for the same year. Assuming they will make a similar profit for next year then they will clear the £11m debt. The only possibility of temporarily running out of cash is purely due to the timing of receipts, in particular Sky Money. The Club already receives a huge cash flow boast in that they will ask for season ticket money in the spring of 2013 for viewing matches which take place up to May 2014.

As regards future income next year we will get about 75m from Sky and ticket receipts - assuming a 5% increase will be below £12m. By the way based on this split Delia was wrong to suggest increases in tickets were necessary to keep up with "premiership wages". In a nutshell premiership football is more or less totally controlled by Sky so that it will probably be not too long when they will arrange for a premiership game to be played every day/night. It brings in more advertising revenue etc. So ticket sales are not a big deal and thats why the Club realises there is no need to increase capacity as its all about money these days.

The big question is how long will the huge worldwide football TV market last ?? It is all massively hyped at the moment although it is my personal opinion that the standard has fallen this year and frankly many games are pretty predictable and boring. But you will never beat a live game when your heroes see off Man United.

[/quote]

 

"premiership football is more or less totally controlled by Sky "

 

Not strictly true, as the domestic rights are about 50% with overseas sales being the other 50%, Of the domestic market sky are paying  around 75% (2013-16) with BT the other 25?.

 

It is the overseas market, asia in particular, that is the cause of games being played at noon on a Saturday.

 

Whilst the few million it would take to subsidise any stadium increase might seem chicken feed compared to the sums now involved, it could well be a massive drain a few years later in the Championship, when the parachute money has gone. Anyone speculating that the TV money will continue at these eye watering rate would be a very brave man - even braver to gamble that we will stay in the PL for the next 20 years so we have that money for subsisding any new seats.

 

I would definitely share your concerns about " how long will the huge worldwide football TV market last ". Within one season the bubble has already burst for City. how much that is due to the initial euphoria wearing off, at home to Stoke is probably no more entertaining/attractive than home to Derby in the Championship.games are now being shown live in pubs as they are on internet streams. It is that technology that maybe the biggest cause for concern to the money men. If those buying the rights in the UK can''t stop pubs in the UK what chance with a cafe/bar in the far east ?

 

As to what happens with the money I would expect to see far more put into the training and coaching infrastructure, as with the acadamy. Category 1 now allows us to recruit not only nationwide, but pretty much across the globe. Hiring the best coaches has certainly shown it''s worth when you look at the success of the GB Olympic team. However we will need to retain PL status to see the long term benefits of this investment and development, which would suggest all efforts will be targeted at the aim.

 

 

[PurpleCanary 5,554]

[quote user="ricardo"]Well I''m gratified to find that I''m not alone in thinking that regularly filling a 35k stadium is a load of tosh. It''s possible for a few big games in the Prem but highly unlikely that we would need over 30k for the rest.

The f/cast budget for next season of £87.8 million was fully explained at the AGM so its no mystery. I''m not an accountant so I could only give a rough overview in my report. If you are really desperate to know the ins and outs of these figures Purple, then buy some shares and go to an AGM. You can have one of mine for £120 or perhaps Nutty can sell you a few of his much larger portfolio.[:D]
[/quote]

 

A load of tosh? Oh yes, I am afraid I have been a prize bore on the subject here for nearly two years now, ever since Bowkett and McNally unveiled their plan, but there is no reason at all why you should have noticed someone else''s opinion. As to shares, a thoughtful, albeit overly generous, offer, but I already possess a few. If the AGM ever coincided with me being back in the UK I would attend. As it is I have to do my poor best to understand these things from a distance.

[ricardo 7,349]

[quote user="PurpleCanary"]

[quote user="ricardo"]Well I''m gratified to find that I''m not alone in thinking that regularly filling a 35k stadium is a load of tosh. It''s possible for a few big games in the Prem but highly unlikely that we would need over 30k for the rest.The f/cast budget for next season of £87.8 million was fully explained at the AGM so its no mystery. I''m not an accountant so I could only give a rough overview in my report. If you are really desperate to know the ins and outs of these figures Purple, then buy some shares and go to an AGM. You can have one of mine for £120 or perhaps Nutty can sell you a few of his much larger portfolio.[:D][/quote]

 

A load of tosh? Oh yes, I am afraid I have been a prize bore on the subject here for nearly two years now, ever since Bowkett and McNally unveiled their plan, but there is no reason at all why you should have noticed someone else''s opinion. As to shares, a thoughtful, albeit overly generous, offer, but I already possess a few. If the AGM ever coincided with me being back in the UK I would attend. As it is I have to do my poor best to understand these things from a distance.

[/quote]Ahhh, I forgot you are not in the UK.A sun drenched tropical beach, palm tree''s waving, nubile maidens in wet T shirts....................... or shall I go to the Norfolk lounge on a cold November evening.Nah, don''t think I''d bother either.[;)]

[ZLF 271]

[quote user="ricardo"]Well I''m gratified to find that I''m not alone in thinking that regularly filling a 35k stadium is a load of tosh. It''s possible for a few big games in the Prem but highly unlikely that we would need over 30k for the rest.

[/quote]

 

 

[Y]

[Monty13 2,229]

The thing I find most concerning about the TV money increase is the effect it will have on relegated teams. I truly believe we will stay up this year, and I hope I''m right because the more premiership money goes up the more disastrous relegation looks.

I agree with you that premiership wages will inevitably rise with the huge percentage increase in extra income. Unless teams have some incredibly well written player contracts in relation to relegation though, the effect of this in that instance will inevitably be more dramatic. Does anyone know whether parachute payments are increasing correspondingly?

It also makes promoted teams lives adjusting to the money harder and inevitably more risky going all out to stay up. It''s great that it looks increasingly likely we will be part of the better off club, but the football haves and have nots are diverging at an even greater rate (although there will with transfers inevitably be some trickle down).

Personally I think this is the last time this money will increase in this way, Football is global but it has made its way, increasingly publicly, on to the internet. Sky can''t stop that, however much they try, bigger industries have tried and failed (music/film), they either find a way to gain advantage from that situation or sit and suffer the effects. At the minute the strategy towards streaming and pubs seems ineffective and outdated imo and they will suffer financially for it.

[ricardo 7,349]

[quote user="Monty13"]The thing I find most concerning about the TV money increase is the effect it will have on relegated teams. I truly believe we will stay up this year, and I hope I''m right because the more premiership money goes up the more disastrous relegation looks.

I agree with you that premiership wages will inevitably rise with the huge percentage increase in extra income. Unless teams have some incredibly well written player contracts in relation to relegation though, the effect of this in that instance will inevitably be more dramatic. Does anyone know whether parachute payments are increasing correspondingly?

It also makes promoted teams lives adjusting to the money harder and inevitably more risky going all out to stay up. It''s great that it looks increasingly likely we will be part of the better off club, but the football haves and have nots are diverging at an even greater rate (although there will with transfers inevitably be some trickle down).

Personally I think this is the last time this money will increase in this way, Football is global but it has made its way, increasingly publicly, on to the internet. Sky can''t stop that, however much they try, bigger industries have tried and failed (music/film), they either find a way to gain advantage from that situation or sit and suffer the effects. At the minute the strategy towards streaming and pubs seems ineffective and outdated imo and they will suffer financially for it.[/quote]Parachute payments at the moment are 16,16,8,8 million quid over the four years. My understanding is that when the new payments are finalised the Parachute payments will increase pro rata.

[spudgfsh 0]

On a truly NCFC basis. The club are well run financially (from the outside looking in at least) and I can''t see that the club have signed contracts which allow

1) players to become a burden financially on the club following relegation

2) players to be *easy* fodder for other teams.

If you add to that the fact club will be essentially externally debt free from the end of this season and I can see a rosy future whatever league we are in.

In the (unlikely) event we go down

The financial stability means there will be no financial pressure to sell players in the event of relegation, which means keeping our better players (or at least those who aren''t mercenaries). We will also be able to get in quality players.

We will have a major advantage over the competition who are (and will continue to be) burdened by debt,

In the more likely event that we stay up, we will be able to build the footballing foundations of the club (players and stadium) so we can be a self sustaining premier league club.

[Rolf Harris 31]

[quote user="City1st"][quote user="vos"]

To answer lappintup the profit of £13.4 m was used to substantially reduce the debt for the same year. Assuming they will make a similar profit for next year then they will clear the £11m debt. The only possibility of temporarily running out of cash is purely due to the timing of receipts, in particular Sky Money. The Club already receives a huge cash flow boast in that they will ask for season ticket money in the spring of 2013 for viewing matches which take place up to May 2014.

As regards future income next year we will get about 75m from Sky and ticket receipts - assuming a 5% increase will be below £12m. By the way based on this split Delia was wrong to suggest increases in tickets were necessary to keep up with "premiership wages". In a nutshell premiership football is more or less totally controlled by Sky so that it will probably be not too long when they will arrange for a premiership game to be played every day/night. It brings in more advertising revenue etc. So ticket sales are not a big deal and thats why the Club realises there is no need to increase capacity as its all about money these days.

The big question is how long will the huge worldwide football TV market last ?? It is all massively hyped at the moment although it is my personal opinion that the standard has fallen this year and frankly many games are pretty predictable and boring. But you will never beat a live game when your heroes see off Man United.

[/quote]

You really don''t want to move away from your seat do you? "rhetorical"  ;) when the stand is being refurbished. 

 

"premiership football is more or less totally controlled by Sky "

 

Not strictly true, as the domestic rights are about 50% with overseas sales being the other 50%, Of the domestic market sky are paying  around 75% (2013-16) with BT the other 25?.

 

It is the overseas market, asia in particular, that is the cause of games being played at noon on a Saturday.

 

Whilst the few million it would take to subsidise any stadium increase might seem chicken feed compared to the sums now involved, it could well be a massive drain a few years later in the Championship, when the parachute money has gone. Anyone speculating that the TV money will continue at these eye watering rate would be a very brave man - even braver to gamble that we will stay in the PL for the next 20 years so we have that money for subsisding any new seats.

 

I would definitely share your concerns about " how long will the huge worldwide football TV market last ". Within one season the bubble has already burst for City. how much that is due to the initial euphoria wearing off, at home to Stoke is probably no more entertaining/attractive than home to Derby in the Championship.games are now being shown live in pubs as they are on internet streams. It is that technology that maybe the biggest cause for concern to the money men. If those buying the rights in the UK can''t stop pubs in the UK what chance with a cafe/bar in the far east ?

 

As to what happens with the money I would expect to see far more put into the training and coaching infrastructure, as with the acadamy. Category 1 now allows us to recruit not only nationwide, but pretty much across the globe. Hiring the best coaches has certainly shown it''s worth when you look at the success of the GB Olympic team. However we will need to retain PL status to see the long term benefits of this investment and development, which would suggest all efforts will be targeted at the aim.

 

 

[/quote]

[Rolf Harris 31]

[quote user="City1st"][quote user="vos"]

To answer lappintup the profit of £13.4 m was used to substantially reduce the debt for the same year. Assuming they will make a similar profit for next year then they will clear the £11m debt. The only possibility of temporarily running out of cash is purely due to the timing of receipts, in particular Sky Money. The Club already receives a huge cash flow boast in that they will ask for season ticket money in the spring of 2013 for viewing matches which take place up to May 2014.

As regards future income next year we will get about 75m from Sky and ticket receipts - assuming a 5% increase will be below £12m. By the way based on this split Delia was wrong to suggest increases in tickets were necessary to keep up with "premiership wages". In a nutshell premiership football is more or less totally controlled by Sky so that it will probably be not too long when they will arrange for a premiership game to be played every day/night. It brings in more advertising revenue etc. So ticket sales are not a big deal and thats why the Club realises there is no need to increase capacity as its all about money these days.

The big question is how long will the huge worldwide football TV market last ?? It is all massively hyped at the moment although it is my personal opinion that the standard has fallen this year and frankly many games are pretty predictable and boring. But you will never beat a live game when your heroes see off Man United.

[/quote]

 

"premiership football is more or less totally controlled by Sky "

 

Not strictly true, as the domestic rights are about 50% with overseas sales being the other 50%, Of the domestic market sky are paying  around 75% (2013-16) with BT the other 25?.

 

It is the overseas market, asia in particular, that is the cause of games being played at noon on a Saturday.

 

Whilst the few million it would take to subsidise any stadium increase might seem chicken feed compared to the sums now involved, it could well be a massive drain a few years later in the Championship, when the parachute money has gone. Anyone speculating that the TV money will continue at these eye watering rate would be a very brave man - even braver to gamble that we will stay in the PL for the next 20 years so we have that money for subsisding any new seats.

 

I would definitely share your concerns about " how long will the huge worldwide football TV market last ". Within one season the bubble has already burst for City. how much that is due to the initial euphoria wearing off, at home to Stoke is probably no more entertaining/attractive than home to Derby in the Championship.games are now being shown live in pubs as they are on internet streams. It is that technology that maybe the biggest cause for concern to the money men. If those buying the rights in the UK can''t stop pubs in the UK what chance with a cafe/bar in the far east ?

 

As to what happens with the money I would expect to see far more put into the training and coaching infrastructure, as with the acadamy. Category 1 now allows us to recruit not only nationwide, but pretty much across the globe. Hiring the best coaches has certainly shown it''s worth when you look at the success of the GB Olympic team. However we will need to retain PL status to see the long term benefits of this investment and development, which would suggest all efforts will be targeted at the aim.

 

 

[/quote]You really don''t want to move away from your seat do you? "rhetorical"  ;) when the stand is being refurbished. 

[Bill 1,788]

"ever since Bowkett and McNally unveiled their plan£

 

what plan might that be ?

 

 

ps a new two tier stand to replace the city stand would generate around £1.64m, assuming there were NO discounts as with Wigan and assuming EVERY game was a sellout. Where would the money come from to pay the shortfall between ticket income and building costs ?

 

 

[Chelmsford Canary 0]

Great post Purple Canary!

[Chelmsford Canary 0]

One thing I''ve thought reading through these posts, is everyone is saying we don''t need stadium expansion, as we have the sky money.

It''s likely to say (sorry to be down beat) that we will be relegated at some point.

Maybe we should not take it for granted. When McNally came in he had a plan for getting promoted...surely we should have a plan for getting relegated - just in case.

Obviously I would love us to progress and be a Fulham, who have had a taste of Europe, ensure mid table - possible cup run!

[PurpleCanary 5,554]

[quote user="lappinitup"][quote user="PurpleCanary"]Apart, then, from the TV money, what picture do we get from the latest accounts and the forecasts for this season? In 2012 we had turnover (ie revenue) of £74.3m, we paid off £5m of debt, spent about £25m on player wages, and made a post-tax profit of £13.4m. As I said at the time those results were slightly freakish (ie, better than they might have been) in that they reflected a season of PL income but without the full costs, because of a wage structure yet to get in sync with PL norms. Plus we paid off only a third of the remaining debt, leaving two-thirds for this year.

[/quote]

Excellent post again Purple. Two points I don''t understand, we made a post-tax profit of £13.4m, so why didn''t we pay the outstanding £11m debt off with that, and also, with that profit, why will we run out of cash for two months?

[/quote]

 

lapps, the accounts are only a snapshot of the situation on a particular day. And in this case a day just before the summer transfer market was about to get under way. Post-balance sheet we bought/acquired Butterfield, Whittaker, Snodgrass, Turner, Garido, Bassong, Tettey and Bunn. Husbanding money to fund those purchases was almost certainly one reason why we didn''t pay off more debt. As to running out of money, one would have to have access to much more information than I have to know. Football cashflow is weird. But virtually all the remaining debt has to be paid by May 31, 2013, and the anticipated (not certain) shorfall is in the summer. Again, there may be a connection there.

[It's Character Forming 1,160]

I remember when I had a season ticket in the late 90s in Division 1, Doomcaster saying we needed a 16,000 average attendance to break even, but we struggled to reach that.  So I''m definitely in the unpersuaded camp about stadium expansion.  We''ve clearly increased our sustainable attendance to around 26,000 as we were getting that sort of number in the lower divisions.  But would we get much higher numbers for the duller Prem games (Stoke being the most extreme example) now the novelty has worn off.

 

Also having been at Everton, the stand for the away fans was as poor as any I''ve been to with City in our recent seasons in L1 and the Championship.  They clearly spend every penny they can on the squad and spend as little as possible on the stadium.

 

I am 100% behind the policy of paying off the debt which means we save the interest cost and if we are relegated, we can devote the parachute payments to getting straight back up.

[shefcanary 2,389]

Purple, like you I wasn''t at the AGM, but one answer to your conundrum of the £87.8M expenditure is that Sam Gordon was discussing cash flow expenditure not profit and loss / accounting expenditure.  I''m sure you don''t need me to tell you the two are not the same.  Take off the loan repayments from the £87.8 M and you start getting close to the £72M profit and loss figure I think you were trying to reconcile to.  Factor in reduction in interest payments and the increases in income you discussed and I think you have the answer.  I expect Sam Gordon was trying to get across just why we would run out of money whilst still making a profit!

[PurpleCanary 5,554]

[quote user="shefcanary"]Purple, like you I wasn''t at the AGM, but one answer to your conundrum of the £87.8M expenditure is that Sam Gordon was discussing cash flow expenditure not profit and loss / accounting expenditure.  I''m sure you don''t need me to tell you the two are not the same.  Take off the loan repayments from the £87.8 M and you start getting close to the £72M profit and loss figure I think you were trying to reconcile to.  Factor in reduction in interest payments and the increases in income you discussed and I think you have the answer.  I expect Sam Gordon was trying to get across just why we would run out of money whilst still making a profit![/quote]

 

shef, thanks. That could be it. I don''t want to be overly critical, because I understand some of the difficulties, but we should not have to be relying on ricardo in particular to report this stuff back. Unlike a great deal of what was said at the AGM, which was old information, Sam Gordon''s outlining of the budget for the current year was new and significant. The EDP made a passing and vague reference to an extra £7m for wages and player purchases, but the specific figures for profits (sharply down to £2.8m) and wages (sharply up to £31m) were nowhere to be seen. And this is not nerdy accountancy stuff; those numbers (and particularly the £31m) are highly relevant in terms of the football side of the business.

[Yelloow Since 72 54]

Thanks to Purple, Ricardo and everybody else contributing to this, as I now have a far clearer sense of City''s future financial situation. I seem to recall that there was a two stage plan for expansion, the first of which was adding another tier to the present stand, but even that seems at least 3 years down the road now. If you look at the way Newcastle, Villa and Sunderland are struggling, you also realise that there are no givens in this game!

[ricardo 7,349]

[quote user="PurpleCanary"]

[quote user="shefcanary"]Purple, like you I wasn''t at the AGM, but one answer to your conundrum of the £87.8M expenditure is that Sam Gordon was discussing cash flow expenditure not profit and loss / accounting expenditure.  I''m sure you don''t need me to tell you the two are not the same.  Take off the loan repayments from the £87.8 M and you start getting close to the £72M profit and loss figure I think you were trying to reconcile to.  Factor in reduction in interest payments and the increases in income you discussed and I think you have the answer.  I expect Sam Gordon was trying to get across just why we would run out of money whilst still making a profit![/quote]

 

shef, thanks. That could be it. I don''t want to be overly critical, because I understand some of the difficulties, but we should not have to be relying on ricardo in particular to report this stuff back. Unlike a great deal of what was said at the AGM, which was old information, Sam Gordon''s outlining of the budget for the current year was new and significant. The EDP made a passing and vague reference to an extra £7m for wages and player purchases, but the specific figures for profits (sharply down to £2.8m) and wages (sharply up to £31m) were nowhere to be seen. And this is not nerdy accountancy stuff; those numbers (and particularly the £31m) are highly relevant in terms of the football side of the business.

[/quote]I will try and concentrate on the budget f/cast at the next AGM and try to get a few more figures down. Trying to listen at the same time as jot stuff down is not easy, it would have been nice to have the Powerpoint notes for the 2012/13 budget but unfortunately were only made available to the top table. As I remarked in my report the f/cast budget was for 16th spot so anything above that and any cup-tie extras would be in addition to the bottom line.I don''t want to be picky over a million quid but I may have made a slight mistake with the figure Bowkett quoted for the prospective stadium expansion. It was £30 not £31 million. The £31 million figure was the budget f/cast for wages in 2012/13. There was also a figure of £14+ million for player purchases. How much of that is for last summers buys, I couldn''t say but as you rightly comment the accounts are only a snapshot of a moment in time.

[Bill 1,788]

[quote user="Chelmsford Canary"]One thing I''ve thought reading through these posts, is everyone is saying we don''t need stadium expansion, as we have the sky money. It''s likely to say (sorry to be down beat) that we will be relegated at some point. Maybe we should not take it for granted. When McNally came in he had a plan for getting promoted...surely we should have a plan for getting relegated - just in case. Obviously I would love us to progress and be a Fulham, who have had a taste of Europe, ensure mid table - possible cup run![/quote]

 

I''m not sure anyone is really saying that. What has been said is that ticket income is a far lower percentage of the overall ''take'' than before. It is not sky money either, they contribute only around a third - not a pedantic point, just a recognition how lower a percentage their money is also becoming. It is the overseas market that is the main player as far as  money is concerned.

 

As to relegation the cub has repeatedly addressed this question, with the point being that whilst we could subsidise the expansion(ie less money taken than the cost of building the stand) it could well cripple us were we out of the PL for a number of seasons.

 

Unfortunately we seem to have a number of fans who think that we don''t have to pay to buils a new stand and any money from extra seats is pure profit, As above, with ALL tickets sold, at CURRENT prices an 8000 new stand would generate around £1.64m.  Can we be certain that we could sell those extra 4000 seats for every game, and at PL prices if we were in the Championship ?

 

 

[Monty13 2,229]

I put this on the expansion thread but the debate seems to have raged on here.

I''m sorry, some of the calculations on here for what ticket income could be generated by an increased capacity are wildly inaccurate as the method for extrapolating the figures are totally flawed.

Using 410,000 as the figure per thousand as an average of current sales and then multiplying it by the number of thousand new seats gives you a figure well below the maximum potential income if tickets were the same price and games sold out. This is because it extrapolates that the new seats will be held by the same percentage of current season tickets in the current capacity, highly unlikely and season ticket prices per game are massively below that of casuals. Also unless someone can show me otherwise, any talk of expansion by the board has always been about creating an EXTRA 8000 seats to bring us to 35,000, not replacing 4000 with 8000. Therefore even using the wrong figure of 410,000 the potential maximum new income would be 3.3 million.

Personally i don''t think the figure however it''s calculated will be that high as I agree for non (real) cat a games ticket prices will have to drop to stimulate demand. And is there another regular 8000 fans? I don''t know, but neither does anyone else unless they have done some pretty hefty market research and the club haven''t shown it to anyone if it is done.

Anyway the difference, and there will be a difference (especially when the stands being built!) will have to come from somewhere, but as I tried to show by doing the loan maths above (on other thread), because the board is talking about a lengthy loan, and it''s unclear of what the actual yearly payments will be, it might be relatively small or even nothing in a good year but close to the yearly payment in a bad year. Over the life of the loan it is certain to fluctuate. Certainly in the premiership it would be very low once it is built with ticket and confectionary sales there might even be a profit, but if we suffered relegation it could be as much as the yearly cost of the loan (whatever that might be but no more than the figures I quoted before).

It''s a complete catch 22 situation, in the premiership it''s almost a no brained but if we relegated (when we might need the income most) it will likely be a drain on the playing staff. Hence why again I understand the boards new found reluctance when there is no enforced requirement.

Once again I do worry when the better time will be though, because in my mind while a long repayment schedule of 20 years makes it cheaper per year, it also means there will never be a better or worse time to do it as no one can predict the fortunes of the club or football in general over such a period.

[shefcanary 2,389]

I hear what everyone says about stadium expansion being too much of a gamble really, given experiences at Carrow Road and elsewhere.  But it is still a desirable and as Monty13 said, when is there a better time to do it if we hold our nerve (low building costs given the economic downturn, no real debt by next June, and increased cashh flow from TV money IF we stay in Premier league).  For this reason, and this reason only, whilst Bowkett and McNally are protraying an ever more cautious view in public, I am sure behind the scenes they are working on something that will enable this to happen without impact on the playing budget.  I''m awaiting for the Club''s full consultation on naming rights early next year  .........!