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PurpleCanary

Commercial revenue

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I know you are all secretly dying for another thread on this subject. But this will be brief. To recap, one of the arguments against ground expansion - very crudely put - is that it would cost a great deal (perfectly true) but would not bring in a significant amount of money, because in the Premier League our overriding source of income is from TV.Now the estimable Swiss Ramble website has published a whole set of financials from the 2011-12 season, ie our first back in the big time. And one chart stands out. In terms of commercial revenue (catering and the club shop but not ticket sales or TV money) we were eighth out of 20, ahead of teams with much bigger stadiums, such as Newcastle, Villa and Everton.Commercial revenue, at £14m, represented 18.8 per cent of overall revenue of £74.3m. Add in ticket sales of £11.3m  and they made up 34 per cent of revenue. TV money provides two-thirds, but one third of revenue from areas where there would be room for significant growth if the capacity was increased is not to be sniffed. It backs up the argument that in the long run (over decades) stadium expansion would pay for itself, by way of extra income from ticket sales and commercial activities.

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"It backs up the argument that in the long run

(over decades) stadium expansion would pay for itself, by way of extra

income from ticket sales and commercial activities."oh dearoh dearieover decades ?There is no certainty of where we will be in decades time, even where football will be in decades time.To handicap ourselves with unnecessary debt ......... because we might be able to repay it in decades ahead is the workings of the lunatic asylum.Thankfully the board of NCFC are not resident, or even out patients, to that type of institution.

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A bit knee jerk there City1st.

Going on what Purple has said before about this I don''t think he is suggesting it is a good idea in the current climate - just that it''s not the financial sinkhole that others have suggested it is.

Also, not in this post, but in others he has also suggested the largest issue would really be getting the funding in the first place with banks far less more likely to loan us the £20-30million for the expansion. That really means it is down to us to finance as a club, which I fully expect that they are.

If you are looking at getting in £70million and having now cleared the external debts I should imagine that they will now start thinking on how to spend the money that previously went on debt repayments. Part of that maybe squirreling money away for stadium expansion.

After all, we are going to hit a sort of limit soon in terms of balancing how much we spend on players in transfers and how much we spend on their wages.

As many financial reports will tell you, it''s not just transfer fees that increase when you bring in better players it is their wages as well.

Exactly what calibre of player our club will be able to sustain may yet not be determined.

But in the long run a stadium expansion would not only pay for itself, it could go on to provide an improved source of income.

When it comes to persuading a player to play for a club, do you think crowd and stadium capacity helps? I certainly do. With a 35,000+ seater stadium being full most weeks we could really start to argue we are not just another ''little provincial'' team, it might even make us more eligible to host full internationals in tournaments etc - who knows?

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This year we''ve improved the TV gantry and made big improvements at Colney, it seems the rest of our budget is going on Players.If it was me saving for a home improvement, I would not spend all the cash, but some in savings, culd the club not work on the same principle ?

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This year we''ve improved the TV gantry and made big improvements at Colney, it seems the rest of our budget is going on Players.If

it was me saving for a home improvement, I would not spend all the

cash, but some in savings, could the club not work on the same principle ?SPELL CHECK !

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[quote user="chicken"]A bit knee jerk there City1st.

Going on what Purple has said before about this I don''t think he is suggesting it is a good idea in the current climate - just that it''s not the financial sinkhole that others have suggested it is.

Also, not in this post, but in others he has also suggested the largest issue would really be getting the funding in the first place with banks far less more likely to loan us the £20-30million for the expansion. That really means it is down to us to finance as a club, which I fully expect that they are.

If you are looking at getting in £70million and having now cleared the external debts I should imagine that they will now start thinking on how to spend the money that previously went on debt repayments. Part of that maybe squirreling money away for stadium expansion.

After all, we are going to hit a sort of limit soon in terms of balancing how much we spend on players in transfers and how much we spend on their wages.

As many financial reports will tell you, it''s not just transfer fees that increase when you bring in better players it is their wages as well.

Exactly what calibre of player our club will be able to sustain may yet not be determined.

But in the long run a stadium expansion would not only pay for itself, it could go on to provide an improved source of income.

When it comes to persuading a player to play for a club, do you think crowd and stadium capacity helps? I certainly do. With a 35,000+ seater stadium being full most weeks we could really start to argue we are not just another ''little provincial'' team, it might even make us more eligible to host full internationals in tournaments etc - who knows?[/quote]

 

You''re quite right, chicken. I am not suggesting we do it now. I understand the funding problems. I understand the need to bolster the squad. I also understand it would take a long time for expansion to pay for itself.But over several decades, unless the club went catastrophically wrong, it would pay for itself. And you wouldn''t need to fill a 35,000-seat stadium every season. Over decades you would only need one season every so often with average attendances of 30,000 or 31,000 to provide the extra revenue to pay for expansion. I am far from assuming continued membership of the top flight. I am factoring in seasons in the second and third tiers as will as some in the top flight.But as those Swiss Ramble figures indicate we would benefit not just from extra ticket sales but from extra commercial revenue. More supporters at the ground means more sales in the club shop and more money from catering.

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"But in the long run a stadium expansion would not only pay for itself, it could go on to provide an improved source of income."

And there is where it all falls downOn present income, increasing the capacity by 25% would increase the revenue by 25% - so let''s say £4m, which equates to a few extra palces up the tableHowever what is known is that any increase in capacity would require a decrease in price, so that intial figure would have to be reduced.Even with stimulus there is no certainty of selling out every game so down comes the take.There is no certainty that the number of premium price tickets (Main Stand), executive boxes etc) would rise accordingly so down would comes that headline figure.As to 35, 000, where is that going to come from. It would require a new 12,000 seater stand to replace the old Main Stand,and I''m not too sure it would be possible to build it in the space available.

So what we have is a massive stand that will have to cost us nothing to build to generate at best a couple of million pounds - PL prices. Assuming that you haven''t factored in the loss of revenue from the Main Stand whilst the work on the new 12,000 seater stand is being built. For this is to happen then the money would have to come from savings ie player budget nw and the next few seasons.I''m not too sure what you mean about ""After all, we are going to hit a sort of limit soon in terms of

balancing how much we spend on players in transfers and how much we

spend on their wages."
As yes, that is basically what we earn is what we can spend. The proposed Fair play stuff is merely to stop rich investors putting in loads or clubs spending more than they earn.

The simply fact is however you spin it, increasing the capacity will cost money as the building costs cannot be met by ticket sales/ food etcMoney would have to be taken from the playing budget to meet those costs.There is no real ''long term strategy'' as unlike player development we cannot know where we are from one season to the next. It is therefore only ever going to be long term gambling - and given how minimal the returns are against how heavy the burden could be then as it stands the club is unlikely to take that gamble.Shout and scream at me as much as you like. Tell me hard luck stories about poor ''horphans'' who cannot get to watch games or any other sentimental guff but as football is currently financed then everything will be thrown at staying in the PL.Simple as that.

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[quote user="City1st"]"But in the long run a stadium expansion would not only pay for itself, it could go on to provide an improved source of income."

And there is where it all falls downOn present income, increasing the capacity by 25% would increase the revenue by 25% - so let''s say £4m, which equates to a few extra palces up the tableHowever what is known is that any increase in capacity would require a decrease in price, so that intial figure would have to be reduced.

[/quote]

 

No. It doesn''t fall down. You continue to think in the short-term. Over decades the prices would go up. The average annual income from a seat at Carrow Road in, say, 2050, will be bound to be significantly higher than the roughly £420 it is now.

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I have to strongly disagree with you on several points City1st. Mainly because you are assuming a lot of things.

First of all: "On present income, increasing the capacity by 25% would increase the revenue by 25% - so let''s say £4m, which equates to a few extra places up the table."

Which is easier to achieve? Which is easier to sustain? It isn''t just a few places either - last season a place in the table was rumoured to be worth £700-800k. That equates to at least five places. You are talking about 6th. Do you think £30 million in transfers and wages could guarantee us that return? Especially over a longer period of time?

The team''s position may well fluctuate in the top flight but if they remain there and the support remains similar to what it is now it is a much healthier financial risk. Than relying on additional playing staff funds to get you the better return in terms of league places.

"However what is known is that any increase in capacity would require a decrease in price, so that initial figure would have to be reduced."

This very much depends. If the expansion is only of say 3,000 extra seats taking us over the 30,000 mark why would they have to reduce prices, they have a waiting list of season ticket holders and there is a reasonable level of casual buyers. There is no evidence to suggest an expansion of up to 5k would require a reduction in price. It may do, but at the moment a healthy season ticket waiting list suggests that you''d probably be able to fill a good number of that expansion now should it magically appear.

If you are talking about 5-10k extra seats then maybe you are right and the price would need to be reconsidered.

"Money would have to be taken from the playing budget to meet those costs."

Not sure where that one comes from. The club is in line to make some really healthy profits in the next few years, being external debt free and with the increased TV money from Sky. All of this is not ''playing budget''. Any club would be foolish not to invest some of this into ways that they club can become bigger in terms of commercial profit. For example allowing space in the new stand for other commercial ventures - not just match day experience ventures.

Infact especially now when the FFP puts a lot of pressure back onto the clubs increasing their own profit to be able to increase what they spend on their players.

So in a way a stadium increase is a double plus in that sense. As the new commercial revenue would count towards our total revenue that would be another (by your calculations) £4million into the pot to which we can directly spend on players/wages.

From what I can see of your argument - I would be more inclined to agree with it if you were talking about having to take out a £30million loan.

Neither myself or Purple have said that.

My suggestion would be that the club could next season, give Hughton £40million to spend on players and still be able to put some aside for stadium development. Going by the most conservative quotes that would still leave £30million+club commercial revenue profits to cover wages etc.

At this point it gets much murkier as I tend to just read what Purple presents on here rather than memorise it. But I think they could easily plan to be able to finance it for say in three years time, then you don''t have to worry about it making money to pay for itself - our success in the premiership would have done that.

I don''t think anyone is saying do it now, more like, how could it be done. Whereas some are staunchly against it without any real substance to which Purple is just providing a little more to be used either way.

Obviously if it wasn''t financially viable, Purple would be the first to say.

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[quote user="PurpleCanary"]

[quote user="City1st"]"But in the long run a stadium expansion would not only pay for itself, it could go on to provide an improved source of income."

And there is where it all falls downOn present income, increasing the capacity by 25% would increase the revenue by 25% - so let''s say £4m, which equates to a few extra palces up the tableHowever what is known is that any increase in capacity would require a decrease in price, so that intial figure would have to be reduced.

[/quote]

 

No. It doesn''t fall down. You continue to think in the short-term. Over decades the prices would go up. The average annual income from a seat at Carrow Road in, say, 2050, will be bound to be significantly higher than the roughly £420 it is now.

[/quote]Who know''s?I can confidently predict that however much it has gone up, I won''t be paying it.[:)]When it comes to stadium expansion we really need to have some input from Tom Cavendish.[;)]

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[quote user="ricardo"][quote user="PurpleCanary"]

[quote user="City1st"]"But in the long run a stadium expansion would not only pay for itself, it could go on to provide an improved source of income."

And there is where it all falls downOn present income, increasing the capacity by 25% would increase the revenue by 25% - so let''s say £4m, which equates to a few extra palces up the tableHowever what is known is that any increase in capacity would require a decrease in price, so that intial figure would have to be reduced.

[/quote]

 

No. It doesn''t fall down. You continue to think in the short-term. Over decades the prices would go up. The average annual income from a seat at Carrow Road in, say, 2050, will be bound to be significantly higher than the roughly £420 it is now.

[/quote]Who know''s?I can confidently predict that however much it has gone up, I won''t be paying it.[:)]When it comes to stadium expansion we really need to have some input from Tom Cavendish.[;)][/quote]

 

Neither will I, ricardo. We will both be dead. Or unnaturally old. But just as prices in 1976 were significantly lower than now, so prices 37 years on from 2013 will be higher.

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[quote user="chicken"]I have to strongly disagree with you on several points City1st. Mainly because you are assuming a lot of things.

First of all: "On present income, increasing the capacity by 25% would increase the revenue by 25% - so let''s say £4m, which equates to a few extra places up the table."

Which is easier to achieve? Which is easier to sustain? It isn''t just a few places either - last season a place in the table was rumoured to be worth £700-800k. That equates to at least five places. You are talking about 6th. Do you think £30 million in transfers and wages could guarantee us that return? Especially over a longer period of time?

The team''s position may well fluctuate in the top flight but if they remain there and the support remains similar to what it is now it is a much healthier financial risk. Than relying on additional playing staff funds to get you the better return in terms of league places.

"However what is known is that any increase in capacity would require a decrease in price, so that initial figure would have to be reduced."

This very much depends. If the expansion is only of say 3,000 extra seats taking us over the 30,000 mark why would they have to reduce prices, they have a waiting list of season ticket holders and there is a reasonable level of casual buyers. There is no evidence to suggest an expansion of up to 5k would require a reduction in price. It may do, but at the moment a healthy season ticket waiting list suggests that you''d probably be able to fill a good number of that expansion now should it magically appear.

If you are talking about 5-10k extra seats then maybe you are right and the price would need to be reconsidered.

"Money would have to be taken from the playing budget to meet those costs."

Not sure where that one comes from. The club is in line to make some really healthy profits in the next few years, being external debt free and with the increased TV money from Sky. All of this is not ''playing budget''. Any club would be foolish not to invest some of this into ways that they club can become bigger in terms of commercial profit. For example allowing space in the new stand for other commercial ventures - not just match day experience ventures.

Infact especially now when the FFP puts a lot of pressure back onto the clubs increasing their own profit to be able to increase what they spend on their players.

So in a way a stadium increase is a double plus in that sense. As the new commercial revenue would count towards our total revenue that would be another (by your calculations) £4million into the pot to which we can directly spend on players/wages.

From what I can see of your argument - I would be more inclined to agree with it if you were talking about having to take out a £30million loan.

Neither myself or Purple have said that.

My suggestion would be that the club could next season, give Hughton £40million to spend on players and still be able to put some aside for stadium development. Going by the most conservative quotes that would still leave £30million+club commercial revenue profits to cover wages etc.

At this point it gets much murkier as I tend to just read what Purple presents on here rather than memorise it. But I think they could easily plan to be able to finance it for say in three years time, then you don''t have to worry about it making money to pay for itself - our success in the premiership would have done that.

I don''t think anyone is saying do it now, more like, how could it be done. Whereas some are staunchly against it without any real substance to which Purple is just providing a little more to be used either way.

Obviously if it wasn''t financially viable, Purple would be the first to say.[/quote]

"Mainly because you are assuming a lot of things."ye gods, that beggars belief" You are talking about 6th"No I am not, as we do not start in 11th place every season. The comparison was in prize money not position, to show how little extra capacity would return." If the expansion is only of say 3,000 extra seats taking us over the 30,000 mark"that was not the figure you post up, therefore it is misleading to compare figures"There is no evidence to suggest an expansion of up to 5k would require a reduction in price."there is, check with the ticket office"Infact especially now when the FFP puts a lot of pressure back onto

the clubs increasing their own profit to be able to increase what they

spend on their players"incorrect"

"Money would have to be taken from the playing budget to meet those costs."

Not sure where that one comes from"oh dear, where then ? thin air ? either the money is used for the playing budget or it is not "Obviously if it wasn''t financially viable, Purple would be the first to say."It isn''t commercially viable irrespective of what purple says. The figures demonstrate that themselves.The real assumptions are coming from yourself in that you assume that football will remain static and that we will be in the PL for the next few decades.

To simplify it as much as possible.To finance a new stand the club eitheri) saves for so many yearsii) meets the loan repayments out of current income.The first would be absurd as we might be relegated yet have £20m in the bank to built a new stand. The second means using money that would be used for the playing budget.The risks arei) the use of part of the playing budget will seriously impact on a ability to stay in the PLii) we will carry a debt for a couple of decades without knowing if we will have the means to pay that debt

As it stands we do not know what divison we will be in next season never mind in 2050 ! We do not know what TV money will be available in 3 or4 seasons time. Technology is moving at a pace where it might be impossible for TV companies to stop free access to live games and so reduce income.Yet for the possibility of a few extra quid in ''a few decades'' time we are to put our neck bak in the noose ? No one is against extra capacity it is just that the figures don''t stack up - moreso when measured against the risk. It is all very well to talk of 35,000 capacity, but not ok to tell us where the stand is going to be built, or where the 4000 inhabitants are going to go during construction.Some comment on that might be welcome.

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@City1st: It is clear that you have got such an idea in your head that you simply are not engaging in a discussion - you merely wish to beat someone with an argument.

"No I am not, as we do not start in 11th place every season. The comparison was in prize money not position, to show how little extra capacity would return."

My argument being that that £30 million investment in a stadium expansion will give you a more sustainable return than any £30million. Your argument only works if we remain in the premiership, so the argument you put forward only really works if we finish five places better off than 17th every season. Should we be relegated the cost of relegation would slap us rather hard, but then that additional revenue is likely to still be there whether it be reduced slightly or not.

"there is, check with the ticket office"

I just did. Sadly the very kind Laura I just spoke to was more baffled than a metsie rabbit in the full beam headlights of a car.

""Infact especially now when the FFP puts a lot of pressure back onto the clubs increasing their own profit to be able to increase what they spend on their players"

incorrect"

Erm.

From the daily mail article(http://www.dailymail.co.uk/sport/football/article-2307471/English-Premier-League-clubs-ratify-Financial-Fair-Play-regulations.html):

"But the restrictions only apply to the income from TV money — so any income from sponsorship deals or tickets sale can still be spent on wages."

So I am actually correct. So even if we only increase overall income by around £4million that could be enough in terms of wages, to up our wage bill enough to be able to afford some better calibre players.

£50k a week equates to £2.5million a year - that on top of what we already have means we could get a couple of £70k a week players in. It does help.

"It isn''t commercially viable irrespective of what purple says. The figures demonstrate that themselves."

Nope. You are saying that the figures demonstrate that it isn''t financially viable. Myself and Purple have pointed out that this is not the case. The figures actually point out that it IS financially viable if looked upon as a longer term project.

If you are saying it is not financially viable in the short term then you have no qualms but a project of that scale making its money back quickly is never going to happen in terms of football stadiums anyway. It would never be something any sane person would look at recouping within 5 years for example.

And actually financial fair play does also kick in when it comes to ''saving money''. Which for some reason you put at £20million.

Lets look at your scenario anyway. Say the club did put £20million to one side at the start of the season as a ''gamble'' lets imagine that things did go awry. They''d have an opportunity to change their mind in January at which point they could invest that money back into the playing squad if they wanted.

Then if the worse did happen and we were relegated if they didn''t spend that money in January, they could use it to soften our blow, launch an attempt at a bounce back straight away.

I doubt it would be that much money however.

On top of that, and Purple will have to correct me here if I am wrong, but if we are debt free externally all of the commercial profit he has quoted on this thread will be in addition to the rumoured TV money of £70million.

Do you foresee the need for us to spend around £30million every summer on players? I think the stronger the squad gets the fewer players that will come and go.

I don''t think it would be unlikely that the club may put away £10million a season (the majority of the money that the commercial side of the club generates anyway) for increasing the commercial output of the club.

As stated this is becoming a much more vital part of the running of a football club as it will dictate whether we can spend above and beyond the amount dictated by financial fair play.

Like I said, it won''t really give us any real short term gain of any substance other than provide more ticket sales etc that could then see our wage budget increase - which arguably could have a knock on effect on the pitch if we can use that to attract more expensive players.

Over the longer haul it is financially viable, especially if a loan is not taken out to pay for it.

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The key to all this is to match the repayment of the liabilities of the loan used to finance the building of the stand to as small a slice of income as possible over the length of the loan, potentially reducing the cost of build up front through development grants and sponsorship packages. The club is close to a financial situation whereby a total build and loan interest of £40 milion spread over say 10 years would only take up less than 5% of next seasons turnover. I agree if relegated this could increase to 10% (don''t forget parachute payments), I''m not convinced of the negative arguments being offered by City1st. Add the argument of FFFP, which I was sceptical but understand the big clubs are paying heed to, then the argument to speculate grows Throw in the time value of holding money which Purple has said would eat away at your cash then the argument for investing to increase your returns grows. City 1st''s argument would stand more stead if the club was in debt. By all accounts it is not. The only issues would seem to be negotiating the right finance package, overcome the technical & planning difficulties and manage the displacement of season ticket holders. I''m even sure some form of loan indemnity insurance could also be arranged just in case the club were relegated and ran out of parachute payments.

 

But I''m Percy Positive and on the waiting list. 

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