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Ray

20th In The League, and Proud Of It

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Why does our CEO make so much of being debt free and 20th in the league of total payroll, the vast majority of which I assume is made up of players, managers, coaches and CEO’s wages.

If we are debt free then we have cash in the bank, I think the accounts showed funds available of £12m.

I find this banging on about being debt free, having the lowest staff costs, etc. somewhat concerning, it appears the money side has become more important and worthy of trumpet blowing than the football side. I appreciate every business has to take care of the pennies, etc. but it’s almost as if we are in a league, formed in our own imagination, a league of prudence and fiscal achievement and are proud to announce we are top or at least qualifying for Europe, whilst the entire purpose of our existence (providing entertaining and winning football for the community, its customers) becomes relegated (a deliberately chosen word) to a secondary consideration.

We are, it appears, cash rich, so let’s get richer by spending money on quality players, managers, coaches, etc. so we can rocket up the league that really matters and earn an extra £1m per place, consequently this process would be self funding, assuming it worked of course?

A business with a turnover of £75m and making a profit would not be embarrassed to have some meaningful borrowings to enable growth, surely? If indeed they were needed.

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If all twenty clubs in the premiership overspent shedloads by borrowing and borrowing, each season three clubs would not only get relegated but would be threatened with their very existence.  The fact that they don''t all go out of business is down to rich investors and sugar daddies. 

We have a choice - live within our means or sell up to a rich investor or sugar daddy. The borrow borrow borrow road is a road to nowhere fast.  I like the living within our means.  It may mean development is slower and maybe more difficult, but the challenge to succeed will always be there, even if it means fighting the odds.

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[quote user="lake district canary"]If all twenty clubs in the premiership overspent shedloads by borrowing and borrowing, each season three clubs would not only get relegated but would be threatened with their very existence.  The fact that they don''t all go out of business is down to rich investors and sugar daddies. 

We have a choice - live within our means or sell up to a rich investor or sugar daddy. The borrow borrow borrow road is a road to nowhere fast.  I like the living within our means.  It may mean development is slower and maybe more difficult, but the challenge to succeed will always be there, even if it means fighting the odds.

[/quote]

Agree with that, I don''t ever want to see our club nearly going into admin again like it was in L1 and I absolutely hate the idea of some Fernandez/Tan type coming in and turning us into a joke. I think us Swansea and Palace are the only teams in the league without some sort of Sugardaddy? I''d be happy for those 2 clubs to also carry on doing well to show other clubs how it''s done.

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LDC,

Please, I did not say borrow, borrow, borrow and I did say we need to look after the pennies, etc.

I am simply suggesting that financial prudence, whilst important, has overtaken the prime reason for our existance and we could loosen the purse strings a little.

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[quote user="Ray"]LDC,

Please, I did not say borrow, borrow, borrow and I did say we need to look after the pennies, etc.

I am simply suggesting that financial prudence, whilst important, has overtaken the prime reason for our existance and we could loosen the purse strings a little.[/quote]

That was the catch phrase in 1995.............

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And we never had it so good, unil 2008 of course, when the world economy collapsed, which I guess would be akin to the Premier League or FIFA collapsing!

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The OP fails to recognise the fact that our 75 million quid business can become a 20 million quid business overnight due to relegation.

The Board have to take account of this.

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Ricardo,

Oh no he didn''t and I think you have exaggerated somewhat to make a point.

I''m not doing a Viv Nicholson and saying spend, spend, spend. I''m saying let''s use some of our reserves and re focus on our prime objective.

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[quote user="Ray"]Why does our CEO make so much of being debt free and 20th in the league of total payroll, the vast majority of which I assume is made up of players, managers, coaches and CEO’s wages.

If we are debt free then we have cash in the bank, I think the accounts showed funds available of £12m.

I find this banging on about being debt free, having the lowest staff costs, etc. somewhat concerning, it appears the money side has become more important and worthy of trumpet blowing than the football side. I appreciate every business has to take care of the pennies, etc. but it’s almost as if we are in a league, formed in our own imagination, a league of prudence and fiscal achievement and are proud to announce we are top or at least qualifying for Europe, whilst the entire purpose of our existence (providing entertaining and winning football for the community, its customers) becomes relegated (a deliberately chosen word) to a secondary consideration.

We are, it appears, cash rich, so let’s get richer by spending money on quality players, managers, coaches, etc. so we can rocket up the league that really matters and earn an extra £1m per place, consequently this process would be self funding, assuming it worked of course?

A business with a turnover of £75m and making a profit would not be embarrassed to have some meaningful borrowings to enable growth, surely? If indeed they were needed.[/quote]That 20th place refers to last season, not this. We will almost cetainly not be bottom of that league table this time. Secondly, it is the policy of the board to spend pretty much all the money it has and only make a small profit, if that, each year. And bear in mind the accounts are only a snapshot of the position on one day, after which any cash shown may well get spent, particularly given the timing of the end of the financial year. As to going back into debt, possibly, but for ground expansion only, I suspect.

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There is nothing wrong with having some borrowings, but they need to be used for the right thing. Expanding the stadium for example, i.e. a major capital project which increases the value of the premises and - assuming the extra seats can be filled regularly - brings in extra revenue. That in turn enables you to increase the wage budget.

But the significant thing is that over the last 3 seasons a fair chunk of Premiership money has been used to clear debt, much of which I believe had relatively high interest rates attached to it.

Whatever happens we won''t need to ring fence that money again; instead it can be used to increase the wage budget, as can the interest saved by clearing the debt.

And incidentally although McNally referred to us being 20th of 20 last season when it comes to wage budgets I don''t think there is any hint at all that he is "proud" of it. I have no doubt at all that his priority will be to get that budget up as soon as he can.

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[quote user="Ray"]Ricardo,

Oh no he didn''t and I think you have exaggerated somewhat to make a point.

I''m not doing a Viv Nicholson and saying spend, spend, spend. I''m saying let''s use some of our reserves and re focus on our prime objective.[/quote]If you are a shareholder and attended the AGM you would know what our focus is and our prime objective. If you are not then there are plenty of reports you can read. We don''t need to re focus and we don''t need to change our prime objective which has always been and remains continued membership of the Premier League.How the money is spent is the responsibility of the board and management and they are only too well aware that they operate a business where 75% of turnover can vanish overnight. In that environment you either err on the side of prudence or open yourself up to the very real possibility of financial disaster. The present manager will live or die by the next twelve results.In the end it''s a gamble for the Board but one thing is certain, having been close to bankruptcy before, they are unlikely to risk the very existence of the club again, nor should they IMO. Who knows where the line between prudence and profligacy lies? Heads you win tails you lose.

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Just to add re. Purple''s comment (added whilst I was posting mine) that we won''t be bottom of the wage pile this season, that''s probably true, but it will be very close.

Looking at the kinds of player Hull and Cardiff brought in after promotion I would be surprised if they are paying less than us. They might be in total if they have a big gap between their top earners and the guys who were there last season and are in mid-contract.

Palace probably are bottom, but even they seem to have found a few pennies recently.

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Like it or not, no football club would be able to borrow money from a bank or financial institution to buy players. No bank would even consider it.Clubs get themselves into debt by borrowing from wealthy owners these days and then being unable to pay their other creditors ( usually HMRC).

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Whoareyou,

Clubs could borrow money secured against property and based on future income. Just like as individuals we can have an overdraft, etc. As long as the bank are happy the loan can be serviced then I suspect they would loan. Not that um saying we should borrow excessively there are plenty of players available on a free, etc who wouldn''t come because of the wages.

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As i understood it, the club already used this sort of short term loan from Barclays to advance for this season''s playing budget. The club doesn''t receive all the Sky money in one lump at the start of the season.However, as a longer term basis ( even over 2 seasons) you will not find a bank to loan in this way as there is no guarantee they will ever get their money back if the borrowing club were to be relegated. If we borrowed say £30 million and our income dropped to £25 million at the end of that season then there is no way of servicing the loan. We are living in a different world to that before the 2008 crash.There was an article about it sometime ago in one of the newspapers.

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Whoareyou,

Firstly, they would get their money back if we wre relegated and went bust as it would be secured against property. Relegation and going bust would have no bearing on land values.

Secondly, why do you talk about our income dropping to £25m, there are parachute payments etc, plus 20,000 fans at £30 per game would bring in £12m alone, plus corporate income, etc, etc.

The point is why not spend £10m or so in supporting the playing side. I''m not saying spend £20m on one player, I''m suggesting we use our money wisely and stop bleating on about our financial prudency. There is an old saying ''you have to speculate to acumulate''.

The U21s used to travel the day before every game and stay over night, now they very rarely do this and travel and play and travel back on the same day, imo that is not the right way to treat our youngsters and encourage them to want to play for NCFC, besides which it doesn''t help them progress as players, and afterall they are our future.

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"The OP fails to recognise the fact that our 75 million quid business can become a 20 million quid business overnight due to relegation"

Probably more like our £100m business can become a £40m business. New TV money, plus £16m in parachute payments.

Although worth pointing out that our current wage bill is greater than our revenue would be in the champs.

Some big changes would be made. I''d like to think we''d hang on to a few stars like Redmond and Hooper, but we''d be losing some too.

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Le Juge,

Exactly, it wouldn''t plummet as some are suggesting, but let''s ensure we don''t get relegated by spending a few million on bolstering up the team and, as I said earlier, by being the ''tightest or most prudent'' club to get relegated. there''s no prizes for that scenario.

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I, for one, support the Board on this one.

There is a lot of money available in the Premiership at the moment and relegation would be very serious for our finances, but I would be more worried if I supported any of the three newly promoted teams given how much they have spent.

Relegation is a possibility for more than half the teams in the Premiership, but how many of those teams could avoid eventual administration if relegated?

I feel that the Board are running the club with our long term future in mind.

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By ''The Board'' you mean McNally, you may not realise it but you do.

ATM he has the support of our 2 of our major shareholders and can do no wrong, even if (imo) he is doing wrong.

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[quote user="Ray"]let''s ensure we don''t get relegated by spending a few million on bolstering up the team and.....[/quote]If you are seriously suggesting we should borrow money to spend on players, who do you think would lend it?

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[quote user="lappinitup"][quote user="Ray"]let''s ensure we don''t get relegated by spending a few million on bolstering up the team and.....[/quote]If you are seriously suggesting we should borrow money to spend on players, who do you think would lend it?[/quote]

Marcus Evans?[:)]

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[quote user="Ray"]Whoareyou,

Firstly, they would get their money back if we wre relegated and went bust as it would be secured against property. Relegation and going bust would have no bearing on land values.

Secondly, why do you talk about our income dropping to £25m, there are parachute payments etc, plus 20,000 fans at £30 per game would bring in £12m alone, plus corporate income, etc, etc.

The point is why not spend £10m or so in supporting the playing side. I''m not saying spend £20m on one player, I''m suggesting we use our money wisely and stop bleating on about our financial prudency. There is an old saying ''you have to speculate to acumulate''.

The U21s used to travel the day before every game and stay over night, now they very rarely do this and travel and play and travel back on the same day, imo that is not the right way to treat our youngsters and encourage them to want to play for NCFC, besides which it doesn''t help them progress as players, and afterall they are our future.[/quote]It doesn''t work like that though. The bank may have  guarantee on its loan but its very unlikely they would want to call it in if the club were relegated. Despite some clubs, including a few big clubs, being in precarious positions over the years, i don''t believe a bank has yet decided to wind up any major english football club to date as they don''t want the bad publicity. Its better for them not to lend that money in the first place.As to spending an extra £10 million. Where would that £10million come from if its not sitting in the bank with nothing extra to pay and no one will loan it to you? A club like ours just doesn''t have £10 million sitting around doing nothing.

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The board run the club as a co-operative with all the income going back into football. That''s all we can ask for. If you want even more money try another share issue. Although it''s unlikely many of us would like any more of our hard earned ending up in players wages.

 

 

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quote user="nutty nigel"

The board run the club as a co-operative with all the income going back into football. That''s all we can ask for. If you want even more money try another share issue. Although it''s unlikely many of us would like any more of our hard earned ending up in players wages.

 

 

/quote

Well said Nutty.

Throughout virtually the entire period that I have been a supporter, the Club has had significant debt. Debt that has been a noose around our neck for so many years, preventing us from competing with Clubs that should be our peers. We''ve now, finally, relieved that debt having paid off some £15m last season which left us with the lowest amount of money available for wages/fees in the division.

Having done that, this season we were in the position to spend the most amount of money that we have ever spent. I hardly think the Club can be accused of not loosening the purse strings given the spending on RVW, Hooper, Fer, Redmond and Olsson. Further, I can''t remember the last time that NCFC sold a player ''against our wishes''.

As has been said at all Club/fan meetings, the Club is run as a co-operative in that all funds are re-invested into the football side of the business, including infra-structure. As well as the huge spending on players, the Club is now planning a 7-figure overhaul of Colney. Further, one of the current U18 squad lives with me and I assure you that for a significant number of away trips this season the U18s have travelled and stayed in a hotel the night before the game.

The Club has done remarkably well to stabilise it''s finances from near oblivion just a few short years ago. It is spending what it has available and it is simply not true to say that we are ''cash rich'' - there are not millions in the bank unspent. We have a very successful board of Directors at the Club right now. Criticise, by all means, what is going on on the pitch if you must, but Delia, MWJ, McNally and Bowkett deserve a huge amount of respect.

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Beefy,

Point 1) We longer have the ''noose around our necks that has prevented us from competing with our peers'', which makes the point I was raising, we can now compete with our peers by spending some, not a stellar signing but by being prepared to be somewhat bolder so we can now outperfrom our peers

Point 2) The latest accounts show £12m as Cash at Bank and in hand. This was at 30th June last year, now I''ve no idea when monies come in from SKY, etc so can only assume this is a typical picture, so if I am correct then we are cash rich, insomuch as we have £12m in the bank. Also our net assets are £15m although admittedly that includes £14m of intangible fixed assets

Point 3) The last time the club sold a player against our wishes, well just how do you judge that? Many, not including me, would say Mr Holt was sold against our wishes to name one.

Point 4) Yes let''s reinvest into the football side of the business, exactly my point.

Point 5) I have two of the U21''s live with me and they say, and I obviously know, that they are staying overnight far less than they did last year, something they are not that happy about (bless '';em). Other aspects of their development have been cut too, so I am afraid we differ wildly on this point.

Point 6) I will critise what goes on on the pitch if I choose (must) but I also have the right to criticise what goes on off the pitch too. Whether you be a player or a Director, it is still performance and can be criticsed by anyone. Not that I was criticising anyone''s performance, my original point was that I feel the Board seem to be too focussed on financial achievement to the possible detriment of on field performance and at no stage have I said the Board do not deserve respect, you are putting a slant on my posts here which does not exist. I often critise myself and loved ones but still have a huge amount of respect for us all. The two are mutually exclusive.

Point 7) You state we have a very successful Board of Directors, may I ask by what criteria you are making your judgement, because would relegation (and I think we will survive) still mean they are successful?

All of what I say is my opinion, but a considered one, well I think it is anyway, you of course may not!

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we do not have 12 million quid sitting in the bank doing nothing, this is an illusion. The accounts do not show this as spare money, in fact we had to have an overdraft agreement with the bank to cover a period when no cash was coming in and outgoings put us into debt. The budget for this year see''s a small profit of half a million.As Nigel stated, the club is run as a mutual with all profits ploughed back into football.

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What it comes down to is that when things are not going well compared to peoples'' relative expectations, blame must be appropriated.

We are a very well run club who are not yet relegated. I would rather take pride in what we have achieved over the last 5 years than revel in the negativity that some seem to enjoy so much.

You do not have to be knowledgable to criticise when things are not going so well, but I truly cannot understand people being overly critical of "off-the-pitch" affairs when I would have bitten your hand off if offered the progress we''ve made, after relegation from the Championship;

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Point 1: We have already spent, because the noose is no longer round our necks.

Point 2: You are making considerable assumptions about what money we have available as of this time. In any case, the transfer window is closed so what point are you trying to make?

Point 3: The Club has not sold any players against its wishes. What the fans think may be different, but the Club were happy for Holt to leave, and by all accounts he seems to have been offloaded at the right time.

Point 4: Agreed

Point 5: I''d be interested in the statistics as we are both looking at this through the prism of our own narrow outlook. However, without a doubt our academy boys have it better than most.

Point 6: You have a right to criticise of course. However...

Point 7; When the current board came together we were in League One and fighting off creditors. We are now in the PL and debt free. Even if we go down, they''ve achieved an enormous amount in comparison to all those before them, certainly in the last 20 years.

What I don''t like Ray, is that these sort of posts have become more frequent as we''ve been perceived to struggle on the pitch this season. I don''t think that''s fair. As I''ve said before, unrealistic expectations lead to these kind of views - that ''all is not well'' on the pitch to off the pitch. By any measure in the last 20 years, off the pitch we are in the best shape we''ve been.

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Ricardo,

I am assuming your accounting knowlege is greater than mine, so could you explain what the following means, it''s taken from the published accounts (note 27)- thanks.

Cash balances

Cash at bank and in hand £11,698,000

Bank Overdraft £0

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