6 point deduction - confirmed

[brookfox]

I’m assuming our main problem was building a squad and wage bill that required Champions League income to sustain. We then bought poorly, didn’t sell well or get the contracts situation under control. Or is that oversimplifying it?

[Stadt]

29 minutes ago, kenny said:

If you finish 4th and have qualify for the champions league, you end up around £60-70m better off than finishing just above the relegation places. For us, that's a turnover swing of 30% that you find out across a 9 month season.

 

It is easy to argue that the club should have been budgeting not to do that each year, but they didn't. European competition makes clubs sign more players due to the number of games which is where we thought we were.

 

The club messed up in many ways, but the wage bill is a product of the success we had at the time.

116%!

[splinterdream]

1 hour ago, kenny said:

If you finish 4th and have qualify for the champions league, you end up around £60-70m better off than finishing just above the relegation places. For us, that's a turnover swing of 30% that you find out across a 9 month season.

 

It is easy to argue that the club should have been budgeting not to do that each year, but they didn't. European competition makes clubs sign more players due to the number of games which is where we thought we were.

 

The club messed up in many ways, but the wage bill is a product of the success we had at the time.

It was £40m lost from not getting a European place but we should have been setting contracts based on merit bonuses, including Rodger’s contract 

[kenny]

27 minutes ago, splinterdream said:

It was £40m lost from not getting a European place but we should have been setting contracts based on merit bonuses, including Rodger’s contract 

Plus £30m from Premier League prize money.

 

 

[Chrysalis]

14 hours ago, Stadt said:

PSR is a barrier but you can’t level it at us when spending 116% of turnover on wages.

 

We were so frivolous we didn’t pay attention and it didn’t even do us any good, had we abided by the regs it might have actually helped us.

I think these are two different things.

It is possible to recognise PSR is poor regulation whilst at the same time recognising our problems are of our own doing, the two things dont go hand in hand.

There is no evidence we wouldnt be going down the same road if there wasnt spending regulations, as its still the case KP have ran out of money, still the case Top is an idiot, still the case Rudkin is running football operations.

[DJ Barry Hammond]

15 hours ago, Stadt said:

116%!

What was Villa’s reported as yesterday? 
 

156% I believe.

 

And then below is Cardiff from last years relegation season - 151%!

 

 

[jammie82uk]

27 minutes ago, DJ Barry Hammond said:

What was Villa’s reported as yesterday? 
 

156% I believe.

 

And then below is Cardiff from last years relegation season - 151%!

 

 

Looking across the years it’s quite scary how quick that % of revenue can change 

 

2018, in the championship, average wage of 21,723, 139% of turnover 

2019, in the premier league, average wage of 24,074, 43% of turnover 

2020, in the championship, average wage of 15,992, 79% of turnover 

 

[Stadt]

1 hour ago, DJ Barry Hammond said:

What was Villa’s reported as yesterday? 
 

156% I believe.

 

And then below is Cardiff from last years relegation season - 151%!

 

 

Yes and they’re being stupid 

[filbertway]

3 hours ago, DJ Barry Hammond said:

What was Villa’s reported as yesterday? 
 

156% I believe.

 

And then below is Cardiff from last years relegation season - 151%!

 

 

Yep, a glimpse into our future under King Power there

 

[DJ Barry Hammond]

 

 

[fox_favourite]

3 hours ago, DJ Barry Hammond said:

 

 

So what you're saying is, don't own a football club, you'll be broke in no time at all. 

[coolhandfox]

6 hours ago, Stadt said:

Yes and they’re being stupid 

The whole system is broken.

 

[nnfox]

1 hour ago, fox_favourite said:

So what you're saying is, don't own a football club, you'll be broke in no time at all. 

Hasn't it been said that the fastest way to become a millionaire is to be a billionaire and buy a football club?

[Claudio Fannieri]

10 hours ago, fox_favourite said:

So what you're saying is, don't own a football club, you'll be broke in no time at all. 

Yes if you don’t run it as a sustainable business. There is no rule in football that says you have to spend over 100% of revenue on wages. The sweet spot is somewhere between 60-70% and it’s having a model that enables you to do that and keep reinvesting in young hungry players with sell on potential. 
 

We had that model and then decided to move away from it and as soon as we dipped it’s collapsed like a house of cards. 

 

 

[Mista_cle31]

1 hour ago, Claudio Fannieri said:

Yes if you don’t run it as a sustainable business. There is no rule in football that says you have to spend over 100% of revenue on wages. The sweet spot is somewhere between 60-70% and it’s having a model that enables you to do that and keep reinvesting in young hungry players with sell on potential. 
 

We had that model and then decided to move away from it and as soon as we dipped it’s collapsed like a house of cards. 

 

 

Lincoln City do exactly this.... Hence why they're now punching above their weight and potentially heading for the Championship. Well run and very much a sustainable club. We need to revert back to this model ASAP!

Edited 28 February by Mista_cle31

[Terraloon]

1 hour ago, Claudio Fannieri said:

Yes if you don’t run it as a sustainable business. There is no rule in football that says you have to spend over 100% of revenue on wages. The sweet spot is somewhere between 60-70% and it’s having a model that enables you to do that and keep reinvesting in young hungry players with sell on potential. 
 

We had that model and then decided to move away from it and as soon as we dipped it’s collapsed like a house of cards. 

 

 

Producing a near to accurate cash flow projection in football is in incredibly difficult.I only ever had input into a non league club whose dominant income streams were commercial ,gate and bar receipts and whilst a model using previous seasons averages was used  a dip in form and a reduction in those that attended changed the numbers in a blink of an eye.In terms of commercial  and sponsorship reduce the resources ( staff) employed getting out there to get entities to sign up and that income goes down even further.
 

Even though additional income could be earned through transfer ( not that much ) or prizes in cup competitions was able to be earned those additional funds were very much treated as an unplanned bonus and formed a contingency fund , well that was the idea ! In other words they didn’t appear in the income projections .

 

In terms of budgeting for wages that was incredibly difficult  an injury to say one of your goalkeepers or sacking the manager  for instance  meant spending some of that contingency fund was inevitable, that’s if you hadn’t already spent it. And that was before things that you didn’t even think would go wrong did. For instance a safety inspection required more lighting or changes of signage.OK these things maybe weren’t that costly  but if there isn’t any money in the coffers the costs significantly impact and as wages were the biggest single head of expenditure it was always there that realistically you had to make savings and so cash is  even more stretched.

 

Now I know that the sort of sums that LC earn is at another level but reading the clubs accounts  and particularly the section which tells us how the auditors assess the clubs ability to carry on trading as a going concern  what strikes me is that the club’s economic model is as we know so flawed as to be comical.
 

So back to your  comment around what sort of sums could / should be spent on wages where LC are so in terms of  the starting number in income terms assumes a significant sum each season will be received by way of a transfer out. In simple terms the sums received for fees received need to match as a minimum the sum accounted for in terms of amortisation and them some.
 

I am pretty sure that I  would be able to get the numbers closer in terms of income matching  expenditure and the normal assumption ( not in the case of LC) is the more you put toward your playing budget the better the return  so by default that would mean even more cuts to the player budget but even using the infamous back of a fag packet calculations it’s abundantly  clear that as the clubs income reduces in accord with the reducing sums that will be received from say parachute payments and likely reducing transfer fees received the % of  that reduced income that has to be put toward wages has to reduce way below 50%.

 

The fixed costs at LC will likely account for around 60% of  cash received in season without parachute payments add in remaining amortisation and without massive transfer income there really won’t be much left for wages. 

 

This is a “ We’re doomed Captain Mainwaring moment “ we all know that there is absolutely no chance of promotion this season indeed, we are all looking downward as opposed to upwards and fast forward to the clubs that will be in the Championship next season, that’s if that’s where the club finds itself next season, the challenges will be I believe greater than this.

 

 

 

 

 

Edited 28 February by Terraloon

[Claudio Fannieri]

8 minutes ago, Terraloon said:

Producing a near to accurate cash flow projection in football is in incredibly difficult.I only ever had input into a non league club whose dominant income streams of were gate and bar receipts and whilst a model using previous seasons averages was used  a dip in form and a reduction in those that attended changed the numbers in a blink of an eye.
 

Even though additional income could be earned through transfer ( not that much ) or success in cup competitions was able to be earned those additional funds were very much treated as an unplanned bonus and formed a contingency fund , well that was the idea !

 

In terms of budgeting for wages that was incredibly difficult simple an injury to say one of your goalkeepers or sacking the manager  for instance  meant spending some of that contingency fund was inevitable, that’s if you hadn’t already spent it. And that was before things that you didn’t even think would go wrong did. For instance a safety inspection required more lighting or changes of signage.OK these things maybe weren’t that cosy but if there isn’t any money in the coffers the costs significantly impact and as wages were the biggest single head of exit was always there that realistically you had to make savings.

 

Now I know that the sort of sums that LC earn is at another level but reading the clubs accounts  and particularly the section which tells us how the auditors assess the clubs ability to carry on trading as a going concern and what strikes me is that the club’s economic model is as we know so flawed as to be comical.
 

So back to your  comment around what sort of sums could / should be spent on wages where LC are so in terms of  the starting number in income terms assumes a significant sum each season will be received by way of a transfer out. In simple terms the sums received for fees received need to match as a minimum the sum accounted for in terms of amortisation + . 
 

I am pretty sure that I  would be able to get the numbers closer in terms of income matching  expenditure and the normal assumption ( not in the case of LC) is the more you put toward your playing budget the better the return but even using the infamous back of a fag packet calculations it’s abundantly  clear that as the clubs income reduces in accord with the reducing sums that will be received from say parachute payments and likely reducing transfer fees received the % of  that reduced income that has to be put toward wages has to reduce way below 50%.

 

The fixed costs at LC will likely account for around 60% of  cash received in season without parachute payments add in remaining amortisation and without massive transfer income there really won’t be much left for wages. 

 

This is a “ We’re doomed Captain Mainwaring moment “ we all know that there is absolutely no chance of promotion this season indeed, we are all looking downward as opposed to upwards and fast forward to the clubs that will be in the Championship next season, that’s if that’s where the club finds itself next season, the challenges will be I believe greater than this.

 

 

 

 

 

👏🏼👏🏼👏🏼 absolutely spot on 

[VLC86]

4 minutes ago, Mista_cle31 said:

Lincoln City do exactly this.... Hence why they're now punching above their weight and potentially heading for the Championship. Well run and very much a sustainable club. We need to revert back to this model ASAP!

It’s a funny one, and while I don’t disagree with what you are saying, would you be happy with the last 10 years of Lincoln City? And will that model ever see them punching about their weight in the Premier League? I’d say they will have to get lucky.

 

It’s being talked about on here like if we adopted this model we would be fine, but whichever model you choose you have to be good at and we wouldn’t be.

 

I think the reality is you need to get lucky, be aligned from top to bottom and switch it up at the right times- look at Sunderland.

 

[Claudio Fannieri]

1 minute ago, VLC86 said:

It’s a funny one, and while I don’t disagree with what you are saying, would you be happy with the last 10 years of Lincoln City? And will that model ever see them punching about their weight in the Premier League? I’d say they will have to get lucky.

 

It’s being talked about on here like if we adopted this model we would be fine, but whichever model you choose you have to be good at and we wouldn’t be.

 

I think the reality is you need to get lucky, be aligned from top to bottom and switch it up at the right times- look at Sunderland.

 

Sorry but we changed our model after the FA Cup final win chasing the champions league dream and its led to 2 relegations, multiple PSR breaches, a 6 point deduction and we stand on the precipice of league one and financial meltdown. Our success in winning the league and up to the FA Cup was largely on the basis of signing hungry players, selling them at their peak and reinvesting. 
 

The club changed from this and it went to 💩 

[VLC86]

1 hour ago, Claudio Fannieri said:

Sorry but we changed our model after the FA Cup final win chasing the champions league dream and its led to 2 relegations, multiple PSR breaches, a 6 point deduction and we stand on the precipice of league one and financial meltdown. Our success in winning the league and up to the FA Cup was largely on the basis of signing hungry players, selling them at their peak and reinvesting. 
 

The club changed from this and it went to 💩 

I agree, but even if we had sold the players we should have at the top price then, do you think we would have bought well enough to keep us there?

[st albans fox]

9 minutes ago, VLC86 said:

I agree, but even if we had sold the players we should have at the top price then, do you think we would have bought well enough to keep us there?

You can never have a 100% strike rate 

But our rate certainly dropped when we needed it to be way better.  Not being able to sell either soumare or daka for a decent profit nor get enough productive input from them on the pitch has probably  proven to be the proverbial straw. 
 

Of course there were plenty of others too

 

just a sh1tshow from top to bottom 

[OwnGoal]

At this rate it won’t matter. We could go down without a deduction. 

[Les-TA-Jon]

https://www.bbc.co.uk/sport/football/articles/c8r1m4mr2k8o

 

Interesting article about the new Squad Cost Ratio costs coming in next season. Appears we would never had been in trouble had these rules been in place...

[Chrysalis]

5 hours ago, Les-TA-Jon said:

https://www.bbc.co.uk/sport/football/articles/c8r1m4mr2k8o

 

Interesting article about the new Squad Cost Ratio costs coming in next season. Appears we would never had been in trouble had these rules been in place...

Rules are all over the place, but yeah it does seem they adding a bit of leeway, however reading into it, I think we still would have been in trouble.  The extra 30% from what I understand is not sustained season after season.

[Ric Flair]

6 hours ago, Les-TA-Jon said:

https://www.bbc.co.uk/sport/football/articles/c8r1m4mr2k8o

 

Interesting article about the new Squad Cost Ratio costs coming in next season. Appears we would never had been in trouble had these rules been in place...

Given our wages were as high as 116% of revenue before we even factored in player amortisation and other costs, i'm not sure we would??