Financial Fair Play / Profit & Sustainability

[Kimbo]

44 minutes ago, Armchair Pundit said:

Pah!

 

https://tbrfootball.com/questions-will-be-asked-after-newcastle-united-spend-20m-on-confirmed-signing/

He’s an experienced international in his prime years and has played over 200 games for Benfica. On paper it’s very easy to justify.

[Slim]

14 minutes ago, gbandit said:

Aye, ask questions of us but  🙏 please at all costs don’t ask questions of Chelsea for paying themselves £10m for each sandwich they sell filled with Boehly’s jizz

If it makes you feel any better there will be no questions. 

[clintdempsey]

Isn’t the gist of it all that every sale through the official club shops is around 50% profit (after the wholesale price is counted of course)?

 

So say we sell 250K shirts all over the world - that equates to 10M quid (based on an average profit of 40 quid per shirt). And that’s just the shirt. Add all training gear and stuff. On top of that I’d presume we get a cut of the sales through Adidas and JD as well as an upfront payment of some kind from both. 
 

We won’t get the reported 40M is my guess (with European football this year there would surely be added bonuses). Probably somewhere around 25M is my best guess. 

[Wolfcastle]

1 hour ago, Armchair Pundit said:

Pah!

 

https://tbrfootball.com/questions-will-be-asked-after-newcastle-united-spend-20m-on-confirmed-signing/

don't hate the player hate the game

 

Were through the looking glass now though, where people are chomping at the bit to have clubs deducted points across the league and where avoiding such punishment via new arbitrary legislation is the most heinous thing imaginable

[TheBrownBottle]

6 hours ago, clintdempsey said:

Isn’t the gist of it all that every sale through the official club shops is around 50% profit (after the wholesale price is counted of course)?

 

So say we sell 250K shirts all over the world - that equates to 10M quid (based on an average profit of 40 quid per shirt). And that’s just the shirt. Add all training gear and stuff. On top of that I’d presume we get a cut of the sales through Adidas and JD as well as an upfront payment of some kind from both. 
 

We won’t get the reported 40M is my guess (with European football this year there would surely be added bonuses). Probably somewhere around 25M is my best guess. 

The adidas deal won’t be based solely on sales.  That’s what the guy who posted on Twitter isn’t getting.  There will be a lump sum payment plus additionals based upon sales

[clintdempsey]

5 hours ago, TheBrownBottle said:

The adidas deal won’t be based solely on sales.  That’s what the guy who posted on Twitter isn’t getting.  There will be a lump sum payment plus additionals based upon sales

Yep, I said as much tbf. 😀

 

On top of that I’d presume we get a cut of the sales through Adidas and JD as well as an upfront payment of some kind from both. 

[FloydianMag]

Isn’t PSR/FFP supposed to prevent this shit?

 

 

[Pablo]

Very sad for their fans.

A good opportunity for someone seeking a multi club model?

[Joe1984]

On 22/07/2024 at 09:14, Ben said:

So Chelsea now have nothing left to sell other than players ? Should be interesting next summer, unless the rules have changed by then.

They will just buy more assets to sell to themselves. At fair market value (increased by 500%).

 

[Joe1984]

3 hours ago, FloydianMag said:

Isn’t PSR/FFP supposed to prevent this shit?

 

 

No PSR/FFP only exists to keep the elite clubs on top. Nothing more.

 

They don't give a damn if other clubs go under. Hell they probably wish they would.

 

If all these 'mediocre' teams would just go bankrupt, they would have free reign to form their 'super' league.

[Nucasol]

5 minutes ago, Joe1984 said:

They will just buy more assets to sell to themselves. At fair market value (increased by 500%).

 

Normally I’d say they would but the snide cunts already own Strasbourg.

[FloydianMag]

30 minutes ago, Joe1984 said:

No PSR/FFP only exists to keep the elite clubs on top. Nothing more.

 

They don't give a damn if other clubs go under. Hell they probably wish they would.

 

If all these 'mediocre' teams would just go bankrupt, they would have free rein to form their 'super' league.

You need to look through my posting history on FFP/PSR/RPT and APT👍

[TheBrownBottle]

7 hours ago, Joe1984 said:

No PSR/FFP only exists to keep the elite clubs on top. Nothing more.

 

They don't give a damn if other clubs go under. Hell they probably wish they would.

 

If all these 'mediocre' teams would just go bankrupt, they would have free reign to form their 'super' league.

Bordeaux are a big club tbf

[Ben]

Ehhh !!! Doesn't these FFP/PSR rules prevent clubs like Bordeaux going bust ? We are holding football back and making it fucking boring to save clubs from themselves, does this prove these type of systems don't fucking work ? 

[Zero]

If the big clubs are unable to spend $ due to PSR, the lower / poor clubs will be unable to raise funds by selling players.

 

PSR in fact is doing the opposite. The tide is coming.

[Paully]

54 minutes ago, Zero said:

If the big clubs are unable to spend $ due to PSR, the lower / poor clubs will be unable to raise funds by selling players.

 

PSR in fact is doing the opposite. The tide is coming.

 

Yep - said this for ages - whole thing is an utter farce!

[TheBrownBottle]

4 hours ago, Zero said:

If the big clubs are unable to spend $ due to PSR, the lower / poor clubs will be unable to raise funds by selling players.

 

PSR in fact is doing the opposite. The tide is coming.

It reminds me of that daft cunt on Question Time who said that she voted for the govt because they promised to reduce payments to people on benefits, but didn’t realise that they included her and her child tax credits

 

The PL’s small clubs all voted for this nonsense, and they’ll end up being the hardest hit when they can’t sell any of their players

[The Prophet]

 

[Guest]

2 minutes ago, The Prophet said:

 

Another season coming up of the PL eating itself from within then

[Ben]

52 minutes ago, The Prophet said:

 

 

Awful news, points deductions leading to relegation or non qualification to Europe could rip the league apart

[The Prophet]

Just now, Ben said:

 

Awful news, points deductions leading to relegation or non qualification to Europe could rip the league apart

 

Most likely just means there's been no outcome reached yet.

[Ben]

Just now, The Prophet said:

 

Most likely just means there's been no outcome reached yet.

 

Hopefully, if not I can see a lot of clubs taking the EPL to court 

[Scoot]

1 hour ago, The Prophet said:

 

 

Still got Amanda Staveley listed as our director on that.

[nufcnick]

They probably have to publish it a minimum time before the season start and will just make an amendment when needed 

[timeEd32]

This post is obnoxiously long and it has so many guesses and disclaimers that I didn’t really want to post it, but we’re losing our collective minds in the transfer thread so here’s my attempt at backing in to where we stand financially. I said awhile back I think selling more players will be a priority right now and here’s the longer version of why I think that…

 

The last three years

We needed to make a profit of somewhere between £2m and £15m in 2023/24 to be PSR compliant for the three year cycle that just ended. £2m was Swiss Ramble's estimate based on allowable deductions, but it's all a bit of a guess since those deductions aren't published.

 

Here are the three years of that cycle:

2021/22 - £73m actual loss / £61m after allowable PSR deductions

2022/23 - £73m loss / £60m PSR loss

2023/24 - £2m(ish) PSR profit target

 

Our 2022/23 accounts break down as follows (this isn't everything - just the headline figures):

 

Revenue: £250m

Player sales profit: £3m

Wages: £187m

Amortisation: £87m

Other costs: £40m

 

Here are 2023/24 estimates from Swiss Ramble back in June. At the time he said we needed to generate about £44m in sales in the last couple weeks, I said he was wrong by up to £30m, and he was clearly not wrong so I am done questioning him.

 

Revenue: £300m

Player sales profit: £85m

Wages: £201m

Amortisation: £106m

Other costs: £46m

 

So, based on his estimates, we would have only needed about £15m of the Anderson sale to meet the requirements. If we accept that as true then we needed £65m of player sale profits to turn a £2m profit. It would also mean we added about £20m of additional headroom for this season (or next).

 

The £60m+ loss from 2021/22 now drops out, so that means we can go back to losing around £60-70m in each of the next two seasons if we’re willing to push it to the limit again (which I’d say is definitely not certain given how tenuously that ended). This sounds great on the surface, but the June PSR scramble has made me concerned about our costs.

 

This season and this window

Now let's look at 2024/25. If you want to read a bunch of waffle about how I landed on these numbers it's in the spoiler. For the most part I have not changed them just to get a sense of where we are today.

Spoiler

The loss of CL money (including the match day boost) is roughly offset by the addition of Adidas. I’m assuming there will be some events at SJP to replace things like Fender, Saudi, and England friendlies we’ve seen in the last couple years and I’m calling the Japan tour equal to the US one. The Amazon doc goes away, but let’s call that a wash from smaller deals we've done in 2024 that will now have a full 12 months as well as SELA Stack. A lot of words to say keeping revenue flat for now. There are clearly some new deals coming but just picking a baseline.

 

Wages are the trickiest part. The big downside to cashing in on Minteh and Anderson is it barely changed our costs. Dummett and Ritchie going will have done more for decreasing wages. I think Dummett + Ritchie + Anderson = Kelly, though it’s hard to fully trust what’s out there. Vlachodimos for Dubravka is also basically even (I’m assuming we’ll give him away at some point). Joelinton got an increase and Bruno now has a full year of his new contract. There are likely other increases, but also a drop from no European bonus. We’ll decrease by £5m, but that may be a kind guess.

 

Minteh removes £1m in amortization but that’s likely offset (or exceeded) by Kelly’s sign on bonus. Vlachodimos adds ~£3m, though that is probably offset by Joelinton’s extension. Hall is already included since his loan fee was essentially just another year of amortization.

 

I’m not including Isak or Gordon contract extensions, which will increase wages and decrease amortization.

 

I’ve decreased ‘other costs’ slightly since these are typically higher when in Europe.

 

Revenue: £300m

Player sales profit: £5m*

Wages: £196m

Amortisation: £106m

Other costs: £42m

* This is Ashworth. It’s not clear to me if this happened by June 30 or was done on July 1, but it doesn’t really matter right now as it helps regardless in the current period. It’s also not clear what the fee was so I’m hedging a bit.

 

So that’s £305m of money in and £344m out. In 2022/23 we also had about £10m in interest payments and depreciation. Swiss Ramble estimated essentially the same for 2023/24, so carrying that forward again. That means our starting point for this financial year is around a £52m loss.

 

If the Anderson sale gave us an extra £20m cushion then we can lose around £80m this season if we go to the limit. If we just barely made the £2m profit we needed then we can max out around a £60m loss. That’s an £8-£28m cushion from where we are now. For context, Tonali added about £18m in annual costs.

 

These numbers aren’t meant to be exact and are a starting point for this season, but hopefully illustrative of why it’s unfortunately not as pretty a picture as “well now we can lose £60-70m again.”

 

We need to get revenue up but there almost certainly isn’t £50m+ of revenue gains coming this season, so we also really need to get costs under control.

 

If we are able to sell Trippier and Almiron that would remove ~£15m from our costs this season, plus whatever fees they bring in. Add a training shirt sponsor and whatever else to boost revenue and then we’re creating some breathing room.

 

Even without Europe, UEFA’s rules are relevant to this window

One other factor in my mind is UEFA’s requirements, which include two parts most relevant to us – Stability (similar to PSR) and Cost Control.

 

For Stability, it’s much of the same calculations as above except the max limit will be €90m (roughly £76m) over the preceding three years, though it could be less based on a dizzying number of factors. If we’re planning for this it could mean that our target for 2024/25 needs to be a ~£30-40m loss at most.

 

For Cost Control, we had to have been under 90% wages & amortization for calendar year 2023, but we were likely between 85-90%. If we qualify for Europe this season then we’ll need to be under 70% for 2025/26, which is the first year of the fully phased in regulations. And the important note there is UEFA works on calendar years, so beginning January 1 our costs matter for next season (if we qualify, of course).

 

If we use 80% of the published wages to estimate 1st team/coaching wages (this is essentially what Swiss Ramble does) and use £30m as our player sales profit (average of 3 years, which we can increase with more sales this summer and next) then we are currently at 79.6%.

 

To get under 70% we need a net gain of about £45m (increased revenue and/or decreased costs). We may be ok drifting a bit above this number since there’s a fairly small monetary fine if you’re within 10% and a first time offender, but presumably it’s part of our planning.