Financial Fair Play / Profit & Sustainability

[Turnbull2000]

1 hour ago, The College Dropout said:

There’s not a big 7 tbf.  We are a few bad decisions away from being Leicester. 

 

 

We're certainly closer to the likes of Leicester and Brentford than we are Arse, Chelsea and Liverpool though.

[gdm]

5 hours ago, The College Dropout said:

You didn’t bother reading the article 

It was a general question about the ‘big 6’ going back years which the people that replied seemed to understand except for….you 

 

no I didn’t read the article tbh the PSR and finances shite depresses me I’d be happy to never have to read another single article about it 

 

 

Edited Tuesday at 19:24 by gdm

[tarie4]

11 minutes ago, timeEd32 said:

 

If you discount the TCD hyperbole then he's probably closer to right than wrong. 

 

We are 12 points ahead of Man United and 17 ahead of Spurs. We will almost certainly finish ahead of both of them this season, but in the grand scheme of things we are nowhere close. Great recruitment and an incredible manager has given us hope, but it's all quite fragile as we have little margin for error. 

Since the takeover, we've been comfortably in the top 8. Really comfortably. Saying we're a few bad moves away from a Leicester-style relegation is totally wrong.

 

It'd take a crazy amount of bad moves to get relegated like Leicester did, and even Man U's transfer business isn't bad enough for that to happen to us.

[Unbelievable]

1 hour ago, timeEd32 said:

 

If you discount the TCD hyperbole then he's probably closer to right than wrong. 

 

We are 12 points ahead of Man United and 17 ahead of Spurs. We will almost certainly finish ahead of both of them this season, but in the grand scheme of things we are nowhere close. Great recruitment and an incredible manager has given us hope, but it's all quite fragile as we have little margin for error. 

I disagree and I will keep arguing this. Sporting success drives commercial success, and we have owners and a commercial team now determined to grow us massively year on year, and so far exceeding their targets. At this rate we will catch up commercially with the teams you mention within a few years, and that is not even taking into account the hit those clubs' revenue will take if they continue to not qualify for CL. Things can go very quickly in football as in any sport.

[timeEd32]

2 hours ago, Unbelievable said:

I disagree and I will keep arguing this. Sporting success drives commercial success, and we have owners and a commercial team now determined to grow us massively year on year, and so far exceeding their targets. At this rate we will catch up commercially with the teams you mention within a few years, and that is not even taking into account the hit those clubs' revenue will take if they continue to not qualify for CL. Things can go very quickly in football as in any sport.

 

I generally agree with you. I'm not being negative and have enjoyed every second of the last couple years nor am I frustrated at the recent lack of signings (I mean I am, but not with the club). 

 

I do think you're being overly optimistic in thinking we'll catch up commercially within a few years. The timeline on that feels much further out to me if we're able to do it.

 

What we don't have that the other six do (though not all six are the same) is the safety net. Our success at the moment is entirely tied to our current players and manager and they are doing it in the face of financial headwinds. The success of the 'Big 6' is almost pre-ordained by their financial might and they have to actively harm themselves to lose that advantage. As you said, things can go very quickly in football, but that can also turn negative for us and positive for the likes of Man United.

[TheBrownBottle]

8 hours ago, Unbelievable said:

I disagree and I will keep arguing this. Sporting success drives commercial success, and we have owners and a commercial team now determined to grow us massively year on year, and so far exceeding their targets. At this rate we will catch up commercially with the teams you mention within a few years, and that is not even taking into account the hit those clubs' revenue will take if they continue to not qualify for CL. Things can go very quickly in football as in any sport.

The issue is that you keep assuming perpetual growth with nothing to support it.  Our biggest commercial deal - as it is with most clubs - is our kit deal.  We've signed up with adidas for five years - so that isn't going up again any time soon.  You allow for the same increases year-on-year that we've had to date, yet never cite where all that additional growth will come from, simply applying increases year on year.  

 

Even if you were to allow commercials to increase in the way they have according to Deloitte last season, and compared them to Spurs (whose commercial growth dropped to 11% from 22%; because there is a ceiling for every club), it would still take five years to catch Spurs.  That's allowing for 62% increases year on year for NUFC and 11% for Spurs - never going to happen without something truly dramatic occurring.  So it would take half a decade even allowing for Spurs' growth to remain as it was and ours to grow at insane rates.  Commercials this season will grow through the adidas deal, but shrink from the lack of CL football.  If there is anything like another 62% growth this year in commercials then the club is doing a phenomenal job of keeping the deals quiet.

 

Things really don't change quickly in football - at all.  The 'Big Five' when I was a kid in the late '80s were Arsenal, Everton, Liverpool, Man Utd, Spurs.  Only one from that group have dropped out.  To it have been added Man City and Chelsea - who had unbelievable sums poured into them when this was still possible, and have won between them (since Abramovich arrived at Chelsea in 2003) 3 European Cups, 2 UEFA Cups, 13 league titles, 8 FA Cups, and 9 League Cups, which is what has built both of them.  We're playing in a very different sport with PSR.

 

 

Edited yesterday at 05:12 by TheBrownBottle

[Whitley mag]

On face value it appears Silverstone has taken the plaudits for the adidas/Sela deals, which I agree was low hanging fruit and has attracted some other minor sponsorships which are not going to move the dial significantly.

 

However, playing devils advocate if your Silverstone and you know the yearly growth is important, would you not be spreading things such as training and stadium sponsorship out, rather than doing them in one fell swoop ?

 

As a layman you could argue why don’t they just do short term deals on training gear etc, but in the real world is that getting the best return ? 
 

My hunch is that Silverstone isn’t the most dynamic, I don’t think the club are maximising the Middle East avenue sufficiently currently and is bleeding the fans dry currently as the easy option, not sure he was particularly liked by Arsenal fans, but think they are holding off on training and stadium sponsorship until these big infrastructure announcements, have a feeling we’ll see a big Middle East sponsorship of new stadium.

 

 

Edited yesterday at 06:04 by Whitley mag

[Stifler]

Since he’s came in we have brought in Adidas, and JD as major sponsors.

You could argue that we should have a training shirt/ground sponsor, but either the club don’t see it worthwhile yet, or the Premier League are holding it up.

At some point we have to commit to one, but I think it’s harsh to give him too much criticism yet.

 

For what it’s worth, I think regardless of how we do it, the Premier League will be very resistant to us closing the gap on the top 6 clubs through sponsorship too quickly. Even if our league position warrants it, they will argue that our stature doesn’t. They will drag it out until the top 6 clubs have deals that are about to expire and can sign new ones that maintain the gap regardless.

[Jewel]

What’s Ed Woodward been up to since leaving Man Utd? Perhaps he could do a job for us?

 

Granted, he was clueless when it came to the football side of things, but seemed to be very highly thought of when it came to maximising commercial revenue streams.

[Unbelievable]

3 hours ago, TheBrownBottle said:

The issue is that you keep assuming perpetual growth with nothing to support it.  Our biggest commercial deal - as it is with most clubs - is our kit deal.  We've signed up with adidas for five years - so that isn't going up again any time soon.  You allow for the same increases year-on-year that we've had to date, yet never cite where all that additional growth will come from, simply applying increases year on year.  

 

Even if you were to allow commercials to increase in the way they have according to Deloitte last season, and compared them to Spurs (whose commercial growth dropped to 11% from 22%; because there is a ceiling for every club), it would still take five years to catch Spurs.  That's allowing for 62% increases year on year for NUFC and 11% for Spurs - never going to happen without something truly dramatic occurring.  So it would take half a decade even allowing for Spurs' growth to remain as it was and ours to grow at insane rates.  Commercials this season will grow through the adidas deal, but shrink from the lack of CL football.  If there is anything like another 62% growth this year in commercials then the club is doing a phenomenal job of keeping the deals quiet.

 

Things really don't change quickly in football - at all.  The 'Big Five' when I was a kid in the late '80s were Arsenal, Everton, Liverpool, Man Utd, Spurs.  Only one from that group have dropped out.  To it have been added Man City and Chelsea - who had unbelievable sums poured into them when this was still possible, and have won between them (since Abramovich arrived at Chelsea in 2003) 3 European Cups, 2 UEFA Cups, 13 league titles, 8 FA Cups, and 9 League Cups, which is what has built both of them.  We're playing in a very different sport with PSR.

 

 

 

 

If I take Spurs' numbers (commercial growth of 261m in 2023 to 297m in 2024, or 13,7% growth year on year) and ours (54m to 90m, or 66,6% growth) and use those for extrapolation we catch up by 2027 and have double their commercial revenue by 2029 (the five years you claim it would take to catch up at current numbers). Welcome to the miracle of compounding.

 

Now of course I take your point that there are limits on the value of our commercial deals and that we will not continue to have a 66% year on year growth, but as long as we will continue to beat our competitors in commercial growth figures we will catch up, and quicker than you think. How are we going to continue outperform our competitors you ask? By continuing to outperform them on the pitch, because that of course is crucial. There is a good chance our existing deals with Adidas are incentivised, so that our commercial revenue increases the higher we finish in the PL and for CL qualification for example. Also we could renegotiate or break contracts for new ones. In any case, with the PL now having to prove that a proposed deal is not FMV (as opposed to the other way around) it helps our case enormously if we continuously outperform clubs with much better commercial deals.

 

Sporting success will bring fan interest, which in turn will help generate more commercial revenue. It's not rocket science.

 

And yes, things can change a lot in football in the space of a few years. You mention the big five from the eighties. Three of those five currently languish in the bottom half of the table. If that carries on it will impact their revenue. We are on an up cycle, whereas some of the big six are on a down cycle. As long as we keep doing the right things we will catch up.

[The College Dropout]

13 hours ago, gdm said:

It was a general question about the ‘big 6’ going back years which the people that replied seemed to understand except for….you 

 

no I didn’t read the article tbh the PSR and finances shite depresses me I’d be happy to never have to read another single article about it 

 

 

 

The article explains it. It’s less to do with position in the table and more to do with a gigantic economic advantage over the field that allows years of mismanagement and still being close to competitive. 
 

Leicester got everything right in except qualify for the CL the second and third time and they’ve paid the price. Us and Villa will need to get nearly everything right over the next 2-5 years to even begin to get onto the financial coattails of the big 6. 

13 hours ago, tarie4 said:

Since the takeover, we've been comfortably in the top 8. Really comfortably. Saying we're a few bad moves away from a Leicester-style relegation is totally wrong.

 

It'd take a crazy amount of bad moves to get relegated like Leicester did, and even Man U's transfer business isn't bad enough for that to happen to us.

Again it’s about finances and hitting a ceiling - checkmate. 
 

If not for the emergence of Yankuba Minteh and his breakout season, we would’ve sold a purple in the summer - on the cheap - without being replaced. Or a points deduction that would end our chances of qualifying for the CL.  We need to consistently perform 8/10 on and off the pitch for us to be long term competitive.  2 years of bad transfer windows, expensive signings that flop etc., a bad managerial hire and we are in trouble. Probably not relegation but something in the magnitude of Everton.  ‘Big 6’ can weather 5 years of underperformance and still be in a better financial position than the field. Thats the difference. 

6 hours ago, timeEd32 said:

 

I generally agree with you. I'm not being negative and have enjoyed every second of the last couple years nor am I frustrated at the recent lack of signings (I mean I am, but not with the club). 

 

I do think you're being overly optimistic in thinking we'll catch up commercially within a few years. The timeline on that feels much further out to me if we're able to do it.

 

What we don't have that the other six do (though not all six are the same) is the safety net. Our success at the moment is entirely tied to our current players and manager and they are doing it in the face of financial headwinds. The success of the 'Big 6' is almost pre-ordained by their financial might and they have to actively harm themselves to lose that advantage. As you said, things can go very quickly in football, but that can also turn negative for us and positive for the likes of Man United.

Agreed. We have to get everything right on the pitch for a sustained period of time.  The others don’t.  It’s possible but you can’t bank on it.  

 

4 hours ago, TheBrownBottle said:

The issue is that you keep assuming perpetual growth with nothing to support it.  Our biggest commercial deal - as it is with most clubs - is our kit deal.  We've signed up with adidas for five years - so that isn't going up again any time soon.  You allow for the same increases year-on-year that we've had to date, yet never cite where all that additional growth will come from, simply applying increases year on year.  

 

Even if you were to allow commercials to increase in the way they have according to Deloitte last season, and compared them to Spurs (whose commercial growth dropped to 11% from 22%; because there is a ceiling for every club), it would still take five years to catch Spurs.  That's allowing for 62% increases year on year for NUFC and 11% for Spurs - never going to happen without something truly dramatic occurring.  So it would take half a decade even allowing for Spurs' growth to remain as it was and ours to grow at insane rates.  Commercials this season will grow through the adidas deal, but shrink from the lack of CL football.  If there is anything like another 62% growth this year in commercials then the club is doing a phenomenal job of keeping the deals quiet.

 

Things really don't change quickly in football - at all.  The 'Big Five' when I was a kid in the late '80s were Arsenal, Everton, Liverpool, Man Utd, Spurs.  Only one from that group have dropped out.  To it have been added Man City and Chelsea - who had unbelievable sums poured into them when this was still possible, and have won between them (since Abramovich arrived at Chelsea in 2003) 3 European Cups, 2 UEFA Cups, 13 league titles, 8 FA Cups, and 9 League Cups, which is what has built both of them.  We're playing in a very different sport with PSR.

 

 

 

Excellent post.  Key question you raised: where are we getting the consistent 60% growth from?

[gjohnson]

9 minutes ago, The College Dropout said:

The article explains it. It’s less to do with position in the table and more to do with a gigantic economic advantage over the field that allows years of mismanagement and still being close to competitive. 
 

Leicester got everything right in except qualify for the CL the second and third time and they’ve paid the price. Us and Villa will need to get nearly everything right over the next 2-5 years to even begin to get onto the financial coattails of the big 6. 

Again it’s about finances and hitting a ceiling - checkmate. 
 

If not for the emergence of Yankuba Minteh and his breakout season, we would’ve sold a purple in the summer - on the cheap - without being replaced. Or a points deduction that would end our chances of qualifying for the CL.  We need to consistently perform 8/10 on and off the pitch for us to be long term competitive.  2 years of bad transfer windows, expensive signings that flop etc., a bad managerial hire and we are in trouble. Probably not relegation but something in the magnitude of Everton.  ‘Big 6’ can weather 5 years of underperformance and still be in a better financial position than the field. Thats the difference. 

Agreed. We have to get everything right on the pitch for a sustained period of time.  The others don’t.  It’s possible but you can’t bank on it.  

 

Excellent post.  Key question you raised: where are we getting the consistent 60% growth from?

CDOs last comment here is the vital one....consistent increases in growth can only be maintained with a large enough environment and enough fertiliser to do it....we have neither, so we need cheat factors like GM and hyper efficient/new fertilisers. Basically need a new Haber-Fitch process to triple output with minimal effort.

 

 

In a closed system which we realistically have innovation is the only way to move up

 

 

Edited yesterday at 09:27 by gjohnson

[500bhp]

 

Nothing to see here,

 

https://www.bbc.co.uk/news/articles/cgrnqvqek4ro

[TheBrownBottle]

2 hours ago, Unbelievable said:

 

If I take Spurs' numbers (commercial growth of 261m in 2023 to 297m in 2024, or 13,7% growth year on year) and ours (54m to 90m, or 66,6% growth) and use those for extrapolation we catch up by 2027 and have double their commercial revenue by 2029 (the five years you claim it would take to catch up at current numbers). Welcome to the miracle of compounding.

 

Now of course I take your point that there are limits on the value of our commercial deals and that we will not continue to have a 66% year on year growth, but as long as we will continue to beat our competitors in commercial growth figures we will catch up, and quicker than you think. How are we going to continue outperform our competitors you ask? By continuing to outperform them on the pitch, because that of course is crucial. There is a good chance our existing deals with Adidas are incentivised, so that our commercial revenue increases the higher we finish in the PL and for CL qualification for example. Also we could renegotiate or break contracts for new ones. In any case, with the PL now having to prove that a proposed deal is not FMV (as opposed to the other way around) it helps our case enormously if we continuously outperform clubs with much better commercial deals.

 

Sporting success will bring fan interest, which in turn will help generate more commercial revenue. It's not rocket science.

 

And yes, things can change a lot in football in the space of a few years. You mention the big five from the eighties. Three of those five currently languish in the bottom half of the table. If that carries on it will impact their revenue. We are on an up cycle, whereas some of the big six are on a down cycle. As long as we keep doing the right things we will catch up.

I think that’s a great post - I do want to be clear that I 100% respect your opinion (and I also want you to be right!).  But I’m a cynical awld bastard so I’m always looking for confidence in the numbers  

[TheBrownBottle]

4 hours ago, Jewel said:

What’s Ed Woodward been up to since leaving Man Utd? Perhaps he could do a job for us?

 

Granted, he was clueless when it came to the football side of things, but seemed to be very highly thought of when it came to maximising commercial revenue streams.

* Ewar Woowar

 

 

Edited yesterday at 11:24 by TheBrownBottle

[The College Dropout]

2 hours ago, Unbelievable said:

 

If I take Spurs' numbers (commercial growth of 261m in 2023 to 297m in 2024, or 13,7% growth year on year) and ours (54m to 90m, or 66,6% growth) and use those for extrapolation we catch up by 2027 and have double their commercial revenue by 2029 (the five years you claim it would take to catch up at current numbers). Welcome to the miracle of compounding.

 

Now of course I take your point that there are limits on the value of our commercial deals and that we will not continue to have a 66% year on year growth, but as long as we will continue to beat our competitors in commercial growth figures we will catch up, and quicker than you think. How are we going to continue outperform our competitors you ask? By continuing to outperform them on the pitch, because that of course is crucial. There is a good chance our existing deals with Adidas are incentivised, so that our commercial revenue increases the higher we finish in the PL and for CL qualification for example. Also we could renegotiate or break contracts for new ones. In any case, with the PL now having to prove that a proposed deal is not FMV (as opposed to the other way around) it helps our case enormously if we continuously outperform clubs with much better commercial deals.

 

Sporting success will bring fan interest, which in turn will help generate more commercial revenue. It's not rocket science.

 

And yes, things can change a lot in football in the space of a few years. You mention the big five from the eighties. Three of those five currently languish in the bottom half of the table. If that carries on it will impact their revenue. We are on an up cycle, whereas some of the big six are on a down cycle. As long as we keep doing the right things we will catch up.

Sustained sporting success and financial success are intrinsically linked.

 

The bolded needs to happen over a sustained period. Both clubs have finished above us in 1 of the last 2 seasons. Man U winning 2 trophies in the process.

[Unbelievable]

33 minutes ago, The College Dropout said:

Sustained sporting success and financial success are intrinsically linked.

 

The bolded needs to happen over a sustained period. Both clubs have finished above us in 1 of the last 2 seasons. Man U winning 2 trophies in the process.

Yes and no. In a true Howe-ism I'd argue we don't need to worry about other clubs' revenue growth, but we need to concentrate on our own. What Man U, Spurs and the others do is beyond our control and only indirectly relevant to our fortunes, because as we've proven since the takeover this club can punch above its weight when galvanised and united. Similarly from 15 years of Ashley we are also all too astutely aware of the devastating impact a non-commited ownership and a fractioned relationship between club, players and fans can have, such as what is brewing at Man U and Spurs. Put it this way: I'd rather be in our position right now than in theirs even with the artificial restrictions imposed on us and that it all feels a bit fragile still. This club was always a sleeping giant and it is slowly waking up under proper management and direction both on and off the pitch.

 

 

Edited yesterday at 12:08 by Unbelievable

[TheBrownBottle]

13 minutes ago, Unbelievable said:

This club was always a sleeping giant and it is slowly waking up under proper management and direction both on and off the pitch.

 

I agree, but it was always such an oddly loaded term - I grew up with NUFC always described as a 'sleeping giant'.  It feels odd looking back - the clubs who'd always be described as that by the media were us, Wolves, the mackems and Sheff Wed (Leeds did win the title).  Yet I suspect the only ones who could really be described as that were NUFC.  English football is unique in terms of clubs being capable of being 'massive'.

[Ben]

1 hour ago, 500bhp said:

 

Nothing to see here,

 

https://www.bbc.co.uk/news/articles/cgrnqvqek4ro

 

Can they not leave these Billionaires alone and get get to back to the benefits scroungers 

[Jackie Broon]

I've done some sums and I think we're actually in a better PSR position than we're led to believe:

 

22/23

Revenue 250m

Expenses 230m

Amortisation 93m

Allowable deductions £10m

Profit on player sales £3m

PSR profit (loss) – (£60m)

 

Estimate for 23/24 (based on Swiss Ramble’s figures)

Revenue 300m

Expenses 247m

Amortisation 109m

Allowable deductions £10m

Profit on player sales £75m

PSR profit (loss) - £29m

 

Rough guestimate for 24/25

Revenue 320m

Expenses 260m

Amortisation 95m

Allowable deductions £10m

Profit on player sales £8m (assuming Miggy is sold)

PSR profit (loss) – (£17m)

 

PSR allows a £105m loss over three years, we have probably got a fair bit of headroom this season. Last season was exceptional because of the two huge losses is 21/22 and 22/23, where we were PIF spending on a Ashley revenue and 20/21, in which we made a profit, dropping off the books.

 

[The College Dropout]

Also need to align to the new squad cost rules. 

[Unbelievable]

1 minute ago, The College Dropout said:

Also need to align to the new squad cost rules. 

Yes. Clearly that is the (new) problem we are facing, especially as Europe looks an ever more likely prospect.

[Jackie Broon]

9 minutes ago, The College Dropout said:

Also need to align to the new squad cost rules. 

 

I know but, they haven't actually been adopted of finalised yet, and I don't believe we would have voted for something that makes our position a lot worse.

 

Also, if they align with UEFA's rules the profit on player sales for the past three years is added to revenue, so we'd probably have plenty of headroom there too, at least until 2027/28.

 

 

Edited yesterday at 12:54 by Jackie Broon

[manorpark]

15 minutes ago, Jackie Broon said:

I've done some sums and I think we're actually in a better PSR position than we're led to believe:

 

22/23

Revenue 250m

Expenses 230m

Amortisation 93m

Allowable deductions £10m

Profit on player sales £3m

PSR profit (loss) – (£60m)

 

Estimate for 23/24 (based on Swiss Ramble’s figures)

Revenue 300m

Expenses 247m

Amortisation 109m

Allowable deductions £10m

Profit on player sales £75m

PSR profit (loss) - £29m

 

Rough guestimate for 24/25

Revenue 320m

Expenses 260m

Amortisation 95m

Allowable deductions £10m

Profit on player sales £8m (assuming Miggy is sold)

PSR profit (loss) – (£17m)

 

PSR allows a £105m loss over three years, we have probably got a fair bit of headroom this season. Last season was exceptional because of the two huge losses is 21/22 and 22/23, where we were PIF spending on a Ashley revenue and 20/21, in which we made a profit, dropping off the books.

 

 

Revenue for 23/24 was £314M

[gjohnson]

16 minutes ago, Jackie Broon said:

I've done some sums and I think we're actually in a better PSR position than we're led to believe:

 

22/23

Revenue 250m

Expenses 230m

Amortisation 93m

Allowable deductions £10m

Profit on player sales £3m

PSR profit (loss) – (£60m)

 

Estimate for 23/24 (based on Swiss Ramble’s figures)

Revenue 300m

Expenses 247m

Amortisation 109m

Allowable deductions £10m

Profit on player sales £75m

PSR profit (loss) - £29m

 

Rough guestimate for 24/25

Revenue 320m

Expenses 260m

Amortisation 95m

Allowable deductions £10m

Profit on player sales £8m (assuming Miggy is sold)

PSR profit (loss) – (£17m)

 

PSR allows a £105m loss over three years, we have probably got a fair bit of headroom this season. Last season was exceptional because of the two huge losses is 21/22 and 22/23, where we were PIF spending on a Ashley revenue and 20/21, in which we made a profit, dropping off the books.

 

Same calculations by others show we still need to sell.

 

Basically no-one outside of NUFCs accountants actually know. We could be skint or could have millions to spend. Let's see how creative they can get