NUFC specific FFP/PSR discussion

[timeEd32]

9 minutes ago, Unbelievable said:

I appreciate that and I acknowledge there is a lot of guesswork involved, but probably safe to say then that the real figure would be in the 45-55m range as it stands?

 

I think that's the most accurate guess with what we know today. Actually for some reason in my previous math I just assumed Dubravka would go, which was maybe dumb. If you add his wages + Osula then I'd probably say £50-60m loss is current state. 

[junkhead]

Broadly speaking, I can't quite work out our grand strategy. Not worried in any way, it's just that I think we're in a very hard situation to close the financial gap on the top 6. 

 

So far, under Amanda's supervision the goals seemed to be:

- annual revenue growth by at least 30%

- success on the pitch - european qualifications

- compliance with PL financial regulations without much creative accounting (Forest deals in June kind of brought an end to that)

 

Even if we keep rising our revenues with 30%, which is extremely unrealistic year-on-year without major help from PIF-related parties.. it would take us many years of success on the pitch and good player trading to be able to overtake even the 6th of the "Big 6" - Spurs. And they're hardly staying still with their mega London stadium, big commercial deals and expected new outside investment.

 

So that can't be the plan if PIF really have ambitions to be "number 1". It'll be interesting if our behaviour changes with Eales and Mitchell now.

 

I have limited knowledge on the subject but the PL's regulations were not designed by experienced Westminster policy makers or the Treasury Department. Chelsea show that it's possible to circumvent the rules in the most obvious ways without consequences.  In Bulgaria we have a saying that the law is a door in a field.. it's not necessarily correct but it applies to our soviet constitution and the premier league's PSR 'top 6 memorandum'.

 

 

Edited August 7 by junkhead

[The Butcher]

 

[Unbelievable]

Could be Sela Cup specific

[r0cafella]

10 minutes ago, Unbelievable said:

Could be Sela Cup specific

I think they will be more club sponsors than just for the Sela club, pre season friendly cup not even broadcast won’t bring much value to advertisers. 

[Guest]

I suspect everything and anything will have a sponsor attached to it, similar to Man U, Liverpool and Arsenal. There will be an official Newcastle United bidet soon enough, to go along side the Lynx Tyne range and the NUFC Halloween Costumes. 

[Unbelievable]

43 minutes ago, r0cafella said:

I think they will be more club sponsors than just for the Sela club, pre season friendly cup not even broadcast won’t bring much value to advertisers. 

Hopefully, but we've had sponsors for our pre-season tours before, so wouldn't surprise me if they were.

[Unbelievable]

16 hours ago, junkhead said:

Broadly speaking, I can't quite work out our grand strategy. Not worried in any way, it's just that I think we're in a very hard situation to close the financial gap on the top 6. 

 

So far, under Amanda's supervision the goals seemed to be:

- annual revenue growth by at least 30%

- success on the pitch - european qualifications

- compliance with PL financial regulations without much creative accounting (Forest deals in June kind of brought an end to that)

 

Even if we keep rising our revenues with 30%, which is extremely unrealistic year-on-year without major help from PIF-related parties.. it would take us many years of success on the pitch and good player trading to be able to overtake even the 6th of the "Big 6" - Spurs. And they're hardly staying still with their mega London stadium, big commercial deals and expected new outside investment.

 

So that can't be the plan if PIF really have ambitions to be "number 1". It'll be interesting if our behaviour changes with Eales and Mitchell now.

 

I have limited knowledge on the subject but the PL's regulations were not designed by experienced Westminster policy makers or the Treasury Department. Chelsea show that it's possible to circumvent the rules in the most obvious ways without consequences.  In Bulgaria we have a saying that the law is a door in a field.. it's not necessarily correct but it applies to our soviet constitution and the premier league's PSR 'top 6 memorandum'.

 

 

 

 

The question about our long term strategy is an interesting one. I think original statements about competing within five years were over-optimistic, but Staveley always laboured the point that PIF are patient, long term investors, and with the 2034 World Cup being in Saudi Arabia, I imagine the more realistic ambition is to have us up there by that time, and also to have their league and national team at a level where it is seen as competitive with European and South American leagues, and the leading competition in the Middle East. Maybe a few years earlier in line with vision 2030. In any case, looks like they're targeting the next decade to really make a splash on the world stage, and we are probably a small cog in that machine.

 

As for how our owners plan to get to "number one", perhaps unrealistically, it looks like they prioritise doing things the "right" way and avoiding scrutiny where they can (they get enough already simply for being who they are). That means being compliant with whatever regulations are in place, but at the same time probably lobbying hard behind the scenes for those regulations to be changed in order to allow us to compete more fairly with the current biggest clubs in England and Europe. We got off to a great start with CL qualification last year, were unfortunate this past season and if we can get back on track and qualify for CL next season it is probably not unrealistic to achieve our 30% revenue increase year on year under our own steam, before and without related party sponsorship deals being responsible for the majority of it. As we all knew and felt before Ashley finally sold up, the potential for this club under its own steam is to compete with the top six. Our commercial revenue flatlined for 14 years while all our competitors doubled and tripled theirs. We suffered pathetic ownership and it set us back more than a decade. Consider the financial and political might of our current owners however, and we can expect to compete long term, but it will definitely take more time than the originally muted five year plan.

 

As you say, other clubs are also developing and growing, so we face an uphill battle. So far most big decisions have been spot on, and no doubt there is more to come. Let's enjoy the ride as much as we will the destination if and when we finally get there.   

[LFEE]

Am I right in thinking buying in January is no different if buying this month? All counts as the same cycle?

[r0cafella]

16 minutes ago, LFEE said:

Am I right in thinking buying in January is no different if buying this month? All counts as the same cycle?

No different, same financial year. 

[macphisto]

At what point do we start to question either the intentions of PIF or the ability of Eales to push the limits of FFP which we will have to do to achieve their stated aims? I see Man U now have back of the shirt sponsors for some competitions. 

 

In the grand scheme of things, I'm very happy with the owners but there is no way we'll be competing with our current approach. I'm fine with that but they need to change their messaging to manage expectations. 

[LFEE]

24 minutes ago, macphisto said:

At what point do we start to question either the intentions of PIF or the ability of Eales to push the limits of FFP which we will have to do to achieve their stated aims? I see Man U now have back of the shirt sponsors for some competitions. 

 

In the grand scheme of things, I'm very happy with the owners but there is no way we'll be competing with our current approach. I'm fine with that but they need to change their messaging to manage expectations. 

10-15 years time maybe. They are doing a fine job. Remember being associated with Saudi isn’t always an easy sell to sponsors annd advertisers.

 

Think the main gauge is the stadium plans.

[Guest]

29 minutes ago, macphisto said:

At what point do we start to question either the intentions of PIF or the ability of Eales to push the limits of FFP which we will have to do to achieve their stated aims? I see Man U now have back of the shirt sponsors for some competitions. 

 

In the grand scheme of things, I'm very happy with the owners but there is no way we'll be competing with our current approach. I'm fine with that but they need to change their messaging to manage expectations. 

 

Man Utd are a global brand, they can get whoever to pay whatever they want, where they want.

 

We're still pretty much restricted to the UK and Saudi markets. The Adidas deal suggests we're doing okay though. 

 

 

Edited August 10 by Optimistic Nut

[macphisto]

57 minutes ago, LFEE said:

10-15 years time maybe. They are doing a fine job. Remember being associated with Saudi isn’t always an easy sell to sponsors annd advertisers.

 

Think the main gauge is the stadium plans.

And in reply @Optimistic Nut There is no reason why we can't have a PIF company on the back of our shirts. A deal that goes through related-parties regulations is better than no deal.

 

100% agree on training ground and stadium being a measure of our ambitions. 

[Gawalls]

55 minutes ago, macphisto said:

And in reply @Optimistic Nut There is no reason why we can't have a PIF company on the back of our shirts. A deal that goes through related-parties regulations is better than no deal.

 

100% agree on training ground and stadium being a measure of our ambitions. 

So they’ve bought the club for £300m, spent over £400m / the maximum they can spend on players since the takeover, been seriously buying good acedemy players and your pushing to question their intentions because there’s nothing written on the back of our shirts?

[TBG]

The queue for the club shop and STACK today should see us right 

[macphisto]

1 hour ago, Gawalls said:

So they’ve bought the club for £300m, spent over £400m / the maximum they can spend on players since the takeover, been seriously buying good acedemy players and your pushing to question their intentions because there’s nothing written on the back of our shirts?

That's the whole crux of my argument, they haven't spent the maximum they can spend as there's a lot of low hanging fruit they haven't exploited; back of the shirt is just one example. 

 

Go back to my original post, I'm happy with how the club is being run but at what point do we question their actions v where they claim they want to be? 

[TheBrownBottle]

7 hours ago, Gawalls said:

So they’ve bought the club for £300m, spent over £400m / the maximum they can spend on players since the takeover, been seriously buying good acedemy players and your pushing to question their intentions because there’s nothing written on the back of our shirts?

Spurs - the club usually considered the lesser of the ‘big six’ - has seen their revenues grow more than ours since our takeover.  And that’s with us grabbing the lowest of low-hanging fruit.

 

You can’t be ‘number one’ if you can’t even keep pace with ‘number six’.

 

That’s what the issue is - and the club doesn’t appear to be maximising potential income.  On the pitch, we’re much closer - but to sustain it, off the pitch the club needs to be on rocket boosters. 

[andyc35i]

But you need to have consistent success on the pitch to be able to attract the sponsors that the others have. I’m not too worried about the gap at the moment as it was always going to be a long term project given the financial rules that are in place now. 
 

The infrastructure behind the team is what I’m looking forward to seeing develop at pace. We need to do something with the training ground and stadium and that can happen regardless of commercial revenue matching the 6 clubs ahead of us

[HayDen Traces]

The stadium is the one. That's the game changer and the one we're going to have to get sorted to truly compete at elite level

[Unbelievable]

  

1 hour ago, LFEE said:

Still awaiting an answer. What’s our likely NET budget 24/25 approximately? Just after a figure.

@LFEE I'll have a stab at answering here so as not to (further) antogonise the FFP/PSR police, and happy to be corrected by people far more knowledgable in here if I've misunderstood something:

 

Based on timeEd32's latest estimation of our current 2024/25 profit/loss position of between 50-60m (see first post on this page). That is after bringing in Hall and Osula for a combined 38m-ish and no outgoings. If we sign Guehi for the reported 55m-ish and assuming he'd be one of our top earners, the yearly cost for him alone would be around 18m (11m amortisation and 7m wages). To remain PSR compliant by June 30 2025 we cannot report losses (far) in excess of the 70m dropped from the first year of the 3 year period just closed (2021/22). So based on where we think we currently stand and with Guehi added, we'd be pretty much at our max not including potential commercial deals that appear to be in the pipeline, or fees for players we manage to sell. That would see a net spend of around 93m.

 

However, let's say hypothetically we sell Lewis Miley (youth product so no amortisation and low wages) to Real Madrid for 50m next week. That then would take our losses for the year back to 20m and allow us to spend all the way back up to a yearly 50m in amortisation and wages, so if you want another 3 "Guehi's" for 165m in transfer fees, adding 115m to our "net spend" (now over 200m).

 

That just goes to show net spend is not a great way to look at while planning for PSR, as it discards that we would be mortgaging our future heavily in that scenario, seeing as we've not only added 50m cost to 2024/25, but also to the four years that follow for amortisation (and wages for the duration of their contract). We'd then need to find the additional income to cover those costs, be it through commercial, matchday, player trading or a combination of the above avenues, before we can even think about further strengthening in those future years.

 

I think for 2024/25 our net spend looks like it will be around the 100m mark unless something unforeseen happens, but that in itself doesn't really tell us anything.

[LFEE]

2 minutes ago, Unbelievable said:

  

@LFEE I'll have a stab at answering here so as not to (further) antogonise the FFP/PSR police, and happy to be corrected by people far more knowledgable in here if I've misunderstood something:

 

Based on timeEd32's latest estimation of our current 2024/25 profit/loss position of between 50-60m (see first post on this page). That is after bringing in Hall and Osula for a combined 38m-ish and no outgoings. If we sign Guehi for the reported 55m-ish and assuming he'd be one of our top earners, the yearly cost for him alone would be around 18m (11m amortisation and 7m wages). To remain PSR compliant by June 30 2025 we cannot report losses (far) in excess of the 70m dropped from the first year of the 3 year period just closed (2021/22). So based on where we think we currently stand and with Guehi added, we'd be pretty much at our max not including potential commercial deals that appear to be in the pipeline, or fees for players we manage to sell. That would see a net spend of around 93m.

 

However, let's say hypothetically we sell Lewis Miley (youth product so no amortisation and low wages) to Real Madrid for 50m next week. That then would take our losses for the year back to 20m and allow us to spend all the way back up to a yearly 50m in amortisation and wages, so if you want another 3 "Guehi's" for 165m in transfer fees, adding 115m to our "net spend" (now over 200m).

 

That just goes to show net spend is not a great way to look at while planning for PSR, as it discards that we would be mortgaging our future heavily in that scenario, seeing as we've not only added 50m cost to 2024/25, but also to the four years that follow for amortisation (and wages for the duration of their contract). We'd then need to find the additional income to cover those costs, be it through commercial, matchday, player trading or a combination of the above avenues, before we can even think about further strengthening in those future years.

 

I think for 2024/25 our net spend looks like it will be around the 100m mark unless something unforeseen happens, but that in itself doesn't really tell us anything.

Thanks ☺️ So my guesstimate wasn’t too far off. Must admit I struggle to understand it. They seemed to of made it very complicated for the general fan to understand.

 

From what I’ve read there I’m sticking with holding off spending big(ish) on RCB and RW. 
 

Id stick with our 4 fit CB’s for 12 months until our other 2 return. Look to shift Miggy for a upgrade RW.

 

If we are in the hunt for 2 trophies and top 4 then maybe gamble on something late January.

[Unbelievable]

  

1 hour ago, 80 said:

Without getting too PSR-y, basically the value of a pound coin is meaning different things to different clubs more than ever before. Which is making player pricing much more erratic e.g. Gordon was worth eight figures less on June 30th than he was on July 1st. We knew that and Liverpool knew that. It's not just that one quality of player is worth 30% less than another quality of player, it's that individual players are going up and down, occasionally even day to day.

 

Meanwhile there's now more sense in us selling Almiron for £10m (I'm not saying it's a slam dunk case) even if that's seen as cheap, because we're a cash rich, PSR poor club and that sale immediately unlocks a £35m transfer kitty for a deal we may have lined up. But that would be less true for a cash poor club, who would need to value him more highly because they need to fund other signings somehow.

 

PSR, combined with transfer windows, is incentivising many clubs into periodically behaving like Leeds United in crisis mode, before the reset button gets hit and normality resumes. The only real alternative is to have a ridiculously higher income than your peers, or not get as close to maxing out your PSR budget as possible because you don't mind giving your competitors who do an advantage.

 

So it's near enough impossible to talk in traditional ways about how much a player is worth in a steady sense, because one month their club might be in liquidation mode, and the next they might be rich. It's more like buying fresh fish from the docks - lots of moving parts, and what's a good deal now can be a very bad deal a few hours later...

 

Oh look at that, I became too PSR-y.

 

 

 

This was a good post with many excellent points @80, but I was wondering about how you got to the 35m in the bit in bold, as that would indeed make it look quite appealing to those not well versed in the complexity of our PSR conundrum to sell Almiron and replace with let's say Madueke.

 

If we assume Rich's numbers from his analysis on the previous page regarding Almiron's amortisation due to deal extension as correct we have "Almirón signed for £20M in January 2019 on an initial 5.5-year deal, re-signed on a 3.5-year deal in February 2023 after 4 years (so only ~3 months reflected in the accounts)" leading to "Almirón from £3.64M per year to £1.15M per year (-£2.49M)". Almiron's remaining book value would be around 4m, so a 10m sale fee would give a 6m PSR profit on the deal, just in this PSR year (2024/25). Capology have Almiron on a 60k/week wage, or let's say 3m per year. By selling Almiron for 10m we'd bank a 6m profit and save ourselves 3m in wages, so let's say for 2024/25 impact only that would give us 9m to spend on amortisation and wages of a replacement player. If we were to spend the 35m you mentioned, that would leave only 2m for wages, or 40k/week. If for example Madueke would be available for under 30m and willing to accept the same wage as at Chelsea (50k/week again according to Capology), it would just about work out for this PSR year (6m amortisation + 3m wages).

 

However, for the first four years of the replacement's contract we'd also have that 9m per year cost compared to Almiron at 4m, so 5m added to annual player cost base.

 

Having done the numbers I think that pair of deals, if they were available to us as presented, would have actually made sense from a sporting and probably financial perspective due to Madueke being a better player and probably growing in value as he is still young, hence a better long term investment.

 

However to suggest a 10m sale allows 3,5 times the incoming money to be spend as a rule of thumb almost might lead people to believe selling Almiron, Wilson and the like for paltry fees is a no brainer and I don't think it is in our PSR situation sadly.

 

The more I think about it, the more it is clear increasing commercial revenue is going to be the key for us. We need the exposure of CL football, and being seen as one of the top clubs in the PL, and then to transform that momentum into better commercial deals that will allow us to close the revenue gap. Alternatively we need related party rules scrapped. Here's hoping Man City tear the PL a new one in their hearing.

[macphisto]

32 minutes ago, Unbelievable said:

 

The more I think about it, the more it is clear increasing commercial revenue is going to be the key for us. We need the exposure of CL football, and being seen as one of the top clubs in the PL, and then to transform that momentum into better commercial deals that will allow us to close the revenue gap. Alternatively we need related party rules scrapped. Here's hoping Man City tear the PL a new one in their hearing.

We don't need it scrapped. We need to start putting these deals in place, even if they are "fair value". 

 

It doesn't make sense to think PIF will go from a situation where they don't exploit every income stream to one where a PIF company will pay millions to sponsor the match ball. Related sonsors are not banned and there are numerous ways we could generate income. 

[TheBrownBottle]

3 minutes ago, macphisto said:

We don't need it scrapped. We need to start putting these deals in place, even if they are "fair value". 

 

It doesn't make sense to think PIF will go from a situation where they don't exploit every income stream to one where a PIF company will pay millions to sponsor the match ball. Related sonsors are not banned and there are numerous ways we could generate income. 

Yep - the ‘gloves off if Man City wins’ is wishful thinking; and even a Man City victory isn’t necessarily going to remove the FMV issues in any case.