I'm no accountant (I'm pleased to say) and others will no doubt provide better informed and insightful comments, however, a few headlines;
The operating loss in the year to end June '12 was circa £7.5m. Profits on transfers (including fees related to appearances) circa £1m. Loans repaid to RBS (as scheduled) circa £1m - this is the North Stand loan. Increase in bank loans/overdraft circa 0,7m. Loans from owners £7.0m - as expected, but important.
In other words, the Club made tremendous progress on the pitch, lost a lot of money and the owners wrote a big cheque to cover that loss.
A reasonable guess is that the ongoing loss is now a little bigger (as the Club strives to compete in the Championship) and hence the cheques being written correspondingly larger.
It's encouraging that neither Solly or Stephens have been sold in the January window - at least not yet.
Happy to be corrected if my rapid skim of the numbers and lack of skill means I have this completely wrong.
Who knows, but it's hard to believe that anybody who understood the nature of the business they were contemplating acquiring would have found much in the accounts that surprised them.
I'm no accountant (I'm pleased to say) and others will no doubt provide better informed and insightful comments, however, a few headlines;
The operating loss in the year to end June '12 was circa £7.5m. Profits on transfers (including fees related to appearances) circa £1m. Loans repaid to RBS (as scheduled) circa £1m - this is the North Stand loan. Increase in bank loans/overdraft circa 0,7m. Loans from owners £7.0m - as expected, but important.
In other words, the Club made tremendous progress on the pitch, lost a lot of money and the owners wrote a big cheque to cover that loss.
A reasonable guess is that the ongoing loss is now a little bigger (as the Club strives to compete in the Championship) and hence the cheques being written correspondingly larger.
It's encouraging that neither Solly or Stephens have been sold in the January window - at least not yet.
Happy to be corrected if my rapid skim of the numbers and lack of skill means I have this completely wrong.
I take it we can finally put to bed the nonsense that last season was funded by the sale of Jenkinson to Arsenal then.
I was surprised by the TV money in the year to end June 12 (though I see it's not much different to the previous year). What do you reckon is the likely take in the Championship? Is it significantly higher?
A superb summary and one which, for me at least, raises an interesting question.
I know nothing about finance at all, so bear that in mind, but it looks to me as if the club is simply going to keep on losing 7 million quid per season whilst in the CCC with the only way of recouping some of these losses being the sale of players which, of course, brings the risk of relegation.
As a result, it seems to me at least (appreciating that its not my money) that the only strategy for the owners it to get promoted to the Premier League because that is the only possible way for us to generate enough cash so that everyone gets paid - and we attract new investors.
Therefore, thinking strategically, would it not be worth the board pumping (if they can find it) 5-6 million quid into the squad to try and get the side promoted? The only question then becomes when you make the investment, I would look to make in the summer rather than now as its better to buy when people are out of contract.
As things stand we are a mid-table side and, if we are being honest, we are nowhere near the quality of Cardiff, Leicester and others so unless we bring in 4-5 new players to seriously improve the squad then we are going to be stuck in the CCC losing 7 million per season anyway - so, why not take the risk and go for promotion?
This will no doubt seem simplistic to many, and it probably is, but it does frame the problem we have; that being we can't prosper in the CCC and need to get to the EPL for at least one season to re-float the club financially.
Therefore, thinking strategically, would it not be worth the board pumping (if they can find it) 5-6 million quid into the squad to try and get the side promoted? The only question then becomes when you make the investment, I would look to make in the summer rather than now as its better to buy when people are out of contract.
As things stand we are a mid-table side and, if we are being honest, we are nowhere near the quality of Cardiff, Leicester and others so unless we bring in 4-5 new players to seriously improve the squad then we are going to be stuck in the CCC losing 7 million per season anyway - so, why not take the risk and go for promotion?
How many other teams will think the same thing.
How much do you reckon Leicester have spent in the last few years.
But how many teams have got the foundations right and can afford to push on?
Great analysis of the accounts! It will be interesting to see what the numbers look like for this season as not too many changes in the squad... a few additions and some contract extensions probably at higher rates. According to the D&T report most championship clubs are in the same boat losing £5-10M every year! And the TV deal is not good - it's actually worse than when we were last in the championship
First funding the losses - there are only a few answers such as the occasional (big) player sale as per CAFC in the 90s; growing the gates but it will take a big increase to make a dent... or having owners / new investors with deep pockets... deeper than our mate at Palace who ran out of cash... There are other ways but they have never been known to work medium / long term
Second the only way is up! Some 6 or so players contracts are up for renewal this summer... any team can beat any other on its day...most clubs coming down from the Premier League are in disarray so can we edge up the league next season? Plus the academy players will be a year older - the U18s are doing well but it may be a wait.
For me next season the club needs to find the money (or youth players) to push up the league into the playoffs... as well as a 1:4 chance of gaining promotion it will also raise the value of the squad and the club as a whole should additional investors be required... I would hope that average gates go up too but this won't solve the financial gap.
So yes the club needs to push on and fullfil the 3-5 yr plan I first heard from Mr Slater...thing is that year 3 is going to be that much harder than years 1 & 2... more expensive, making the right signings, every loss on the pitch will be more painful / stressful... but maybe the League 1 champions can get to the premier league - without having to be sold?!
Therefore, thinking strategically, would it not be worth the board pumping (if they can find it) 5-6 million quid into the squad to try and get the side promoted? The only question then becomes when you make the investment, I would look to make in the summer rather than now as its better to buy when people are out of contract.
As things stand we are a mid-table side and, if we are being honest, we are nowhere near the quality of Cardiff, Leicester and others so unless we bring in 4-5 new players to seriously improve the squad then we are going to be stuck in the CCC losing 7 million per season anyway - so, why not take the risk and go for promotion?
How many other teams will think the same thing.
How much do you reckon Leicester have spent in the last few years.
The difference is that Leicester are owned by a mega-rich bloke from Thailand and he is happy to absorb the losses and does not seem to be bothered about selling the club on, he wants to get them into the Premiership and use the club as a self-promotion vehicle.
We don't seem to have that luxury as we don't know who owns us so have no idea how long, or if at all, they will be willing to swallow a 7 million loss every season.
Therefore, thinking strategically, would it not be worth the board pumping (if they can find it) 5-6 million quid into the squad to try and get the side promoted? The only question then becomes when you make the investment, I would look to make in the summer rather than now as its better to buy when people are out of contract.
As things stand we are a mid-table side and, if we are being honest, we are nowhere near the quality of Cardiff, Leicester and others so unless we bring in 4-5 new players to seriously improve the squad then we are going to be stuck in the CCC losing 7 million per season anyway - so, why not take the risk and go for promotion?
How many other teams will think the same thing.
How much do you reckon Leicester have spent in the last few years.
The difference is that Leicester are owned by a mega-rich bloke from Thailand and he is happy to absorb the losses and does not seem to be bothered about selling the club on, he wants to get them into the Premiership and use the club as a self-promotion vehicle.
We don't seem to have that luxury as we don't know who owns us so have no idea how long, or if at all, they will be willing to swallow a 7 million loss every season.
long term solution in the championship ties into financial fair play which is regulating and reducing the amount of losses and owner loans / investment... not sure how this will work... solution for CAFC is to have the best academy in SE London and the biggest fan base to reduce losses and improve the first team over time... How much one has to spend to accelerate that process is anyone's guess but Fulham and QPR spent a fortune to get up
I'm not an accountant either but who would be stupid enough to have anything to do with a business that has a turnover of £8.5 million and costs of £16 million??
Why not just set fire to £7.5 million in the street or start a very expensive drug habit?
If you lose £7.5 million on a £100 million turnover that's one thing but spending double what you have coming in is bonkers.
Do we have Goldman Sachs as our financial advisers or am I missing something?
Thanks NYA; that is a great summary. These are a truly shocking set of numbers!! It's difficult to see how CAFC can have any future without serious increases in income (promotion to PL) or massive reductions in costs (filling the team with kids, selling the Valley). The costs to the owners of just keeping the club alive are huge. I need to understand the Financial Fair Play Regulations better, because I don't think this sort of situation will be allowed to continue once these kick in. Something is going to have to change quickly to reduce these losses to a more acceptable level.
How friendly is that friendly debt And did I read correctly that "non" friiendly debt to banks or whoever has increased , why has that happened, as mentioned above who lends to footy clubs I wonder what's been given as insurance against that loan(s) Have the new owners spent(donated/wasted) any money , or is their risk just more "friendly" debt and at what point does any of this "friendly" debt become "unfriendly" !
Let's face it no one in their sane mind should be involved with a footy club unless they have money to burn , do our owners have that ????
Therefore, thinking strategically, would it not be worth the board pumping (if they can find it) 5-6 million quid into the squad to try and get the side promoted? The only question then becomes when you make the investment, I would look to make in the summer rather than now as its better to buy when people are out of contract.
As things stand we are a mid-table side and, if we are being honest, we are nowhere near the quality of Cardiff, Leicester and others so unless we bring in 4-5 new players to seriously improve the squad then we are going to be stuck in the CCC losing 7 million per season anyway - so, why not take the risk and go for promotion?
How many other teams will think the same thing.
How much do you reckon Leicester have spent in the last few years.
The difference is that Leicester are owned by a mega-rich bloke from Thailand and he is happy to absorb the losses and does not seem to be bothered about selling the club on, he wants to get them into the Premiership and use the club as a self-promotion vehicle.
We don't seem to have that luxury as we don't know who owns us so have no idea how long, or if at all, they will be willing to swallow a 7 million loss every season.
So spending more money is the solution?
It could be, we aren't going up with the current squad so will simply carry on bringing in 8.5 million and spending 16 million.
By spending another 5 million we give ourselves a better chance of getting promoted and bringing revenues up to 60 million (or whatever the latest figure is) for one year in the Premier League and getting out of a big financial hole.
Spending 5 million to save losses of 20 million plus for three seasons in the CCC has to be worth doing if you can get the cash.
Very interesting that out wage bill was as high as 8m last year, the 4.5m mentioned a few times in passing on the forum has proved to be way off. When compared to someone like Bristol City, however, with a wage bill of nearly 19m, I think we've done pretty well.
It will be interesting when FFP comes in and teams are forced to hugely reduce their losses. Obviously it's a good thing, but it will serve to make the gap between Championship and Premiership even bigger. With the highest ever Premiership TV deal in place from next year (meaning even higher revenues as well as increased parachute payments) and the gradual implementation of FPP in the Football league, getting promoted to the Premiership within the next three years has become even more important for every Championship team.
Very interesting that out wage bill was as high as 8m last year, the 4.5m mentioned a few times in passing on the forum has proved to be way off. When compared to someone like Bristol City, however, with a wage bill of nearly 19m, I think we've done pretty well.
It will be interesting when FFP comes in and teams are forced to hugely reduce their losses. Obviously it's a good thing, but it will serve to make the gap between Championship and Premiership even bigger.
Comments
The operating loss in the year to end June '12 was circa £7.5m.
Profits on transfers (including fees related to appearances) circa £1m.
Loans repaid to RBS (as scheduled) circa £1m - this is the North Stand loan.
Increase in bank loans/overdraft circa 0,7m.
Loans from owners £7.0m - as expected, but important.
In other words, the Club made tremendous progress on the pitch, lost a lot of money and the owners wrote a big cheque to cover that loss.
A reasonable guess is that the ongoing loss is now a little bigger (as the Club strives to compete in the Championship) and hence the cheques being written correspondingly larger.
It's encouraging that neither Solly or Stephens have been sold in the January window - at least not yet.
Happy to be corrected if my rapid skim of the numbers and lack of skill means I have this completely wrong.
http://newyorkaddick.blogspot.co.uk/2013/01/money-for-nothing.html
I was surprised by the TV money in the year to end June 12 (though I see it's not much different to the previous year). What do you reckon is the likely take in the Championship? Is it significantly higher?
I know nothing about finance at all, so bear that in mind, but it looks to me as if the club is simply going to keep on losing 7 million quid per season whilst in the CCC with the only way of recouping some of these losses being the sale of players which, of course, brings the risk of relegation.
As a result, it seems to me at least (appreciating that its not my money) that the only strategy for the owners it to get promoted to the Premier League because that is the only possible way for us to generate enough cash so that everyone gets paid - and we attract new investors.
Therefore, thinking strategically, would it not be worth the board pumping (if they can find it) 5-6 million quid into the squad to try and get the side promoted? The only question then becomes when you make the investment, I would look to make in the summer rather than now as its better to buy when people are out of contract.
As things stand we are a mid-table side and, if we are being honest, we are nowhere near the quality of Cardiff, Leicester and others so unless we bring in 4-5 new players to seriously improve the squad then we are going to be stuck in the CCC losing 7 million per season anyway - so, why not take the risk and go for promotion?
This will no doubt seem simplistic to many, and it probably is, but it does frame the problem we have; that being we can't prosper in the CCC and need to get to the EPL for at least one season to re-float the club financially.
How much do you reckon Leicester have spent in the last few years.
Great analysis of the accounts! It will be interesting to see what the numbers look like for this season as not too many changes in the squad... a few additions and some contract extensions probably at higher rates. According to the D&T report most championship clubs are in the same boat losing £5-10M every year! And the TV deal is not good - it's actually worse than when we were last in the championship
First funding the losses - there are only a few answers such as the occasional (big) player sale as per CAFC in the 90s; growing the gates but it will take a big increase to make a dent... or having owners / new investors with deep pockets... deeper than our mate at Palace who ran out of cash... There are other ways but they have never been known to work medium / long term
Second the only way is up! Some 6 or so players contracts are up for renewal this summer... any team can beat any other on its day...most clubs coming down from the Premier League are in disarray so can we edge up the league next season? Plus the academy players will be a year older - the U18s are doing well but it may be a wait.
For me next season the club needs to find the money (or youth players) to push up the league into the playoffs... as well as a 1:4 chance of gaining promotion it will also raise the value of the squad and the club as a whole should additional investors be required... I would hope that average gates go up too but this won't solve the financial gap.
So yes the club needs to push on and fullfil the 3-5 yr plan I first heard from Mr Slater...thing is that year 3 is going to be that much harder than years 1 & 2... more expensive, making the right signings, every loss on the pitch will be more painful / stressful... but maybe the League 1 champions can get to the premier league - without having to be sold?!
We don't seem to have that luxury as we don't know who owns us so have no idea how long, or if at all, they will be willing to swallow a 7 million loss every season.
solution for CAFC is to have the best academy in SE London and the biggest fan base to reduce losses and improve the first team over time...
How much one has to spend to accelerate that process is anyone's guess but Fulham and QPR spent a fortune to get up
Excellent blog post. Thank you NYA.
I'm not an accountant either but who would be stupid enough to have anything to do with a business that has a turnover of £8.5 million and costs of £16 million??
Why not just set fire to £7.5 million in the street or start a very expensive drug habit?
If you lose £7.5 million on a £100 million turnover that's one thing but spending double what you have coming in is bonkers.
Do we have Goldman Sachs as our financial advisers or am I missing something?
And did I read correctly that "non" friiendly debt to banks or whoever has increased , why has that happened, as mentioned above who lends to footy clubs I wonder what's been given as insurance against that loan(s)
Have the new owners spent(donated/wasted) any money , or is their risk just more "friendly" debt and at what point does any of this "friendly" debt become "unfriendly" !
Let's face it no one in their sane mind should be involved with a footy club unless they have money to burn , do our owners have that ????
By spending another 5 million we give ourselves a better chance of getting promoted and bringing revenues up to 60 million (or whatever the latest figure is) for one year in the Premier League and getting out of a big financial hole.
Spending 5 million to save losses of 20 million plus for three seasons in the CCC has to be worth doing if you can get the cash.
It will be interesting when FFP comes in and teams are forced to hugely reduce their losses. Obviously it's a good thing, but it will serve to make the gap between Championship and Premiership even bigger. With the highest ever Premiership TV deal in place from next year (meaning even higher revenues as well as increased parachute payments) and the gradual implementation of FPP in the Football league, getting promoted to the Premiership within the next three years has become even more important for every Championship team.
Money and high wages could wreck the game at 2nd tier level which cannot be good for the top tier