Sincilbanks
Vital Football Hero
Not when compared with League 1 wages it won't...
Financial Loss 2.24 million
- Thread starter JT_LCFC
- Start date
MaineRoad_96
Vital 1st Team Regular
Worrying, and highlights the absurdity of the club ‘going for’ the Championship, which we heard a lot about last summer. We’re doing well to compete at this level.
The £2.24m loss looks high in isolation, but, and I'm no financial expert, if you delve into the figures a bit more that figure probably looks worse than what the full picture is?
At the end of the accounting period, we still had cash in the bank, so in that respect, it's was a manageable loss and since those accounts, it reads like £1.4m of cash (from Clive/LCH) has been put back in via share issue. We still have no bank loans, no director loans and the only thing outstanding are the supporter EPC bonds (£400k).
We knew we were taking a calculated gamble last season by putting together a ready-made, promotion side last season and it paid off comfortably. £600k of bonuses is obviously a hit as well as a one-off figure.
I'm guessing it should be a lower loss next year - Cowley(s), Toff, Andrade, Rhead etc sales, higher ticket prices, increase in TV money. That said, as Sincilbanks points out, this is now L1. The increase in TV money won't cover the increase in wages on it's own, nor will an increase in ticket price and that'll be partly why we've had to, rightly, change how we approach the transfer market and why this next season or two will still be a bit of a transition one. We could compete financially in the NL (eventually when we got some momentum), we could do it in L2. In L1 we can't. It's an expensive league, skewed by the Championship clubs coming down.
At the end of the accounting period, we still had cash in the bank, so in that respect, it's was a manageable loss and since those accounts, it reads like £1.4m of cash (from Clive/LCH) has been put back in via share issue. We still have no bank loans, no director loans and the only thing outstanding are the supporter EPC bonds (£400k).
We knew we were taking a calculated gamble last season by putting together a ready-made, promotion side last season and it paid off comfortably. £600k of bonuses is obviously a hit as well as a one-off figure.
I'm guessing it should be a lower loss next year - Cowley(s), Toff, Andrade, Rhead etc sales, higher ticket prices, increase in TV money. That said, as Sincilbanks points out, this is now L1. The increase in TV money won't cover the increase in wages on it's own, nor will an increase in ticket price and that'll be partly why we've had to, rightly, change how we approach the transfer market and why this next season or two will still be a bit of a transition one. We could compete financially in the NL (eventually when we got some momentum), we could do it in L2. In L1 we can't. It's an expensive league, skewed by the Championship clubs coming down.
NewburyImp
Vital Reserves Team
Not surprised by this and have full faith in Clive and the board. The Cowleys moving on was the right time for all parties. A very clear change of strategy will reduce our operating costs and create value moving forward.
I think what this does raise is the question around non match day revenue. Clubs with the right facilities are able to generate £m’s of extra revenue. Which for us would plug the gap.
I suspect the LNER non match day revenue is no more than 5 figures for the year.
If we really want to push on and challenge in this league, without additional financial backing, this is one way of generating additional cash with some certainty each year.
For me adds fuel to the fire of the new stadium debate and could mean we need to make some tough decisions as a club to move forward. Otherwise I think our ceiling has been reached.
UTI
I think what this does raise is the question around non match day revenue. Clubs with the right facilities are able to generate £m’s of extra revenue. Which for us would plug the gap.
I suspect the LNER non match day revenue is no more than 5 figures for the year.
If we really want to push on and challenge in this league, without additional financial backing, this is one way of generating additional cash with some certainty each year.
For me adds fuel to the fire of the new stadium debate and could mean we need to make some tough decisions as a club to move forward. Otherwise I think our ceiling has been reached.
UTI
Brendan Bradley
Vital Squad Member
The reason there is cash in the bank at that point is because of share issues and, significantly, season ticket income for 2019/20.
Cash is overplayed as a factor. Obviously it has to be available to cover running costs at all times, but accounting losses exist and in the short-medium term they cannot be ignored as they indicate that outside sources of finance have to be found.
The club is fortunate that nobody who has put money into the club in recent times is under any illusion that they can get it back, but someone has to keep covering these losses.
MaineRoad_96
Vital 1st Team Regular
There will be no new stadium in my lifetime (and I’m not yet 40).
Brendan Bradley
Vital Squad Member
I agree, but you're missing the most important factors of all for possible progression; good coaching and player recruitment.
7
79imp
Guest
The Cowleys performed miracles in 2016/17... their achievements in that season match or exceed anything in English football for many, many years. Indeed, since the PL began, perhaps only the work of Coleman at Accrington could stand comparison.
However, what is now clear is that they basically did a bit of a Steve Evans job since we returned to the league... i.e. throw a load of money at the squad and hope that the league table does what by and large it usually does, and that's reflect the money spent on player/staff wages.
Of course, the Cowleys did a whole lot more for the club than just buy promotion. The club's standing in the community and infrastructure has changed and improved beyond recognition, and that was possible through their incredible work in the National League season. For that, all of us should be extremely grateful.
Going forward, we have to hope that the policy of signing promising, young players brings in a steady stream of cash every year. And going on the last two year's accounts, that's going to need to be a very significant sum. Beyond that, we surely have to get more of the high earners off the books, with Shackell, Bostwick, Eardley and Frecklington pretty much certain to leave in the summer. And as is mentioned in the report summary itself, the continued support of the fans is absolutely critical. If we were to lose 2,000 fans on the back of a 'mediocre' season or two (not unlikely given the fickle nature of football fans), that will hit us very hard.
However, what is now clear is that they basically did a bit of a Steve Evans job since we returned to the league... i.e. throw a load of money at the squad and hope that the league table does what by and large it usually does, and that's reflect the money spent on player/staff wages.
Of course, the Cowleys did a whole lot more for the club than just buy promotion. The club's standing in the community and infrastructure has changed and improved beyond recognition, and that was possible through their incredible work in the National League season. For that, all of us should be extremely grateful.
Going forward, we have to hope that the policy of signing promising, young players brings in a steady stream of cash every year. And going on the last two year's accounts, that's going to need to be a very significant sum. Beyond that, we surely have to get more of the high earners off the books, with Shackell, Bostwick, Eardley and Frecklington pretty much certain to leave in the summer. And as is mentioned in the report summary itself, the continued support of the fans is absolutely critical. If we were to lose 2,000 fans on the back of a 'mediocre' season or two (not unlikely given the fickle nature of football fans), that will hit us very hard.
Casperimp
Vital 1st Team Regular
I think you are misunderstanding the point. Last season we were paying out League 1 wages but in League 2 that's why we have lost so much money. We can see now why Danny and Nicky were unhappy that they were going to have the same budget as last year and they kept saying it! Take a look at the price of football we payed out more wages an bonuses last season in League 2 than half of League 1!
Our income will be more now and as Clive has said we have moved onto a model of younger players to develop. Why is it absurd to dream of the championship. Clearly we have a model going forward that they believe will achieve it the point being we aren't going to buy it like we bought promotion out of League 2 becasue it isn't sustainable!
NewburyImp
Vital Reserves Team
No at all, this is important and part of the change of strategy. But it isn’t guaranteed. Some seasons will be better than others. If we get recruitment wrong there are massive gaps to fill. This is a way of generating guaranteed income to help support the development of the team.
In response to the comment about there not being a new stadium in the next 40 years, thats my point. In my view we have a decision to make either we stay put and accept we are at our ceiling or make some tough decision with the aim of growing and having the opportunity of playing at a higher level (and consolidating at that level)
buckielugger
Vital 1st Team Regular
Extra Stacey West will give extra income.
(And thankfully from fans of other clubs instead of us lot digging even deeper).
And Lge 1 wages are only higher if we pay the players more.
And it would seem we may now be paying less overall than we had been, particularly going forward having shipped out several of the higher earners in this transfer window.
For long term sustainability, and not just for us but for all clubs, we need an EFL that enforces a wage cap throughout the League.
For example a maximum spend on playing squad of 60% of income.
So for us with a turnover it seems of around £5 million, that would give £3 million for players, an average of around £3k a week for a squad of 20.
And you could (and maybe should) have it written into contracts that the pay is a percentage of whatever the turnover is.
That way all clubs should in theory remain on an even keel.
7
79imp
Guest
Completely agree. Some kind of wage cap has to come in - at all levels of the game. We all rightly denounce the obscene sums going into players' pockets in the Premier League (and Championship), but truthfully, I think L1/L2 players getting the kind of sums bandied around (like £4k a week for Akinde) is madness as well.
My suggestions would be:
- have a weekly wage cap for each division that no player can go above
- limit squad sizes to 25 to stop players just jumping up a league to rot in the reserves for a higher wedge (or have rich clubs stockpiling talent as happens now)
- do away with the transfer window so clubs can trade as and when they need to
markhonesmagicstuds
Vital Reserves Team
Despite the headline figure of £1million compensation, interesting that Kieran Maguire reckons a third went back to the Cowleys as a bonus.
buckielugger
Vital 1st Team Regular
Yes I'd read that.
Although if they hadn't moved on, they would presumably have been due that money as their promotion bonus.
So we'd have had to pay it out no matter what.
Sincilbanks
Vital Football Hero
That's exactly how I read it...
buckielugger
Vital 1st Team Regular
Yep Akinde's £4k a week, £200k or so a year is massive compared to the money most of us earn. But even then, there are now loads in Premier League who earn that amount and more in just a single week!!
It is insane.
And there will inevitably be a big bursting of the Premier League bubble at some point.
Lots of people I know no longer pay for Sky etc but watch the games via free streaming or other such means.
Sky's (and BT etc) business models are therefore doomed to change significantly and football will next time around get nothing like the TV deal it gets now.
MaineRoad_96
Vital 1st Team Regular
I wouldn’t be too confident about that - Sky and BT might lose out but the big clubs will soon be selling their rights individually. Arguably that could be even more lucrative for them.
The best thing for lower league clubs would be for the top 6 to just disappear off into a European Superleague - although that wouldn’t stop the remaining ‘big’ teams wanting to take a bigger slice and of the cake.
There's already a 60% spend cap of turnover in L1 (55% in L2) under the Salary Cost Management Protocol (SMCP), but not a wage cap (the latter I don't think you could enforce).
Brendan Bradley
Vital Squad Member
The success of clubs in the PL relies on ever-expanding TV revenue. There's also 14 of the 20 who will definitely be relegated either in the near or quite-near future, as apart from the elite there is no such thing as an "established" PL club.
Despite being allegedly the 12th richest club in Europe/The World, West Ham just made an operating loss of £37m.
This is despite selling their soul to move to the Olympic Stadium. This, they said, would catapult them into the elite club bracket. Instead, despite increased attendances, it's had practically no effect on their matchday or commercial income.
If they get relegated they are, potentially, screwed.
And we should remember that Aston Villa were recently two hours from going to the wall and that, but for promotion last season, so probably were Norwich.
