cannockwolves
Just doesn't shut up
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- Jun 30, 2005
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I was thinking the other day that we hear a lot about sustainability from Jeff, but we haven’t actually (as far as I am aware) discussed it as a separate topic on here.
Just what is sustainability?
We know that at its basic level it is only using the money you can generate from operations (perhaps supported by some debt or equity?). But it also has to be defined in the terms of the club’s ambition. Is that ambition to survive in the Prem, or do they want sustainability but at a much higher level?
My own view is they want a higher level of ambition in terms of league position and European football, but they are quite prepared to play the very long game to get it – and won’t be going to Fosun to bankroll any major investment. As Jeff has said, “time is our friend” – I don’t think they will be that stressed if we bob around in mid table as long as they can see development in the brand, commercial revenues, and the conveyor belt of talent via the academy. I honestly think as long as those metrics are improving they will be happy enough – obviously those metrics would be helped with a successful 1st team but they are not going to threaten long term financial security to achieve short term success.
I am fine with that, but many will not.
It would be interesting to exactly understand why Fosun appear to have pulled the ongoing investment (although they do sponsor the training ground, and may well do more than we realise).
But adding say £25m a season on top of retained profits and player trading would be peanuts in the scheme of things for Fosun, I do wonder if there are geo-politics at play limiting their ability to invest.
As it stands at the moment we make about £20m profit a year, the biggest driver of that is league position and European football. Gate receipts of £12m can’t be pushed much higher that quickly, but commercial revenue and sponsorship could be much higher. Looking at our accounts we would make about £25m in a normal non-covid year, compared to Leicester City who made £39m from commercial and sponsorship.
It is also worth pointing out that Leicester also took more gate receipts by about £1m – I have not calculated the per fan average cost, but maybe Vinny is right that on average Leicester fans as a group pay more? That is for another thread!
We have seen that Everton, Leeds, and even Villa haven’t achieved success while throwing big money at it. But I was surprised to see just how dire Brighton’s finances are. They lost £53m and their sugar daddy is ‘owed’ £450m. They have posted losses of over £270 million in their four completed seasons as a top flight club. That puts them into the top 10 loss making clubs in Premier League history – ok as long as their sugar daddy doesn’t call in the loan or cut off the taps.
Leicester have made some big investments into their training ground, are looking to expand their ground and invest in their squad, but their owners are in it for the joy – but they are owed £217m according to the latest account and lost £31m (after losing £61m the year before) – which just goes to show two of our direct competitors for the top six are rich men’s play things – and now Newcastle are a rich counties play thing.
Back to sustainability.
Driving up turnover and profit is critical. FFP and wages are linked to our income. Compared to Leicester we are £14m down in commercial & sponsorship, If they could just get parity with them – with our existing profit of £20m you could see a profit of say £40m a year. A cup run, higher league position, or European football could easily push that profit to £50m a year – if Jeff continues to run a tight ship.
Now, at £40m or £50m a year operating profit you are really starting to be sustainable at a reasonable level. The problem is not about having enough money, it’s about spending it well. That is where Mendes comes in I guess. But the point is that starts to give you the ability to add a good Premier league quality player every year, and with an improving academy maybe we will have a MGW level talent come through every three or four years – it will be interesting to see where Cundle, Hodge, Roberts, Bueno, and Frasier are in three or four years. All you need is one or two of them to come through and the club really could be in a very good position
Personally, I like the concept of sustainability. I lived through the pain of the 80’s and listening to the radio at dinner time to see if my club still existed. I know we should have more ambition than ‘just surviving’ but I do think Fosun’s long term plans can actually work – it won’t be quick, it may be bumpy, but I do actually think it’s the right approach.
Just what is sustainability?
We know that at its basic level it is only using the money you can generate from operations (perhaps supported by some debt or equity?). But it also has to be defined in the terms of the club’s ambition. Is that ambition to survive in the Prem, or do they want sustainability but at a much higher level?
My own view is they want a higher level of ambition in terms of league position and European football, but they are quite prepared to play the very long game to get it – and won’t be going to Fosun to bankroll any major investment. As Jeff has said, “time is our friend” – I don’t think they will be that stressed if we bob around in mid table as long as they can see development in the brand, commercial revenues, and the conveyor belt of talent via the academy. I honestly think as long as those metrics are improving they will be happy enough – obviously those metrics would be helped with a successful 1st team but they are not going to threaten long term financial security to achieve short term success.
I am fine with that, but many will not.
It would be interesting to exactly understand why Fosun appear to have pulled the ongoing investment (although they do sponsor the training ground, and may well do more than we realise).
But adding say £25m a season on top of retained profits and player trading would be peanuts in the scheme of things for Fosun, I do wonder if there are geo-politics at play limiting their ability to invest.
As it stands at the moment we make about £20m profit a year, the biggest driver of that is league position and European football. Gate receipts of £12m can’t be pushed much higher that quickly, but commercial revenue and sponsorship could be much higher. Looking at our accounts we would make about £25m in a normal non-covid year, compared to Leicester City who made £39m from commercial and sponsorship.
It is also worth pointing out that Leicester also took more gate receipts by about £1m – I have not calculated the per fan average cost, but maybe Vinny is right that on average Leicester fans as a group pay more? That is for another thread!
We have seen that Everton, Leeds, and even Villa haven’t achieved success while throwing big money at it. But I was surprised to see just how dire Brighton’s finances are. They lost £53m and their sugar daddy is ‘owed’ £450m. They have posted losses of over £270 million in their four completed seasons as a top flight club. That puts them into the top 10 loss making clubs in Premier League history – ok as long as their sugar daddy doesn’t call in the loan or cut off the taps.
Leicester have made some big investments into their training ground, are looking to expand their ground and invest in their squad, but their owners are in it for the joy – but they are owed £217m according to the latest account and lost £31m (after losing £61m the year before) – which just goes to show two of our direct competitors for the top six are rich men’s play things – and now Newcastle are a rich counties play thing.
Back to sustainability.
Driving up turnover and profit is critical. FFP and wages are linked to our income. Compared to Leicester we are £14m down in commercial & sponsorship, If they could just get parity with them – with our existing profit of £20m you could see a profit of say £40m a year. A cup run, higher league position, or European football could easily push that profit to £50m a year – if Jeff continues to run a tight ship.
Now, at £40m or £50m a year operating profit you are really starting to be sustainable at a reasonable level. The problem is not about having enough money, it’s about spending it well. That is where Mendes comes in I guess. But the point is that starts to give you the ability to add a good Premier league quality player every year, and with an improving academy maybe we will have a MGW level talent come through every three or four years – it will be interesting to see where Cundle, Hodge, Roberts, Bueno, and Frasier are in three or four years. All you need is one or two of them to come through and the club really could be in a very good position
Personally, I like the concept of sustainability. I lived through the pain of the 80’s and listening to the radio at dinner time to see if my club still existed. I know we should have more ambition than ‘just surviving’ but I do think Fosun’s long term plans can actually work – it won’t be quick, it may be bumpy, but I do actually think it’s the right approach.