has the football bubble burst or at least deflated?

[oldgoldheart]

Hearing that chelsea may be after £45m for broja got me wondering whether they have no choice. With their 8 year contracts inflating player values for longer the write off (like us with fabio) would have a massive impact on profits. there has been virually zero activity in the market. I wonder if we are going to see transfer values drop significantly as clubs adjust to lower budgets? the problem is that it is a house of cards. the auditors will start to impair the value of players on the books and that in turn impacts profits and available budgets....

does anyone else see it this way?

 

[SteveBullsKnee]

Hearing that chelsea may be after £45m for broja got me wondering whether they have no choice. With their 8 year contracts inflating player values for longer the write off (like us with fabio) would have a massive impact on profits. there has been virually zero activity in the market. I wonder if we are going to see transfer values drop significantly as clubs adjust to lower budgets? the problem is that it is a house of cards. the auditors will start to impair the value of players on the books and that in turn impacts profits and available budgets....

does anyone else see it this way?

I wouldn’t say it’s burst personally. I do think the premier league spending was getting way out of hand though, clubs have got a bit too much “video game” with recruitment. With what’s happening at Everton and Forest, there’ll definitely be a lot of clubs cutting their cloth in the summer and that will naturally filter down prices.

It’s happening in most of Europe really, barring the odd exception no one is spending big in Italy, Spain or France and certainly not like they were.

 

[TheRetroChief]

The bubble has to burst at some point. The money is football is absolutely ridiculous (transfers and wages). It can't really go on and is unsustainable - I think we are beginning to see this now with even Elite clubs being affected.

 

[Flump]

I think the new rules about 90%, stepping down 10% each year and more draconian than people had planned for, and people have suddenly realised it's right around the corner.

 

[Oh When the Wolves]

I think the new rules about 90%, stepping down 10% each year and more draconian than people had planned for, and people have suddenly realised it's right around the corner.

What rule is that?

 

[SingYourHeartsOut]

It's been just about to burst for 20 years at least. All that's happening now is that clubs are having to work to some financial rules that means ones that massively overspent have to claw a bit back, if too many do it at the same time that will be harder for them to do, but I don't think it heralds a collapse. The market and wages might be a bit suppressed and owners will make a profit rather than limiting their losses.

 

[S G Wolves]

I think its a really good question.

Listening to others in the media I'd say that PSR will be having an effect on the price of players. It doesn't matter how wealthy the owners are clubs have to abide by the rules. Also with the points deductions clubs are taking it more seriously now.

Eventually players valuations and wages will have to come down.

Also think it is a good thing.

 

[Flump]

What rule is that?

The UEFA ones based on % of revenue.

UEFA have recently revealed their new squad cost rule, which will limit clubs to spending 70% of their annual revenue on player wages, transfers and agents fees - although a gradual transition will start with 90% in 2023 before dropping to 80% in 2024 before reaching 70% in 2025.

Presumably only impacts the top half who think they might get into Europe, but will definitely trickle down if i.e. you can flog people to Chelsea for £100m whenever they have a good season.

 

[Timberwolf]

You’ll soon have European clubs bleating how skint they are, now that Premier League money is drying up. Without this money filtering down through just the Portugal pyramid in recent years, they'd be in serious trouble.

 

[WolfLing]

I think the new rules about 90%, stepping down 10% each year and more draconian than people had planned for, and people have suddenly realised it's right around the corner.

What rule is that?

The 'squad cost rule' where wages, plus amortised transfer costs can't exceed 70% of revenue by 25/26.

It was 90% this year, stepping down to 80% next season, then falling and staying at 70% by 25/26 onwards.

If you look at where clubs were in 20/21 it shows how challenging this must be. How many of those clubs have actively decreased those costs since that time? We are certainly in a minority in doing that.

Since 20/21, revenues haven't increased much, unless clubs get to Europe, but even then our Europa season only saw our revenues increased by about £40m.

Like @Flump says, it's very difficult for some clubs to achieve the levels from where they were.

But it's positive in the sense that it has got all clubs to start to think more about value for money, even the big boys. You probably won't see much more of Man United dropping £60m and £350k per week in wages on a 30 year old like Casemiro, with little to no sell on value. That sort of transfer was the worst kind of transfer for football in general.

Once clubs do get to the 70% level, they will then have to carefully balance the books each season to maintain it. It will drive wages down over time too, as if a player demands a 100% increase in salary to sign a new deal, the club might just have to say no and sell them instead.

 

[Oliwolf44]

For all the moaning is FFP actually showing its value? Something needs to be done to address player wages though. They are ridiculous. Players been getting a free ride in terms of criticism in this way. Its always the rules, the agents, the clubs, ticket prices, modern football, broadcasters, the premier league who are the problem but lets not forget it takes a greedy so and so to want over £250k a week and say they just want to be treated fairly. Looking at it objectively that is just madness and not sustainable, yet wages have just gone up and up and up and the answer has always been more revenue rather than cutting costs. Maybe FFP will help there?

 

[WolfLing]

For all the moaning is FFP actually showing its value? Something needs to be done to address player wages though. They are ridiculous. Players been getting a free ride in terms of criticism in this way. Its always the rules, the agents, the clubs, ticket prices, modern football, broadcasters, the premier league who are the problem but lets not forget it takes a greedy so and so to want over £250k a week and say they just want to be treated fairly. Looking at it objectively that is just madness and not sustainable, yet wages have just gone up and up and up and the answer has always been more revenue rather than cutting costs. Maybe FFP will help there?

That's where the squad cost rule helps. For the first time, rather than just increase Rashford's salary by £100k every couple of seasons, clubs like United will be asking themselves if he's value for money at that cost.

It will naturally drive down wages over time.

 

[Werewolf of Wombourne]

Surely the new PSR will have an effect. How many clubs will be able to afford to spend £100m+ on a transfer fee as well as the £5m+ wages and unknown amount of agents fees on a single player in the future?

Even Man City will have to be careful. Their income in 2022/23 was £712m. Similar results in the next couple of seasons would see a PSR limit of £498m in 2025/26. Their current wage bill of £422m would give them limited scope to make further signings without big outgoings

 

[Halesowen wwfc]

This summer coming could be the breaking point for a lot of clubs, thinking the likes of forest, even if they stay up, west ham, palace, bournemouth, have such a hefty wage bill in comparison to turnover, but will struggle to move players on as they have heavily remunerated in terms of wages to entice them into the club in the first place. Clubs abroad cant afford the fees and wages like we are seeing with Jonny, where it looks like we have had to mutually agree to terminate his contract.

Thats fine on a player who has little balance sheet value, and as a one off, but when you have 10 players not contributing to the first team, on over 50k a week with book values of over 10m per player, so cant be sold off cheaply, you arent going to be able to move them on so easily.

Wolves reducing their wage bill by 25m last summer restrospectively looks to be a master stroke as apart from jonny, now being moved on, we do not have any high earners not contributing to the match day squad.

The only way for those clubs below the top 6 to make it work going forwards is to have much smaller squads, a core of 15 players at the best they can afford, supplemented by the youth teams, which we are pretty much at ourselves as it is now anyway.

 

[Oh When the Wolves]

The 'squad cost rule' where wages, plus amortised transfer costs can't exceed 70% of revenue by 25/26.

It was 90% this year, stepping down to 80% next season, then falling and staying at 70% by 25/26 onwards.

If you look at where clubs were in 20/21 it shows how challenging this must be. How many of those clubs have actively decreased those costs since that time? We are certainly in a minority in doing that.

Since 20/21, revenues haven't increased much, unless clubs get to Europe, but even then our Europa season only saw our revenues increased by about £40m.

Like @Flump says, it's very difficult for some clubs to achieve the levels from where they were.

But it's positive in the sense that it has got all clubs to start to think more about value for money, even the big boys. You probably won't see much more of Man United dropping £60m and £350k per week in wages on a 30 year old like Casemiro, with little to no sell on value. That sort of transfer was the worst kind of transfer for football in general.

Once clubs do get to the 70% level, they will then have to carefully balance the books each season to maintain it. It will drive wages down over time too, as if a player demands a 100% increase in salary to sign a new deal, the club might just have to say no and sell them instead.

View attachment 40013

Great. Villa in all sorts of trouble then

What’s the penalty for breaching it?

 

[Ercall Wolves]

Hearing that chelsea may be after £45m for broja got me wondering whether they have no choice. With their 8 year contracts inflating player values for longer the write off (like us with fabio) would have a massive impact on profits. there has been virually zero activity in the market. I wonder if we are going to see transfer values drop significantly as clubs adjust to lower budgets? the problem is that it is a house of cards. the auditors will start to impair the value of players on the books and that in turn impacts profits and available budgets....

does anyone else see it this way?

Good point, could well be
If so then it comes down to irresponsible owners, despite having a fit and proper test prior to be allowed to own a football club

 

[GoldenHorseshoe]

The bubble has certainly at least deflated, but I can see the 35M pa being increased due to inflation.

 

[Stourport wolf]

Maybe FFP will be the catalyst for the European Super League.

 

[WolfLing]

Great. Villa in all sorts of trouble then

What’s the penalty for breaching it?

There is a financial penalty, defined in a table based on how much above the club are and whether it's a first, second, third or fourth breach,

It's not clear yet what the Premier League would do. The no nonsense approach they are taking recently could see potential points deductions.

 

[Wolf316]

Maybe FFP will be the catalyst for the European Super League.

Not a bad shout that. Come to the Super Leagur and spend what you want will be very appealing to some owners.

 

[WolfLing]

This summer coming could be the breaking point for a lot of clubs, thinking the likes of forest, even if they stay up, west ham, palace, bournemouth, have such a hefty wage bill in comparison to turnover, but will struggle to move players on as they have heavily remunerated in terms of wages to entice them into the club in the first place. Clubs abroad cant afford the fees and wages like we are seeing with Jonny, where it looks like we have had to mutually agree to terminate his contract.

Thats fine on a player who has little balance sheet value, and as a one off, but when you have 10 players not contributing to the first team, on over 50k a week with book values of over 10m per player, so cant be sold off cheaply, you arent going to be able to move them on so easily.

Wolves reducing their wage bill by 25m last summer restrospectively looks to be a master stroke as apart from jonny, now being moved on, we do not have any high earners not contributing to the match day squad.

The only way for those clubs below the top 6 to make it work going forwards is to have much smaller squads, a core of 15 players at the best they can afford, supplemented by the youth teams, which we are pretty much at ourselves as it is now anyway.

We are way ahead of the curve. Foresight or luck?

 

[Hsvwolf]

The way it is , can see the top 6 / 8 clubs who have already have bigger 50k / 60k capacity stadia and can generate more revenue remaining as it is .....How do clubs like Wolves develop & increase match day revenues without huge outlay in the stadium (e.g Everton) , in which case to stay within FFP rules means we cant invest & improve in the team ..........unless we continue to unearth lower cost gems who are then inevitably picked off by the top 6 clubs ........Catch 22 situation most clubs are in now for the foreseeable

 

[Black Country Wanderer]

The way it is , can see the top 6 / 8 clubs who have already have bigger 50k / 60k capacity stadia and can generate more revenue remaining as it is .....How do clubs like Wolves develop & increase match day revenues without huge outlay in the stadium (e.g Everton) , in which case to stay within FFP rules means we cant invest & improve in the team ..........unless we continue to unearth lower cost gems who are then inevitably picked off by the top 6 clubs ........Catch 22 situation most clubs are in now for the foreseeable

Its possible to do it ,just not the Everton way of taking huge loans to rebuild the stadium
If Fosun, or another owner, want to invest in a new stadium they can,as the rules say you can invest in infrastructure and deduct that from FFP as long as the owners fully bankroll it
Its probably our only way to vastly increase turnover,but that would probably mean relocating the stadium,as well as taking many years to get done
I think its next month that theres a debate about the possible new rules coming in and when they will start,but most think they will and it will start next season
We are in a decent position,but not great as the top 6 or so have 3 or 4 times our revenue
Wages are a big part of the costs,and we could see those coming down in the near future,i think at one point Newcastle were paying 95% of revenue on wages alone,they have trimmed that to about 70% now i believe,but you can see how little headroom clubs will have once this is bought in

 

[Werewolf of Wombourne]

There is a financial penalty, defined in a table based on how much above the club are and whether it's a first, second, third or fourth breach,

It's not clear yet what the Premier League would do. The no nonsense approach they are taking recently could see potential points deductions.

The 70% PSR is a UEFA requirement for clubs in their competitions so doesn't officially apply in the Premier League, but the Premier League are going to align their PSR rules with it. That would leave the Premier League free to apply any sanctions they see fit.

Points deductions are the only way to get the clubs to take the rules seriously.

 

[Werewolf of Wombourne]

Its possible to do it ,just not the Everton way of taking huge loans to rebuild the stadium
If Fosun, or another owner, want to invest in a new stadium they can,as the rules say you can invest in infrastructure and deduct that from FFP as long as the owners fully bankroll it
Its probably our only way to vastly increase turnover,but that would probably mean relocating the stadium,as well as taking many years to get done
I think its next month that theres a debate about the possible new rules coming in and when they will start,but most think they will and it will start next season
We are in a decent position,but not great as the top 6 or so have 3 or 4 times our revenue
Wages are a big part of the costs,and we could see those coming down in the near future,i think at one point Newcastle were paying 95% of revenue on wages alone,they have trimmed that to about 70% now i believe,but you can see how little headroom clubs will have once this is bought in

Do the PSR rules count capital expenditure on stadiums etc? I thought it was solely on wages, transfer fees and agents fees

 

[Oliwolf44]

The way it is , can see the top 6 / 8 clubs who have already have bigger 50k / 60k capacity stadia and can generate more revenue remaining as it is .....How do clubs like Wolves develop & increase match day revenues without huge outlay in the stadium (e.g Everton) , in which case to stay within FFP rules means we cant invest & improve in the team ..........unless we continue to unearth lower cost gems who are then inevitably picked off by the top 6 clubs ........Catch 22 situation most clubs are in now for the foreseeable

there are rules to it though that mean some spending doesnt count towards it though. academy infrastructure and womens team i think im correct in saying.
If anything teams will have to be smarter which should be happening anyway.

Paul Barber on talksport the other day was heavily in favour saying in no other walk of life would we be making the concept that a business should be allowed to lose more money lol

 

[Black Country Wanderer]

Do the PSR rules count capital expenditure on stadiums etc? I thought it was solely on wages, transfer fees and agents fees

They dont if its fully funded by the owners,its when clubs take out external loans that the problems occur ,at least thats my understanding

 

[Jefe]

I wonder what the viewing figures have been like since, say when VAR came in? It's made the viewing experience a lot less pleasurable.

 

[crocos]

We are way ahead of the curve. Foresight or luck?

I was just about to post the same question myself; I do think we may just perhaps have been rather fortunate in some respects with how things have panned out around this.

However, you have to say that those currently overseeing our club have, in hindsight, 1) also been what would appear to be very wise and astute in ruthlessly & decisively cutting back our spending recently [despite the uncertainties and furore caused at the time]; and 2) also been deft hands at milking other clubs with some of our recent sales [Nunes to City being the most obvious one].

To what extent the successes to date of the GoN appointment in this context are down to astute judgement in our recruitment of him / luck that he's actually better than many thought is a moot point. But I certainly do feel at the moment that our current overseers & owners do actually seem to know what they're doing and had their fingers on the pulse before many others did. Given everything that's been going on over the past 12-18 months, we are - currently at any rate - in what would seem to be a remarkably good place.

 

[Black Country Wanderer]

I was just about to post the same question myself; I do think we may just perhaps have been rather fortunate in some respects with how things have panned out around this.

However, you have to say that those currently overseeing our club have, in hindsight, 1) also been what would appear to be very wise and astute in ruthlessly & decisively cutting back our spending recently [despite the uncertainties and furore caused at the time]; and 2) also been deft hands at milking other clubs with some of our recent sales [Nunes to City being the most obvious one].

To what extent the successes to date of the GoN appointment in this context are down to astute judgement in our recruitment of him / luck that he's actually better than many thought is a moot point. But I certainly do feel at the moment that our current overseers & owners do actually seem to know what they're doing and had their fingers on the pulse before many others did. Given everything that's been going on over the past 12-18 months, we are - currently at any rate - in what would seem to be a remarkably good place.

I think its a bit of both tbh
They have indeed kept us out of a very deep hole,but we got lucky with the Neves and Nunes deals being as good as they were at the time that they happened
Im sure that wasnt all foreseen
Guess its right what they say,you make your own luck at times

 

[WickedWolfie]

You’ll soon have European clubs bleating how skint they are, now that Premier League money is drying up. Without this money filtering down through just the Portugal pyramid in recent years, they'd be in serious trouble.

A good point

 

[Werewolf of Wombourne]

I think you can realistically make either argument about whether the position we are in is by luck or judgment but one thing the club has to be commended for is taking FFP seriously enough to take sufficient action to ensure compliance, when other clubs showed a lot of complacency and seemed to be willing to risk non-compliance because they thought nothing would happen.

 

[Banks's Mild]

The way it is , can see the top 6 / 8 clubs who have already have bigger 50k / 60k capacity stadia and can generate more revenue remaining as it is .....How do clubs like Wolves develop & increase match day revenues without huge outlay in the stadium (e.g Everton) , in which case to stay within FFP rules means we cant invest & improve in the team ..........unless we continue to unearth lower cost gems who are then inevitably picked off by the top 6 clubs ........Catch 22 situation most clubs are in now for the foreseeable

Although the highest revenue generating teams will certainly be able to pick off the more expensive players as we know they don't always turn out to be the best and they will still have to be careful with their squads which in theory should leave plenty of decent bargains around .
I'm sure some of the very good but not top class players will have to take a bit of a reality check re wages if this pans out correctly.

 

[Oliwolf44]

Although the highest revenue generating teams will certainly be able to pick off the more expensive players as we know they don't always turn out to be the best and they will still have to be careful with their squads which in theory should leave plenty of decent bargains around .
I'm sure some of the very good but not top class players will have to take a bit of a reality check re wages if this pans out correctly.

I think thats a fair assessment. Maybe there can be improvements to the application of FFP but it has to be a step in the right direction. Those arguing FFP makes a closed shop at the top point, is a fair one. However is it not exactly the bastion of competitiveness currently is it? the only one to break in (Leicester one off aside) is Man City and we know how theyve done it and there are only so many state funds to go around. Will be the application of the rules imo rather than whether we should have any.
I agree that if anything it will stop the stockpiling of players on high wages etc. Does it add more advantage to Saudi also? FFP means they might be the only big spenders so clubs and players more willing to go there. What would the affect be in Europe and on european competition? Advance of ESL?
Think its an interesting time if the rules and administrators finally show their teeth. People complain how can Barcelona run up these massive debts and spend willy nilly. We now might find out for better or worse.
Its going to make clubs be smart and it is something the game as a whole has needed for a long time.

 

[JOSWolf]

I'd say deflated at present. Clubs will have to start using their academies more in future I think.

 

[sillytuna]

The change needed is proper wage caps. The bigger teams will always have an advantage but it's much too big now. A wage cap could balance the sport more and allow the large clubs to be very profitable. Of course they'll find ways through that but not so much as to render them pointless.

That actually works well for everyone.

Although red bull dominated, caps in F1 have brought the field closer together and increased the value of the teams significantly. Red Bull simply did a better job.

 

[dizzydonut]

latest Deloitte article

Deloitte Football Money League 2024

The 27th edition of the Deloitte Football Money League profiles the highest revenue generating clubs in world football over the 2022/23 season.

www2.deloitte.com

Edit: apologies - I thought the 2024 edition included the English leagues. It doesn’t!

Last years:

Annual Review of Football Finance

The 32nd edition of the publication chronicles the 2021/22 season, as European football is set between the crossroads of some of the most pivotal regulatory changes that the game has ever seen.

www2.deloitte.com

 

[Stourport wolf]

I wonder what the viewing figures have been like since, say when VAR came in? It's made the viewing experience a lot less pleasurable.

People are attracted to scandal and any contentious decisions can be debated and in the end, talked about more than the football.

 

[Wonder Boyo]

The change needed is proper wage caps. The bigger teams will always have an advantage but it's much too big now. A wage cap could balance the sport more and allow the large clubs to be very profitable. Of course they'll find ways through that but not so much as to render them pointless.

That actually works well for everyone.

Although red bull dominated, caps in F1 have brought the field closer together and increased the value of the teams significantly. Red Bull simply did a better job.

No chance of a wage cap in football as it is a truly international sport with professional leagues in a multitudes of countries throughout the world, all with different employment laws and financial rules and regulations. No chance the Premier League, UEFA, FIFA or any governing body could impose a wage cap all over the world. If the Premier League unilaterally imposed a wage cap in England then the top players would go to Italy, Spain, Germany, Saudi, or wherever they are paying more and not limited by a wage cap. It works in a franchised sport like F1 where all the teams come under one umbrella or the NFL where it's the only proper league in the world and all the teams are based in one country. A wage cap in football is a complete non starter.

 

[sillytuna]

No chance of a wage cap in football as it is a truly international sport with professional leagues in a multitudes of countries throughout the world, all with different employment laws and financial rules and regulations. No chance the Premier League, UEFA, FIFA or any governing body could impose a wage cap all over the world. If the Premier League unilaterally imposed a wage cap in England then the top players would go to Italy, Spain, Germany, Saudi, or wherever they are paying more and not limited by a wage cap. It works in a franchised sport like F1 where all the teams come under one umbrella or the NFL where it's the only proper league in the world and all the teams are based in one country. A wage cap in football is a complete non starter.

I agree at the top level -unless- the owners of the big clubs realise the benefits. They will mostly keep their advantage and be profitable venture.

The mistake made with things like the european league is the explicit removal of competition. At the moment there's an implicit lack of competition which is quite different, even if not agreeable.