We were all warned about profit & sustainability

[Pseudonym]

Jeff Shi: Letter to supporters

As the owners and management of the club, one important thing we must learn and follow is the Premier League’s rules on profit and sustainability (formerly called financial fair play or abbreviated to FFP). Before the end of 2023/24 season there will be an annual test and we are going to make sure we pass it, as we have done in the last five seasons.

FFP sets a profit and loss limit for three rolling years, with a loss of £105m the threshold. We were very comfortable on FFP during the years just after promotion and before the covid pandemic, because of a relatively low wage bill, low-cost signings from the Championship and relatively stronger finishes in the league and Europe.

After a longer stay in the Premier League, we are now at a stage where we must pay even closer attention to FFP and manage it well. The first reason is the inevitable impact of covid on our revenue. Though we’ve put those years behind us, we still needed to invest more afterwards to fill the gaps caused by the pandemic, especially on squad strengthening.

Secondly, we once had a fantastic squad, built in the Championship then brought into the Premier League. However, after the ageing of some players and unexpected injuries, that squad had to be evolved year by year with a significantly increasing wage bill and player acquisition costs in the best, but also most expensive, league in the world.

Finally, in recent years we have made a lot of long-term investments into young talent that may not play for our first-team immediately, and those investments increase our asset value in the balance sheet but impact our profit and loss, especially in a net investment phase.

An additional factor to consider in our FFP management is that last January we invested much more highly in the first-team than we had anticipated, bringing in six players. It was a very unusual winter window for us, and it literally advanced the investment room originally left for this summer.

The positive thing is that FFP is based on a rolling number, season by season, so if we do manage it well this summer, next summer we will be more free financially.

Jeff Shi -- while responsible for much dysfunction & poor decision making over his tenure -- very clearly laid out what the football world was expecting in terms of increased profit & sustainability scrutiny this season, yet many people on here refused to take it as face value, claiming they knew more and FFP is just a lame excuse.

 

[northnorfolkwolf]

My 2 reactions are - a. I don't think Shi is one to lecture on this tbh; we've been financially strapped due to poor decision making under his watch and some awful purchases with about £100 mil worth of unwanted players out on loan. And b. Everton are so far the only club to have been sanctioned. Will any others?

 

[wolfslair]

He overspent on multiple players on fees and wages two of whom are on loan and unlikely to ever play for the club again…..

He lost the club prize money by not building on the foundations of two great seasons. His management of the club and staffing saw three straight seasons with less prize money due to lower league positions, and the quality of the squad meaning we became worse to watch led to us being shown less on television that caused a reduction in tv rights money as no one wanted to put us on as we were horrible to watch.

So great he sorted out the issue that was significantly down to his ineptitude of running a football club for 3 years, where he made significant mistakes that cost the club millions upon millions of pounds in TV money, prize money and wasted fees and salaries.

If he had been doing a good job the previous years and put competent football people in key positions instead of promoting and keeping duffers like sellers in post or the hiring of Vinny Turpin, then the summer fire sale wouldn’t have needed to have been anywhere near as aggressive or in the scale it had to be.

 

[Mighty Thor]

My 2 reactions are - a. I don't think Shi is one to lecture on this tbh; we've been financially strapped due to poor decision making under his watch and some awful purchases with about £100 mil worth of unwanted players out on loan. And b. Everton are so far the only club to have been sanctioned. Will any others?

Absolutely. Jeff and Fosun’s tongue was too far up mendes’ ********. They bought a football club, had no idea what they were doing, and subsequently got run over by a perma tanned ****** who’s MO is solely to make $$$$ for HIMSELF and a bunch if often sub-standard, over-hyped, dross he represents. Hopefully that’s now changed!!! Mendez represents everything that is wrong with modern football.

 

[SingYourHeartsOut]

Jeff Shi -- while responsible for much dysfunction & poor decision making over his tenure -- very clearly laid out what the football world was expecting in terms of increased profit & sustainability scrutiny this season, yet many people on here refused to take it as face value, claiming they knew more and FFP is just a lame excuse.

Well, let's assume this OP doesn't have a load of egg on its face on Monday.

That means we were OK for FFP for the 3 year cycle
20/21 +£18.4m
21/22 -£46.1m
22/23 - let's say (ignoring the non FFP parts) -£70m

So this year is basically the return to 20/21 where we need to turn a profit of £18m again (and keep wages/turnover below 90%).

About 12 months from now we'll know if that's what's happened and we can all make a informed comment.

 

[Pseudonym]

It is absolutely 100% of his own making and he isn't being seen as some sort of nostradamus. Our own picture within P&S has been worsened and accelerated massively due to years of unchecked neglect -- and being another patsy within the Mendes ponzi network.
This is not in question.

What is interesting and a point of conversation is the fact that the football world saw and knew what was coming -- which clearly dictated our mass exodus of players and the profit that came with it, assisting with this & next year's profit/loss.

 

[Scallywolf]

Just looking forward to next season when we will (according to Jeff) be more free, financially.

Build on what we have now, Jeff, and prove the doubters wrong!

 

[goldfish]

My 2 reactions are - a. I don't think Shi is one to lecture on this tbh; we've been financially strapped due to poor decision making under his watch and some awful purchases with about £100 mil worth of unwanted players out on loan. And b. Everton are so far the only club to have been sanctioned. Will any others?

Shi deserves criticism for some of the poor signings, but he also deserves praise for putting a stop to it rather than continuously throwing good money after bad and instead trusting people able to do more with less.

 

[Sussex Wolf]

Far too early for this kind of self congratulatory thread.

 

[Adrian_Monk]

Always amuses me when Mendes gets the blame. Yeah it's the football agent's fault for doing their job, rather than the lazy football club directors who can't be bothered to develop a management team and think using an agent as a director of football will end up fruitful.

There's plenty to not like about the modern game, but at the same time it's hard to argue against the reality that clubs are now getting what they deserve, paying for years of shafting players at every opportunity they could.

 

[inaglasshouse]

I'm pleased with what our dealings with Mendes gave us overall, he played a big part in our biggest successes with players and of course his and our special friend Nuno. If we have over reached and broke the rules that's our fault but it sounds like we played it just right.
Now I'm sure we have many more contacts around the world than in the Nuno years so hopefully we can match that level of team building success.

 

[VancouverWolf]

We’ve had some very good signings and some not so good…….normal in football. No club is infallible.
On balance, in our 6th. PL. season since promotion, we’re not too shabby. It suggests a reasonable degree of competency.

Whats more important is whether Jeff and co. improve their transfer business in the future.

 

[Perton Wolf]

Jeff Shi -- while responsible for much dysfunction & poor decision making over his tenure -- very clearly laid out what the football world was expecting in terms of increased profit & sustainability scrutiny this season, yet many people on here refused to take it as face value, claiming they knew more and FFP is just a lame excuse.

Perhaps, but then Shi was responsible for the mess we found ourselves in after approving the deals for Fabio and Guedes, particularly the former which he personally pushed and then continued to defend in the years following.

 

[CelebrityWolf]

We are in a financial hole thanks to horrible business on many fronts. We shouldn't be dishing out praise here.

We first off need to start making smarter decisions regarding players leaving for the right fee at the right time. We cost ourselves in excess of 30 million by being all precious over a massively overhyped Traore and now if rumours are to be believed we might do the same with Kilman.

Unfortunately the only way we bridge any gap is by selling high and that will mean constantly selling our stars to maintain the squad

 

[VancouverWolf]

My 2 reactions are - a. I don't think Shi is one to lecture on this tbh; we've been financially strapped due to poor decision making under his watch and some awful purchases with about £100 mil worth of unwanted players out on loan. And b. Everton are so far the only club to have been sanctioned. Will any others?

What are these “poor decisions” and “ awful purchases” you mention? Please don’t use hindsight to answer me as the club didn’t have that info like you do now when they acted.

We‘re all delighted that Hwang is doing great but remember the tons of abuse he got on here, game after game? We had posters who wanted to drive him to Leeds.

Can we agree that NO club sets out to make bad investments? We all know that transfers are a gamble.

 

[SA Wolf]

What are these “poor decisions” and “ awful purchases” you mention? Please don’t use hindsight to answer me as the club didn’t have that info like you do now when they acted.

We‘re all delighted that Hwang is doing great but remember the tons of abuse he got on here, game after game? We had posters who wanted to drive him to Leeds.

Can we agree that NO club sets out to make bad investments? We all know that transfers are a gamble.

Although this post is aimed at northnorfolkwolf, my twopenneth on the 'awful purchases' and not using hindsight as I commented at the time.
Silva, hailed as a 'wonderkid' and some sort of 'generational talent', was never that and I said as much a game or two after I saw him play. He showed nothing of flair, skill and traits that true 'generational talents' like Messi and Ronaldo displayed at a similar age. £35m was wasted, whichever way it is dressed-up.
Sasa had a poor injury record and was commented on this site in the lead up to his signature. It was no surprise when he broke-down after 20 or so minutes. That he was left on the field another 20 minutes, just compounded the injury. £15m wasted as I don't believe he'll play for us again.
Guedes was cajoled, if not pressurised to sign for Wolves and was never going to be content in such a situation. I'd seen him play for Portugal, but was never totally convinced by him. Forcing players to move clubs and country rarely ends well and it hasn't. £27m wasted.
Cutrone - see Guedes. £16m wasted.

These are all examples of us wasting in total £93m plus wages, which were predictable and preventable with more-careful governance and didn't need the services of Nostradamus. There will be more that I can't recall at the moment. This is not 'hindsight', but evident to ordinary fans without the insight, knowledge and experience that those in daily-involvement in the game would have.

As for Hwang, in complete contrast to Silva, for example, he had a record of playing and scoring in one of Europe's top leagues, scored on his debut and got two 'coolly-taken' goals soon afterwards. One could see that there was a footballer in there! He then suffered a catalogue of injuries over the years and was played out of position, while low on confidence. People would have 'driven him to Leeds' in this situation, while expecting better and more glamorous signings. Those with a more intimate knowledge of football and our finances, had insight into where we were and where we were going, both financially and as a team, decided to keep him.

 

[Hanbury_Wolf]

We made some signings that didn't work out. All clubs do it. Quite a lot of recency bias particularly concerning any Mendes deals.

Don't think you can type Guedes and Fabio in a sentence, laying into the club whilst missing Neves, Jota, Jonny and Jimenez.

We now seem to be evolving the football side of the business for the better but all in all, based on all footballing decisions on Jeff Shi's watch, its been pretty successful.

Mid table champ to mid table prem and the right side of FFP. There's a long list of clubs and owners that would bite your hand off for that deal.

 

[Lincoln-Wolves86]

We made some signings that didn't work out. All clubs do it. Quite a lot of recency bias particularly concerning any Mendes deals.

Don't think you can type Guedes and Fabio in a sentence, laying into the club whilst missing Neves, Jota, Jonny and Jimenez.

We now seem to be evolving the football side of the business for the better but all in all, based on all footballing decisions on Jeff Shi's watch, its been pretty successful.

Mid table champ to mid table prem and the right side of FFP. There's a long list of clubs and owners that would bite your hand off for that deal.

And Moutinho too, who we picked up for peanuts.

And for those mentioning Guedes not wanting to join, which is probably right, I can’t imagine Neves was particularly enthralled by the prospect of joining a Championship club either. But he came and proved himself. Same with Jota. Guedes should have done the same…just a shame he cost as much as he did

 

[wolvesaywe]

We made some signings that didn't work out. All clubs do it. Quite a lot of recency bias particularly concerning any Mendes deals.

Don't think you can type Guedes and Fabio in a sentence, laying into the club whilst missing Neves, Jota, Jonny and Jimenez.

We now seem to be evolving the football side of the business for the better but all in all, based on all footballing decisions on Jeff Shi's watch, its been pretty successful.

Mid table champ to mid table prem and the right side of FFP. There's a long list of clubs and owners that would bite your hand off for that deal.

I lost my **** with Fosun post Lopetegui going but in retrospect there was clearly some unexpectedly hard messaging from the PL about PSR in the summer which caused the ructions with Lopetegui

Overall have Fusun and Shi made mistakes along the way? Undoubtedly. Big ones at times

Under them are we in a better position than at any point since I was playing on my Spectrum 48k? Absolutely and by the proverbial country mile

And now we're battling for Europe again, playing exciting football and scoring goals. I'm back on team Fosun

 

[Minimalist]

If the ffp rules are going to continue and be properly enforced with heavy punishments; then fosun are very good owner to have. Navigating different financial hurdles and getting the best value for money is pretty much literally their whole business empire!

 

[Golden Oldie]

We made some signings that didn't work out. All clubs do it. Quite a lot of recency bias particularly concerning any Mendes deals.

Don't think you can type Guedes and Fabio in a sentence, laying into the club whilst missing Neves, Jota, Jonny and Jimenez.

We now seem to be evolving the football side of the business for the better but all in all, based on all footballing decisions on Jeff Shi's watch, its been pretty successful.

Mid table champ to mid table prem and the right side of FFP. There's a long list of clubs and owners that would bite your hand off for that deal.

Far more than would be sitting here grumbling, because in truth there is little or nothing to grumble about. Moaning is a habit and one a lot of people find hard to kick. What drives this latest grumbling outburst, and why now, is difficult to fathom. But certainly no matter what was achieved there would be an undercurrent of dissatisfaction - something like winning the Lottery .... but it not being a rollover jackpot ..... just single figure millions .... when it could have been more!

 

[Ponty]

Do any owners get things right all the time? Success can be heavily dependent on one or two signings being good or bad. We’d never have finished 7th if Raul hadn’t been outstanding and at the time we signed him expectations were certainly below what he proved to be. Who knows where we’d be now without that single reckless challenge on him? Overall Fosun have been great for us as we’d become a Championship club who occasionally went up or down.

 

[glorybox]

Some people just can’t help being negative. Fosun have made mistakes but look at the bad transfer dealings at Man Utd, Chelsea…it happens. They’ve got more right than wrong, by a fair bit. The Mendes connections the same. In my Wolves supporting life we’ve spent about 90% of it outside the top division. We are now on track to be able to start our 7th consecutive season in the top division. These are my halcyon days and even though I can get disillusioned sometimes, almost exclusively because of referees, I am thankful that Fosun bought my club and they are trying to run it properly, even if not perfectly.

 

[Woburn Wolf]

Well, let's assume this OP doesn't have a load of egg on its face on Monday.

That means we were OK for FFP for the 3 year cycle
20/21 +£18.4m
21/22 -£46.1m
22/23 - let's say (ignoring the non FFP parts) -£70m

So this year is basically the return to 20/21 where we need to turn a profit of £18m again (and keep wages/turnover below 90%).

About 12 months from now we'll know if that's what's happened and we can all make an informed comment.

Genuine question. How did you get to £70m loss this year. Which player purchases and sales are you including.

 

[Minimalist]

Genuine question. How did you get to £70m loss this year. Which player purchases and sales are you including.

Think that’s last year.
April 22 - April 23 (?)
So buying Nunes and Guedes and Sasa, then also last January business.

 

[groundhogwolf]

We’ve had some very good signings and some not so good…….normal in football. No club is infallible.
On balance, in our 6th. PL. season since promotion, we’re not too shabby. It suggests a reasonable degree of competency.

Whats more important is whether Jeff and co. improve their transfer business in the future.

At last a reasonable post, people talk as if it was their money Jeff spent, at the time of signing Fabio, Guedes, Cutrone there was no out cry as we were all hoping that they would turn out to be Raul, Jota and Neves, as you say normal in football.

 

[lyechris]

I just shake my head reading these posts!! Without fosun where would we be seriously, we've had some great years, seen some great players and we've competed!
Yes some players haven't worked out but that's called risk, and as for mendes well we wouldn't have got a seat at the table to talk to some of the lads we've signed.
Why are so many focused on waste, is it your cash? I imagine fosun arent best pleased either but on balance we've done rather better with our decision making than others UTWV

 

[greco wolf]

We need to increase turnover. One way is increase the ground by 10,000.

10,000 * 40 * 19 = 7.6m per year. - assume £40/ ticket but likely more

Plus add more corporate - maybe add a few more million.

And make more places to drink / easier to get drinks etc

This may all add around £15m per year at a stretch. Doesn’t sound alot but over the three year period is £45m

Look at our revenues compared to other clubs - I know fosun have tried to do this with esports etc. but more fans and nee generations of fans will spend more money to attend , shirt sales etc.

 

[berwickwolf]

We need to increase turnover. One way is increase the ground by 10,000.

10,000 * 40 * 19 = 7.6m per year. - assume £40/ ticket but likely more

Plus add more corporate - maybe add a few more million.

And make more places to drink / easier to get drinks etc

This may all add around £15m per year at a stretch. Doesn’t sound alot but over the three year period is £45m

Look at our revenues compared to other clubs - I know fosun have tried to do this with esports etc. but more fans and nee generations of fans will spend more money to attend , shirt sales etc.

Agreed, if we are now a secure Premier league club then we must improve the stadium. Its noticeable how many overseas fans are visiting too, surely now is the time to build capacity and what is on offer.

 

[arctic rime]

Guedes cant even get a game in his homeland

 

[Wolf316]

Agreed, if we are now a secure Premier league club then we must improve the stadium. Its noticeable how many overseas fans are visiting too, surely now is the time to build capacity and what is on offer.

Zero chance of any rebuilding unfortunately it’s just not financially viable.

 

[Wolf316]

I lost my **** with Fosun post Lopetegui going but in retrospect there was clearly some unexpectedly hard messaging from the PL about PSR in the summer which caused the ructions with Lopetegui

Overall have Fusun and Shi made mistakes along the way? Undoubtedly. Big ones at times

Under them are we in a better position than at any point since I was playing on my Spectrum 48k? Absolutely and by the proverbial country mile

And now we're battling for Europe again, playing exciting football and scoring goals. I'm back on team Fosun

Surely our financial department should have been on top of that and known how close we were to a breach?

 

[SingYourHeartsOut]

Genuine question. How did you get to £70m loss this year. Which player purchases and sales are you including.

Just working on the basis that we're supposed to be pushing FFP close to the limit in 22/23, so 3 year losses might be close to £105m (or even more given the rules are a bit more complicated e.g. Newcastle have already posted much more). I've seen bigger losses suggested and we were paying some very high wages given our pretty average performance. Really the mess that Shi, Sellars and Lage oversaw in the summer of '22 is the cause of this whole situation.

 

[SingYourHeartsOut]

Think that’s last year.
April 22 - April 23 (?)
So buying Nunes and Guedes and Sasa, then also last January business.

Yes, as ever though it's not so much the buying as the players we already had on big wages and amortising their contracts. Given that we lost £46.1m in 21/22 if you add on the wages (say £8m for those three) and the amortisation (say £16m) then it's not hard to get to £70m when you're not selling or even getting wages off the books (Guedes to some extent I guess and maybe Sasa was insured?). Lower income I guess too.

 

[Starsky]

In years to come, GON should be remembered as playing a key role in all of this as this season could've gone properly pear shaped and ended in relegation, given all of the financial stuff and the utter shambles in the Summer.

Instead we are safe and seemingly ready to build again in the Summer - now in a far better position than many of our peers.

He has got us (and Jeff) out of jail, big time.

 

[Olivergoldblack]

We made some signings that didn't work out. All clubs do it. Quite a lot of recency bias particularly concerning any Mendes deals.

Don't think you can type Guedes and Fabio in a sentence, laying into the club whilst missing Neves, Jota, Jonny and Jimenez.

We now seem to be evolving the football side of the business for the better but all in all, based on all footballing decisions on Jeff Shi's watch, its been pretty successful.

Mid table champ to mid table prem and the right side of FFP. There's a long list of clubs and owners that would bite your hand off for that deal.

Spot on. We've had way more successful signings than bad ones. Every club has signed flops. The net result is we'll be ffp safe, and evolved into a stable established mid table premier league club which we haven't been in 40 years.

 

[theweave]

My 2 reactions are - a. I don't think Shi is one to lecture on this tbh; we've been financially strapped due to poor decision making under his watch and some awful purchases with about £100 mil worth of unwanted players out on loan. And b. Everton are so far the only club to have been sanctioned. Will any others?

I assume you're focusing on the ones that went wrong e.g. Guedes and Fabio? Ignoring the money made on the ones that went right e.g. Neves and Jota?

 

[Superted]

We need to increase turnover. One way is increase the ground by 10,000.

10,000 * 40 * 19 = 7.6m per year. - assume £40/ ticket but likely more

Plus add more corporate - maybe add a few more million.

And make more places to drink / easier to get drinks etc

This may all add around £15m per year at a stretch. Doesn’t sound alot but over the three year period is £45m

Look at our revenues compared to other clubs - I know fosun have tried to do this with esports etc. but more fans and nee generations of fans will spend more money to attend , shirt sales etc.

The ticket price isn't all profit though. More seats means more stewards, more police, higher utilities costs.

More corporate and restaurants etc. means more staff and other overheads.

Having more seats would help but it's no magic bullet if you're only doing it to try and get more FFP wiggle room.

 

[Minimalist]

Yes, as ever though it's not so much the buying as the players we already had on big wages and amortising their contracts. Given that we lost £46.1m in 21/22 if you add on the wages (say £8m for those three) and the amortisation (say £16m) then it's not hard to get to £70m when you're not selling or even getting wages off the books (Guedes to some extent I guess and maybe Sasa was insured?). Lower income I guess too.

Indeed. Actually I’d be surprised if it’s not more than 70 !
I guess it’s all also a factor in why we probably paid above the odds for Cunha - because they allowed a deal where we delayed payment. If we had bought him in that financial year we’d of been in an even harder position.

 

[Ponty]

Perhaps those who think Fosun are so bad could enlighten the rest of us what their expectations are. Two 7th places probably raised those expectations but a club with our resources is really pushing it to get top 8, top half is very good and lower mid table acceptable. The resources the Scum Six plus Newcastle have are completely different and were dependent on them underperforming to be able to get close to them. Throw in Villa who seemingly have money to burn and anyone with an ounce of objectivity can see we’ve done ok under Fosun.