Expenditure exceeding income

[Arkwright]

ITV 10 oclock news, a football administrator said "30% of Championship clubs have expenditure exceeding income".

This is just getting stupid now and the FA most step in if not Pompey will become the tip of the iceberg. High Street companies can't trade like this so why on earth do football clubs?

Who are the 30%?

Are the Albion safe?

Who is next?

I run a small business and I can't borrow money so have to trade within my own finance,s football clubs must stop over stretching to buy success. The only people getting rich out of all this are the players we FA must set up a wage cap. I might be wrong but I think a 60% of income cap is coming in soon, not soon enough in my books.

 

[Beach Hut]

An option could be the NFL model where everything is licensed by one company all revenue - shirt sales, TV money etc is evenly split up per division ?

 

[Wozza]

I think it's fair to say that Tony Bloom's expenditure exceeds income to date, although the pie takings from Tuesday haven't been calculated yet.

 

[Leekbrookgull]

Debt is our issue,bring it down. Then we have the 'Wipe hand'

 

[Arkwright]

I think it's fair to say that Tony Bloom's expenditure exceeds income to date, although the pie takings from Tuesday haven't been calculated yet.

So are you saying The Albion are one of the 30% of Championship Club? That's not good news, are we trying to buy success then? I was under the impression that everything at the club was gently gently and there is a business plan for promotion but not for a few years, even get that impression from Gus's interviews, hence the 5 year contract.

Pie sales do worry me but they don't pay the wage bill.

 

[Barrel of Fun]

Now seems to be an appropriate time to do a back of a fag packet type calculation for our income this year.

2,400 fans paying an average of £90 a month fir a year - 1901 = £2.5m
75% of those paying £500 for their place = £900k
25% paying £1k for their lifetime agreement = £600k
15,000 people paying an average of £16 per game (league games only) = £5.5m
Cup Games - 5 (thus far) - with 13,000 people parting with £13 a game = £845k

Total thus far...

£10.345m

 

[Wozza]

So are you saying The Albion are one of the 30% of Championship Club?

You do know how much the stadium cost, right?

 

[BensGrandad]

Is it not against the law for any company to trade in an insolvent position ie expenditure exceeding income.

 

[Arkwright]

You do know how much the stadium cost, right?

Yes I do but as with my properties they are on mortgage and paid over a term (20 / 25 years) and not a one off payment. Surely this is factored in to the annual expenditure of our annual ins and outs. Not being clever just concerned about not just the Albion but all football clubs.

 

[Arkwright]

Is it not against the law for any company to trade in an insolvent position ie expenditure exceeding income.

Totally agree but it's not a great way to trade, surely it's best to trade witin your means. If not you are always chasing your backside, a bad quarter and it's belly up.

 

[BensGrandad]

Totally agree but it's not a great way to trade, surely it's best to trade witin your means. If not you are always chasing your backside, a bad quarter and it's belly up.

I thought that it was actually against the law.

 

[severnside gull]

Because of the way TB has funded the stadium we don't have the debt. His investment ultimately converts to shares if it isn't repaid within a specified period.

I very much doubt that in our day to day trading accounts our income is exceeded by expenditure, or at least not critically so - as Gus has been at pains to point out we have a squad still essentially on League 1 wages and although our wage costs (in line with our squad size it seems) are increasing incrementally we still have a pretty rigid budget.

Transfer fees may obviously fall between the twin stools of the long term balance sheet and TB's ability to provide additional funding as he has to date. My guess is that we have an inbuilt overspend calculated over a specific period of time to be recoverable through promotion and if that target is missed it would be covered in part by further cash injections by TB and, potentially, in part by sale of assets (players). I suspect that it is as structured and as calculated as it can be.

We may not know the extent of TB's wealth but overall we do have some degree of transparency with regard to the security of our club's finances insofar as we know how they are structured if not the amounts involved.

 

[Gwylan]

You do know how much the stadium cost, right?

I could be wrong on this but I don't think that the stadium is technically owned by the club so the cost of it doesn't appear in our accounts. Isn't like a mortgage except the monthly payments go to the Bank of Bloom?

I stand to be corrected by the accountants

 

[GreersElbow]

Now seems to be an appropriate time to do a back of a fag packet type calculation for our income this year.

2,400 fans paying an average of £90 a month fir a year - 1901 = £2.5m
75% of those paying £500 for their place = £900k
25% paying £1k for their lifetime agreement = £600k
15,000 people paying an average of £16 per game (league games only) = £5.5m
Cup Games - 5 (thus far) - with 13,000 people parting with £13 a game = £845k

Total thus far...

£10.345m

What about advertisement boards, income from live games, etc?

 

[Barrel of Fun]

What about advertisement boards, income from live games, etc?

I was just dealing with matchday income (for this year) via ticket sales. My heinously poor calculations for everything else would completely mislead the pack.

 

[GreersElbow]

I was just dealing with matchday income (for this year) via ticket sales. My heinously poor calculations for everything else would completely mislead the pack.

Oh fair enough.

 

[lfc]

As a generalisation, too many clubs spend far too much on transfer fees and wages relevant to their income....sounds very basic but its true....theres some very very poor footballers getting paid very very good money, thats where the problem lies. And at the top level, i.e Premier League, most teams sell out their grounds and still some cant get away with it forever (Leeds, Pompey, Rangers in Scotland), so its easy to see how lower league teams with smaller fanbases can go under very quickly.

 

[PILTDOWN MAN]

What about advertisement boards, income from live games, etc?

probably missed most of the revenue in that v. poor analysis

 

[beorhthelm]

only 30%? things arent as bad as i thought then. since when have football ever paid its way from regular trading, clubs have long relied on wealthy backers to loan or gift money. as the old saying goes, best way to make a small fortune is to start with a large fortune and buy a club.

the problem ha been people coming in and misunderstanding this, running up large debt on the clubs account with out the money to prop it up themselves.

I thought that it was actually against the law.

nothing illegal about running at loss, many companies run like this as long as you can cover the losses and debt repayments. idealy you only do it for a short period, but its upto the creditors how long this goes on for.

 

[Sussex Nomad]

I would suggest the 30% are those coming down to the Championship from the Prem. Wages and transfer fees exceeding income. The Prem may pay parachute payments, but by the time these teams are scrapping for survival in the land of milk and honey they have already spunked well over their budget. They end up relegated and potless.