Financial restrictions at the Albion hampering the playing budget?

[Uter]

I'm not on a wind up. I got off my arse and dug out the accounts from 2011 from Companies House and then summarised them on NSC.

I was surprised at the time that there were no comments from the club about the finances on either seagulls.co.uk (apologies if I missed them BTW) or the Argus.

The success of the Amex in terms of bringing money in has been a revelation, but we need to contextualise things. 22,000 season tickets at an average of £350 (remember the ST price includes VAT, so you have to net that off from the price paid to arrive at the figure received by the club, and then take into account the lower fees paid by concessions) each brings in £7.7 million, add in extras from 1901'ers, corporates and away fans adds let us say another £3 million. The TV deal for the Championship is about another £2 million, giving a total of £13 million in total. Even if with some sponsorship and allied revenue stream we are probably looking at £15 mill max.

Then compare this to a club who has just been relegated from the Premiership, who has a parachute payment of £18 million in the first season, and then £9 million for each of the next two seasons, and it clearly knocks the Albion's negotiating position into a cocked hat.

I'm not being critical of anyone, just trying to look at things from an analytical perspective only.

As you take an interest in the accounts then this excellent blog might interest you:

The Swiss Ramble: Brighton and Hove Albion


It only goes up to 2009, but does demonstrate that the last season at Withdean was atypical from an expenditure point of view (presumably a lot of costs were stadium related), but typical in that we made a big loss. It also goes to show the huge sum that TB pumped into the club to allow us to stay afloat all those years: £17m!

If we are playing "guess last season's turnover" the IMO it will be in excess of £20m.

The current Championship TV deal that provides the bulk of our TV money (which actually falls from next season) is £264m over 3 years, so around about £4m per club if you factor in various other smaller deals. Of course this is pretty much the same for everyone so doesn't give us a competitive edge.

The catering deal with Azure was reported in the media as £18m for 5 years so that's a whopping £3.6m a year.

The cup runs will have also generated a decent amount, but perhaps not as much as you'd expect when you remember we only get to keep around 45% of gate receipts and that Gillingham and Wrexham prices were lower than for league games. With prize money I guess this could be around £1m in total.

Additionally merchandise and other commercial streams must surely have performed well too. Difficult to guestimate so it's finger in the air for this one. I don't think £2m is out of the question, but time will tell.

Finally, the Amex was clearly designed with venue hire in mind and this must also be a decent income stream. It will probably take time to grow this arm of the business, but there have already been many conferences, conventions and of course 2 concerts this past year. I'd guess we are probably talking hundred of thousands at the moment rather than millions, but I'd expect this arm to flourish as our expertise in selling ourselves improves.

Of course this doesn't completely close the gap between us and the clubs benefitting from parachute payments so you are correct in your assertion that they have a huge financial head start. And it all counts for little if costs are not controlled.

 

[severnside gull]

It's Paul Barber - and if he is King Midas why go from the FA (where very big commercial deals were possible) to Spurs under the complications of working for Levy - to the outpost of Vancouver Whitecaps. Seems like a career path in reverse. Clearly the only reason the job was available was because the previous MD / CEO were hustled very quickly out of the door.

TB has said publicly that he has had to write bigger personal cheques than he anticipated.

On the subject of stewards and matchday staff I doubt very if they are at levels insisted upon by regualtory bodies - the number of people standing arounf to direct you are admirable but way in advance of what is necessary. The contracts for these services must be debilitating financially.

I for one would be delighted if the club is run in future on financially sustainable grounds and that our objectives are realistic. Over-extending to reach the promised land has been the downfall of many in the past - and more will go the same way in the future. We should support the team - and the principle of common sense management and the right principles.

That seems pretty fair. Clearly costs are higher than anticipated and some senior staff seem unable or unwilling to cut their cloth appropriately in the belief that TB will just pick up the bill unquestioningly. I am rather surprised that Hebberd is still with us to be honest but I don't think the cost of stewarding is likely to be the biggest overspend orindeed a major concern. Barber appears to be a revenue generator rather than a cost cutter.

Clubs with bigger revenues and/or better budgetting skills may well outbid us in the transfer fee/wages stakes - clubs with substantially smaller revenues and resources will do the same albeit, unless their gamble to make the next step up at all costs succeeds, only for a short time before it comes home to roost.

 

[Marshy]

i fail to see how profits could have been anything other than spectacular

think people are worrying over nothing.

 

[crasher]

Can't be bothered to read through all this thread but if we have to work on lower budgets than the rest of the division then so be it. I'd rather not be in the Prem than do a Portsmouth. The investment in the academy (and of course the stadium) is what will build long-term stability and success.

 

[Moshe Gariani]

i fail to see how profits could have been anything other than spectacular

think people are worrying over nothing.

You are half right.

 

[hans kraay fan club]

Can't be bothered to read through all this thread but if we have to work on lower budgets than the rest of the division then so be it. I'd rather not be in the Prem than do a Portsmouth. The investment in the academy (and of course the stadium) is what will build long-term stability and success.

Exactly this.

 

[Ernest]

Exactly this.

If cutting our cloth and living within our means meant another top 10 league finish and 2 good cup runs then I'd be more than happy with that

 

[SI 4 BHA]

I'm not on a wind up. I got off my arse and dug out the accounts from 2011 from Companies House and then summarised them on NSC.

I was surprised at the time that there were no comments from the club about the finances on either seagulls.co.uk (apologies if I missed them BTW) or the Argus.

The success of the Amex in terms of bringing money in has been a revelation, but we need to contextualise things. 22,000 season tickets at an average of £350 (remember the ST price includes VAT, so you have to net that off from the price paid to arrive at the figure received by the club, and then take into account the lower fees paid by concessions) each brings in £7.7 million, add in extras from 1901'ers, corporates and away fans adds let us say another £3 million. The TV deal for the Championship is about another £2 million, giving a total of £13 million in total. Even if with some sponsorship and allied revenue stream we are probably looking at £15 mill max.

Then compare this to a club who has just been relegated from the Premiership, who has a parachute payment of £18 million in the first season, and then £9 million for each of the next two seasons, and it clearly knocks the Albion's negotiating position into a cocked hat.

I'm not being critical of anyone, just trying to look at things from an analytical perspective only.

Interesting to compare us with a club like Millwall, according to last accounts, turnover around £12m, but tv money higher than I expected at £4.7m on an average crowd of 11,400, compared to our 20,000, so if Millwall's income was £12m, surely we must have income in excess of £15m. Obviously we can't compete on income with clubs receiving parachute payments, but don't forget those clubs will already have wage costs far in excess of ours so they are not necessarily in a much stronger position and if they don't get back to the Prem quickly we have seen the financial mess they get in.

Millwall FC's results for the year shows a significant improvement of some £2.8m reduction in the loss from operations, down to £0.6m from £3.4m reflecting the benefit of £1.7m (2010: £0.2m) of income from player sales.

Before taking account of non-cash charges for amortisation and depreciation, as well as interest, the Group earned a profit this year of £0.2m (2010: loss of £2.9m.) This is the best result since 2004.

Revenue for the year reflects the benefit of the first year of playing once again the Football League Championship.

Overall turnover has increased by 58.5% (2010: 15.3%) from £7.5m to £11.8m. This is mainly as a result of a substantial increase in the Central League awards, principally TV sponsorship rights, which this year were £4.7m, compared with £0.7m last year.

Despite the higher gates, Match Day income showed only a small increase of 2.8% (2010: 22.3%), but this year did not benefit by the revenue generated by the play-off final at Wembley that occurred in the previous year. Income from player sales rose substantially this year to £1.7m (2010: £0.2m). This is mainly the transfer fee for the sale of Steve Morison to Norwich City, less the element of this fee due to Stevenage Town under the terms of the contract for the transfer of the player to Millwall in 2008.

Total staff costs rose to £8.4m (2010: £6.4m). Contracts with players were adjusted to a rate of salary commensurate with playing in the Championship. Despite this increase, the ratio to revenue fell to 71% (2010: 85%).

Other expenses (excluding Depreciation and Amortisation) increased to £4.9m (2010: £4.1m), representing 42% of revenue (2010: 55%). The principal reason for this increase is attributable to the additional costs of policing and stewarding the higher profile games that occur in the Championship, these costs having risen by £0.3m.

Other major increases relate to the higher costs of £0.3m for the retail operation, reflecting the higher turnover and an increase of £0.2m in agents fees, once again reflecting the costs incurred in operating at a higher level of the football league.

Finance costs were reduced by £0.2m during the year as a result of lower borrowings following the successful Open Offer in December last year.

 

[Paddy B]

I have a slightly different take on this. I think we are bound to show a loss in the frst year of trading at the Amex, given the amount of money that needed to be spent. This is not counting the finance of the stadium construction, which I assume will show as loans, but the extraordinary items involved in turning the club from a ramshackle portacabin operation to the professional business it now surely is.

However I dont think this is anything to worry about and would have been part of the business plan, which as we all know under estimated the income.

 

[Bwian]

Another simple generation of revenue would have been for the club to have ran the catering and kiosks as an offshoot company themselves rather than franchise it out to a catering company,thus only receiving a fee or rental .

I think opening a brand new stadium, with all of the teething problems that alone brings, was more than enough for the club to cope with without a brand new catering learning curve as well. The club also receives a percentage of the profits-this fact alone is incentive enough for TB to be kicking Azure's backsides. If they actually knew what they were doing then I'm sure the club would be receiving loads more cash from catering.

I still cannot believe we actually have The Amex as our home, there are a few things that need tweaking but damn, what a great place to watch The Albion.

 

[Uter]

Another simple generation of revenue would have been for the club to have ran the catering and kiosks as an offshoot company themselves rather than franchise it out to a catering company,thus only receiving a fee or rental .

I think that would have been a big mistake. The deal with Azure gives us a guranteed huge sum every year for 5 years. To branch out from day one into mass catering, given all the training, recruitment, supply needs and expertise involved would have been a step too far. The catering operation alone at Falmer approximates to our entire turnover at Withdean. We simply could not have managed it. It was far too big a jump.

Once the 5 years are up it would be sensible to at least pose the question "should we take catering in house?" but outsourcing this was the correct move for now.

 

[BensGrandad]

My view and perhaps it is slightly blinded by hindsight and what has happened re the catering, was that like Azure employed a catering manager etc we could have sourced the same calibre man and staff to have set this up ourselves and as much as I can agree perhaps a step too big a jump to start with would expect TB to consider it at the first contract renewal.

 

[*Gullsworth*]

So to sumarise, we are making shitloads of money through ST sales and other revenues, but cant compete with the clubs recieving parachute payments because of spiraling transport costs!

 

[Uter]

My view and perhaps it is slightly blinded by hindsight and what has happened re the catering, was that like Azure employed a catering manager etc we could have sourced the same calibre man and staff to have set this up ourselves and as much as I can agree perhaps a step too big a jump to start with would expect TB to consider it at the first contract renewal.

I definitely think we should seriously consider it once the contract finishes as clearly Azure enjoys profits that could otherwise go to team strengthening etc. It would be crazy not to think about it.

All the criticism that has been levelled at Azure, an established company that specialises in stadium catering, does perhaps suggest it not quite as straightforward as many people imagine. I can't think of any compelling reason to think that the club could have done any better, and there must have been a very real chance that they would have made a worse job of it.

 

[Dave the OAP]

if cutting our cloth and living within our means meant another top 10 league finish and 2 good cup runs then i'd be more than happy with that

someone has hacked ernests account!!!!!

 

[PILTDOWN MAN]

five home cup games and one big one away many on telly as well would have been very lucrative.

Basic day to day operational costs must have been closely budgeted, not like the first club to move to a new stadium. The only extra would be the transport but even that the club would have surely known the contract cost prior to the season. That the revenue stream for the transport costs were not achieved was also pretty much anticipated I would have thought.

The club are also advertising for more stewards http://www.seagulls.co.uk/page/Latest/0,,10433~2808408,00.html

 

[Lord Bracknell]

travel costs... how can they be tracking this reliably? i get that people havent purchased vouchers as expected, many using the train are buying a ticket or eligible to travel on their rail season tickets. i dont know how buses are working, presumably you still have to pay not just show a ticket?

The simplest way for the Club to track travel costs is to pay the invoices that the Bus, Train and Car Park Operators are submitting and then to add in the staff costs of stewarding the transport operations. I can easily see how the sums will exceed £1 million a year, gross.

 

[PILTDOWN MAN]

The simplest way for the Club to track travel costs is to pay the invoices that the Bus, Train and Car Park Operators are submitting and then to add in the staff costs of stewarding the transport operations. I can easily see how the sums will exceed £1 million a year, gross.

But the train and bus company must charge a set amount per game

 

[Albion Dan]

Anyone else and I wouldn't believe it, but [MENTION=31]El Presidente[/MENTION] lives and breathes this stuff..

But is basing the entire post on hearsay with no sound foundation. It is pure conjecture and mischief and certainly not the reason we have made no signings, which will certainly start to arrive shortly. Above all else TB will know there is a balance between customer numbers and the quality of product.
To suggest it is the reason we didnt get Mattock is even worse. I heard Poyet was far from impressed with hia attitude.

 

[Lord Bracknell]

But the train and bus company must charge a set amount per game

What makes you say that? They probably charge a set amount per vehicle provided per hour per game. That's the way most transport companies cost their transport operations (plus a bit added on for fuel and othe mileage-related costs). The amount of resources put into the transport system will have varied as the season unfolded.