Leicester City losses 2012-13 - £34m

[CheeseRolls]

A Midlands-wide product more like. Can't see too many people around the world, or in Torquay or Brighton, rushing out to pick up a Leicester City shirt or club-endorsed clock/radio anytime soon, Premier League or no Premier League.

This is a very good point. You don't just get handed a cheque for 120m and expect all your players to carry on playing for the same wage for the next 3 years - regardless of whether or not they get relegated in the first season.

Football is currently unsustainable, and all it will take is for one of these foreign investors to get bored of the game and withdraw their millions for a club to go under.

Gamble? Yes, you've got that right. As for picking up big bucks and becoming "a world wide product"..........hmmmm.

Any time Leicester spend in the Premier League will be temporary (not just them, this applies to 70% of that league at any one time). When their inevitable relegation follows at some time in the near or less-near future, I guarantee they will be in a far, far worse financial position than they even are now.

Wolves is a great example. They sensibly and prudently broke even during their PL years (OK, they gave their modest budget to Mick McCarthy to spend which was less sensible). They get relegated with no debt, and then, having adapted to a level of income they can no longer rely on, post losses of £30 million.

It will end in tears, and Leicester have form in this regard.

How marketable is Cardiff City compared to say Man Utd, Chelsea or Arsenal abroad. These fans are no different to the plastics we have here who will only support the teams at the top and the teams that keep winning, anything else is considered a failure.

I really think you are missing the point. Take a look at Vincent Tan's wikipedia page http://en.wikipedia.org/wiki/Vincent_Tan, just to get a flavour of his business interests. He is a big fish in Malaysia, with close links to prominent politicians. how does he protect his money (especially if the politicians fall out of favour), grow his influence and satisfy his ego ? Not by turning Cardiff City into a model of financial propriety. You need to look at this more like a local businessman who has a Corporate Box at the Amex, or membership at an exclusive golf club. A waste of money when looked at in isolation, but when you consider all the deals that can be done on the back of this, it starts to make more sense.

 

[Stat Brother]

These owners probably thought they would walk these teams to the Champions League final. Because of their lack of understanding of our game, supporters and the general make up of football in the UK, it's turned out not to be so easy.

That's an amazing statement.

All the owners know exactly what they are doing and how they are doing it.

Firstly you don't get to be a billionaire by being as fick as pig s***.
Or by being naive.
Or by throwing millions of pounds away.

From the outside looking in, it would seem the headline figure of EPL money is attractive.
But it's nowhere near as attractive as the 10%+ interest they are taking on their LOANS.

No foreign owner is doing this because they thought they could walk into the Champions League.
They are doing it for cold hard cash, and it's being handed to them in bucket loads.

 

[Diego Napier]

If a benefactor wants to gift the club or wrap it up as soon spurious sponsorship deal or naming rights or whatever then fine. Equally if other "investors" want to buy shares or equity that overvalues the club then why not?

It's only when clubs and owners use their assets to borrow or simply convince creditors that by lending they will get their money back when they get to the promised land, that things go wrong.

There's nothing unusual about borrowing against future revenues just as long as those revenues are fairly well set or guaranteed. I'd have thought the FL could act in a supervisory capacity to oversee clubs borrowings. It may well not be able to actually stop them but it has the ability to impose sanctions if a club exceeds it's reasonable borrowing capability.

I don't know, perhaps it's unworkable but I'm convinced FFP is not the way to go, far too simplistic

But the major benefit surely is that it's a reasonable start which can be built on or modified depending on experience gained to eventually achieve a satisfactory outcome. Rome wasn't built in a day.

It's easy to pick holes from the sidelines but the majority of the clubs have voted for this; it's much better than having a beauty contest between any number of competing ideas and schemes that would inevitably see nothing get off the ground.

 

[Cheeky Monkey]

I think nwgull was more trying to highlight further evidence that the 60m you get in the premier league plus parachute payments is eaten up quite quickly and won't stop you falling into debt

Yep. The wage bill eats massively into that alone.

 

[Not Andy Naylor]

So why are so many foreign owners attracted to buying football clubs in this country ?

I think it boils down to three main factors and sometimes a combination of these.

1 Prestige - pretty much along the lines of owning racehorses and a big yacht in the Med.

2 Business legitimacy - Owning a premiership football brand, looks fabulous in Thailand, Malaysia, India, Hong Kong. Take your team on a pre-season tour, flog merchandise, take a cut of the local TV revenue, but also examine the impact this has on your business. You must be a powerful global businessman, to run such a powerful empire. Why is it we see owners smiling and waiving, as their own supporters boo and gesticulate at them. Guess which bits the cameras back home will focus on ?

3 Wanting to be part of the British establishment -Why else would you pore money into Fulham, or Hull.

4 To make money directly - not a general rule, but one specific to the cash cow that is Man Utd.

The population of Leicester is 330,000. The population of Thailand is 66 million. Which is easier to achieve ?

1 Sell 10,000 extra season tickets at £400 per season = £4m revenue.
2 Sell 100,000 TV and shirt deals in Thailand at £40 per season - £4m revenue

Simplistic, I know, but I think this demonstrates the point. Global does not have to mean that a brand appeals to the whole world.

You forgot money-laundering.

 

[Brighton Breezy]

Crystal Palace played an absolute blinder last season. Promotion AND a small profit due to selling Zaha.

 

[Rugrat]

But the major benefit surely is that it's a reasonable start which can be built on or modified depending on experience gained to eventually achieve a satisfactory outcome. Rome wasn't built in a day.

It's easy to pick holes from the sidelines but the majority of the clubs have voted for this; it's much better than having a beauty contest between any number of competing ideas and schemes that would inevitably see nothing get off the ground.

It's a matter of opinion but I think it's a totally shit start!! It was voted in and will now be ignored by some and likely challenged. Even if it weren't it's a totally blunt instrument and half baked. It's not just picking holes I see it as a huge backwards step for the game outside the Prem making the chasm between the Leagues and premiership even wider

I don't think there should be competing ideas but if it had been thought through better from the start and the basic philosophy was to prevent clubs going into administration and living within their means then an approach that limited borrowing to sustainable levels would have been fairly easy to construct.

 

[CheeseRolls]

You forgot money-laundering.

Business legitimacy pretty much covers this. Even then I am not sure that the clubs themselves are being used, to launder money. I would imagine due to scrutiny a lot of the money passing through clubs is traceable, there is likely to be easier ways to achieve this. I might be wrong though.

 

[gripper stebson]

LCFC are losing £96,000 a day!

 

[Brighton Breezy]

The one problem I have with FFP - well, the MAIN problem, there are a few - is that once it at settles down and is being adhered to, it will basically sort clubs out by their potential fan base size.

Follow a small club? You won't ever progress higher than the lower end of Championship unless the club charges £50 a ticket because the attendances will be smaller, advertising smaller, merchandise sales smaller etc etc.

Why SHOULDN'T someone be able to fund the progress of a traditionally smaller club if that is what they want to do with their money?

 

[nwgull]

If Bolton are a good example then so are the Albion. Bolton are being bankrolled by Eddie Davies in the same way we are by Tony Bloom. Nearly all the money Bolton owe is to Davies (or a company he controls) in the same way we own Bloom.

How are the Albion a good example of a club losing 50m in their first season back in the championship after relegation?

 

[Bozza]

How are the Albion a good example of a club losing 50m in their first season back in the championship after relegation?

Leicester aren't in their first season back in the Championship after relegation, are they, and that's what this thread is/was about.

I (clearly) meant in terms of the structure of their general financial structure.

 

[nwgull]

The one problem I have with FFP - well, the MAIN problem, there are a few - is that once it at settles down and is being adhered to, it will basically sort clubs out by their potential fan base size.

Follow a small club? You won't ever progress higher than the lower end of Championship unless the club charges £50 a ticket because the attendances will be smaller, advertising smaller, merchandise sales smaller etc etc.

Why SHOULDN'T someone be able to fund the progress of a traditionally smaller club if that is what they want to do with their money?

Club gets more punters through the turnstiles so can pay larger wages and transfer fees. Isn't that the way it should be?

There's also the incentive to produce home grown talent rather than pay over the odds for foreign players.

 

[Brighton Breezy]

Club gets more punters through the turnstiles so can pay larger wages and transfer fees. Isn't that the way it should be?

There's also the incentive to produce home grown talent rather than pay over the odds for foreign players.

One of the best things about football in this country, for me, is the way clubs can move from the bottom division to the top flight. Under FFP this simply won't happen as much, if at all.

Of course, if wages were actually capped at a more affordable rate so the difference between what top clubs pay and what bottom clubs pay was less drastic, it might not be such an issue.

But as it is, if smaller clubs have ambitions of progressing through the divisions backed by limited attendances, the cost will be handed on to the fans in the way of increased ticket pricing.

 

[Westdene Seagull]

The idea of FFP was, and is, a good one. It's just the penalties aren't severe enough to make much difference. They also should have added in higher punishments for administration and removed the rule making football creditors preferred over other creditors ( such as us the tax payer for example ).

 

[nwgull]

Leicester aren't in their first season back in the Championship after relegation, are they, and that's what this thread is/was about.

I (clearly) meant in terms of the structure of their general financial structure.

My point was in response to the suggestion that Leicester would be fine with their losses - as they're getting a 120m cheque at the end of the year - and another poster pointing out that the chances are they'll come back down within a couple of years and cited Wolves as a good example of clubs struggling. I added Bolton as another example that parachute payments don't necessarily prevent huge losses in the first year back.

 

[Rugrat]

Club gets more punters through the turnstiles so can pay larger wages and transfer fees. Isn't that the way it should be?

There's also the incentive to produce home grown talent rather than pay over the odds for foreign players.

It's a nice thought but it just wont' happen with all the commercial forces at play. The days of "this is how much we make in revenue so this is how much we can afford" are long gone, although I don't disagree that FFP is making a supreme effort to turn the clock back in it's effort to clean up the game.

 

[Vegas Seagull]

35 million loss last year, unknown loss this year, +60 million for reaching the PL next year ( rest of the 120 million is future parachute payments ), PL wage bill next year at least40 million....

Still looks grim financially.

Too one sided old bean, why bother?
Their viewing figures for Man U live across China etc may be more than v Yeovil...shirt, perimeter revenues x 5 or 10? etc etc

 

[nwgull]

One of the best things about football in this country, for me, is the way clubs can move from the bottom division to the top flight. Under FFP this simply won't happen as much, if at all.

It always used to happen in the old days before the Premiere League. There weren't many rich foreign investors throwing millions at clubs back then.

 

[Brighton Breezy]

The big loser in FFP is going to be fans who regularly attend football matches and have to pay increased ticket prices because many clubs won't suddenly lower their ambitions or halve their wage offers. They will just pass the cost on.

In an ideal world the clubs would take FFP on board and collectively drop the ridiculous wages being offered to players. This is unlikely to happen though - particularly all the time certain clubs can fund these wages with parachute payments. Those looking to compete with them will have to up their prices in order to do so.

Ditch parachute payments. Encourage clubs in the Premier League to have sensible and sustainable wage reductions written into player contracts guarding against relegation - as Sunderland do already, I believe.

Go back to the idea of distributing FFP penalties to those clubs who DO follow the rules.

In isolation I can't see how FFP will work in the way I think we all hope it will.