Financial Fallout

AFCBmattjamr

AFCBmattjamr

First Team
Never paid too much attention to the financial side of the game (I know we posted a 30m loss this year though) so how bad is the financial Fallout gonna be of/when we go down?
Should we be concerned that we will end up exactly where we started with administrations and buckets collections or we will be alright?
 
Buckets aren't going to make even a dent in the debt we'll have.

Some incredibly tough decisions will have to be made. ie abandon all hope of promotion, clear out all the players that we can, play youngsters and pocket the parachute money to pay down the debt OR go for a Vegas style gamble it all in the hope we can come straight back up.

More than half the clubs in the Championship pay more in wages than their total turnover. That's before all other expenses are then taken into account. It's a financial aberration of a league and we aren't exactly dropping into it from a position of strength.

Come what may I'll still be here posting rubbish but it looks like it might well be a rocky few years ahead.
 
Short answer is: it depends, I think!

Most of it is down to Max, who owes all the club debt to himself, basically.

Some of the issues at hand will be:

What sort of relegation wage reduction clauses are there in player contracts.

How much money can the club recoup in sales this summer.

How does Covid and the wider financial implications impact the market in which we'd sell players.

How does that leave the squad for an attempt at getting back in the next few years.

How much does Max want to repay himself of his debt, or leave in the club, from what sales we make.

What kind of staff redundancies are we looking at, how does that shape Eddie's staff for next season.

The possibility of relegation can't come as a surprise to anyone at the club, so you'd hope there is a folder on the office shelf marked 'relegation contingency plan' that can swiftly and calmly enact the above.
 
kirsikka said:
Buckets aren't going to make even a dent in the debt we'll have.

Some incredibly tough decisions will have to be made. ie abandon all hope of promotion, clear out all the players that we can, play youngsters and pocket the parachute money to pay down the debt OR go for a Vegas style gamble it all in the hope we can come straight back up.

More than half the clubs in the Championship pay more in wages than their total turnover. That's before all other expenses are then taken into account. It's a financial aberration of a league and we aren't exactly dropping into it from a position of strength.

Come what may I'll still be here posting rubbish but it looks like it might well be a rocky few years ahead.
Click to expand...

What is our current debt?

I think I'd rather stay in the championship and still have a club than risk it all and potentially lose quite literally everything
 
Financial Fallout....friggin hope so!

And I don't want my bucket £20 quid back.
I loved that moment !

I might even do it again.....I've changed my mind on that very recently. I said in a previous post..never again...during a bad bit of introspection.
But its kind of nice and cosy when you do it for your Lifelong Club!
 
AFCBmattjamr said:
What is our current debt?

I think I'd rather stay in the championship and still have a club than risk it all and potentially lose quite literally everything
Click to expand...

About £100m according to the accounts covering the period up to summer 2019. It may well have grown since then.

I'm probably being a miserabilist but I don't think there is a stay in the Championship choice. We can't fund the loss making required season after season just to remain there. It's either go for broke and try and get back up or sell off everything and accept a League One future.
 
In year end 2019, broadly speaking and ignoring player sales and purchases, you broke even.

Turnover was £140m, wages £111m, other opertaing costs £21m, interest £6m profit £2m, in round numbers.

(You then spent a vast sum in player signings - £90m+.)

2020 is going to be less profitable. Factor in a £10m drop from coronavirus and whatever you lose on gate money, and a further drop in TV money from finishing lower down the league. Wages may reduce depending on bonus structure - Burnley players, for example, get about a quarter of their wages as a bonus for staying up. If we go down, so do wages.

So if you get relegated at lose about £70m of turnover, you have to make it up by (a) cutting wages, via sales or by relegation clauses. (b) cutting operating costs - but you're only playing round the edges there. (c) selling players. (d) money from owner. I would suggest (e) loans but you won't be in a good position to borrow.

And it appears that the first £16m of player sales are already mortgaged, and that you still owe in the region of £50m to other league clubs for incoming transfers signed before last June.

I think you need a big cash injection from the owner. Who you already owe £110m to.

https://www.afcb.co.uk/media/111040...accounts-11022020-small-file-size-version.pdf
 
It'll all be down to what's written into the players contracts in regards to relegation clauses on wages and transfers.

If that has been handled well behind the scenes then the club hold a bit of power, at least during the first season when you know you've got x amount of parachute payments from the Premier League for two seasons.

We could hold on to the players we want too, or hold out for the transfer fees that we find acceptable, given our new position and the state of the transfer market during a global pandemic.

If those wage clauses have been written well, they should fall in line with the parachute payments that will be forthcoming. The club has that information and it all should have been calculated knowing this. So whilst income will dramatically decrease, so will our biggest outlay, which is player wages.

This should give a buffer to have a pop at an instant return, like Norwich etc.

If it doesn't materialise, wholesale changes would follow a year later to try and balance the books in the medium term without the Premier League cash cow.
 
How Sunderland’s parachute payments were used by new owners is an interesting story. Max will want his money back - can he sell to get his money back?
 
kirsikka said:
About £100m according to the accounts covering the period up to summer 2019. It may well have grown since then.

I'm probably being a miserabilist but I don't think there is a stay in the Championship choice. We can't fund the loss making required season after season just to remain there. It's either go for broke and try and get back up or sell off everything and accept a League One future.
Click to expand...

Christ that does seem pretty bleak. Hopefully someone will be along in a bit to tell us why your wrong lol.
Hopefully that £100m could almost be cleared with player sales this summer?

Ake - £35m
Wilson - £20m
King - £20m
Lerma - £12m
Brooks - £20m

That's just over £100m with some pretty low (imo) estimates although no idea how COVID will affect the player sales this year
 
Can the club continue with the sort of financial managers we've got? They appear to have made a series of strategic decisions that have left us staring into an abyss.

New financial team required?
 
I suspect any statement wouldn't happen until we are actually relegated! To be fair, I would not expect anything to be said until it happened. That would be counter productive.

All the noises were that relegation clauses were put in, but we will see... I doubt it is doomsday as long as transfers do happen and wages are cut big time by clauses. If they don't, then we are in trouble. If it has been planned well, then we will have a couple of years to fight. Considering the mess the EFL 'could' be in, who knows what opportunities there will be. For us, it depends who was put in charge of planning for relegation - gulp.
 
dsr-burnley said:
In year end 2019, broadly speaking and ignoring player sales and purchases, you broke even.

Turnover was £140m, wages £111m, other opertaing costs £21m, interest £6m profit £2m, in round numbers.

(You then spent a vast sum in player signings - £90m+.)

2020 is going to be less profitable. Factor in a £10m drop from coronavirus and whatever you lose on gate money, and a further drop in TV money from finishing lower down the league. Wages may reduce depending on bonus structure - Burnley players, for example, get about a quarter of their wages as a bonus for staying up. If we go down, so do wages.

So if you get relegated at lose about £70m of turnover, you have to make it up by (a) cutting wages, via sales or by relegation clauses. (b) cutting operating costs - but you're only playing round the edges there. (c) selling players. (d) money from owner. I would suggest (e) loans but you won't be in a good position to borrow.

And it appears that the first £16m of player sales are already mortgaged, and that you still owe in the region of £50m to other league clubs for incoming transfers signed before last June.

I think you need a big cash injection from the owner. Who you already owe £110m to.

https://www.afcb.co.uk/media/111040...accounts-11022020-small-file-size-version.pdf
Click to expand...

Even if we stay up I think we all know Ake will be off for £40-50m this summer. 2 years left on his contract and (well deserved) interest from much higher up the table. Now is the time we can get maximum value from him.

Josh King will also be on the move. He would have gone to Man Utd in Jan if they hadn't made a silly bid but with only twelve months left on his deal and having been burnt by Fraser downing tools for the final season of his contract I can't see us risking that again. Probably another £15-20m there.

There are other players that could be sold if we went down but I think those are two deals that will happen this summer whichever division we're in next season. It will also remove about £100k/week from the wage bill.
 
There's still two seasons of £60m income. Assuming half the starting 11 go for about £100m (pay back max) and the remaining salaries are halved to what would likely be about a £40m salary bill, I'm not really sure what the panic is.
 
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