Financial Fair Play in Championship

[Svlad Cjelli]

Just to give some background on the state of Championship Clubs' finances, this is a summary of the new Deloitte Report, released yesterday.

Championship clubs are spending £4 for every £3 they generate in revenue according to figures released today. Although Championship revenues increased by 9% to exceed £400m for the first time “urgent corrective action” is required according to Deloitte’s Annual Review of Football Finance.

Championship clubs’ operating results worsened for the sixth consecutive year, to a record loss of £133m. 14 Championship clubs lost £5m or more at an operating level as opposed to 12 clubs in 2008/09 – in comparison only three clubs reported pre-tax profits. The Football League’s new domestic TV deal, coming in at £195m, is a 26% drop on the previous one while added pressures on matchday and commercial revenues risk weakening clubs’ positions further, says Deloitte.

Around one third of clubs in the Championship paid out more in wages than they earned in revenue. Deloitte says the correlation between wage costs and league finishing position remains weaker in the Championship than the Premier League although evidence indicates automatic promotion almost always requires a top six ranked wage bill. Championship clubs’ wages grew by 6% to £357m although their wages/revenue ratio dropped to 88% from a record high of 90% the previous season due to revenue growth.

The Football League suffered a 6% decrease in attendances in 2010/11. Deloitte said this was due to a change in the mix of clubs in the Championship and reflective of the “challenges faced by lower league clubs arising from the economic climate”. The aggregate net debt of the 24 Championship clubs has increased to £875m at the end of the 2009/10 season (£459m at summer 2009). Excluding Newcastle United, the figure falls to £587m in summer 2010 – but is still up £128m year on year.

[brendywendy]

that cant continue can it. its daft

[Snowball]

Just to give some background on the state of Championship Clubs' finances, this is a summary of the new Deloitte Report, released yesterday.

Championship clubs are spending £4 for every £3 they generate in revenue according to figures released today. Although Championship revenues increased by 9% to exceed £400m for the first time “urgent corrective action” is required according to Deloitte’s Annual Review of Football Finance.

Championship clubs’ operating results worsened for the sixth consecutive year, to a record loss of £133m. 14 Championship clubs lost £5m or more at an operating level as opposed to 12 clubs in 2008/09 – in comparison only three clubs reported pre-tax profits. The Football League’s new domestic TV deal, coming in at £195m, is a 26% drop on the previous one while added pressures on matchday and commercial revenues risk weakening clubs’ positions further, says Deloitte.

Around one third of clubs in the Championship paid out more in wages than they earned in revenue. Deloitte says the correlation between wage costs and league finishing position remains weaker in the Championship than the Premier League although evidence indicates automatic promotion almost always requires a top six ranked wage bill. Championship clubs’ wages grew by 6% to £357m although their wages/revenue ratio dropped to 88% from a record high of 90% the previous season due to revenue growth.

The Football League suffered a 6% decrease in attendances in 2010/11. Deloitte said this was due to a change in the mix of clubs in the Championship and reflective of the “challenges faced by lower league clubs arising from the economic climate”. The aggregate net debt of the 24 Championship clubs has increased to £875m at the end of the 2009/10 season (£459m at summer 2009). Excluding Newcastle United, the figure falls to £587m in summer 2010 – but is still up £128m year on year.

Is that saying Newcastle owed 288 MILLION?

And the championship went AN EXTRA 128M in debt? (I presume they mean "not cleared" as in the RFC model tries to re-adjust)... Am I right in thinking that's 5.5M ACCUMULATED debt, extra per club for a single year?

And does this debt include director loans?

[Svlad Cjelli]

When we talk about clubs in debt, what percentage is Director loans?

I am really only interested in amounts owing to suppliers, tax-man, VAT-man, police, council etc

I'd need to lookup the percentage - I think it's about 45% but that's a few years ago.

.....

From today's Deloitte Report :

Of the £2.6 billion net debt in the Premier League, around 40% (£1.0 billion) is in the form of non-interest bearing ‘soft loans’, of which the majority relates to just two clubs - Chelsea (£740m) and Fulham (£187m)

I'd imagine a similar percentage would apply in the Championship.

[Snowball]

When we talk about clubs in debt, what percentage is Director loans?

I am really only interested in amounts owing to suppliers, tax-man, VAT-man, police, council etc

I'd need to lookup the percentage - I think it's about 45% but that's a few years ago.

.....

From today's Deloitte Report : [url]Of the £2.6 billion net debt in the Premier League, around 40% (£1.0 billion) is in the form of non-interest bearing ‘soft loans’, of which the majority relates to just two clubs - Chelsea (£740m) and Fulham (£187m)[/url] I'd imagine a similar percentage would apply in the Championship.

So ignoring 927 Million (as you do...) that leaves

£1,673,000,000 = ONE BILLION, six hundred and seventy-three million pounds owed

I'm guessing that DOESN'T include leveraged buy-outs like Man Utd, or does it. Weren't they approaching a billion on their own?

[Svlad Cjelli]

From today's Deloitte Report :

Of the £2.6 billion net debt in the Premier League, around 40% (£1.0 billion) is in the form of non-interest bearing ‘soft loans’, of which the majority relates to just two clubs - Chelsea (£740m) and Fulham (£187m)

I'd imagine a similar percentage would apply in the Championship.

So ignoring 927 Million (as you do...) that leaves

£1,673,000,000 = ONE BILLION, six hundred and seventy-three million pounds owed

I'm guessing that DOESN'T include leveraged buy-outs like Man Utd, or does it. Weren't they approaching a billion on their own?

That £2.6b includes ALL debts to all external parties. That'll include bank overdrafts, debts to HMRC and suppliers, and also debts for leveraged buyouts such as Man Utd and Liverpool, as well as the £1.0m total director's loans.

[Snowball]

So take out

740 Million Abromovich
717 Million Man Utd (Feb 2010)
187 Million Fayed

1.602 BILLION

Leaving a billion owed, 40% of which is soft loans, so 600 Million

Take out Manchester City, say 300 Million?


Leaving 300 Million owed by 16 clubs? Say 20M each. Seems too low


PS

BTW March 2010 = The owners of Chelsea and Manchester City have even written off their soft loans of £701m and £305m respectively in recent months, making these two clubs debt-free.

[Wycombe Royal]

Why are you taking out the soft loans twice?

[Snowball]

Feb 2010

717 M Manchester United
511 M Chelsea
297 M Arsenal
262 M Liverpool
194 M Man City (after wiping 300M+ of debt)
164 M Fulham
115 M West Ham

2,260 MILLION (2.26 Billion) 7 Clubs

72 M Aston Villa
59 M Bolton
58 M Portsmouth
54 M Wigan
49 M Sunderland
46 M Spurs
38 M Everton
20 M Blackburn
13 M Wolves
12 M Birmingham

417 Million across ten clubs, say 42 M each about equal to a season's TV money

The rest were neglible

[Snowball]

Why are you taking out the soft loans twice?

Sorry I wasn't clear

So take out

740 Million Abromovich
717 Million Man Utd (Feb 2010)
187 Million Fayed

1.602 BILLION

Leaving a billion owed, BY THE REST OF THE CLUBS (17) 40% of which is soft loans, so 600 Million

Take out Manchester City, say 300 Million?


Leaving 300 Million owed by 16 clubs? Say 20M each. Seems too low


PS

BTW March 2010 = The owners of Chelsea and Manchester City have even written off their soft loans of £701m and £305m respectively in recent months, making these two clubs debt-free.

[Wycombe Royal]

Why are you taking out the soft loans twice?

Sorry I wasn't clear

So take out

740 Million Abromovich
717 Million Man Utd (Feb 2010)
187 Million Fayed

1.602 BILLION

Leaving a billion owed, BY THE REST OF THE CLUBS (17) 40% of which is soft loans, so 600 Million

Take out Manchester City, say 300 Million?


Leaving 300 Million owed by 16 clubs? Say 20M each. Seems too low


PS

BTW March 2010 = The owners of Chelsea and Manchester City have even written off their soft loans of £701m and £305m respectively in recent months, making these two clubs debt-free.

The 40% figure was of the £2.6bn. You can't remove the biggest soft loans and then still apply the 40%.

[Snowball]

Why are you taking out the soft loans twice?

Sorry I wasn't clear

So take out

740 Million Abromovich
717 Million Man Utd (Feb 2010)
187 Million Fayed

1.602 BILLION

Leaving a billion owed, BY THE REST OF THE CLUBS (17) 40% of which is soft loans, so 600 Million

Take out Manchester City, say 300 Million?


Leaving 300 Million owed by 16 clubs? Say 20M each. Seems too low


PS

BTW March 2010 = The owners of Chelsea and Manchester City have even written off their soft loans of £701m and £305m respectively in recent months, making these two clubs debt-free.

The 40% figure was of the £2.6bn. You can't remove the biggest soft loans and then still apply the 40%.

or apply 40% to the championship

OK

I've posted a list from feb 210 of actual figures

[Barry the bird boggler]

Just to give some background on the state of Championship Clubs' finances, this is a summary of the new Deloitte Report, released yesterday.

Championship clubs are spending £4 for every £3 they generate in revenue according to figures released today.

With the arrival of West Ham and Birmingham I expect that has changed to £10 for every £3 generated....

[Northern Git]

It was converted to shares long ago now

I think not, last figures still has both Reading FC ltd and Millenium Madejski Hotels Ltd ( both owned by Reading FC PLC) with substantial debts to JM, £8,000,000 and 12,000,000 respectivly

Will be interesting what figures Reading would present to the Championship if this 'Financial Fair Play' idea comes into being. Do you go with Reading FC Ltd with £8 million debts, or go with Reading FC PLC with greater turnover but with much larger debts of £20 million?

[handbags_harris]

As posted in the GF thread on Financial crises, the Bristol City chairman has stated that 22 or the 23 Championship clubs represented in Cyprus voted in favour of a 60% cap on wages from summer 2013 onwards.

http://www.thisisbristol.co.uk/act-wake ... story.html

[T.R.O.L.I.]

..that 22 of the 23 Championship clubs represented in Cyprus voted in favour of a 60% cap on wages from summer 2013 onwards.

Wonder who the odd two out were - i.e. the club that wasn't represented and the club that said "No".

Leeds and Pompey per chance?

[Wimb]

Makes sense to me.

Personally I've no real problem with big transfer fees going around but its the wages that are just killing clubs, or leaving them on life support. If a club spends £7 million on a transfer fee at least it's going to another club, rather then £7 million on wages that'll go to some Bentley dealership and to nightclubs all over London....

[Svlad Cjelli]

..that 22 of the 23 Championship clubs represented in Cyprus voted in favour of a 60% cap on wages from summer 2013 onwards.

Wonder who the odd two out were - i.e. the club that wasn't represented and the club that said "No".

Leeds and Pompey per chance?

It's reported that Ken Bates supported this.

[T.R.O.L.I.]

Blimey - there's a turn up for the books

[under the tin]

It's hardly that magnanimous of old Ken.
If the level is pitched at 60% of turnover, it still puts Leeds on a different financial planet from the likes of Peterborough or Donny.