[Archived] Why Do We Have No Money

[McClarky]

Lets get real here. The only way we will have more money to spend on transfers is to:-

a) get outside investment, or

Sell our best players.

If we assume that we don't want the later the only option would be the former. This could lead easily to disaster if you get the wrong people in. The alternative is of course to get a manager who knows talent when he sees it and hope you can keep hold of him. I've been saying for ages that we are where we are because we have been well managed but I fear if Hughes goes.

We have signed 1 big name player in each of the last 3 seasons (Bellamy, McCarthy and Santa-Cruz) but because of our good management we have got them at reasonable prices where other clubs have wasted money on players with less ability.

[only2garners]

A couple of quick points gleaned from last night's Fans' Forum meeting: -

1. The club put up to £1m aside from the new Sky agreement to subsidise ticket prices. If there had been no change in attendances this season the club would have lost £1m in gate revenue. As it is, attendances have gone up. The club's best estimate for the season as a whole is that the ticket reduction will have cost about £350K, not a million. (See also Revidge Blue's new thread).

2. Man Utd and Arsenal each take in gate receipts from one home match about 2/3rds of what Rovers take in an entire season. This puts into context what we are competing against. I know other clubs will not be getting as much but nearly every other team in the Premier League will be making more from gates than Rovers, despite the best efforts of the club. No matter what they do that equation isn't going to significantly change in the near future.

[John]

BP - thanks for your post. Very interesting and explains a few things.

Hypothetical question and possibly one you cannot answer, and it is maybe because I am a dreamer..... in your opinion do you think the Trustees would release extra cash for transfers for Hughes to spend, in order to ensure he stays as our manager (should Newcastle firm up their offer).

[thenodrog]

The wage bill, as we know is currently an area that the club are concerned about and its currently taking up too high a percentage of income. In basic terms as I understand it there is not a major problem in funding transfer fees - the problem is that there is no "headroom" on the wage bill to take on extra players.

Hence the very obvious one out - one in policy.

On a final but very significant note, anyone questioning the support of the Trust over the years should bear this in mind. When Rovers were relegated the impact on the accounts was lethal, an operating loss of nigh on £50m in just two years. This would be enough to send most clubs under, however Rovers continued to operate normally, holding onto most of their players and paying premier league wages whilst in the champsionship, as well as remaining active in the transfer market. What enabled them to do this? Just stop an think logically for a minute, a £50m black hole in two years is a frighteningly serious situation, and if it wasnt for the Trust plugging this black hole Rovers could well have gone pop. Couple this with the interest free non-repayable loans and other donations, operating losses in other years that are written off by the Trust, the actual amount of money they have has put into Rovers is staggering.

Thank you BP for a very clsear and concise explanation. Unfortunately there are many on here who seem able to type but unable to read.

[thenodrog]

Dickens anybody?

My other piece of advice, Copperfield, said Mr. Micawber, you know. Annual income twenty pounds, annual expenditure nineteen nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

This club is a major footballing power because of the wealth of one family so notwithstanding that wtf has the appropriation of private funds got to do with anybody on here? You want to see money invested in BRFC? Then write a cheque.

[T4E]

The upshot being that we need to bring more regular money in to create said "headroom". Yet another reason why attendances are such a major problem. How are we supposed to attract more fans with the sheer volume of clubs within our "catchment area"? How many of these clubs are struggling with exactly the same problems as us?

Lancashire United doesn't seem so daft after all.

[BrianPotter]

BP - thanks for your post. Very interesting and explains a few things.

Hypothetical question and possibly one you cannot answer, and it is maybe because I am a dreamer..... in your opinion do you think the Trustees would release extra cash for transfers for Hughes to spend, in order to ensure he stays as our manager (should Newcastle firm up their offer).

That is a very good question, and one that had crossed my mind.

In all honesty any view on that would be pureley a guess. From what I understand the problem is not particularly in raising money for Transfer Fees (within in reason) it is the impact on the wage bill that any new signing would have. Wages are already taking up more of our income than they should be so to add to that could be seen as poor management.

The Trustees primary concern is what is best for the club and its long term stability (note to certain posters - this is why we are not throwing around huge sums of money in the transfer market), if they feel that releasing extra funds in order to hold onto the manager makes good business sense in the clubs long term future then they may consider it. But who knows, as yet there has been no approach for Hughes and it could all be hot air.

[Jordan]

One question I do have is this.

If we have no money why did the club seem happy to loose £1,000,000 of the revenue of gate receipts. Surely they would have known what the financial situation was. The club also seemed pretty obliging to reduce the price of tickets. Would we really have lost that much money if tickets were the same amount as last season?

[den]

One question I do have is this.

If we have no money why did the club seem happy to loose £1,000,000 of the revenue of gate receipts. Surely they would have known what the financial situation was. The club also seemed pretty obliging to reduce the price of tickets. Would we really have lost that much money if tickets were the same amount as last season?

They had to arrest the 10% drop in ST sales for each of the previous two years?

[Exiled in Toronto]

From what I understand the problem is not particularly in raising money for Transfer Fees (within in reason) it is the impact on the wage bill that any new signing would have. Wages are already taking up more of our income than they should be so to add to that could be seen as poor management.

Firstly, let me echo the thanks for you providing the first comrehensible and plausible account of the Trust's relationship with the club I have seen on this messageboard.

Secondly, I think the point that is still eluding me and perhaps others is as follows: due to the Sky deal, our income is rising quite substantially. If we still have no headroom on the wage bill, the implication is that it has all been eaten up by wage increases already. While wages clearly have risen thanks to the well-publicised increases for several first-teamers, if all the extra Sky money has already gone, through to the players - Alan Sugar's prune juice economic theory - then surely questions must be asked of the executives?

Did Nelsen really need 2 wage increases in one injury-ridden year? We have only lost one first-teamer who's gone for extra money - and that was a West Ham desperation one-off - so to me the implication is that perhaps we are not sailing close enough to the wind on managing wages to leave the headroom necessary to refresh/improve the squad.

[USRoverME]

Interesting poitn Exiled... but at the same time.... we're not losing people (other than the Neill case you mentioned, and perhaps Bellers to WHam as well).... but we still aren't exactly paying the types of wages that attract the money hungry mercenaries either. Did our lack of wages prevent us from acquring folks Hughes wanted ones we could have agreed fees with? That's likely a question that will never be answered, but related to the point. Eitehr way, I doubt we're at the top end of the wage scale in the prem by any means.

[thenodrog]

How are we supposed to attract more fans with the sheer volume of clubs within our "catchment area"? How many of these clubs are struggling with exactly the same problems as us?

Lancashire United doesn't seem so daft after all.

What? Lancashire Utd! (brainless outraged indignation mode on) Thats preposterous! If that happened I'd never buy a season ticket ever again. I'd rather sit on my own watching us us in the Conference ...... (b o i m off).

[RevidgeBlue]

One question I do have is this.

If we have no money why did the club seem happy to loose £1,000,000 of the revenue of gate receipts. Surely they would have known what the financial situation was. The club also seemed pretty obliging to reduce the price of tickets. Would we really have lost that much money if tickets were the same amount as last season?

With the increase in attendances the actual loss is estimated as being only around 330k by the end of the season. How much more would attendances have dropped had prices stayed the same?

[USRoverME]

They took a small portion of the new money and set it aside in order to attempt to revive the popularity of the club. Twas a gamble, if they cut prices and attendances kept falling, it could have cost the entire 1 mil (or more if attendances really fell). In the end, they "paid" 330K to get ~ 3500 new ST holders. Sounds like some shrewd marketing to me.

[Fife Rover]

Wages.

Plus poor attendence, low ticket prices and a crap club shop all limiting the amount of money coming in compared to our rivals.

The Premiership is very lucrative but it'also a very expensive league to compete in.

You missed out extremely expensive programs, ditto beer and food on the concourse.

[thenodrog]

They took a small portion of the new money and set it aside in order to attempt to revive the popularity of the club. Twas a gamble, if they cut prices and attendances kept falling, it could have cost the entire 1 mil (or more if attendances really fell). In the end, they "paid" 330K to get ~ 3500 new ST holders. Sounds like some shrewd marketing to me.

Be even shrewder marketing if the good Lord helps us to see Wigan and Bolton relegated this season. Sad (for them) but true.

It really is one of only two progressive ways forward for football in Lancashire.

[RevidgeBlue]

All will become very clear when Rovers publish the accounts for the financial year ended June 2007. The following though is already public knowledge and will explain a little, I hope. Regret to say I cannot find the 2006 figures but the following may help (don't think 2006 was much different.

For this season (Rovers financial year ending June 2008) the minimum Sky income is £30m.

In the season 2004/05 (financial year ended June 2005) Rovers received £21.4m in Sky money.

Therefore the increase from last season (assuming the 05/06 money is similar to the 04/05 money) is ONLY £8.6m. We don't suddenly have £30m we have £8.6m more than before. From this deduct the £1m the club put into STs, the £3m the trust is NOT giving to the club this year and Roque Santa Cruz at £3.75m. That totals £7.75m which leaves us with £850,000 - that doesn't by a third choice reserse striker these days.

On top of the £30m minimum there is place money, which I think is £1m per place. So 10th gets an extra £10m. If Rovers finish 10th we get another £10m - the club may chose to spend that, they may not. Why might they chose not to spend it? Wages have spiralled throughout the PL and the club have had a stated policy of investing in players and resisting transfer approaches - it costs more money to keep these players at Ewood, let alone buy more.

I think the one thing people forget is we already had £21.4m per season and so £30m is great but it's only an increase of £8m or so - half of Anelka without paying him a day's wages!!!!

Those figures are somewhat misleading Paul, you have quoted MINIMUM money for 2008. The ACTUAL money we will receive for a mid table finish this year will be ten million more than that, meaning an 18.6m increase from 2005.

Also the actual loss on gate revenue will be be 330k not 1m, the fee for RSC will not be payable up front it will be payable in installments, and Brian Potter in his excellent post claims the 3m p.a. is still available to the club?

[JAL]

Seems like sensible management of our club we'll just have to wait for those around us to fall first then cherry pick whats left.

[Tyrone Shoelaces]

Going out of the F.A. Cup at the first time of asking won't help much either !

[RevidgeBlue]

I have a very limited but pretty reliable insight into The Jack Walker Settlement through a business associate who has links with Rathbones. Bear in mind his knowledge is limited to the Trust, he doesn't know a great deal about Blackburn Rovers.

I was discussing the Rovers situation with him yesterday in light of the recent Hughes to Newcastle rumours. Here are a few intersting points that he made:

The Trust Withdrawing the £3m donation:

As far as he understood the £3m is still available for the club. It was stated that the Trustees felt there was CURRENTLY no need for ADDITIONAL invesment. The emphasis being on the words currently and additional.

The Trust Support for the Club and Financing:

This is a complicated one to put down in a few words, but here goes.

The problem the Trustees and Utlimatley the Club has is that when the deeds of the Trust were put into place it made what was considered sufficient provision to support the club for the forseable future, providing additional income and funding for transfers. What the Trust did not allow for was the financial explosion in the football sector. The original structure for supporting the club is simply not making the impact it was intended to do due to the huge rise in transfer fees and wages over the past 6 or 7 years. Jack Walkers plan was always for the club to be self sufficient where by any additional money provided by the Trustees would give them an advantageous position.

The Trustees want to sell the club to enable it to move forward. They will only consider selling the club to an entity that would put it in a better position than it is currently - this factor is also related to the Deeds of The Trust (but my source didnt know any more on that).

They are not in a position to provide the club with year on year investment that would make us competetive at the highest level in the transfer market, hence the need for outside investment.

There is currently money available for transfers, each case would be judged on its individual merits and if it was agreed the deal suited the club money would be released by the Trustees. However, the major stumbling block is the wage bill. Whilst money can be made available for transfer fees, the wages of any signing must be covered by the clubs income - and the fact that any significant addition to the squad could increase our wage bill by up to £2-£3m a year is a major issue. The wage bill, as we know is currently an area that the club are concerned about and its currently taking up too high a percentage of income. In basic terms as I understand it there is not a major problem in funding transfer fees - the problem is that there is no "headroom" on the wage bill to take on extra players.

Money put into the club by the Trust:

On a final but very significant note, anyone questioning the support of the Trust over the years should bear this in mind. When Rovers were relegated the impact on the accounts was lethal, an operating loss of nigh on £50m in just two years. This would be enough to send most clubs under, however Rovers continued to operate normally, holding onto most of their players and paying premier league wages whilst in the champsionship, as well as remaining active in the transfer market. What enabled them to do this? Just stop an think logically for a minute, a £50m black hole in two years is a frighteningly serious situation, and if it wasnt for the Trust plugging this black hole Rovers could well have gone pop. Couple this with the interest free non-repayable loans and other donations, operating losses in other years that are written off by the Trust, the actual amount of money they have has put into Rovers is staggering.

Hopefully this will help people understand the ins outs of things.

Excellent post Brian, thanks. I would however make a few comments.

1) Several posters on here who have seen the current chairman's report to accompany the accounts state the 3m p.a. has been withdrawn.

2) I'm sure everyone would agree that the wage bill needs to be kept under some sort of control, however the suggestion that money is there for transfers as long as the wage bill doesn't get too big doesn't really tally with the lack of funding afforded to MH over the last three and a bit years.

3) Everyone would agree that the Trustees were generous to a fault at one time but that time seems to have passed some time ago, there seems to have been a complete sea change in policy, and that doesn't really help us now.

[broadsword]

From what I remember of teh conditions enforced on teh Trustees for any sale of teh club, it is unrealistic to think that they'll ever sell the club.

[Bazzanotsogreat]

Why not try reading what has been written already? The answers are all logically laid out in this thread.

Then come back and apologise for adopting an unnecessary tone.

PhilipL, when I last looked you weren’t a moderator. So disagreeing with someone else’s opinion is against board rules? I know you’re used to getting your own way on here, but the last time I checked debate was still allowed.

I aren’t taking any unnecessary tone with Paul, I have no issue with him whatsoever. I actually read the vast majority of his posts and like him as a poster. I may not agree with certain things that he posts, but that’s what forums are for debate.

Not a one way PhilpL: love-in were everyone bows down to your superiority or else.

If anyone needs to change there tone its you. You think you so much better than everyone else on this board; you are a grandiose, pompous individual.

I have my opinions on this matter, you have yours – .I could pick about a dozen of your predictions on this matter that have turned out to be completely incorrect, so therefore I would be a little more reluctant when policing other people.

[philipl]

Thank you Brian. I've been trying to get people to understand those two words for some weeks. It's nice to see it come from elsewhere. Plus thanks for the rest which is very interesting reading.

Re the £3m investment by the Trust not being necessary at the moment, this is how I think everybody has described when it has been mentioned on the various threads to the best of my knowlege. However, it has been widely misinterpreted just as the £6m actual cash which has transferred into the Rovers coffers each year since Jack's death.

[philipl]

PhilipL, when I last looked you weren’t a moderator. So disagreeing with someone else’s opinion is against board rules? I know you’re used to getting your own way on here, but the last time I checked debate was still allowed.

I aren’t taking any unnecessary tone with Paul, I have no issue with him whatsoever. I actually read the vast majority of his posts and like him as a poster. I may not agree with certain things that he posts, but that’s what forums are for debate.

Not a one way PhilpL: love-in were everyone bows down to your superiority or else.

If anyone needs to change there tone its you. You think you so much better than everyone else on this board; you are a grandiose, pompous individual.

I have my opinions on this matter, you have yours – .I could pick about a dozen of your predictions on this matter that have turned out to be completely incorrect, so therefore I would be a little more reluctant when policing other people.

Opinions are one things. Posting complete factual inaccuracies and then calling people naive (and worse) and demanding sackings is something else.

You have just been plain wrong in most of your posts from making sweeping statements about when the company's year runs to how the Rovers costs and revenues are made up to the finances of other clubs.

But then as you have said yourself, you don't read other posts on many occasions (or you wouldn't have come steaming in with half of your comments) and I doubt you will read this.

[Bazzanotsogreat]

Opinions are one things. Posting complete factual inaccuracies and then calling people naive (and worse) and demanding sackings is something else.

You have just been plain wrong in most of your posts from making sweeping statements about when the company's year runs to how the Rovers costs and revenues are made up to the finances of other clubs.

But then as yo have said yourself, you don't read anyone else's posts (or you wouldn't have come steaming in with half of your comments) and I doubt you will read this.

What the hell are you an about? Talk about putting a spin on things to suit your own agenda.

I said that if Mr Williams allowed Wage Budget to increase, a staggering 10 million in one season (as posters have suggested) he wouldn’t be doing his job correctly. But thankfully that won’t happen.

Please illustrate an inaccuracy in this thread that I have posted, I have used only a few figures. A projected turnover of around the 50 million mark, and payroll cost of between 33-37 million for this financial year.

PhilipL – If anyone makes sweeping, exaggerated statements it is you; don’t make me dredge up your previous posts on “”rovers spending capacity” for this transfer window. I will not bother to reply to your posts as you are simply dragging the thread off topic. And we both are wise enough to know that you wont be the person held accountable for doing so.