[Archived] Why Do We Have No Money

[Blackburn Ender]

It is exactly that. An apparent withholding of funds.

It's entirely possible Hughes's desired players were not available or didn't want to come to Ewood.

I can't think of many midfielders, potentially available at a sensible price (sub £10m?!) he could have gone for who would have seriously improved our middle four.

So we are back to unearthing hidden gems and Hughes just can't keep pulling rabbits out of his hat every transfer window.

We are doing pretty well in the league.

Let's see what money he spends in the summer.

[Paul]

A bit of an embarrassment really. We plainly need to strengthen the midfield but a severe lack of ambition and money means we'll have to stick with what we've got. In allowing one player to leave and making provision for no replacement, the board has seriously undermined Hughes. One wonders where the millions generated by being in the Premiership all these years (we are actually playing in that league, in spite of some fans' views that we are a championship team who just happen to be lining up against Liverpool, Arsenal and United twice a season) actually goes. That funding cannot be found to recruit at least one body on loan is both an embarrassment and a concern.

Anyone who is interested to know the answer should go here, type in Blackburn Rovers, pay £1 and read the 2007 accounts

In the YE June 2007 Rovers incurred operating losses of £3.3m (excluding player trading). This loss, to quote the chairman " entirely as a result of increased staff costs (attributable to player wages) up 10% from £33m to £36m. Later in his report Mr Williams goes on to state "It is sobering to reflect that without the improved TV revenue going forward we would have had to have run a reduced wage bill closer to £30m, than the £40m forecasted for 2007 / 2008."

2007 Key Figures (2006 figures in brackets)

Revenue £43.3m (£43.4)

Loss £3.3m (£0.7m)

Wages to revenue % 85% (77%)

Attendance 21,262 (21,015)

Player Trading +£6.5m (-£0.6m)

I must apologise for being highly selective and no doubt skewing the club's published financial information. Looks to me like the current financial year will see an increase of the wage bill of "several millions" over the 2006 accounts. Hmmmm.

The accounts are very readable and include interesting comments from Williams and Finn. Worth a £1 of most fans money.

[Wing Wizard Windy Miller]

Anyone who is interested to know the answer should go here, type in Blackburn Rovers, pay £1 and read the 2007 accounts

In the YE June 2007 Rovers incurred operating losses of £3.3m (excluding player trading). This loss, to quote the chairman " entirely as a result of increased staff costs (attributable to player wages) up 10% from £33m to £36m. Later in his report Mr Williams goes on to state "It is sobering to reflect that without the improved TV revenue going forward we would have had to have run a reduced wage bill closer to £30m, than the £40m forecasted for 2007 / 2008."

2006 figures in brackets

Revenue £43.3m (£43.4)

Loss £3.3m (£0.7m)

Wages to revenue % 85% (77%)

Attendance 21,262 (21,015)

Player Trading +£6.5m (-£0.6m)

I must apologise for being highly selective and no doubt skewing the club's published financial information. Looks to me like the current financial year will see an increase of the wage bill of "several millions" over the 2006 accounts. Hmmmm.

The accounts are very readable and include interesting comments from Williams and Finn. Worth a £1 of most fans money.

Then it would appear that our wage to revenue percentage is way to high. If so, why do the club persist in increasing salaries of players on an almost yearly basis?

Given that few players consistently maintain form, perhaps a more prudent strategy would be to cap salaries. If certain players do not wish to remain at the club on said salary structure then cash in and move them on as there value would surely be at its highest (ie they would be performing well enough to warrant transfer interest). Would we be too sad to see players leave just for financial gain?

Cases in point being Nelsen (2 recent pay rises) McCarthy (renegotiated last year) Pedersen (renegotiated in last 12 months) All of whom could have been sold, figures mentioned being £5million, £8 million and £8 million respectively.

Three highest wage earners of the bill, circa £20 million to invest in replacements. With Hughes transfer record he could surely replace the 3 of these players with some within a defined wage structure.

Down side - You potentially (dependant on the character/attitude of the player) lose some of your best players.

Up side - The club maintain a realistic salary to income ratio, maximise transfer fees and the fans get to see some new talent with something to prove.

Risky - perhaps, but how many of you would take £20 million for the above 3 players if offered it tomorrow?

[stuwilky]

Then it would appear that our wage to revenue percentage is way to high. If so, why do the club persist in increasing salaries of players on an almost yearly basis?

To keep hold of the players I'd imagine.

Who would have though, a wage bill close to £40m.....

[Guest Kamy100]

While it is disappointing that new players were signed during the transfer window I am remain convinved that if Hughsie REALLY wanted a player then the board would have backed him. It seems to me that Hughes had a midfield target in mind that the club went for but his current club were unwilling to sell. So rather than settle for some "inferior" alternative Rovers tried to get Faye on loan and persue this other target in the Summer, makes perfect sense to me. To be honest teh vast majority of players, particularly midfielders bought during the transfer window would not in my opinion improved our team, the only exception was Diarra but he is reported to be on £92,000 weekly wages so that was a no goer from the start.

The chairman readily admits that transfer funds are tight but they are not non-existent. We have a very astute manager who will not waste money on players who are not going to improve the squad signifcantly. Also have to take into account that during the Winter Transfer Window you are always going to have to pay a "premium" price.

[Scotty]

I've downloaded and read the accounts and, to answer the original question, the reason we don't have any money seems to be:

- The Jersey Trust have stopped giving us any money.

- In June 2007 we had a wage bill to turnover ratio of 85%.

- In June 2007 we made a loss of £3.3m compared to the previous year.

- In June 2007 the club had a debt of over £20m.

The accounts state that the new tv deal will help to reduce the debt. However, the wage bill is expected to increase to roughly £40m per year (from £36m), meaning that the wage bill to turnover ratio will stay approximately the same.

So, for the first time since Jack Walker took over the club, we are self-sufficient.

There would appear to be two possible strategies going forward:

- We can continue the way we have i.e. reward our best players with new contracts making it difficult for other clubs to poach them, rely on our manager to keep picking up good players for relatively small fees, whilst at the same time use the extra tv money to manage (and hopefully reduce) the club's debt.

- Or, as suggested above, we could cap wages, sell our best players, reduce the debt quickly, and rely on our management to pick up even more good players for relatively small fees.

We also have to bear in mind that relegation would be pretty catastrophic for us unless the Trust stepped in to bail us out.

Personally, I think the way we are currently operating is the less risky option. However, we will have to get used to not spending much money in future transfer windows as we simply don't have much to spend.

[LeftWinger]

I'd like to see us hanging on to our best players - and being cautious with how much we spend on transfers.

This way we can slowly put a good team together - as we have been doing - and I'm sick of the club losing their best players since I was a kid.

The longer we keep the likes of Bentley, Samba and Santa Cruz the better for me - and where would we be had we sold Friedel!!

[Hughesy]

I thought the only debt we had was that owed to the Trust, which actually we will never have to pay back??? Im sure that was mentioned on here a few months ago.

[Exiled in Toronto]

Thanks Scotty for the summary - very illuminating.

I am shocked that wages have been allowed to spiral to 85% of turnover or, to put it another way, rise by 21% in 2 years. I see no evidence that the increase has been absolutley essential to hold onto our 'stars' - how many bids have we seen for them? Or is the plan that potential suitors will be scared off by not wanting to match our bloated wages.

The executive team of Williams/Finn/the financial bod played no role whatsoever in the windfall coming our way, but have already spent it by jacking up a wage bill that previous sets of accounts said was already too high a % of turnover. Well done; I can now see why they are paid half a million between them.

[den]

I thought the only debt we had was that owed to the Trust, which actually we will never have to pay back??? Im sure that was mentioned on here a few months ago.

In the past the trust have made loans to the club. The loans were later converted into shares, effectively writing the debt off.

[Hughesy]

I agree that there were no good players available for a fair price, just look at some of them! Cahill for £5 million, Andy Reid £4 million. Going off those prices I don’t blame the board for keeper their ‘Powder dry’. However WHEN will the money be available for good players?!?

We didn’t spend much in the summer – in fact since Hughes has been at Ewood, we are actually in a positive in terms of cash spent to cash received.

We have reduced our wage bill quite abit in January again – Removing Savage, Enckleman, Gallagher (Loan), – which must be saving the club about £60k a week (IF you don’t agree then I can tell you for a fact that Gally is on over £16k a week and I would of thought Savage would be on at least £30k if not more. So that is over £1.2 million saved between now and the end of June. Add to that the £2 million for Savage. = £3 million minimum saved.

BUT the key question is - will Hughes get fed up with the lack of cash to spend??! Pompey spend big, Bolton have spent some cash this season too in both the summer & January (From Anelka Sale), aswell as signing Anelka the season before.

Is our problem attendances? Look at Portsmouth.

They have had 69,000 fewer fans through their turnstiles this season compared to us – having played 1 less home game. Which after Saturday should be around 75,000 less!

Our Current average is 23,172 compared to Bolton with 19,833 – We are doing better with a difference of 3339 – also we are up 19,591 compared in total attendances, despite playing 1 less home game.

Our average attendance will be up to around 23,500 if we can get a home gate of 27,000 against Everton and we have a real chance of finishing the season with an average of around 23,500-24,000, compared with Pompey & Bolton who will end up at about 20,000. UP nearly 2,500 on the previous years of 06 and 07 according to the figures published!

If Hughes doesn’t get at least £10 million in the summer, without selling then there are some serious issues at Ewood. We have saved £3 million, we haven’t requested the walker trust cash (which is supposedly available if we need) and we have surely got a budget set for each season so we should have some planned in next season’s budget. Also we are due a nice sponsorship deal, which could be significantly better than any previous deals, because of our success on the field and also the fact the premier league is now attracting major interest.

We have Santa Cruz the 5th top scorer in all competitions with 15 – amongst the likes of Ronaldo 27 (4 penalties), Adebayor 19 (3 pens), Keane 18 (2 pens), Torres 17 and level with Gerrard (but has 3 pens). In the top 10 there is the 6 mentioned above + Benjani, Yakubu, Tevez and Berbatov – All worth £10.5 million or more!!!

Looking at that list of top scorers + the fact King is worth £5 million and Lita £7 million and going off other market prices – Id say Cruz is worth easily £12 million, as is Bentley! So between them, we paid around £4 million and now they are worth 500% more. Samba cost us £200k – he must be worth 4000% more. Going off that - The best way forward for our club is to find good young players, like Arsenal do, players who won’t need massive wages, until they reach the top of their game and therefore not keeping our figures at 85% of income on wages!! Or find players who are failing to show their potential due to lack of chances, like Bentley.

In terms of January signings, I think Villa might of got the best one in Routledge! There are others that if willing to gamble could pay off, like Huddlestone. Yes he may cost us a few bob, but if Hughes and his team can develop him to his potential then he could be worth a hell of a lot more in a few years, like Bentley, Cruz, Samba etc. Maybe even look at the lad Mifsud, he has got goals against Premier league teams already and has pace. Or Maybe Giles Barnes?

[Tyrone Shoelaces]

Well the January transfer window has been a total damp squib hasn't it ?

Our need for reinforcements in the squad is plain for most people to see. The central midfield is distinctly threadbare, especially after the departure of Savage.

We have a left-sided midfielder in MGP who is woefully out of form and hasn't managed a Premiership goal in 30 odd games. I think it's a sad indictment of the lack of funding at our club when we have to persist with a player like Pedersen, who has been so totally out of sorts this season.

Graeme Souness once said: "We have to wee with the willy we've got" - and it appears, sadly, as if we don't have a pot to have a pee in.

Mark Hughes has spoken of his frustration at the situation. As he said earlier this month: "Sometimes when you know there are weaknesses in the team that need strengthening, there is frustration when you can't address that immediately. That's to do with resources."

(Link to those quotes HERE)

The big question is will Hughes eventually get so frustrated with a lack of funding in the transfer market, that he'll eventually want to move away when a bigger club next has a vacancy?

Our club could certainly go downhill fast if Hughes left and the wrong man replaced him. Relegation, under a poor manager, would be the death knell for the club.

Surely Rovers should be doing everything possible to try to keep Hughes happy. I think the lack of funding from the board/trustees is a big slap in the face for our manager.

This just about sums up my feelings as well, we were absolutely desperate for the midfield to be strengthened and we've done nothing about it. No wonder Hughes has been linked with the last three big Premier League jobs, it's obvious that this is as far has he can take us without being given a reasonable transfer kitty.

If we're not careful it won't be just the top teams that are interested in him, the ones around and below us will start thinking he can be approached.

Jack would be gutted to see what's going on at Ewood at present.

[Hughesy]

Jack would be gutted to see what's going on at Ewood at present.

Jack would be turning in his grave!!! But for some reason his family dont realise what Jack Loved!!

[stuwilky]

Jack would be turning in his grave!!!

That he owned a team in the top half of the table.... I doubt it very much.

As an aside, for those with the accounts doesn't note 27 suggest that the settlement did give us £3m?

[Hughesy]

The fact that we now have the right manager in place who could spend his money wisely and potentially get us to 4th if given the opportunity!!!

[RevidgeBlue]

One point springs instantly to mind, surely the 3m loss as opposed to the previous season is just as attributable to only finishing 10th instead of 6th?

Haven't time to obtain and read the accounts now but can I just ask, was the 3m loss before or after taking player amortisation into account?

i.e. writing off the players notional values.

In the past we've read headlines like "Rovers lose 10m!" even though if you read a bit lower down we actually broke roughly even on an actual day to day trading basis.

[waggy]

looks like we are sailing close to the wind.i for one question the wisdom off handing out these new contracts with big payrises.after the summer events when we could have gained £ 15 million for benni and mgp,i think rovers would be foolish to turn down big offers for bentley and santa cruz in the summer,who says they will not have a season like the other 2.

the academy must be either revamped or scrapped,it is useless!!!!!!!!!!

how can the walker trust alter jack's wishes??????????????????

[Scotty]

That he owned a team in the top half of the table.... I doubt it very much.

As an aside, for those with the accounts doesn't note 27 suggest that the settlement did give us £3m?

Last year they did yes. They won't be doing this year though (see Chairman's notes).

[RevidgeBlue]

Last year they did yes. They won't be doing this year though (see Chairman's notes).

There are surely huge issues arising out of that.

1) Who on earth either in Jersey or on the Board thought we didn't need that extra 3m?

2) How can withdrawing longstanding funding possibly be complying with Jack's wishes?

3) Who can or will challenge the Trustees if they aren't complying with Jack's wishes?

4) What's the Board's role in all of this? Do they actively stick up for Hughes and challenge the Trustees on the funding and say "look you've got an exceptional young manager who needs a workable transfer budget and who you're going to lose if you don't back him?" or just shrug their shoulders, look the other way and continue drawing their rather large salaries?

[Scotty]

Jack Walker wanted Rovers to be self-sufficent - he stated that on many occasions. The trustees have decided, rightly or wrongly, that with the new TV money coming in plus the global Premiership boom that seems to be happening the time is right to pull the plug on their funding.

This is purely my opinion, but I suspect the Trust would supply funds in the future if the club really needed them e.g. if we looked like being relegated. For now though it would seem they have decided to see if the club can stand on its own two feet.

[Hughesy]

Is there some sort of contract that the Trustees have to follow? What are the rules of the trust?

Anybody know how we could get a copy, where from? Maybe under the freedom of information act?

[waggy]

Jack Walker wanted Rovers to be self-sufficent - he stated that on many occasions. The trustees have decided, rightly or wrongly, that with the new TV money coming in plus the global Premiership boom that seems to be happening the time is right to pull the plug on their funding.

This is purely my opinion, but I suspect the Trust would supply funds in the future if the club really needed them e.g. if we looked like being relegated. For now though it would seem they have decided to see if the club can stand on its own two feet.

let's hope if we need the funds they will be receptive,surely one off the walker trustees must be a rovers fan,i remenber every time we played manu one off jack's relatives was the mascot,he must be at least 20 by now

[RevidgeBlue]

Jack Walker wanted Rovers to be self-sufficent - he stated that on many occasions. The trustees have decided, rightly or wrongly, that with the new TV money coming in plus the global Premiership boom that seems to be happening the time is right to pull the plug on their funding.

This is purely my opinion, but I suspect the Trust would supply funds in the future if the club really needed them e.g. if we looked like being relegated. For now though it would seem they have decided to see if the club can stand on its own two feet.

You're probably right in your analysis but history has shown time and time again that the best time to strengthen is when you're doing well, not when you're struggling.

[stuwilky]

Maybe under the freedom of information act?

When did the trust become a public organisation?

[BrianPotter]

Is there some sort of contract that the Trustees have to follow? What are the rules of the trust?

Anybody know how we could get a copy, where from? Maybe under the freedom of information act?

These are known as "the deeds of the trust". They basically set out what the responsibilities of the Trustees are and certain clauses that they must adhere to. For example one of the these clauses (of which there will be many) appears to relate to the sale of the club, along the lines that any sale must put the club in a better position than it is currently - hence why finding a suitable buyer is proving less than straight forward. The deeds of the trust will be very complex, and as to what is set out within the deeds we will probably never know. There is no chance of getting hold of these as they contain no information related to the public and contain only the private affairs of the Jack Walker Settlement.

As I've stated on a number of previous posts, we as supporters cannot start pointing the finger at the Trustees for lack of financial support. They have continued to provide funding to the club since Jacks death, and this is in addition to the £3m a year dontation. Interest free loans have been converted to shares, which effectivley writes off the loan (so it ihas essentially not been repaid).

It is quite simple, BRFC has been financially supported by the Walker Family and the Trustees for over 15 years during which time they have pumped huge amounts of money into the club for absolutley no return at all. You don't need to even be business minded to see that throwing a huge slice of money at something for no return year after year is not good business practice - its just common sense that sooner or later the club has to stand on its own two feet, the trustees simply cannot keep throwing money into the club as this could affect the long term stability of the Trust itself - then where would we be? Also, doing this would probably go against other clauses within the deeds of the trust.

Example:

You are head of a family of four children (So you are the Trust and they are the Subsideries). You have a pot of money with £100 in it which was left in trust to look after the four children, and you are the Trustee. For the last five years you've donated £1 per year to Children 1 to 3 and £5 to Child 4. At the end of each year Children 1 and 2 come back and give you £5 in return, Child 3 gives you £1 and Child 4 gives you nothing. The following year you again give Children 1 to 3 £1 and Child 4 £5 plus another £3 to cover what he lost last year. Same happens again year after year. It doesn't take long before Children 1 to 3 start to get miffed that the profits of their work are being channelled to Child 4 to cover his losses and you start realising that your £100 pot is starting to decrease quite rapidly. Suddenly somebody (in our case the TV companies) comes along who agrees to give child 4 £10 per year. At that point you are sure to say that whilst he is receiving the £10 from them, he doesn't need the £5 from you - especially bearing in mind what you've given him over recent years.

Hopefully that helps to explain the position of the trust in a strange sort of way