[Archived] Why Do We Have No Money

[broadsword]

I'm getting very Bob geldof about all of this.

Just send us your flaming money NOW!

[only2garners]

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!

The flaw in this argument is that although we have bigger gates than Portsmouth we will have considerably less gate income. Portsmouth's lowest adult ticket price for any League game is £32 and most tickets are quite a bit more. Our match day prices are about half of Portsmouth's. Tom Finn said at the last Fans' Forum that the club are likely to take around £350K less this season than last because of the ticket price reduction. It's great news that crowds are up but don't assume that we are therefore rolling in extra money.

[Ronin]

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

A good way to explain things

[only2garners]

Sorry posted twice.

[Paul]

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.

The £3m is an operating loss IMV which would be before player amortisation, which I think is treated the same way as depreciation on, for example, a company car (ducks for jim's wrath!!).

[Boz]

Count your blessings and smile.

We are fortunate to support a team who has benefited from having a fellow supporter who is/was a wealthy benefactor.

Likewise he had the foresight to ensure that he left his team on a sound financial footing with astute custodians who he left specific instructions to safeguard his club.

We have a switched on Board of Directors who are also not going to jeopardise this position.

They too had the acumen to have appointed pound for pound THE BEST manager for our club.

In the time that MH has been our manager he has shipped out some costly players, none of whom are arguably doing any better. Whilst at the same time brought in some bargain signings together with tying up our prized assets on longer term deals that hopefully may generate significant transfer fees if it is so desired.

We have not spent silly money on any of the crazy transfer fees which have been paid in this window by some desperate clubs. Ok midfield is a bit lightweight and ideally another MH gem would have been great. Balance out the overinflated cost of a panic buy now with obtaining quality at a reasonable amount in the summer. With only another fourteen matches this season and no cup interruptions placing greater burdens on a diluted squad, is it not fair to hope that we will get by?

The club have been given notice that the trustees have expressed their preference to dispose of their holding and hence in order not to jeopardise our position they quite rightly aim to break even and be cash neutral.

Some figures to consider.

• Retained loss for 2007 = £3.4m

• Profit on disposal of players in 2007 = £6.5m (Bellamy, Douglas, Kuqi, McEveley & Neil)

• Amortisation cost of players in 2007 = £5.6m

• Net book value of players as at 30.6.07 = £12.6m (Anyone wish to care to place an estimate of the market value?)

• Transfer fees receivable at 30.6.07 = £4m (outstanding proceeds on above sales)

• Transfer fees payable at 30.6.07 = £6.6m (outstanding fees on acquired players)

• A bank loan of £5.25m at 30.6.07, repayable at £875k pa

• A bank overdraft of £12m

• There is a contingent liability of £7m at 30.6.07 for possible appearance and performances.

• The authorised share capital is £140m

• The issued share capital is nearly £134m, with nearly £80m of redeemable shares being converted to ordinary shares in the year ended 30 June 2007, hence improving the balance sheet with actual capital.

• During the year ended 30.6.07 £3m of a donation was received from ‘Jack Walker 1987 Settlement’. The trustees have informed the club that they see no immediate requirement to invest further (JW 19.11.07).

We and our club are in safe hands.

[Exiled in Toronto]

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.

Therein lies the problem, treating it as an investment proposition. Owning football clubs, in the most part, has always been a rich man's indulgence. We were bought as a rich man's indulgence but, through fate, are now a disinterested owner's liability. If they no longer want to do what it takes to be an ambitious premier league team, then they have to sell, otherwise, what's the point? If I can employ an alternative analogy:

If the Trust don't enjoy being in the casino, which usually entails losing money, they should get out of the place. If, however, they can't get out because the terms of the trust rule out all buyers apart from Bill Gates and Warren Buffet, their answer seems to be to now bet a penny a time at the roulette table and hope to keep getting 17 black, while pointing to their past losses as a reason why. They will get neither pleasure nor profit, and they will eventually be kicked out of the casino anyway.

I cannot believe that Jack's desire for self-sufficiency would have come at the expense of ambition and purpose.

[OscarRaven]

Ok let’s say £1M for everyone other than players covers wages.

Assuming 80/20 rule holds, that is 80% of the wages belong to the top 20% of players at the club for arguments sake let's say the first 11 (assumes 55 contracted professional footballers)

Then average salary at Rovers for a first teamer is: £48,951 per week

Very arbitrary but I bet not far away.

[LeftWinger]

Ok let’s say £1M for everyone other than players covers wages.

I'm pretty sure it'll be a lot more than that - and then you've got Hughes and his coaches to consider.

[BrianPotter]

Therein lies the problem, treating it as an investment proposition. Owning football clubs, in the most part, has always been a rich man's indulgence. We were bought as a rich man's indulgence but, through fate, are now a disinterested owner's liability. If they no longer want to do what it takes to be an ambitious premier league team, then they have to sell, otherwise, what's the point? If I can employ an alternative analogy:

If the Trust don't enjoy being in the casino, which usually entails losing money, they should get out of the place. If, however, they can't get out because the terms of the trust rule out all buyers apart from Bill Gates and Warren Buffet, their answer seems to be to now bet a penny a time at the roulette table and hope to keep getting 17 black, while pointing to their past losses as a reason why. They will get neither pleasure nor profit, and they will eventually be kicked out of the casino anyway.

I cannot believe that Jack's desire for self-sufficiency would have come at the expense of ambition and purpose.

I don't share your views I'm afraid. To suggest that the Trust see BRFC as an investment is absurd, there is no substance to back this up at all. When you look at the amount of money they've invested (I use the term loosely - written off would be closer to the mark) with absolutley no return at all there is no way it could be classed as an investment. It is simple - the Trust or anyone else for that matter cannot keep pumping vast amoutns money into the club on a continuing basis - they have been doing so for over 15 years.

I can honestly say as a supporter, If I was the head of the Trust now I would be doing exactly the same thing. If they did decide to throw us £25m for buying new players it would more than likeley do more harm than good in the long term as it wouldn't be on a continuing basis. £25m spent on players means large increases in wages (who funds that - we can't even fund the current wage bill). There's no guarantee at all that it would increase our revenue or improve our league position.

The Trusts primary concern is keeping the club at a competetive level in the PL and securing its long term future. For me they are doing an excellent job on both counts.

We have to accept that we do not have a god given right to receive vast sums of money from anyone. The Trustees are there to help the club as and when required and that is what they are doing. Lets stop this riddiculuous vision that the Trust are letting BRFC, Jack or the fans down - we should think ourselves very lucky for what they've done for our club.

On a side note, the Casino theory makes no sense to me - I couldn't see the relevance. The Trust are in a position where they cannot "bet" large sums of money on the club wihtout putting the whole setup at potential risk - we are lucky they are betting at all. Remember BRFC is a very very small fish in the huge ocean of the Walker empire.

[Yorick]

Then it would appear that our wage to revenue percentage is way to high.

Anybody who did not foresee huge hikes in players wages following last years huge hike of Sky money into the Prem must be delusional.

Down side 1. - 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.

Down side 2. How do you suggest that we attract new replacement players?

/quote]

[Anti Euro Smiths Fan]

Then you are left with clubs who are all on a sensible budget.

Martin O'Neill at Villa has done a decent job without splashing out millions.

David Moyes has done the same at Everton

Rednapp has always been a bit of a wheeler-dealer & he's doing OK.

Since January 2007, Martin O'Neill has been able to splash out £9.7m on Ashley Young, £7.5m on Nigel Reo-Coker and £4m on Marlon Harewood.

David Moyes has a strikeforce which has cost him the best part of £20m - Andy Johnson for £8.6m and Yakubu for £11m.

In last month's January transfer window, Harry Redknapp splashed out £5.5m on Diarra from Arsenal and further millions on Jermaine Defoe - who cost between £7m and £9m, according to different media reports. Portsmouth spent approximately £25m last summer in the transfer market.

I'm afraid Colin that these clubs on a "sensible budget" are leaving Rovers way behind in terms of the amount of money they've got available to spend.

About a month ago somebody put up a graphic which showed that over the last 5 years Rovers have spent less overall in the transfer market than any of our competitors in the Premiership. (Any chance that a kind chap could put up that interesting graphic again on this thread?)

Eventually I suspect that this lack of investment from Rovers in the playing squad will catch up with the team - with potentially very serious consequences.

Mark Hughes has already said that he can't keep pulling rabbits out of the hat, and if Hughes leaves at some point for a fresh challenge elsewhere, to be replaced by a less astute manager who struggles with a pitifully low transfer budget, then Rovers could well find themselves eventually crashing into oblivion into the Championship.

The trustees should perhaps be reminded of the old phrase: "speculate to accumulate". That's exactly what one particular section of the family trust for the late Jack Walker did last year, when they announced plans to invest £1.2bn - yes £1.2bn, in new jets for the airline Flybe.

Wouldn't it be nice if the football club trustees were able to give just 1% of that amount - £12m - for Mark Hughes to invest in new players this summer.

Wouldn't it be nice if they said to Hughes: "Mark, you've generally done a fine job since you've been here and you've kept Rovers in the top half of the table on a miniscule budget. Here's £12m to invest in new players this summer". (1% of the £1.2bn that Flybe are investing in new jets.)

Given Mark Hughes's fine record so far in the transfer market, if he was given £12m to spend, the players could well increase in value - just as David Bentley, Chris Samba, Ryan Nelsen and Santa Cruz's market valuations have obviously increased since Hughes signed those particular players. They are now worth considerably more than the fees which Mark Hughes paid for them.

As I said, "speculate to accumulate" can often pay dividends. I was very disappointed to hear that the trustees apparently see "no immediate need to invest in the team". The warning signs were there for the fans to see in the shocking performances against the likes of Wigan, Coventry and Larissa this season. Certainly judging by those abysmal disgraceful performances, there is a need for further investment in the team.

I hope that one day the trustees become a little less tight with the pennies, instead of giving our manager a pittance to spend in comparison with our rivals. Hughes, understandably, must be frustrated with the current situation.

Jack Walker said that he wanted Rovers to be playing in Europe every season. Do the trustees think that can be done every year on a pitifully low transfer budget? John Williams claimed last month that Rovers are challenging for a Champions League place. Frankly that is a pipe dream unless the trustees are willing to invest more in the team.

I know there will be those who will always defend the trustees. If they spent 99 pence on a birthday card for Mark Hughes, some people on here would be saying: "What a fantastically generous act from the trustees - aren't they wonderful" - but there are other people, like myself and Revidge Blue, who certainly feel they could be doing more for our football club at the moment.

Link: Flybe invests £1.2bn in new jets

[Wing Wizard Windy Miller]

Then it would appear that our wage to revenue percentage is way to high.

Anybody who did not foresee huge hikes in players wages following last years huge hike of Sky money into the Prem must be delusional.

Delusional is maintaining a wage to income structure of 85% or greater over the long term.

Man Utd business model is a wage to income ratio of 50% - it is currently 47%. Granted Man U have a much bigger turnover, but also a bigger squad on much higher wages than us. Point being - how much more competitive in the transfer market could we be if the wage ratio was even 60-65%.

Down side 1. - 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.

Down side 2. How do you suggest that we attract new replacement players?

How did we attract the likes of Bentley, Samba, Reid, Neil, Pedersen etc in the first place? - by offering premiership football and an excellent manager/coaching set up to young, promising players with something to prove.

[John]

I can see it from both sides, and never like to be critical of the Trustees. They have been wonderful for us.

However, it is clear from Hughes comments over the past month, that he is very frustrated by the lack of finance available. It seems to be becoming a weekly theme of late in his press conferences.

I do wonder if the Board are taking note of his comments, because I cannot see him hanging around much longer.

[Exiled in Toronto]

we should think ourselves very lucky for what they've done for our club.

I'm sure everyone does. They have certainly done us proud. But gratitude for past support should not cloud an assessment of a change in their level of commitment.

I'm sorry I did not explain my casino analogy clearly: the Premier League has now become a very high stakes place to be in. Past contributions will not keep us competitive. I don't see how the Trust think that they can achieve the two goals of simultaneously cutting back and keeping us competitive at a time when the table stakes of just being here have increased dramatically and when the wage bill is being allowed to balloon.

[American]

I can see it from both sides, and never like to be critical of the Trustees. They have been wonderful for us.

However, it is clear from Hughes comments over the past month, that he is very frustrated by the lack of finance available. It seems to be becoming a weekly theme of late in his press conferences.

I do wonder if the Board are taking note of his comments, because I cannot see him hanging around much longer.

But how much of the lack of money can be blamed on him having higher-priced veteran backups (Berner, anyone?) and not using reserve/youth players in those roles?

[John]

Because Hughes obviously does not rate our youth/reserve players, and prefers to have better quality back-up .......

[JAL]

Some great contributions on here about the running of the club and their take on matters concerning Rovers but nobody throws into the thread the current economic state of Blackburn and its inhabitants.

The fans forum stated that average spend of a Blackburn supporter is £12 per head whilst rivals are paying £32 plus per head, add to this can the club get any more out of the fans when the average disposable income in the Blackburn area is just £10 PER WEEK.

Why would the trustees want to invest more when the pay back simply isnt there except in prestige ialone.

Back to Blackburn town itself, its a shambles that is fast becoming a poorer economic area as evry year goes by despite having such a high profile MP.

Why do we have any money do the fans have any money?

[waggy]

i originally thought jack left 30 million in a trust fund,and we got the intrest

[BiggusLaddus]

Because Hughes obviously does not rate our youth/reserve players, and prefers to have better quality back-up .......

We don't have very many 'senior' back-up players anyway. Enkleman, Berner and Henchoz are the only ones that I would put into that catagory and Enks is out on loan. This group would grow if we brought in another 1st team striker without losing someone, and it could include Tugay if he's still here next season. Hopefully the current three will be offloaded by then anyway, Olsson seems to have become the No. 2 left back and I would like to think that Berner would not be needed as left midfield cover next year...

It sounds bad, but I hope Tugay (if here) does fall into the rarely seen back-up catagory next year, if not then we would be relying on a 38yr old chain smoker

[Jonnolad]

The trustees should perhaps be reminded of the old phrase: "speculate to accumulate". That's exactly what one particular section of the family trust for the late Jack Walker did last year, when they announced plans to invest £1.2bn - yes £1.2bn, in new jets for the airline Flybe.

Wouldn't it be nice if the football club trustees were able to give just 1% of that amount - £12m - for Mark Hughes to invest in new players this summer.

Wouldn't it be nice if they said to Hughes: "Mark, you've generally done a fine job since you've been here and you've kept Rovers in the top half of the table on a miniscule budget. Here's £12m to invest in new players this summer". (1% of the £1.2bn that Flybe are investing in new jets.)

First off it has to be noted that the 1.2bn to invest in new jets will have been raised through financing / borrowing. There is absolutely no way the trust just have 1.2bn lying around waiting to invest. The people who will have ultimately lent the £1.2bn will have needed to see figures which would give security on a return, and the trust themselves would only make this investment if they knew it would see a justifiable return (i.e. a profit). This is therefore obviously a business decision made by the trust.

Could the same be said for giving £12m to Mark Hughes? If not then surely the two cannot be compared.

[Guest fernhurstblue]

without reading through 12 pages of argument and counter-argument, the main reason rovers dont have any money is cos we dont get enough people through the turnstile, paying enough money ..... that added to low merchandise revenues, low sponsorship deals and LOW EVERYTHING (relative to the big city clubs, with bigger fan bases) who we are competing with, and the un-williness to throw daft money at over priced footballers, which would leave the club in heavy debt AND HAS TO BE PAID BACK AT SOME POINT IN THE FUTURE means we dont spend big bucks anymore ..... like it or not, we are a small fish in a very big pond.

we are the exception to the rule ..... sometimes it's better to be different and not try and keep up with the jones' esp when the money isnt there. remember the jack walker wanted the club to stand on its own two feet.

after the sky money, the major income into the club on a regular basis is gate receipts, ask yourself this "how many people would pay any extra 50% - 75% on the price of a ticket just to bring us on a par with what the majority of PL clubs charge"

fans of this clun want their cake and to eat it and in big business (which is what rovers and the PL is) that just doesnt work ..... so whatever your views, unless there is a major investor prepared to throw their money away this is as good as it gets.

[speeeeeeedie]

Fernhurst; spot on. I've been trying to say that for ages. Some Rovers fans want Euro calibre players but are only willing to pay Championship prices or less to watch them.

The club management, playing and non-playing, are doing a great job. They don't let the latest trends buckle their plan. We all know Hughes will eventually leave for a bigger job, it will then be the Chief Exec's task to find the next one.

If we ever develop a youth conveyor belt we'll be laughing.

[BrianPotter]

without reading through 12 pages of argument and counter-argument, the main reason rovers dont have any money is cos we dont get enough people through the turnstile, paying enough money ..... that added to low merchandise revenues, low sponsorship deals and LOW EVERYTHING (relative to the big city clubs, with bigger fan bases) who we are competing with, and the un-williness to throw daft money at over priced footballers, which would leave the club in heavy debt AND HAS TO BE PAID BACK AT SOME POINT IN THE FUTURE means we dont spend big bucks anymore ..... like it or not, we are a small fish in a very big pond.

we are the exception to the rule ..... sometimes it's better to be different and not try and keep up with the jones' esp when the money isnt there. remember the jack walker wanted the club to stand on its own two feet.

after the sky money, the major income into the club on a regular basis is gate receipts, ask yourself this "how many people would pay any extra 50% - 75% on the price of a ticket just to bring us on a par with what the majority of PL clubs charge"

fans of this clun want their cake and to eat it and in big business (which is what rovers and the PL is) that just doesnt work ..... so whatever your views, unless there is a major investor prepared to throw their money away this is as good as it gets.

Exactly. That is spot on.

However, it seems that some people want to blame the Trust for this rather than facing the cold hard facts.

[den]

However, it seems that some people want to blame the Trust for this rather than facing the cold hard facts.

Brian, - I don't think anyone is BLAMING the trust. Some people are sceptical that the trusts' recent decision is what Jack would have wanted. At the end of all this, the trust aren't there to decide what THEY want to do about BRFC. They are there to ensure that what Jack wanted, does in fact happen.

Can someone persuade me that he would have wanted the trust to withdraw their recent annual input?