[Archived] Philipl's Financial Review

[1864roverite]

Walsall at home on a wet wednesday night anyone?........never let it happen again.

UNLESS

it is the second leg of the cup semi final as Rovers enjoy a 5-0 first leg lead

Seriously good read

[Hughesy]

Great work Philip –

So the trust have just wrote £80 million worth of debt off your saying?!!

11.1m spent last year?! On who – McCarthy, Dunn, Samba??

And sold players for £10.1m?

2.7m this summer – That’s Santa Cruz?!

True market value of the players rose during 2006/7 to an estimated £60m, what was our true market value in the previous accounts, any ideas?!

So in terms of accountancy, the likes of Samba and Bentley are worth under £1 million combined??? That’s just daft!!

The estimates value of our squad will now also of jumped surely for next years figures, up to at least £75m – with Cruz true market value at least £10 million now and Bentleys/ Samba’s both rocketing.

The idea of spend ahead, get for lower prices, get on wages that wont be as inflated as when the TV cash came in, - then even out the loss later, seems a very good idea, very good work Mr Williams & Co.

So what is our debt that we will have to pay back - £12 million to the bank???

[USRoverME]

Wages up another £4m + Trust income down £3m + repay last year's £7m borrowings + gate money down £0.3m + Cup money down £1m

This was the math(s) I was trying to do in my head with my 3 points from earlier.... If that is this season's 'plan' for the extra TV money, I say well done. Because it means the TV money will be mostly avilable for transfers and wages next season, but we'll have freed that annual dept payment for wages as well.

[Hughesy]

Gate money must also be up this season - we are up to an average of 23,500 so far! Thats an increase isnt it?! And if more people are at the ground, then more matchday income surely?

[T4E]

Replying to the points raised:

Boz; you are right, I made a typing error and entered the same number twice

ME; you are right except point 3 as there was no debt pay down to non-related parties. Bank borrowing went up £7m.

LeChuck; sorry I don't have an answer on commercial income dropping 3%

EiT; bit harsh as the Execs have managed extremely well if you put last year's numbers into the four year picture. They have set strategic targets and delivered. Other examples are the way that non-player costs have been controlled, the club has found cash to invest about £2m in new fixtures and fittings over 4 years (probably medical/training equipment mostly) and the way the club has negotiated very good deals on new players when Hughes et al have found them. The amount of transfer fee money we owe is a multiple of transfer fee money owed to us. That is a zero sum game so for Rovers to be using other people's money to play for us means other clubs are paying cash out on transfers and not getting cash in.

Jan; yes

Is it a capital i or a small L?

[JC4LAB]

Anyone wanting a set of accounts can download them from Companies House for £1.

[Cheshireblue]

The commercial revenues are far more than sales at the club shop. If you are to maximse a return on your asset, then you need to milk it 24/7. The issue that all football clubs have is that thier biggest asset - the ground is used once every two weeks for about 2 hours. The commercial side of the club is supposed to generate income for the other 13 days a fortnight.

In terms of hospitality packages, I know that the club were struggling to sell off the boxes pre-season as I was offered one for a very silly price. Hospitality genrally on match days is getting cheaper and will effect revenues for the club. Even ManUre dropped it's corporate prices this year. The economy is not blazing ahead and entertaining budgets are one of the first things that get hit.

It is none match day activities that the club needs to focus on and I'm not sure that Beamo is necessarily the best man for that job.

[only2garners]

Gate money must also be up this season - we are up to an average of 23,500 so far! Thats an increase isnt it?! And if more people are at the ground, then more matchday income surely?

No. As stated a few times on other threads, the club is anticipating a reduction of about £350K in gate revenue this season. The club set aside £1m for reduction in gate income because of lower prices, with the hope that an increase in gates would reduce this. That is what looks likely to happen, based on best estimates of gates for the rest of the season, but the club will still take less money than last season. That's where Philip's number comes from, albeit he's said £300K.

[joey_big_nose]

Great work Philip –

So the trust have just wrote £80 million worth of debt off your saying?!!

11.1m spent last year?! On who – McCarthy, Dunn, Samba??

And sold players for £10.1m?

2.7m this summer – That’s Santa Cruz?!

True market value of the players rose during 2006/7 to an estimated £60m, what was our true market value in the previous accounts, any ideas?!

So in terms of accountancy, the likes of Samba and Bentley are worth under £1 million combined??? That’s just daft!!

The estimates value of our squad will now also of jumped surely for next years figures, up to at least £75m – with Cruz true market value at least £10 million now and Bentleys/ Samba’s both rocketing.

The idea of spend ahead, get for lower prices, get on wages that wont be as inflated as when the TV cash came in, - then even out the loss later, seems a very good idea, very good work Mr Williams & Co.

So what is our debt that we will have to pay back - £12 million to the bank???

Look, forget about Player values- they count for nothing! Bentley is worth zero if he get an injury which ends his career. You cannot put that sort of thing in accounts. The way it works, as Phillpl has already pointed out, is you mark the player as worth whatever you paid for him and then just deprciate that over the term of the cotract.

So Cruz (4 year contract) is valued at 3.5 mill now, 2.62 next year, 1.8 million following year, 0.9 million year 3 and the 0 year four. If he signs a contract he goes back up to 3.5 million. Its an accounting tool. No point in genuinely valuing the players as the prices go crazy. McCarthy for example- probs 12 million this time last year, now worth 5 million tops. It's lunacy.

[Jan]

Anyone wanting a set of accounts can download them from Companies House for £1.

OR check the topic marked "financial statements" and get them free

[stuwilky]

No. As stated a few times on other threads, the club is anticipating a reduction of about £350K in gate revenue this season. The club set aside £1m for reduction in gate income because of lower prices, with the hope that an increase in gates would reduce this. That is what looks likely to happen, based on best estimates of gates for the rest of the season, but the club will still take less money than last season. That's where Philip's number comes from, albeit he's said £300K.

Can I just touch on this a moment.

Does the figure for matchday income include matchday income from the semi final at Old Trafford for example? Additionally the home cup matches.

So is this "down £350k" figure simply down on the corresponding league matches this season, OR is it an estimate for the total decrease in matchday ticket income, if you get my drift.

[OscarRaven]

Great Summary. Well Done.

Personally I'm glad the trust are investing £3M elsewhere this season, they will get a much better return on their money. Why - because undoubtedly we will need it later!

Agree with the academy comments, it should be a profit centre at a club like Rovers. Our biggest selling point is a relatively short route to the first team and playing in the premier league, but is hampered by Arsenal paying their kids on a par with our first teamers.

The era of the millionaire player who has never played a top flight game is upon us. Time for a salary cap (it will help the English game!)

[only2garners]

Can I just touch on this a moment.

Does the figure for matchday income include matchday income from the semi final at Old Trafford for example? Additionally the home cup matches.

So is this "down £350k" figure simply down on the corresponding league matches this season, OR is it an estimate for the total decrease in matchday ticket income, if you get my drift.

I assumed that we were talking about income from home league matches only, but in truth I don't know for sure. However, we shared income from attendances of about 200,000 in domestic cup competitions last season, about three times what we've had this season, so I would imagine this income wasn't included in the calculation. If you add the UEFA Cup attendances the difference between last season and this would be even more marked.

[Hughesy]

Look, forget about Player values- they count for nothing! Bentley is worth zero if he get an injury which ends his career. You cannot put that sort of thing in accounts.

He is insured isnt he??

[OscarRaven]

He is insured isnt he??

Injury yes, but not against walking out the day after his contract expires - hence the sensible policy of depreciating players transfer values over the length of their contracts.

As Leeds Utd found when they needed to cash in on the 'asset' that was their superstar squad assembled for a 9 figure sum, the values simply evaporated. For all intents and purposes players are rented not owned so assigning values to them for accounting purposes is at best meaningless and at worst fraudulent.

For me the best analogy is renting a house, do you care if the value of the property goes up or down? Chances are it only impacts you via the rent (wages) you have to pay. Accepted in football they might be someone willing to pay you off so they can rent your house now rather than waiting - which is very unlikely in real life.

[waggy]

even i nearly understand this thread,i reckon after last summer when we could have sold benni and mgp for £15million plus,rovers will not be so hasty too turn down bids for bents/santa/samba this summer.with the big increase in tv money,why do wages have to go up accordingly.i'm sure bp/shell workers did not get 100% wage rises when there companies produced massive profits.i think clubs are cutting there own throats by succuming to players demands

[1864roverite]

Waggy

We already know that clubs are gonna call offering money for players such as Bentley, Cruz and Mccarthy.

Rovers dont have to sell and there is nothing to say that they will. We are a well run club and dependent on how this season finishes Rovers are in a solid state off the park if I have read the report properly.

The good thing is that if any player is gonna leae they go for the big fees. Bentleys fee will eclipse the Duff price easilyon its own, Cruz will triple his initial transfer fee whilst we can expect a money return if McCarthy was to be sold.

I dont see any of them leaving UNLESS they want to.

[RevidgeBlue]

I'm sorry but I disagree. If you look at our competitors then very few will be running at such high levels as 85%. It needs to be brought down to allow some space for the money to be used on transfer fees, signing-on fees etc

Fair point FLB, we may think we run a tight ship but if you consider players like Gallager are on 16k p.w., presumably Rigters is on something comparable, that's about 1.6m p.a. being flushed away on two players we never use!

Add in players like Henchoz and Berner and that's potentially over 3m p.a. just vanishing into thin air on players we don't really use, and to be fair are not likely to in future.

[Tyrone Shoelaces]

Thanks very much to Phil and all the other learned contributors to this debate, at least I now have a fair idea of our financial heath. I've nothing to add, the debate has been very wide ranging.

[Hughesy]

I agree with the likes of Berner, Henchoz and players that havent made it like Gally, but not with a new, young prospect like Rigters.

The way forward is talented youngsters or players that havent yet quite reached their potential - like Bentley. Compare bentley £20k and Gally £16k - its crazy!!

I still cant understand how the likes of Gally got onto 16k a week anyway.

Fair point FLB, we may think we run a tight ship but if you consider players like Gallager are on 16k p.w., presumably Rigters is on something comparable, that's about 1.6m p.a. being flushed away on two players we never use!

Add in players like Henchoz and Berner and that's potentially over 3m p.a. just vanishing into thin air on players we don't really use, and to be fair are not likely to in future.

[Hughesy]

Do you think these clubs pay 100% of our players wages when on loan?? Very unlikely - they will pay some as it is benefitting them, however it also benefits us by one of our players getting experience. The likes of stoke wont be paying 100% - the reason they didnt sign him last time was because they couldnt afford his full wages!!

Berner can go - we have Ollson (Young lad, on alot more cash)

Henchoz can go - we have 4 good centre backs + youth

Gally can go - he is about 5th choice striker!

As for Rigters going on loan - the window for loan signing out of prem is still open.

[JAL]

Fair point FLB, we may think we run a tight ship but if you consider players like Gallager are on 16k p.w., presumably Rigters is on something comparable, that's about 1.6m p.a. being flushed away on two players we never use!

Add in players like Henchoz and Berner and that's potentially over 3m p.a. just vanishing into thin air on players we don't really use, and to be fair are not likely to in future.

If Rovers can afford these wages now by running a tight ship then surely Mark Hughes has plenty of room for manoeuvre in the future i'd have thought.

For me Mark Hughes has plenty of playing cards of which you mention that he can afford to lose, though, with a bit of luck, hopefully he can collect a few new quality additional ones to replace them.

How Hughes hand unfolds over the next twelve months should be interesting, i dont see any reason for not improving further on the pitch.

[philipl]

I think JAL makes some very fair points there.

Were there to be a reduction in media income following the next TV deal, I could see three or four Prem clubs struggling badly but Rovers being able to ride the storm. However, current indications point to the next bidding round being enormously lucrative although that might prove not to be the case if BskyB and ESPN discover they are largely interested in different parts of the package.

Wanted for Rovers- another Randy Lerner. Profile of the quiet American.

[philipl]

I'll stick this here so I know where to find it- the Independent's assessment of transfer budgets in relation to the financial strengths of the clubs.

These are my observations-

The journalist has obviously been asking questions at Man U and has faithfully reported the Man U "line". It ignores the fact that Man U are not covering annual interest costs from operating surpluses. With all the goodwill and hype from the double, I guess they will be allowed to do that again this summer but there will be a time of reckoning.

In one respect, the numbers for Man U are even worse than I have been saying. The £666m debt does NOT include player transfer debts. Add another £98m for monies owed on transfers and Man U's debts are a cosy little £764m.

Close your eyes and forget that this is Man U. If I told you that a company has debts equal to nearly four times its annual sales and that its operating surplus last year only paid half the interest bill, what would you think about that company? Oh, and one debt equal to a year's sales has a clause that can activate a forced sale of the business 23 months from now.

Liverpool looks very sick - £350m of debt and no new stadium.

Elsewhere, the club "valuations" are taken from the guestimate made by some accountants on the top 25 clubs in Europe. The British clubs not in the top 25 are presumably pure guesses by the author and as such the valuations of the three newly promoted clubs ignore the fact they are now in the Premier League.

Finally it is not up-to-date. Pompey recently published a £23m loss but is shown here as not available.

[S15]

This week Man Utd were talking about increasing their capacity by filling in corners which would raise up to another 10,000 seats, as well as preparing to spend £50m on new players.

Maybe you are right, however, their actions constantly contradict everything you ever write about them. Perhaps you should call and inform them of their problems.