[Archived] Parachute Payments = Profit?

[True Blue & White]

I know the so-called parachute payments are drip fed over a few years so there's no worry about Venky's taking the money and running, but are they a set amount or based on your player's contracts?

As I understand it, they are they to pay for the increased player contracts a newly relegated team has over their Championship rivals but if the payments are a set amount, regardless of player wages, is it possible that Venky's have already done the ground work to ensure the team we start with next season will already be on Championship pay and thus the parachute payments become nothing but profit?

Samba gone, Nelsen gone (they were two of our highest earners) earlier in the season with a few more likely to follow (Hoilett is gone, Robinson will probably leave, Salgado definitely). Teams like Newcastle and West Ham managed to retain a number of Prem quality players after their recent relegations using the parachute payments, I can't see us doing the same. And now the Championship have voted in financial regulations they'll even have an excuse as to why we're selling off our higher earners.

It could be another 4 years of Venky's whilst they enjoy the parachute payments, then they'll sell us when we're in League 2.

[Paul]

Year one £16m

Year two £16m

Year three £8m

Year four £8m There aren't sufficient cost savings to let the Raos make a profit out those amounts.

[AggyBlue]

Year one £16m

Year two £16m

Year three £8m

Year four £8m

My guess is we're stuck with them for another two seasons. They'll be after pocketing each 16M payment.

[Hughesy]

At the last accounts the wage bill was £49.8m or something like that.....our new TV income is £16m (Around £25m less).

So no its highly unlikely they can take a profit!

[AggyBlue]

Don't forget the wage bill will be reduced even further this summer and remember the 'young players and loan players' comment when they first arrived.

[Bobby G]

At the last accounts the wage bill was £49.8m or something like that.....our new TV income is £16m (Around £25m less).

So no its highly unlikely they can take a profit!

Id argue that wages are considerably less now, wouldnt you?

[True Blue & White]

At the last accounts the wage bill was £49.8m or something like that.....our new TV income is £16m (Around £25m less).

So no its highly unlikely they can take a profit!

But did that £50m include Samba and Nelsen's wages? I would suspect our wage bill would be cut in half with player departures anyway.

[Miker]

With our current wage bill we'd be running at a 20m-30m loss next season, so I don't see how it's possible for us to run a profit next season. I'm pretty sure Newcastle recorded something like a 20m loss while in the Championship, which was covered by Mike Ashley, so the Raos would have to to do the same if they want to keep most of the current squad together.

Does anyone know if the money is actually paid in a lump sum or spread out over the year like the Sky money?

[Miker]

But did that £50m include Samba and Nelsen's wages? I would suspect our wage bill would be cut in half with player departures anyway.

I doubt anyone was receiving more than 80k/week, so our highest earners are at most getting paid 4m/year. We can probably quite easily cut the wage bill down by 10-20mil, but that still wouldn't get us a profit.

[True Blue & White]

With our current wage bill we'd be running at a 20m-30m loss next season, so I don't see how it's possible for us to run a profit next season. I'm pretty sure Newcastle recorded something like a 20m loss while in the Championship, which was covered by Mike Ashley, so the Raos would have to to do the same if they want to keep most of the current squad together.

Does anyone know if the money is actually paid in a lump sum or spread out over the year like the Sky money?

So you reckon we'd still be making the same loss as Newcastle despite the fact they retained a large number of EPL players?

[lukey]

Can someone quickly explain the purpose of the parachute payments to me please? Is it to cover for the lack of income we will get from premier league tv money etc?

[Miker]

So you reckon we'd still be making the same loss as Newcastle despite the fact they retained a large number of EPL players?

This page says the Newcastle wage bill was 74.6m before relegation (http://www.twohundredpercent.net/?p=1549) and it was reduced to 47m while in the Championship. However, it also looks like their income was virtually halved in the Championship, yet their matchday/commercial income was still about triple what ours is now.

I have no idea how much our matchday/commercial income will fall, but even if we halved our wage bill I don't think we'd break even.

[True Blue & White]

Can someone quickly explain the purpose of the parachute payments to me please? Is it to cover for the lack of income we will get from premier league tv money etc?

Yes, it's to cover the cost of Premiership wages for players that signed contracts pre-relegation.

That is why I'm asking if Venky's were to ship out all out players on "prem wages" (which it seems they've done most of already and the rest will almost certainly follow now) would the parachute payements earn them a nice little profit.

[Hughesy]

£49m did include all players yes.

Samba's wages were massive and others have come and gone too - so perhaps reduced it by say £100-200k a week...so even at £200k that's only £10m less. Taking it to £39m.

Clubs often have a 40% relegation clause in players contracts so that could take it down a further £15.6m if they do have the clauses. Leaving us with a £23m ish wage bill before any departures.

[he6rt6gr6m]

With our current wage bill we'd be running at a 20m-30m loss next season, so I don't see how it's possible for us to run a profit next season. I'm pretty sure Newcastle recorded something like a 20m loss while in the Championship, which was covered by Mike Ashley, so the Raos would have to to do the same if they want to keep most of the current squad together.

Does anyone know if the money is actually paid in a lump sum or spread out over the year like the Sky money?

20-30m loss is unacceptable, given the Championship's new Financial Fair Play rule. We're only allowed a debt of £10m, from what I remember. And if we don't, we get embargoed and a massive fine that is distributed to everyone that actually abides by the FFP rule.

[ABBEY]

At the last accounts the wage bill was £49.8m or something like that.....our new TV income is £16m (Around £25m less).

So no its highly unlikely they can take a profit!

Don't start getting mad now the horse has bolted and you smelt the coffees

[True Blue & White]

20-30m loss is unacceptable, given the Championship's new Financial Fair Play rule. We're only allowed a debt of £10m, from what I remember. And if we don't, we get embargoed and a massive fine that is distributed to everyone that actually abides by the FFP rule.

Doesn't affect newly relegated clubs, so that gives us a year to play with anyway (presuming these new rules come in next season).

Clubs often have a 40% relegation clause in players contracts so that could take it down a further £15.6m if they do have the clauses. Leaving us with a £23m ish wage bill before any departures.

OK so even with no departures Venky's could be looking at a tidy profit then? £16m in TV money plus the £16m parachute payment = £32m (or £9m profit on the £23m running cost).

Once we sell/lose Robinson, Hoilett, Pedersen, N'Zonzi, Olsson (the good one) etc they're gonna be raking it in. Champagne bottles popping in Venky's HQ tonight!

[he6rt6gr6m]

Doesn't affect newly relegated clubs, so that gives us a year to play with anyway (presuming these new rules come in next season).

Didn't know that. Cheers.

Pretty sure they come in next season. Recall seeing it on SSN in the Blues...

[Hughesy]

OK so even with no departures Venky's could be looking at a tidy profit then? £16m in TV money plus the £16m parachute payment = £32m (or £9m profit on the £23m running cost).

Once we sell/lose Robinson, Hoilett, Pedersen, N'Zonzi, Olsson (the good one) etc they're gonna be raking it in. Champagne bottles popping in Venky's HQ tonight!

where's the £16m tv money from???

[True Blue & White]

where's the £16m tv money from???

Um, from you?!?!?!?

At the last accounts the wage bill was £49.8m or something like that.....our new TV income is £16m (Around £25m less).

[Howler]

My guess is we're stuck with them for another two seasons. They'll be after pocketing each 16M payment.

Well, they could sell now as the buyer (if there will ever be a creditable one) would presumably be willing to pay for future guaranteed income.

[Hughesy]

According to the telegraph article from when Blackpool went down.

The difference in TV money AFTER parachute payments is around £21m

You then also lose money on commercial deals and also match day income and season ticket sales etc

[Tim Southampton Rover]

I can't see them having any profit after being relegated. The expenditure will definitely be greater than the income.

If you think about what they'll have to pay next season:

- Wages + various individual bonuses

- Players signed by the cub + agent fees

- General expenses i.e. hotels, flights, every day expenses

- Academy expenses

- Loan payments

The list goes on and on.

Apart from the parachute payments, I can't see us bringing in much more money.

Attendances will be extremely poor so season tickets will not bring in a lot of money neither will on the day ticket purchases. This will cause a knock on affect on player shirts/merchandising being sold. TV money will be a lot less, sponsorship - will we even be able to attract much with a ) player shirts not having one this year b ) would any companies want to be associated with the club with all the negative press?

Venkys will lose more money and I can't see them turning it around. I hope, pray, they do but if they can't do it in the Premier League with all that money coming into the club then what chance to they have in the lower leagues with little money coming in.

[Exiled_Rover]

With our current wage bill we'd be running at a 20m-30m loss next season, so I don't see how it's possible for us to run a profit next season. I'm pretty sure Newcastle recorded something like a 20m loss while in the Championship, which was covered by Mike Ashley, so the Raos would have to to do the same if they want to keep most of the current squad together.

Does anyone know if the money is actually paid in a lump sum or spread out over the year like the Sky money?

There's no chance they'll cover that debt.

I'm afraid we're going into administration. This could be the end of Rovers 'cos I don't see anyone picking up the bill once the Venky's discard us.

[m0r94n]

I think it was very telling that in the post match interview last night Kean put a fair bit of emphasis on bringing players through the academy. I wouldn't expect players in this summer unless we have a lot of outgoings.