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Fulham: a financial look at what went wrong

Started by MJG, March 30, 2015, 10:19:53 PM

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Jonnoj

Superb article, thank you.
Can't help but feel reading that that someone got the transfer strategy terribly wrong. All the 30+ players with no sell on is madness. meanwhile we've been signing up 17 year olds like there's no tomorrow. Couldn't someone have looked at say Moussa Dembele and thought well there's a good idea, good player at a a playable age and we make a profit when we sell.
Rigg has got a very big job this summer, probably one of the most important close reasons in our recent history.

b+w geezer

This is a fine piece, well done. Just one disagreement worth the mention.

You suggest Khan would not be permitted to do anything like the same as MAF and spend £200 million over 16 years (much of it recouped in the end.) Actually he could.

Financial Fair Play from next season allows Championship owners to fund £13 million of loss per season, a major increase. Nor would spending on the Riverside development count towards that loss.

So even with FFP there's still a huge gap in financial muscle between clubs with rich owners and those without -- if the owner cares to stump up.  One may not necessarily wish Fulham to take that route again, but, it's permitted. For chapter and verse, see here:-
www.bbc.com/sport/0/football/29940463


MJG

Quote from: b+w geezer on March 31, 2015, 06:10:17 PM
This is a fine piece, well done. Just one disagreement worth the mention.

You suggest Khan would not be permitted to do anything like the same as MAF and spend £200 million over 16 years (much of it recouped in the end.) Actually he could.

Financial Fair Play from next season allows Championship owners to fund £13 million of loss per season, a major increase. Nor would spending on the Riverside development count towards that loss.

So even with FFP there's still a huge gap in financial muscle between clubs with rich owners and those without -- if the owner cares to stump up.  One may not necessarily wish Fulham to take that route again, but, it's permitted. For chapter and verse, see here:-
www.bbc.com/sport/0/football/29940463
I take the point and I was not really looking 16 years ahead but yes the rules do change next year and it would allow us to show losses, on a par with the worst losses we had in the PL. I don't think that's a route we want to go down.
Having looked closely at some championship accounts I see no reason why with the right purchases we can't challenge next season. But I stress it has to be next year for me due to the parachute payments. As you know it drops year on year and already we are 5m down season on season with next season payment.

Back to your main point,  it maybe does come across that Khan can't invest,  but if it's all about sustainability then we may have to work our way around things without it.


Bill2

An interesting view which seems pretty spot on. If we struggled with crowds of +23,000, I wonder how clubs like Brentford and Bournemouth would manage with ground capacity of less than 12,000.

b+w geezer

#44
I agree with all that (said by MJG two responses above here). What's possible is one thing,  what's desirable is different -- in the long term anyway. Sixteen years of subsidy @ £13 million p.a. is surely on no-one's agenda....

...but a year or two to help us return to the prem, well maybe. And if Khan and his people felt that that would help to protect their original investment, then we might even see it happen. One ought at least to be aware the rules permit it.

I certainly commend your piece as an overview of life latterly in the prem. Many years ago, I attempted similar and confirm that it is a lot of work and essentially depressing too! But highly informative. Well done again.



YoungsBitter

If Khan is in for the long run, which I think is a fair assessment ( his US businesses will be doing better now as the US economy continues to grow, car sales up etc so no pressure for cash in the short term) he has some options open to him. Not the least would be to fund the Riverside development with loans which could be structured to minimize balance sheet impact and FFP. As MJG's analysis shows come what may we need to increase capacity to maximise the revenue if/when we get back into Prem, but even in the Championship I would assume the additional hospitality options bring in much needed cash and London being what it is there are fair amount of businesses looking for entertaining options for visitors and a suite at Craven Cottage may be a reasonably attractive option.
My first reaction on reading Mike's article though was that the story to me read like really bad commercial mismanagement over the last 4-5 years. Managers will always look to sign their favorite players and so the GM must negotiate the best deal he can for the club, bringing some balance. But it looks like under Jol that stopped happening and almost seemed out of control with Magath. I thought Alistair McIntosh was a real coup for us to get such an accomplished administrator but upon reflection he has been less than impressive in his dealings with too many over the hill passengers on high wages, no sell on value and topped off with the Mitroglou farce. I am not surprised that Kahn brought in Grigg and pushed him into non football matters like the Riverside project.
As much as Symons has been criticized for not pulling the trigger in January I am actually pleased that we did not go back down a path of repeating earlier bad judgements in getting poor value in a panic.
Quark, strangeness and charm


Apprentice to the Maestro

Quote from: YoungsBitter on April 01, 2015, 12:13:10 AM
If Khan is in for the long run, which I think is a fair assessment ( his US businesses will be doing better now as the US economy continues to grow, car sales up etc so no pressure for cash in the short term) he has some options open to him. Not the least would be to fund the Riverside development with loans which could be structured to minimize balance sheet impact and FFP. As MJG's analysis shows come what may we need to increase capacity to maximise the revenue if/when we get back into Prem, but even in the Championship I would assume the additional hospitality options bring in much needed cash and London being what it is there are fair amount of businesses looking for entertaining options for visitors and a suite at Craven Cottage may be a reasonably attractive option.
My first reaction on reading Mike's article though was that the story to me read like really bad commercial mismanagement over the last 4-5 years. Managers will always look to sign their favorite players and so the GM must negotiate the best deal he can for the club, bringing some balance. But it looks like under Jol that stopped happening and almost seemed out of control with Magath. I thought Alistair McIntosh was a real coup for us to get such an accomplished administrator but upon reflection he has been less than impressive in his dealings with too many over the hill passengers on high wages, no sell on value and topped off with the Mitroglou farce. I am not surprised that Kahn brought in Grigg and pushed him into non football matters like the Riverside project.
As much as Symons has been criticized for not pulling the trigger in January I am actually pleased that we did not go back down a path of repeating earlier bad judgements in getting poor value in a panic.

None of us know how the system has worked under MAF or Khan between the owner, manager and the CEO. It may.be that the manager has persuaded the owner who has overruled the CEO's financial advice.

That said, however it happened, wages have shot up ahead of earnings and they will have almost certainly risen again in the next accounts which cover last season. Sustainability hasn't yet kicked in and we still have high wage earners on the books.

Burt

The interesting thing is that whilst this has all been going on, public statements were made to the effect that we had to live within our means and become self-sustaining.

There has clearly been a gap between the rhetoric and the reality...

snarks

Mind you Bolton have just confirmed they lost over 9 Million last year and their debts are up to 172.9 million.

Even in my wildest nightmares, I don't think Fulham is anywhere near that fiancial plight.


Apprentice to the Maestro

Quote from: Burt on April 01, 2015, 12:23:45 PM
The interesting thing is that whilst this has all been going on, public statements were made to the effect that we had to live within our means and become self-sustaining.

There has clearly been a gap between the rhetoric and the reality...

A problem is you may choose to move to sustainability but you may have players with high wages with contracts with 3 or 4 years still to run. It will take time for the high wage bill to run down.

FurMan

And the finance department can't even get their financial statements submitted on time...

From the Companies House website:

QuoteAccounting Reference Date: 30/06
Last Accounts Made Up To: 30/06/2013  (GROUP)
Next Accounts Due: 31/03/2015 OVERDUE
Last Return Made Up To: 21/05/2014
Next Return Due: 18/06/2015

Arthur

Quote from: YoungsBitter on April 01, 2015, 12:13:10 AM
As much as Symons has been criticized for not pulling the trigger in January I am actually pleased that we did not go back down a path of repeating earlier bad judgements in getting poor value in a panic.

My perception was that it was Khan who bore the brunt of criticism for the fact that we didn't go on a spending spree; those who already held him in low regard seemed more than happy to conclude that our lack of expenditure could have only one reason: Khan's poor chairmanship/lack of interest.

What MJG's research shows is that, from the moment we were relegated, Khan has been in a position whereby unpopular decisions have had to be made. How skilfully the situation has been handled, time will tell. (If we were to be promoted next season and the accounts for this season were to show us having operated within the rules of FFP, then frankly he'd be nothing short of a hero.)

Like you, however, I think the Club (whether it be Khan or Symons or both) made the right call: I think we were prepared to purchase a player-or-two who would be of use to us into next season and beyond, but when that list of select players proved unobtainable, we were not willing to invest transfer fees and wages for two-and-half-year contacts on players upon whom we would straightaway need to upgrade in the summer if we are to challenge for promotion.


MJG

Quote from: FurMan on April 02, 2015, 02:14:56 PM
And the finance department can't even get their financial statements submitted on time...

From the Companies House website:

QuoteAccounting Reference Date: 30/06
Last Accounts Made Up To: 30/06/2013  (GROUP)
Next Accounts Due: 31/03/2015 OVERDUE
Last Return Made Up To: 21/05/2014
Next Return Due: 18/06/2015
Without knowing what they are I will give you my guess at what the figures will be for 2013-14 against the season before which I had in the article and some for this season.




FulhamStu

Again, very well put together and a great read Mike.   

The whole story that Mike has told is why I have repeatedly said that our top earners like Parker / Ruiz / McCormack / Amor and Hugo have to be worth the money we are paying them.  I don't know exactely what they earn however I can guess its something between £30-50K a week.  For me only Parker and McCormack have come anywhere near earning this money which is why we have to shift them out as soon as we can.  I know people love Parker but I am not convinced he can't be replaced next season, after all he is going to a year older, unable to play all games and potentially start to get injured more often.   McCormack has never played in the Premiership so whilst I would expect him (due to his transfer fee size) to be on top wages, he may not be on quite as much as the others.

Scrumpy

Quote from: FulhamStu on April 02, 2015, 05:46:33 PM
Again, very well put together and a great read Mike.   

The whole story that Mike has told is why I have repeatedly said that our top earners like Parker / Ruiz / McCormack / Amor and Hugo have to be worth the money we are paying them.  I don't know exactely what they earn however I can guess its something between £30-50K a week.  For me only Parker and McCormack have come anywhere near earning this money which is why we have to shift them out as soon as we can.  I know people love Parker but I am not convinced he can't be replaced next season, after all he is going to a year older, unable to play all games and potentially start to get injured more often.   McCormack has never played in the Premiership so whilst I would expect him (due to his transfer fee size) to be on top wages, he may not be on quite as much as the others.
.......and don't forget Stekelenberg! He was signed by joker Jol for very good wages, on a very long contract. Question is, who will take the likes of Amore and Stek off our hands?
English by birth, Fulham by the grace of God.


FulhamStu

Quote from: Scrumpy on April 02, 2015, 09:11:57 PM
Quote from: FulhamStu on April 02, 2015, 05:46:33 PM
Again, very well put together and a great read Mike.   

The whole story that Mike has told is why I have repeatedly said that our top earners like Parker / Ruiz / McCormack / Amor and Hugo have to be worth the money we are paying them.  I don't know exactely what they earn however I can guess its something between £30-50K a week.  For me only Parker and McCormack have come anywhere near earning this money which is why we have to shift them out as soon as we can.  I know people love Parker but I am not convinced he can't be replaced next season, after all he is going to a year older, unable to play all games and potentially start to get injured more often.   McCormack has never played in the Premiership so whilst I would expect him (due to his transfer fee size) to be on top wages, he may not be on quite as much as the others.
.......and don't forget Stekelenberg! He was signed by joker Jol for very good wages, on a very long contract. Question is, who will take the likes of Amore and Stek off our hands?
I think the loans of Stek and Mitro have probably achieved this although I am not sure.  The press are saying Southampton want Stek.

Skatzoffc

Quote from: MJG on March 30, 2015, 10:19:53 PM
I have written an article on Fulham's finances setting the picture for the accounts that are due to be released in next few days. Usually i would paste it on here but there are a number of graphics.

If you wish to comment or give any feedback please do so.

http://www.vivaelfulham.co.uk/articles/fulham-a-financial-look-at-what-went-wrong--7-587.html


Great stuff MJG!
Well done
Siblings, let us not be down on it.
One total catastrophe like this...is just the beginning !