Author Topic: Clubs 'risk bankruptcy' with promotion  (Read 835 times)

Offline Statto

  • The Bard/Corked Hat
  • *
  • Posts: 3825
Clubs 'risk bankruptcy' with promotion
« on: October 10, 2017, 06:47:59 PM »
http://www.bbc.co.uk/sport/football/41564471

Interesting article on the BBC based on some research conducted by "financial data firm" Vysyble.

I must admit, haven't read the underlying research, just the BBC article. If you can't even be bothered to read that the highlights are as follows:

  • 19 clubs promoted from 2008-09 to 2015-16
  • Average losses in their promotion seasons were £300,000 per week, i.e., £15m over the year
  • 1 in 3 was immediately relegated
  • 2 in of 3 were relegated within 3 yrs
  • only 1 in 4 was "in the black" after 4 yrs


The key issue, on which parts of the article are a bit misleading IMO, seems to be that it's not the money spent getting promoted that's a problem, but rather, the much greater financial commitments the club makes trying to stay up after getting promoted, which aren't affordable when it's (inevitably) relegated shortly after. So not a problem that is, or can be, remedied by FFP.
« Last Edit: October 10, 2017, 06:51:35 PM by Statto »

Offline filham

  • Gentleman Jim
  • ***
  • Posts: 5995
Re: Clubs 'risk bankruptcy' with promotion
« Reply #1 on: October 10, 2017, 06:55:58 PM »
The income in the Premiership is enormous but it would seem that promoted clubs are tempted to overspend in order to stay up.
Shows how good a job MAF did to keep us in the Premiership all those years.

Offline Twig

  • The Bard/Corked Hat
  • *
  • Posts: 3843
Re: Clubs 'risk bankruptcy' with promotion
« Reply #2 on: October 10, 2017, 07:05:33 PM »
The income in the Premiership is enormous but it would seem that promoted clubs are tempted to overspend in order to stay up.
Shows how good a job MAF did to keep us in the Premiership all those years.

 :plus one:


Offline Newry FFC

  • Jimmy Hill
  • *
  • Posts: 2217
Re: Clubs 'risk bankruptcy' with promotion
« Reply #3 on: October 11, 2017, 02:51:17 PM »
True. If we get a promotion, we will probably get more bums on seats, but probably more as in tourists and one offs as opposed to season tickets . Means they will spend less on merchandise than a proper fan.

Then the prize money for getting there as Bournemouth and co are showing will be reinvested paying overinflated fees and wages to big time Charlies. The moneyball / stats approach could save us so much money if we were to get there. You even have the likes of Watford   Spending silly money. There's plenty of money to be made in getting promotion but many clubs go a bit gung ho/ chasing pound signs etc as opposed to doing it sensibly but with a hint of ambition. Guess it's the agents and co forcing the silly spending

Offline MJG

  • Graham Leggat
  • **
  • Posts: 292
Re: Clubs 'risk bankruptcy' with promotion
« Reply #4 on: October 11, 2017, 03:16:25 PM »
True. If we get a promotion, we will probably get more bums on seats, but probably more as in tourists and one offs as opposed to season tickets . Means they will spend less on merchandise than a proper fan.

Then the prize money for getting there as Bournemouth and co are showing will be reinvested paying overinflated fees and wages to big time Charlies. The moneyball / stats approach could save us so much money if we were to get there. You even have the likes of Watford   Spending silly money. There's plenty of money to be made in getting promotion but many clubs go a bit gung ho/ chasing pound signs etc as opposed to doing it sensibly but with a hint of ambition. Guess it's the agents and co forcing the silly spending
But lets be honest that wont sell to the fans who just see money as the answer to everything. If we had got promoted this summer you can see the starting figure for a bog standard PL player was £10m at the lowest point.

You could argue to go up and improve the squad its a 100-150M summer spend required.

As much as we like all these players, and while many could play in PL teams, as a collective they are not good enough. We would need massive investment i'd argue. If we spent £50 that could be just on 2 or 3 players.
Just the views of a long term fan

Offline Statto

  • The Bard/Corked Hat
  • *
  • Posts: 3825
Re: Clubs 'risk bankruptcy' with promotion
« Reply #5 on: October 11, 2017, 03:56:12 PM »
I have thought about this more since I posted it and come to the conclusion IMO that they need to drastically increase the solidarity payments the PL pays to EFL clubs.

Currently, of the billions of pounds the PL gets for its TV deal, you have £100m+ going to every PL club and I believe about £6m going to each championship club. IMO that needs to be increased to something like a 50:50 or 60:40 split.

Then they could do away with FFP and parachute payments.

It’s all well and good trying to restrict clubs’ losses with FFP but it’s nigh on pointless when their underlying revenue can fluctuate from £150m down to £30m in a short period of time.


Offline MJG

  • Graham Leggat
  • **
  • Posts: 292
Re: Clubs 'risk bankruptcy' with promotion
« Reply #6 on: October 11, 2017, 04:03:41 PM »
I have thought about this more since I posted it and come to the conclusion IMO that they need to drastically increase the solidarity payments the PL pays to EFL clubs.

Currently, of the billions of pounds the PL gets for its TV deal, you have £100m+ going to every PL club and I believe about £6m going to each championship club. IMO that needs to be increased to something like a 50:50 or 60:40 split.

Then they could do away with FFP and parachute payments.

It’s all well and good trying to restrict clubs’ losses with FFP but it’s nigh on pointless when their underlying revenue can fluctuate from £150m down to £30m in a short period of time.
Which when you consider the top 6 want a bigger slice of the pie anyway is not the direction of travel to give EFL clubs more money to compete with them.
Just the views of a long term fan

Offline hovewhite

  • The Bard/Corked Hat
  • *
  • Posts: 3031
Re: Clubs 'risk bankruptcy' with promotion
« Reply #7 on: October 11, 2017, 05:48:53 PM »
I think we are runnining at a sustainable level Al'so the shad I read somewhere had converted the last loss into bonds so we are not in debt.
When we go up shad won't be risking the club its over spending that puts clubs at risk and I don't believe we do that .

Offline Statto

  • The Bard/Corked Hat
  • *
  • Posts: 3825
Re: Clubs 'risk bankruptcy' with promotion
« Reply #8 on: October 11, 2017, 06:09:17 PM »
Which when you consider the top 6 want a bigger slice of the pie anyway is not the direction of travel to give EFL clubs more money to compete with them.

Well I wouldn't advocate given them a bigger slice of the pie but I think the current position, where a large component of the award depends on league position, is fair. For me The big problem is the effect of relegation so it's the gap between (1) the bottom of the PL and (2) the top of the EFL that I'd be trying to close. So you could perhaps still give the top 6 their £150m each, but then only give the bottom half PL and newly-promoted clubs say £50m, rather than £100m, and then championship top 12 get c. £50m each as well.



Offline grandad

  • Gentleman Jim
  • ***
  • Posts: 6526
Re: Clubs 'risk bankruptcy' with promotion
« Reply #9 on: October 11, 2017, 06:24:50 PM »
I don´t feel that the 3 teams finishing bottom of the PL should  receive £100 mil plus for what is in reality a failure. Parachute payments I am OK with.
The other clubs in the PL who all receive exorbitant sums must be made to pay a large percentage in grass roots football.
Where there's a will there's a wife

Offline Marcel_Gecov

  • Graham Leggat
  • **
  • Posts: 823
Re: Clubs 'risk bankruptcy' with promotion
« Reply #10 on: October 12, 2017, 10:34:57 AM »
Which when you consider the top 6 want a bigger slice of the pie anyway is not the direction of travel to give EFL clubs more money to compete with them.

Well I wouldn't advocate given them a bigger slice of the pie but I think the current position, where a large component of the award depends on league position, is fair. For me The big problem is the effect of relegation so it's the gap between (1) the bottom of the PL and (2) the top of the EFL that I'd be trying to close. So you could perhaps still give the top 6 their £150m each, but then only give the bottom half PL and newly-promoted clubs say £50m, rather than £100m, and then championship top 12 get c. £50m each as well.

Issue is then you are potentially closing off competition at the top. To me a larger cash prize for winning and getting promoted from the championship would make more sense. A large check at the final game, 7 days to clear, now start buying some players with your winnings.

Offline toshes mate

  • Legend
  • ***
  • Posts: 1866
Re: Clubs 'risk bankruptcy' with promotion
« Reply #11 on: October 12, 2017, 11:31:21 AM »
Surely the prize for obtaining a top two (or whatever) spot is automatic promotion to a higher division playing better opponents with greater gate receipts etc., with the prize for the four following teams being at least two extra games and a potential trip to Wembley for their troubles, with promotion ultimately going to the winners. 

As revenue from media money is the thing that is keeping professional football alive for almost everybody's enjoyment then it is appropriate for it to be spread evenly among all the teams in any one league before the start of a season.  That would at least give competition a chance to exist even allowing for the widely different profiles football clubs have.  Relegation is the reverse issue.  The mitigating factor would be not having such a huge difference between the riches of the tops and bottoms of the pyramids.


Offline Logicalman

  • Global Moderator
  • cebu
  • *
  • Posts: 4475
Re: Clubs 'risk bankruptcy' with promotion
« Reply #12 on: October 12, 2017, 12:30:56 PM »
Surely the prize for obtaining a top two (or whatever) spot is automatic promotion to a higher division playing better opponents with greater gate receipts etc., with the prize for the four following teams being at least two extra games and a potential trip to Wembley for their troubles, with promotion ultimately going to the winners. 

As revenue from media money is the thing that is keeping professional football alive for almost everybody's enjoyment then it is appropriate for it to be spread evenly among all the teams in any one league before the start of a season.  That would at least give competition a chance to exist even allowing for the widely different profiles football clubs have.  Relegation is the reverse issue.  The mitigating factor would be not having such a huge difference between the riches of the tops and bottoms of the pyramids.

I agree with you, though from the 'big teams' perspective, the money being evenly spread does bring up the question as to what is even?

100M to Citeh and 100M to Bournemouth are vastly different in their actual worth to the clubs themselves when you bring into focus the wages, stadiums, etc. So they might argue that they deserve a bigger slice of the pie, not only from that perspective but, as you rightly say, the vast amounts of money is gained via media and media rights sales, and those clubs at the top generate a much larger slice of that money than the rest do. I mean, as an overseas watcher, one not affiliated to any particular team, who would they prefer to watch, Citeh vs Liverpool or Watford vs Bournemouth?
Logical is just in the name - don't expect it has anything to do with my thought process, because I AM the man who sold the world.

Offline toshes mate

  • Legend
  • ***
  • Posts: 1866
Re: Clubs 'risk bankruptcy' with promotion
« Reply #13 on: October 12, 2017, 12:59:03 PM »
I mean, as an overseas watcher, one not affiliated to any particular team, who would they prefer to watch, Citeh vs Liverpool or Watford vs Bournemouth?
I think what I am getting at is there was a time when Big City and Best v Anfield Monopoly Money was not a given as top billing and the more watchable and bigger audience match may have been Hertfordshire Poor Neighbours v Dorset's Pride.  Football seemed better that way, more competitive, unpredictable and infinitely more exciting to watch (at least to my eyes).  Competition is about change (The King Is Dead. Long Live The King) not an endless battle between a group of spoiled brats who never want dominance (or at least a chance of it) to end.  A more evenly handed world produces much more prospect of success to the many which allows them to embrace the possibility of their fifteen minutes of fame instead of constantly living in the shadow of those who greedily want to keep it all.  Even the media will choose games that increase their advertising revenue and not be the best possible entertainment for all their potential viewers and so they'll force you to watch the less entertaining game if necessary for the sake of their profits. 

Year in, year out the FA Cup used to bring us the great giant killing acts and we couldn't wait for the mighty to tumble.  True box office stuff by anyone's measure.  If only we had an Minimal Upstarts United winning the Premiership more often than not don't you think it would broaden soccer's horizon and be real entertainment instead of formula profit making?

Offline Statto

  • The Bard/Corked Hat
  • *
  • Posts: 3825
Re: Clubs 'risk bankruptcy' with promotion
« Reply #14 on: October 12, 2017, 05:25:29 PM »
Issue is then you are potentially closing off competition at the top. To me a larger cash prize for winning and getting promoted from the championship would make more sense. A large check at the final game, 7 days to clear, now start buying some players with your winnings.

They're 2 different issues IMO

If the problem is making the rich richer and poor poorer then you have to think about how all the money is distributed with the nuclear option being splitting the whole £2bil equally between all 92 FL clubs. But currently I believe the top PL club gets about £50m more than the bottom PL club, £150m vs £100m, so within the PL it's about 33% merit-based and IMO that's about fair

Newly-promoted clubs bankrupting themselves to stay in the PL is a different issue and IMO you just make that problem worse by increasing the prize money for promotion. When a club like huddersfield signs a player for £16m, 4yr deal at £75kpw, the way the fee is accounted for is £4m per year for the next 4 yrs. Add wages, £8m. Sign 5 players like that and they're committing to spending £40m per year. So then if they get releagted and their revenue goes back down to £20m the next season, they're screwed. And the more money they have in that first PL season, the more they'll spend and expose themselves in their desparate attempt to stay up