Fulham Finances and what would it take to make Fulham self-sustaining?

[MJG]

http://www.bloomberg.com/news/2011-03-14/fulham-soccer-club-loss-widens-to-27-million-on-costs-of-europa-success.html

Nice to see us making money from Europe......!!!!

[FatFreddysCat]

What we need to know is will this push the price of sausages up ?  :028:

[RidgeRider]

Personally I would love to see the income statement for 2010 for the club. We made more money last year due to Europa League,  but what I would like to know is did those increased revenues get completely erased by the expenses the club incurred for travel for the tournament. In addition, we must have been able to recognize some of the transfer fees from Smalling and PK in 2010, my guess is much of the payments on those deals must have been backend loaded given the deficit cause since we didn't seem to spend as much as we received on Moussa, Salcido and Haliche. I guess the fee for Greening was probably paid in 2010.

While we often site we are a well run club fiscally, losing 17.6M doesn't meet that definition to me. What this tells me is we are punching well above our fiscal capacity as a club and we should be, as many have said in the past, counting our blessings we have a sugar Daddy like MAF.

[HatterDon]

Here in the states, NFL and MLB owners make obscene amounts of money, but they have figured out how to use asset depreciation and other such fiddles to make it look like 75% of the franchises are losing money. That way, they don't have to pay so much in tax breaks. Additionally, many/most of them -- millionaires/billionaires all -- have figured out a way for tax-payers to build new stadia. Then, they then jack up the seat prices so hight that the tax payers who built the damn thing with their money can't afford to attend. Meanwhile corporations, already richer from stupid tax cuts last decade, write off their corporate boxes as business expenses, so that the individual bloke gets nailed a third time.

So, Mo? Even the Russian down the road may not be losing all that money that you see on the paper. It's harder to fiddle the tax man in the UK then it is in the states, but they didn't get to be bloody rich by being bloody stupid.

[Fletchino]

It just goes to show what a great fan and chairman MAF is.
We should all chip in and buy him the title of lord fulham or a big flag or somethink!!!

[MJG]

If anyone wants a copy of the info PM me.
I'm trying to make sense of it at the moment.

[White Noise]

http://www.skysports.com/story/0,19528,11661_6814445,00.html


Al-Fayed committed to Fulham

Cottagers supremo to continue backing club


Last updated: 15th March 2011    


Al-Fayed: Committed to Fulham

Mohammed Al-Fayed insists he remains fully committed to Fulham despite posting a £16.9million loss for the last financial year.

The club's coffers were swelled by reaching last season's Europa League final, a run that is said to have earned the west Londoners £12.5m.

However, the club's loses increased by £10m, mainly due to wages and new contracts, and they continue to trade in the red.

Chairman Al-Fayed has dismissed suggestions his commitment could be wavering stating he will continue to invest on and off the pitch.

"As is evident, I remain committed to making investment funds available to achieve our goals both on and off the pitch," Al-Fayed said in a statement.

"The continued success of Fulham and its eventual financial self-sustainability is my priority."

[BalDrick]

Anyone else amazed at the level of losses?

[MJG]

"its eventual financial self-sustainability is my priority"
not going to happen soon and the only way I can see it being possible will be: relegation-clear out of the squad-start again.
I'm really having trouble looking at the accounts and seeing we lost money in what was our best seaons ever.We have a debt of £200M (ok to MAF not a bank). We are paying nearly £50M in wages and that will have increased this year i'm sure.We brought in over £12M from europe.
And after the accounts  date , this season we have paid out £8.5M in tranfers and got back in £3.75 (although we did get a part payment for Smalling of £3M)
Spending more than you get in is not going to lead to self-sustainability.

[White Noise]

Anyone else amazed at the level of losses?

It doesn't make any sense at all. It is such a massive swing when the extra Europa revenue is taken into account. It can't be wages - I would imagine that accounts for very little of it. Also I don't see it being down to 'the expense of the Europa campaign'. I think it must be something like MAF having taken a bigger chunk than normal of his money back - probably for tax reasons so that the club continues to make a loss. Maybe it is to ensure that if we get into Europe this year that we keep within the new financial constraints about loss levels? But given that we will not have the Smalling or Europa funds in this financial year our turnover will surely drop massively. £40 million loss next time anyone?

[Chopper]

Anyone else amazed at the level of losses?

Yes. Makes you wonder why anyone would want to get involved with a club of our size. Respect to Mo for continuing to makes us a going concern.

Also makes me even more certain that we should make the most of where we are while it lasts.

[MJG]

Anyone else amazed at the level of losses?

It doesn't make any sense at all. It is such a massive swing when the extra Europa revenue is taken into account. It can't be wages - I would imagine that accounts for very little of it. Also I don't see it being down to 'the expense of the Europa campaign'. I think it must be something like MAF having taken a bigger chunk than normal of his money back - probably for tax reasons so that the club continues to make a loss. Maybe it is to ensure that if we get into Europe this year that we keep within the new financial constraints about loss levels? But given that we will not have the Smalling or Europa funds in this financial year our turnover will surely drop massively. £40 million loss next time anyone?

The smalling transfer is £10M, in the accounts it says we get £3m in 2010-11 and another £2M in 2011-12. I do not know if we got any in the account year of 2009-10.

[White Noise]

Thats interesting MJG.

The word at the time was that the Smalling deal was the largest up front fee we had ever had - bigger than Saha. The reporting suggested that it was £8 million up front with a further two million afterwards and then another £2 million dependant on appearances/Cups/England etc.

[FurMan]

It looks like the reason losses increased this year was because the club took a one time hit to player values of £8m (reports don't specify who this is in relation to). If this impairment cost  and the depreciation of player values (increased from £14m to £16m) are not taken into account then the club actually made a profit of £4m before taxes.

They didn't publish a cash flow statement, but I would bet that the club actually generated cash this year.

[Burt]

With relatively modest income from gate receipts, merchandizing, transfers, etc. we are pretty much reliant on Sky and Mo.

Transfer prices and wages show no sign of stablilizing so I am not convinced that self-sufficiency being but a pipe-dream. No way we can achieve that in the premiership, at any rate.

Got to agree with Baldrick's comment about making the most of it, because at some stage something's going to have to give. The tipping point will be if Mo moves on...either through choice, or natural causes. If a loaded benefactor does not step in to the breach then we will be up sh1t creek without a paddle.

[MJG]

Thats interesting MJG.

The word at the time was that the Smalling deal was the largest up front fee we had ever had - bigger than Saha. The reporting suggested that it was £8 million up front with a further two million afterwards and then another £2 million dependant on appearances/Cups/England etc.

When I meet the CEO with some other fans the impression I got was that the total could be £12M with extras and a large up front fee. But inthe accounts it says ...and I think I may have read this wrong looking at it again (in between doing work) "Transfer fees of £3M are recevable in respect of smalling(from total transfer fee £10M), 2M of which is receivable in 2011/12.

this statement is in a section "Post balance sheet events" so looking again we may have got £7M and upfront and then £1M this season and £2M next.

[MJG]

Gross revenues 77.1
Turnover         76.4
Total staff costs 49.3
Staff costs as % of gross revenues 63.9%
Net operating loss (17.6)

54% of the income came from premier lge controlled sources . this is down from 68% in 2009 due to us being in Europe.(i surpose less live games and a lower position.)

[Logicalman]

not going to happen soon and the only way I can see it being possible will be: relegation-clear out of the squad-start again.

Not too certain if that is a reality for us.
If we go down we lose the TV income generated and also the gates will collapse again. Forget the 22K+ we can regularly get, it will be down in the 10-12K, and that's a money-loss in itself.
Without the Prem exposure we will also lose revenue generated from overseas kit sales, etc. and will become even more dependent on Mo for our survival (if that's possible).

I don't have the answer, but I would say to remain in the Prem is a necessity for us, and slowly pay down any debt we can.

[ImperialWhite]

http://swissramble.blogspot.com/2010/08/theres-only-one-debt-in-fulham.html

Worth a re-post and a re-read.

I don't have the answer, but I would say to remain in the Prem is a necessity for us, and slowly pay down any debt we can.

@Logicalman

I think there are two problems, unfortunately.

1. Unless we pay huge sums back eack season, we may as well not bother. We're not going to be in the top flight for the 50 years (or whatever it is) it would take to pay back the debt if we paid only small sums (say £1million) back each season.

2. Getting rid of the debt wouldn't actually help us be sustainable. Our debt to MAF is growing, simply because our revenue is so small that we need cash injections on a seasonal basis so that the quality of our squad is good enough to keep us up. Our own revenue is insufficient to maintain such as squad.

I don't have answers either. Perhaps (and it's probably far far easier said than done) we should invest massively in our academy while we still can. Our steady supply of good youngsters probably wouldn't keep us in the Premiership, but I reckon it'd probably keep us going in the Championship. For now, survive as long as possible in the top flight so that hopefully our fanbase might be strengthened sufficiently that the attendances don't take too much of a hit upon relegation.

[White Noise]

It looks like the reason losses increased this year was because the club took a one time hit to player values of £8m (reports don't specify who this is in relation to). If this impairment cost  and the depreciation of player values (increased from £14m to £16m) are not taken into account then the club actually made a profit of £4m before taxes.

They didn't publish a cash flow statement, but I would bet that the club actually generated cash this year.

Welcome FurMan.

That makes sense. That is the sort of thing banks and property companies do when it suits them. A quick depreciation of the assets can work wonders.