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

[MJG]

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.

From the accounts
"In the event of relegation from the FAPL, the group's revenues would fall in the next two years to a level which would not finance ongoing contractual commitments, and the group woul therefore have to take action to significantly reduce operating costs, such action could prevent the maintenance of a playing squad capable of gaining promotion back to the FAPL"

[SG]

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.

This is a key point. By writing off player values and increasing the rate of write off of these values creates a loss in accounting terms but not in cash terms and cash profit is the most important aspect. These figures are not material when it comes to assessing whether the club is trading profitably/sustainably as they can be adjusted within reason to suit. You could if you want and it can be justified, increase the values and thereby generate a profit By adding these items back a cash profit is generated so the figures are not such bad news as people think.

[BalDrick]

'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.'

Absolutely - would be like when you start having to mortgage your properties or sell back your houses/hotels to the bank in Monopoly - once you go down that road you know the end is nigh.

[White Noise]

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.)

Thanks for that. Hmmm, staff costs have gone up quite a bit but then that includes all Fulham FC staff and maybe some from other parts of MAF's empire who 'do work for Fulham'. The percentage of staff costs must be the lowest it has been since MAF's arrival -

http://www.footballeconomy.com/content/fulham-football-club-1987-ltd-fulham-football-leisure-ltd

[BalDrick]

'You could if you want and it can be justified, increase the values and thereby generate a profit'

Which would only herald a call from Mr 'that's one for me, 19 for you', so understandable why. I'm not really worried about this having read some replies - actually think we're on the up. Quality management in place, playing staff getting better (and dare I say it younger!).

[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.)

Thanks for that. Hmmm, staff costs have gone up quite a bit but then that includes all Fulham FC staff and maybe some from other parts of MAF's empire who 'do work for Fulham'. The percentage of staff costs must be the lowest it has been since MAF's arrival -

http://www.footballeconomy.com/content/fulham-football-club-1987-ltd-fulham-football-leisure-ltd

Staff costs went up from 46.2 in 2009 to 49.3 in 2010.
That covers 164 Admin and ground staff , 60 players and 572 part time match day staff.

[AlFayedsChequebook]

To me the accounts highlight several things:

1) Al Fayed is the only reason that we are in the premier league
2) There can be no more shouts of a 'lack of investment' by any Fulham supporter
3) This club will never break even in the premier league
4) We should probably be encouraging the premier league to look at a '39th game' because this would bring more revenue and global exposure
5) We need to pray for a wage cap to come into place
6) I would be intrigued to know what is happening with the 'online media' rights...do the club have them?

[MJG]

Turnover               2010              2009
Gate receipts         11.069            11.205
Europa lge              12.483           -
Sponsorship            3.987             3.326
Central awards FAPL 35.723           37.397
Broadcasting           6.227             5.933
Commercial             6.909             5.299
Total                      76.398          63.160

[MJG]

To me the accounts highlight several things:

1) Al Fayed is the only reason that we are in the premier league
2) There can be no more shouts of a 'lack of investment' by any Fulham supporter
3) This club will never break even in the premier league
4) We should probably be encouraging the premier league to look at a '39th game' because this would bring more revenue and global exposure
5) We need to pray for a wage cap to come into place
6) I would be intrigued to know what is happening with the 'online media' rights...do the club have them?

you had a look then?  pretty much how I feel, what is it someone said below "enjoy it while it lasts" because if we go down we are fecked.

[ImperialWhite]

For a 'ghost of Christmas future' type look at what might happen upon relegation, we should keep a close eye on Wigan in the coming seasons:

*Smallish club
*Smallish attendances
*Smallish revenues
*Rich benefactor who has invested massively through love of the club
*and thus a large safe-ish debt

[White Noise]

b+w geezer did this analysis on CCN a couple of years ago that may be useful in appraising the direction the club is going in -

http://cravencottagenewsround.wordpress.com/2007/06/24/fulham-football-leisure-ltd/

http://cravencottagenewsround.wordpress.com/2009/06/19/fulham-finances-update/

http://cravencottagenewsround.wordpress.com/2007/06/24/fulhams-staff-costs-in-context/

http://cravencottagenewsround.wordpress.com/2007/06/24/income-from-football/

http://cravencottagenewsround.wordpress.com/2007/06/24/the-other-costs-of-running-fulham/

http://cravencottagenewsround.wordpress.com/2007/06/24/chris-colemans-transfer-spend-in-context/

http://cravencottagenewsround.wordpress.com/2007/07/08/fulham-finances-debt-part-1-of-2/

http://cravencottagenewsround.wordpress.com/2007/07/09/fulham-finances-debt-part-2-of-2/

http://cravencottagenewsround.wordpress.com/2007/07/15/fulham-finances-assets/

http://cravencottagenewsround.wordpress.com/2007/07/15/fulham-finances-summing-up/

[SG]

'You could if you want and it can be justified, increase the values and thereby generate a profit'

Which would only herald a call from Mr 'that's one for me, 19 for you', so understandable why. I'm not really worried about this having read some replies - actually think we're on the up. Quality management in place, playing staff getting better (and dare I say it younger!).

Because the valuations and the changes to such items are relatively subjective the losses or the profits arising from these matters are added back for tax liability calculations so they have no impact in that area - assuming thats what you meant by one for me, 19 for you

[AlFayedsChequebook]

To me the accounts highlight several things:

1) Al Fayed is the only reason that we are in the premier league
2) There can be no more shouts of a 'lack of investment' by any Fulham supporter
3) This club will never break even in the premier league
4) We should probably be encouraging the premier league to look at a '39th game' because this would bring more revenue and global exposure
5) We need to pray for a wage cap to come into place
6) I would be intrigued to know what is happening with the 'online media' rights...do the club have them?

you had a look then?  pretty much how I feel, what is it someone said below "enjoy it while it lasts" because if we go down we are fecked.

I did and it is pretty interesting.

Not sure we are screwed if we go down but if we do get relegated we are not coming back up without continued investment from MAF.

Interesting stuff about post-balance sheet events, basically we had an  outlay of £8,589,000 for Dembele, Senderos, Halliche, Salcido and Sidwell and an income of £3,750,000 for Konch, Elm, Stoor and Milsom (plus £3m for Smalling for this year) so a net loss of £1,839,000. Not bad considering the team has been considerably strengthened - that is some good wheeler dealer stuff right there!

[Rambling_Syd_Rumpo]

the problem is this,we are a championship sized club playing in the premiership
to break even the club needs to grow and unfortunately the truth is we are not even the biggest club in our own backyard,without Mo we are gonners

[ImperialWhite]

So if the top flight is not our natural level, for financial reasons, what is?

Championship? There are some pretty large average attendances at that level.

[AlFayedsChequebook]

For a 'ghost of Christmas future' type look at what might happen upon relegation, we should keep a close eye on Wigan in the coming seasons:

*Smallish club
*Smallish attendances
*Smallish revenues
*Rich benefactor who has invested massively through love of the club
*and thus a large safe-ish debt

Wigan will be fine I think due to Whelan, he seems to be in good health and has other businesses in fitness/sports retail, so investing in Wigan can be advantageous.

They are in the same position as us is Whelan goes though, maybe we will eventually be playing each other in the 3rd division once more...

[FurMan]

This is a key point. By writing off player values and increasing the rate of write off of these values creates a loss in accounting terms but not in cash terms and cash profit is the most important aspect. These figures are not material when it comes to assessing whether the club is trading profitably/sustainably as they can be adjusted within reason to suit. You could if you want and it can be justified, increase the values and thereby generate a profit By adding these items back a cash profit is generated so the figures are not such bad news as people think.

They do actually have a bit of a cash flow statement in the notes and we definitely generated cash this year. Not only that, the cash was generated from operating activities rather than financing ones, so it's not even a loan from MAF that's boosted the coffers.


Cash from operating activities: £11.5m
Cash from investment (including transfer fees): -£5m
Cash from financing activities (including a £6m non-bank loan repayment, probably MAF): -£2m

So it looks like £4.5m in cash was generated...


And WhiteNoise - Thanks for the welcome, been reading for more than a year now

[White Noise]

So if the top flight is not our natural level, for financial reasons, what is?

Championship? There are some pretty large average attendances at that level.

If it is based on attendances and financial potential then yes, a top half Championship team is the best we can hope for with the odd foray into the Prem.

The hope would then be that we could, over time, build our gates back up to a level where we can maybe sustain a few years in The Prem. Our natural Championship gate is probably broadly the same as other London clubs like The Haha's, Palace, and Charlton - 12,000-14,000 - but that is a hell of a lot better than it would have been.

[SG]

Surely the key to all of this financial sustainability is to bring through youngsters from the academy. No large transfer fees in, no large signing on fees, lower wages initially at least until they are well established and the transfer out of a few marginal ones for fees or a transfer out of another Smalling every so often. Sadly there seems to be few signs of this so far.

[White Noise]

Surely the key to all of this financial sustainability is to bring through youngsters from the academy. No large transfer fees in, no large signing on fees, lower wages initially at least until they are well established and the transfer out of a few marginal ones for fees or a transfer out of another Smalling every so often. Sadly there seems to be few signs of this so far.

You are right of course but it is a difficult trick to pull off consistently. You have to kiss a lot of frogs and that can be costly.