They actually didn't have much scope to spend

[b+w geezer]

On reflection, I don't think there was much scope this season to spend on transfers more than was received for transfers. even if Khan took the maximum hit allowable under the new Financial Fair Play rules.

What follows is, amazingly, a BRIEFER version of what I've posted on TIFF. It's heavy going, but if you feel the club has been unduly penny-pinching , then consider reading on.

Here's the thinking in detail...

Income this season (£ millions):
23m from parachute payment from Prem and 2m from the Championship broadcasting deal (both of these certain).
Gate and matchday 6m (+?) (estimate, down from 12m in the most recent accounts)
Sponsorship and commercial 7m(+) (down from 11m -- this frankly a guess)
I have presumed corporate hospitality/boxes to be in the 'Matchday' category, but if not, transpose the last two figures.
Total of the above £38 million (unlikely to be less, but nor much more either -- or do you disagree?)
Those are the income items quoted every year by David Conn in his survey of Prem clubs.

Add to this the allowable seasonal loss if funded by the owner: 6 million under Financial Fair Play rules (down from 8m last season).

Therefore 44 million plus any surplus on transfers is spendable on EVERYTHING if Khan takes the maximum personal loss allowed as an owner.

So what about cost?. First costs other than wages.

The last figure I have to hand is 14.9m in the 2008-2009 accounts (16.3 the previous year, 14.9 the one before that). Source: Swiss Rambler. Inflation adds 20% to that 2008-9 figure, so if we estimate 14m for the current season, that implies that cuts of 22% were found post-relegation. Hard to achieve more in a single year, one would have thought.

That leaves an estimated 30 million for wages this season for everyone on the staff (not just players) plus or minus the net effect of transfer fees received versus transfer fees paid. (In 2012-13 such a wage bill would have been 5th highest in The Championship)

For comparison, wages were 67 million in season 2012-13, the last for which accounts exist.

So if the effect of transfers was zero, that would require savings of 37 million on wages.
We know there have been some job cuts at Motspur Park and elsewhere on the non-playing side, but the biggest savings would need to come within the first-team squad and management.
According to the Daily Mail, 19th Nov 2014, Championship players earned £486,000 on average, compared to £2.3 million in the Premier League. But it is pointed out that the latter was skewed upwards by the really high earners.

If we need to save at least 30 million and probably more like 32m on player wages, then that could have been done via, for example, 24 people earning 1.33m less on average than the season before.

Something at least approximately on those lines may have happened, but it's hard to see how much more could have been saved on wages. (Don't you think?)

Which leads to the preliminary conclusion that for this season as such, there wasn't in fact much scope to spend on transfers more than was received for transfers.

Over to you for major corrections to my estimates/guesstimates (minor error variance is taken as read; it's bound to be there).  Also over to you for estimates of how transfer-in costs will have related to transfer-out receipts. Has there really been much either way?

Sources for all this are variously the Guardian, the Daily Mail and http://swissramble.blogspot.co.uk

That was fun, wasn't it.

[davew]

On reflection, I don't think there was much scope this season to spend on transfers more than was received for transfers. even if Khan took the maximum hit allowable under the new Financial Fair Play rules.

What follows is, amazingly, a BRIEFER version of what I've posted on TIFF. It's heavy going, but if you feel the club has been unduly penny-pinching , then consider reading on.

Here's the thinking in detail...

Income this season (£ millions):
23m from parachute payment from Prem and 2m from the Championship broadcasting deal (both of these certain).
Gate and matchday 6m (+?) (estimate, down from 12m in the most recent accounts)
Sponsorship and commercial 7m(+) (down from 11m -- this frankly a guess)
I have presumed corporate hospitality/boxes to be in the 'Matchday' category, but if not, transpose the last two figures.
Total of the above £38 million (unlikely to be less, but nor much more either -- or do you disagree?)
Those are the income items quoted every year by David Conn in his survey of Prem clubs.

Add to this the allowable seasonal loss if funded by the owner: 6 million under Financial Fair Play rules (down from 8m last season).

Therefore 44 million plus any surplus on transfers is spendable on EVERYTHING if Khan takes the maximum personal loss allowed as an owner.

So what about cost?. First costs other than wages.

The last figure I have to hand is 14.9m in the 2008-2009 accounts (16.3 the previous year, 14.9 the one before that). Source: Swiss Rambler. Inflation adds 20% to that 2008-9 figure, so if we estimate 14m for the current season, that implies that cuts of 22% were found post-relegation. Hard to achieve more in a single year, one would have thought.

That leaves an estimated 30 million for wages this season for everyone on the staff (not just players) plus or minus the net effect of transfer fees received versus transfer fees paid. (In 2012-13 such a wage bill would have been 5th highest in The Championship)

For comparison, wages were 67 million in season 2012-13, the last for which accounts exist.

So if the effect of transfers was zero, that would require savings of 37 million on wages.
We know there have been some job cuts at Motspur Park and elsewhere on the non-playing side, but the biggest savings would need to come within the first-team squad and management.
According to the Daily Mail, 19th Nov 2014, Championship players earned £486,000 on average, compared to £2.3 million in the Premier League. But it is pointed out that the latter was skewed upwards by the really high earners.

If we need to save at least 30 million and probably more like 32m on player wages, then that could have been done via, for example, 24 people earning 1.33m less on average than the season before.

Something at least approximately on those lines may have happened, but it's hard to see how much more could have been saved on wages. (Don't you think?)

Which leads to the preliminary conclusion that for this season as such, there wasn't in fact much scope to spend on transfers more than was received for transfers.

Over to you for major corrections to my estimates/guesstimates (minor error variance is taken as read; it's bound to be there).  Also over to you for estimates of how transfer-in costs will have related to transfer-out receipts. Has there really been much either way?

Sources for all this are variously the Guardian, the Daily Mail and http://swissramble.blogspot.co.uk

That was fun, wasn't it.

Thanks for that, I am an accountant and will study with interest what you have posted in the morning. This whole FFP ruling is somewhat complicated and I am at a loss to understand it? Playing monopoly in the old days was far more simpler!

[MJG]

Thanks for that,  won't keep people happy but at least shows why we are not spending left right and centre.

[Chutney]

So happy someone has posted this

[MJG]

B&W I know you are trying to second guess the wage bill for last season. Having looked at five seasons of account and the steady rise to £67m in 2012-13 I think 13-14 will have to be in the 75m region.
We had Parker,  Bent plus loan fee,  3 managers and various coaches,  January loans and signings, and much more.
They gambled on experience and that comes at a price so yep,  75m plus is my answer.
So question is how well have we been able to cut that back.

[GloucesterWhite]

I'm not sure I buy this. Not disputing your figures, I have no idea whether they are accurate or not. But if Khan wanted to invest money he just has to think outside the box. For example, I don't know what the name of his company in the USA but he could pay the club £10M to advertise his company on our shirts. That's money brought in to swell the coffers and there are several other ways he could do this with a bit of imagination and while still staying within FFP rules. How about renting one of the executive boxes for £5M a year? There's nothing in the rules to say the club can't charge that and if someone is willing to pay it... Advertising around the ground: nobody sets rules about how much the club can charge - willing seller, willing buyer.

There are ways to invest. But FFP is a good excuse not to, especially if people just throw up their arms and say 'ah, we can't buy anyone because of FFP'.

[b+w geezer]

Concerning GloucesterWhite's thoughts, just above, this bit is relevant from here...http://www.financialfairplay.co.uk/financial-fair-play-explained.php

4. Fair Value....UEFA are aware that owners of clubs could look to inflate a club's profitability by injecting funds into clubs via artificially inflated commercial deals. Paris St-Germain recently announced a huge sponsorship deal via a body that is connected to the club owners. For this reason UEFA FFP rules require any transaction from a 'related part' (i.e. a company or body connected to the club owners) to be assessed to ensure it was a genuine transaction at a 'fair value'. UEFA has the power to adjust any artificial 'mates rates' deals and apply a lower value to the Break Even calculation. This assessment will be carried out by the CFCB panel.

My own comment on this is that it's currently uncharted and untested territory. Any owner who wants to be the test case before the panel and in the courts is being brave. Khan is clearly not that owner. Wonder who will be.

[GloucesterWhite]

Concerning GloucesterWhite's thoughts, just above, this bit is relevant from here...http://www.financialfairplay.co.uk/financial-fair-play-explained.php

4. Fair Value....UEFA are aware that owners of clubs could look to inflate a club's profitability by injecting funds into clubs via artificially inflated commercial deals. Paris St-Germain recently announced a huge sponsorship deal via a body that is connected to the club owners. For this reason UEFA FFP rules require any transaction from a 'related part' (i.e. a company or body connected to the club owners) to be assessed to ensure it was a genuine transaction at a 'fair value'. UEFA has the power to adjust any artificial 'mates rates' deals and apply a lower value to the Break Even calculation. This assessment will be carried out by the CFCB panel.

My own comment on this is that it's currently uncharted and untested territory. Any owner who wants to be the test case before the panel and in the courts is being brave. Khan is clearly not that owner. Wonder who will be.

That's interesting. I'm sure there must be wiggle room, and I bet Mo would have been brave enough to test it!

[b+w geezer]

Not disputing your figures, I have no idea whether they are accurate or not.

Not too happy with that bit, though. You ought to have some idea, as I have quoted sources and showed which bits are estimates and which aren't. The whole point of bothering to do that is that you don't get responses which say "I have no idea", but instead responses which say...OK, that aspect is certain, accepted, but that other aspect is in my opinion an over-/under-estimate. (e.g. as MJG has posted just above you).

Anyway, offline for the day now, so will only later find out if I there are any more such. Also whether anyone reckons they have a handle on the transfers side of things.

[MJG]

Anyone looking to see how Brighton did in 2012_13 a year they got to the playoffs should read this
http://swissramble.blogspot.ch/2015/01/brighton-and-hove-albion-love-at-pier.html
Will give you a good grasp on not only Brighton but the finances of other clubs in the championship both income and expenditure.

[FPT]

You are a god.

[rogerpbackinMidEastUS]

I'm not sure I buy this. Not disputing your figures, I have no idea whether they are accurate or not. But if Khan wanted to invest money he just has to think outside the box. For example, I don't know what the name of his company in the USA but he could pay the club £10M to advertise his company on our shirts. That's money brought in to swell the coffers and there are several other ways he could do this with a bit of imagination and while still staying within FFP rules. How about renting one of the executive boxes for £5M a year? There's nothing in the rules to say the club can't charge that and if someone is willing to pay it... Advertising around the ground: nobody sets rules about how much the club can charge - willing seller, willing buyer.

There are ways to invest. But FFP is a good excuse not to, especially if people just throw up their arms and say 'ah, we can't buy anyone because of FFP'.

It doesn't really matter how many businesses Mr Khan has, they would all (or mostly) be separate 'profit centers' and as such run as autonomous operations.
There may be some justifiable cross-pollination but why would one of his companies sponsor
Fulham for 10 million unless there is any benefit.

"Flex-N-Gate Corp"  on the left breast of our grey and white shirt (with the natty orange trim) is hardly likely to make any UK-based supporter buy a used car part from America, or in fact me from Virginia.

He also couldn't just take $10 of profits from a company and 'throw it away'
I'm not sure about rules and laws but it wouldn't be very good business practice,
I know because the owner of my company cross-pollinates all of the time
"Robbing Peter to pay Paul" is an understatement :0)

Despite the Jaguars sad record in the 3 years since he bought them he has still increased their value by nearly 200 million.

He's a smart man with financial wizards surrounding him no doubt, he knows what he's
doing and he won't want Fulham playing in the Conference League in 2/3 years.
There is after all a strong magnet pulling QPR in that direction.
Fernandes has realized this at last and 'pushed' Hot Harry which made him break a bone in his knee  forcing him to'look to the West Country for his next venture.