Paul Barber: Why the Albion lose £1m a month

[Mackenzie]

Lets hope that academy starts paying dividends soon then, until we produce a Zaha it looks like we're stumped.

Keep eating those pies!

 

[Return of the Rev]

just done my maths and if we make 10% on food we only need everyone in the crowd of 26,000 to spend a £100 each and we are sorted! Its slightly over a that figure but didn't want to scare anyone.

 

[Hotchilidog]

I get, and agree with, what PB is saying BUT he has previously said we will conform to FFP this season - we can't do that it we're losing £1m a month. That makes a £12m loss this financial year - deduct the £5m TB is allowed to chip in and that leaves a £7m loss. This season we're only allowed to make a £5m loss under FFP. Or am I missing something ?

** this is not a swipe at PB or the club and is probably my maths being wrong **

This also explains why not all the Ulloa money has gone on new players. The Buckley and Leo sales will help us towards FFP compliance I'm sure.

 

[KZNSeagull]

Finished it this morning. Agree with the vast majority of what they had to say, what did you think of the book?

Extremely interesting, not quite finished it yet - am reading the bit about the Ajax and Barcelona academies which is the model we need to follow, but that is for the very long term.
The part at the beginning about clubs not being a normal business (ie they rarely disappear, they just get their debts written off and start again) was very true but also rather depressing. It does make me wonder whether the model our club is on is actually achievable - I believe it is but it is going to get harder every season until such time as the wage disparity reduces dramatically.
And who would have thought that England actually overachieve according to their calculations! I found that very interesting.

What was the conclusion and reaction to your paper on comparing the PL with the NFL franchise system? Have you published it anywhere?

 

[El Presidente]

Ummm, you might want to try that calculation again

Doesn't alter the fact that your basic point (why £4.10 and not £4) is correct...

Oh good grief, I need to go back to Nintendo Brain Training!

 

[Dick Knights Mumm]

just done my maths and if we make 10% on food we only need everyone in the crowd of 26,000 to spend a £100 each and we are sorted! Its slightly over a that figure but didn't want to scare anyone.

Just try and make a positive post about our Club. Have a try.

 

[jgmcdee]

Ummm, you might want to try that calculation again

Doesn't alter the fact that your basic point (why £4.10 and not £4) is correct...

Typical pricing problem though. Hold the pies at £4 for a couple of years then put it up by 50p? I'm sure that everyone would find that fair and reasonable, and there'd be no debate at all on NSC about it.

 

[El Presidente]

Extremely interesting, not quite finished it yet - am reading the bit about the Ajax and Barcelona academies which is the model we need to follow, but that is for the very long term.
The part at the beginning about clubs not being a normal business (ie they rarely disappear, they just get their debts written off and start again) was very true but also rather depressing. It does make me wonder whether the model our club is on is actually achievable - I believe it is but it is going to get harder every season until such time as the wage disparity reduces dramatically.
And who would have thought that England actually overachieve according to their calculations! I found that very interesting.

What was the conclusion and reaction to your paper on comparing the PL with the NFL franchise system? Have you published it anywhere?

Nothing published yet. I'm not a heavyweight academic, (apart from weighing 16 1/2 stone) so bit of a struggle getting into journals, although I've had a few online successes.

 

[Prince Monolulu]

Fear not ye of faint hearts. In 10 years time we shall be self-sufficient, rolling out star after star from the Lancing conveyor belt. Some we shall flog on to Liverpool and Real Madrid, others will form part of our blossoming Sussex born & bred lads with local heart and roots, and others will move to lower teams having just missed the boat.
Not quite the X-Factor style instant hit some clamour for.
Just hope I am still on this mortal coil to enjoy it, looking forward to the bumpy ride 'til then

 

[34064 Fighter Command]

My assumption rightly or wrongly is that the 1 million a month loss, is not the FFP figure and likely includes the start up costs associated with the academy. The intention here must be to improve the standard of locally produced players, with the intention of reducing our ongoing costs for transfers and signing on fees. There are development centres for under 8s through to under 15s planned for both Kent and Surrey.

From a cost perspective promotion to the premiership, would transform the finances, especially if we have the player base in place to sustain this beyond the short term. We may not have a top class centre forward right now, but plenty of other things are going our way.

Spotting and developing local talent in preference to paying transfer fees is not cost neutral, why would it be? There are capital costs in building the Centre-of-Excellence, and many many more staff are required ( and have to be paid both a salary and expenses for travelling around the country ) to find and train this pool of youngsters. These trainees also have to be schooled, found accomodation which the club will also have to pay for, fed etc etc. Developing youth development squads is more akin to running a private school / college these days, and the club doesn't demand (tuition) fees from the parents concerened.

 

[Blue Valkyrie]

Yesterday, Paul Barber wrote a long-detailed note addressing some concerns that Albion fans had expressed on NSC about the running of the club and the state of the club's finances. Some fans thought he had skipped the question as to why the club was losing in the region of £1m a month, so he's had another go:


Most Championship clubs lose money. Unfortunately it has been this way for many years and, although FFP is partially controlling and ultimately capping the issue, losing money in the Championship will continue to be the case for most clubs for some time to come.

This is because the combined pot derived from club controlled revenues (made up of ticket and hospitality revenue, merchandise sales, catering, events and sponsorship sales etc) PLUS central revenues from the Football League (made up of TV and sponsorship revenues and what's known as solidarity payments from the Premier League) simply do NOT add up to enough to fund a promotion-chasing football budget - and this is after some very aggressive operational cost management and reduction across the entire club.

It is why supporters always hear me bleat on about the disparity created by parachute payments as those relegated PL clubs benefit from nearly all of the above revenues (they don't currently get the PL solidarity payments) - their own and the Central Football League derived monies AND they also have the benefit of (this year) £20million+ worth of parachute payments (in year 1 alone).

To compete with this extreme level of disparity we, as a club that has never benefitted from any parachute payments, must rely on Tony to supplement our revenues in order to generate a playing budget that enables us to build a competitive squad. The alternative is that we lower our ambitions, reduce our losses far quicker and reduce our football operations budgets. However, as I've said previously, this strategy does not match our club's ambitions nor that of our chairman nor, I believe, of the vast majority of our supporters.

At the same time, and to minimise the need to allocate the playing budget we do have against transfer fees, we have invested in a world class academy facility and the coaching and technical talent it needs in the hope and belief that we will develop great young players for the future, either for our own first team or to sell on to different clubs in a variety of different circumstances thereby topping up our revenue pot from a different stream. This doesn't make us a "selling club" - players may develop with us and move on for a variety of reasons - and neither does it make us a "non buying" club; there will always be talent we need to buy in and we will always budget for that.

FFP adds another dimension to the mix because it puts a finite limit on the amount Tony can contribute in the meantime. I know some supporters scoff at FFP but, whilst these rules may change - and I expect them to - they aren't going away any time soon so we must take them seriously and comply.

All of this is why I am so obsessive about generating as much of our own revenue as possible - why I do want supporters to eat and drink at the stadium, why I do want fans to buy our merchandise, and why we need supporters to direct as many non-match day events as possible our way - and why I'm equally obsessive about reducing our operational costs, cutting waste, getting better supplier deals, and making the club more efficient because it's the only way that we can maintain a competitive playing budget without breaking FFP regulations.

Interesting, very interesting.

I wonder what that means.



To be honest it's not FFP that is the problem, in fact that is very commendable and in the ideal world would go further.


The real devil in the whole set up is parachute payments, which urgently need to be scrapped or reformed.

If the payments cannot be scrapped, then clubs that draw on them need to be handed a strict transfer embago. No longer can we see situations where parachute payments can be used to bring in new players ( ie Wayne Bridge to Reading ).

I see parachute payments need to be available to stop teams going bust, but the penalty for actually drawing on the money needs to be strict.

Any parachute money not drawn on could go to charity. Everyone would be a winner.

 

[Tom Hark Preston Park]

Seeing as how we won't be betting the farm, or even a few outhouses, on promotion any time soon in order to grab a share of parachute payments, does anybody know what the club could reasonably expect to generate from a Wembley final (FA Cup / League Cup) and associated run-up nowadays? Realistically seems about the only way for the club to receive a hefty financial boost in the short term. Besides, TB is fully deserving of a chance to lead the team out at Wembley.

 

[Return of the Rev]

Just try and make a positive post about our Club. Have a try.

The stadium is lovely,T B is a legend and P B is a a decent chap. Come on you super seagulls!!!!!!!!!!!!!!!!!!!

 

[Blue Valkyrie]

I get, and agree with, what PB is saying BUT he has previously said we will conform to FFP this season - we can't do that it we're losing £1m a month. That makes a £12m loss this financial year - deduct the £5m TB is allowed to chip in and that leaves a £7m loss. This season we're only allowed to make a £5m loss under FFP. Or am I missing something ?

** this is not a swipe at PB or the club and is probably my maths being wrong **

You are missing 2 things :

The permitted FFP loss in the next accounts is 8 million, not 5 million.

The FFP loss is just a part of the overall loss.

ie some things in the 12 million loss do not count towards the permitted FFP 8 million loss.

 

[Guinness Boy]

I feel that the messages coming out of the club seem to be preparing the fans for a period of trying to stay in this division and waiting. For all these players we have bought for the " development squad" to come through at some time in the future.

I would say quite the opposite, and always have. Why would the club deliberately want to stay in a division where you lose c. £1 million a month just keeping your head above water. The best result financially would actually be to become a yo-yo club and alternate promotion on parachute payments with Premier League TV revenues. I don't think we'd aim for that either though. I think the middle ground of trying to go up without breaking the bank and then being sustainable in the Premier league is what we're aiming for and we have been since we moved to the Amex.

 

[Bozza]

Interesting, very interesting.

I wonder what that means.

Good spot!

I'm led to believe that there could be changes afoot to both FFP rules and parachute payment distributions that could be very beneficial to a club run in the way the Albion is. We'll have to wait and see...

 

[Titanic]

Let's say we have 25000 active match going fans... over 25 match days (allowing for a couple of cup games although these often attract very small crowds)... that's 625000 attendances.

£14,000,000 / 625000 = £22.40 extra we need to profit the club, per fan, per match.

even if you allow for some of the £14m as non-FFP expenditure like training ground etc... and use £8,000,000 as the loss, it is £12.80 per fan per match.

This is clearly not the issue.

The money paid out in WAGES to players is the issue... and this is driven by the 'parachute' payments so many clubs are receiving in the Championship.

And clubs being willing to risk their financial future by their short-term ambition to reach the Premier League and it's vast mountains of cash.

Surely the answer is for the Premier League to distribute more money down the pyramid? I will hate myself for saying this, but perhaps a PL2 is the answer??

 

[KZNSeagull]

Nothing published yet. I'm not a heavyweight academic, (apart from weighing 16 1/2 stone) so bit of a struggle getting into journals, although I've had a few online successes.

Didn't you do a presentation on it though? What was the reaction to that? If you don't mind me asking of course...

Do you think the club is on the right track? As things stand, I think the one they are on is the least likely to lead to ruin, assuming TB does not keel over in the short term.

 

[Marshy]

Well I think its hard to imagine the club being more honest and open about these things.

Paul, you and your team are doing a fine job.

 

[Bozza]

The stadium is lovely,T B is a legend and P B is a a decent chap. Come on you super seagulls!!!!!!!!!!!!!!!!!!!

Let's hear it then. Your starting point is where we are currently: in the Amex with c22,000 season ticket holders, a strong squad commanding decent wages and ongoing operating losses.

Tell us where the club should be and how you would get it there.