• How much is promotion worth?

    As Albion fans scour NSC* on a regular basis every day for hints and revelations of new signings, research undertaken at Mod Towers suggests that if Tony Bloomís investment of over £200 million in the club results in promotion, it would have a massive impact on the club valuation.

    For those clubs in the Championship with their noses pressed to the window of the Premier League, the situation is challenging. Losses averaged over £9 million per club in 2013/14. Those losses are likely to increase in 2015/16 following the relaxation of Financial Fair Play rules.

    NSCís research reveals that whilst the average Championship club is worth just under £12 million, the average in the Premier League is £450 million.

    This explains why so many clubs in the Championship are going for broke this season, with teams such as Derby County signing Tom Ince, Darren Bent, Alex Pearce and Andreas Weimann, and Middlesbrough signing Stuart Downing and being rumoured to be offering £12 million for Jordan Rhodes.

    The valuations, which take into consideration revenue, profit, and attendance and wages as a proportion of revenue and ground capacity, are as follows, and are based on the accounts for the 2013/14 season.

    The most surprising figures are in relation to Blackpool. This highlights the decision taken by the club to not pay out the parachute payments from their time in the Premier League through wages.

    Suffering Blackpool fans will tell you exactly what has happened to those parachute payments, and the consequence of the decision may explain why the club was relegated in 2014/15. That value is only sustainable if they continued to play in the Championship, so today would be far lower.

    You might also like: Other articles on Albion's finances

    At the other end of the scale clubs such as Blackburn, Forest and Middlesbrough all have negative values. The reason for this is that in each case they gambled on signing players and paying them high wages, which far exceeded the revenue coming into the clubs.

    For how long the owners of these clubs can continue to operate such a business is questionable. It does mean that if new owners came in they would inherit a club that cannot pay its way without subsidising the activities on the pitch.

    The average weekly wage in the Championship is now around £10,000 a week, with some players being on far more than that, especially if they play for a club recently relegated from the Premier League.

    The Premier League is on the crest of a wave financially. New sponsorship deals, new signings, a new TV deal kicking in this season for Champions League and the Europa League, and domestic rights from 2016/17, mean that the money has never flowed freer or faster.

    In the Premier League Manchester United, despite finishing a Dean Wilkinsesque 7th in 2013/14, top the valuation chart.

    This is mainly due to their ability to generate so much cash. Unitedís total of £433 million is likely to increase to beyond £500 million in 2015/16 when the new Adidas kit deal commences, which means they will be generating more money than all of the clubs in the Championship put together.

    The one surprising figure in the Premier League is Spurs being valued at a higher figure than Chelsea. The distortion here is that the Spurs figures include the profits made from selling Gareth Bale. We would expect the positions to reverse themselves next year.

    Wages in the Premier League average almost six times those of the Championship.

    The most depressing sight for Albion fans is seeing Palace being valued at £232 million.

    Without rubbing even more salt into an ever gaping wound, the decision to let Sir Glenn of Murrayshire leave on a Bosman to the Croydon outfit is looking like the biggest mistake the Albion have ever made, not only in terms of the quality of our strike force, but also the difference to Uncle Tony's pocket.

    *Other news sources are available
    Comments 4 Comments
    1. Bob!'s Avatar
      Bob! -
      Revenue is in £,000 I presume?
    1. El Presidente's Avatar
      El Presidente -
      Quote Originally Posted by Bob! View Post
      Revenue is in £,000 I presume?
      Yes Bob. Sorry I think I removed the thousands when trying to get it onto a small page!
    1. cooliobhafc's Avatar
      cooliobhafc -
      Interesting article but a little concerning, when you consider our situation against Derby and others. Despite having the highest revenue, we still had a pretty large loss, compared to some. Derby's wage bill was less than ours, yet they had a far superior side? We really need to look at our recruitment policy and our overall costs if this is the case.
    1. KZNSeagull's Avatar
      KZNSeagull -
      Interesting how the wages to turnover ration of the PL teams has dropped remarkably in a short space of time (other than QPR of course). Looks almost sustainable!
  • Advertising