Article: The Price of Going Down

[El Presidente]

You can view the page at http://www.northstandchat.com/content.php?364-The-Price-of-Going-Down

 

[Hamilton]

You can view the page at http://www.northstandchat.com/content.php?364-The-Price-of-Going-Down

Is this the right link?

 

[Creaky]

Income will undoubtedly drop significantly if we are relegated - that is a given. Even with the odd player on a long contract that we can't 'offload' player costs will have to fall dramatically in order to comply with League 1's equivalent of FFP.

If I have read your figures correctly then in 2013 our 'income' was £8.7M from ticket sales, £1.4M retail, £4.8M TV payments and £4.2M sponsorship - a total of £19.1M. Again from your figures the wage bill for the same period was £21.1M, £2M more than income. Of course not all of the wage bill related to player payments but a reasonable estimate for them would seem to be about £16M.

If we are relegated and your guesstimates are close to the mark we would have an income in the region of £12.5M with a maximum player wage cost of £7.5M, (60% of turnover).

In summary then in the Championship we have income, (£21.1M), less player costs, (£16M), leaving approximately £5M, plus whatever TB has to inject, to cover all other costs.

In League 1 the comparable figures would be £12.5M less £7.5M also leaving around £5M. However as you pointed out the other costs would also be cut so it seems reasonable to project a smaller loss if we are relegated than if we remain in the Championship.

There is also one other important factor that has to be considered - the change in the FFP rules for the Championship. Instead of the 'allowable' loss of £8M in 2013 this is to be increased to an average of £13m per year over 3 years - it seems inevitable that if we do remain in the Championship and want to compete then costs in terms of player wages will increase to match other teams in the League.

All in all financially I don't see that a drop to League 1 will cause the club to suffer significantly greater losses, (indeed they could well be smaller), than if we remain, (fingers crossed), in the Championship.

 

[chaileyjem]

When Wolves were relegated from the Champ to L1 in 2012/13 crowds fell from 21,662 to 20,818. ie: they went down by less than 1K. When Southampton were relegated from Champ to L1 in 2009/10 to 2010/11 their average crowds actually went up from 18,149 to 20, 108. These were both promotion winning seasons but a 10K drop in attendances whilst possible isn't necessarily the case.

 

[chaileyjem]

Loan Players reducing the bill ? There's a scenario where only Tex and Bennett remain as loanees at the club post January. (Gardner, Halford recalled, Bennett signed). Perhaps Bent on a further loan. We might even add to the squad in January with more permanent players arriving.
Although obviously a few departures (O Grady, Holla ?, Toko ?) must be on the cards and some loanees might be used as replacements/strengthening but not sure that loanees are making much difference to the overall wage bill or overall that different to last years bill.

 

[El Presidente]

When Wolves were relegated from the Champ to L1 in 2012/13 crowds fell from 21,662 to 20,818. ie: they went down by less than 1K. When Southampton were relegated from Champ to L1 in 2009/10 to 2010/11 their average crowds actually went up from 18,149 to 20, 108. These were both promotion winning seasons but a 10K drop in attendances whilst possible isn't necessarily the case.

If you were at the recent Wigan game there were only 16,000 at the Amex. Agree that a successful season would minimise the attendance drop but there's no certainly of that happening. The fact that 7,000 STH chose not to attend a recent match is a huge warning sign to the club. I was in the North Stand right behind the goal, which is 100% STH and the eleven seats to my left and right were all unoccupied.

 

[El Presidente]

Loan Players reducing the bill ? There's a scenario where only Tex and Bennett remain as loanees at the club post January. (Gardner, Halford recalled, Bennett signed). Perhaps Bent on a further loan. We might even add to the squad in January with more permanent players arriving.
Although obviously a few departures (O Grady, Holla ?, Toko ?) must be on the cards and some loanees might be used as replacements/strengthening but not sure that loanees are making much difference to the overall wage bill or overall that different to last years bill.

The point I'm making is that the loanees will be on good money, but those costs wouldn't have to be borne in L1.

 

[Rugrat]

Wouldn't we also lose about £4m in so called 'solidarity' payments?

 

[Dick Knights Mumm]

Interesting analysis. Well done El Pres.

Difficult to predict attendance for League One. For many people with kids - it does not really matter that much. For people happy with an afternoon out - it may not matter that much. Better to sell an afternoon with the prospect of seeing some Albion goals than the prospect of another miserable defeat. Of course - if we do bounce back - with renewed vigour and a some of our younger players leading the way - then it will be exciting.

I am not sure the bounce-back will be as exciting if Hyypia is still at the helm though. More food for thought for Tony.

 

[Peter Grummit]

If you were at the recent Wigan game there were only 16,000 at the Amex. Agree that a successful season would minimise the attendance drop but there's no certainly of that happening. The fact that 7,000 STH chose not to attend a recent match is a huge warning sign to the club. I was in the North Stand right behind the goal, which is 100% STH and the eleven seats to my left and right were all unoccupied.

I don't think the NS is 100% STHs any more. The club has never (to my knowledge) announced the number of STHs this season as it is not a good news story. But judging by the availability of individual seats in the North, there has been some erosion there and elsewhere. Most speculation suggests we lost around 2-3k STHs this season.

Because we have such a high proportion of STHs, though, the critical point is the renewal date which is well before we will know which division we will be in (March?). I share the view that a large number will choose not to renew. Just as gates have exceeded prior forecasts at the Amex, the JCL factor is very likely to be symmetrical in effect. Set against this, in income terms, aren't most 1901ers committed for a further season (5 year deal)? Speculation on the size of average total gates in L1 is very difficult - it depends how we do! But what seems certain is we will need to bring youngsters through from the Academy on a fast-track basis.

PG

 

[El Presidente]

Wouldn't we also lose about £4m in so called 'solidarity' payments?

That's included in the TV money. It comes under the heading of 'Football League Distributions' (I think).

 

[Julio]

When Wolves were relegated from the Champ to L1 in 2012/13 crowds fell from 21,662 to 20,818. ie: they went down by less than 1K. When Southampton were relegated from Champ to L1 in 2009/10 to 2010/11 their average crowds actually went up from 18,149 to 20, 108. These were both promotion winning seasons but a 10K drop in attendances whilst possible isn't necessarily the case.

Both clubs with bigger core fan bases than us - interestingly Wolves' crowds were hepled by the club re-engaging with the fans and by Kenny Jackett picking players who wanted to play for Wolves. Facts are that our core base is around 7,000 - this is boosted by the Amex effect so possibly another 2-3,000 will come along as it's a nice place to go and watch football, as opposed to an undying love for all things Albion.

Now, if we do fly in the league then the feelgood factor will return and bring back on a match by match basis some more floaters. If we ar*e around in mid-table then for midweek games against less well supported teams from further afield, it's very likely we would see crowds in the region of 10,000-11,000 and possibly lower. Now, when you compare this to other attendances of clubs around mid-table in league 1 this would look quite healthy; but quite a few of them have grounds which hold 15,000 or so. I often think %age of capacity is a much better indicator of how a team is doing, rather than the actual crowd number.

 

[chaileyjem]

If you were at the recent Wigan game there were only 16,000 at the Amex. Agree that a successful season would minimise the attendance drop but there's no certainly of that happening. The fact that 7,000 STH chose not to attend a recent match is a huge warning sign to the club. I was in the North Stand right behind the goal, which is 100% STH and the eleven seats to my left and right were all unoccupied.

Yep. The empty seats at the Wigan game probably the most worrying thing about the 2014/15 season so far. And there's been plenty of em.

 

[El Presidente]

Yep. The empty seats at the Wigan game probably the most worrying thing about the 2014/15 season so far. And there's been plenty of em.

The performance at Derby was worse!

 

[Goldstone1976]

Set against this, in income terms, aren't most 1901ers committed for a further season (5 year deal)?

All, I think. I took up my 1901 membership two years into the 5 year period and my commitment was adjusted to terminate at the same time as the people who had taken out membership at the start. I would assume that any other transfer-ins had the same deal. However, one would assume that the incidentals e.g. formal dining would drop significantly in L1, and also that many more more fickle members would seek to offload their ticket(s). They'd have to find a willing buyer though.

 

[GreersElbow]

I'm glad this has been put back up at the top of the site.

Many are panicing about relegation because we'll be 2 leagues away from the premier league.

Brings it into perspective.

 

[Tubby-McFat-Fuc]

Great piece.

Let's just hope Millwall do us a favour, and lose a game!

I not even thinking about us going down..... yet! Might do come 2.30 Saturday though!

 

[Brightonfan1983]

I'm glad this has been put back up at the top of the site.

Many are panicking about relegation because we'll be 2 leagues away from the premier league.

Brings it into perspective.

Certainly does. I've never really taken on board the financial minutae of promotion/relegation, but what made me look at the league table just now was to see where Cardiff, after trousering £64,000,000 last season, and I'm presuming whopping great zeppelin-esque parachute payments this year, are. They're 13th and Birmingham, one point below them, have a game in hand. Now that's perspective on the so-called 'promised land' of the Permiership.

Jolly good read too El P.

 

[Prince Monolulu]

Not going down, this year at least.

 

[Blue Valkyrie]

Would be an utter disaster.

4 years worth of Championship losses for nothing

4 AMEX years wasted, as well as at least one season in league 1.

5+ wasted years