Anyone seriously think we could go bust next Season

[Les Lawrence]

Reading some off the more in the know posters on here,saying we are in trouble. if we go down.Is it really a possibility we could go under?Can only think of Bury in last few years that have.

[Burnley1989]

No

[RVclaret]

No chance

[Newcastleclaret93]

Not next season as we have saleable assets.

However a few years in the champ is a different matter

[bfcjg]

Not next season as we have parachute payments, however all clubs that are in debt and cannot service it are in trouble eventually.

[Jamesy]

Donny Osmond will see us ok.

[GodIsADeeJay81]

Nope.

Our wage bill is manageable and will continue to be so.
The new rules coming in require clubs to ensure their wage bills are 70% or less of a clubs income and we will be able to meet that over the years, as our parachute payments reduce if we don't bounce straight back up and because our wage bill has been sensibly managed.

We have no work required on the club's infrastructure, so the only outlays required are wages and money for new signings.

No one, and I mean no one, on here knows the repayment terms on any loans so any claims that those will cripple/doom the club by people on here should be taken with a massive pinch of salt.

Worst case, ALK sell the club and we carry on operating.
We're a million miles away from doing a Bury

[Winstonswhite]

I’m interested to know how you are so sure our wage bill is definitely manageable if we get relegated?

It’s currently over 100 million but currently we get 130 million in tv money. Next season we could get closer to 50 million. So how is that manageable?

[NewClaret]

I’m interested to know how you are so sure our wage bill is definitely manageable if we get relegated?

It’s currently over 100 million but currently we get 130 million in tv money. Next season we could get closer to 50 million. So how is that manageable?

Someone will need to confirm but I read somewhere it’s about £33m with the rest paid in bonus’. Bonus’ that are not paid if we go down, obviously. Since our alleged top salary is £2.8m (Mee), our small squad, and not everyone will be on that, I think it mightn’t be far off. 11 of the highest paid players are OOC this summer, inc Mee and Tarks. If we let them all go and promoted youth we’d be absolutely fine.

Whatever - there is no chance whatsoever we go bust next season. Our issue is much more whether we can make a genuine promotion push with the squad upheaval we’ll have!

[GodIsADeeJay81]

I’m interested to know how you are so sure our wage bill is definitely manageable if we get relegated?

It’s currently over 100 million but currently we get 130 million in tv money. Next season we could get closer to 50 million. So how is that manageable?

Relegation clauses, it's been mentioned on here before.
We've always had them and we will continue to do so I suspect precisely because we're currently not showing the ability to remain in the top flight indefinitely.
It's also the reason why Jeff Hendrick signed for Newcastle, because they don't have them and that was prior to their takeover because Shelvey was earning £60-70k a week in the championship last time they went down.
It's been reported a few times we've lost out on players because we have relegation clauses.

We operate a good bonus scheme to compensate for the slightly lower wages though.
That's why I know we will keep our wage bill manageable
When Rovers went down, their wage bill was already exceeding their then PL income and they've never managed to get it below their income since then, at present it's 160% of income I think.
Bolton were the same, along with others and most of them didn't have relegation clauses.
Bournemouth did it turns out, which surprised me.

[Devils_Advocate]

Nope.

Our wage bill is manageable and will continue to be so.
The new rules coming in require clubs to ensure their wage bills are 70% or less of a clubs income and we will be able to meet that over the years, as our parachute payments reduce if we don't bounce straight back up and because our wage bill has been sensibly managed.

We have no work required on the club's infrastructure, so the only outlays required are wages and money for new signings.

No one, and I mean no one, on here knows the repayment terms on any loans so any claims that those will cripple/doom the club by people on here should be taken with a massive pinch of salt.

Worst case, ALK sell the club and we carry on operating.
We're a million miles away from doing a Bury

Agree with most of that apart from saying that worst case is ALK sell the club.

The worse case is ALK start spending the parachute payments and any income from player sales on new players and high wages in a bid to get back into the Premier League. If this is unsuccessful over a few seasons that is when we could be left in bad financial shape as a club

Not for one minute saying this will happen but with the amount ALK have invested and stand to lose if we stay outside the Premier League then its definitely a scenario that would make some sense from their position.

[RVclaret]

Bournemouth did it turns out, which surprised me.

Yep, me too. Their wage bill in the PL was actually a fair bit larger than ours too! Norwich and West Brom are another two examples of 50% wage cuts. I’d even imagine Dyche’s cut might even be larger… I mean, if he’s earning 80-100k a week now, I can’t see how he’ll continue at 50k a week at that level, I don’t think managers get paid anywhere near that amount.

I think we’d likely sell a player or two as well, the likes of McNeil / Pope / Cornet who will likely attract some interest. That would genuinely give a sizeable transfer kitty to rebuild after the wage cuts, bearing in mind first year parachute payments would easily cover wages / other costs.

[Winstonswhite]

We lost ten million last time we were in the championship with the relegation clauses activated that you talk about. Since then our wage bill has almost doubled(?), we owe on the debt we’re now in and we’re paying MC, WW and SD bumper new contracts which we have no idea whether there are relegation clauses in.

Look I’m not saying we will go bust. Absolutely no chance. But when it’s stated that our wage bill is manageable,I too think it is- but we’ll have to sell players and let a lot go/ not offer new contracts, to many.

[GodIsADeeJay81]

Agree with most of that apart from saying that worst case is ALK sell the club.

The worse case is ALK start spending the parachute payments and any income from player sales on new players and high wages in a bid to get back into the Premier League. If this is unsuccessful over a few seasons that is when we could be left in bad financial shape as a club

Not for one minute saying this will happen but with the amount ALK have invested and stand to lose if we stay outside the Premier League then its definitely a scenario that would make some sense from their position.

With the changes to wage bill Vs turnover I don't think they'd be able to do that, but it will depend on how robust the new measures are after years of the likes of Derby abusing the old ones.

[RVclaret]

We lost ten million last time we were in the championship with the relegation clauses activated that you talk about. Since then our wage bill has almost doubled(?), we owe on the debt we’re now in and we’re paying MC, WW and SD bumper new contracts which we have no idea whether there are relegation clauses in.

Look I’m not saying we will go bust. Absolutely no chance. But when it’s stated that our wage bill is manageable,I too think it is- but we’ll have to sell players and let a lot go/ not offer new contracts, to many.

Didn’t have wage cuts and parachute money has gone up substantially since then too. We won’t be forced to sell players but likely we’ll need to as they might want to leave / it will be useful cash for a rebuild. I’ve done forecasts for our year 1 finances in another thread, which il try to find.

[GodIsADeeJay81]

We lost ten million last time we were in the championship with the relegation clauses activated that you talk about. Since then our wage bill has almost doubled(?), we owe on the debt we’re now in and we’re paying MC, WW and SD bumper new contracts which we have no idea whether there are relegation clauses in.

Look I’m not saying we will go bust. Absolutely no chance. But when it’s stated that our wage bill is manageable,I too think it is- but we’ll have to sell players and let a lot go/ not offer new contracts, to many.

I believe most of that £10 million was actually promotion bonuses of £7 million ish, but I'd need to do some checking, but that would tie into my previous claim about lower wages and higher bonuses.

The coaching staff will also most likely have relegation clauses, because why would you pay them PL wages if they've failed to keep us in the PL?

We've got numerous players OOC this summer, many of whom are probably going to be on their way with a bit of luck because I personally don't believe they'll be able to push us back up into the PL assuming we go down.

Most clubs who drop and struggle financially are crippled by wage bills that exceeded PL income and they didn't have relegation clauses.
Two notable examples were Sunderland paying Rodwell £70k a week in league 1 and before that Wolves paying Jamie O'Hara £40k a week, also in league 1.
Both clubs arrogantly decided to not have relegation clauses and they also displayed a willingness to bend over for agents, something we aren't famed for doing in regards to both

[Devils_Advocate]

With the changes to wage bill Vs turnover I don't think they'd be able to do that, but it will depend on how robust the new measures are after years of the likes of Derby abusing the old ones.

I agree its unlikely but if they are willing to gamble the club to get back up then Im sure they would be willing to break the rules on the hope of getting back up. Im just pointing out that the risk isnt next season but what ALK do with the club for the next few years.

Its not relegation from the Premier League that causes teams to get into a financial mess but its the teams who chase the Premier League and throw good money after bad. If we are going to rightly push back against people thinking we will suddenly be in big trouble next season we should be realistic about the genuine risk of how ALK approach the next few years.

The discussion always seems to be the people who think we are doomed to go bust and people who make out there is no risk at all and the reality is there is very much a middle position although I think it is far more weighted to your position than to some on the other side of the discussion

[RVclaret]

I agree its unlikely but if they are willing to gamble the club to get back up then Im sure they would be willing to break the rules on the hope of getting back up. Im just pointing out that the risk isnt next season but what ALK do with the club for the next few years.

Its not relegation from the Premier League that causes teams to get into a financial mess but its the teams who chase the Premier League and throw good money after bad. If we are going to rightly push back against people thinking we will suddenly be in big trouble next season we should be realistic about the genuine risk of how ALK approach the next few years.

The discussion always seems to be the people who think we are doomed to go bust and people who make out there is no risk at all and the reality is there is very much a middle position although I think it is far more weighted to your position than to some on the other side of the discussion

Some good points there but just to add, surely if they were going to ‘gamble’ at the PL then they would have chucked more money at it while we were already in the league in January, with a fair chance at staying up. As it stands it appears they might not have even spent in Jan at all had Wood not been sold.

[claretandbluesky]

When you’re in debt you can go bust.

[tiger76]

No but hard choices will have to made, and we'll need to ensure we rid ourselves of a lot of deadwood, that in itself should radically reduce our wage bill for starters, plus we'll no doubt sell a couple minimum to bring funds in, the big unknown is how we'll deal with the debt, we've historically never had to service debts, so this well present a challenge, and I certainly don't expect us to be throwing money around on incomings, we might have to return to picking up free transfers, and lower league gems, but if we shop wisely that might not be a bad thing at all.

One thing we definitely need to do is clear out the old guard, they are the ones on big salaries, and they've simply not justified being kept on, so for me most if not all of the OOC players can happily leave, this will allow us to revamp the squad well not breaking the bank, and also we need to invest in youth, that strategy should if carried out sagely ensure we have a few saleable assets if we don't make a quick return to the PL.

[Boss Hogg]

No. If we don’t get back up which is quite possible and the parachute money runs out there could be huge cost cutting. This could mean a drop further into League 1. ALK seemed very comfortable with accepting relegation quite early on this season. I don’t see how their model works if the parachute money runs out. Naivety and the Venkys spring to mind.

[spt_claret]

I don't think we will go bust next season.
I think if we are relegated we will, regardless of relegation wage clauses or out of contract players, have to have a fire sale of our most saleable assets because we will need to future proof for the loss of premier league income for that season and potentially going forward regardless of parachute payments. Chester Perry put our historical wage bill at the below:

This is a a reasonable argument

UEFA and the EFL (the Premier League are likely to follow) are moving to a new variation of of FPP/Profit and Sustainability regulations whereby the old wages to revenue ratio (UEFA) and maximum losses/investment (PL/EFL) are going to be replaced by an overall football cost (wages + amortisation) in relation to revenues - the target being a ratio of 70%. There will be a phased introduction, likely to be Year 1 90%, Year 2 80%, Year 3 70% (though this may prove difficult in the Championship as some clubs are paying wages well over 100% of revenues before adding amortisation)

here is our recent history on this new measure (the real numbers will not include wages of non football staff)

2019/20 - 99% (13 month accounting period)
2018/19 - 90%
2017/18 - 79%
2016/17 - 69%
2015/16 - 93%
2014/15 - 44%
2013/14 - 95%
2012/13 - 123% (FFP introduced)
2011/12 - 95%
2010/11 - 90%
2009/10 - 61%
2008/09 - 139%

Last time we were in the Championship our bill was 93%. Season before was 95%. Even with relegation clauses that's a grim picture especially when you see that our bill crept into the 90s even with Premier League money. We have one of the highest percentages of total revenue attributed to PL money of any club, that is a grim picture even with parachute payments.
Add in that those saleable players will want to leave and you can guarantee we will sell- and have two factors (necessity and player pressure) that might drive down the price.
Next consider that we will have a huge need to replace the departures. That means either transfer fees, agent fees, decent wages- or freebies and gambles on unproven cheaper options hoping they can step up. So either a financial risk or an on pitch risk- which if we fail to bounce back will rapidly become a financial risk as parachute payments drop/cease and the financial glass ceiling laws (it's not remotely fair play it advantages billionaire clubs and outright incentivises such takeovers) tighten.
At that point, the prospect of a financial downwards spiral grows, ditto a footballing one.
Now consider that anybody paying attention not wearing Burnley or ALK tinted specs will see this and understand how hard it is to attract the right players and even harder to find a managerial upgrade who would want the job,be affordable and be promising and capable of the rebuild.
Relegation is a crisis point, but failing to bounce back is when I'll start to worry we'll go bust.

[RVclaret]

No. If we don’t get back up which is quite possible and the parachute money runs out there could be huge cost cutting. This could mean a drop further into League 1. ALK seemed very comfortable with accepting relegation quite early on this season. I don’t see how their model works if the parachute money runs out. Naivety and the Venkys spring to mind.

I’d say very different to Venkys for a couple of reasons.

Firstly, Venkys Made a complete mess of the entire running of the club when they came in, got involved with some very dodgy agents, got the strategy completely wrong and left themselves in big trouble upon relegation (still paying the likes of Danny Murphy, Dickson Etuhu and Leon Best 50k a week). They also had some really bad managerial appointments in both PL and Champ.

Secondly, despite all of this, they are multi billionaires and have loaned the club 150m+ to date I believe to cover the losses they’ve been facing, no chance ALK could do that, so they are forced to run things more sensibly.

[NewClaret]

No. If we don’t get back up which is quite possible and the parachute money runs out there could be huge cost cutting. This could mean a drop further into League 1. ALK seemed very comfortable with accepting relegation quite early on this season. I don’t see how their model works if the parachute money runs out. Naivety and the Venkys spring to mind.

None of us know the structure of the deal, so I’m reserving judgement.

I’m hopeful, given the proclamations of stewardship over the years, and his own experience of such, MG would not’ve allowed a takeover structure that saw us in deep trouble if relegated.

That may prove to be false hope but I also can’t see the sense in worrying about something that may or not happen given we know very little about the takeover structure.

[JohnMac]

Only if the Club renew the contracts of ageing players at 'over the top' wages.

Clearing out the 'deadwood' as someone put it isn't an instant fix given some of our underperformers may still have another year to go.

I think as a Club the realisation of relegation has always been there but tinged with optimism of a 'Dyche magic formula'. Hopefully those in power have done the sums correctly.

[aggi]

I don't think we will go bust next season.
I think if we are relegated we will, regardless of relegation wage clauses or out of contract players, have to have a fire sale of our most saleable assets because we will need to future proof for the loss of premier league income for that season and potentially going forward regardless of parachute payments. Chester Perry put our historical wage bill at the below:


Last time we were in the Championship our bill was 93%. Season before was 95%. Even with relegation clauses that's a grim picture especially when you see that our bill crept into the 90s even with Premier League money. We have one of the highest percentages of total revenue attributed to PL money of any club, that is a grim picture even with parachute payments.
Add in that those saleable players will want to leave and you can guarantee we will sell- and have two factors (necessity and player pressure) that might drive down the price.
Next consider that we will have a huge need to replace the departures. That means either transfer fees, agent fees, decent wages- or freebies and gambles on unproven cheaper options hoping they can step up. So either a financial risk or an on pitch risk- which if we fail to bounce back will rapidly become a financial risk as parachute payments drop/cease and the financial glass ceiling laws (it's not remotely fair play it advantages billionaire clubs and outright incentivises such takeovers) tighten.
At that point, the prospect of a financial downwards spiral grows, ditto a footballing one.
Now consider that anybody paying attention not wearing Burnley or ALK tinted specs will see this and understand how hard it is to attract the right players and even harder to find a managerial upgrade who would want the job,be affordable and be promising and capable of the rebuild.
Relegation is a crisis point, but failing to bounce back is when I'll start to worry we'll go bust.

You've misunderstood the table. That's wages plus amortisation. 2015/16 our wage bill was 68% of revenue, 13/14 it was 75% (stripping out promotion costs).

[ClaretPete001]

Nope.

Our wage bill is manageable and will continue to be so.
The new rules coming in require clubs to ensure their wage bills are 70% or less of a clubs income and we will be able to meet that over the years, as our parachute payments reduce if we don't bounce straight back up and because our wage bill has been sensibly managed.

We have no work required on the club's infrastructure, so the only outlays required are wages and money for new signings.

No one, and I mean no one, on here knows the repayment terms on any loans so any claims that those will cripple/doom the club by people on here should be taken with a massive pinch of salt.

Worst case, ALK sell the club and we carry on operating.
We're a million miles away from doing a Bury

Begs 5 points really:

(1) No one has ever said the club will go into admin next season. The problem is at the end of year 3 in the championship.

(2) The clubs wage bill is already around 70 per cent and has ballooned to £94 million whether that has been well managed or otherwise is open to conjecture.

(3) In year 1, relegation clauses could cover the loss of £50 million in broadcasting revenue (if we have them); however, in years 2 and 3 we will lose another £73 million. How are you going to pay for that and maintain a promotion chasing squad?

(4) As soon as we are relegated VSL/ALK could not sell the club because it is heavily loaded with debt and worth substantially less in the Championship than the £200 million they paid for it. Investors aren't stupid they would smell the whiff of a distressed asset from a million miles away. Regardless, it would not be easy to sell.

(5) It's ok to argue that every detail of the loans between £128 million and £200 million are unknown (£128 million of it is known) but suggesting that any attempt to add them into the financial equation should be taken with a pinch of salt is not really reflecting reality.

[aggi]

On the original topic, it's incredibly unlikely we'll go bust next season (or the following one). After that, we'll have to see how the Championship pans out and whether there is the eventual will to bring wages under control.

I posted this on another thread but this is the current state of play in the Championship, virtually every team is chasing the dream rather than being run sensibly.



There is talk of introducing caps as alluded to further up but we will have to see how long that takes, or whether there is a willingness for them to be introduced at all. We certainly won't be able to afford to compete at the sharp end of the Championship for more than a few years (and that has always been the case).

[Boss Hogg]

I’d say very different to Venkys for a couple of reasons.

Firstly, Venkys Made a complete mess of the entire running of the club when they came in, got involved with some very dodgy agents, got the strategy completely wrong and left themselves in big trouble upon relegation (still paying the likes of Danny Murphy, Dickson Etuhu and Leon Best 50k a week). They also had some really bad managerial appointments in both PL and Champ.

Secondly, despite all of this, they are multi billionaires and have loaned the club 150m+ to date I believe to cover the losses they’ve been facing, no chance ALK could do that, so they are forced to run things more sensibly.

Fair point. I meant like Venkys more in the naivety aspect. I just get this impression that ALK seem over confident of bouncing back. I don’t think Venkys even knew there was relegation but they can cover the losses which we can’t.

[gandhisflipflop]

No. Sounds like you’re listening to the hissy fitters about ALK. No accounts have been released yet, so nobody knows the situation of the club. They say they have budgeted for relegation, they deserve the benefit of the doubt, not all the **** that has been thrown their way from day dot by certain sections of the crowd who hate any kind of change that threatens the little old Burnley mentality.

[GodIsADeeJay81]

Begs 5 points really:

(1) No one has ever said the club will go into admin next season. The problem is at the end of year 3 in the championship.

(2) The clubs wage bill is already around 70 per cent and has ballooned to £94 million whether that has been well managed or otherwise is open to conjecture.

(3) In year 1, relegation clauses could cover the loss of £50 million in broadcasting revenue (if we have them); however, in years 2 and 3 we will lose another £73 million. How are you going to pay for that and maintain a promotion chasing squad?

(4) As soon as we are relegated VSL/ALK could not sell the club because it is heavily loaded with debt and worth substantially less in the Championship than the £200 million they paid for it. Investors aren't stupid they would smell the whiff of a distressed asset from a million miles away. Regardless, it would not be easy to sell.

(5) It's ok to argue that every detail of the loans between £128 million and £200 million are unknown (£128 million of it is known) but suggesting that any attempt to add them into the financial equation should be taken with a pinch of salt is not really reflecting reality.

1- thread title asks if we could go bust

2- relegation clauses and with new rules we would have to align ourselves with them according to income and new contracts would have to reflect that.

3- better scouting and recruitment quite simply and of course as I've said we have a generous bonus scheme, also let's not forget the first time Dyche got us promoted we'd signed several freebies who actually turned out to be excellent, more than anyone expected so it's doable.

4- yes actually they can sell the club, with the debt if needs be because English football is attractive to investors.

5- I'm reflecting the reality of what's known and not a lot is despite what the naysayers claim.
It's perfectly reasonable to believe the terms of the loan would change based on the income of the club and that income is dependant on the league we're in.
MSD are in it to make money, they cannot do that if the club folds.

[RVclaret]

Begs 5 points really:

(1) No one has ever said the club will go into admin next season. The problem is at the end of year 3 in the championship.

(2) The clubs wage bill is already around 70 per cent and has ballooned to £94 million whether that has been well managed or otherwise is open to conjecture.

(3) In year 1, relegation clauses could cover the loss of £50 million in broadcasting revenue (if we have them); however, in years 2 and 3 we will lose another £73 million. How are you going to pay for that and maintain a promotion chasing squad?

(4) As soon as we are relegated VSL/ALK could not sell the club because it is heavily loaded with debt and worth substantially less in the Championship than the £200 million they paid for it. Investors aren't stupid they would smell the whiff of a distressed asset from a million miles away. Regardless, it would not be easy to sell.

(5) It's ok to argue that every detail of the loans between £128 million and £200 million are unknown (£128 million of it is known) but suggesting that any attempt to add them into the financial equation should be taken with a pinch of salt is not really reflecting reality.

1. That was the question from the OP.

2. 94m includes substantial bonus' for survival and still one of the lowest total wage bills in the PL.

3. Wage bill gets decreased gradually, recruitment needs to improve to the point where player sales more than cover for the drop off in revenue - same could be said about the youth system now its Cat 1.

4. Agree.

5. It's true to say we don't know the details of the loan from MSD yet and / or structure, plus any clauses between MG and VSL/ALK on relegation. Hopefully the latest accounts shed a bit more light but ChesterPerry has done a good job so far investigating as much as possible which has led him to several assumptions.

[GodIsADeeJay81]

Fair point. I meant like Venkys more in the naivety aspect. I just get this impression that ALK seem over confident of bouncing back. I don’t think Venkys even knew there was relegation but they can cover the losses which we can’t.

ALK have Garlick on the board still and he's there for the foreseeable.
As much as a number of people on here have grown to hate the man, it cannot be denied that he will be able to provide good advice to ALK about English football and how to navigate it.

[ClaretPete001]

I’d say very different to Venkys for a couple of reasons.

Firstly, Venkys Made a complete mess of the entire running of the club when they came in, got involved with some very dodgy agents, got the strategy completely wrong and left themselves in big trouble upon relegation (still paying the likes of Danny Murphy, Dickson Etuhu and Leon Best 50k a week). They also had some really bad managerial appointments in both PL and Champ.

Secondly, despite all of this, they are multi billionaires and have loaned the club 150m+ to date I believe to cover the losses they’ve been facing, no chance ALK could do that, so they are forced to run things more sensibly.

Opinion would argue the Venky's got their strategy wrong and got the club relegated but it looks increasingly likely VSL/AKL have done the same.

New owners came into Newcastle and have turned the club around since January with a former Burnley manager and two former Burnley players openly cited as key to the turnaround.

And the argument that people who have bought clubs with no money are somehow forced to be more sensible than people who have bought clubs and are well able to afford them is interesting....!

[DCWat]

How big a staff do we currently have in place, on a non-football side? I can see that being trimmed if it’s excessive at Championship level. It’ll also be interesting to see just how long we deem Cat 1 as an affordable luxury, particularly if we aren’t seeing players coming through to justify the cost.

[GodIsADeeJay81]

Opinion would argue the Venky's got their strategy wrong and got the club relegated but it looks increasingly likely VSL/AKL have done the same.

New owners came into Newcastle and have turned the club around since January with a former Burnley manager and two former Burnley players openly cited as key to the turnaround.

And the argument that people who have bought clubs with no money are somehow forced to be more sensible than people who have bought clubs and are well able to afford them is interesting....!

Newcastle - have the ability to spend £4-500 million in the next couple of years and remain within FFP thanks to Ashley's previous running of the club and their January spend was the highest seen in Europe in a January for many a year, possibly ever.

Venkys were handed bad advice from the offset, especially potting a manager who'd proven he could keep clubs up and also get promoted.
We all knew what Big Sam was capable of and sacking him to replace him with Kean was absolutely bizarre at the time and ranks highly in stupid football decisions anywhere.

[RVclaret]

Opinion would argue the Venky's got their strategy wrong and got the club relegated but it looks increasingly likely VSL/AKL have done the same.

New owners came into Newcastle and have turned the club around since January with a former Burnley manager and two former Burnley players openly cited as key to the turnaround.

And the argument that people who have bought clubs with no money are somehow forced to be more sensible than people who have bought clubs and are well able to afford them is interesting....!

Rovers were very much a mid table club when Venkys took over, definitely not a relegation threatened one like we have been since ALK took over. I’d say their handling of the club was far far far worse than anything we’ve seen here, in fact, it’s not even comparable.

Using Newcastle as a comparative to ALK is also pretty daft, they are literally the worlds richest owners and spent £95m in January (despite that I also think Howe has done a great job).

Evidence of LBO’s in the wider world suggests that new management actually run the business very well as they now have debt to manage, while meeting their objectives of increasing value in the company.

[ClaretPete001]

1. That was the question from the OP.

2. 94m includes substantial bonus' for survival and still one of the lowest total wage bills in the PL.

3. Wage bill gets decreased gradually, recruitment needs to improve to the point where player sales more than cover for the drop off in revenue - same could be said about the youth system now its Cat 1.

4. Agree.

5. It's true to say we don't know the details of the loan from MSD yet and / or structure, plus any clauses between MG and VSL/ALK on relegation. Hopefully the latest accounts shed a bit more light but ChesterPerry has done a good job so far investigating as much as possible which has led him to several assumptions.

Fair points, however:

Point 2: It is still 70 per cent of turnover and a big increase on a squad that has significantly diminished over the last couple of seasons. Also (depending on source) one of the least valuable in the Premiership. Therefore, in my view it is open to conjecture whether wages paid represent a good investment in the playing squad as it stands.

Point 3: £73 million is an awful lot of money to recoup on player sales while investing in the squad. According to sum sites the entire squad is not currently worth a £100 million and it would be worth less in the championship.

[GodIsADeeJay81]

Fair points, however:

Point 2: It is still 70 per cent of turnover and a big increase on a squad that has significantly diminished over the last couple of seasons. Also (depending on source) one of the least valuable in the Premiership. Therefore, in my view it is open to conjecture whether wages paid represent a good investment in the playing squad as it stands.

Point 3: £73 million is an awful lot of money to recoup on player sales while investing in the squad. According to sum sites the entire squad is not currently worth a £100 million and it would be worth less in the championship.

You've got a fixation on the £73 million for some reason.
If the club manages to bring down overall running costs, mainly the wage bill, through sensible signings/ contracts then they won't need to find £73 million.

[RVclaret]

You've got a fixation on the £73 million for some reason.
If the club manages to bring down overall running costs, mainly the wage bill, through sensible signings/ contracts then they won't need to find £73 million.

Yeah, exactly this.

ClaretPete - I also think it’s daft looking at sites that ‘value’ a player, I know in the past you used transfermarkt but it’s really of no use. It’s rarely accurate.

[thelaughingclaret]

Go bust next season? No.
Within the next 10 years. Maybe. Depends if things change. If they don’t then we are in trouble. Having owners who themselves are in debt and have no money at all is not good no matter what anyone says. No one will buy the club as no one will want to take on that debt the club now have. Because or one greedy man (Garlick) the club is on it’s knees and unless things change, the next decade is going to be tricky.
And if the rumours are true about if we go down Garlick could regain control of the club then that is even more scary. He is one man who never should be allowed anywhere near a football club ever again.

[ClaretPete001]

Rovers were very much a mid table club when Venkys took over, definitely not a relegation threatened one like we have been since ALK took over. I’d say their handling of the club was far far far worse than anything we’ve seen here, in fact, it’s not even comparable.

Using Newcastle as a comparative to ALK is also pretty daft, they are literally the worlds richest owners and spent £95m in January (despite that I also think Howe has done a great job).

Evidence of LBO’s in the wider world suggests that new management actually run the business very well as they now have debt to manage, while meeting their objectives of increasing value in the company.

It's not daft because that is the reality of competing in the Premiership.

I would reverse your argument and suggest it is daft to assume it can be done without that kind of investment. As we both know 17 of the 20 Premiership clubs are run by millionaires as are another 6 or 7 in the Championship.

I think LBOs can work where companies are in a market situation that could see significant organic growth. Generally speaking most LBOs don't operate in a commercial environment where it is as likely as not to lose £113 million of income out of £134 million in one year. LBOs of clubs like Man Utd can work because they are big enough to avoid the potential pitfalls of the market place.

[spt_claret]

You've misunderstood the table. That's wages plus amortisation. 2015/16 our wage bill was 68% of revenue, 13/14 it was 75% (stripping out promotion costs).

I understood that but definitely forgot to discuss that, apologies. I'd imagine we have some level of amortisation still due even if we haven't spent much in transfers, FFP accounts for both now so it could still be an issue. Depending on how much that is it could increase the need to offload wages or raise transfer money as that's a fixed cost we can't cut due to relegation, but I'd hope it's a fairly small percentage of the total and therefore relegation wage clauses reduce the combined total more.

[Les Lawrence]

Cheers,looks like we should be ok then.Get shut of some dead wood,get some youth in,and look forward to some local derbies

[spt_claret]

Evidence of LBO’s in the wider world suggests that new management actually run the business very well as they now have debt to manage, while meeting their objectives of increasing value in the company.

Only someone in finance could ever argue that debt is a good thing.
Debt is fine and often deemed necessary in modern business growth if you have a steady cashflow in a stable market (barring Black Swans), reliable growth potential, good liquidity ratios to pay off that debt without significant asset stripping, and above all- if you're not personally the last person/party on the hook for the debt.
Burnley meet none of these requirements and ALK/the board only meet the last one.

[ClaretPete001]

Yeah, exactly this.

ClaretPete - I also think it’s daft looking at sites that ‘value’ a player, I know in the past you used transfermarkt but it’s really of no use. It’s rarely accurate.

The £73 million is the loss of broadcasting revenue in years 2 and 3.

It is not daft to value players that is what clubs have to do in the real world (outside football forums). No doubt MSD have some sense of player valuations. If you are going to suggest selling players to make up the broadcasting revenue that is tacitly valuing players. Not putting an actual figure on it just avoids the reality that the figures don't work.

It's a bit like the argument that you can't account for a debt of £128 to £200 million debt because no one knows all the details. It's there whether all the details are known or not.

The problem is this: in 3 years, (1) turnover will reduce from £134 million to around £20 million (2) the wage bill will reduce from £94 million to around £14 million. And out of the 6 million turnover left (20-14) the club will have to find interest payment on anything between £60 million and £200 million. And the rest of the overheads will require chucking in £10 - £20 million just like many other clubs have done. Even the ones with relegation clauses.

Anyway, it's not my job to depress Clarets. There are differing views on here pick the one that makes you the happiest or that can be most easily lived with...! Que sera sera.

[RVclaret]

The £73 million is the loss of broadcasting revenue in years 2 and 3.

It is not daft to value players that is what clubs have to do in the real world (outside football forums). No doubt MSD have some sense of player valuations. If you are going to suggest selling players to make up the broadcasting revenue that is tacitly valuing players. Not putting an actual figure on it just avoids the reality that the figures don't work.

It's a bit like the argument that you can't account for a debt of £128 to £200 million debt because no one knows all the details. It's there whether all the details are known or not.

The problem is this: in 3 years, (1) turnover will reduce from £134 million to around £20 million (2) the wage bill will reduce from £94 million to around £14 million. And out of the 6 million turnover left (20-14) the club will have to find interest payment on anything between £60 million and £200 million. And the rest of the overheads will require chucking in £10 - £20 million just like many other clubs have done. Even the ones with relegation clauses.

Anyway, it's not my job to depress Clarets. There are differing views on here pick the one that makes you the happiest or that can be most easily lived with...! Que sera sera.

I'll put faith in our experienced professional owners and the plan they will have in place for relegation. They bought the club in Jan 2020 when even relegation that season could have been months away. I think you are incredibly pessimistic with all your assumptions and worst case scenarios, which is fine to have, but I'm a glass half full person so we'll leave it there.

[Newcastleclaret93]

I'll put faith in our experienced professional owners and the plan they will have in place for relegation. They bought the club in Jan 2020 when even relegation that season could have been months away. I think you are incredibly pessimistic with all your assumptions and worst case scenarios, which is fine to have, but I'm a glass half full person so we'll leave it there.

Who are the experienced professional owners?

[RVclaret]

Who are the experienced professional owners?

The ALK team (over 2 decades at the highest level in finance) plus the likes of Checketts and Davila with their sports experience and knowledge.

[superdimitri]

Ofc not. You get a lot of money for finishing 17th in the premier league.