Beware the cost of relegation

[TVC15]

Good for you - well done.
If a profitable company borrows money that it has proven it can afford to repay in order to buy bigger premises or purchase bigger or more efficient / faster machinery so that it can grow and make even more profits i’m not sure why anyone would think that’s a “screwy” way of looking at things....when that’s exactly what most companies do and exactly what many football clubs do.

[Bordeauxclaret]

You wouldn’t believe the screwy way people buy houses.

[SGr]

Not sure there are any fans who “don’t mind” us going down.
There may be some fans like me who don’t believe it will be the end of the world and that not all clubs who are relegated have to end up like Sunderland or Bolton. Like most / all Burnley fans I would still mind very much if we got relegated.

There definitely were. Like I said, “if there still are”.

No I agree it wouldn’t be “the end of the world”, because we’d have the resources to make a return.

[Chester Perry]

I never said that other clubs have made good profits going about their business like us without debt.
I said plenty of other clubs have made profits and do so on a regular basis. Debt is not always a bad thing - it’s only when you over stretch yourself in borrowing too much or allowing your costs to increase by too much or in some clubs cases both of these things.
Look at what United fans thought about the debt the Glazers brought to United...few of them mention that now as it has never hindered the clubs spending and they are worth a lot more now as a club than before the Glazers took over.
It’s whatever model works for your club and how much risk you are prepared to take. Our model is no debt and a prudent approach to wages, transfer fees relative to most other teams in the league. In reality if we had say £20m of debt we would probably still be fine - even if we got relegated.
If (or when) we get relegated like nearly every club who has been in the Premier League has then we will not have to worry about some rich owner losing interest and deciding to stop the subsidies or worry about servicing debt. For us it will be about how we find the balance between going back up and reducing the wage costs over the period of the parachute payments.

If you think that the Glazers taking out £1.2bn from united to reduce debt by £50m and give them a net cash return of £130m+ already on their investment you need to look at the state of the club and it's infrastructure it is severly under maintained whatever the healines on Transfers and Wages - they don't even pay minimum wage to staff.

as for being free to take risks - @AndyhHolt who knows more than most about these things - having and still running a successful business as well as owning and running an EFL Club, had this to say this morning https://twitter.com/AndyhHolt/status/11 ... 7392647174" onclick="window.open(this.href);return false;

[TVC15]

If you think that the Glazers taking out £1.2bn from united to reduce debt by £50m and give them a net cash return of £130m+ already on their investment you need to look at the state of the club and it's infrastructure it is severly under maintained whatever the healines on Transfers and Wages - they don't even pay minimum wage to staff.

as for being free to take risks - @AndyhHolt who knows more than most about these things - having and still running a successful business as well as owning and running an EFL Club, had this to say this morning https://twitter.com/AndyhHolt/status/11 ... 7392647174" onclick="window.open(this.href);return false;

I’m a bit confused.
You are referencing the owner of Accrington in the same post as one of the most commercially successful sports clubs in the world.
What exactly is wrong with the infrastructure of United ? They have increased the capacity of the ground many times, generate more revenue than any other club, make significant profits every year. They get almost as many corporate customers as we do normal fans. They employ thousands of people on a match day - and if they were not paying minimum wage as you allege then they would be surely fined and told they have to ?
The value of United had increased by several multiples since the Glazers took over. Yes they have taken big chunks of interest out but it’s still a fraction of the extra revenue and profits the club have generated under their stewardship.
And then we have Accrington FC - who struggle to give away tickets on a Saturday to try and increase one of the lowest crowds in the football league and can’t afford to fix the roofs on their stands.
Of course he is referring to Bury on his twitter and I do know that Bury have taken some ridiculous risks with player wages in the last year which has resulted in them being in an almighty financial mess. I don’t think anyone is advocating doing what Bury did.

[Chester Perry]

Suggest you look at how the pyramid has helped the big clubs become big clubs and how they are now continually trying to shut the door on everyone else and hold onto everything for themselves (which actually incudes FFP in it's current forms) -

Andy Holt is the only club owner how will publicly speak out about the mess our game is in (still awaiting Sheff Wed to post last years finances - yet in the championship losses last season are currently over £600m). Only in the Premier league does the division actually make a profit (30% of the teams don't)

As for United - I am well aware that they are an incredible money making machine, but no club can effectively throw that much away without it impacting somewhere. Debt as you have described it is used to generate future income for the business - here it is used only for Bankers and the Glazer family itself - not the business

as for the state of the infrastructure - start with these
https://twitter.com/SoccerAM/status/1121093339246419969" onclick="window.open(this.href);return false;
https://www.theguardian.com/football/bl ... -spotlight" onclick="window.open(this.href);return false;

[TVC15]

Think the Guardian article is typical Guardian - says little and no substance.
I was in the hospitality at OT for our recent 2-2 and seriously anybody who thinks that ground is “tatty” or that the club are struggling in any way needs their head testing.
I’ve been to Barcelona a couple of times and that whilst huge and impressing was much older and in worse condition than OT.
Yes Spurs have got a great new stadium but their trophy cabinet remains pretty bare and as a club they are minnows compared to United.
Of course the Glazers are only interested in making money for themselves but they were clever enough to realise that the more successful the club is on and off the field then everyone wins. Rather than read reports on Twitter always looking for some kind of new angle on United just try looking at the facts and financial numbers at how the club has grown during the Glazers time.

And you can’t just blame United for what is happening lower down the Pyramid. That is down to the Premier League and we are part of it. If any clubs in our league really cared about the financial chaos happening further down the leagues they would try and do something about it by voting to redistribute some of their billions of TV money on offer...but we or nobody else is going to to that despite the fact that 14 or 15 of the clubs in the league now (as history shows) will be relegated in the future.

[Chester Perry]

I have commented before that I believe Old Trafford to be a death Trap in the making - Hospitality may well be fine and should be considering the cost - but the narrow seat spacing and tight caged stairs to those upper tiers are a disaster waiting to happen

Barcelona are about to start on a grand rebuild as have/are all the big clubs bar Utd

and what about debt to invest in the future rather than to take money away

[dsr]

Good for you - well done.
If a profitable company borrows money that it has proven it can afford to repay in order to buy bigger premises or purchase bigger or more efficient / faster machinery so that it can grow and make even more profits i’m not sure why anyone would think that’s a “screwy” way of looking at things....when that’s exactly what most companies do and exactly what many football clubs do.

The problem for most football clubs in the Premier League is that when they borrow money, they are borrowing money that they can't guarantee they can repay. That's because they suffer the risk that their income will drop by 50% overnight and 90% in the short/medium term. And if it does, then whatever they have spent the borrowed money on, will not generate much income, unless it's a player who has resale value.

Most companies operate in a very different market from football.

[TVC15]

I have commented before that I believe Old Trafford to be a death Trap in the making - Hospitality may well be fine and should be considering the cost - but the narrow seat spacing and tight caged stairs to those upper tiers are a disaster waiting to happen

Barcelona are about to start on a grand rebuild as have/are all the big clubs bar Utd

and what about debt to invest in the future rather than to take money away

Are you seriously saying United have not invested on and off the pitch ? You talk about their ground like its dilapidated when its remains one of the best grounds in the country / Europe. They are the best supported club in the world and given their relative lack of success in the last 5 years and the amount they need to invest in players to rebuild the team I doubt very much there is a single United fan who are wishing they had a new or better stadium or looking enviously at Spurs...they want spend on the team.

We aren't going to agree on this clearly but the facts speak for themselves. I don't like United at all and at the time I thought the Glazer takeover was hilarious and would ruin the club...but its actually had the opposite effect and they have just grown bigger and stronger as a commercial entity. And as said what the Glazers have taken out is a fraction of the increases in the value of the company and increase revenues they have generated.

[ClaretTony]

There has been a lot of talk recently about the state of Old Trafford and the need to make serious changes to the stadium.

The Glazers did there what Gillette & Hicks did at Liverpool in putting the debt onto the club. It came close to finishing Liverpool off; United are bigger and have managed the debt.

[TVC15]

The problem for most football clubs in the Premier League is that when they borrow money, they are borrowing money that they can't guarantee they can repay. That's because they suffer the risk that their income will drop by 50% overnight and 90% in the short/medium term. And if it does, then whatever they have spent the borrowed money on, will not generate much income, unless it's a player who has resale value.

Most companies operate in a very different market from football.

Yes I get that but they are no longer borrowing money from Banks and financial institutions in the way you and I or a normal company would do. The days of banks lending money to football clubs disappeared a good while ago...as the Banks had to write of tens of millions of pounds to the many clubs that went bust in the 1990s.

The clubs who are in debt tend to be now financed by rich owners / shareholders and whilst this in itself also carries a big degree of risk and definitely no guarantee it will be repaid there are many investors still prepared to subsidise clubs by a huge amount of money...and probably a bigger risk is when these owners get fed up and decide to sell up.

Football is a unique model yes....but I'm not really sure how you can change it now. They have tried and failed with financial fair play as the very rich owners are far more powerful than the legislators...and remember the people who are supposed to be running the game are also invariably part of the gravy train. Just look at the increase in budgets and number of people employed by the likes of FIFA, UEFA or our own FA. Even take a look at the so called Trade Union leader - Gordon Taylor - 10 years ago he was on a salary of £450k which was hardly a pittance and he recently retired on a salary of £2.5m. The whole thing has gone way beyond morals or caring what happens to individual clubs.

[Chester Perry]

I am saying that their is a malaise at Manchester United Football Club that goes to the very top, Ferguson fought tooth and nail for a football focus but that went with him, the only people with any strategy at the club appear to be the commercial department

[TVC15]

There has been a lot of talk recently about the state of Old Trafford and the need to make serious changes to the stadium.

The Glazers did there what Gillette & Hicks did at Liverpool in putting the debt onto the club. It came close to finishing Liverpool off; United are bigger and have managed the debt.

The Moores sold the club to Gillette & Hicks for almost £300m and from that point of course the club owed the money to Gillette and Hicks. You cannot really blame the americans for that - its the Moores who were cashing in just like Edwards etc at United. The Fenway Group then bought out Hicks and Gillette because they had fallen out and decided to put it up for sale - the amount they sold it for was not too different to how much they paid to buy Liverpool.
Since then the club has been successful largely due to the big increases in TV money which is the only reason why any of the Americans want a part of any club in England. The Fenway Group have not done all of this out of the goodness of their hearts. The only difference is (and its the same with the Glazers and United) is that most of the noise and outrage from the fans disappeared as the clubs became profitable and they saw hundreds of millions spent on their team. At the time of Hicks and Gillette nobody could have known or dreamed how much the TV income would increase by...or maybe they did which is why they and the others invested in the first place.

[Touchline]

So, the message here is that badly run clubs suffer financial difficulty if they are relegated.
That criteria doesn’t apply at Burnley. Certainly not at the moment.
Our Directors are astute and aware of the potential consequences.

[Chester Perry]

So, the message here is that badly run clubs suffer financial difficulty if they are relegated.
That criteria doesn’t apply at Burnley. Certainly not at the moment.
Our Directors are astute and aware of the potential consequences.

I actually think the message is - it is a tightrope across a canyon and mistakes are potential fatal

[KRBFC]

So, the message here is that badly run clubs suffer financial difficulty if they are relegated.
That criteria doesn’t apply at Burnley. Certainly not at the moment.
Our Directors are astute and aware of the potential consequences.

So in 5 years time, if we are in the PL still, any ideas on probable income and wage bill? What is a manageable wage bill on Championship income? We are heavily reliant on player sales to make profit, Pl income rises year on year, player fees rise, overall wage bill rise year on year. Fine margins indeed and it’s no surprise some of the relegated clubs end up a mess given the income difference.

[GodIsADeeJay81]

So in 5 years time, if we are in the PL still, any ideas on probable income and wage bill? What is a manageable wage bill on Championship income? We are heavily reliant on player sales to make profit, Pl income rises year on year, player fees rise, overall wage bill rise year on year. Fine margins indeed and it’s no surprise some of the relegated clubs end up a mess given the income difference.

Given the way the club are careful with wages and transfer fees, will almost certainly include relegation clauses I'd say we'd survive a relegation without a financial implosion like numerous other clubs.

If our wage bill/running costs exceed the PL money then that's the time to worry, but I don't think it will happen with this board/owners.

The other clubs are a mess because their wage bill alone exceeds their incoming monies, usually by a fair whack and they aren't allowing for relegation.

[Chester Perry]

There is an increasing chance the TV income will stagnate or even fall (certainly domestically with the overseas rights becoming dominant and balancing the shortfall) - couple this with the new distribution agreements - the bottom six will get less from the new deal as will those who are relegated as parachute payments fall accordingly.

The big six will earn evermore from the new distribution rules and from the increased monies in UEFA competitions. In 2024 (should Andrea Agnelli get his way) the Champions League and even Europa League will effectively become a closed shop as a 3rd competition is introduced for clubs seeking to improve their coefficeint's and get a promotion to the next tier. Everyone else will be under incredible pressure to increase wages to a comparable level (big six Academy wages). about 20-24 clubs will take it in turns to rotate the other 14 PL places between them.

There is always the possibility that the EFL may turn it's back on PL solidarity payments altogether - a topic that is gaining support