Anyone seriously think we could go bust next Season

[spt_claret]

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.

And as people have pointed out that highest level encompassed Lehman Brothers who went bust and Citibank who have been mired in scandals and irregularities- I'm not suggesting they were involved or responsible in any way simply that if you want to refer to that experience for the positives you have to consider the negatives as well (namely troubled companies) and also how American/multinational high finance is a very different market to football with very different asset profiles.

[RVclaret]

And as people have pointed out that highest level encompassed Lehman Brothers who went bust and Citibank who have been mired in scandals and irregularities- I'm not suggesting they were involved or responsible in any way simply that if you want to refer to that experience for the positives you have to consider the negatives as well (namely troubled companies) and also how American/multinational high finance is a very different market to football with very different asset profiles.

Point being I’m sure their team can put together some pretty complex cash flow forecasting models and understand how to factor in various risks, relegation being clearly the main one. Being in Lehman brothers, so what, so was the owner of the worlds largest private equity firm (Blackstone) who is now one of the richest and most successful people on the planet. As long as they weren’t the key decision makers (they werent) then it doesn’t have relevance.

[spt_claret]

Point being I’m sure their team can put together some pretty complex cash flow forecasting models and understand how to factor in various risks, relegation being clearly the main one. Being in Lehman brothers, so what, so was the owner of the worlds largest private equity firm (Blackstone) who is now one of the richest and most successful people on the planet. As long as they weren’t the key decision makers (they werent) then it doesn’t have relevance.

Peterson and Schwartzmann left Lehmann over 2 decades before it collapsed, our chairman left a couple of years before, very different pictures of institutional success and competence regardless of how far from the decision making he was as a managing director (of which I believe there were a fair few). And I don't much care how rich and successful Peterson and Schwartzmann made themselves I care about the condition of the businesses left behind or invested by our board during their financial careers, and we don't know what decisions they made or what they invested in.

You're going off hypothetical "I trust" and "I'm sure" with no evidence, and then discounting concerns which are self admittedly not jumping to conclusions but just pointing out you can't take the smooth, ignore the rough entirely, and go off pure faith.
And then you go in other threads and accuse people of blind faith or wilful ignorance for not wanting shut of Dyche. It's quite the inconsistency.

[Newcastleclaret93]

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.

Finance and football are a completely different thing.

Why don’t you mention what Checkitts etc… did at his last few sporting clubs.

[GodIsADeeJay81]

Finance and football are a completely different thing.

Why don’t you mention what Checkitts etc… did at his last few sporting clubs.

Ok, now you're getting tiresome with your bizarre diatribe.

Dyche is respected in football, just because you don't respect what he'd done here, doesn't mean others share your view.

We all know what happend at RSL, it's been done to death and still you can't seemingly grasp what happened there.

I've started ignoring what you say a lot of the time, but right now it's difficult because if the idiocy of what you're saying.

[Newcastleclaret93]

Ok, now you're getting tiresome with your bizarre diatribe.

Dyche is respected in football, just because you don't respect what he'd done here, doesn't mean others share your view.

We all know what happend at RSL, it's been done to death and still you can't seemingly grasp what happened there.

I've started ignoring what you say a lot of the time, but right now it's difficult because if the idiocy of what you're saying.

What you Ona about? I do respect Dyche and what he has done for this club? It’s fantastic.

I am just realistic and understand that no other club would be interested in him in the prem.

Yes and you love to spin there time at RSL as some kind of weird success story.

[RVclaret]

Peterson and Schwartzmann left Lehmann over 2 decades before it collapsed, our chairman left a couple of years before, very different pictures of institutional success and competence regardless of how far from the decision making he was as a managing director (of which I believe there were a fair few). And I don't much care how rich and successful Peterson and Schwartzmann made themselves I care about the condition of the businesses left behind or invested by our board during their financial careers, and we don't know what decisions they made or what they invested in.

You're going off hypothetical "I trust" and "I'm sure" with no evidence, and then discounting concerns which are self admittedly not jumping to conclusions but just pointing out you can't take the smooth, ignore the rough entirely, and go off pure faith.
And then you go in other threads and accuse people of blind faith or wilful ignorance for not wanting shut of Dyche. It's quite the inconsistency.

Not going off pure faith, but at the same time, there has to be some on the table given 1. The owners impressive CV’s in the world of finance 2. MG’s stance as a ‘custodian of the club’ / fan. Plus I’ve backed up with several forecasts of our finances, using accounts from West Brom / Bournemouth as comparisons. I don’t buy the doom scenario that others do and while, if we don’t go back up within three seasons of parachute payments, yes we would likely re settle as a mid / bottom half table Championship club. That will come with significant wage bill cuts and player sales.

[Chester Perry]

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.

Garlick's parting gift to the club was falling amortisation (it could be as low as £25m in the next accounts) and almost zero outstanding on transfer payments (apart from conditional ones. Transfer dealings since may raise that - particularly as we have a lot of bodies to sign up this summer (remember signing on fees and agents fees make up part of the amortisation figure)

The 2019/20 season saw wages of £94m over 12 months, of which circa £16m was the bonus pot, leaving a basic wage bill of £78m - £80m
The 2020/21 season is likely to see a fall in wages to £83m - £87m (my estimate) which when added to amortisation of circa £25m and against revenues that may be as low as £115m gives the W+A/R ratio of 94% - 96.5% - the accounts out soon will provide the true position

If we are relegated this season we will not pay the bonus for Premier League status - saving around £15m possibly more - but it is probable that the basic wage bill is back up around £80m+

As for life in the Championship, are we certain that VSL have continued the relegation policy with their new signings (my guess is yes, but there may also be release/sale agreements in place too)

The next question is what rate is the cut in the relegation clause?

for the sake of this exercise let us assume a cut of 50% which would leave wages at circa £40m and add amortisation at around £25m - £30m (which is punishingly high in the championship under this new measure).

We are told that the fixed distribution element of the Premier Leagues Overseas Income levels is going to rise which will see a small increase in parachute payments - taking them to circa £50m (their value has not been disclosed officially for 3 years now) - can the club make the necessary commercial and matchday revenues to get to a level where the W+A/R ratio is 90% or lower - that is a very big ask of circa £25m, one we have never previously achieved.

as for the MSD loan - I suspect that the loan agreement will require a reduced exposure in the Championship (a partial not a full repayment, certainly if it extends to a 2nd season at that level) - West Ham's certainly does, though that loan is for a considerably larger sum than we believe ours is.

[spt_claret]

Not going off pure faith, but at the same time, there has to be some on the table given 1. The owners impressive CV’s in the world of finance 2. MG’s stance as a ‘custodian of the club’ / fan. Plus I’ve backed up with several forecasts of our finances, using accounts from West Brom / Bournemouth as comparisons. I don’t buy the doom scenario that others do and while, if we don’t go back up within three seasons of parachute payments, yes we would likely re settle as a mid / bottom half table Championship club. That will come with significant wage bill cuts and player sales.

It's not an impressive CV. It's high level titles at problem stricken institutions with zero information about what they did or did not invest in and the long term outcome of those investments for anyone except themselves. An impressive CV would be providing impressive credentials and examples of their work, not just pointing to their titles and appealing to the authority of such.
I for one don't want us to revert to a bottom half championship club and believe financial security is integral in preventing this.

Garlick's parting gift to the club was falling amortisation (it could be as low as £25m in the next accounts) and almost zero outstanding on transfer payments (apart from conditional ones. Transfer dealings since may raise that - particularly as we have a lot of bodies to sign up this summer (remember signing on fees and agents fees make up part of the amortisation figure)

The 2019/20 season saw wages of £94m over 12 months, of which circa £16m was the bonus pot, leaving a basic wage bill of £78m - £80m
The 2020/21 season is likely to see a fall in wages to £83m - £87m (my estimate) which when added to amortisation of circa £25m and against revenues that may be as low as £115m gives the W+A/R ratio of 94% - 96.5% - the accounts out soon will provide the true position

If we are relegated this season we will not pay the bonus for Premier League status - saving around £15m possibly more - but it is probable that the basic wage bill is back up around £80m+

As for life in the Championship, are we certain that VSL have continued the relegation policy with their new signings (my guess is yes, but there may also be release/sale agreements in place too)

The next question is what rate is the cut in the relegation clause?

for the sake of this exercise let us assume a cut of 50% which would leave wages at circa £40m and add amortisation at around £25m - £30m (which is punishingly high in the championship under this new measure).

We are told that the fixed distribution element of the Premier Leagues Overseas Income levels is going to rise which will see a small increase in parachute payments - taking them to circa £50m (their value has not been disclosed officially for 3 years now) - can the club make the necessary commercial and matchday revenues to get to a level where the W+A/R ratio is 90% or lower - that is a very big ask of circa £25m, one we have never previously achieved.

as for the MSD loan - I suspect that the loan agreement will require a reduced exposure in the Championship (a partial not a full repayment, certainly if it extends to a 2nd season at that level) - West Ham's certainly does, though that loan is for a considerably larger sum than we believe ours is.

Good to see Garlick drove that down where possible. The wage cut of 50% I'm fine with assuming. How did you arrive at 25-30m amortisation is that just going off your earlier estimate with potential for extra from recent signings? Is there a possibility it's lower and by how much? I'm going to avoid worst case "how much higher could it be".
The match day revenue figure is terrifying especially for a championship club with reduced gates.
Reaching the end of my work day so a bit confused but your point on the loan- are you meaning they might increase or decrease the amount/speed with which they want to be repaid?
Thanks for another excellent bit of info.

[aggi]

...

for the sake of this exercise let us assume a cut of 50% which would leave wages at circa £40m and add amortisation at around £25m - £30m (which is punishingly high in the championship under this new measure).

We are told that the fixed distribution element of the Premier Leagues Overseas Income levels is going to rise which will see a small increase in parachute payments - taking them to circa £50m (their value has not been disclosed officially for 3 years now) - can the club make the necessary commercial and matchday revenues to get to a level where the W+A/R ratio is 90% or lower - that is a very big ask of circa £25m, one we have never previously achieved.

...

Firstly there's no guarantee that these measures will come in. There's a need for them but is there an appetite?

I also wouldn't be surprised if relegated teams start to write down the book value of their players on relegation. There's probably an argument that can be made that relegation impairs the value.

[Chester Perry]

Firstly there's no guarantee that these measures will come in. There's a need for them but is there an appetite?

I also wouldn't be surprised if relegated teams start to write down the book value of their players on relegation. There's probably an argument that can be made that relegation impairs the value.

there is and if the new measure does come in I suspect that it too will drive down transfer values - all part of UEFA's plan to keep the biggest clubs happy and increase their opportunities to take part in UEFA club competitions - thereby helping UEFA maximise it's revenues it is not sport in any traditional sense of the word anymore

[Chester Perry]

Good to see Garlick drove that down where possible. The wage cut of 50% I'm fine with assuming. How did you arrive at 25-30m amortisation is that just going off your earlier estimate with potential for extra from recent signings? Is there a possibility it's lower and by how much? I'm going to avoid worst case "how much higher could it be".
The match day revenue figure is terrifying especially for a championship club with reduced gates.
Reaching the end of my work day so a bit confused but your point on the loan- are you meaning they might increase or decrease the amount/speed with which they want to be repaid?
Thanks for another excellent bit of info.

Incoming transfers this last year of £12m + £2.5m + £15m + £12m = £41.5m + £6m in agents fees = £ 47.5m / by 5 years gives an annual amortisation of £9.5m which is roughly 70% - 80% of what we will lose from the outgoings this year from Wood, Gibson and those unlikely to extend - new signings (even on frees) and extension signings will add to the amortisation bill (signing on fees and agents fees)

I am saying there may be a partial repayment not full repayment on the MSD loan required on relegation - thereby reducing the overall loan amount.