Accounts: £36.6m Profit

[Leisure]

Ever heard of the happy medium.

So what, they should have made a profit but less than they've made?

[Cleveleys_claret]

A couple of points that strike me here.

Firstly, without more context - which realistically isn't going to be forthcoming - it's incredibly difficult to draw too many firm conclusions from these accounts, and there is definitely a danger in over-interpreting. The wage bill, for example, looks strikingly high compared to most estimates - and indeed looks higher than expected when compared with some of our rivals - but what we cannot tell is the extent to which that is distorted by our success last season.

Secondly, though, it does seem that we're at a bit of a crossroads. I note there's broad agreement that we should be prioritising younger talent upon which we can turn a trading profit. However, I'm not sure the assertion that has underpinned our recent strategy is backed up by evidence - the focus of our signings in the last two years have been much older, more experienced players who may well have been low risk, but will also have a wage premium: Hart, Lennon, Cork, Crouch and (to a lesser extent given their slightly lesser pedigree) Walters and Bardsley (Rodriguez would have been a similar sort of signing). It isn't the whole story but it's the prevailing trend, and it's notable that when players list the players we've signed as senior players who are likely to turn us a profit, we're focusing on players who we signed 2-3 years ago like Pope and Tarkowski.

There will always be a balance to be struck, and there's nothing wrong with signing "bankers" given that staying in the Premier League and getting the TV money will always be better for our finances than player trading. But we've seen this season that actually, the players we've signed aren't quite good enough to secure that on their own, and we've not balanced those steady-eddie signings with enough players who we can nurture and (over time) make into players who can take this league by the scruff of the neck (but who, at least in theory, arrive initially on smaller wages reflecting the fact that they're less proven). Of course, the size of the profit we've generated suggests we've had more scope to be braver in that regard than perhaps we have been.

So whilst we can't draw too many conclusions from the accounts themselves, perhaps the rough outline does give rise to useful opportunity to reevalulate exactly what we're trying to achieve in our recruitment. But admittedly, the other thing those accounts do show is how difficult the balance is that we're trying to strike, and the size of the challenge in remaining competitive at this level whilst remaining on a long-term stable footing.

Excellently put, much better than I could have.

[Blackrod]

It would be interesting to work out what the value of the club really is based on no debt ( rare), future liabilities on contracts, assets and future income streams. Much will be dependent on our PL status.

[Vegas Claret]

would be interesting to see what the breakdown of wages are, obviously the bulk of that would be to the players - anyone know how many paid staff the club actually employ ?

[Tall Paul]

would be interesting to see what the breakdown of wages are, obviously the bulk of that would be to the players - anyone know how many paid staff the club actually employ ?

It's in the notes to the accounts - 184 plus 295 part time staff on matchdays.

[Chester Perry]

It's in the notes to the accounts - 184 plus 295 part time staff on matchdays.

It is a tight run ship - same notes show that we employ the same results based bonus to transfer fees as wages -

Additional transfer fees of up to £12,990,000 (2017 - £7,080,000) that may become payable upon achievement of certain conditions contained within transfer contracts if the respective players are still in service of the club on specific future dates, are accounted for in the year in which those conditions are satisfied.

or perhaps people want us to be like Fulham who last season ran at £1.14m loss per week and spent £118m on players in the summer see post #733 http://www.uptheclarets.com/messageboar ... &start=700" onclick="window.open(this.href);return false;

[cricketfieldclarets]

Great news. A lot right at the club. 

But for those saying we need to be careful / cant afford to compete. There is a balance. 

We have spent circa 30m in fees this season on Gibson, Hart and Vydra. Along with wages and signing on fees for those and Crouch. 

Gibson, Crouch and Vydra have started 4 games between them. Meaning Hart aside we have started almost every game without any new bodies. Which is incredibly poor. And explains exactly why we are where we are. Anyone who doesnt improve and invest be it Man Utd or Burnley will go backwards. 

Its a great time to be a claret. 
We are in a good place. 

Hopefuly this season is a lesson. 

I keep banging the drum about it, but if we start looking abroad we will start to get better value. 

The investment in youth. Training. Etc is frugal. Our transfer business over the last 3 windows hasnt been.

[Hipper]

Gibson, Crouch and Vydra have started 4 games between them. Meaning Hart aside we have started almost every game without any new bodies. Which is incredibly poor. And explains exactly why we are where we are. Anyone who doesnt improve and invest be it Man Utd or Burnley will go backwards. 

Don't agree. That does not explain why we have gone backwards (although frankly that is the only way we would go, just not as far back as we have!).

Our failing this season is the poor performance of the team due to the complete loss of form or absence of so many players - Lowton, Ward, Defour, Brady and Pope have mostly not played because of fitness issues or poor form. Mee and Tarkowski have blown hot and cold. Cork is nothing like he was last season. Whilst Bardsley, Taylor, Westwood, McNeil, and Hart have done OK and in some cases are improving individually, it's not the same.

Of course it all began with the loss of Defour and Brady half way through last season and most agree that it would have been good to replace at least Defour.

[joey13]

He is always happier when ever there is a loss, especially on a Saturday. Can't wait to log in and bitch

You really are an odious individual and troll

[joey13]

Guess you'd be happier then if we'd made a loss!

No I’d be happier if the money had been spent on strengthening the team and not bringing in a 38 year old has been , then again I would have thought that was obvious.

[GodIsADeeJay81]

No I’d be happier if the money had been spent on strengthening the team and not bringing in a 38 year old has been , then again I would have thought that was obvious.

There's an earlier reference to Vokes/Crouch deal.

In your opinion, would you have kept a player who wants out for regular first team football, thus potentially causing disharmony in the squad or sell him for a decent amount and get a short term bench warmer.
The club then gets more time to find a replacement for Sam by the summer...

[aggi]

It would be interesting to work out what the value of the club really is based on no debt ( rare), future liabilities on contracts, assets and future income streams. Much will be dependent on our PL status.

I previously did a rough valuation of a club and used:

Club Valuation = (Revenue + Net Assets) x (Net Profit + Revenue)/Revenue x (Stadium Capacity %) ÷ (Wage Ratio %)

(Stadium capacity is how much of the stadium is used on average)

A rough calculation would give a value of ~ £415m which I think most would agree would be too high. The issue being is that formula is used for valuing established clubs. For a club like Burnley you'd have to discount it to represent the chances of us being relegated and a significant drop in turnover.

(For comparison, the same formula applied to 2016 (i.e. Championship level) would come out at around £45m so you'd be looking somewhere in between there most likely.)

[cricketfieldclarets]

Don't agree. That does not explain why we have gone backwards (although frankly that is the only way we would go, just not as far back as we have!).

Our failing this season is the poor performance of the team due to the complete loss of form or absence of so many players - Lowton, Ward, Defour, Brady and Pope have mostly not played because of fitness issues or poor form. Mee and Tarkowski have blown hot and cold. Cork is nothing like he was last season. Whilst Bardsley, Taylor, Westwood, McNeil, and Hart have done OK and in some cases are improving individually, it's not the same.

Of course it all began with the loss of Defour and Brady half way through last season and most agree that it would have been good to replace at least Defour.

Which kind of backs up my point. We didn't strengthen the eleven. With all those injury and poor form issues, the summer signings (hart excluded) have still started a combined 4 games.

[Leisure]

No I’d be happier if the money had been spent on strengthening the team and not bringing in a 38 year old has been , then again I would have thought that was obvious.

I understand that we didn't pay a transfer fee for Crouch but either way it's immaterial to the published figures, as they are for the previous season! But how much would you have liked the club to spend and on which payers and how do you know that said players would have come to Burnley?

[GodIsADeeJay81]

I understand that we didn't pay a transfer fee for Crouch but either way it's immaterial to the published figures, as they are for the previous season! But how much would you have liked the club to spend and on which payers and how do you know that said players would have come to Burnley?

Queue the usual answer of "it's not my job to decide what to spend or who to sign, it's the clubs job"

[houseboy]

Burnley fans have a lot to be thankfull for IMO of course . Great news!

Why exactly? We haven't seen too much spending on players. As I have said before we aren't a bank and and I don't care how 'rich' we are, I feel no 'pride' at all, strangely last I looked you don't win trophies for having most money. I find it absolutely bizarre that anyone can find anything to be 'proud' about because we have posted a profit. We are in serious relegation trouble at the moment and that concerns me a tad more than how rich we might be in the Championship. What I would give to be skint and in the top half of the table.

The whole problem with football these days is the obsession with money and unfortunately fans are coming around to think the same.

[Paul Waine]

A couple of points that strike me here.

Firstly, without more context - which realistically isn't going to be forthcoming - it's incredibly difficult to draw too many firm conclusions from these accounts, and there is definitely a danger in over-interpreting. The wage bill, for example, looks strikingly high compared to most estimates - and indeed looks higher than expected when compared with some of our rivals - but what we cannot tell is the extent to which that is distorted by our success last season.

Secondly, though, it does seem that we're at a bit of a crossroads. I note there's broad agreement that we should be prioritising younger talent upon which we can turn a trading profit. However, I'm not sure the assertion that has underpinned our recent strategy is backed up by evidence - the focus of our signings in the last two years have been much older, more experienced players who may well have been low risk, but will also have a wage premium: Hart, Lennon, Cork, Crouch and (to a lesser extent given their slightly lesser pedigree) Walters and Bardsley (Rodriguez would have been a similar sort of signing). It isn't the whole story but it's the prevailing trend, and it's notable that when players list the players we've signed as senior players who are likely to turn us a profit, we're focusing on players who we signed 2-3 years ago like Pope and Tarkowski.

There will always be a balance to be struck, and there's nothing wrong with signing "bankers" given that staying in the Premier League and getting the TV money will always be better for our finances than player trading. But we've seen this season that actually, the players we've signed aren't quite good enough to secure that on their own, and we've not balanced those steady-eddie signings with enough players who we can nurture and (over time) make into players who can take this league by the scruff of the neck (but who, at least in theory, arrive initially on smaller wages reflecting the fact that they're less proven). Of course, the size of the profit we've generated suggests we've had more scope to be braver in that regard than perhaps we have been.

So whilst we can't draw too many conclusions from the accounts themselves, perhaps the rough outline does give rise to useful opportunity to reevalulate exactly what we're trying to achieve in our recruitment. But admittedly, the other thing those accounts do show is how difficult the balance is that we're trying to strike, and the size of the challenge in remaining competitive at this level whilst remaining on a long-term stable footing.

Hi spice, agree, there is a skill to reading and understanding financial statements. We can draw a large number of firm conclusions if we understand the accounting standards - i.e. the rules which govern the preparation of accounting statements - and relate the accounts to the things that we know have happened during the period that the accounts relate to and those other events that happened either before the specific accounting period and those other events that happened after the end of the accounting period.

I posted a number of times last summer (transfer window time) that the wages for the latest set of accounts could be "up to £80 million." (I'm sure there is someone on here who is an expert on the search facilities who can find my posts. Maybe thee's someone who can draw themselves away from politics for a few minutes to do this). My estimate took into account: 1) Sean Dyche's new 5 year contract - Jan-2017, so Sean's new wage would impact or a full year on the 2017/18 a/cs; 2) similarly new contracts and new signings in both Jan-2017; summer 2017 and Jan-2018 all adding to the wages in the 2017/18 period, either full 12 months or 6 months only. Yes, we've got to make some estimates on the bonuses to be paid out for retaining Premier League status and then achieving 7th in the league. My expectation is that retaining PL will earn the larger share of the bonus pot than finishing 7th - and, this based on the revenue from another season in the PL v the extra revenue for 7th. (I don't think the difference in tv money for 17th v 7th will be anywhere near a good estimate of the "7th finish" bonus contribution. Maybe next season's accounts will tell us more).

Signings: I feel Hart falls into the category of £3.5 million to sign and City py half his wages so a decent shot at improving him and selling on to get back more. Unfortunately, I don't think this investment has worked out like that. I doubt any of the others you've mentioned would be straining our wage budget - though I'd hope they'd all get good bonuses if the squad is successful.

Pope and Tarks and, add JBG, signed in Jan-2016 and July-2016. Don't forget that these accounts cover the period July-2017 to Jun-2018. So, it is relevant to refer to the players brought in a year or so before the new accounts relate to. We should also remember that Tarks became a 1st XI starter at the start of the season 2017/18 - and Nick Pope got in the team when Tom Heaton was injured in Sept-2017.

My firm conclusions from the accounts, Burnley FC is doing fantastically well. Our board is "stewarding" the club excellently. All we need now is a few good results from our last 7 games - and we can forecast another season in the Premier League starting in August.

UTC

[claret wizard]

£81m in wages? Terrific value for money, that

I might start supporting Padiham instead.

7th best team in the Country for $81M, seems cheap compared to the others.

[GodIsADeeJay81]

Why exactly? We haven't seen too much spending on players. As I have said before we aren't a bank and and I don't care how 'rich' we are, I feel no 'pride' at all, strangely last I looked you don't win trophies for having most money. I find it absolutely bizarre that anyone can find anything to be 'proud' about because we have posted a profit. We are in serious relegation trouble at the moment and that concerns me a tad more than how rich we might be in the Championship. What I would give to be skint and in the top half of the table.

The whole problem with football these days is the obsession with money and unfortunately fans are coming around to think the same.

It isn't really an obsession though, unless you'd prefer to end up like Bolton in the long term, not knowing if your going to have a club to follow soon?

Yes that's the extreme but even using Sunderland as an example, they're in their arses financially.

There's nothing wrong with wanting a club to be on an even financial keel.

[NL Claret]

The outspoken Accy Stanley chairman, Andy Holt, tweeted something along the lines of Burnley been a proper run club.

Some UTC posters unhappy though, not sure why and then there's the usual attempt to change the thread to one about the Peter Crouch signing.

Just needs another UTC expert to come out and mention the money we gave to Scudamore, yes I know, it wasn't in this set of accounts.

[summitclaret]

as @KieranMaguire puts it - Burnley once again didn’t need owners to dip their hands into their pockets for either loans or new shares. Shows how a professionally run outfit can live within its means and qualify for Europe.

And be in a fight to avoid relegation brought about by it refusal to invest a mediocre amount in its midfield.

[Chester Perry]

And be in a fight to avoid relegation brought about by it refusal to invest a mediocre amount in its midfield.

there is absolutely no objective method you could employ to make that claim

[Stproc]

This thread was going so well until the usual, predictable posters stepped.
There are people who have probably never managed any accounts in their life but know how to run a football club, amazing.

[Goodclaret]

The posters who just say "buy another 2 players and we would be safe" just prove they have no idea how football works and, more importantly, how to financially manage a business to ensure it continues as a going concern. Fulham are the clear example this season - blew a shed load of money only to be relegated again. Wolves spent more and it has worked very well for them BUT it wasn't guaranteed. The real difference is both these clubs mentioned are backed, heavily, by a benefactor. They can afford to gamble far more than we can. Last year we posted similar profits but, because we were safe and looking towards Europe, the club had been managed brilliantly. A year later, the same way of running the club, we are fighting relegation so the club get bashed by some.

My final comment is the obvious link between the increase in TV broadcasting and player wages. Whichever player we want to sign, they want a split of that income. If our turnover suddenly jumped to £200m our wages would, more than likely, be £140m for the exact same calibre of player. Those increase in salary demands have to be managed correctly due to the financial gulf between the PL and Championship.

[summitclaret]

Yet again people quoting Fulham's approach. Why pick extremes.

Dyche clearly wanted to beef up midfield. We even had Clucus in for a medical. So we must have had the money. Stop making excuses. There aren't any.

[IanMcL]

Lot of talk about player sales being the driving factor behind the profit, and concern over the wage bill.

I’ll reiterate then, that signing younger players with sell on potential should always be this club’s objective.

ADDITIONALLY: How many people still think Jay Rodriguez would’ve been a smart investment?

I do!
There was a need for his quality and he still has mileage.

[Chester Perry]

So Summit who would you pick to compare us with

[IanMcL]

When I received the shareholders email this morning, it was an old year, not the latest figures!

Corrected now. Good news.

[summitclaret]

So Summit who would you pick to compare us with

I wouldn't we are unique and I remain generally happy with how we are managed. However ask yourself how on earth the expected yo compete in the PL and the EL with such a threadbare midfield. We made 45m pre tax profit.

[GodIsADeeJay81]

Yet again people quoting Fulham's approach. Why pick extremes.

Dyche clearly wanted to beef up midfield. We even had Clucus in for a medical. So we must have had the money. Stop making excuses. There aren't any.

We had Lansbury here with pen in hand ... remember?

[GodIsADeeJay81]

I wouldn't we are unique and I remain generally happy with how we are managed. However ask yourself how on earth the expected yo compete in the PL and the EL with such a threadbare midfield. We made 45m pre tax profit.

We have been, and are, competing with no benefactor.
How do you expect us to compete in this market?

[summitclaret]

We have been, and are, competing with no benefactor.
How do you expect us to compete in this market?

Like we are but with a tinny tiny bit more nous.

[rob63]

Bit concerned about Mike Rigg's comments on the new computer-driven scouting system for assessing players.....statistics can lie, or at least take you down the wrong route. I'd be happier if he said they were concentrating on watching actual football matches, albeit online or by other non-terrestrial means to assess players,preferably young ones with potential & a sell-on value....... i know these are in the evening & weekends, but maybe football club staff don't like to take their work home with them! I watch a lot of continental matches & the players really are out there if you look in depth

[Chester Perry]

Summit that is obfuscation given everything else you have said

We are aware that the club identified more than one player for the midfield but for reason's we are not privy too were unable to complete a transfer - there is a likelihood that other attempts were made we do not know about. that leaves us with the reasonable conclusion that what we could get who we wanted/thought we could or the players available would not strengthen us in the management teams eyes

also if we discount player sales we are actually trading at a level at the limits of sustainability in this league

[claretblue]

we could be going down with circ 100m in thr bank

we could afford to buy Fulham!

[AndyClaret]

£8m paid in corporation tax.

[Chester Perry]

£8m paid in corporation tax.

£8.5m actually - makes you wonder how Amazon, Apple, Facebook etc struggle on doesn't it - no way you would see £0 in Directors remuneration there or a recommendation that no dividend be paid

[summitclaret]

Summit that is obfuscation given everything else you have said

We are aware that the club identified more than one player for the midfield but for reason's we are not privy too were unable to complete a transfer - there is a likelihood that other attempts were made we do not know about. that leaves us with the reasonable conclusion that what we could get who we wanted/thought we could or the players available would not strengthen us in the management teams eyes

also if we discount player sales we are actually trading at a level at the limits of sustainability in this league

No we tried to sign a player everyone knew had a bad knee and left it too late to get anyone else when he failed a medical. It's outcomes that count. Did we achieve what we set out to do. No. Are we sufferring from it. You bet we are.

[cricketfieldclarets]

Yet again people quoting Fulham's approach. Why pick extremes.

Dyche clearly wanted to beef up midfield. We even had Clucus in for a medical. So we must have had the money. Stop making excuses. There aren't any.

Absolutely.

Fulham are the extreme. There is no strategy there at all. No allignment with manager, board or even players. Theyre an example that poor investment is worse than no investment.

We are an example of that in the last three windows. But to a much lesser extreme.

[summitclaret]

we could afford to buy Fulham!

For a year!

[aggi]

also if we discount player sales we are actually trading at a level at the limits of sustainability in this league

But there's no reason to do that. We have assets that can be realised and although it may be a little difficult to predict exactly which players will make profits if we have a sensible transfer policy it becomes a revenue stream we can have a decent idea about overall.

[Bin Ont Turf]

A win tomorrow and we'll let them off with the £81 million wages.

[Spijed]

Absolutely.

Fulham are the extreme. There is no strategy there at all. No allignment with manager, board or even players. Theyre an example that poor investment is worse than no investment.

We are an example of that in the last three windows. But to a much lesser extreme.

Is there a single example where a club has succeeded at this level without having to bust the bank and ending up in financial difficulties?

[GodIsADeeJay81]

Like we are but with a tinny tiny bit more nous.

That's why we have appointed Rigg, to improve our transfer strategy etc.

Next.

[GodIsADeeJay81]

Bit concerned about Mike Rigg's comments on the new computer-driven scouting system for assessing players.....statistics can lie, or at least take you down the wrong route. I'd be happier if he said they were concentrating on watching actual football matches, albeit online or by other non-terrestrial means to assess players,preferably young ones with potential & a sell-on value....... i know these are in the evening & weekends, but maybe football club staff don't like to take their work home with them! I watch a lot of continental matches & the players really are out there if you look in depth

Clubs watch games around the world on TV, even future opponents, not just players.
Then if a player looks like they're worth pursuing then a scout attends.

It's not rocket science is it to understand a simple process, or do you want the club to have hundreds of scouts?

[summitclaret]

That's why we have appointed Rigg, to improve our transfer strategy etc.

Next.

As maybe but not much use if we go down.

[GodIsADeeJay81]

As maybe but not much use if we go down.

Will we stop buying players if we go down then?

Hope someone's told the club that....

[Chester Perry]

Summit you are still avoiding the questions

[Long Time Lurker]

Accounts

First off, I really like reading our accounts. Other clubs tend to go down the route of making things obscure, but our accounts are always very transparent with explanations that highlight all the key points in a clear and constructive manner. Viewing them is a numerical pleasure not a chore.

Looking at the figure of £36.5m profit, in comparison to the £22.1m profit of the previous financial period, it is tempting to say that our profit is rising.

However, that isn't the case. Looking at the figures more closely our profitability actually declined.

We generated £14.4m more profit for the year ended 30th June 2018, but that included player sales and the 7th place cash windfall. On the opposite side of the balance sheet wages increased by a little over £20.5m, we lost about £6m more in player depreciation than the previous period and we spent an extra £3.6m on general operating costs.

Bundling all of that together our primary cost of doing business increased by roughly £30m.

In the same time frame our turnover increased by almost £18m, mainly due all of the extra money that our 7th placed league position brought in. Our 7th placed position earned us about £27m along with additional income from TV revenue and income from live matches.

The income streams that are associated with TV revenue are more balanced in respect to the league positions, although the top six are trying their best to extend the revenue inequality when the health of the league and the quality of football would be better served by increasing the revenue share for those outside the top six. Arguing that the top six clubs attract more viewers is a fair point, but how many viewers would they attract if they had nobody to play or every game was a walkover.

It takes two teams to play a game of football and preserving the competitive quality of the league is far more important to viewer figures than the commercial visibility of the top six.

Adding to the prize money and TV revenue we had player sales of nearly £29.5m.

To put everything in context we had a very profitable period, but that doesn't stand as a bench mark for this year and beyond.

We posted a profit of £36.65m for the financial period. Now, our costs are going to stay roughly the same if we stay in the premier league (although our wages will decrease because a significant chunk of the £20m rise will have been a result of bonus payments). For the sake of hypothetical argument lets chop it down to £10m for the next accounts. If we finish in 16th this season we will earn about £9.5m in prize money, which would be £17.5m less than last season.

This season we will have to cover something like £20m in higher wages (£30m less bonuses) and our revenue from player sales could be £24.5m lower than the last financial period (we probably got £5m for Vokes). I should also point out that the income generate from player sales is received over time, which is very important, but not for this rough and ready assessment.

So in the next set of accounts our income could decrease by £42m. Or to put it simply, instead of us making a profit of about £36.5m we could be facing a loss of £5.5m. That is how quickly things can turn around in the world of football finance. If we look at the £2m that is awarded for each position on the league ladder it is easy to see why people refer to football as a result driven business.

As fans we want to finish as high up the table as we can, but from a financial perspective a couple of places can mean the difference between posting a profit and a loss.

Now, taking all of that onboard do we have nearly £60m to splash out on players? Yes, but only if we throw caution to the wind and place the long term prosperity of the club at risk.

For some people the £60m cumulative profit will stand out as a license to go out and spend our cash freely, but to me it is evidence of sound financial planning. It is a very healthy state of affairs that has been secured with the understanding that we need to combine financial prudence with on the pitch performance to move forward.

Well done to the club and everyone involved. Although a bit of "investing in the future" during the last window wouldn't have gone amiss instead of leaving us with what could turn out to be a lot of work to do in the next window. One way or another doing nothing in an environment that doesn't reward standing still will always be costly.

Follow Up Notes

These very simplistic ramblings are based on the club staying in the Premier League. If we ever suffer the drop things would change dramatically. Granted we would get parachute payments that will help in the short term and relegation clauses would lower our wage costs, but the impact of losing out on the lucrative TV revenue stream would be immense.

Our balance sheet currently looks healthy and the benefit of astute financial management is easy to see. The increasing costs of depreciation and amortisation of player registrations is a bit of a worry, along with the impact player sales have contributed to our profit. Selling players to bring in revenue is always an option, but if the money raised is wasted on players who aren't up to the job the team performance suffers and that can lead to a downward spiral.

In the short term the trading section of the balance sheet could show parity between a clubs player sales and player purchases, but only because the actual decrease in overall value is being hidden in the reduced performance ability of the first team and their respective values.

The true extent of such a loss will only reveal itself as players are sold for less than they were bought for or they sit out their contracts and leave on free transfers. Naturally, an important difference has to be made between players actively fighting for the shirt who can contribute when called upon and players who aren't playing because they aren't good enough. The first of those scenarios represents the limiting fact that we can only ever field eleven players, but the second is indicative of very poor recruitment decisions.

A club can show a balanced trading account, but if they have or they are showing a greater reliance on things like loan players, to maintain performance levels despite spending heavily on permanent signings, then it should raise serious question marks about the quality of their permanent signings.

We only need to look at QPR and Fulham, amongst others, to see that.

Prior to their relegation QPR focussed on bringing in players closer to the end of their careers who were happy to coast along and take relatively high wages in return for their lack lustre efforts. The trading account showed parity, but the team performance suffered and when they did drop those wages and the associated transfer expenditure player a major part in their downward trajectory towards their current fight against bankruptcy.

Fulham spent the bulk of their transfer income on questionable players who contributed little. Once again, their balance sheet showed parity, but it made them heavily reliant on short term loans. They arrived in the Premier League with only half a team, after most of their loan players returned to their clubs, which forced them to spend heavily this season.

Some people have questioned their spending vs their performance this season. However, I don't think they spent heavily because they wanted to, they spent heavily because they had to. It was a direct response to the poor quality players that they brought in as permanent signings during the past few years and negligent strategic planning.

The seeds of their misfortune this season were sown three of four years ago. Although, spending all that money on the two French midfielders they brought in this season highlights the fact that their heavy reliance on analytical money ball is still a very big cause for concern. Statistics count for very little in and of themselves, it is the quality of the people interpreting them that is always important.

It is easy to fall into the trap of believing data is objective and consequentially superior to personal experience and individual decision making. In the sense that it has a very loose connection to the a priori (separate from experience) objectivity of mathematics. However, when we introduce people into the equation, to make decisions about what we are going to include in the interpretive formulae we use, or they are given authority to make judgements about what should be considered or excluded in respect to the data then we have tainted the process with subjectivity.

Comparing any formula with verifiable results can increase its verisimilitude (nearness to the truth), but it can be a very long and potentially costly process. The more variables in play the greater the potential for errors and the process will always be susceptible to the appearance of a "black swan". We can put forward the hypothesis that all swans are white and proceed to act upon it with certainty, because all the swans that we have encountered have been white, but it only takes a single black swan to render the hypothosis flawed. Things have a habit of changing and the same is true for the value of data in relation to its ability to accurately represent things.

Collecting data is good and making use of analytical systems can be very beneficial in any decision making process, but having the right people in place is always a lot more important. Analytics are a tool used that can be used by people to good effect or bad, they are never anything more.

The news coming out of the club, that we are going to pay closer attention to the development of players in terms of their performance potential and financial value as a means of increasing our profitability, is very welcome. If we get it right everyone will benefit, but if we get it wrong it could have devastating consequences in a very short time frame.

When you put your faith in numbers then one way or another you are rolling the dice. If youut your faith in people with proven track records that can be trusted to deliver results your odds of getting a good outcome increase. Employ both to best effect and the potential for ongoing success will move one step closer.

Wolves and Fulham

Wolves have done well because they spent a lot, but that shouldn't take away from the fact that they recruited wisely, albeit with some questionable help from Jorge Mendes. Fulham haven't, because they were hampered by past strategic mistakes and they made some bad recruitment decisions in the Summer window.

What is happening at Fulham should definitely be of some interest to us. Four years ago Mike Rigg was embarking on his two years of employment with them. His time at Fulham played a big part in their development and what has happened to them since, but the the upturn in their playing performance during the two years prior to their promotion had more to do with the loan players they had to bring in after his departure.

The restructuring of our recruitment operations towards a new statistics-based model, "which is better than anything else out there", has something of a Fulham flair to it, and more of a Snake OIl Salesman's spin. The mention of a data professor who Rigg has known for 4 years also caught my attention (which would probably place the person at Fulham).

In terms of damage limitation I'm hoping that it is Miguel Rios who moved to Opta in February and not Craig "Crackpot" Kline with his "golden algorithms" and his "two boxes ticked" shenanigans. Putting all of the "talk like a joke" intellectual property ramblings to one side, tailoring the work flow of an existing software package to our needs would be infinitely preferable to having Kline associated with our club.

In reference to another thread if I had to pick between Craig Kline with his "golden algorithms" and Quickenthetempo's kids with their copy of FIFA then I would go with the kids. The way I see it the kids are unproven, they might just pull an unexpected rabbit out of the hat, but Kline was part of a recruitment team that was definitely responsible for a lot of extremely poor signings over a period of three years. Thinking along those lines I would rather have Mystic Meg in charge of our recruitment "It could be Claret and Bluuuuuuuuuue".

The Fulham system didn't work then, it isn't working for them now and the statistics indicate that if we replicate it then it won't work for us - unless we have better people in place to guide the basic strategic premise. Only misguided people like Theresa May believe that doing the same thing over and over again will lead to a different result. Arguably, it might do, but it is statistically improbable.

And They All Lived Happily Ever After

I think that is how I'm supposed to finish the equivalent of a short story and it is the outcome that I'm hoping for when it comes to us. Cupcakes and Rainbows would be a nice extra.

UTC

[summitclaret]

Summit you are still avoiding the questions

Which questions?