Oh, What A Lovely Defecit!

[brendywendy]

...so, bottom line, no one can confirm for sure from sketchy accounts whether we have a black hole and, if so, the size of it and whether SJM is drawing money out of the club as its owner?

In other words, no one except SJM presumably, has a clue as to the financial position of the club?

the accounts are fulsome. they just dont distinguish between wages for players, and other staff, but since the players wages will be massive, and the other staffs will be tiny, id imagine it makes very little difference

[brendywendy]

I'd rather Reading stick with where we are at the moment, and strike a balance between paying enough for players to remain competitive (and before anyone says we won't compete this year, then that's what we heard a million times prior to last season, let's wait and see what magic McD can do), but also run the business in a way that doesn't accrue debt year on year, and assures the long term viability of the club....

yes. this.

[Man Friday]

Thanks for your responses folks. Some helpful, measured ones here (unlike my own unsubstantiated and unresearched misgivings, probably).

[specialjon]

"It's hard work to get players in anyhow. I don't think I'll be getting any of the money, I think we have just got to look for Bosmans and look for shrewd acquisitions, loan players etc and try and do it on the smallest transfer fee outlet there's ever been."

http://www.thisislondon.co.uk/standard-sport/football/article-23971989-neil-warnock-not-expecting-to-see-cash-from-adel-taarabt-sale.do

That is Neil Warnock talking about the sale of Taarabt! Many hob nobbers complain about the lack of spending money. Imagine that we where owned by some of the richest men in the world. Just got promoted to the premier league (with all the extra cash coming in from that) and our manager came out with that?!?!?!? I think there would be a board melt down!!!

So all in all, stop your moaning if your not happy go to your local sports shop and get your self a Manche$ter City shirt.

[Seal]

...so, bottom line, no one can confirm for sure from sketchy accounts whether we have a black hole and, if so, the size of it and whether SJM is drawing money out of the club as its owner?

In other words, no one except SJM presumably, has a clue as to the financial position of the club?

There's nothing sketchy about them at all...did you read the Whiff article? Did it make sense? I'm no accountant, but even I can make sense of what they contain and understand "where the money's going"...

It's quite clear where the "black hole" is - all you have to do is look at the income vs outgoings figures, then take into account that the 2010 accounts where the last to include £11M extra income from the parachute payments.
In 2009/2010 we made an operating loss of £2M, which was turned into an operating profit of £2M with £4M of player sales...now take away the parachute payments, without those this would have been an operating loss of £13M and with player disposals £9M LOSS.

What were our losses prior to promotion? I seem to remember a figure of c. £1-2m per year.

So based on your logic flow above, promotion and then subsequent relegation from the PL turned us from a small loss making club to one with a deficit of £13m per year.

If this is correct, really illustrates the folly of not investing more in the team, particularly in that second season, because come down and you are screwed, and quite frankly unable to recover through anything other than major player sales or another promotion.

It also show how damaging losing to out to Birmingham in 2008/9 was for auto promo back up. We had the highest wage bill in the league that year and have never recovered.

Pretty depressing.

[floyd__streete]

If this is correct, really illustrates the folly of not investing more in the team, particularly in that second season, because come down and you are screwed, and quite frankly unable to recover through anything other than major player sales or another promotion.

It also show how damaging losing to out to Birmingham in 2008/9 was for auto promo back up. We had the highest wage bill in the league that year and have never recovered.

Pretty depressing.

Well run club.

[Wycombe Royal]

...so, bottom line, no one can confirm for sure from sketchy accounts whether we have a black hole and, if so, the size of it and whether SJM is drawing money out of the club as its owner?

In other words, no one except SJM presumably, has a clue as to the financial position of the club?

There's nothing sketchy about them at all...did you read the Whiff article? Did it make sense? I'm no accountant, but even I can make sense of what they contain and understand "where the money's going"...

It's quite clear where the "black hole" is - all you have to do is look at the income vs outgoings figures, then take into account that the 2010 accounts where the last to include £11M extra income from the parachute payments.
In 2009/2010 we made an operating loss of £2M, which was turned into an operating profit of £2M with £4M of player sales...now take away the parachute payments, without those this would have been an operating loss of £13M and with player disposals £9M LOSS.

What were our losses prior to promotion? I seem to remember a figure of c. £1-2m per year.

I thought the season we got promoted we had a loss of around £6m?

[Bucks Dave]

Yes, we did, and losses in many seasons before that. Spending more and more is not investment, it is gambling.

[brendywendy]

"It's hard work to get players in anyhow. I don't think I'll be getting any of the money, I think we have just got to look for Bosmans and look for shrewd acquisitions, loan players etc and try and do it on the smallest transfer fee outlet there's ever been."
http://www.thisislondon.co.uk/standard-sport/football/article-23971989-neil-warnock-not-expecting-to-see-cash-from-adel-taarabt-sale.do

That is Neil Warnock talking about the sale of Taarabt! Many hob nobbers complain about the lack of spending money. Imagine that we where owned by some of the richest men in the world. Just got promoted to the premier league (with all the extra cash coming in from that) and our manager came out with that?!?!?!? I think there would be a board melt down!!!

So all in all, stop your moaning if your not happy go to your local sports shop and get your self a Manche$ter City shirt.

whats he on about anyway - if they only buy 1 player for 1.5 million, theyll still only be equal with us on our first year up

[brendywendy]

...so, bottom line, no one can confirm for sure from sketchy accounts whether we have a black hole and, if so, the size of it and whether SJM is drawing money out of the club as its owner?

In other words, no one except SJM presumably, has a clue as to the financial position of the club?

There's nothing sketchy about them at all...did you read the Whiff article? Did it make sense? I'm no accountant, but even I can make sense of what they contain and understand "where the money's going"...

It's quite clear where the "black hole" is - all you have to do is look at the income vs outgoings figures, then take into account that the 2010 accounts where the last to include £11M extra income from the parachute payments.
In 2009/2010 we made an operating loss of £2M, which was turned into an operating profit of £2M with £4M of player sales...now take away the parachute payments, without those this would have been an operating loss of £13M and with player disposals £9M LOSS.

What were our losses prior to promotion? I seem to remember a figure of c. £1-2m per year.
So based on your logic flow above, promotion and then subsequent relegation from the PL turned us from a small loss making club to one with a deficit of £13m per year.

If this is correct, really illustrates the folly of not investing more in the team, particularly in that second season, because come down and you are screwed, and quite frankly unable to recover through anything other than major player sales or another promotion.

It also show how damaging losing to out to Birmingham in 2008/9 was for auto promo back up. We had the highest wage bill in the league that year and have never recovered.

Pretty depressing.

more like between 3-6 million i think in most years preceding our promotion.
point still stands though

[Svlad Cjelli]

What were our losses prior to promotion? I seem to remember a figure of c. £1-2m per year.
So based on your logic flow above, promotion and then subsequent relegation from the PL turned us from a small loss making club to one with a deficit of £13m per year.

If this is correct, really illustrates the folly of not investing more in the team, particularly in that second season, because come down and you are screwed, and quite frankly unable to recover through anything other than major player sales or another promotion.

It also show how damaging losing to out to Birmingham in 2008/9 was for auto promo back up. We had the highest wage bill in the league that year and have never recovered.

Pretty depressing.

Quite - but that's today's football. John Beech, who is an absolute god of football finance, makes a good point in one of his presentations that the worst thing that a football club can do in order to achieve financial stability is to move divisions. Also, the higher up the leagues you do this the greater the impact.

We did it twice, at the highest level possible, in just 3 years, and then gambled (uncharacteristically!) on going straight back up. No wonder things are bad.
But I'd argue whether investment in teh PL would have saved us - it might have done, but no way of being sure. The margins were so tight, that it could be argued that we went down just because Rosenior choose the wrong boots, or because Shane Long tried a fancy scissor-kick at St Andrews, or many other single factors. The irony is, though, that investment was available at that point but SC chose not to use it.

However, the fact that we're still in the Championship, still in business and still competitive is a wondrous thing - especially when you compare our fortunes to other clubs who have been relegated.

[Hiram K Hackenbacker]

I strongly agree

[Royal Rother]

Steady!

[BR2]

What were our losses prior to promotion? I seem to remember a figure of c. £1-2m per year.
So based on your logic flow above, promotion and then subsequent relegation from the PL turned us from a small loss making club to one with a deficit of £13m per year.

If this is correct, really illustrates the folly of not investing more in the team, particularly in that second season, because come down and you are screwed, and quite frankly unable to recover through anything other than major player sales or another promotion.

It also show how damaging losing to out to Birmingham in 2008/9 was for auto promo back up. We had the highest wage bill in the league that year and have never recovered.

Pretty depressing.

Quite - but that's today's football. John Beech, who is an absolute god of football finance, makes a good point in one of his presentations that the worst thing that a football club can do in order to achieve financial stability is to move divisions. Also, the higher up the leagues you do this the greater the impact.

We did it twice, at the highest level possible, in just 3 years, and then gambled (uncharacteristically!) on going straight back up. No wonder things are bad.
But I'd argue whether investment in teh PL would have saved us - it might have done, but no way of being sure. The margins were so tight, that it could be argued that we went down just because Rosenior choose the wrong boots, or because Shane Long tried a fancy scissor-kick at St Andrews, or many other single factors. The irony is, though, that investment was available at that point but SC chose not to use it.

However, the fact that we're still in the Championship, still in business and still competitive is a wondrous thing - especially when you compare our fortunes to other clubs who have been relegated.

Not particularly disagreeing with your general points but "still in the Championship,still in business" is that wondrous a thing considering that just 4 years ago we were a point away from being in Europe.
My how quickly our expectations have been diminished.

[Royal Rother]

Not as quickly as they were raised in the 1st place.

All as a result of the same policies.

[BR2]

Not as quickly as they were raised in the 1st place.

All as a result of the same policies.

Er..not exactly the same policies,you seem to have forgotten those many years of indebtedness and big spending on players particulary under Burns and Pardew that formed the bedrock for our susequent push on from the Championship.
It wasn't lack of investment or lack of gambling that got us into that position it was directly the opposite.

[brendywendy]

so in your opinion all the years where we spent big at the level we were at, but had no real sucess, were key
but the years where we spent less(proportionately), but had success are irrelevant?

[Royal Rother]

so in your opinion all the years where we spent big at the level we were at, but had no real sucess, were key
but the years where we spent less(proportionately), but had success are irrelevant?

Kabooom!!!!

[Victor Meldrew]

so in your opinion all the years where we spent big at the level we were at, but had no real sucess, were key
but the years where we spent less(proportionately), but had success are irrelevant?

No you idiot-the club spent heavily to get up to the Championship which is some sort of success and don't forget that was not very long ago.

[Hoop Blah]

Didn't we have this 'there's been a change in spending policy' discussion a few weeks back and generally decided that there had been.

In terms of loses, it was more like £6m the year we went up to the Premier League and then costs ran away from us quite a bit. I'm pretty sure that if our 'black hole' was £4m then this season, after getting rid of more of the expensive old guard on reduced Premier League contracts, we'll see that deficit reduced to more like £2m.

The loses we were making in the first year or two after relegation would've been after the club took into account the parachute payments. Our cost base will be being pulled in line with the falling revenues.