Madejski's comments to BBC Radio Berkshire

[Tony Le Mesmer]

"Over the past three years we've spent everything that we've had"

10% on stadium
10% on signings
30% on wages
50% on loan repayments
...maybe

exactly.

[Nobby]

This thread seems to be reserved for everyone to state the exact same knee-jerk drivel.

So spending loads of money will be the answer to everything? The same sh1t was being voiced by similarly impatient to55ers three years ago.

Then of course, when we won the league you were singing "There's only one John Madejski"

Go back even further and you had no end of dumbf**ks writing to the Evening Post about how much more money Swindon and Oxford were spending. True sages those people eh?

So who do you want as chairman?

Gillette and Hicks?
Dodgy politicians from Thailand?
Peter Ridsdale?

Why don't you shut up and let the bloke who made something of this club, do it again.

Of course if he does, you'll all be singing his name again won't you?

To55ers.

[Northern Git]

"Over the past three years we've spent everything that we've had"

Ok lets accept that as 100% the truth, and the next R&A will confirm that by showing no profit and no loss as previous two years cancel themselves out 6 million loss 05-06 followed by 6 million profit 06-07.

Few questions I would like to know the answers too, but am not holding my breath (or maybe HNA? financial wizards can help)

Did any of the money generated by RFC go towards paying for any part of the hotel extension?
Does RFC own the Hogwood Park training complex? If not who does, and how much do RFC pay to use it?
Does work done for RFC by other JM companies (print for example) go out for competitive tender? Is this work done at the market rate?
Are there any management fees charged against RFC by principles or directors of associated companies?

Absolutley not suggesting anything untoward here BTW, just interested how the income is being spent over and above the obvious wages, stadium upkeep etc etc.

[Kes]

have the concourses been improved yet or is it the same horrible breeze blocks as before?

[Dirk Gently]

I can answer one of those.

Does RFC own the Hogwood Park training complex? If not who does, and how much do RFC pay to use it?

Yes, they do - they've also spent a damn lot of money there over the past couple of years in upgrading the facilities. For instance (and it sounds fatuous and banal but it's true!) PL players' won't accept a canteen, they have to have a "restaurant, with chef.

There's also been quite a bit of money spent on the new media centre which was insisted upon to bring it up to PL standards.

So, in many ways, we are a lot stronger in the background and the way we're run than we were 3 years ago when we started the last CCC season.

[brendywendy]

we will make a loss this season
any incoming transfer money will be weighted towards offsetting the loss we make on the day to day business side of things.
just look at the accounts for our 1st year to see where the money went while in teh top flight , and how much mr mad is "lieing" to us and "stealing " all our money

just taking a look down the leagues at previous prem teams, and the perilous financial state some of the more recently demoted teams are in to see what hes on about

the money is all in plain view, and what we did with it

if we are getting 22 M less in tv money after parachute payments, have fewer fans coming through the gates, and each fan paying considerably less for their tickets,while only making 6m profit when we were up anyway, it doesnt take a rocket scientist to see why we need to"cut our coat according to the cloth" in order to stop us losing money this season

But that rocket scientist must also realise that costs have tumbled too? Wages are supposely slashed by around 40%, or so we were led to believe anyway.

do you think the 40% reduction in wages covers the 22 million we are losing?
and that loss, as explained, is on top of a huge decrease in income from ticket sales

[Royal Rother]

And can I add that any profit would have been after any loans had been repaid.

Loan repayments are not an overhead of a business so do not have an impact on the Profit made, therefore the above statement is completely incorrect.

If the club made a profit of £20m then there will have been surplus funds that may have enabled JM to take some repayments on his loans to the club; to be absolutely clear on this, loan repayments do not have an impact on the Profit.

I usually explain this once every couple of months - twice in 3 days is pushing it a bit, but I suppose, unfortunately, it is the hot topic once again!

Loan repayments due in a year, and long term loans are covered in the annual report though, do they not effect the P&L or is this just for the balance sheet?

The books (to June 07) show that the Chairmans loan hasn't decreased but I think from memory a bigger repayment was planned for for 07-08. If money is paid out to reduce liabilities does this not show up anywhere on the P&L?

I know you keep mentioning, but I don't think you've really explained it to be fair, but I'm not really expecting an accounting lesson, but thanks anyway.

Yes, when you take out a loan of £40m, it is not income on the Profit & Loss account, rather it creates a liability on the Balance Sheet.

So obviously neither do the repayments of that loan feature in the Profit and Loss a/c, they reduce the balance owing on the Loan in the Balance Sheet.

If the loan is interest bearing then that interest charge WOULD feature as a cost on the Profit and Loss a/c.

Assuming it wasn't an interest-freeloan, if the interest rate on the loan was 5% then some £20m of interest would have accrued over 10 years. That interest would have shown as a cost on the accounts every year, and might, if the club had not been in a position to repay anything to JM, have resulted in a total loan facility standing at £60m now. If he takes all that £20m of interest out now, taking the loan back to its original capital amount of £40m, that £20m would not show in this year's accounts because it has already been shown as a cost in equal-ish amounts in each of the last 10 years.

Having invested the money into the club that enabled it to reach the PL, could anyone deny his entitlement to make a drawdown on that loan and reduce his indebtedness from the club now it has (presumably) made some surpluses? He is a businessman first and foremost and the way he would look at it is possibly to ask himself how might he otherwise have used that £40m if he had had use of it for the last 10 years... Might he have generated himself £20m in some another investment, safe, high risk or whatever. Well yes he might of course, so why should he be expected to wait to take some repayment on the loan now that the club can afford it.

(Not that I know anything specific about RFC's or JM's finances whatsoever, so whilst the general accounting bits are spot on, where I am speaking about interest and drawdown as if facts, they are totally suppositions based on normal accounting policies. The whole thing might of course be far more complicated than that with off-shore companies etc. involved. That probably wouldn't effect the way in which the deal works, but it might do...)

[Hoop Blah]

do you think the 40% reduction in wages covers the 22 million we are losing?
and that loss, as explained, is on top of a huge decrease in income from ticket sales

No it doesn't, obviously, but trimming off the 8 players we've lost from the squad, including somewhere around £8-10m worth of transfer fee's certainly helps as well though.

40% of last seasons wage bill would be about £12m if we had that enforced across the board of the whole of last seasons squad.

Last season I'm sure you were telling us we wouldn't be spending the Premiership money until it was in the bank (ie we won't spend the 07-08 £60m or whatever it was worth). Surely that means we've still got last years windfall plus the parachute payments to kick in yet.

I don't want us to mortage the future of the club chasing further glory, but I would like to have some explanation of the financial situation over and above Madejski coming out and saying "we've spent it all." I know and appreciate they dont owe us this, but it would be nice all the same.

[Arch]

I'm officially bored of this thread.

[Hoop Blah]

Cheers RR, that makes some sense, and I've got no problem with Madejski getting his money back, or even a half decent return on it either.

[brendywendy]

do you think the 40% reduction in wages covers the 22 million we are losing?
and that loss, as explained, is on top of a huge decrease in income from ticket sales

No it doesn't, obviously, but trimming off the 8 players we've lost from the squad, including somewhere around £8-10m worth of transfer fee's certainly helps as well though.

40% of last seasons wage bill would be about £12m if we had that enforced across the board of the whole of last seasons squad.

Last season I'm sure you were telling us we wouldn't be spending the Premiership money until it was in the bank (ie we won't spend the 07-08 £60m or whatever it was worth). Surely that means we've still got last years windfall plus the parachute payments to kick in yet.

I don't want us to mortage the future of the club chasing further glory, but I would like to have some explanation of the financial situation over and above Madejski coming out and saying "we've spent it all." I know and appreciate they dont owe us this, but it would be nice all the same.

aaaagggghhhhh
its not 60 million profit!!!!
if it was id totally agree with you

i do agree it was me who said that last year , well remembered!
the windfall from this year is going to be a small profit of <10M, probably<5 M
the parachutes only go partly to cushion the blow of losing 30 odd million in tv money

[Once were Biscuitmen]

I know what people don't seem to realize is that the vast majority of professional football clubs in this country operate at a loss.

In our 1st year in the prem I think it was only the three promoted clubs and Man Utd that actually made any profit at all!

The only way to "compete" is to be even less sane than those around you. I'm quite glad we opt out of this madness as far as possible.

[Hoop Blah]

aaaagggghhhhh
its not 60 million profit!!!!
if it was id totally agree with you

i do agree it was me who said that last year , well remembered!
the windfall from this year is going to be a small profit of <10M, probably<5 M
the parachutes only go partly to cushion the blow of losing 30 odd million in tv money

Who said anything about profit?

Last season people were saying, and I was pretty sure it was you, that we wouldn't be blowing all the Premiership REVENUE before we got it because that was a gamble. I may have been putting words into your mouth, in which case I apologise, but it was certainly an arguement used at some point that we couldn't spend money we hadn't already received.

You're right i regards to the parachute payments of course, which is why the club has restructured it's cost base to reflect the fall in income. I guess we just differ on how close the two figures are. Personally until I see the proof I'm of the opinion that we're doing better financially than is made out in some quarters.

[Dirk Gently]

I know what people don't seem to realize is that the vast majority of professional football clubs in the country is operating at a loss.

In our 1st year in the prem I think it was only the three promoted clubs and Man Utd that actually made any profit at all!

The only way to "compete" is to be even less sane than those around you. I'm quite glad we opt out of this madness as far as possible.

According to a survey conducted by the BBC two weeks ago, 44% of Premier League CEOs expect to make a pre-tax loss this season.
In the Championship the number who who expect to make a loss is 67%.

JM himself has quoted several times the old adage that the best way to make a small fortune from running a football club is to start with a large fortune!

[papereyes]

I do like this idea of losing the TV money.

This being money we also 'lost' three seasons ago, I guess.

DG - do the club publish accounts? Was a great proportion of our increased revenue over the last two seasons simply eaten up in increased wages, increased outlay of non-playing staff? Does getting the necessary infrastructure in place over the last two years mean that we can potentially turn increased revenue on our next promotion into wages/spending?

[brendywendy]

aaaagggghhhhh
its not 60 million profit!!!!
if it was id totally agree with you

i do agree it was me who said that last year , well remembered!
the windfall from this year is going to be a small profit of <10M, probably<5 M
the parachutes only go partly to cushion the blow of losing 30 odd million in tv money

Who said anything about profit?

Last season people were saying, and I was pretty sure it was you, that we wouldn't be blowing all the Premiership REVENUE before we got it because that was a gamble. I may have been putting words into your mouth, in which case I apologise, but it was certainly an arguement used at some point that we couldn't spend money we hadn't already received.

You're right i regards to the parachute payments of course, which is why the club has restructured it's cost base to reflect the fall in income. I guess we just differ on how close the two figures are. Personally until I see the proof I'm of the opinion that we're doing better financially than is made out in some quarters.

]

not sure what i said now!
i have always said i would always only spend the money once i had it, if it were my football club, yes.

ill also say that mr mad was very careful to say-"over the last three years weve spent everything we got-which is true"
this year-with the player sales etc im not so sure-but like i said id imagine this would mainly be put in to offset the operating loss at the stadium on a matchday.

i just get annoyed with people slating mr mad just for running the club like a business sometimes, or worse,accuse him somehow stealing our money, when in reality its that attitude that will see us safe if the bottom falls out of the current football boom we are seeing

[Hoop Blah]

I do like this idea of losing the TV money.

This being money we also 'lost' three seasons ago, I guess.

DG - do the club publish accounts? Was a great proportion of our increased revenue over the last two seasons simply eaten up in increased wages, increased outlay of non-playing staff? Does getting the necessary infrastructure in place over the last two years mean that we can potentially turn increased revenue on our next promotion into wages/spending?

Yes they do. If you ask nicely they'll even send you a copy.

[brendywendy]

I do like this idea of losing the TV money.

This being money we also 'lost' three seasons ago, I guess.

DG - do the club publish accounts? Was a great proportion of our increased revenue over the last two seasons simply eaten up in increased wages, increased outlay of non-playing staff? Does getting the necessary infrastructure in place over the last two years mean that we can potentially turn increased revenue on our next promotion into wages/spending?

well we had it last year, dont get it this year
thats lost in my book

in terms of revenue anyway!

and three years ago we didnt have it, then still didnt have it- so no, thats not lost

i believe th eaccounts are out there for prem year 1-shows a 6 m profit that offsets the 6m loss the previous year when we won the championship with our highest ever gate receipts they also show that wages doubled for the whole business between championship and prem.

i would agree that next time it would hopefully mean we could have more to spend on the team as we are good for infrastructure now.

[papereyes]

well we had it last year, dont get it this year
thats lost in my book

and three years ago we didnt have it, then still didnt have it- so no, thats not lost

Ingenious.

[brendywendy]

well we had it last year, dont get it this year
thats lost in my book

and three years ago we didnt have it, then still didnt have it- so no, thats not lost

Ingenious.

what?!