Oh, What A Lovely Defecit!

[Ian Royal]

Long played in the MF?

I hear what you are saying Ian about Long's goal scoring offsetting what we lost with Gylfi. But Gylfi's departure left a big hole in the middle that wasn't properly filled until Leigertwood's arrival. I guess there is a rumor we are serious about Lee Williamson. If so we have potentially found Mills' replacement will Leigertwood moving to CB, where he has played before, and Williamson playing in the MF. Rumor and speculation and all but I am hoping we all agree with have to do something to fill the hole left by Mills' departure...

Sorry but that's utter nonsense. Gylfi was the goalscoring threat (from attacking midfield) Long was the goalscoring threat (upfront) and we changed formation to incorporate Hunt who also did well. Leigertwood and Sigurdsson are incomparable as they played roles that are in no way comparable. Legs performs a totally different role in a different position.

Why on earth are you believing anything Kes posts? He's full of shite. I find it extremely doubtful we'll move a midfielder who's been excellent to a role he may of played ages ago, and buy a midfielder, when we actually want a defender, and have said we're looking for one.

[Libertine]

Long played in the MF?

I hear what you are saying Ian about Long's goal scoring offsetting what we lost with Gylfi. But Gylfi's departure left a big hole in the middle that wasn't properly filled until Leigertwood's arrival. I guess there is a rumor we are serious about Lee Williamson. If so we have potentially found Mills' replacement will Leigertwood moving to CB, where he has played before, and Williamson playing in the MF. Rumor and speculation and all but I am hoping we all agree with have to do something to fill the hole left by Mills' departure...

Sorry but that's utter nonsense. Gylfi was the goalscoring threat (from attacking midfield) Long was the goalscoring threat (upfront) and we changed formation to incorporate Hunt who also did well. Leigertwood and Sigurdsson are incomparable as they played roles that are in no way comparable. Legs performs a totally different role in a different position.

Why on earth are you believing anything Kes posts? He's full of shite. I find it extremely doubtful we'll move a midfielder who's been excellent to a role he may of played ages ago, and buy a midfielder, when we actually want a defender, and have said we're looking for one.

So we went from an attacking MF to a holding one with the goal scoring burden falling more to the strikers. But you need the players to be able to make that tactical change...players we didn't have until we brought in Leigertwood. Of course Leigertwood and Gylfi had different roles on the team.

As far as the moving players to different positions goes, like I said pure speculation...and probably I should keep that to the appropriate sub-forum. Just trying to piece together what we are going to do about the gaping hole at CB.

[Northern Git]

It may be of use to understand what a financial ‘black hole’ is:
‘A business activity or product on which large amounts of money are spent, but that does not produce any income or other useful result’

So clearly, In terms the financial business community understands, what we have a Reading FC ltd (not PLC) is not a black hole, merely a gap between the projected, and actual, breakeven point and the actual income generated by the business activities over the previous contributing business cycle.

What there should be a RFC ltd is a clear business plan that takes into account a base start point of income and expenditure over the financial year. There will be of course anomalies that occur during the business cycle.
A prudent model would, for instance, assume we would appear in rounds one of the Carling Cup (or whatever it is called this week) and round three of the FA Cup. As it is a lottery whom you are drawn against and as the results are unpredictable a neutral financial forecast would probably be prudent. Anything after that could be a bonus (or deficit) depending on results.
The model would obviously also include all predicted income, and expenditure, incurred over the forthcoming business cycle. More straight forward to predict as many costs are fixed and controllable, and base income from all sources predictable within a very small margin.

None of the probable results last season would suggest to me an unexpected deficit.
Carling Cup - - Dumped out by Northampton
FA Cup ++++ Quarter finals
League ++++ Play off final losers (so retain Swansea city share of income)

So in my humble view there is nothing in the events of the previous season that would indicate an unexpected shortfall of predicted income, indeed there are several events that would suggest that substantial additional monies have come into the club, FA cup , Playoffs and attached TV monies (even after the additional costs that would have been generated).

So to suggest the sale of Mills fills a ‘unforeseen black hole’ is in my view bollocks, as is the requirement to sell any other player for this reason.
There may have been a player sale required to cover a normal operating costs / income deficit but I think this season that should be at a minimum considering the extra revenue generated by our FA Cup and League play off final games.

The oft stated ‘best financially run club in the league’ statement holds , for me, little credence as year after year un-quantified ‘black holes’ appear that need plugging, surprisingly to almost exactly the same amount as outgoing player(s) is sold for.
Mills goes – nothing for McD to invest - undefined black hole to be plugged.
Poss Long goes – would (will) have money on nothing for McD to invest – undefined black hole to be plugged
Poss Kebe goes – as above

To slightly change a much heard Kevin Keegan rant, I would love it, just love it, to spend day looking at the RFC management accounts

[brendywendy]

gates were down,and so were sales of everything at the ground.loads of our game prices had to be discounted, other than that, i cant see a reason we cant spend a bit of the mills money.what i do know is that jm isnt stealing, or syphoning it off,and we will see the whole picture when the accounts come out,or when the club come out and make more statements to placate the baying mob. Id imagine we will buy.well have targets agreed to fill gaps that we have scouted and feel will fit with,and add to the squad. i guess that doesnt change cos we suddenly have 5million quid. I do think we need to,and will replace anyone who goes. But if we dont i trust that theres a damn good reason.

[Royal Rother]

It may be of use to understand what a financial ‘black hole’ is:
‘A business activity or product on which large amounts of money are spent, but that does not produce any income or other useful result’

So clearly, In terms the financial business community understands, what we have a Reading FC ltd (not PLC) is not a black hole, merely a gap between the projected, and actual, breakeven point and the actual income generated by the business activities over the previous contributing business cycle.

What there should be a RFC ltd is a clear business plan that takes into account a base start point of income and expenditure over the financial year. There will be of course anomalies that occur during the business cycle.
A prudent model would, for instance, assume we would appear in rounds one of the Carling Cup (or whatever it is called this week) and round three of the FA Cup. As it is a lottery whom you are drawn against and as the results are unpredictable a neutral financial forecast would probably be prudent. Anything after that could be a bonus (or deficit) depending on results.
The model would obviously also include all predicted income, and expenditure, incurred over the forthcoming business cycle. More straight forward to predict as many costs are fixed and controllable, and base income from all sources predictable within a very small margin.

None of the probable results last season would suggest to me an unexpected deficit.
Carling Cup - - Dumped out by Northampton
FA Cup ++++ Quarter finals
League ++++ Play off final losers (so retain Swansea city share of income)

So in my humble view there is nothing in the events of the previous season that would indicate an unexpected shortfall of predicted income, indeed there are several events that would suggest that substantial additional monies have come into the club, FA cup , Playoffs and attached TV monies (even after the additional costs that would have been generated).

So to suggest the sale of Mills fills a ‘unforeseen black hole’ is in my view bollocks, as is the requirement to sell any other player for this reason.
There may have been a player sale required to cover a normal operating costs / income deficit but I think this season that should be at a minimum considering the extra revenue generated by our FA Cup and League play off final games.

The oft stated ‘best financially run club in the league’ statement holds , for me, little credence as year after year un-quantified ‘black holes’ appear that need plugging, surprisingly to almost exactly the same amount as outgoing player(s) is sold for.
Mills goes – nothing for McD to invest - undefined black hole to be plugged.
Poss Long goes – would (will) have money on nothing for McD to invest – undefined black hole to be plugged
Poss Kebe goes – as above

To slightly change a much heard Kevin Keegan rant, I would love it, just love it, to spend day looking at the RFC management accounts

Did Swansea give us their cut of the Play Off Final Revenues? I thought that was a thing of the past... (see below)

The FL "fund" takes a 50% cut, then the remaining 50% is split between the two finalists - regardless of the result of the game.

- FL Regulation 10.1.4. (d) & (e)

And, why do you quote "unforeseen black hole" as if it is a phrase used recently by the club? I haven't seen that myself.

As you rightly point out the club will have made very accurate projections of income and expenditure at the start of the season and nothing that we know of would have created an "unforseen black hole". Surely that would leave one to assume that a deficit was anticipated? I cannot believe that anything else is the case. Hopefully as a result of the FA Cup run and Play Off Final the actual deficit might actually have been lower than projected but, as has been pointed out by Svlad a few weeks ago, those 2 events would probably have netted the club no more than a million.

I maintain that the club's finances are probably run to "achieve" an annual operating loss in the knowledge that player sales will generally make up the difference ("fill the black hole" if you prefer something more emotive).

That IS the sign a well-run club. Ok, it's one which is receiving no new financial input from its owner but that is EXACTLY how Madejski said the club would be run about 10-12 years ago. It's frankly pathetic for fans to get upset about it now.

If we budgeted to break even so we didn't have to rely on player sales to prop the club up then we wouldn't have been able to get the likes of Mills in in the 1st place, because the money wouldn't have been there to sign him and the wages would have had to be reduced thus reducing the size and quality of the squad from what we have now; and of course in all probability we'd have to cut back on the Academy. Surely, surely it is better to do it the way we are doing it and regularly cash-in on our best players, than make those cutbacks?

Maybe I just can't get the message across in a way that people can understand but it absolutely and totally baffles me that others cannot see what to me is so obvious.

[FiNeRaIn]

37 million in from player sales plus parachute payments since relegation to the championship. It truly baffles me that we have invested as poorly as we have. I am not suggesting madejski is pocketing any money. But for all the years people were claiming reading were a " well run club" they were obviously talking crap if we have messed ourselves up so much we are not investing a substantial amount of those player sales back into the team. Perhaps people were right who claimed reading were a " plastic club that bought their way to the prem".

[winchester_royal]

Yawn.

You'd have thought by now people would have realised how Reading go about their business. If you don't like it, go support a team that has a chairman that is willing to put their club's future on the line just to please the pathetically short-minded fans who need a couple of big money signings to prove the 'ambition of the club'.

Meanwhile, the rest of us will continue supporting the club we love, which thankfully, goes about things in the correct, honest, financially sound way.

[FiNeRaIn]

Dear Winchester.

Ah thats right, doing a bradford or leeds...that old chestnut in threatening the clubs future.

Kind regards, Portsmouth.

[Royal Rother]

You really don't see it do you?

Since points deductions were introduced for going into administration (in 2004) there have been 14 league clubs who have gone through that process.

9 of those are playing at a lower level than when they went pop and not one of them is playing at a higher level.

You might be happy to gamble with the club's future, but thank God the people in power have more sense than that.

[FiNeRaIn]

You don't get it, who is saying gamble the clubs future? You seriously think spending 5 million on players is going to send us into administration out of the 37 million + parachute payments since we have been relegated....like really? What part of we have made the MOST IN THE ENTIRE FOOTBALL LEAGUE AND HALF OF THE PREM on player sales in the last 3/4 years do people not understand?? how is it REMOTELY possible we still need to be financially tighter than almost all of those clubs despite the luxury of all those player sales no one else can compete with?

[Libertine]

Frustrating arguing with that kinda logic innit FiNeRain? Anything above what the chairman says he is willing to spend will instantaneously result in the club's demise. And nobody, who support the idea of reinvesting some money in the team, is even remotely saying we should be spending like those irresponsible clubs.

[Royal Rother]

Of course it's frustrating for you because it clearly sets out the good sense and logic that is applied in running the football club and contrasts that with what has happened to those who don't apply the same standards and get seduced by the likes of Peter Ridsdale who can promise all kinds of riches in return for another few million investment here and there. And never delivers success.

Your frankly pathetic exaggerations of everything that is being said in support of the way the club is run only serve to undermine any point you try to make.

Wind yourself up all you want but money is constantly being reinvested in the team and it will continue that way for evermore.

It's just that SJM has that ultimate desire, first aired 10-12 years ago to make the club financially independent. A sound aim and one that, since he first talked about it and put measures in place to achieve it, has actually coincided with the best spell in the club's 140 year history.

His vision, his brick by brick building process has brought this success and still he takes no financial payback... And still he gets fools with zero business acumen questioning his approach.

[FiNeRaIn]

This brick by brick approach has put us so far in debt we have to rely on selling players every summer to fill black holes. Now, I don't profess to be an accountant nor a business wizard...but that sounds like a massive fail with bricks being hit with a sledge hammer.

I do not question what SJM has done for this club until until the season after our relegation. We SHOULD have been a yoyo club, A WBA, Wolves, Birmingham,etc but now we are back to being a mid table championship club making play-off runs ( thanks to a remarkable manager on limited resources) we should be a name people don't want to play when they look at the fixtures. However anyone with any talent has been flogged and replaced by cheap lower division players, gradually we are getting worse. If shane long goes and we do not get at least 1/2 strikers in who can score goals at this level, we may well be in a relegation battle as no one else can hit a barn door other than an aging left back. We needed another striker to partner long as it was, if he goes god knows how bad we'll be up front. We also now need at the very least one established centre back and we should be looking at an option for when harte can't play anymore.

We should be looking to spend the mills money on 3/4 players and bank the money we get from long, that is most definitely not asking too much, nor will we fall into administration . If someone dares to claim spending 5 million will equal " doing a bradford" I am personally going to launch a campaign to get you banned from the forum.

[Harpers So Solid Crew]

gates were down,and so were sales of everything at the ground.loads of our game prices had to be discounted,

League gates were UP, only cup were down, and that is the luck of the draw. Include the 3 play off games and gates were UP.

Where does this info about sales of merchandise and food etc come from exactly? Was it not said in the past that Compass pay the same regardless of what they take?

There appeared to be less discounting last seaon IMHO, KFK once but not much on adult tickets, feel free to prove me wrong though


I am on your side in supporting the club Brenders, but you need to use real facts.

[Harpers So Solid Crew]

Good read from The Oatcake here, with debt figures.
I know most are only rumours but it seems like they're being linked with every half decent player in the Premiership and Bruce himself seemed to be saying on Sky yesterday that he's looking to have a big overhaul in the summer.
How can they do this if they're 66m in debt as the Guardin suggested.
Any Sunderland fans know the proper situation. Haven't seen CF around for a while he usually gives a balanced opinion.

If anybody missed it the current net debts for the Premiership clubs are as follows.

Arsenal Debt 136m Wages 110m
Villa Debt 110m Wages 80m
Brum Debt 16m Wages 38m
Blackburn Debt 21m Wages 47m
Blackpool Debt 9m Wages 13m
Man C Debt 41m Wages 133m
Man you Debt 590m Wages 131m
Newcastle you Debt 150m Wages 47m
Stoke C Debt 8m Wages 45m
Sunderland Debt 66m Wages 54m
Bolton Wanderers Debt 93m Wages 46m
Chelsea Debt 734m Wages 174m
Everton Debt 45m Wages 54m
Fulham Debt 190m Wages 49m
Liverpool Debt 123m Wages 121m
Spurs Debt 65m Wages 67m
WBA Debt 10m Wages 23m
West Ham Debt 34m Wages 54m
Wigan Debt 73m Wages 39m
Wolves Debt 0m Wages 30m

Comments on us are
Stoke’s achievement in establishing themselves in the Premier League is thanks financially to the backing of Peter Coates and his family fortune from bet365 online gambling. After returning in 2005 to buy back the club he has always supported, Coates has put in £43m, much of it towards buying players for Tony Pulis to keep Stoke up. The wage bill is climbing steadily, as it tends to do once promoted clubs grow in ambition.Having been the owner when Stoke went down to the third tier in 1998, Coates knows it can quickly change.Outlook Healthy, with the Coates family committed to backing the club.

Sunderlands is
Difficult not to wonder whether this is how US private equity investor Ellis Short imagined owning a Premier League club would be, when chairman Niall Quinn met him at the US Masters golf and sold him the idea of Sunderland. The £47m Short paid last year to bankroll a high wage bill and £28m losses followed £67.5m paid in and converted into shares the previous year,when Sunderland needed to be bailed out of probable financial crisis.Outlook Even with Short’s financialsupport, losses do not look sustainable. Sunderland have to wrestle the wage bill down, while remaining competitive

I can see that there problems are nothing compared to the likes of Wigan, Bolton and Fulham who look like they're a pull out away from crisis but still they seem to be playing a dangerous game.

Hats of to Wolves, The Baggies and ourselves for being so sensible in the market. I'll be interested to see how far these clubs can take these debts before they explode. I know Man you are a worldwode brand but theyre 590m in debt and no doubt rising with the likes of Sneidjer joining them. It all seems very unfair.


Read more: http://oatcakefanzine.proboards.com/ind ... =1#2765344#ixzz1RmBEFWF4

[Harpers So Solid Crew]

I do not question what SJM has done for this club until until the season after our relegation. We SHOULD have been a yoyo club, A WBA, Wolves, Birmingham,etc but now we are back to being a mid table championship club making play-off runs ( thanks to a remarkable manager on limited resources)

Coppell made the play-offs in our first season back, that cost a lot of money in wages, there were two players on £25k a week, who both got new contracts around Xmas to make sure they stayed. I believe the accounts have been shown for that season, with the wages levels included. We then brought in the wrong manager, which set us back, BMc rescued the season at further expense, with loan signings to add to our already good sized squad.

During the summer of 2010 there was a good feeling around the club again, then Siggy left at the last minute to disturb things in the team, as pointed out by BMc and repeated Ad nauseam by Snowball to back up his stats.

Last season we had some players on very good championship wages, Mills Long, Leigertwood, McAnuff, Federici , Kish, none came cheap, Feds got a rise in Jan, and Mills wanted one last month. Is it worth once again repeating that we do not cover the costs with the current income?

The alternative way is to sign players, who will take lower wages, yet we all know that football wage pressure is still up, despite the fall in tv money for the Championship next season, something has to and will give.

[Svlad Cjelli]

OMFG, it's Groundhog Day. Must we really cover the same ground again and again.

The basic, fundamental fact is that if you are running a Championship team then expenditure will be greater than income. FULL STOP. A football league club is not a profit-making enterprise and never will be. It's horrible but it's true - and while wealth distribution in English football is structured the way it currently is then this is a basic, unalterable fact, no matter how much people with their heads up their arses might choose not to see it.

To cover that excess of expenditure over income there either has to be outside money coming in or the club will face insolvency.

Some clubs have rich benefactors who loan money to the club to cover this on-going deficit (Notes that they only very rarely give money to the club concerned.) For the vast majority of those clubs, soft debt is building up and building up all the time.

We do not have that option available to us - we are being run as a self-sufficient business organisation. That means that when we have an annual operating deficit we have to sell assets to cover that deficit.

The options are either decrease expenditure (i.e. don't compete in teh league) or increase income (errr - how do we do that?). Alternatively, go and get a foreigner prepared to throw money at the problem - but for every Man City Sheik there are about 25 unknown Pompey/Birmingham-esque villains who want a vehicle for asset stripping and/or money-laundering.

[STAR Liaison]

So in my humble view there is nothing in the events of the previous season that would indicate an unexpected shortfall of predicted income, indeed there are several events that would suggest that substantial additional monies have come into the club, FA cup , Playoffs and attached TV monies (even after the additional costs that would have been generated).

So to suggest the sale of Mills fills a ‘unforeseen black hole’ is in my view bollocks, as is the requirement to sell any other player for this reason.
There may have been a player sale required to cover a normal operating costs / income deficit but I think this season that should be at a minimum considering the extra revenue generated by our FA Cup and League play off final games.

If it is any help I can confirm that in the middle of last season the matchday income was below that budgeted and well below what was needed for the then level of spending on the playing staff. I was not told if the size of the squad was what made it over-budget or the wage increase after renegotiated contracts or the increase in coaching staff but I suspect it is all 3.

Svlad is correct in saying that despite what we may all wish even competing the way Reading does (whether that is considered furstrating and lacking ambition or prudent) needs an injection of capital.

As long as there is no ultimate control other than bankruptcy there will always be some willing to spend to achieve success as the industry is all about competition. However it is a fact that there can only be 3 promoted teams under current rules so just spending is not enough, you have to spend more than a fair proportion of the rest of the league, and also have greater skills than the spending indicates unless you are in the top spenders.

The fact that at the present there are no buyers on the horizon and the chairman does/will not inject more money and the banks are not generous in the current climate, there seems one other obvious source of funds - players. As long as the Academy is producing good players we are likely to play at being the new Crewe (or to be fair follow the usual lower league model until Prem clubs bought foreign players).

[Schards#2]

OMFG, it's Groundhog Day. Must we really cover the same ground again and again.

The basic, fundamental fact is that if you are running a Championship team then expenditure will be greater than income. FULL STOP. A football league club is not a profit-making enterprise and never will be. It's horrible but it's true - and while wealth distribution in English football is structured the way it currently is then this is a basic, unalterable fact, no matter how much people with their heads up their arses might choose not to see it.

To cover that excess of expenditure over income there either has to be outside money coming in or the club will face insolvency.

Some clubs have rich benefactors who loan money to the club to cover this on-going deficit (Notes that they only very rarely give money to the club concerned.) For the vast majority of those clubs, soft debt is building up and building up all the time.

We do not have that option available to us - we are being run as a self-sufficient business organisation. That means that when we have an annual operating deficit we have to sell assets to cover that deficit.

The options are either decrease expenditure (i.e. don't compete in teh league) or increase income (errr - how do we do that?). Alternatively, go and get a foreigner prepared to throw money at the problem - but for every Man City Sheik there are about 25 unknown Pompey/Birmingham-esque villains who want a vehicle for asset stripping and/or money-laundering.

Well, if the business model requires a £5 million profit on player transactions every year to function, then, unless everyone around us has point deductions/bankruptcies, it will inevitably lead to our being less and less competitive, relegation, further reduction in income, greater requirement to sell players, further uncompetiiveness etc, etc.

Is this really a model to be lauded?

[Royal Rother]

Unlike FineRain I do have a financial background so I do understand this stuff. I suppose it's because it's what I do / did that it makes sense to me.

But I can't do electrics, flat packs, DIY of any description, work on cars etc. etc. and it doesn't make any difference how long people spend explaining it to me it's like a different language, so I am equally as thick I suppose.

I should be more tolerant.