By Mundell
Earlier this year I was asked to write a piece for Trust News 6 commenting on the Club’s recently released financial results (for the year ended June 2013); on what recently arrived owner Roland Duchatelet might make of them and, most importantly, on what the future might hold. We called the piece, which was written in the middle of our desperate struggle to avoid relegation to League One, “Money, Strategy and Execution”.
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Written by Richard Wiseman.
ps
was there a ballot to see who was going to be part of the board?
A good read Mundell. Just looking forward to seeing Frederic's brother, Francois pull on the red and white ;-).
Cardiff, Hull, QPR and Leicester have secured promotion to the Premier league with losses far in excess of FFP £8m loss limits...now £6m. A club like CAFC might contemplate losing £10m+ if it guaranteed promotion but where's the guarantee?!
So let's take our time, enjoy the new style of football and wait to see where the new look squad takes us. Our losses have been reducing and will be way below the limits...our budgets are not far off those of Palace, Derby and Burnley so there are chances once the basics are in place.
We have the youngest squad in the Championship and it has goals in it but only retains 40% possession... I don't know which players would add to it but building for 2015-16 makes a lot of sense over the next two windows while other clubs lose a fortune.
There is absolutely no point in the club stating the obvious about the premier league. Far more professional and convincing to say:
2013-14 avoid relegation
2014-15 top 12 is really hard but we will try
2015-16 ???
Personally I think M.Duchatelet, Meire and Peeters will know the club, the squad and the competition by next summer and will be in a good position to close the gap on the top six.
Beating Boro on Saturday appears to do that but hanging onto 6th place is a big ask for CAFC right now. What is refreshing is that they are signing players on five year deals - as Katrien Meire stated, they looked at 25 players over the summer and have done enough already to return CAFC to the top half.
And last of all I really welcome Mundell's sober analysis - no need to vilify anyone in the past nor to state that the current crowd have all the answers... To be delivered immediately!
So far they have revamped the squad but the toughest challenge will be to grow the crowds and add to the squad and the club overall without losing talent...the first six months was the easy part! The next 12 months will determine whether we can continue to progress at the same pace?
The formal minutes of the AGM should be up on the website shortly.
On your second point just look at the aborted Sheffield Wednesday deal where they are £50m in debt or the guy who baught Fulham by taking on £200m! Clubs with stupid levels of debt are less likely to run better and be a tradeable club when the owner wants to move on. That limits the number of future owners.
On FFP the theory is great and of course clubs will and have challenged - let's see what happens in December/January. Bolton, Blackburn, Forest, Ipswich, Boro and Brighton are all borderline and if they struggle to report losses of £8m for last season then that means they need to make £2m cuts to comply this season? I sense Forest haven't bothered - no idea what they pay but they have a lot of new talent arrived over the summer.
Question is what should CAFC and other compliant clubs do about clubs who overspend? I still think the majority of owners want to reduce losses so it's not in their interests to see two promotion places going to overspending clubs every season...especially as the penalties go to charity and not shared between the compliant clubs.
I think their gesture is a pathetic tribal swipe at their neighbours but they grandly dress it up as standing up for "fans". "They" are Man City Suppporters Club (not a Trust) who claim 15,000 members, but this gesture was probably agreed on by some committee. When they say "join", that implies a class action, where they might be jointly liable for costs when this case is lost in court. Their 15,000 members will be well pleased.
Nowhere do they say what their better alternative to FFP is. They simply want the Quataris to be allowed to pour unlimited dosh into City. The idea that the lawyer responsible for the disgrace that was the Bosman ruling, acting on behalf of a Belgian football agent, cares a jot about fans, is laughably naive.
This interesting articleforecasts which clubs are likely to have a transfer embargo as of Jan, and briefly summarises why. Interestingly, we are in the 'hard to call' bracket.
Seems reasonable assumptions that we (or should I say Roland) is a net spender and that a cash injection via shares will cover us.
Interesting table though. Not sure about Bolton. Is existing debt a factor in FFP or just profit/loss in the relevant period?
The site you've linked to is excellent and a very good source for FFP material. However, I feel that this article, unusually, is disappointing and somewhat misleading.
To get to the most important point first, there is simply no way that Charlton will breach the FFP rules. There is absolutely no need to be concerned on this point.
The most important aspect of the rules is the overall limit on losses which for the year 2013/14 is £8m. This is the loss after the exclusion of so-called add-backs, which includes spend on infrastructure, a club's academy and some other items. David Joyes reported in the programme around twelve months ago that Charlton's add-backs in the year ended June 2013 were around £2m, allowing an overall loss of £10m.
The nuance in the rules which the article focuses on is that of this £8m allowable loss, only £3m can be funded through loans with the balance of £5m requiring equity financing.
However, in a world where a single owner is providing all of the funding directly, as is generally the case today, this distinction is much less significant than it was when banks and non bank financial institutions were providing debt finance. It is misleading, therefore, to imply that clubs will be striving to keep losses within a £3m limit in order to comply with the rules.
While there are a number of reasons why an owner may prefer to fund via loans rather than through equity, as did our previous owners, I doubt that Roland Duchatelet would be unduly concerned about providing equity finance. In reality, it's no riskier than funding through loans.
The reference to Bolton's debt mountain is superfluous. The rules say nothing about the level of debt. Only in the event that the debt was being serviced, i.e. interest was being paid, might it influence the FFP result. Where the owner has lent the money to the club this is unlikely, at least where the club is loss making.
I wrote a piece on FFP for the Trust website in June and, with the help of @seriously_red, produced the following guess at the outcome.
1. Clubs very likely to breach the FFP limits
Blackburn Rovers, Bolton Wanderers, Bournemouth, Leeds Utd, Nottingham Forest. [And QPR].
2. Clubs which may breach the FFP limits
Brighton, Ipswich Town, Middlesborough, Wolverhampton Wanderers. [And Leicester City].
3. Clubs exempt because relegated from the Premier League in previous season
Reading, Wigan.
4. Clubs in compliance with FFP
Blackpool, Birmingham City, Brentford, Charlton A, Derby Co, Huddersfield T, Millwall, Rotherham U, Sheffield W, Watford. [And Burnley].
Of those in the very likely to breach category, Bournemouth may escape as a result of the windfall they received when Southampton sold Adam Lallana to Liverpool. If forced to get off the fence on the "mays" I'd be inclined to assume that they'll comply.
http://www.financialfairplay.co.uk/
"Although, crucially, it remains unclear precisely what those sanctions will be, with Football League clubs set to meet on November 6 to vote on numerous potential changes to the way FFP rules are enforced.
Many clubs are thought to favour a new set of guidelines that would fall more in line with rules implemented in the Premier League, which assess a club’s losses over a number of years, rather than just one season – although those changes may not come in to force until next summer, which could still leave Forest facing an embargo in January in the meantime.
Top flight clubs are in favour of the changes, as most believe it would be largely impossible for them to adhere to the current FFP guidelines following relegation.
Read more: http://www.nottinghampost.com/Nottnigham-Forest-face-potential-January-transfer/story-23408267-detail/story.html#ixzz3IHRV5Mz8
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We are owned by a multi-millionaire.
We can't afford to man the ticket office on Thursday afternoons - that's all you need to know.
#youdothemaths
But marking seven clubs as "highly likely" to receive a sanction of a transfer embargo is a tad excessive. Bournemouth might well "get out of jail" due to the sell on clause worth £6m for Lallana; Wolves wrote off a whole load of player value when they were relegated to league one - there are also some quirks with the league 1 (and league 2) FFP system which may well make them ok. Boro cut costs at the beginning of last season but their gates have been falling like a stone. And Leeds also had a big player sale after @Mundell Fleming and I put together the numbers last April /May.
From a practical perspective If nine clubs fail who is enforcing sanctions? They aren't going to happen! And there will be much tension between those who play by the rules and those who don't. But if there are just two fines levied and perhaps three clubs like Forest handed player registration embargos then it is more likely to work and be enforced / change behaviour over time.
And finally anyone saying our club is hard to call hasn't done their research! Successive boards have cut player budgets and stated their commitment to FFP. The network moves a fair few players around and to have CAFC restrained from signing players (and extending contracts) for the sake of a small equity injection doesn't make sense. I don't think the CEO and head coach would be talking about acquiring quality players in January if there was any chance of an embargo.
These latest proposals are interesting and they will require a 75% majority to go through. How would a three year rolling average system doesn't really work in a division with six clubs leaving every season? Surely overspending clubs will find it even easier to buy promotion and we will be back to square one. Unless the FAPL is prepared to put a lot more solidarity money on the table I can't see too many championship clubs voting to make life easier for the likes of Cardiff and Forest.
Perhaps rules change but not for this season so I look forward to a January window with some of our competitors excluded from adding to the squad.
We all know that two more quality forwards might turn our draws into wins - the difference between mid-table and sixth place. And I think all the compliant clubs whose owners don't want to burn £10m + a season will look at the question from a similar perspective...why would Watford and Ipswich competing in the top ten with ourselves want richer owners to be able to lose more money?