Finances - Transfer Impact (ins and outs)

[Harry]

Having perused the Massengo thread on the Transfer Forum, I wanted to try to get some kind of summary of our finances and how this will have to impact transfer activity in the next 2-3 years. Some say “we need to sell” whilst others say “we must keep”. 

Given our losses of £38m for last year, the 3 year FFP position (4 years for covid) for the 18/19/20/21 period stands at around £29m. So we are currently around £10m under the allowed losses. 
 

For the 19/20/21/22 period, based on some pretty rough estimates of how much we can offset for covid and other factors, I think we are currently reporting an £8m loss, with whatever losses we’ll declare for this season. 
I’ve estimated this to be roughly about a £20m loss this season (based on the same income as the last non-covid year but with the reduction in the wages that we got rid of last summer). 
So that would give us an FFP figure of around £28m, so again, about £11m under the allowed losses. 
 

For the 20/21/22/23 period, I think we’re currently reporting circa £19m loss for the 20/21 accounts plus the £20m loss I’ve estimated for this year. 
That puts us on £39m already, meaning we’d need to make a profit next season otherwise we’d be over the FFP allowance. 
 

These are pretty rough estimates, but I don’t think they’d be too wild. 
These are also based on zero player trading. 
 

So, at the moment, unless we make some big sales, we are on course to fail FFP in 2024. 
 

We will lose some big salaries this summer (assuming we can offload Palmer, Wells and Dasilva, plus the out of contract players). We could knock our wage bill down by around another £6m. 
 

The question is, do we sell Massengo for £8m or so, or do we keep the likes of HNM & Scott and rely on the reduced wage bill and hopeful sales of Bentley, Palmer, Wells etc. 

I can’t see very much (if any) of the funds from any sales being made available for any big incomings. We’ll have to be very very shrewd in our incoming transfers (both from a fee and a wage perspective). 
 

Therefore, does Pearson say to SL - “I want to keep Han and I want to keep Scott. I want these 2 to form the basis of a promotion push in 2-3 years”. 
Or does SL say to Pearson - “Sorry Nige, we need to sell HNM and Scott to balance the books in order to avoid FFP fine / deduction”. 
 

Personally, I’d take Nigel’s perspective. We need to try to get rid of the highest earners, try to get any semblance of a fee for them, and try our best to keep the youngsters that should hopefully form the core of the team in the next few years. 
It would be a very fine line, and would mean we’d have to rely on some very good free / low cost transfer deals. But it’s doable without selling the family silver again. 

[JoeAman08]

The thing is the high earners make the hole bigger. Even if we get rid, and think no one is expecting much in fees for most mentioned, we still have the giant losses to contend with. So even if NP wants to keep his best young players for more than a season or two, I just don’t think it is feasible. Can’t keep all of them anyway. 
 

It is a shame we will have to sell to pretty much stay afloat. That is the cost of letting Ashton(and LJ though I think much less so) run things as he did.

I think maybe why I am so critical of NP. Keep saying when he gets rid of some and adds some more. I am just not sure there is scope to get the quality he probably wants. It can be done of course but we need to be meticulous in our scouting. If we aren’t almost perfect, he is going to need to get a tune out of a lot of players people here have given up on. 

[James54De]

Swiss Ramble’s analysis suggests we’ll be okay for FFP for the foreseeable. Not going to pretend I understand it all, but he seems fairly confident. 

[grifty]

No-ones thought of the idea that we screw FFP and the EFL, spend an absolute load on wages and transfers buying great players, get promotion and hope we never get relegated!

[milo1111]

3 minutes ago, grifty said:

No-ones thought of the idea that we screw FFP and the EFL, spend an absolute load on wages and transfers buying great players, get promotion and hope we never get relegated!

Been done before 

[cidercity1987]

Surely it depends on the player and how long is left on their contract. Massengo could turn into prime Xavi in the next 6 months but if he isn't going to sign a new deal then he needs to be sold in the summer with a year left.

Never should we be in a situation again of letting a £5m asset disappear out the door for nothing 

[Spoons]

@Harryis no @Mr Popodopolous

[Davefevs]

@Harry

I reworked my xls at the weekend, based on @Hxj’s info on annual FFP excludables, plus an estimated £3m covid allowance in 19/20 and £11m in 20/21.

It means we are okay this season.  Next season is tight, probably just over the £39m, but that is because it’s based on the current squad.  I’ve been conservative with income increases, so gradual rise back to £30m.

However, we can remedy this by moving on some or all of the likes of Palmer, Dasilva, Moore, and Wells.  We will either renegotiate Kalas, both saving some of his wages and smoothing his amortisation costs, or sell him. Win-win, assuming we don’t let him run down his contract.  O’Dowda we will do likewise, although his saving is wages (his amortisation is small / negligible at this point).  So I think by the end of this season / the summer, we will be back inside FFP for next season, but then also 23/24 too.

That means we ought to be able to trade when we want, not because we have to.  We probably have a couple of seasons where if we sell we can use that money smartly (with the aid of spreading fees paid over the contract length) to recruit.

But we have to do the hard work of moving on the high earners by this summer to allow that to happen.

Its a shit set of accounts but it’s possible to remedy because we started the hard work in the summer when we let so many players go.  Had we kept Diedhiou with say a 3 year deal on even £15k p.w (let alone £30k) then that would start to break the model.

[Ivorguy]

I am so pleased we have NP as I am sure he is far more savvy than most managers we have had in recent past.  Plus he is big enough to standup to SL, let alone our non functioning Chairman.  And don’t forget we also have Gould who strikes me as a well rounded person and professional.

I think we shall be alright as long as NP sticks with us

[PHILINFRANCE]

*

Edited January 4, 2022 by PHILINFRANCE

[PHILINFRANCE]

16 minutes ago, billywedlock said:

We won't be spending 5.5m on a 30 year old forward this January though. 

Every cloud, and all that.

[Harry]

5 hours ago, Spoons said:

@Harryis no @Mr Popodopolous

Not really sure what this is supposed to mean? 

[Pezo]

Just now, Harry said:

Not really sure what this is supposed to mean? 

I’m fairly sure it’s related to your guestimations re financials, mr popodopolous turns up with cold hard numbers.

[Pezo]

5 hours ago, Harry said:

 

Having perused the Massengo thread on the Transfer Forum, I wanted to try to get some kind of summary of our finances and how this will have to impact transfer activity in the next 2-3 years. Some say “we need to sell” whilst others say “we must keep”. 

Given our losses of £38m for last year, the 3 year FFP position (4 years for covid) for the 18/19/20/21 period stands at around £29m. So we are currently around £10m under the allowed losses. 
 

For the 19/20/21/22 period, based on some pretty rough estimates of how much we can offset for covid and other factors, I think we are currently reporting an £8m loss, with whatever losses we’ll declare for this season. 
I’ve estimated this to be roughly about a £20m loss this season (based on the same income as the last non-covid year but with the reduction in the wages that we got rid of last summer). 
So that would give us an FFP figure of around £28m, so again, about £11m under the allowed losses. 
 

For the 20/21/22/23 period, I think we’re currently reporting circa £19m loss for the 20/21 accounts plus the £20m loss I’ve estimated for this year. 
That puts us on £39m already, meaning we’d need to make a profit next season otherwise we’d be over the FFP allowance. 
 

These are pretty rough estimates, but I don’t think they’d be too wild. 
These are also based on zero player trading. 
 

So, at the moment, unless we make some big sales, we are on course to fail FFP in 2024. 
 

We will lose some big salaries this summer (assuming we can offload Palmer, Wells and Dasilva, plus the out of contract players). We could knock our wage bill down by around another £6m. 
 

The question is, do we sell Massengo for £8m or so, or do we keep the likes of HNM & Scott and rely on the reduced wage bill and hopeful sales of Bentley, Palmer, Wells etc. 

I can’t see very much (if any) of the funds from any sales being made available for any big incomings. We’ll have to be very very shrewd in our incoming transfers (both from a fee and a wage perspective). 
 

Therefore, does Pearson say to SL - “I want to keep Han and I want to keep Scott. I want these 2 to form the basis of a promotion push in 2-3 years”. 
Or does SL say to Pearson - “Sorry Nige, we need to sell HNM and Scott to balance the books in order to avoid FFP fine / deduction”. 
 

Personally, I’d take Nigel’s perspective. We need to try to get rid of the highest earners, try to get any semblance of a fee for them, and try our best to keep the youngsters that should hopefully form the core of the team in the next few years. 
It would be a very fine line, and would mean we’d have to rely on some very good free / low cost transfer deals. But it’s doable without selling the family silver again. 

I guess where all of this falls down is if HNM doesn’t sign a new contract and winds his existing one down, then we’re really up a creek without a paddle.

[Rocking Red Cyril]

35 minutes ago, Pezo said:

I guess where all of this falls down is if HNM doesn’t sign a new contract and winds his existing one down, then we’re really up a creek without a paddle.

Yes surely HNM has to be a keeper as does Scott

[Davefevs]

36 minutes ago, Pezo said:

I guess where all of this falls down is if HNM doesn’t sign a new contract and winds his existing one down, then we’re really up a creek without a paddle.

FWIW, although running down his contract wound be massively undesirable, I don’t believe it puts us up the swanny.  It does constrain recruitment though.  Ideally we want to extend his contract and smooth out his amortisation, same with Kalas too.

[Lrrr]

7 hours ago, Harry said:

I want to keep Han and I want to keep Scott. I want these 2 to form the basis of a promotion push in 2-3 years”. 

Issue is HNM being out of contract in 18 months which doesn’t allow you that 2-3 season planning, it’s only one promotion push at most if he won’t sign a new contract. Therefore taking the money, banking some and allowing Nigel to reinvest some a couple players who could be part of that push would be the smarter move for me 

[Pezo]

6 hours ago, Rocking Red Cyril said:

Yes surely HNM has to be a keeper as does Scott

That depends on his wage demands.

[Harry]

6 hours ago, Lrrr said:

Issue is HNM being out of contract in 18 months which doesn’t allow you that 2-3 season planning, it’s only one promotion push at most if he won’t sign a new contract. Therefore taking the money, banking some and allowing Nigel to reinvest some a couple players who could be part of that push would be the smarter move for me 

Of course. Obviously my comment meant that he would have to be offered and sign an extended contract. 

[Fordy62]

I don’t imagine we’re in too good a position to offer him the sort of wages that’d be sufficient for him to sign. 

At the price he signed for (4m rising to 8m?) then he’s got to be one of the higher earners surely? That doesn’t leave much scope for an increased salary. 

I think he’ll be gone if we can get 6-8m. I highly doubt he’ll sign a new deal when he could potentially secure 50k p/w on a free somewhere. 

[Rocking Red Cyril]

1 hour ago, Pezo said:

That depends on his wage demands.

Surely if we do not keep players like these we might as kiss our asses goodbye. Because we ain't going to get to the prem. 

[Bristol Rob]

I don't think wages will necessarily be the reason HNM signs or not.

He is a young professional at the start of his journey and he'll likely want to take his career as far as possible, so he might decide that the next career move isn't financially motivated but more about where he will develop best. Could be thinks for where he is, mid table Championship is what he needs, could be that he thinks reserves/u23s at a bigger club is the better option.

 

[Bristol Oil Services]

15 hours ago, Harry said:

 

Therefore, does Pearson say to SL - “I want to keep Han and I want to keep Scott. I want these 2 to form the basis of a promotion push in 2-3 years”. 
Or does SL say to Pearson - “Sorry Nige, we need to sell HNM and Scott to balance the books in order to avoid FFP fine / deduction”. 
 

Yes, this, and SL might add: "Don't get too attached to players, Nigel" and then something about getting back to the wildly successful and much admired around the game (source: MA) 5 pillars thingy, buying young/low selling peak/high which somehow mysteriously morphed into: "buy Nahki Wells at almost 30 for millions and play him left wing." 

[Bristol Oil Services]

41 minutes ago, Rocking Red Cyril said:

Surely if we do not keep players like these we might as kiss our asses goodbye. Because we ain't going to get to the prem. 

If we first pull our fingers out our "asses"  - as @Banjo Redrecently  suggested - then perhaps we need never "kiss our asses goodbye" and instead move on to the sunny uplands of baring said "asses" in prominent shop windows, what about that?

[brad blit]

Lots of talk about HNM and his contract, but I’m really hoping they are talking to COD about his (guessing they will offer reduced wages but 3 year deal) as he’s been another who has really impressed these past few weeks. Am I right in thinking he has 18 months left to run?

[dREDful]

52 minutes ago, Rocking Red Cyril said:

Surely if we do not keep players like these we might as kiss our asses goodbye. Because we ain't going to get to the prem. 

Exactly. The aim for the next 2-3 years will be avoid relegation - nothing out of the club suggests otherwise. 

Bad feeling that won't be achievable if we're relying on our academy players to ensure that. 

[Red DNA]

15 hours ago, Harry said:

 

The question is, do we sell Massengo for £8m or so, or do we keep the likes of HNM & Scott and rely on the reduced wage bill and 

 

Therefore, does Pearson say to SL - “I want to keep Han and I want to keep Scott. I want these 2 to form the basis of a promotion push in 2-3 years”. 
Or does SL say to Pearson - “Sorry Nige, we need to sell HNM and Scott to balance the books in order to avoid FFP fine / deduction”. 
 

 

I think we should sell Massengo but keep HNM!

 

In all seriousness the points you’ve raised are valid, it’s bit of of heart or head decision whilst playing poker with the EFL. 
 

So much of the outcome  rests on what HNM wants to do himself and that’s the one thing none of us know. 
 

I want to go with the heart decision but feel the head will rule this time as SL is a money person and tries to stay within the guidelines where possible. 

[Super]

12 minutes ago, brad blit said:

Lots of talk about HNM and his contract, but I’m really hoping they are talking to COD about his (guessing they will offer reduced wages but 3 year deal) as he’s been another who has really impressed these past few weeks. Am I right in thinking he has 18 months left to run?

Should impressive for a few weeks result in a new contract? Not having a go at COD i'm actually one who likes him.

[Bristol Rob]

21 minutes ago, brad blit said:

Lots of talk about HNM and his contract, but I’m really hoping they are talking to COD about his....Am I right in thinking he has 18 months left to run?

Some would argue that he needs to run for 18 months to earn one.

[Davefevs]

23 minutes ago, brad blit said:

Lots of talk about HNM and his contract, but I’m really hoping they are talking to COD about his (guessing they will offer reduced wages but 3 year deal) as he’s been another who has really impressed these past few weeks. Am I right in thinking he has 18 months left to run?

No, he has 6 months left to run, but we have a year option.  Only my guesswork, but I’d imagine we’d want to do something similar to Weimann, I.e. not take up the option because the wages are too high, but offer him 2/3 years to smooth out the wage drop.