Sustainability Going Forward

[Fuber]

Out of interest, with a few people (on the likes of Twitter, etc,) highlighted an interest as to whether city should sign the likes of Hector (who was on circa £20kpw at Fulham) - what's a wage bill that people consider 'sustainable' in lieu of the last few seasons and the general overspending that's occurred?

For example in 18/19, 19/20, and 20/21 wage spending was circa £30m, £33m, and £36m respectively.

For context, average Revenue between 2017-2020 was circa £26m, peaking at around £31m in 18/19. Discounting the 20/21 results on revenue in leiu of the impact of COViD.

What should we overall perhaps be aiming for as wages% as a proportion of turnover?

For example, my logic would be circa 90-95% wages as proportion of turnover, overheads to be offset by odd bits of player trading. Which would thereby mean wage bill of around £22m/per annum.

My educated guess is that we're currently in or around that figure currently around £23-24m if NP and RG have reduced the overall bill by a third.

So what are people general views on how Sustainability should look for us?

[chinapig]

https://www.uefa.com/returntoplay/news/0274-14da0ce4535d-fa5b130ae9b6-1000--explainer-uefa-s-new-financial-sustainability-regulations/

Assuming the new UEFA rules are adopted by the EFL the following (among other things) will define sustainability:

The cost control rule restricts spending on player and coach wages, transfers, and agent fees to 70% of club revenues. (The gradual implementation will see the percentage at 90% in 2023/2024, 80% in 2024/2025, and 70% in 2025/2026). This requirement provides a direct measure between squad costs and income to encourage more performance-related costs and to limit the market inflation of wages and transfer costs of players.

Which is going to be a challenge for us, and most clubs in fact.

[Major Isewater]

1 hour ago, chinapig said:

https://www.uefa.com/returntoplay/news/0274-14da0ce4535d-fa5b130ae9b6-1000--explainer-uefa-s-new-financial-sustainability-regulations/

Assuming the new UEFA rules are adopted by the EFL the following (among other things) will define sustainability:

The cost control rule restricts spending on player and coach wages, transfers, and agent fees to 70% of club revenues. (The gradual implementation will see the percentage at 90% in 2023/2024, 80% in 2024/2025, and 70% in 2025/2026). This requirement provides a direct measure between squad costs and income to encourage more performance-related costs and to limit the market inflation of wages and transfer costs of players.

Which is going to be a challenge for us, and most clubs in fact.

If the governing body decides that’s how it will be then every club will have to adapt.

This should mean lower wages and / or smaller squads. 
In any case it cannot be healthy to be spending more than your income on wages it is madness which needs to stop. 

[chinapig]

17 minutes ago, Major Isewater said:

If the governing body decides that’s how it will be then every club will have to adapt.

This should mean lower wages and / or smaller squads. 
In any case it cannot be healthy to be spending more than your income on wages it is madness which needs to stop. 

The irony here is that what I quoted above is essentially a salary cap. Steve has always been in favour of that yet he allowed Ashton to keep increasing the wage bill to the extent that @Fuberpoints out.

Now he is going to be forced to do what he claimed he was in favour of. Better late than never.

[RoystonFoote'snephew]

Many Clubs marketing strategies are going to have to improve if they're to maintain their desired squad and players too are going to have serious decisions to make, take a pay cut or be out of a job. Perhaps City will finally get off its  backside and improve the club shop for a better revenue stream. Elsewhere, I'm sure it's, already very good but PSGs income revenue will have to be amazing if they wish to keep both Mbappe and Messi on board. 

[RUSSEL85]

Will there just be an increase of signing on fees if salary caps are implemented?

[chinapig]

7 minutes ago, RUSSEL85 said:

Will there just be an increase of signing on fees if salary caps are implemented?

I think UEFA's reference to transfers would include signing on fees.

I trust wages will include image rights too given that one of the clinchers for Mbappe was that PSG allowed him to keep 100%.

[RUSSEL85]

1 minute ago, chinapig said:

I think UEFA's reference to transfers would include signing on fees.

I trust wages will include image rights too given that one of the clinchers for Mbappe was that PSG allowed him to keep 100%.

Yes they do include signing on fees don’t they! Doh!

*im typing this as my Mrs is in Labour , gets boring after a while.

[chinapig]

9 minutes ago, RUSSEL85 said:

Yes they do include signing on fees don’t they! Doh!

*im typing this as my Mrs is in Labour , gets boring after a while.

Wow! Hope all goes well.

[1960maaan]

1 hour ago, Major Isewater said:

If the governing body decides that’s how it will be then every club will have to adapt.

This should mean lower wages and / or smaller squads. 
In any case it cannot be healthy to be spending more than your income on wages it is madness which needs to stop. 

Long overdue, but it could make the Championship as bad as the Prem. A team boxing up and down like Norwich or Watford. They'd get £100m for the year they stay, then £40m (?) for their year back , regardless of income from similar sources as the rest of the teams in the League.  
They should exempt PP from income on returning to the Championship, difficult I know, but the Championship is a great League and will only be skewed by 70% of the league starting £40Million or more behind the relegated teams.

[RUSSEL85]

11 minutes ago, chinapig said:

Wow! Hope all goes well.

If she’s sees me on here il be the one ending up staying here lol

[archie andrews]

39 minutes ago, RUSSEL85 said:

Will there just be an increase of signing on fees if salary caps are implemented?

You mean an increase in brown envelopes....... 

[The Original OTIB]

3 hours ago, Major Isewater said:

If the governing body decides that’s how it will be then every club will have to adapt.

This should mean lower wages and / or smaller squads. 
In any case it cannot be healthy to be spending more than your income on wages it is madness which needs to stop. 

Remove agents and there's a lot more money staying in the game.

[NcnsBcfc]

7 hours ago, 1960maaan said:

Long overdue, but it could make the Championship as bad as the Prem. A team boxing up and down like Norwich or Watford. They'd get £100m for the year they stay, then £40m (?) for their year back , regardless of income from similar sources as the rest of the teams in the League.  
They should exempt PP from income on returning to the Championship, difficult I know, but the Championship is a great League and will only be skewed by 70% of the league starting £40Million or more behind the relegated teams.

For me nothing will change until they resolve the issues around FFP and PPs.

Just like the Accrington Stanley chairman (Holt) said on Twitter. How can you limit losses at one club to £39m over 3 seasons, and then give a relegated club £90m to play with over the same period?

Absolute madness, and completely devaluing the Championship as a credible sporting competition in my eyes.

What is the point of PPs anyhow if generally 2 out of 3 relegated clubs go straight back up anyhow. 

Either they increase the amount existing clubs are allowed to lose over the 3 year period, or reduce the PPs.

That's the only way realistically the divison will get back to 24 clubs fighting for 3 promotion places each year, rather than current approx 20 clubs all fighting over the 1.

Edited May 24, 2022 by NcnsBcfc

[Mr Popodopolous]

I remember taking a quick look at this earlier this year. Not done so for a while but from memory...

Assuming a £25-30m average turnover, under the current rules I'd say the wage bill would need to fall into the £20-25m bracket. When I say the wage bill, I am including the final definitive figure inclusive of NI, pensions, non footballing staff- the final figure.

I think our non wage and amortisation costs were in the £14m bracket...there is also the amortisation and sometimes impairment of player registrations to consider.

Assuming that the non football costs- ie the £14m of non footballing costs remain static, I would say and this factors in the £5m allowance for FFP ie youth, community etc, but also assumes as a starting point £0 transfer profit that we should not be exceeding an £18m accounting loss...£14m remains fairly fixed.

On a £25m turnover the total wage and player amortisation bill should not exceed £29m- split it however you like.

On a £30m turnover, it should not exceed £34m. Break it down however you like.

Under the new rules, player wages and amortisation etc- £25-30m turnover- 90% year 1, 80% year 2, 70% year 3 and the same thereafter...£22.5-27m, £20-24m and £17.5-21m...although this won't include non footballing staff etc.

Unsure how transfer profits/revenue would impact this moving forward- and this would hopefully go hand in hand with significant redistribution.

While since I have looked at the figures in depth and certainly subject to revision, looking from other angles etc. 

Edited May 25, 2022 by Mr Popodopolous