NFFC Financial Talk

[Reds73]

Does anyone know the full details of the premier league P&S rules? The only thing I can see is that you can't lose more than 105m over 3 seasons.

However, I was sure they put something in to stop teams increasing their wage bill by a certain amount each year eg City style.

So the principles remain the same.
You amortise the transfer fees over the term of the contract for accounting purposes.

So if we spend £150 in transfer fees and give those players 4 yrs contracts, that means 37.5m goes into this years accounts. I would assume the wage bill will be around the 60-70m mark.

If we finish bottom, taking the TV rights into account (100m), then our turnover will be around 140m.

Therefore for accounting purposes we will be well in profit. 

Costs will be around 110m against income of around 140m.

Because we had such a low cost base after promotion, has enabled us to spend the money that we are doing.

Even if we went down (which I doubt we will given how we are going about things), parachute payments  next year are 40m, which added to other revenue would have turnover at around the 70m mark.
The wage bill would be covered, and also we will have a lot of very sellable assets should we need to.

We’re in really good shape.

The club has moved forwards 5 yrs in a 12 month spell.

[Salvatore Matrecano]

We have all seen social media comments from rival fans “You’re still going down and you’ll go bust too with all those signings” , Could anyone put my mind to rest a bit on this because I am an eternal worrier.

Its well known we get £170m for promotion but this takes in to account 3 year payments, parachute money etc. Our owner has shown quite incredible levels of ambition but spending is already around the £120m mark, thats before you take wages into account. Granted some of those payments will be spread out over 4-5 years too but the fact remains EM has already gambled the entirety of our PL windfall on signings in an attempt to keep us up.

If the worst happens, MGW, Taiwo and Dennis all stink the place out this season with 5 goals between them and we go down. No chance we would get back what we paid. Do we possibly end up with a squad whose wages and future payment commitments threaten our future?

Dont get me wrong I realise we have to gamble to give ourselves a chance and Im hugely grateful EM is looking like stumping up more than any owner of any promoted club in history. Just concerned it could all go a bit….Mel Morrisy.

[Floridared]

When Huddersfield got promoted their gross receipts went from £18.5 m in the championship to £123.5 m in their first year back in the premier league. I’m guessing Forest will be a little more with a new sponsor and these figures being 5 years old. So the spending so far will use up the first year “ windfall “ not including wages. If we go down then parachute payments, gate receipts, sponsorships etc will seriously reduce total income but I believe would cover our bloated wage bill, ( but no further incomings) if we fail to get promoted again then that’s when the problems start. I’m sure all eventualities have been considered, EM is no mug and financial security would have been a priority.

[wassy04]

We have all seen social media comments from rival fans “You’re still going down and you’ll go bust too with all those signings” , Could anyone put my mind to rest a bit on this because I am an eternal worrier.

Its well known we get £170m for promotion but this takes in to account 3 year payments, parachute money etc. Our owner has shown quite incredible levels of ambition but spending is already around the £120m mark,  thats before you take wages into account. Granted some of those payments will be spread out over 4-5 years too but the fact remains EM has already gambled the entirety of our PL windfall on signings in an attempt to keep us up.

If the worst happens, MGW, Taiwo and Dennis all stink the place out this season with 5 goals between them and we go down. No chance we would get back what we paid. Do we possibly end up with a squad whose wages and future payment commitments threaten our future?

Dont get me wrong I realise we have to gamble to give ourselves a chance and Im hugely grateful EM  is looking like stumping up more than any owner of any promoted club in history. Just concerned it could all go a bit….Mel Morrisy.

Last year Norwich received around 100m for TV money alone. We'll get slightly more I suspect as we'll be on TV more. I was reading about this yesterday, you're allowed to lose up to 105m over a three year period in FFP terms, so no worries there.

If we went down we would like need to sell some of these players to cover the extra losses on wages. However, in accounting terms the fees are spread over the life of the contract. Ie MGW will only be 5m a year plus wages. Obviously in cash flow terms we need someone to actually hand over the cash but it doesn't seem like there's any worries there either.

Honestly, I'm not 100% sure why what we're doing isn't the default for newly promoted sides. Perhaps our lack of contracted players has made it easier to justify.

Also worth noting the prize for staying up is a minimum 100m TV money again. Plus all the either likely perks that come with the Premier league

[Fumanchew]

Well if all moneys we have payed for our current signings is all being paid across the length of the contract then it breaks down as thus for the next 5 years.

Year 1 £32.675mil
Year 2 £32.675mil
Year 3 £32.675mil
Year 4 £25.175mil
Year 5 £8.4mil

Just fees not add-one and or course not taking into account wages

[Salvatore Matrecano]

There is a bit of an explainer on the Athletic today, more about the why than specific numbers. The likes of Keiran Maguire saying its definitely worth the gamble but we've probably spent all this years money and are maxing out the FFP limit so don’t expect anything like the same next year if we do stay up.

[Sausage Roll]

Apparently we've spent more this window than the entire rest of our history.

[Plymouth red]

Apparently we've spent more this window than the entire rest of our history.

That does not surprise me.

I hope it works. This is a one off year and if it works then I imagine we would have a 1 in 1 out policy, upgrading on players and getting a decent return on those we sell. 

That I assume is the plan long term.

[Reds73]

Promotion was always going to be club changing

Look at the age profile of the side now. We’ve got a nucleus of players who hopefully we be with us for next 3-5 yrs. if any of them leave it has to be for huge money.

No reason this club cannot be top 10 in next 2 yrs

Brennan, Neco, MGW, Mangala, Dennis all potentially elite talents who are under 25

[wassy04]

Just reading an article by Swiss Ramble on our recent accounts (which is for last season FYI)

I'd say key points were:

- EM'S investment at the end of last year was around 90m which was converted to equity. I would presume this has since increased and the stadium costs if it happens will obviously push that further up.
- We actually have one of the lowest debts around thanks to the above write off so if EM was ever to leave the club would be noth easy to sell and attractive to potential future buyers.
- According to his calcs we would've failed FFP last year by around 10m although obviously it would've been close and that excludes the fact we could've sold someone before 30th June similar to what Everton did this year with Richarlison.
- He estimates we have room to lose around 40m this year and still meet FFP, so we'll be fine on that front.

I think the bigger issue will be the following year if in championship as our operating loss excluding bonuses for promotion was around 30m. Meaning in a normal year we'd need to make net sales of around 17-20m to meet FFP. It will depend how much of the wage increase is offset by parachute payments which is pretty much impossible for us to estimate right now. Hopefully a nice hefty wedge for Brennan will take any risks away.

[JollyLolly]

Wassy, I think if we go down then a few of our existing squad will be sold, maybe for less then we purchased them, but this should also be taken into account?

[Radon TAS]

Just reading an article by Swiss Ramble on our recent accounts (which is for last season FYI)

I'd say key points were:

- EM'S investment at the end of last year was around 90m which was converted to equity. I would presume this has since increased and the stadium costs if it happens will obviously push that further up.
- We actually have one of the lowest debts around thanks to the above write off so if EM was ever to leave the club would be noth easy to sell and attractive to potential future buyers.
- According to his calcs we would've failed FFP last year by around 10m although obviously it would've been close and that excludes the fact we could've sold someone before 30th June similar to what Everton did this year with Richarlison.
- He estimates we have room to lose around 40m this year and still meet FFP, so we'll be fine on that front.

I think the bigger issue will be the following year if in championship as our operating loss excluding bonuses for promotion was around 30m. Meaning in a normal year we'd need to make net sales of around 17-20m to meet FFP. It will depend how much of the wage increase is offset by parachute payments which is pretty much impossible for us to estimate right now. Hopefully a nice hefty wedge for Brennan will take any risks away.

The Brennan point could be interesting.  I vaguely remember Johnno Sr on a podcast (Garibaldi Red at a guess) suggesting that when he signed his new contract there was no release clause - unless we are relegated.  So just depends on what that clause may be set at.