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It seems to me many posters think our financial situation is so dire we will end up with a depleted squad next season. Many seem to believe we will have to sell Freeman and cannot resign any of the loan players and cannot make any new signings. I don’t think it is as bad as many fans fear.
To comply with FFP rules we must improve ca £7.5m compared to this season. This can come through sale of players, reduction of salaries or reduction of other costs. Jonny, a regular poster here, has also analyzed the accounts and conclude we need to cut even less to comply, so my estimate might be worst case.
The first good piece of news is that we will benefit from a nice reduction of amortization costs next season. Amortization is the word used for write-off of player contracts or other intangible assets. What does this mean? If we signed a player for £3m on a three-year contract, the cost of the player is £1m (amortization) per year over the three-year contract. Such player signed during summer of 2016 will cost us £1m this season. If we resigned such player amortization costs would disappear, but we would have to pay his salaries of course.
We have 11 players on outgoing contracts, plus Sylla and Washinton, who has already left (they are part of the amortization costs for this season). Out of these I believe we have paid a transfer fee for 6: Bidwell, Lynch, Cousins, Wzsolek, Sylla and Washington. On top of this comes outgoing contracts of Furlong, Hall, Shodipo, Rangel, Wells, Hemed and Cameron, where I suppose we didn’t pay any transfer fees.
I don’t know what the six players cost us. I believe Sylla and Washinton were the most expensive, supposedly commanding a fee in the region of £2.5-3m per player when we signed them. The other four might have cost £4-5m altogether. I don’t know, so this is just my best guess. These players have had contracts lengths ranging from 2 to 3 years. A fair estimate may be amortization cost of £3.5m this season.
Corrected for amortization we therefor just need to cut costs of £4m.
Let’s say we did not re-sign Hemed, Lynch, Cousins, Shodipo and obviously Sylla and Washington (I think we pay a good part of Sylla's salary through this season, despite the fact he left in January, but I think we paid Washington salary just up till 1 September 2018). That would save us around £3m if they have an average salary of £10.000 a week. If we re-signed the others on more modest salaries we would save even more.
Hence, we are just looking at a possible need of further cutting costs of £1m if we don’t resign all players on outgoing contracts but let some of them leave.
Let’s say we sell Eze (yes, it is painful to think about it). I believe we will get a fee in the range of £3-5m for him. He is again picked for England U21 and he is a decent prospect, despite his recent slip of form.
Provided we got this fee and did not part with any other players than Eze, Hemed, Lynch, Cousin and Shodipo we would have £2.5m to £4.5m to strengthen the squad and we could afford to keep Freeman, Wells, Cameron, Rangel, Leinstner, Luongo, Wzsolek, Hall and other players subject to exit speculations.
I think £2.5 to 4.5m would bring us two to four very decent signings or loans. Even if we factor in £1m cost for firing McClaren we would have a fair budget for new signings.And we would still have Freeman and the three best newcomers (Wells, Cameron and Rangel).
The following season (2020/2021) will be Nirvana from a financial point of view, as we can put 2017/2018 behind us (it will be out of the three-year rolling FFP calculations). We can up spend significantly without fearing FFP – even as much as £10m. We would be in a better place than many other Championship clubs.We can give promotion a serious push if we just get through 2019/2020 without relegation. We are out of the worst FFP nightmare.
With all the youngsters coming back from loans (Smyth, Chair, Oteh) I think we can field a squad good enough to stay up next season. We can even surprise a few, provided a good manager. A few of us think we are an unattractive club to manage, but we are not less attractive than a third of the Championship clubs. A new manager would face modest expectations, which is a good starting point.
If we get rid of McClaren I don’t think it looks that bad, provided we get the new signings spot on including the new manager.
To comply with FFP rules we must improve ca £7.5m compared to this season. This can come through sale of players, reduction of salaries or reduction of other costs. Jonny, a regular poster here, has also analyzed the accounts and conclude we need to cut even less to comply, so my estimate might be worst case.
The first good piece of news is that we will benefit from a nice reduction of amortization costs next season. Amortization is the word used for write-off of player contracts or other intangible assets. What does this mean? If we signed a player for £3m on a three-year contract, the cost of the player is £1m (amortization) per year over the three-year contract. Such player signed during summer of 2016 will cost us £1m this season. If we resigned such player amortization costs would disappear, but we would have to pay his salaries of course.
We have 11 players on outgoing contracts, plus Sylla and Washinton, who has already left (they are part of the amortization costs for this season). Out of these I believe we have paid a transfer fee for 6: Bidwell, Lynch, Cousins, Wzsolek, Sylla and Washington. On top of this comes outgoing contracts of Furlong, Hall, Shodipo, Rangel, Wells, Hemed and Cameron, where I suppose we didn’t pay any transfer fees.
I don’t know what the six players cost us. I believe Sylla and Washinton were the most expensive, supposedly commanding a fee in the region of £2.5-3m per player when we signed them. The other four might have cost £4-5m altogether. I don’t know, so this is just my best guess. These players have had contracts lengths ranging from 2 to 3 years. A fair estimate may be amortization cost of £3.5m this season.
Corrected for amortization we therefor just need to cut costs of £4m.
Let’s say we did not re-sign Hemed, Lynch, Cousins, Shodipo and obviously Sylla and Washington (I think we pay a good part of Sylla's salary through this season, despite the fact he left in January, but I think we paid Washington salary just up till 1 September 2018). That would save us around £3m if they have an average salary of £10.000 a week. If we re-signed the others on more modest salaries we would save even more.
Hence, we are just looking at a possible need of further cutting costs of £1m if we don’t resign all players on outgoing contracts but let some of them leave.
Let’s say we sell Eze (yes, it is painful to think about it). I believe we will get a fee in the range of £3-5m for him. He is again picked for England U21 and he is a decent prospect, despite his recent slip of form.
Provided we got this fee and did not part with any other players than Eze, Hemed, Lynch, Cousin and Shodipo we would have £2.5m to £4.5m to strengthen the squad and we could afford to keep Freeman, Wells, Cameron, Rangel, Leinstner, Luongo, Wzsolek, Hall and other players subject to exit speculations.
I think £2.5 to 4.5m would bring us two to four very decent signings or loans. Even if we factor in £1m cost for firing McClaren we would have a fair budget for new signings.And we would still have Freeman and the three best newcomers (Wells, Cameron and Rangel).
The following season (2020/2021) will be Nirvana from a financial point of view, as we can put 2017/2018 behind us (it will be out of the three-year rolling FFP calculations). We can up spend significantly without fearing FFP – even as much as £10m. We would be in a better place than many other Championship clubs.We can give promotion a serious push if we just get through 2019/2020 without relegation. We are out of the worst FFP nightmare.
With all the youngsters coming back from loans (Smyth, Chair, Oteh) I think we can field a squad good enough to stay up next season. We can even surprise a few, provided a good manager. A few of us think we are an unattractive club to manage, but we are not less attractive than a third of the Championship clubs. A new manager would face modest expectations, which is a good starting point.
If we get rid of McClaren I don’t think it looks that bad, provided we get the new signings spot on including the new manager.
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