Football Finance Thread

Hello my fellow cocks,

It can no doubt be said that finances have been frustrating us recently. We have built a huge stadium which has been delayed to infinity and have had to sit through a summer of almost no activity. We watch as stingy wages cause discontent and drive out players. We have seen our best players sold on to more financially loose clubs.

But allow me to flip this on it's head. We should be very proud of how our finances our managed. Not just because we have the least spend of all the top clubs, and have become a big player in English football without a sugar daddy or huge inbuilt advantage (*cough*, united, *cough*). Not only is this impressive, but it could become very important, very quickly.

I have grown increasingly suspicious of how clubs have been spending over the past few seasons. I agree with Levy that it is unsustainable. Higher and higher spending has been engaged with on the basis that TV money will continue to rise. Much of this is debt based, in other words the most dangerous way to spend.

I am an econ/finance student in real life, so I'll give you a quick rundown on debt. It's great, until it isn't. Everything being equal, debt is great as it allows you to make more money than you would otherwise have been able to. The problem is things never remain equal, and when things take a downturn debt quickly becomes unmanageable.

You are all familiar with Leeds's collapse at the turn of the millennium. It happened because they borrowed and spent on the basis of achieving champions league football. Initially this worked great, until they finished 5th one season and, well, you know the rest.

Also around that time many football league clubs nearly went belly up after borrowing on the expectation of more money from ITV digital. When ITV digital collapsed they were unable to service their debt. The whole football league was nearly wiped out.

We like to imagine finance is a little different in football than in real life, but it isn't. The collapse of LTCM happened because they had models which didn't properly grasp risk. Lehman brothers took out huge debt to finance what they thought were risk free assets (CDOs). When it turned out they weren't risk free and they began to collapse, we were served up the largest corporate bankruptcy in history.

The risk for premier league clubs is their dependence on TV money and the expectation that it will continue to rise. I am not going to stand here and tell you that tv money is going to fall next year, or ever. All I am saying is that it is highly risky for clubs to be basing their model on TV money and debt. If there is a rare event, and the longer time goes on the more likely it becomes, they will be hit badly. On the other hand, clubs that have focused on managing debt, keeping their wage bill down, turning over profit and diversifying their revenue streams (like, say, building a new stadium to increase matchday revenue) will be able to resist such shocks.

Basically, when everything is good its hard to appreciate good financial management. This is true everywhere, including sports. It's only when things take a downturn that you see who was being smart and who was being reckless. In the words of Steve Eisman (the main character in the Big Short) people constantly '[mistake] leverage for genius'.

As I said, this is just a theory. I could be wrong about all this. But I hope I have given you a new perspective about our often frustrating thrifty ways.

Feel free to attack me below and discuss football finances in general.
 

asterdroid

White Hart Pain
The Real Madrid kit sponsorship:
LaLiga Santander: Real Madrid and Adidas have 1,100 million euro sponsorship deal agreed - MARCA in English

Talk about moving the goalposts wtf. It's not even like you can claim a shady connection like with Etihad and Qatar for inflating the value.
It's like the Neymar moment - when every new transfer was compared to his, new kit deals are compared to this.
Nike for Barcelona? minimum £120m a year for example. If we think we're half the club they are, we'd want £50m a year from Nike, no?
except it's a little typical how we only just committed to Nike on a long long term deal.
Dammit.

Edit: they were already on these figures, it's still ridiculous though.
 
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Overspending In The Premier League Continues, And It's Worrying
I just found this article from forbes which echoes many of my points. Primarily, that clubs are over-leveraged (too much debt) and this leaves them extremely vulnerable to short term financial shocks.

The article also addresses something I've been thinking for a while, that is that the culture of huge spending is becoming a 'social contagion'. As more clubs do it, others feel inclined to follow. Woolwich, for all we think of them, have traditionally been one of the most financially responsible clubs. Recently though they have begun to splash the cash in a huge way and take on debt. Why this has happened I couldn't tell you, but I think it's a mix of social contagion and pressure created by their fanbase.

I didn't say this at the time, but I thought that not signing anyone in the summer was a very ballsy and brave move. I'll explain this more another time, but it's apparent that Levy is trying very hard to resist getting caught up in the circus. This will become increasingly difficult. As Chuck Price, CEO of Citibank just before the 2007-08 crisis, said in regards to the ever more risky tactics banks were taking in the run up: 'As long as the music is playing, you've got to get up and dance'.

We've been trying hard not to dance for a while now. I don't know how much longer we can hold out.
 
Comment
Overspending In The Premier League Continues, And It's Worrying
I just found this article from forbes which echoes many of my points. Primarily, that clubs are over-leveraged (too much debt) and this leaves them extremely vulnerable to short term financial shocks.

The article also addresses something I've been thinking for a while, that is that the culture of huge spending is becoming a 'social contagion'. As more clubs do it, others feel inclined to follow. Woolwich, for all we think of them, have traditionally been one of the most financially responsible clubs. Recently though they have begun to splash the cash in a huge way and take on debt. Why this has happened I couldn't tell you, but I think it's a mix of social contagion and pressure created by their fanbase.

I didn't say this at the time, but I thought that not signing anyone in the summer was a very ballsy and brave move. I'll explain this more another time, but it's apparent that Levy is trying very hard to resist getting caught up in the circus. This will become increasingly difficult. As Chuck Price, CEO of Citibank just before the 2007-08 crisis, said in regards to the ever more risky tactics banks were taking in the run up: 'As long as the music is playing, you've got to get up and dance'.

We've been trying hard not to dance for a while now. I don't know how much longer we can hold out.

He states that the clubs are overleveraged with out backing it up with anything - I am not an analyst but this doesn't seem too unhealthy
Premier League finances: the full club-by-club breakdown and verdict doesn't seem to

then says if their sponsors cant pay they would be screwed, this would need the arse to fall out of the market (i.e. no new sponsors to replace them) and in this case its obvious they would be screwed.
 
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Link to full PDF is in here:
Sporting Intelligence

TDLR:
Spurs have the 13th Highest Wage bill in world Football (66th highest Sports Club). Suspect, we are currently 11th leapfrogging both Inter and Milan given our recent new contracts handed out, directly behind Liverpool then Woolwich in the football club list.
 
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Spurs_Bob

N'Koudou looked world class on YouTube
taken from here (PDF)

RANK (LAST YEAR) TEAM - AVG ANNUAL PAY (PER WEEK)

10 (23) Man Utd - £6,534,654 (£125,666)
20 (24) Man City - £5,993,000 (£115,250)
35 (39) Chelsea - £5,020,004 (£96,539)
38 (55) Liverpool - £4,862,963 (£93,519)
39 (48) Woolwich - £4,853,130 (£93,329)
66 (64) Tottenham - £3,515,778 (£67,611)
69 (72) Everton - £3,252,690 (£62,552)
71 (70) West Ham - £3,189,333 (£61,333)
80 (114) Crystal Palace - £2,757,000 (£53,019)
81 (89) Leicester - £2,710,710 (£52,129)
83 (110) Southampton - £2,669,333 (£51,333)
141 (165) Bournemouth - £1,989,520 (£38,260)
157 (169) Watford - £1,775,172 (£34,138)
159 (-) Wolves - £1,757,600 (£33,800)
160 (-) Fulham - £1,727,440 (£33,220)
161 (174) Brighton - £1,695,040 (£32,597)
166 (159) Newcastle - £1,650,133 (£31,733)
168 (172) Burnley - £1,603,197 (£30,831)
181 (187) Huddersfield - £1,238,000 (£23,808)
192 (-) Cardiff - £957,471 (£18,413)
 
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^ Fantastic set of posts and I find it incredibly interesting. The one thing I don’t understand is why some clubs pay tax and others don’t though? Is that a function of the structure or are you guys taxed differently based on geography? Seems crazy to let the two Manchester’s and Liverpool (in particular) pay zero?
 
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Hello my fellow cocks,

It can no doubt be said that finances have been frustrating us recently. We have built a huge stadium which has been delayed to infinity and have had to sit through a summer of almost no activity. We watch as stingy wages cause discontent and drive out players. We have seen our best players sold on to more financially loose clubs.

But allow me to flip this on it's head. We should be very proud of how our finances our managed. Not just because we have the least spend of all the top clubs, and have become a big player in English football without a sugar daddy or huge inbuilt advantage (*cough*, united, *cough*). Not only is this impressive, but it could become very important, very quickly.

I have grown increasingly suspicious of how clubs have been spending over the past few seasons. I agree with Levy that it is unsustainable. Higher and higher spending has been engaged with on the basis that TV money will continue to rise. Much of this is debt based, in other words the most dangerous way to spend.

I am an econ/finance student in real life, so I'll give you a quick rundown on debt. It's great, until it isn't. Everything being equal, debt is great as it allows you to make more money than you would otherwise have been able to. The problem is things never remain equal, and when things take a downturn debt quickly becomes unmanageable.

You are all familiar with Leeds's collapse at the turn of the millennium. It happened because they borrowed and spent on the basis of achieving champions league football. Initially this worked great, until they finished 5th one season and, well, you know the rest.

Also around that time many football league clubs nearly went belly up after borrowing on the expectation of more money from ITV digital. When ITV digital collapsed they were unable to service their debt. The whole football league was nearly wiped out.

We like to imagine finance is a little different in football than in real life, but it isn't. The collapse of LTCM happened because they had models which didn't properly grasp risk. Lehman brothers took out huge debt to finance what they thought were risk free assets (CDOs). When it turned out they weren't risk free and they began to collapse, we were served up the largest corporate bankruptcy in history.

The risk for premier league clubs is their dependence on TV money and the expectation that it will continue to rise. I am not going to stand here and tell you that tv money is going to fall next year, or ever. All I am saying is that it is highly risky for clubs to be basing their model on TV money and debt. If there is a rare event, and the longer time goes on the more likely it becomes, they will be hit badly. On the other hand, clubs that have focused on managing debt, keeping their wage bill down, turning over profit and diversifying their revenue streams (like, say, building a new stadium to increase matchday revenue) will be able to resist such shocks.

Basically, when everything is good its hard to appreciate good financial management. This is true everywhere, including sports. It's only when things take a downturn that you see who was being smart and who was being reckless. In the words of Steve Eisman (the main character in the Big Short) people constantly '[mistake] leverage for genius'.

As I said, this is just a theory. I could be wrong about all this. But I hope I have given you a new perspective about our often frustrating thrifty ways.

Feel free to attack me below and discuss football finances in general.
This is the best thread I've seen in a while

 
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So the only clubs running in any way normally are
Mufc
Afc
Thfc
Wba
Southampton
Burnley

All the rest is vanity although Liverpool and West ham are getting there
 
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What I take from this is that spurs truly are a sleeping giant


Generating nearly twice as much cash as Liverpool. We have the ability in the future to win and win big. If we can win a major trophy CL and or the PL the numbers would explode. Woolwich too are in that position.
 
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