If you are a growing team why would you want profits, serious question there. Profits get taxed, if you are an owner of a team and you want to grow I would think zero profit is a good business model.
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You actually think zero profit isn't a good business model? Read your last sentence back and tell me you'd think the same if you ran your own business.
The profit is still there, it hasn't vanished into thin air, it's there for us to use, to invest further, it keeps us from looking over our shoulders should something bad happen.
Ask owners or fans at clubs like Swansea & WBA in their current state how they'd feel being closer to zero profit with what they did last year compared to us. The two best financial figured teams, Spurs & Liverpool both competiting in the Champions League final to me really does say it all about how vital the running of a clubs figures are to its trickle down effect. If we need to spend we can spend, the same cannot be said for roughly 75% of the leagues clubs who are at large solely dependent on their owners money, not the clubs.
Zero profit is never a good business model, in any walk of life so why football is seen as any different is completely beyond me.
Zero profit is the standard life cycle so why would football be any different?
Assuming "being a premier league club" means your product is in development / introduction phase then it would be expected / good business practice to have zero profit.
In addition to this, profits are taxed so if you make profit you may be better off investing those in infrastructure etc. rather than recording it as profit.
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Kick in, given that you mention seedings, a win in Madrid will automatically put us in pot 1 next season.
The quality gap is much smaller going from pot 2 to pot 1, than from pot 3 to pot 2, especially with the bizarre pot 1 allocation, but it's still worth taking into account. It should, barring a horror draw, mean a (further) increased likelyhood of making the knockout rounds, and also the chance of winning the group and securing an easier last 16 tie.
Regardless of the result this year, a decent run in CL next season will very probably move us above several other clubs which are currently above us, so we end as being something like 10th - 15th in the co-efficient table (currently we are 17th), and that will be enough to guarantee us Pot 2 the following year (regardless of other results), and a couple more seasons of similar would cement our place in the co-efficient table.
Would be good to put clear water between ourselves and ManU too as imo, they will struggle to get CL for a couple of years, so the more room we create the better as with their income they will be back in CL in say 3 or 4 years time, unless of course they totally screw up and sponsors do not renew !
Zero profit is the standard life cycle so why would football be any different?
Assuming "being a premier league club" means your product is in development / introduction phase then it would be expected / good business practice to have zero profit.
In addition to this, profits are taxed so if you make profit you may be better off investing those in infrastructure etc. rather than recording it as profit.
Zero profit as a business aim is very high risk.
Take on one high wage player or one or two players who are constantly injured and suddenly you are making losses - and no easy source of money to bale you out.
Aim to make a profit, and one or two mistakes in player acquisition are not a problem - you have enough spare money to get rid of the and buy more.
So aiming to make a profit is a significant risk reducer - and that's true for any business .
Risk and reward - Its not an aim its a process of quicker growth - you can invest in the short term in the hope/ expectation of higher revenue in the future (see Uber / WeWorks etc). Zero profit on its own is not a great indicator of health of a club - I will stand by this.
There are ways to mitigate against risk (relegation clauses etc.), if I am a club coming up from the Championship I would not be looking to make any profits for the first few years, I would be spending the cash to try and establish as a PL club -the rewards are huge. It didn't work for Fulham /QPR but has for Wolves / Leicester).
There are other strategies out there (Burnley) but Zero profit for a period is valid.
Regarding the tax thing - if at the end of the Financial year I have £50M and I want to carry that over I would pay 20% tax so £40M - (I think this is how it works not an accountant or business owner).
Alternatively I could spend the full £50M on a new training ground / hospitality etc. for growth in the future.
Second is zero profit but I wouldn't say its significantly more risky or non-desirable.
Alternatively I could spend the full £50M on a new training ground / hospitality etc. for growth in the future.
Second is zero profit but I wouldn't say its significantly more risky or non-desirable.
Probably 50% of players bought do not live up to expectation. So buying a complete dud or someone who is far from expectation just is not that unusual.
So if you plan to break even and do that - guess what you may need to pay to get rid of the player or may just get in only a fraction of what you spent on them. And that means replacing that player is a problem as you don't have the funds you had when you first bought them.
And if you buy Alexis Sanchez on £350k pa on a 5 year deal, then if you don't like him after a year (as ManU have the problem now) the most likely outcome is they need to subsidise his wages for say £200k per week (£10m) for 4 years - so that £40m out of the window.
And if you have aimed to have zero profits, then you are £40m down to start with
No prudent businessman would aim for a zero profit.
Problem only becomes when the market becomes overheated in terms of values - first well known example being the Dutch bulb crisis when prices of bulbs rose to £1,000 or so (in the 1700's)…...and then suddenly there were no buyers and anyone holding bulbs lost a lot of money.
That's why you make profits, so you can ride market downturns, even severe ones
You can for a period but it comes with risk attached but for long term growth / health Leicester's & Wolves approach was sound as long as they now increase revenues and move into profit making.
Lots of business (with prudent owners) have a strategy during growth of no profit in the short term and clubs are no different.
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Growth of a market does not mean its a bubble - FFP is largely stopping excessive spending in the PL. That's not to say these clubs are healthy, without looking at the contracts etc in detail to see how they deal with relegation I have no idea. If they are still making losses once they are an established PL team this is also a concern.