Ffp

[Abrak]

Now I know you guys are not that interested in Football Club financials but here is a PDF chart that sets out all the numbers with a comment which can be read in 2 minutes a club. It is based on 09/10 financial results.

http://image.guardian.co.uk/sys-files/Guardian/documents/2011/05/18/sportscribddoc.pdf

And for those who dont want to bother here is a key point summary.

If you dont count clubs losing or making +/- 10m profit a year, out of 20 clubs there are 11 losing more than 10m and one club making a profit of more than 10m.

If you look at the numbers the most obvious thing that stands out is that there is the top 6 and then noone comes close in terms of financial resources to compete with them over a full season. To give you an example Spurs is 6th in terms of revenue (although it has the second strongest profit model) with turnover 119m. Now 7th is theoretically Aston Villa with 91m revenues but the club is such a basket case with 110m of debt and a loss of 38m that it is really only Lerner keeping it alive. A more realistic 7th is Everton with turnover of 79m (and which basically breakeven). Still Spurs in 6th has 50% more revenues (and that was in a year that didnt include CL).

Of the top 6 they fall into 3 categories. The top 2.

Man U lost 79m but it was mostly banking fees to refinance their 500m bond issue. Has the highest turnover and wont have problems meeting FFP.

Arsenal made a profit of 56m. However 90% of this is due to property sales so they are not quite as strong as they look. Where they are going to do very well is that they will renegotiate their shirt and naming rights deals over the next couple of years and that will add 30m. There financial position is so strong under FFP, it is possible they will over take Man U as the team to beat.

The big spenders

Chelsea have losses a minimum of 40m every year in the last 6. Last year it was 78m. They also have a need to rebuild their squad. If they really have to cut back spending by 80m to breakeven, then Liverpool and Spurs would likely overtake them. But that is a HUGE IF. It is going to be very difficult for Chelsea to meet FFP requirements.

Man City. Well they lost 121m and will lose even more in the current year. Luckily their revenues are growing fast - they are now in CL and I suspect they stand a better chance than Chelsea of meeting FFP.

The hopefuls

Spurs have a profit model very similar to Arsenal and they are in the unique position amongst the top 6 that they dont have to be in CL to be profitable. (They are in fact more efficient than Arsenal in the their cost base is 70m lower.) This puts them in a strong position. Imagine if say Chelsea had to cut costs sharply and as a result they missed out on a top 4 finish replaced by Spurs, the following year Chelsea would have to cut costs further because it had 30m less revenues and Spurs could increase their costs accordingly.

Liverpool is suffering because it is not in CL, needs to spend to rebuild the team and has a whole load of expensive baggage from the last lot. If they get into CL the extra revenues will solve the problems. If they dont they will struggle. In the long term their large global fan base which is driving commercial revenues (the main driver of revenue growth) should mean they eventually get back in the top 4 consistently.

Still what is most surprising about the league given the financial inequalities and wage bills ranging from 20% to 50% of the clubs in the top 6, is that they sometimes win matches against them.

Edited August 16, 2011 by Abrak