TV Money and our NET spend

[Beni]

Going from the ITK today regarding that we would need to sell first, in order to buy Schneiderlin and Musacchio as they were becoming expensive, just wanted to start a discussion or answer, to explain to a simpleton like myself of where our money is going, mainly the TV money.

2012/13 season we apparently got 58m, and last season would have been a lot more, but I don't have a number of what we received.

Obviously I know we need to balance the books etc but surely the extra TV money we get, is an added extra bonus where we could spend where we liked without the need of selling players etc

If that money is being used for the new stadium like some suggest, then if so, why would we need funding and naming rights? If say we received £50m (though it's likely more) from 2012 to when we hope to be in the stadium 2017/18, we would have set aside £250m. If the supposed cost of the new stadium is around £450m reportedly, That would mean we would only need a loan or investment of £200m and less, as I'm sure a lot of that £450m has been already paid for.

Obviously the above is a very simplistic way of looking at it, but just would like to know people who knows more about this stuff thoughts

 

[Lilbaz]

Do we need to sell if we are going to buy players, yes. But this is not necessarily down to money. We have too many players. We can only put in a squad of 25 (over 21's) we currently have a squad of around 30 add in u21's we want to give game time, then it's obvious we need to sell it will also cut our wages which we want to keep around 60% of turnover (as that is healthy).
How much of a budget do we have for players? We don't know.
Yes we have an increase in TV revenue, we also have had a £40m cash injection from Joe. This we believe has cleared our debts (£70m) made up largely of our new training ground (£50m) and our new stadium (which we have already spent £100m).
Historically we have had to sell so as not to make a loss. The biggest profit we have made recently was the summer we sold Keane and Berba. If we hadn't we'd have made a £20m loss.

 

[absolute bobbins]

Going from the ITK today regarding that we would need to sell first, in order to buy Schneiderlin and Musacchio as they were becoming expensive, just wanted to start a discussion or answer, to explain to a simpleton like myself of where our money is going, mainly the TV money.

2012/13 season we apparently got 58m, and last season would have been a lot more, but I don't have a number of what we received.

Obviously I know we need to balance the books etc but surely the extra TV money we get, is an added extra bonus where we could spend where we liked without the need of selling players etc

If that money is being used for the new stadium like some suggest, then if so, why would we need funding and naming rights? If say we received £50m (though it's likely more) from 2012 to when we hope to be in the stadium 2017/18, we would have set aside £250m. If the supposed cost of the new stadium is around £450m reportedly, That would mean we would only need a loan or investment of £200m and less, as I'm sure a lot of that £450m has been already paid for.

Obviously the above is a very simplistic way of looking at it, but just would like to know people who knows more about this stuff thoughts

• Why get a loan when you can be debt free and finance the ground with a commercial deal?
• £200,000,000 gap is a lot of money
• Any money we have saved should not be thought of in cash terms, it will be tied up in incredibly complexed investments designed to maximise returns but incredibly hard and expensive to get hold of early
• Very little of the stadium has actually been paid for, contracts have not gone to tender and we still don't own the Archway site.

 

[brasil_spur]

There's a few issues all combined together in your post OP.

In regards to the sell before we buy bit you mention, this has as much to do with retaining players values (and therefore profit we make on them) as it does needing the cash before we buy. I would imagine we could get the funds together to buy any player in the world we wanted to, barring perhaps the top 2 or 3, having the money is not the problem.

What happens in this approach is what has happened to Man City, who spunk £25m on another striker only to realise that they now can't get close to market value for the one they want to sell. The can't afford to keep them on their books as they have too big a squad to accommodate and so they can either sell at a knock down price and take a £10-15m loss on that player within 1 or 2 years of buying them, or they can loan him out and see his value depreciate over a season or two on loan. Adebayor is the most obvious example of this.

The stadium costs will obviously increase over time and potential building quotes that were negotiated back in the middle oh a country wide housing/building crisis won't be valid any longer. I would imagine construction and material costs have probably gone up 25% on what we were looking at a few years ago. The protracted CPO and other hold ups will also have eaten in to original estimates.

There's a huge amount going on which isn't accounted for in the above, and i agree that technically we should have more money to spend.

However the problem them becomes that if you just start paying what clubs demand for players then you quickly end up paying far too much for all your major signings. Liverpool are a clear example of this with both their current spending spree and their previous one from the Torres funds that included the likes of Andy Carrol, Steward Downing etc...

 

[Beni]

• Why get a loan when you can be debt free and finance the ground with a commercial deal?
• £200,000,000 gap is a lot of money
• Any money we have saved should not be thought of in cash terms, it will be tied up in incredibly complexed investments designed to maximise returns but incredibly hard and expensive to get hold of early
• Very little of the stadium has actually been paid for, contracts have not gone to tender and we still don't own the Archway site.

Totally agree being debt free is the best solution, This is fine if the TV money is being used for the new stadium, but if so, why are we still looking for investors and naming rights if we're going to try and be debt free.

I also read in the stadium thread that we had already spent around £100m of the total £450m cost on the planning of it all, ground works etc so the remaining costs are reduced for us to save/fund for

Also not sure why my original post was rated funny, when other clubs are spending there TV money yet we're not or investing it in the stadium, so is a genuine question from someone more knowledgable to clarify

 

[Lilbaz]

At the end of the day the stadium is the most important lay out. If we get that done we guarantee an extra £40-50m a season. That's basically like making the champions league every year. Why spend the money on a player that might not work out (torres etc...), get injured, who's value will most likely deteriorate, might not help you get in the CL and who will cost a fortune in wages. When you can spend that money on the new stadium.

Once it's done, (and with ffp) we can then buy players knowing that we can cover the costs and try to challenge.

It's hard when you see City and Chelsea getting sugar daddies and we all want immediate success but we are playing the long game with little risk of doing a Leeds/Rangers/Liverpool/Chelsea/Portsmouth/80%of the teams in Spain.

 

[nidge]

Didn't we only make £4m profit before tax last year?

 

[Lilbaz]

Totally agree being debt free is the best solution, This is fine if the TV money is being used for the new stadium, but if so, why are we still looking for investors and naming rights if we're going to try and be debt free.

I also read in the stadium thread that we had already spent around £100m of the total £450m cost on the planning of it all, ground works etc so the remaining costs are reduced for us to save/fund for

That still leaves £350m for the stadium costs. Say we get £150m for naming rights, we will still need to borrow £200m. Which is more than our turnover (and also about the amount Liverpool owed when the banks took them over and forced the owners to sell).

 

[Beni]

There's a few issues all combined together in your post OP.

In regards to the sell before we buy bit you mention, this has as much to do with retaining players values (and therefore profit we make on them) as it does needing the cash before we buy. I would imagine we could get the funds together to buy any player in the world we wanted to, barring perhaps the top 2 or 3, having the money is not the problem.

What happens in this approach is what has happened to Man City, who spunk £25m on another striker only to realise that they now can't get close to market value for the one they want to sell. The can't afford to keep them on their books as they have too big a squad to accommodate and so they can either sell at a knock down price and take a £10-15m loss on that player within 1 or 2 years of buying them, or they can loan him out and see his value depreciate over a season or two on loan. Adebayor is the most obvious example of this.

The stadium costs will obviously increase over time and potential building quotes that were negotiated back in the middle oh a country wide housing/building crisis won't be valid any longer. I would imagine construction and material costs have probably gone up 25% on what we were looking at a few years ago. The protracted CPO and other hold ups will also have eaten in to original estimates.

There's a huge amount going on which isn't accounted for in the above, and i agree that technically we should have more money to spend.

However the problem them becomes that if you just start paying what clubs demand for players then you quickly end up paying far too much for all your major signings. Liverpool are a clear example of this with both their current spending spree and their previous one from the Torres funds that included the likes of Andy Carrol, Steward Downing etc...

Thanks, makes more sense with the selling players part , as we would have a big squad and levy isn't the type to risk in not being able to sell players at full whack.

Agree, don't want us to just pay whatever the selling club are wanting, it was more a case of not being able to afford both than meeting of the required fees

 

[Beni]

At the end of the day the stadium is the most important lay out. If we get that done we guarantee an extra £40-50m a season. That's basically like making the champions league every year. Why spend the money on a player that might not work out (torres etc...), get injured, who's value will most likely deteriorate, might not help you get in the CL and who will cost a fortune in wages. When you can spend that money on the new stadium.

Once it's done, (and with ffp) we can then buy players knowing that we can cover the costs and try to challenge.

It's hard when you see City and Chelsea getting sugar daddies and we all want immediate success but we are playing the long game with little risk of doing a Leeds/Rangers/Liverpool/Chelsea/Portsmouth/80%of the teams in Spain.

Totally get this, and I'm fine with this and totally agree that we need to get in this new stadium as soon as possible.
But my question is, if that money is being invested in the stadium, why would we still be looking at naming rights etc if we're pretty much gonna fund it all ourselves with the extra TV money we're getting.

 

[absolute bobbins]

Totally agree being debt free is the best solution, This is fine if the TV money is being used for the new stadium, but if so, why are we still looking for investors and naming rights if we're going to try and be debt free.

I also read in the stadium thread that we had already spent around £100m of the total £450m cost on the planning of it all, ground works etc so the remaining costs are reduced for us to save/fund for

We're not looking for investors, naming rights is just another sponsorship agreement albeit a very big agreement. The only time ENIC will look for investors is when they come to sell the club which will probably be in the two or three seasons after the new stadium has been built.

No real money has yet been spent of the physical work of the stadium and no contracts have been put out to tender or awarded and groundworks (in the construction sense) have not started. A lot of the money spent has been on buying property for the stadium, legal fees, impact studies and design work (which is still ongoing).

 

[Beni]

That still leaves £350m for the stadium costs. Say we get £150m for naming rights, we will still need to borrow £200m. Which is more than our turnover (and also about the amount Liverpool owed when the banks took them over and forced the owners to sell).

But say we get £70m a year from TV money, by the time we hit 2017/18 season where we hope to be in the new stadium, we would have set aside £280m, meaning our loan would be minimal compared to what Arsenal did, and we wouldn't need to sell naming rights etc

 

[Lilbaz]

We're not looking for investors, naming rights is just another sponsorship agreement albeit a very big agreement. The only time ENIC will look for investors is when they come to sell the club which will probably be in the two or three seasons after the new stadium has been built.

No real money has yet been spent of the physical work of the stadium and no contracts have been put out to tender or awarded and groundworks (in the construction sense) have not started. A lot of the money spent has been on buying property for the stadium, legal fees, impact studies and design work (which is still ongoing).

Also built Brooke House, Sainsbury's and a college.

 

[Lilbaz]

But say we get £70m a year from TV money, by the time we hit 2017/18 season where we hope to be in the new stadium, we would have set aside £280m, meaning our loan would be minimal compared to what Arsenal did, and we wouldn't need to sell naming rights etc

Why wouldn't we sell naming rights? Even if we had all the money in place it's an extra £150m we could spend on players without effecting ffp.

 

[Beni]

We're not looking for investors, naming rights is just another sponsorship agreement albeit a very big agreement. The only time ENIC will look for investors is when they come to sell the club which will probably be in the two or three seasons after the new stadium has been built.

No real money has yet been spent of the physical work of the stadium and no contracts have been put out to tender or awarded and groundworks (in the construction sense) have not started. A lot of the money spent has been on buying property for the stadium, legal fees, impact studies and design work (which is still ongoing).

Sorry investors I used was wrong word, meant sponsors and lenders.
Yeah, we still need to go out for tender and that, my understanding was that the buying of property, legal fees impact studies and designs you mentioned, were Incorporated in the £450m figure and that these came to around £100m

 

[LexingtonSpurs]

Didn't we only make £4m profit before tax last year?

Accounting mumbo jumbo...its been a while since I could intelligently read financial statements, but looking at the cash flow from operations, looks like it was about £14M in 2013, down from £26M in 2012. The increase in TV revenue will help some.

 

[Beni]

Why wouldn't we sell naming rights? Even if we had all the money in place it's an extra £150m we could spend on players without effecting ffp.

Not sure, be nice for the cash yes, just the whole fact of being told what to name your stadium

 

[Kendall]

Our revenue from last year was £147m
Player/staff salaries, bonus and pension payments were £96m
Net finance costs were at about £8m
Tax of around £2m


That leaves around £40m, excluding depecriation/amortisation adjustments (£12m) to pay for ordinary, day to day operating expenses and funding initial stadium work prior to obtaining naming rights.

 

[Beni]

Our revenue from last year was £147m
Player/staff salaries, bonus and pension payments were £96m
Net finance costs were at about £8m
Tax of around £2m


That leaves around £40m, excluding depecriation/amortisation adjustments (£12m) to pay for ordinary, day to day operating expenses and funding initial stadium work prior to obtaining naming rights.

But this wouldn't of had the increase of TV money which will show on this years, which we should get £58m for the 2012/13 season and not sure what it was for last season

 

[Kendall]

But this wouldn't of had the increase of TV money which will show on this years, which we should get £58m for the 2012/13 season and not sure what it was for last season

Yes, this may have increased (it actually decreased from 2012 to 2013), but lets not forget our wage bill will have also increased, as will, in all likelihood, the costs associated with the stadium.