By Sonny Braga
There has been a lot of nonsense talked on social media in recent weeks regarding the benefit to the club of European football and player trading. I have done a fair bit of research over the years on our financials and summarise below the figures I believe accurately reflect the position for the current season. The numbers in the table below won’t be perfect as there are a few educated estimates included but they won’t be far off the mark.
I have firstly tried to identify the incremental income we have from Champions League compared to Europa League group stages. We need to qualify for Europa League Group stages in order to afford our current player wage bill and for the club to breakeven and I am reliably informed that this is what the club budget for every year.
I don’t know exactly how many Group stage points are budgeted but have used 7 points for EL and 3 points for CL as this is consistent with failing to progress to the knock out stages of the competitions.
There is a substantial financial upside in gaining more points and a higher coefficient ranking but it wouldn’t be very prudent for the club to anticipate this. At this stage you could say that 3 points from our remaining four Champions League games looks ambitious!
I have also included the costs to the club of travelling to the away European matches which often gets overlooked and player bonuses which are significantly higher for CL group stage qualification
The table below shows that we should make ￡6.9m more from CL group stages than EL group stages. If we could get beyond the group stages or at least gain more points then the differential could increase significantly.
With regard to player trading, again I am reliably informed that we budget for a ￡3m net cash gain annually. Since our player trading model has only just started working, this is probably the first season we will have a cash surplus and outperformed the budget. The table shows the cash surplus will be ￡7m in 22/23 based on the instalments received and paid on transfer dealings since the end of June 22. (￡12m received v ￡5m paid). Often people forget that the club has to pay 5% solidarity fee on transfers and players bought on cross border development fees (like Bassey and Aribo) usually have negotiated a slice of the sell on for themselves and their agents.
In total therefore we are ￡10.9m ahead of budget in cash terms which the board had available to spend. The player wage bill has been increased by circa ￡5m per annum to circa ￡37m for 22/23 with a number of lower paid squad members being replaced by higher paid signings and several new contracts including clauses with increased wages when we qualify for CL.
The balance of the surplus has probably been earmarked for infrastructure projects primarily Edmiston House and Blue Sky lounge (total cost of circa ￡14m partially offset by third party, sponsor and fan contributions of ￡8m)
The board could have opted to spend the entire cash surplus on improving the playing squad, but ￡10.9m would only get us one player at a cost of ￡3m with a 4 year contract at ￡30k per week (plus National Insurance and agents fees which add 25% to costs).
The table below takes no account of the positive impact of improved cash flows in season 21/22 because these were largely used to settle historical transfer and other liabilities and reduce shareholder loans to improve our balance sheet which should be evident from the June 22 financial statements to be issued in the next month or so.
