More Budget Cuts

[Jim Chimmerney]

According to the YP today, the wage budget is due to be cut by a further 40% next season to around £6M, on a par with our local 'rivals', just about the lowest in the Division.

We've debated to death ambition and finances but it would be difficult for McCabe to come out and seriously convince people that we are serious about promotion in the next few seasons unless there's any new investment coming in.

I can appreciate the financial climate and the well being of the club as a whole but to me, it just seems like we had a real chance to establish ourselves, it went wrong, and we are now resigned to being a well run Championship club. What worries me is how many of the 25,000 current faithful will remain that satisfied.

 

[Grecian2000]

When clubs talk about a wage budget does it just include the playing staff? How much do people like the chief exec etc. squeeze out of the business?

6m would give a squad of 20 (too low) an average wage of just under 6k per week. I haven't got a clue what the current players are on but I'll wager there are a few well over that mark.

 

[JJ Sefton]

I can appreciate the financial climate and the well being of the club as a whole but to me, it just seems like we had a real chance to establish ourselves, it went wrong, and we are now resigned to being a well run Championship club. What worries me is how many of the 25,000 current faithful will remain that satisfied.

Sadly that is exactly where we are. Like Peter Fonda says at the end of Easy Rider, "We blew it".

And I think quite a few of those fans who have come on board in recent years will drift away. Crowds are, I would guess, at a peak for us. Certainly the prospect of another 10 years watching us play at Carrow Road and Loftus Road doesnt fill me with much excitement.

 

[lenners]

Crikey, we must have immense losses.
£20m plus from Tevez, hotel, property, enterprise centre, 25,000 plus crowds, £8m from Spurs - and a £6m wage bill?
How's that stack up?

 

[madeinsheffield]

£6m??? Killa is wanting £1,560,000 of that if what we have been told is correct

 

[Micalijo]

It should be perfectly possible to run a decent CCC club where the average wage is 4k per week. I'm all for this more towards a more sensible wage structure in football in general. If we are in less debt than our rivals in CCC then we should have some ability to attract investment but more likely we will just get left behind by clubs who have owners with deeper pockets than McCabe.

Plenty of clubs play decent football and have good seasons in CCC with similar budgets but you are relying on togetherness and everyone pulling in the same direction. We don't have that and with further cuts it is only going to get worse in terms of support expectations not being met.

Such a shame that when crowds are so high everything we read about is excuses and warnings of cutbacks etc. It'll be a sad day when we get a crowd a crowd below 20k and I think it's coming next term. When was the last one - early 2005/06?

 

[Micalijo]

Sadly that is exactly where we are. Like Peter Fonda says at the end of Easy Rider, "We blew it".

And I think quite a few of those fans who have come on board in recent years will drift away. Crowds are, I would guess, at a peak for us. Certainly the prospect of another 10 years watching us play at Carrow Road and Loftus Road doesnt fill me with much excitement.

Hard to think of two more enjoyable away days than Norwich and QPR isn't it? Certainly beats paying £50 to watch us get slaughtered by Chelsea.

 

[lenners]

Hard to think of two more enjoyable away days than Norwich and QPR isn't it? Certainly beats paying £50 to watch us get slaughtered by Chelsea.

On balance, I'd rather see us get tonked by Chelsea than Norwich and QPR.
It'd probably be on telly somewhere n'all.

 

[lenners]

When you think about it, cutting the wage bill by 40 per cent and building a 44,000 seat stadium seems to have a logical flaw somewhere along the way.
Can anybody tell what it is yet...

 

[Grecian2000]

It should be perfectly possible to run a decent CCC club where the average wage is 4k per week. I'm all for this more towards a more sensible wage structure in football in general.

Amen to that.

Sadly it isn't going to happen. Clubs will still over-inflate wages in an attempt to get promoted (especially the three clubs who get relegated the previous season).
We await the badly run clubs above us going bust in order for us to profit from their stupidity. Even more sadly this won't happen either!

 

[Jim Chimmerney]

Spot on Micalijo, as I've said a few times, the re-profiling had to be a 3 year plan and this ties up exactly with KB's contract extension.

Unfortunately, I can see it getting a bit worse before it gets better. We will have to release Killa, probably Naysmith and maybe even a few of the long standing players such as Morgs, Monty, Paddy, who will presumably still be on top Championship wages. We are also reliant on un-earthing decent young players from either the academy or the lower divisions and you can't really base a football business plan on luck (Strafford has tried that !!) We are taking three or four steps back in order to start progressing again and even then, progressing on much dodgier ground with the prospect of less public support.

All this on the back of plans for a 44,000 stadium !!!

 

[Micalijo]

On balance, I'd rather see us get tonked by Chelsea than Norwich and QPR.
It'd probably be on telly somewhere n'all.

Fair point - I wasn't factoring in the possibility of getting tonked by those two - which is looking like a mistake on my part!

 

[Jim Chimmerney]

When you think about it, cutting the wage bill by 40 per cent and building a 44,000 seat stadium seems to have a logical flaw somewhere along the way.
Can anybody tell what it is yet...

Beat me to it by two minutes Len. Much as I admire McCabe for what he's done for the club, I think he's taking a huge leap of faith thinking that the fans will stick with him on this one.

Great that we would have one of the best stadiums outside the top flight but what's the point of a 2/3rds empty stadium ?

 

[lenners]

Beat me to it by two minutes Len. Much as I admire McCabe for what he's done for the club, I think he's taking a huge leap of faith thinking that the fans will stick with him on this one.

Great that we would have one of the best stadiums outside the top flight but what's the point of a 2/3rds empty stadium ?

Absolutely none.
And as previously stated, the more this ridiculous pipedream is mentioned, alongside putting the results of various other teams around the world on the club's website, the more his otherwise strong record is going to melt away.

 

[Highbury_Blade]

Crikey, we must have immense losses.
£20m plus from Tevez, hotel, property, enterprise centre, 25,000 plus crowds, £8m from Spurs - and a £6m wage bill?
How's that stack up?

If these figures are true then i'm absolutely flabbergasted. £5m from West Ham for the next 5 years should at least see us being able to afford a decent size wage bill. My understanding is that money wasn't available for transfer, but for "running the club" which surely wages are a part of.

 

[Highbury_Blade]

Absolutely none.
And as previously stated, the more this ridiculous pipedream is mentioned, alongside putting the results of various other teams around the world on the club's website, the more his otherwise strong record is going to melt away.

To be honest i'm beginning to come around to your way of thinking Len. For all that McCabe has done for the club since he took over, we're still only about 5-10 places better off than when he took over. And for many blades fans that's what his legacy will be.

A £6 million wage bill will not get us out of this division by getting promoted.

 

[Micalijo]

If these figures are true then i'm absolutely flabbergasted. £5m from West Ham for the next 5 years should at least see us being able to afford a decent size wage bill. My understanding is that money wasn't available for transfer, but for "running the club" which surely wages are a part of.

Remember though that its appears Scarborough are taking what free cash we have available over the next few years.

Everything else is used to reduce overdraft and the hotel and properties just are not thecash cows many think they are - I am convinced of that even though I obviously don't have figures.

 

[matth]

We are also reliant on un-earthing decent young players from either the academy or the lower divisions...

Whom we will immediately sell when an offer comes in...

 

[Highbury_Blade]

Remember though that its appears Scarborough are taking what free cash we have available over the next few years.

Everything else is used to reduce overdraft and the hotel and properties just are not thecash cows many think they are - I am convinced of that even though I obviously don't have figures.

I'm struggling to think of what else it could be, unless we're renting a fishtank in the boardroom at £100,000 a month.

 

[LoughboroBlade]

There do seem to be a lot of conflicting messages emerging. We have received a fair amount of cash for outgoing players, yet it still isn't enough for us to be financially secure - it's possible that the money is coming to us in stages (almost certainly), and also possible that the Robson era wage bill was more crippling than we thought. I'd like to know if we are yet to receive a single installment of the Tevez compensation.

Meanwhile, we have plans to turn the Lane into a World Cup ready stadium, despite the fact that a) we are publicly saying that we don't have much money to be throwing around, b) there is absolutely no guarantee that we will be getting the World Cup, c) there is absolutely no guarantee that Sheffield would be one of the designated cities in the bid, and d) that even if we do get the World Cup, and Sheffield is one of the cities picked, even with the improvements there is no guarantee that we will be one of the host grounds, especially given there are plans to re-do/re-paint Hillsborough.

We seem to be going out of our way to increase the potential for someone to buy the club off McCabe, with the off-the-field set-up taking priority over the desire to get to the Premiership and stay there. Major stadium enhancements, hotel built, Blades brand in the top divisions in China, Hungary, and Australia - these will all be factors that will help to attract new investment in, and presumably would help us get this in preference to Premiership clubs with less off-the-pitch appeal. In theory anyway.

 

[lenners]

I don't mind McCabe taking his money back out unless he isn't open about it.
When he delisted a year ago, he probably knew what was coming and it is all the harder now to know what's going on.
The thing is, he's not daft and he knows how this will play out ultimately and yet still he doesn't really strike me as a quitter.
If it is all about creating a low-debt investment opportunity for AN Other to come along he ought to just come out and say so.

 

[Micalijo]

There do seem to be a lot of conflicting messages emerging. We have received a fair amount of cash for outgoing players, yet it still isn't enough for us to be financially secure - it's possible that the money is coming to us in stages (almost certainly), and also possible that the Robson era wage bill was more crippling than we thought. I'd like to know if we are yet to receive a single installment of the Tevez compensation.

Meanwhile, we have plans to turn the Lane into a World Cup ready stadium, despite the fact that a) we are publicly saying that we don't have much money to be throwing around, b) there is absolutely no guarantee that we will be getting the World Cup, c) there is absolutely no guarantee that Sheffield would be one of the designated cities in the bid, and d) that even if we do get the World Cup, and Sheffield is one of the cities picked, even with the improvements there is no guarantee that we will be one of the host grounds, especially given there are plans to re-do/re-paint Hillsborough.

We seem to be going out of our way to increase the potential for someone to buy the club off McCabe, with the off-the-field set-up taking priority over the desire to get to the Premiership and stay there. Major stadium enhancements, hotel built, Blades brand in the top divisions in China, Hungary, and Australia - these will all be factors that will help to attract new investment in, and presumably would help us get this in preference to Premiership clubs with less off-the-pitch appeal. In theory anyway.

I truly believe that the clubs in Hungary, China and Australia are a hinderance to investment. Other than that I agree entirely.

 

[SwissBlade]

This seems way too cautious EVEN for us.

Finally, though the club are admitting that we have no further desire to get the "Quality" in that we keep hearing about. In a way this is a relief as its a bit more honesty from the club.

I seem to remember that when we went up last time, there was an article in the media about Ballack (after he signed for Chelsea on 120k a week) earning more in a week than us. I seem to remember that our wage bill at the time for the entire 1st team squad was 105k per week and the average was around 5k, with the likes of Unsworth and Jags on around 12k I think.

At 105k per week that would give an annual budget of 5.5million (approx).

So now we've been up, we've earned more cash, made large player sales, got Tevez cash and lots of larger investments and sponsorships and also had consistently higher attendances than when we went up and we still only reach a figure thats probably just above inflation... Back to the thread from a week a so ago then..

Where's the money gone?

Apparently we were going to be in a better position than most to come out of the "credit crunch". Ok so we've perhaps paid off some debt.

But if we need to reduce so much, then why oh why are we planning to extend to a 44k capacity ground? We won't and don't fill our current capacity. So its a complete waste to extend the ground if we don't have the Premier league team to match.

We'll just end up with an expensive, empty ground with echos and no atmosphere. And all for a World Cup that probably won't end up in Sheffield anyway!

Up the Blades

 

[lenners]

I truly believe that the clubs in Hungary, China and Australia are a hinderance to investment. Other than that I agree entirely.

The only club we own is Chengdu though.

 

[shorehamview]

My main thought is that while McCabe has generally been good for United, you don't invest in a football club unless you want to wave a lot of money goodbye. The only people it will make money for are players and agents. Owners will never make money from a club that is successful on the pitch. Perhaps McCabe needs that explaining.

 

[Highbury_Blade]

At 105k per week that would give an annual budget of 5.5million (approx).

So now we've been up, we've earned more cash, made large player sales, got Tevez cash and lots of larger investments and sponsorships and also had consistently higher attendances than when we went up and we still only reach a figure thats probably just above inflation

How many players did that 5.5m cover?

 

[Vistoma]

Here is part of Mawhinneys' report

"The latest statistics show that in the Championship, year on year,
players' wages increased by a further 24.1 per cent in the season 2008/09. In the Premier League, research indicates that player wages simply follow television income. The truth, however, is that as players` wages increase, club debt increases also.

The Premier League is the highest revenue generating league in the world, and the
Championship alone is the sixth highest football revenue generator in Europe. Yet that success seems to be founded on the promise of a virtuous circle - better players, more success, more revenue, profits. The reality is a zero sum game. Club A increases wages.

Club B matches them. Club C seeks to gain an edge. Club D tries to keep up. And no one
(except players and agents) makes money. This approach leads to massive inflation in terms of 'wages to revenue. In 2007/08 in the Championship, research from Deloitte shows that clubs spent an average of 87 per cent of revenue on players` wages. Is there any business in the world where such a percentage would be sustainable? Lots of clubs are chasing a dream paid for by their owner`s wealth. They are defying economic
gravity simply because their owners are rich. There is nothing wrong with that. Rich men have always been involved in football. But increasingly, being a rich man in football is not enough.

Today what is required is to be very rich. This trend has reached the point where the wealth of countries may soon start to influence the football scene. Millionaires cannot compete with billionaires. And billionaires cannot compete with national GDPs (gross domestic products).

The 'sustainability' of debt is becoming increasingly dependent on the infusion of non football related resources. That is not a sustainable business model and everyone in this room knows it.

I am told that a strength of our professional game is that it operates in a 'free market'; but the truth is that market freedom is limited. Any one of us can set up a business to make widgets
and from day one we can compete with other sellers of widgets. That is not true in the world of football. You can set up a team today, but you cannot play in our leagues today.

It would be more accurate to describe our structure as a 'closed market', though that in itself is simplistic. For example, those at the top of the Premier League play simultaneously in two closed markets - a domestic one, and a European one. One of the most important aspects of a closed market is that, over time, whatever happens in it affects all the members".



In my humble opinion McCabe is leading and others will follow, as finances in football tighten, small squads will be the norm and it will become a buyers market ESPECIALLY if the much talked about centralisation of wage control comes into force (wages as % of income)

This will, of course, mean the big clubs get bigger and the likelihood of a club challenging them becomes more and more remote.

 

[SwissBlade]

How many players did that 5.5m cover?

I don't remember, i think it just said entire 1st team squad

 

[LoughboroBlade]

The only club we own is Chengdu though.

Indeed. Though the global links presumably add value even if we don't own them.

Speaking of which, where are all the Sao Paulo youth players that were destined to join?

 

[shorehamview]

There also seems to be absolutely no point in spending money on the ground when the World Cup is merely a pipe dream at the moment. It seems a rather futile gamble, and we might as well go to the casino and stick the money on red.