the current wage bill: salaries, sustainability and implications

[DuncDisorderly]

Actually Dunc, Rev did not say that. Still I had money on you being one of the first to poo poo this thread.

If spending your train journies doing detailed analysis of a bunch of guesses is your thing Ollie, then fine. Maybe you are close to the truth, but who knows for sure.

McCabe's 'deep pockets' will count for little if we do not get promoted this season. The wage bill (whether it be anything from 6 to 10 million) will need to be decreased if we are in the third division next year.

Your first comment is speculation. I would have said that if we don't get promoted then KevMc's pockets will have to fund any shortfall again next season and will therefore be all important, not less. I thought that Kev Mc had virtually said this himself recently. Reductions in the wage bill can only come from moving on the big earners or waiting for their contracts to expire, and replacing them with players of equal or greater technical ability, who we pay less money for. It will just take time. Don't we need to reduce anyway to comply with the L1 wage cap thingy no-one seems to take notice of anyway?

What I want to know is if people think McCabe is gambling on promotion (not learning from the Robson mistake) or just that his hands are tied and he is planning a more sustainable approach, but it is subject to offers, contracts ending etc.

Those are the two main possibilities. I doubt if its the first, given that the club has made clear that these players are for sale to any 'sensible' offer, (i.e more than 10 bob and a pickled egg) so long as we can get rid of the wages...

 

[Worksop II]

McCabe bears a massive amount of responsibility for the club being relegated, therefore it is only right that he funds a wage bill large enough to enable us to compete as this level.

This, I like.

Makes the £15 I paid for a Membership bearable .......

 

[Ollessendro]

Your first comment is speculation. I would have said that if we don't get promoted then KevMc's pockets will have to fund any shortfall again next season and will therefore be all important, not less. I thought that Kev Mc had virtually said this himself recently. Reductions in the wage bill can only come from moving on the big earners or waiting for their contracts to expire, and replacing them with players of equal or greater technical ability, who we pay less money for. It will just take time. Don't we need to reduce anyway to comply with the L1 wage cap thingy no-one seems to take notice of anyway?

Yes, we need to reduce to compay with the wage cap/sustainable salary rule. This is why I am saying McCabe's pockets will count for little, other than fuding the salary cap (60% of turnover) and any transfer fees. You could argue that he might be able to fund the full 60% (and other clubs not) and shell out more in transfer fees, but I don't reall think either hold water.

 

[ghandi]

Yes, we need to reduce to compay with the wage cap/sustainable salary rule. This is why I am saying McCabe's pockets will count for little, other than fuding the salary cap (60% of turnover) and any transfer fees. You could argue that he might be able to fund the full 60% (and other clubs not) and shell out more in transfer fees, but I don't reall think either hold water.

All McCabe has to do is get one of his other companies to sponsor the Academy for xx millions. This is what the Manc clubs are doing to circumvent the rules for competing in Europe as the sponsorship money is counted as turnover.

 

[beightonblade]

All i have to say on this is ....... its a good job i'm not in charge of salaries at BDTBL.

 

[Sothall_Blade]

Yes, we need to reduce to compay with the wage cap/sustainable salary rule. This is why I am saying McCabe's pockets will count for little, other than fuding the salary cap (60% of turnover) and any transfer fees. You could argue that he might be able to fund the full 60% (and other clubs not) and shell out more in transfer fees, but I don't reall think either hold water.

According to Preston's Official website, the SCMP (Salary Cost Management Protocol) is already in effect at 75% of turnover THIS season (2011-12).
Is it wrong? If not, what punishment does a club get for failing to comply?

http://www.pnefc.net/page/NewsDetail/0,,10362~2398750,00.html

 

[Highbury_Blade]

I assume Bramall lane will soon be known as the <Insert shitty Company Name here> Lane

 

[SwissBlade]

I assume Bramall lane will soon be known as the <Insert shitty Company Name here> Lane

Its a bit of a mouthful... How about The ISCNH Arena

 

[DuncDisorderly]

Yes, we need to reduce to compay with the wage cap/sustainable salary rule. This is why I am saying McCabe's pockets will count for little, other than fuding the salary cap (60% of turnover) and any transfer fees. You could argue that he might be able to fund the full 60% (and other clubs not) and shell out more in transfer fees, but I don't reall think either hold water.

The salary cap has to be a guideline though or its not sustainable especially for relegated clubs. I don't recall who's contracts are up at the end of the season, but for sake of argument (as if we need an excuse...), if all our big earners had three years left on their contracts, and these contracts added up to 100% of revenue, what would we be expected to do, (other than kick the clubs commercial director up the arse and slap his head a few times.)? Its a very different scenario from a team who goes out and buys in lots of talent they can't afford because they are having a punt on getting up...

 

[Highbury_Blade]

Wages aren't a problem for some teams....

http://www.guardian.co.uk/football/2011/aug/23/samuel-etoo-internazionale-anzhi-makhachkala

"Anzhi-makhachkala? Who are they?"

"Exactly"

 

[SwissBlade]

Wages aren't a problem for some teams....

http://www.guardian.co.uk/football/2011/aug/23/samuel-etoo-internazionale-anzhi-makhachkala

"Anzhi-makhachkala? Who are they?"

"Exactly"

Apparently Roberto Carlos plays there too.

A quick check of the map shows them being down in Dagastan, North Caucasus... Perhaps its advisable not to go walking in the mountains as the rebels in the mountains will probably be rubbing their hands at the ransom they could get for him

 

[Ollessendro]

All McCabe has to do is get one of his other companies to sponsor the Academy for xx millions. This is what the Manc clubs are doing to circumvent the rules for competing in Europe as the sponsorship money is counted as turnover.

That is an interesting potential loop hole.

According to Preston's Official website, the SCMP (Salary Cost Management Protocol) is already in effect at 75% of turnover THIS season (2011-12).
Is it wrong? If not, what punishment does a club get for failing to comply?

Thanks for the info. I seem to remember United battling against this (along with Preston) and getting some sort of reprieve. However, the best I can find on the net is an article saying that Preston and United were in consultation with the Football League and looking for 'clarification abiut the salary cap proposal' (http://www.sheffieldtelegraph.co.uk...ification_about_salary_cap_proposal_1_3478308)

"United’s delegate voted in favour of the plans, which will see teams in League One adopt a salary cap next season, at the FL’s annual general meeting in Cyprus last week.

But officials at Bramall Lane, together with their counterparts at Deepdale, are seeking further clarification about how the system, called Salary Cost Management Protocol, will be rolled-out.

“Most people agreed this is a sensible idea,” a source close to those talks revealed. “But those coming down into the division have entered into legally binding contracts with many players which are set at Championship level and, unless these players leave, they have to honour them which could have an impact.

“It might be sensible for them to be given time to adjust while still being asked to fulfil certain criteria which makes sure they do not enjoy an instant advantage over everyone else.”

I thought that United had got some sort of reprevieve (along with Scunny and Preston) from this consultation. However, I cannot find any news of it.

The salary cap has to be a guideline though or its not sustainable especially for relegated clubs. I don't recall who's contracts are up at the end of the season, but for sake of argument (as if we need an excuse...), if all our big earners had three years left on their contracts, and these contracts added up to 100% of revenue, what would we be expected to do, (other than kick the clubs commercial director up the arse and slap his head a few times.)? Its a very different scenario from a team who goes out and buys in lots of talent they can't afford because they are having a punt on getting up...

Cresswell, Quinn, Monty and Simmonsen (and possibly Evans) will all still be on large contracts - ceteris paribus. We have had a reprieve of one season (I believe) and hence it is up to us, in the one year we have, to get oursleves into a position where we meet the cap (65% next season I believe).

The two situations that you give are both cases of financial mismanagement. It seems that for now, with the latter there is a temporary let off (in line with parachute payments) but clubs have to learn to be more sustainable. We dished out contracts silly contracts (that are not sustainable in this division) and risk getting stubng for it again (if not careful).

---------- Post added at 09:09 AM ---------- Previous post was at 09:05 AM ----------

All I can find is that us and Preston are consulting with the League (http://www.thestar.co.uk/sport/football/sheffield-united/blades_back_finance_plan_1_3475918)

This seems to put us in one of two situations:

a) we have to meet the 75% salary cap for this season

b) we get a temporary reprieve (and have to meet the 65% the season after)

 

[axel smeets]

I was also under the impression that we got a sort of reprieve as well. Let's not forget that United had, from 1989-2011, been in the top two divisions, PNE were a championship club that reached the play offs 4 times between 2000-2011. Neither club would have been expecting, nor budgeted for, relegation. The rules, whilst I agree 100% with them, were only voted on this summer. United and PNE should be given this season to adjust and acclimatise.

We both will have players on large contracts that are a legacy of the championship and they aren't always easy to shift on, because other clubs won't give them the same level of pay again.

 

[Balham]

Apparently Roberto Carlos plays there too.

A quick check of the map shows them being down in Dagastan, North Caucasus... Perhaps its advisable not to go walking in the mountains as the rebels in the mountains will probably be rubbing their hands at the ransom they could get for him

Anzhi Makhachkala also spent £13.5m on Yury Zhirkov from Chelsea. It's amazing what you can do with an oligarch although Eto'o's wages are reported as being a mere €10m a season rather than the €20.5m reported there.

The players apparently all live in Moscow and fly down for home games. Must be a lovely area.

 

[geekblade]

evans can be suspended from wages if hes under arrest

Really? Sounds unlikely in a legal system where defendants are innocent until proven guilty. More likely they would keep paying him and then if found guilty be sacked for misconduct backdated to the date of the offence and the money ordered back. Is there a clause in his contract covering suspension of wages for such a thing? Source?

---------- Post added at 12:47 PM ---------- Previous post was at 12:38 PM ----------

Player Min salary (k) Max salary (k) Ollie’s guess-timate
SS -------10 --------- 14 -------------- 11.5
Aksalu -- 1 ------------ 3 ------------ 1.5
Long --- 1 ------------ 3 ------------ 1.5
Lowton --3.5 ------------ 6 ------------ 5
Maguire --1 ------------ 2 ------------ 1.5
Taylor -- 4 ------------ 7 ------------ 5
Ertl ---- 5 ------------ 10 ------------ 8
Lescinel --2 ------------ 5 ------------ 3
Morgan - 8 ------------ 14 ------------ 10
Collins -- 5 ------------ 10 ------------ 7
Kozluk -- 3 ------------ 5 ------------ 4
Flynn --- 4 ------------ 6 ------------ 4.5
Williamson 6 ----------- 10 ------------ 8
Montgomery 10 -------- 15 ------------ 12.5
Doyle -- 5 ------------ 8 ------------ 6.5
Quinn -- 8 ------------ 14 ------------ 11
McAllister 1.5 --------- 4 ------------ 3
Harriot -- 1 ------------ 2 ------------ 1.5
Tonne -- 1 ------------ 2 ------------ 1.5
Mendez-Liang 3.5 ----- 6 ------------ 4
McDonald 5 ----------- 10 ------------ 7.5
Cresswell 9 ------------ 14 ------------ 10
Evans -- 10 ------------ 18 ------------ 15
Bogdanovic 5 ------------ 8 ------------ 7
Porter -- 4 ------------ 7 ------------ 5

Total ------------ 107 ------------ 200 ------------ 147

Min salary 107k x 52 = 5.5m
Max salary 200k x 52 = 10.4m
Olle’s guess 147 x 52 = 7.6m

Interesting figures. I've seen similar estimates before on other boards. I would think that Evans and Williamson would be pulling in more than that and boggy a bit less but who really knows. I think all estimate that we're in a bit of a mess with regards to the wage bill...I'm just pleased that they've managed to reduce it by a fair chunk so far and hopefully that will be ongoing, as much as I wouldn't want to see Quinn or Monty go. I think Evans is on borrowed time to be honest whatever the outcome of the trial.

 

[SwissBlade]

Anzhi Makhachkala also spent £13.5m on Yury Zhirkov from Chelsea. It's amazing what you can do with an oligarch although Eto'o's wages are reported as being a mere €10m a season rather than the €20.5m reported there.

The players apparently all live in Moscow and fly down for home games. Must be a lovely area.

I was talking with my Russian colleague about this area a couple of weeks ago as he’s from the Caucasus’ and had just been to his parents place for his summer holidays, it’s also (relatively) close to where one of our projects will go ashore and right beside the Winter Olympics venue for 2014, in Sochi.

Apparently the Caucasus area is lovely, but as you get down towards the Georgian Border and some of the remote regions like Dagestan then it gets dodgy.

Its bandit country even by Russian standards and that is saying something!

 

[Darren]

Really? Sounds unlikely in a legal system where defendants are innocent until proven guilty. More likely they would keep paying him and then if found guilty be sacked for misconduct backdated to the date of the offence and the money ordered back. Is there a clause in his contract covering suspension of wages for such a thing? Source?

As poste delsewhere the legal position is almost certainly that we will have to continue paying him if and until he is found guilty and there is very little hope of recovering that money if he is found guilty.

 

[Ferenc Blade]

Is Ollie the new Johnny Ball?

 

[Ollessendro]

This seems to put us in one of two situations:
a) we have to meet the 75% salary cap for this season

b) we get a temporary reprieve (and have to meet the 65% the season after)

Last years annual turnover was £20.5 million. However that figure will drastically fall this year with the decrease in revenue from all angles. McCabe has stated that relegation could cost us £12 million in revenue. When you take into account the loss of revenue from tv, the football league/n-power, season tickets and ticket sales, general sales (merchandise etc) and sponsorship then that figure does not seem way out. Relegation from the Prem cost us £12m in revenue.

a)

If turnover was to be £20.5 million this season and we did have to meet the 75% criteria this year, then our wage bill would have to be less than £15. However if turnover falls to £8-£10m, then this season we would be looking at having a wage bill of between £6 and £7.5. Even if you think my calculations are dubious, I am sure you can see the potential implications. Our wage bill is almost certainly in this region and probably more.
If we take my guess-timate (of a wage bill of approx £7.5) then we would need turnover to be £10m for this season. Turnover will probably be around £10m (possibly a bit more) and hence this might be ok. However, if I have underestimated wages then we could be in trouble. My upper band estimate (of a £10m wage bill – which is not completely unrealistic) would mean that we would need turnover to be just over £13m.

b)

If we do have a reprieve for this season (I still believe this is the case) then we just have to meet the 65% criteria next season. So this means that we are looking at having a wage bill in the region of:
• £13.5m if turnover is £20m (i.e. the 2010/2011 figure)
• Somewhere between £5m and £7m if turnover is in the region of £8m-£10m

Turnover fell from approx £32m to £20.5m in the previous financial year (and from approx £42m the year before that), so the above figure seems about right. Does anyone have a copy of the annual accounts or can they point me in the direction of them?. I’d like to get hold of the individual figures and analyse them.

One thing seems for certain and that is that before next August, if we do not get promoted, we will need some restructuring and offloading of any big earners.

 

[Sothall_Blade]

The club used to post the Annual Accounts on the Official website but they haven't done since 2009 (I can't imagine why!?):-

http://www.sufc.co.uk/page/PLC/0,,10418~1081124,00.html

In 2009 the Turnover was £32.1M and the "First team costs" were £15.7M (49%).

---------- Post added at 05:12 PM ---------- Previous post was at 05:02 PM ----------

Evans, Taylor, Simonsen, Williamson, Bogdanovic and Ertl’s contracts expire in Summer 2012.
The worst case scenario is we offload those six and replace them with youngsters or cheap Division 3 players.
That should reduce the wage bill by enough to meet any new regulations that come into force.

 

[Ollessendro]

Evans, Taylor, Simonsen, Williamson, Bogdanovic and Ertl’s contracts expire in Summer 2012.
The worst case scenario is we offload those six and replace them with youngsters or cheap Division 3 players.
That should reduce the wage bill by enough to meet any new regulations that come into force.

Good point Sothall. That is around £3m off the wage bill and hence if we replace them with youngsters or lower league players then we should meet the sustainability criteria. Let's hope that Wilson uses this as his philosophy and over time and we move the high earners on and replace them with younger, hungrier and more athletic players (on lower salaries). Next summer may the the turning point in the 'quiet revolution' I keep banging on about. We have been horrendously financially mismanaged in the past before, but Wilson and McCabe seem to be taking a sensible approach and hopefully this can set us up for an assault up the leagues (in a sustainable manner).

Does this mean that McCabe (and the board) would have the balls to turn down a last minute bid from Quinn? We stand a much greater chance of promotion with Quinn in the squad, but he has to be a top earner. It's the age old United dilemma. Will McCabe be giving us the same old 'we're not a selling club, but he wanted to go and we could not stop him ..... it was his pesky agent' or will we see Wilson show his large red and white testicles and state he is not willing to lose one of his best players? (or will the transfer deadline slip by without a bid for Sheffield United's ginger answer to Johan Cruyff?)

 

[Ollessendro]

I am bumping this thread, as there is a lot of talk about contracts, fair play and the wage bill. This got some interesting discussion going last time and I think it is the right time to return to it. We all know that not getting promoted will have an impact on personnel. There are sustainability rules and McCabe is shrewd and will be looking to cut the cloth where possible.

Rough calculations

I’ve attempted to do some calculations. Now this is (educated) guess work and I realise there is a margin for error. I could be out and am opening myself up for criticism. However I feel using estimates of minimum salary and maximum salary I think we can get a rough idea of what the club is paying on wages. This is far from exact, but I am aiming for a likely figure, I realise it could be a million or two out, but

I still think it could give us an indication of how much we are paying. See my estimates and calculations below.

Player Min salary (k) Max salary (k) Ollie’s guess-timate
SS -------10 --------- 14 -------------- 11.5
Aksalu -- 1 ------------ 3 ------------ 1.5
Long --- 1 ------------ 3 ------------ 1.5
Lowton --3.5 ------------ 6 ------------ 5
Maguire --1 ------------ 2 ------------ 1.5
Taylor -- 4 ------------ 7 ------------ 5
Ertl ---- 5 ------------ 10 ------------ 8
Lescinel --2 ------------ 5 ------------ 3
Morgan - 8 ------------ 14 ------------ 10
Collins -- 5 ------------ 10 ------------ 7
Kozluk -- 3 ------------ 5 ------------ 4
Flynn --- 4 ------------ 6 ------------ 4.5
Williamson 6 ----------- 10 ------------ 8
Montgomery 10 -------- 15 ------------ 12.5
Doyle -- 5 ------------ 8 ------------ 6.5
Quinn -- 8 ------------ 14 ------------ 11
McAllister 1.5 --------- 4 ------------ 3
Harriot -- 1 ------------ 2 ------------ 1.5
Tonne -- 1 ------------ 2 ------------ 1.5
Mendez-Liang 3.5 ----- 6 ------------ 4
McDonald 5 ----------- 10 ------------ 7.5
Cresswell 9 ------------ 14 ------------ 10
Evans -- 10 ------------ 18 ------------ 15
Bogdanovic 5 ------------ 8 ------------ 7
Porter -- 4 ------------ 7 ------------ 5

Total ------------ 107 ------------ 200 ------------ 147

Min salary 107k x 52 = 5.5m
Max salary 200k x 52 = 10.4m
Olle’s guess 147 x 52 = 7.6m

Realistically the wage bill is probably around £7-8 million per year. What does this mean?

Now a couple of things strike me when I look at this: firstly my guess my might have been a bit out, secondly that we seem to have gambled on going up and thirdly perhaps we might not have to have the ‘fire sale’ many are talking about.

From the above Kozluk, Mendez-Laing and Boggy are no longer relevant. Simmonsen has been released and Taylor and Ertl are likely to follow. I cannot see us being able to afford Williamson or McDonald and Ched is likely to stay banged up (and we wouldn’t be able to keep him anyway).
Unfortunately we are still paying Morgan and Montgommery hefty contracts for very little. This needs to be addressed, with the former making a decision (hang up boots and coach or get fir for start of season) and the latter being shipped out (free transfer, loan or whatever).

After that, it seems that the only ‘unsustainable’ salaries (i.e. more than 10k a week) are Cresswell and Quinn. I cannot see anyone coming in for the former, but perhaps it is time to move Quinn on. He obviously has buckets of quality and there is a strong argument for keeping him (the amount of goals he creates – cue Highbury). However, with only a year left on his contract and his wages likely to be around 15k a week we may accept any bids. He certainly would have put himself in the shop window and I expect him to go.
We’re left with:

Player Min salary (k) Max salary (k) Ollie’s guess-timate
Howard -------3 --------- 5 -------------- 6
Long --- 1 ------------ 3 ------------ 1.5
Lowton --3.5 ------------ 6 ------------ 5
Maguire --1 ------------ 2 ------------ 1.5
Lescinel --2 ------------ 5 ------------ 3
Morgan - 8 ------------ 14 ------------ 10
Collins -- 5 ------------ 10 ------------ 7
Flynn --- 4 ------------ 6 ------------ 4.5
Montgomery 10 -------- 15 ------------ 12.5
Doyle -- 7 ------------ 12 ------------ 8.5
Quinn -- 10 ------------ 17 ------------ 14
McAllister 1.5 --------- 4 ------------ 3
Tonne -- 1 ------------ 2 ------------ 1.5
Cresswell 10 ------------ 17 ------------ 14
Porter -- 4 ------------ 7 ------------ 5
(note, I have tweaked a few figures)

That is a wage bill between 3.5m and 7m, but likely to be around £5m.
Turnover for the financial year (2010-11) was approx. £16m. That fell 4m from the previous year. We can probably expect turnover to fall again and it to be around £14m for the last financial year. So by the fair play rules (65% of turnover) we would have to have the wage bill at around 9m. Now taking a range (turnover falls dramatically to £11m or stays same at 16m) then the wage bill could need to be £7m or £10m. You’re starting to get the picture.
Now there are things that I will have not picked up (squad players, bonuses etc) and this may be reflected in the players salary figure for 2010-11: a whopping £18m. Obviously well outside the financial fair play rules.
I’ll leave it up to you lot to debate what this means. It might suggest that we could keep K Mac (providing no one comes in) if we can shift Monty on, or that it might be a choice between selling Quinn and offering Williamson a new deal. It could give us hope that we can keep Lowton and Maguire, yet it shows the scale of the task Wilson has. By this I mean not only finding and attracting potentially 10 players, but doing within a wage budget of only a few million for the year.

 

[Highbury_Blade]

Anyone know if the wage cap rule includes non-playing salaries?

 

[Houso]

The thing is, what would selling Lowton and Maguire achieve with respect of the financial fair play rules? I assume it wouldn't play into the percentage of turnover available for wages and I'd be surprised if they're on significant contracts.

We HAVE to come to some arrangement with Monty to leave, even if it involves taking a hit to get him off the books. I'm sure he'd be more than willing to terminate and find a new club as most managers seem to rate him. I'd like to think the same would happen with Cresswell, but I can't see it.

If the retained list does come out today, I can see it being a bloodbath. And we'll have some real catching up to do with getting new players in considering the personnel clubs like PNE have brought in.

 

[SotonBlade]

Good analysis Olle. Would find it hard to disagree with any of that

 

[SotonBlade]

Anyone know if the wage cap rule includes non-playing salaries?

I wondered this as well Higbury. If Morgan has no chance of playing again, then it would be prudent to move him to a coaching role only

 

[Railway Blade]

Some where in all that we have to find the wages for at least 2 decent strikers. The forward line as it is will not get us promoted.

 

[Houso]

I my estimation, with players going out, we'll need to find around 10 new players to go straight in to the first 11 and/or supplement the squad. Some of these will come from youth, but we're going to have to bring in plenty.

I'm gutted to see Preston have stolen a march and brought in Laird and others, while we're lagged behind.

 

[Wards]

The forward line as it is would struggle to keep us mid table.

 

[Darren]

The thing is, what would selling Lowton and Maguire achieve with respect of the financial fair play rules? I assume it wouldn't play into the percentage of turnover available for wages and I'd be surprised if they're on significant contracts.

We HAVE to come to some arrangement with Monty to leave, even if it involves taking a hit to get him off the books. I'm sure he'd be more than willing to terminate and find a new club as most managers seem to rate him. I'd like to think the same would happen with Cresswell, but I can't see it.

If the retained list does come out today, I can see it being a bloodbath. And we'll have some real catching up to do with getting new players in considering the personnel clubs like PNE have brought in.

If Monty doesn't figure in Wilson's plans (and he probably doesn't), Wilson will tell him this and tell Monty he might like to look for a new club rather than being stuck on the bench/in the reserves all season. The problem would be that NM would struggle to find a club willing to pay him what he is on at United, so, as you say, we might end up having to pay him a lump sum if lieu of the difference between his current contract and any new contract he gets with another club.