The importance of realising our financial position.

I was really intrigued by Brendan Rodger's warning to this club and others in the Premier League warning of the threats that are out there regarding the future of clubs like us and others in the Premier League. He stressed a couple of days ago of the need to get value in the transfer market and stressing the importance of this in today's footballing world

"This is Liverpool Football Club and it's incredible to think it came close to bankruptcy," Rodgers said. "You may think it'll never happen to your club but who'd have thought it could to a team like Rangers? But if football continues to pay the wages some clubs do, you will be asking for it. If you believe it can't happen, well it can, maybe not now but certainly later. Look at Rangers' history. That is a warning for everyone".

Read more at http://www.espn.co.uk/football/sport/story/165295.html#jG26hPjkX0MXgBwH.99

Reading up on Premier League money figures I was astounded to learn that just under 60% of the total European club debt is situated right in England. Deloitte published statistics this May stating that the league was £2.4 BILLION in debt with wage control being the biggest headache with clubs in the top flight spending 70% of their income on wages. A lot of people (and fans) don't seem to realise the importance of it all I think. The Premier League has bred a culture where everyone believes money isn't an object. The Premier League is bulletproof according to most. When we see our owners not spending what we expect them to relative to our rivals then we'll make them know about it, completely ignorant of the severity of the situation. But why break our backs and the clubs long term future by competing on terms that are well above our level? I think this is the situation for Liverpool. We can't and haven't been able to compete anywhere near to the financial clout of many teams above us so we have to show innovation and play the long term game up against our rivals shorter term game.

http://www.bbc.co.uk/news/business-18248540

The only other top name, it seems, acting on their wage structure (and who have always acted it seems) are Arsenal. Will other clubs soon follow suit because surely it can't go on like this? Wages are just one of the problems, but the debt is surely bigger. And dare I say it - if the Premier League is to experience it's own mega scale crash ala Lehman Brothers 2008 then where better to look than our rivals down the East Lancs Road?

While the doom mongers were accusing the owners of asset stripping, pocketing our transfer money, shipping out players on high wages etc etc I was looking at this from a business point of view.

Put quite simply, our owners know that the current model isn't sustainable for any club who don't have a mega rich owner, and even then if FFP has any teeth it will change for them as well.

For some time now, especially after last season, it made no sense at all to keep players on huge wages who were not justifying them.
Looked at realistically, shipping out those players makes complete sense, provided their replacements are of adequate quality. So let's assume they ARE decent players for the moment, and that their wages are a fraction (half, a quarter, a third, whatever) of the players they have replaced.

Doesn't that make sense?

It better, because that's how it's going to work until we get into the CL, then we will progress to the next stage.

You don't build a house by starting with the roof, do you?
Foundations, and then build up.
We've just laid the foundations is all, as we progress we will add more: more quality, more players, more sponsors, more partnerships etc

So, now that we have a clear indication of the direction we are heading, in a healthy, sustainable financial model, can all the doom sayers put their hands up and admit they were wrong, and if that is too much to ask, shut the F**k up and let the rest of us enjoy the ride.

While the doom mongers were accusing the owners of asset stripping, pocketing our transfer money, shipping out players on high wages etc etc I was looking at this from a business point of view.

Put quite simply, our owners know that the current model isn't sustainable for any club who don't have a mega rich owner, and even then if FFP has any teeth it will change for them as well.

For some time now, especially after last season, it made no sense at all to keep players on huge wages who were not justifying them.
Looked at realistically, shipping out those players makes complete sense, provided their replacements are of adequate quality. So let's assume they ARE decent players for the moment, and that their wages are a fraction (half, a quarter, a third, whatever) of the players they have replaced.

Doesn't that make sense?

It better, because that's how it's going to work until we get into the CL, then we will progress to the next stage.

You don't build a house by starting with the roof, do you?
Foundations, and then build up.
We've just laid the foundations is all, as we progress we will add more: more quality, more players, more sponsors, more partnerships etc

So, now that we have a clear indication of the direction we are heading, in a healthy, sustainable financial model, can all the doom sayers put their hands up and admit they were wrong, and if that is too much to ask, shut the f**k up and let the rest of us enjoy the ride.

Well said Swab!

Good posts.

FFP has to work. The majority of European clubs are either in financial trouble (United, potentially) or are not owned by mega-rich owners (us, Arsenal). They outnumber the truly mega-rich by a wide margin. So logic would say that the majority will put pressure on UEFA to toughen FFP rules on the minority who are treating football like a toy.  We all have our doubts though, don't we?

Good posts.

FFP has to work. The majority of European clubs are either in financial trouble (United, potentially) or are not owned by mega-rich owners (us, Arsenal). They outnumber the truly mega-rich by a wide margin. So logic would say that the majority will put pressure on UEFA to toughen FFP rules on the minority who are treating football like a toy.  We all have our doubts though, don't we?

I was going to go on about the lack of regulation in football in the original post but that would have required a whole new thread. I find it disgusting and repulsive individuals like Richard Scudamore continue to breathe while ruling the likes of Hicks & Gillett, Venky's etc to be fit and proper owners. I respect UEFA's good intentions but I seriously doubt there ability and nerve to hold out these FFP rules. Football from FIFA through to the FA is run by gutless, ignorant tools who largely know nothing of the sport or it's business side.


edit: Can the mods please edit the error in the title. "The importance of realising our financial position" it should have been

At the moment we've outspent Tottenham, Man City and Arsenal in net spend so that's all well.

Just need to keep hold of Agger now and I'm happy with this summer. A step in the right financial direction to sign players for relatively high costs but on low wages.

This Assaidi fella will look like a genius signing if he works out and if true he'll be on 20 k he will be extremely easy to shaft out for say 5 mil if he doesn't.

FFP is a flawed system. It isn't fair because clubs who have spent 100s of millions over the years (like ourselves) have a huge advantage. 

These clubs are now in a position to qualify every year for the champions league and the reward for finishing in the champions league will keep these clubs above the others.

Chelsea for example now have huge funds we don't have because they won the CL having spent massively in the past to do so.

FFP is a flawed system. It isn't fair because clubs who have spent 100s of millions over the years (like ourselves) have a huge advantage. 

These clubs are now in a position to qualify every year for the champions league and the reward for finishing in the champions league will keep these clubs above the others.

Chelsea for example now have huge funds we don't have because they won the CL having spent massively in the past to do so.

Over time it will become more of a level playing field IF other clubs have the ambition, the patience and the capability to take a long term view.

I'm going to stick my neck out here and say that is exactly what our owners have planned, but WE as supporters have to accept that.
We have to accept that until the financial madness of the last 20 years ends, we won't be making many marquee signings, and we may even be punting our better fringe players on to improve the first team and/or squad.

So many owners want a quick fix because the supporters demand it, then they place themselves in untenable positions because they have been caught in a kind of negative equity trap, so they have to cut back on everything, players get sold to reduce debt, their league standings drop etc etc
In fact apart from the owners wanting to please, it sounds horribly like a position we ourselves were in not so long ago.

So, there are 2 choices, plan carefully, structure the wages/fees properly, get the right people in place and progress in a sustainable way or end up like Leeds and Rangers.

The thing with FFP is whether they'll issue the sanctions to make it worthwhile having the rules in the first place. It'll be interesting to see what happens to PSG next season because there's no way they can meet the requirements without playing silly beggars.

We have started to get the youth right. Chelski and Citeh can't do this! They need constant success to feed the machine. We should have used the youth set up put in place a few years ago now, to get us in the right direction. We may not be producing a Steve Gerrard but we can bring through plenty of first teamers and buy a couple of real quality players to complete the picture.

As ever with FFP there are a hell of different opinions.  As a qualified accountant with over 20 years of experience I have been naturally curious as to the effect FFP might have.

The clubs that stand to be affected most are those that overspend most in relation to their income - ie Man City, Chelsea and more recently PSG.  The clubs that will ultimately benefit will be those with the largest incomes and with regard to the premier league that means Man Utd.

Contrary to popular opinion, Man U are not in trouble financially.  The acquisition by the glazers saddled the club with a huge debt but that will never be a major issue whilst the club can service the debt comfortably - which it can. All it means is that the club has less to spend on players and wages due to the high levels of interest payments that must be made to service the debt.

To be honest, supporters of other clubs ought to be grateful to the Glaziers for structuring their acquisition this way because otherwise Man U would have had far more money to spend on the playing side of the club.  The creation of the premier league and champions league has ensured that the richest clubs get richer and made our domestic league less competitive - witness Man U's premier league record which shows an unprecedented level of consistent success over 20 years.

Money is the dominant force in football and FFP will not change this in the slightest - the wealthiest clubs will continue to dominate domestic and european football and prudently run clubs on smaller budgets will only be able to achieve limited success.

This doesn't bode well for the long term future of the game as the wealth will be concentrated in the hands of comparitively few clubs and as The Jam put it in Funeral Pyre :

                   " the weak get weak as the strong grow stronger"

The acquisition by the glazers saddled the club with a huge debt but that will never be a major issue whilst the club can service the debt comfortably - which it can.

Spot on angus; as with everything in life from car loans & mortgages to football clubs; when it comes to debt it's all about servicing the debt comfortably. I touched on this a couple of times now in other threads and it is something which a lot of people want to overlook after the bad experience of H & G.

So whilst it's important to realise where we are financially (sh*t there may even be fans on the forum who don't) it's also important to realise and accept that not all debt is bad (something which all fans clearly don't realise).

Thanks for that read angus; Interesting... "To either cut down on beer or the kids' new gear..." 

Getting into debt for players wages and living beyond your means should be a big no no ,it is as stated un sustainable, but say we were getting a mortgage/debt on a new stadium then that would be a totally different ball game ,and you would at least get something at the end of it , where as paying players big wages does not guarantee  you anything.

As ever with FFP there are a hell of different opinions.  As a qualified accountant with over 20 years of experience I have been naturally curious as to the effect FFP might have.

The clubs that stand to be affected most are those that overspend most in relation to their income - ie Man City, Chelsea and more recently PSG.  The clubs that will ultimately benefit will be those with the largest incomes and with regard to the premier league that means Man Utd.

Contrary to popular opinion, Man U are not in trouble financially.  The acquisition by the glazers saddled the club with a huge debt but that will never be a major issue whilst the club can service the debt comfortably - which it can. All it means is that the club has less to spend on players and wages due to the high levels of interest payments that must be made to service the debt.

To be honest, supporters of other clubs ought to be grateful to the Glaziers for structuring their acquisition this way because otherwise Man U would have had far more money to spend on the playing side of the club.  The creation of the premier league and champions league has ensured that the richest clubs get richer and made our domestic league less competitive - witness Man U's premier league record which shows an unprecedented level of consistent success over 20 years.

Money is the dominant force in football and FFP will not change this in the slightest - the wealthiest clubs will continue to dominate domestic and european football and prudently run clubs on smaller budgets will only be able to achieve limited success.

This doesn't bode well for the long term future of the game as the wealth will be concentrated in the hands of comparitively few clubs and as The Jam put it in Funeral Pyre :

                   " the weak get weak as the strong grow stronger"

Haha love that song!

What would happen if Manchester United, by some chance, became that club who finished 5th - just outside the Champions League spots? Would this affect them when it comes to servicing the debt, or would they still make enough from other avenues (like their worldwide fanbase)?

Haha love that song!

What would happen if Manchester United, by some chance, became that club who finished 5th - just outside the Champions League spots? Would this affect them when it comes to servicing the debt, or would they still make enough from other avenues (like their worldwide fanbase)?

What would happen would be that their transfer budget would be cut to say 20 mil a season at a maximum. It's a real possibility the season after Ferguson that they would suffer a bit if the new manager does an "AVB at Chelsea". That said, I doubt Howard Webb and co would allow them to miss out on top four 

I was going to go on about the lack of regulation in football in the original post but that would have required a whole new thread. I find it disgusting and repulsive individuals like Richard Scudamore continue to breathe while ruling the likes of Hicks & Gillett, Venky's etc to be fit and proper owners. I respect UEFA's good intentions but I seriously doubt there ability and nerve to hold out these FFP rules. Football from FIFA through to the FA is run by gutless, ignorant tools who largely know nothing of the sport or it's business side.


edit: Can the mods please edit the error in the title. "The importance of realising our financial position" it should have been

Done, Bill is in the post.

I think that our financial situation was a big factor in the appointment of BR.  I have heard him say a number of times that he likes players who are hungry for success and his strategy is built around a solid team (this seems to be the way Utd are) as opposed to star players (the City/Chelsea model).  After the last ownership debacle I am sometimes surprised that some fans expect us to splash huge amounts of cash, at the risk of financial difficulties.  The team approach is much more sustainable than the group of star players model.

There is a concern that FFP will not be effective, and it will be interesting to see if any sanctions are ever put in place.

I think that our financial situation was a big factor in the appointment of BR.  I have heard him say a number of times that he likes players who are hungry for success and his strategy is built around a solid team (this seems to be the way Utd are) as opposed to star players (the City/Chelsea model).  After the last ownership debacle I am sometimes surprised that some fans expect us to splash huge amounts of cash, at the risk of financial difficulties.  The team approach is much more sustainable than the group of star players model.

There is a concern that FFP will not be effective, and it will be interesting to see if any sanctions are ever put in place.

H & G only spent some cash in their first calendar year... after that we were a living joke on the transfer market because they were looking to drive the club skint all the way. But it's a myth that we spent like a Chelsea or City. Far from the truth. Torres cost 22 mil and that was a marquee signing financially.

....and in a wider context:-

bbc news

                     Europe 'Critical' To Liverpool

Liverpool chairman Tom Werner has warned it is ''critical'' the Anfield club secures a return to Champions League football.
Werner told BBC Radio 5 live LFC were missing out on vital revenue from the competition.
''It is critical we make the Champions League because there is so much revenue associated with that,'' Werner said. He also admitted in the interview that mistakes were made in the Luis Suarez affair. 

           http://www.bbc.co.uk/sport/0/football/19290256

Tom Werner makes the same noises as John Henry about the importance of the CL, their financial aspirations thus far would seem at odds with those statements.

Off topic for a moment but I am intrigued by the Luis Suarez statement he closes with.

....and in a wider context:-

bbc news

                     Europe 'Critical' To Liverpool

Liverpool chairman Tom Werner has warned it is ''critical'' the Anfield clubsecures a return to Champions League football.
Werner told BBC Radio 5 live LFC were missing out on vital revenue from the competition.
''It is critical we make the Champions League because there is so much revenue associated with that,'' Werner said. He also admitted in the interview that mistakes were made in the Luis Suarez affair.   

It's critical in the sense of the re-building programme they have undertaken.
If they were happy to see us as a mid table side, as some doomers (new word I just made up ) have suggested, nay INSISTED they would be in order to asset strip us, they would not be making these sorts of noises.
Sponsors and partnerships can only take us so far, we need that CL money to step up to the next level.

BBB is spot on about serviceable debt. You can have debt when it's manageable, you just have to be careful not to keep piling on that debt like under H&G. It can get to the point where it consumes you, but as long practice self-control, having some debt, while not ideal, is OK.

I still think FSG want the club to operate as close to debt-free as possible and within reason.

BBB is spot on about serviceable debt. You can have debt when it's manageable, you just have to be careful not to keep piling on that debt like under H&G. It can get to the point where it consumes you, but as long practice self-control, having some debt, while not ideal, is OK.

I still think FSG want the club to operate as close to debt-free as possible and within reason.

ManUre are the paradox of the ''manageable debt'' proposition, their debt is managable while they have the commercial set up to service it.
The Glazers are milking the cow that is manUre on a battery farm basis with alarming regularity and while they have a global fanbase as prolific as they do the situation will continue. Success is an optional extra apparently in that scenario.
There is one constraint in the equation and that is qualification with Europes elite in the CL or failure to do so.
Continued under achievement has a price. 

They took a punt on us thinking the FFP rules were a slam dunk.
Now they are not so clear cut .
Also how does Brendan will be given time and we hace to get top 4 work.
We are not spending CL money on players so how can they demand it?.
Its the same old questions wheres the stadium and wheres the investment in the squad to bring it up to CL standard.
By mid Sept we will have at least put the transfers to bed and we will have played enough games to see what sort of team we have.