Author Topic: The Budget  (Read 1613 times)

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Standaman

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The Budget
« on: July 28, 2019, 05:19:12 PM »
I have seen a certain amount of speculation on the transfer rumours board about what the club can or cannot afford by the way of transfers and despite the Dowling specifically ruling out a move for Dwight Gayle I still see stuff on twitter from Baggies banging on about "announce Gayle".

I don't know what our budget is. I can guess at our income and the key part of that the TV deal is a matter of public record so that is not an unreasonable starting point which can be shown as follows the figures in brackets being the total income

18/19 £41m (£58m)
19/20 £34m  (£51m)
20/21 £17m  (£34m)
21/22 £7m   (£26m)

 I also know the owner is not going to finance the day to day running of the club (like it or not that is the reality). 

Our financial position is known but only as at the end of the last Premier League season where we had a £7m loss and virtually zero cash reserves. I also know that at various points since we have been in a negative cash flow position  which has required bank financing.

 The biggest unknown is transfer income and expenditure. Yes fees are reported but a lot of detail is missing or not reliable for instance in the case of Zohore while there is general consensus is the fee is £8m but I have seen a huge range of what is actual up front cash and what is contingent to performance etc... and I have no clue what triggers the contingent payments.

While we account for outgoing fees across the lifetime of the players contract the actual payments even if they are staggered they fall due a lot quicker. For instance Burke's £15m (if it was £15m) is spread over the 5 years of his contract yet the final payment was made to Leipzig this summer.

Profit on player sales is booked at the point of sale but the fee arrives over a staggered period.

While income and outgoings may balance in theory however the timing is important and there are real cash flow crunches if the two don't match.

So where does that leave the budget?

I cannot see how we can balance the books and have players on wages above £20k a week after next season if we remain in the Championship. So in short any Premier League players with the typical contracts that start at £30k and upwards aren't going to be arriving on Permanent deals.

With regard to fees again it is hard to see how we can afford a single fee in excess of £15m and even across a four year contract that is £3.75m a year and by the 21/22 that is more than half of the club's TV Championship money. A deal like Maupay on relatively low wages but with higher fee might be possible.

Loans are a different matter, regardless of the players wages the club will only have to make a contribution towards the players wages obviously there is competition between ourselves and others who might be able/willing to pay a bigger % of the wages.

Overall the signings to date are going to be more typical and I doubt we will be making some of the more eye catching signings that are being rumoured.

« Last Edit: July 28, 2019, 06:19:42 PM by Standaman »
Standaman - Born to be a Baggie.

tylerm

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Re: The Budget
« Reply #1 on: July 28, 2019, 06:05:42 PM »
Good sensible post. This season now is vital to us. If we don’t go up we will spend many years in this league as we won’t have the income to compete with the relegated clubs. Last year was wasted

overseas baggie

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Re: The Budget
« Reply #2 on: July 28, 2019, 06:31:28 PM »
Good sensible post. This season now is vital to us. If we don’t go up we will spend many years in this league as we won’t have the income to compete with the relegated clubs. Last year was wasted

That didn’t prevent Norwich and Blades going up

WBArgo

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Re: The Budget
« Reply #3 on: July 28, 2019, 10:29:06 PM »
That didn’t prevent Norwich and Blades going up

This is certainly true, i.e. under Megson our first promotion was done on merit over money - but as a general rule, it's MUCH easier to go up when you also have financial clout. Look at Villa for instance, swinging money around like it's going out of fashion and it wasn't pretty at times, but eventually they went up. Same with Wolves, a few failed managers but eventually it clicked - whereas when they were poorer they struggled.

I don't think anyone's saying you're doomed to 20 years of non Premier-league football, but the issue is it gets harder with every year. Birmingham have been in the Championship close to 10 years now, so it can creep up on you, some clubs even more so.