Great news re the clubs financial position

[QPROslo]

I sincerely hope your £8m reduction is salaries is correct, Jonny. In that case we would be even better off now than I anticipated, as my assumption when I wrote the post above was a reduction in salaries of £2-4m.

My best "guesstimate" of salary savings of those that left during or after 2017/2018 is an amount close to yours - ca £7.5m. However, I have taken into account the salaries of the new signings, totally ca £3.5m. Moreover, I took height for a substantial loan fee for Wells and Hemed, but if they came for free I am very happy to adjust my estimate.

I don't know how Holloway's parachute payment is booked. He had one year left of his contract and was dismissed during May, which is prior to the end of the financial year (ended 31 May). We might have to add his parachute to the savings when we compare the two seasons. I guess Holloway cost us in the region of £0,75m.

On the other hand, we have to factor in increased salaries for none playing staff (annual wage inflation) and higher costs for U23 players that have signed professional contracts or got extensions to existing contracts. I assume Eze is paid more this season than last and I believe Freeman got a healthy salary increase when he extended his contract. We are also paying full annual salaries to Lumley and Ingram (they were out on loan for long periods last year). On the other hand: We save a bit from all the loan deals done in January. Whether we saved anything on Sylla is less clear to me, as we probably pay quite a bit of his salary while he is playing for the poor Belgium club). All in all, I assumed the extra costs for Holloway was outweigh by the various contract extension costs and general salary increases.

Here is the estimate I made when I wrote the post above. I assumed we only paid N'gbakoto and Lua-Lua for six months (hence I have reduced salary by 50%). I have assumed we paid Caulker for the entire duration of the season despite the fact he left in January.

		Salary		Yearly
Petrasso		4,000		208,000
Greco-Cox		4,000		208,000
N'Gbakoto		7,500		390,000
Caulker		40,000		2,080,000
Mackie		10,000		520,000
Perch		10,000		520,000
Onuoha		15,000		780,000
Robinson		15,000		780,000
JET		15,000		780,000
Lua-Lua		7,500		390,000
Washington		15,000		780,000
		150,500		7,436,000
Leinstner		15,000		780,000
Wells		15,000		780,000
Hemed		15,000		780,000
Cameron		15,000		780,000
Rangel		10,000		520,000
		70,000		3,640,000
Difference				4,186,000

I took height for protentional loans fees for Wells and Hemed and therefore estimated savings in the region of £2-4m.

All my figures are my own assumptions. If £8m saving is indeed right I must have made a number of ill made estimates, which I don't rule out.

[LoftusRoadLad]

https://footballeconomyv2.blogspot.c...on-owners.html

The authoritative Swiss Ramble takes a look at the recently published accounts of Queens Park Rangers. The club's loss significantly increased by £32m from £6m to £38m, largely due to booking a £20m FFP fine (for previous misdemeanours); a £15m reduction in the parachute payment driving a £17m (35%) decrease in revenue from £48m to £31m; and profit on player sales down £7m to zero.

[Martinmalta]

https://footballeconomyv2.blogspot.c...on-owners.html

The authoritative Swiss Ramble takes a look at the recently published accounts of Queens Park Rangers. The club's loss significantly increased by £32m from £6m to £38m, largely due to booking a £20m FFP fine (for previous misdemeanours); a £15m reduction in the parachute payment driving a £17m (35%) decrease in revenue from £48m to £31m; and profit on player sales down £7m to zero.

I am sure I read somewhere that the FFP fine will not be considered for the final accounrs of a season. I think it was one of the conditions the club wanted to have to pay the fine. Could be wrong, but if it is the case, the situation will not be that bad.

[Tarbie]

Is this really good news? Doesn't sound too great to me. So assuming the loss for FFP is £20.3m for 2017-18 and we do lose £14m this season, then it leaves us only £4.7m allowed losses for 2019/2020 season. Taking into consideration that we will lose £16.6m parachute payment next season (according to Wiki but don't know how accurate that is), we will be £21.3m down next season. How are we going to make up for that? Can see Freeman/Luongo/Eze going in the summer. Hope we don't have to cash in on the likes of Chair and Smyth this soon too.

Can now also understand why none of those senior players have signed contracts yet, can't see any of them staying after end of season. Will be an U23 team next season. And we really will be in the #### if we did go into freefall and end up getting relegated this season, as FFP allowed losses are even less in League One, will end up playing our U18 team.

Hopefully I am thinking about this the wrong way but really concerned about it.

How I read it too. For me it seems inevitable there will be at least 1 high profile departure this summer, on top of the players that are out of contract.

[stanistheman]

I don't pretend to understand anything more than the basics, but welcome news if Ruben not charging interest on his loan - every little helps

I second that .

QPR does not need the extra burden of paying interest to one of the owners. Yes, I know it is a lot of money, but if they want the club to make good progress, charging interest is only making it it ever more so difficult.

[QPROslo]

If you do much better than anticipated because of the end of millions of interest charges that is good news in my book, even though the huge loss is bad of course. But we knew we would lose a hell of a lot of money and I take comfort from the fact that it is a lot less than feared. More importantly, our costs going forward are also a lot less than we had reasons to believe. The 2017/2018 accounts are really good news.

I also think there will be one high profile departure. However, this time it is not because we have to. If my calculations above are correct we have to cut costs with £4m or thereabout. It could be even less if Jonny is correct (he thinks the salary savings are bigger than in my estimate).

We can achieve this without selling Freeman or Eze. However, I think one of the will be sold to free up funds to strengthen several positions.

I think the future looks brighter than anytime he last three years. We are about to exit the FFP mess, while other clubs are entering. That's good news to me.

[klonk]

I have just read through the annual accounts for 2017/2018 which is actually very good news, despite a total loss including the FFP fine of £37.5m.

In a post from summer of 2018 I predicted an operative loss for 2017/2018 for FFP calculations purposes of £23-25m. Because of this I predicted sales of players of minimum £10m to make sure we comply with the maximum three year loss of £39m by end of this season.

I admit I was very surprised we only sold one player during last summer - Smithies for ca £3.5m. I couldn't get my head around it. Moreover, I was even more surprised we could afford Wells, Hemed, Cameron and Rangel. I cannot imagine a loan fee for the first two of anything less than £1m per year per player.

In my post of last summer I said it was one way out of the mess, and that was an end to the interest charges on Rubens loan to the club. Ruben charged interest of £5.8m in 2016/17. In addition came interest charges of banks, bringing total finance costs just above £6m. I assumed interest charges would increase by a further £3m in 2017/18, taking interest costs to £9m to reflect increased financing by Ruben.

The great news is that Ruben made the loan interest free from the summer of 2017. As far as I know this is completely new information. Moreover, he provided financing in order to pay down the £4m bank loan. This completely changed the picture around. Interest costs for 2017/2018 was a tiny £21.000.

Operational loss of 2017/2018 was ca £22.5m. Corrected for depreciation of ca £1,5m and youth and women football costs the total loss for FFP purposes seems to be ca £20.3m. Given that the loss for FFP calculation purposes was approximately £4,5m in 2016/2017 it means we are allowed to loose around £14m this season without breaking the rules. We will lose a lot less, but I won't bore you with my estimate of this years loss.

The end to interest charges means a big burden is taken off the shoulders of the club. It means we have £9-10m more to spend this season than we otherwise would, and the same applies for the coming seasons.

It does not mean we are out of the financial trouble, but it is way easier.

I must admit this is the best piece of news we have received for a very long time. Thanks a lot, Ruben!

hmmmm... without wanting to say something that might make your chips taste any less edifying, oslo, i have a slightly different reading of the latest figures...

firstly, yes, it's good news that ruben is no longer charging the outrageous amount of interest that he was doing. no idea whether this is from the goodness of his heart, a condition that the league set as part of the ffp settlement or the realisation that continuing to charge that interest would push us into a further breach of ffp rules - i have a view on which is the most likely, but whatever, the end result is the main thing.

we still have a very high wage bill - 98% of our total revenue went on wages last time around - that's not sustainable in the longer term. we also face a big cliff edge, because our parachute payments (approximately half of that current income) finally come to an end at the end of this season.

going forward.... if we treat 17/18's £21m loss as the first year of a new 3-year cycle, this will restrict us to £18m losses over this season and next. we already know that we have generated very little in transfer fees this season (only whatever profit we got from the Smithies sale approx £3m). we also know that we face a substantial decrease in income next season (approximately £16m) as a result of the end of the parachute payments. so even if we've cut the wage bill by say £5m over the summer, then that would mean, if we have no further substantial change to the wages or incoming/outgoing players:

yr 1 - £21m
yr 2 - £13m (£5m wage bill reduction + £3m profit for Smithies)
yr 3 - £32m (same wage bill as yr 2, no profit on player sales and £16m reduction in parachute payments)

three year loss would be £66m

in fact, even if we have managed to cut the wage bill by say, £12m (and i'm fairly sure we we haven't), the numbers are still incredibly harsh

y1 - £21m
y2 - £6m
y3 - £25m

three year loss would be £52m.

the reality is, we need to both cut our wage bill and sell our best players. there's a huge bunch of players out of contract in the summer and the likelihood is that they will either be asked to take a huge paycut to stay or they will leave. basically, there's a lot more pain to come in my view.....

[Rebel R's]

This thread should probably be entitled "good news" as it's hardly great news ,debatable whether it's even good news .sorry in advance for being so negative and grumpy ect

[Jonny]

hmmmm... without wanting to say something that might make your chips taste any less edifying, oslo, i have a slightly different reading of the latest figures...

firstly, yes, it's good news that ruben is no longer charging the outrageous amount of interest that he was doing. no idea whether this is from the goodness of his heart, a condition that the league set as part of the ffp settlement or the realisation that continuing to charge that interest would push us into a further breach of ffp rules - i have a view on which is the most likely, but whatever, the end result is the main thing.

we still have a very high wage bill - 98% of our total revenue went on wages last time around - that's not sustainable in the longer term. we also face a big cliff edge, because our parachute payments (approximately half of that current income) finally come to an end at the end of this season.

going forward.... if we treat 17/18's £21m loss as the first year of a new 3-year cycle, this will restrict us to £18m losses over this season and next. we already know that we have generated very little in transfer fees this season (only whatever profit we got from the Smithies sale approx £3m). we also know that we face a substantial decrease in income next season (approximately £16m) as a result of the end of the parachute payments. so even if we've cut the wage bill by say £5m over the summer, then that would mean, if we have no further substantial change to the wages or incoming/outgoing players:

yr 1 - £21m
yr 2 - £13m (£5m wage bill reduction + £3m profit for Smithies)
yr 3 - £32m (same wage bill as yr 2, no profit on player sales and £16m reduction in parachute payments)

three year loss would be £66m

in fact, even if we have managed to cut the wage bill by say, £12m (and i'm fairly sure we we haven't), the numbers are still incredibly harsh

y1 - £21m
y2 - £6m
y3 - £25m

three year loss would be £52m.

the reality is, we need to both cut our wage bill and sell our best players. there's a huge bunch of players out of contract in the summer and the likelihood is that they will either be asked to take a huge paycut to stay or they will leave. basically, there's a lot more pain to come in my view.....

Klonk, we have some serious wedge coming off the wage bill for this season around 6.5m http://www.wearetherangersboys.com/f...tch?id=2468466

also seems like the club will also benefit from salaries that should of been accounted for in the prior season but were not, for whatever reason. But the fact remains a number of players left in and their salaries are yet to be accounted for (wage bill allegedly stayed flat last season which is not possible). So clearly some wages will fall over and I would expect anything from 6m-10m total wage reduction.

You also need to consider champsionsuip tv income, which is going up based on the new contract, and which we don’t get. So the 16m parachute goes yes, but our income does not go to zero here. It’s several million. In terms of pure cash loss making, yes we will get to a level whereby we need to find 5-10m every season. The club has a decision how to fund this until the new stadium - either thru shareholder investment or player sales. But they have the choice. My guess is they will fund the losses rather than make player sales, as they have been doing. Only if a substantial offer that comes in will we consider on its merits.

In terms of FFP loss, I’m not worried at all. This is more about accounting policies than actual cash loss. Player amortization was affecting our figures badly and basically we don’t make any transfers any more so that’s done. Add in Rubens interest charge removal, another big factor, and FFP is not to be worried about in the coming years. We will be within the 13m average “loss” allowed year on year.