QPR Finances

[klonk]

think the wage differential between last season (16/17) and this season (17/18) will be far greater than 2m as suggested above. all those that left end of 16/17 are no longer on the 17/18 payroll, and were not replaced, include hoilett (50k per week = 2.6m) and henry (15k per week = 780k). then there is chery and polter salaries who left, but the likelihood is we reinvested their wages on other incoming players (smith, freeman).

this season, large contracts that were not paid the full season (i.e. they left the club halfway through the season in January), include caulker (50k per week = 2.6m, or 1.3 per half year) and nbakoto (15k per week = 780k, or 390k per half year). so, total reduction is likely to be circa 5m for this season (17/18), compared to last (16/17). 2.6m + 780k + 1.3m + 390k = 5.07m

thing is hoilett had already gone at the beginning of 16-17 so the reduction is already in there (along with the likes of green, hill, faurlin, diakite, traore, yun, fer, phillips etc).

i reckon that most of the henry, polter and chery wages will have gone to the incoming players, leaving just the savings from the mighty man of glass, sandro, to be saved. i reckon that we probably paid most of caulker's contract up to get him out of the door, so wouldn't expect too much savings on that - maybe £100k.

i really hope we've saved about £5m... but i think £2m is probably closer to the mark.

[Jonny]

17-18 numbers could indeed be fairly bad.

- losses in 16-17 before player sales were £8m
- i think tv income in 17-18 should be around £16m - roughly the same as foolham received last year (£15m lower than 16-17)
- i think we've chipped away at salaries, but realistically probably only about £2m less than in 16-17

on that basis the loss before player sales might be in the region of £21m.

next comes ruben's interest... probably something in the region of a £7m charge (assuming we need to borrow a bit more to finance our continuing loss position - 16-17 charge was £6m), bringing the running figure to £28m (clearly, the board, or rather ruben, could do things to reduce this charge).

finally we've not done much sales-wise... i'd expect the profit on player sales to be around £4m, so i'd guess the year end figure is somewhere around a £24m loss.

think the wage differential between last season (16/17) and this season (17/18) will be far greater than 2m as suggested above. all those that left end of 16/17 are no longer on the 17/18 payroll, and were not replaced, include hoilett (50k per week = 2.6m) and henry (15k per week = 780k). then there is chery and polter salaries who left, but the likelihood is we reinvested their wages on other incoming players (smith, freeman).

this season, large contracts that were not paid the full season (i.e. they left the club halfway through the season in January), include caulker (50k per week = 2.6m, or 1.3 per half year) and nbakoto (15k per week = 780k, or 390k per half year). so, total reduction is likely to be circa 5m for this season (17/18), compared to last (16/17). 2.6m + 780k + 1.3m + 390k = 5.07m

[Stanley]

It would be really useful to have an ongoing financial sticky on the board because let's face it, what happens with the numbers is going to determine the future of this club.

It isn't easy even for people with accountancy expertise to keep up with all this, so it would be really good if we simply update this one as and when.

Klonk's point re interest is well made. 12.5%. We're being bent over the kitchen table good and proper. That figure is a very bad sign.

Done. Good idea, we can use this one thread from now on.

[QPRDave]

but it is exactly this kind of fiscal policy (aka boom and bust) which, far from saving money, could lead to further loss of revenue. Selling your best players runs the risk of failure on the pitch = fan disinterest = lower revenue, especially if the sales threaten our championship status - and there are plenty of examples of clubs which have suffered by following exactly the type of policy you advocate.

I have always argued that a median/balanced policy is far more likely to provide stability than becoming a 100% selling club per se. Why? Because bar the EPL and about four championship clubs, everyone else is doing exactly the same thing, which means the search for young, cheap talent is massively competitive. Far better to have a tight budget, but not so tight that you end up in a desperate fight to retain your place in the division, which could happen to us in the event of a mass sale of what little quality we actually have. There's no point in anyone investing in the club if our ambitions are so limited, Ruben included, which makes me think that it may not quite work out the way you anticipate..... It is hard to believe that a club invested in by the Mittals, Ruben and Tony would have the same policy as say Peterborough (or indeed any club whose chairman and board are worth a fraction of ours).

but it is exactly this kind of fiscal policy (aka boom and bust) which, far from saving money, could lead to further loss of revenue. Selling your best players runs the risk of failure on the pitch = fan disinterest = lower revenue, especially if the sales threaten our championship status - and there are plenty of examples of clubs which have suffered by following exactly the type of policy you advocate

[klonk]

It looks like the interest charged by Ruben on the loans is swapped for shares and is therefore not a real cost to the club.

that's correct when we're talking about cash being paid, but from an accounting perspective (and therefore also a ffp perspective), it is registered as a cost.

we should be more concerned at this than we possibly are being... looking forward, at some point, they'll be no point in swapping them for shares - so some other arrangement will have to happen.

[padam]

It looks like the interest charged by Ruben on the loans is swapped for shares and is therefore not a real cost to the club.

[hal9thou]

It would be really useful to have an ongoing financial sticky on the board because let's face it, what happens with the numbers is going to determine the future of this club.

It isn't easy even for people with accountancy expertise to keep up with all this, so it would be really good if we simply update this one as and when.

Klonk's point re interest is well made. 12.5%. We're being bent over the kitchen table good and proper. That figure is a very bad sign.

[klonk]

17-18 numbers could indeed be fairly bad.

- losses in 16-17 before player sales were £8m
- i think tv income in 17-18 should be around £16m - roughly the same as foolham received last year (£15m lower than 16-17)
- i think we've chipped away at salaries, but realistically probably only about £2m less than in 16-17

on that basis the loss before player sales might be in the region of £21m.

next comes ruben's interest... probably something in the region of a £7m charge (assuming we need to borrow a bit more to finance our continuing loss position - 16-17 charge was £6m), bringing the running figure to £28m (clearly, the board, or rather ruben, could do things to reduce this charge).

finally we've not done much sales-wise... i'd expect the profit on player sales to be around £4m, so i'd guess the year end figure is somewhere around a £24m loss.

[padam]

maybe not as bad as Oslo thinks?

Hi Oslo.
Hopefully the situation is not as gloomy as you think.
Firstly the three year FFP cycle runs to the end of this season, with the estimated losses for this year needing to be submitted this month.
So we can happily loose £39 million over the next 3 yrs.
Also we actually have one more year of parachute payments next season , although at a reduced figure, probably around £10 million .
I am so not an accountant , and it is hard to project the figs for next year but a back of a fag packet attempt-
Presume QPR will try to reduce player salaries to around £20 million ( letting Mackie, Perch, possibly Ned etc go plus no more Caulker etc)
Say they have another £10 million of other costs = £30m total costs.
Revenue for next season - £12million from tickets and commercial operations ( same as last year), £10 million parachute payment, plus £5 from EFL TV rights ( presume we get both) = £27 million. - loss £3m. ( we can loose £13million a season) .
Even without the parachute payments for the seasons after next, we would still scrape in.
I might have missed a whole chunk of extra costs/ losses but hopefully not.
Best I can come up with at 2am!

[hal9thou]

I think QPR has no other option than to sell players such as Luongo, Smithies, Freeman and Sylla to raise this sort of money. The players have to be replaced by cheap acquisitions.

but it is exactly this kind of fiscal policy (aka boom and bust) which, far from saving money, could lead to further loss of revenue. Selling your best players runs the risk of failure on the pitch = fan disinterest = lower revenue, especially if the sales threaten our championship status - and there are plenty of examples of clubs which have suffered by following exactly the type of policy you advocate.

I have always argued that a median/balanced policy is far more likely to provide stability than becoming a 100% selling club per se. Why? Because bar the EPL and about four championship clubs, everyone else is doing exactly the same thing, which means the search for young, cheap talent is massively competitive. Far better to have a tight budget, but not so tight that you end up in a desperate fight to retain your place in the division, which could happen to us in the event of a mass sale of what little quality we actually have. There's no point in anyone investing in the club if our ambitions are so limited, Ruben included, which makes me think that it may not quite work out the way you anticipate..... It is hard to believe that a club invested in by the Mittals, Ruben and Tony would have the same policy as say Peterborough (or indeed any club whose chairman and board are worth a fraction of ours).

[acricketer]

We have to put faith in Penrice, Ramsey,

[QPROslo]

Our financial outlook is tough

I have tried to figure out what sort of budget constraints we will operate under next season (2018/2019 season). This will obviously determine whether we have to sell a number of players to keep afloat or whether we can keep those we have and even strengthen the squad.

It isn't easy and I am not sure I understand neither the FFP rules nor the parachute payments and the TV revenue structure. However, I have given it a go, but I am happy for added information or corrections from those being more knowledgeable than me.

If I get it right, the maximum loss we are allowed during a three year period is £39m. There are some costs not taken into account, such a women football, youth development and depreciation on fixed assets (stadium etc).

The loss of the 2016/2017 was £6.4m. Depreciation of fixed assets was £1.5m. I cannot find information about costs of women football and youth development, but lets assume it runs up to £1m a year. If so, the relevant loss for the FFP calculation was ca. £4m.

The loss of the present season isn't known. But we got an indication when Les Ferdinand, in a recent interview when explaining lack of new signings during the January transfer window, informed that we are close to breaching the FFP rules yet again. This means that the total loss according FFP rules for the three last seasons is close to or around £39m. The loss for 2015/2016 was £11m. Making the same corrections as for the 2016/2017 season the loss according FFP rules was therefore £8.5m

If 205/2016 and 2016/2017 add up to a loss of £12.5m (£4m + £8.5m), the total loss for this season is a staggering £26.5m if we are close to breaching the FFP rules yet again.

Looking at the income for 2016/2017 this actually makes sense. Out of total revenues of £48m as much as £35.3m came from broadcasting rights. This was mainly parachute money from our time in the Premier League, but also some TV revenues coming from our season in the Championship. I have read somewhere that the present TV agreement for the Championship gives £5-6m in annual TV revenue, so this indicates that the parachute money was ca £30m.

If I have understood correctly, relegated Premier League clubs get parachute money for three seasons. However, if the club has just one season in the PL before being relegated the parachute money is limited to just two seasons. We fall in the latter category and hence there was no parachute money this season. This means our broadcasting revenues were cut by £30m from last season to this. We have obviously cut cost by getting rid of some highly paid players (Sandro, Chery, Polter, Henry etc) and I guess some more cost cutting has also taken place. Hence, it might actually be realistic that our loss has just weaken from £4m to £26.5 despite TV revenues dropping £30m.

The above brings me closer to estimating the sort of loss we can accept in 2018/2019 if we are going to comply with FFP: This is £39m minus £26.5m minus £4m = £8.5m.

To limit the loss next season to just £8.5m will be a tall ask, if this year's loss of £26.5m is anything to go by. If the revenue structure is the same as this season, we need to cut costs by £16m. We have trimmed the squad by getting rid of one more high earner in Steven Caulker and a number of fringe players. Caulker will save us £2m per annum at least, and all the others that have left probably another £1-2m. However, it is still a long way to go!

The way I read this we will have to trim costs another £12-13m, or sell players to get a trading surplus to make up the difference.

If I am realistic, I think QPR has no other option than to sell players such as Luongo, Smithies, Freeman and Sylla to raise this sort of money. The players have to be replaced by cheap acquisitions.

Reality has now hit us: We are without parachute payments, and we have considerably less revenue that the clubs we compete with. A few examples:

* QPR has sponsorships and commercial revenues of £3.5m, while Leeds has £16.7m (2015/2016).
* QPR has gate receipts of £5.2m while Sunderland has £10m.

We will realize we have to compete with a fraction of the budget of the bigger teams in the division. We have to prepare ourselves for busy transfer activities during the summer, but not the sort of outcome we are really looking forward to.

We have to put faith in Penrice, Ramsey, Holloway & co, hoping they will manage to make some really shrewd, bargain signings, that can quickly come in to replace the established, outgoing players. In all honesty, Holloway & co did that during 2017: Scowen, Smith, Freeman and Baptiste were all excellent signings on a shoestring budget. Youth becomes very important, and it is great to see the massive progress in terms of youth by Holloway & co this season. The process of adopting to new financial realities has started, and I think we understand better why we did not sign many new players during the recent two transfer windows once reading the newly released accounts.

As there is such a big loss this season, and the FFP rules are based on a three years rolling calculation, we will have to be very tight also in 2019/2020, but in 2020/2021 we can increase our spending again. Until then our job is to stay in this division. It will take a miracle to get promoted with the financial constraints we are facing right now.

[Hitman34]

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