Football News: Wolverhampton Wanderers Accounts

Re. The Wolverhampton Wanderers Accounts. Basically there are 4 things to think about:
Turnover - Made up of 4 main categories tv rights, league distributions, commercial activities and gates.

Costs - Largely made up of wages and the impact of transfers, (see below) and
Transfers upon which we have less than perfect visibility and which impact in two ways;
a) The amortisation of the fees paid over the life of the contracts awarded and the profits on the sale of players sold both of which are taken through the profit and loss account

b) The cash paid / received either up front or deferred in which case it is accounted for in debtors and creditors on the balance sheet.

Clearly we can all read the numbers in the latest set of accounts, so what is more useful is to look at what the accounts for the year ending May 2023 might look like, as that is what will impact what we can / have to do this summer.

Turnover: Likely to be similar to this. TV and league distributions are likely to be at best unaltered as at present it would appear that we are unlikely to be have been on TV more or have finished higher up the league this year than last year.

Gates are modest and again won't change much and sadly, commercial activities are also likely to be largely unchanged. (Commercial activities which have basically flat lined for several years now are Jeff's greatest failure - astonishing given his impact on the team! - and compared to teams like Leicester who are now well ahead of us and moving forwards rapidly and Villa who despite having been in the league for less time than us have already caught us up - it is extremely disappointing. I hear about all our ventures into music, fashion and E-sports and am told that these will bring about untold wealth at some point but remain highly sceptical!).

Costs: The wage element is likely to be markedly higher both due to the changes in the squad and and the cost of removing Lage and his team. The amortisation of transfers element is much harder to quantify. We will have made large profits on the sales of Gibbs, White and Dendonker plus others perhaps even 40m+.

The amortisation of the pre existing squad, players here at May 2022, will also be much lower as much of the squad will be fully amortised but the new players will add markedly to that figure. A figure of 30m for the pre existing and £35m for the new players seems fair.

Net losses will be similar or slightly lower but losses there will be surely creating an FFP issue at some point in time? It is hard to see how without a substantial improvement in turnover, either as a result of more success on the pitch or commercial activities, this can be turned around. Costs particularly in the light of exploding fees and wages in the league are very hard to cut without hurting the on field success - a somewhat pyrrhic victory - Very worrying!

Transfers: As stated above, next year's amortisation position will be far better largely due to large sales - Gibbs, White and Dendonker. But going forwards it is hard to see where the next big profitable transfers come from (Kilman or Neves - but at what cost to the performance of the team?).

Whilst amortisations will again run on at very high levels due to the big (and surely in many cases over priced) purchases made. A further worry might be that some sales are actually made at losses - Guedes? Re. cash, we don't know how much cash was paid / received from the new transfers i.e. the ones made post May 22 - but we know that we will receive £24m and pay £29m from the pre existing ones.

It would be nice to think about cash in general, but given the largest element is the transfers and we have no visibility on the cash aspects, therefore it is hard to be definitive, but given we made far more purchases than sales and underlying activities are all cash negative, (losses despite reduced amortisations and negative cash from old transfers) it is hard to see anything other than further increases in debt over the near future. Again worrying!

The club was running on the fumes of Nuno's regime and was under Jeff's management on course for total collapse, but JL seems to have both restored the footbal side and with deals like Dawson, Lemina and Gomes, has given us hope that the insanity of the previous regime and its consequences for the finances have ended.

The next few years are going to be very tough financially and I do not think we are well positioned to spend heavily even if we sell the few jewels we have under contract - Neves and Kilman being the obvious ones - unless Fosun are willing and allowed by FFP to fund further spends.

These figures and projections are not surprising - mismanagement is expensive and without Fosun taking action this year, it could all have ended in tears. Fortunately there are rumours of Jeff being "promoted", so we can only hope that the new person is competent and both allows JL to do his job on the football side and he or she does their job off the field and drives revenues forwards!

Keep the faith.

Written by Thefutureisoldgold March 08 2023 14:39:42