Football News: Are Wolverhampton Wanderers Penny Wise And Pound Foolish?
A raft of posts and threads about Wolverhampton Wanderers' financial plight and the Neto sale has been added to the site so I will add one more.
You are only allowed to lose £105m on a rolling 3 year basis but we lost £107m before player sales in our 2022/23 accounts and £58m the year before - circa £20m increase in both wages and player contract amortization plus £5m higher finance charges and a £3m insurance claim in the prior years accounting for the bulk of the difference.
This became £64 and £43m losses after player sales. Note that for FFP, (or whatever it is now called), there are allowances for various matters, so these won't be the losses we carry for those purposes but won't be massively wrong.
Hence last year 2023/24 we had to pretty much break even. Clearly we did so, we were not fined or deducted points etc. However we only made one major Profit and Loss sale in Neves, plus a number of other smaller sales, (from a profit perspective), in Coady, Jimenez, Sanderson, Giles, Collins and Nunes, so made nothing like £107m profit from player sales. Consequently, our pre player sales loss must have been markedly lower than £107m.
Given these summer of 2023 sales, net of our purchases, would have significantly reduced amortisations and wages for 2023/24 and surely revenues would have slowly marched forward it is not unreasonable to assume that our 2023/24 loss pre sales would have been perhaps some £30-£40m lower perhaps circa £70m?
Roughly in line, perhaps with the profits made from player sales.
Now, for 2024/25 we can afford to lose circa £40m as the 2021/22 figure drops out of the calculation. However our underlying loss pre player sales will still be far higher than that although probably sub £70m as hopefully once again revenues will edge upwards and costs should be down again down - no managers paid off this year for the first time in 3 years for example.
So after the Kilman sale we should be well clear and free. If we aren't and we actually needed to sell Neto this summer, then that means losses must be running some £50m higher than the figures indicate and we are in deep, deep financial and football trouble.
Maybe not this year, as the squad should still be good enough to survive, or financially probably even next year when we can sell RAN and Gomes J but after that - assuming we haven't already been relegated, when all bets are off, - who can we sell for circa £90m pure profit?
I have been banging this drum for a while now, but surely now we can all see that you can't keep selling the family silver to cover losses - it can only end one way!
No team has ever followed this strategy successfully for a sustained period, so why do we think we can - in 2 years time we will hit the buffers financially if we haven't been relegated already.
We must grow revenues and control costs so that we can self finance without selling our best players. Note that the rules still allow you to lose £35m per anum, so in the short term we can still make small losses whilst working towards a self financing position that clearly won't happen overnight.
Ironically however, despite my moaning about Jeff Shi, I strongly suspect that we are not far away from this already and once Fabio drops out of the accounts next year and if we further cut the "unaccounted for" £30-50m of 'wage' costs in the £2022/23 accounts, we would be comfortably there!
Sadly, this means however that unless Neto forced the 'move', it was our choice to do it showing sadly that either we believe the nonsense Hobbs spouted about buying and selling or we simply wanted the cash and damn the consequences or we don't understand them!
In conclusion, I strongly suspect that Jeff and Fosun simply don't understand the game and don't realise that the only way to be truly self-sustaining in the medium to long term is by winning matches and to do that you need to keep your best players.
We are sadly penny wise and pound foolish!
Written by Thefutureisoldgold August 14 2024 09:30:33
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