Cardiff City and Swansea City's financial situations
Thu Sep 01, 2016 7:12 am
Cardiff City and Swansea City's financial situations explained: Why Welsh clubs couldn't splash the cash
Thursday 1st September 2016
BY CHRIS WATHAN
Over £1 billion has been spent in this transfer window, but not much of that cash has come from South Wales
Swansea City and Cardiff City can't spend big
It won’t be the first time supporters at Swansea City and Cardiff City have spent transfer deadline day casting envious glances at rivals.
The Bluebirds will have seen promotion hopefuls in the Championship spend money like it’s never been spent in the second-tier, all while still getting over the loss of keeper and captain David Marshall.
And those from the Liberty would have had their heart broken a little when former favourite and much-missed striker Wilfried Bony turned up at Stoke. When the inevitable Bony goal from a Joe Allen pass gets shown on highlights packages, there might be enough rueful tears to fill the Tawe.
And in a window of £1bn transfers, not much of it has flowed out of South Wales.
But it was never likely to and it’s surprising that it might come as a surprise to some.
CARDIFF CITY
Starting with Cardiff, it’s been clear for some time there’s been a cost cutting exercise going on at Cardiff City Stadium.
There are thoughts those cuts could be getting deeper still, with Paul Trollope said to be well aware of the restraints in front of him when he was signed up to replace Russell Slade this summer.
And it’s needed, even looking at the accounts on a basic level; which, given as the last available figures are from the 2014/15 season, is all you can do.
But from those it is clear to see that the numbers were close to not adding up, even then.
Those accounts, made public in February this year, were headlined as the first profit posted of the Vincent Tan era and represented significant steps in the right direction to a sounder financial footing. They were helped considerably by Tan’s move to reduce the debt, confirmed in the accounts that were signed off just before a framework of further debt reduction – so the club can be debt free by 20201 – was laid out by the club’s owner.
In other words, something many fans have called for under the Malaysian’s ownership was beginning to take place.
But need for tightening of the belts was laid out in the income column. The drop out of the Premier League into the Championship saw revenue fall by 52% to £40.2m. Of that latter figure, around £25m of it came from parachute payments – the payments to relegated clubs from the Premier League that are aimed to smooth the transition back into the Football League.
It is known that the payment for this season is down to £10m, with the same guaranteed for next season before it finishes completely. In other words, £15m less than in those accounts.
What it means is that if Cardiff have not improved any other revenue streams then their income could be down to around £25m a year.
Now, we can’t be sure whether new sponsorship or kit deals haven’t been boosted or that merchandise sales aren’t on the way back up – especially after the return to blue – but we know that attendances have fallen.
And there has not been the big sales to make it any easier. When Cardiff were relegated, they made a £9.7m profit from player sales from the likes of Steven Caulker and Gary Medel. Since then, it has roughly been a case of breaking even.
Again, in the days of undisclosed deals, it’s tough to be accurate, but educated estimates and factoring in loan fees suggests Cardiff have more or less spent what they’ve earned.
Which is necessary.
Again, if we take the last accounts, then wages were around the £30m mark, taking up around 75% of the club’s income.
If income has dropped, the wage bill has to drop accordingly for the club not to rack up more debt.
Granted, some of the recruitment can be questioned over recent seasons, but it is why some big-earners – Kenwyne Jones a case in point – have had to be removed from the wage bill.
Having to pay up contracts in the case of several will have cost, but it least makes room in the salary costs. It is something Slade had to oversee, and it can be assumed that it is the same for Trollope.
And having been burned by Financial Fair Play last season – although that was somewhat harshly tied into Tan’s debt restructuring – Cardiff know more than most that they cannot afford to fall out of line.
THE SWANSEA CITY SITUATION
Financial Fair Play comes into play with Swansea too.
While there will be many wondering where they money is from the new moneymen in the Liberty boardroom, they too are ignoring the cost control rules in place in the top-flight.
Updated rules state that wage bills can’t increase by more than £7m a season, unless the club can show they have increased their revenue by the same amount.
Crucially, that does not include the extra television revenue which has seen clubs effectively ‘jump the shark’ when it comes to transfer value this season.
It was outlined when Jason Levien and Steve Kaplan were first revealed to be in talks that they would help the club have greater financial manoeuvrability, but ultimately weren’t going to start running the club in a different way to they have previously.
And FFP rules – with punishments from points deductions and transfer embargoes – mean they can’t even if they did.
It does tempt you to wonder how some clubs are getting around it, though some have managed to match increase in expenditure from player sales or existing huge commercial revenue streams. Again, perhaps it is no surprise that improving Swansea’s source of the latter has been mentioned several times with regards to the boardroom’s newcomers.
Swansea, as revealed earlier this year, have had to walk a tightrope with wages. Salaries are spiralling in the Premier League but Swansea’s income (at least not before the new broadcast deal) has not matched the same rate of growth; in the 2014/15 accounts wages increased by 12% while turnover – although breaking the £100m barrier for the first time – only went up by 5%.
It is interesting to note that the rules only count if the starting wage bill is above £67m, meaning you can exceed the £7m cap if it was below that figure. In other words, teams promoted from the Championship are able to boost their wage spending by a far bigger amount in their bid to stay in the Premier League, which could explain some of Middlesbrough’s big moves.
Of course, selling Andre Ayew and Ashley Williams for a combined £32m will see plenty wonder why that hasn’t been pumped immediately back in.
The Ayew cash is thought to have been accounted for by the deals for Borja Baston and Fernando Llorente, while there has been a spend of £11m on Alfie Mawson, Mike van der Hoorn and Leroy Fer.
But there is a danger of looking at ‘net spend’ (the sum difference between player sales and purchases). Not only does it ignore whether there was good value on either side of the deal, it also ignores a lot of the hidden extras that go on.
For example, net spend will not have accounted for the hike in wages to keep Gylfi Sigurdsson. An easy example is Ayew: his arrival at Swansea will have not gone down as a fee, yet with wages reportedly at £80,000-a-week, the yearly spend on his contract (around £4m a year) will have been in the books that have to be balanced.
Cash flow is not simple either. There is little chance that the money from Ayew and Williams will come in an up front fee, but rather in instalments over an agreed period. In other words, the bank balance doesn’t suddenly go up by £20m once a West Ham owner tweets a picture of the player in claret and blue.
Swansea have to be warned that sometimes risks need to be taken to make sure they stay competitive, but it’s fair to suggest they – like others – will have been taken aback by the explosion in the size of fees this summer.
But it goes to show the misnomer of many celebrating the money on offer from the new broadcast deals. The new sums on offer has simply inflated the market. Like in life, if the wages of every worker goes up, so does the cost of living.
The new TV deal has simply inflated the market
It won’t satisfy all and it doesn’t excuse some of the poor recruitment decisions made by both South Wales clubs in recent times, but there is a case of remembering that you can’t have it both ways.
Many Cardiff fans were keen for the club to find itself in better financial shape, something that seems to be happening.
Likewise, Swansea fans were keen to know that the share-purchase would not change the way the club has been run to jeopardise it financially.
To have both those things and get involved too heavily in silly season just doesn’t work. It’s not an excuse not to spend money, but does explain why there may not have been mega deals this window.
Of course, that won’t make it any easier when Bony scores from an Allen pass or when Marshall pulls off a penalty save for Hull.
But – in the modern world – that’s football.
Thursday 1st September 2016
BY CHRIS WATHAN
Over £1 billion has been spent in this transfer window, but not much of that cash has come from South Wales
Swansea City and Cardiff City can't spend big
It won’t be the first time supporters at Swansea City and Cardiff City have spent transfer deadline day casting envious glances at rivals.
The Bluebirds will have seen promotion hopefuls in the Championship spend money like it’s never been spent in the second-tier, all while still getting over the loss of keeper and captain David Marshall.
And those from the Liberty would have had their heart broken a little when former favourite and much-missed striker Wilfried Bony turned up at Stoke. When the inevitable Bony goal from a Joe Allen pass gets shown on highlights packages, there might be enough rueful tears to fill the Tawe.
And in a window of £1bn transfers, not much of it has flowed out of South Wales.
But it was never likely to and it’s surprising that it might come as a surprise to some.
CARDIFF CITY Starting with Cardiff, it’s been clear for some time there’s been a cost cutting exercise going on at Cardiff City Stadium.
There are thoughts those cuts could be getting deeper still, with Paul Trollope said to be well aware of the restraints in front of him when he was signed up to replace Russell Slade this summer.
And it’s needed, even looking at the accounts on a basic level; which, given as the last available figures are from the 2014/15 season, is all you can do.
But from those it is clear to see that the numbers were close to not adding up, even then.
Those accounts, made public in February this year, were headlined as the first profit posted of the Vincent Tan era and represented significant steps in the right direction to a sounder financial footing. They were helped considerably by Tan’s move to reduce the debt, confirmed in the accounts that were signed off just before a framework of further debt reduction – so the club can be debt free by 20201 – was laid out by the club’s owner.
In other words, something many fans have called for under the Malaysian’s ownership was beginning to take place.
But need for tightening of the belts was laid out in the income column. The drop out of the Premier League into the Championship saw revenue fall by 52% to £40.2m. Of that latter figure, around £25m of it came from parachute payments – the payments to relegated clubs from the Premier League that are aimed to smooth the transition back into the Football League.
It is known that the payment for this season is down to £10m, with the same guaranteed for next season before it finishes completely. In other words, £15m less than in those accounts.
What it means is that if Cardiff have not improved any other revenue streams then their income could be down to around £25m a year.
Now, we can’t be sure whether new sponsorship or kit deals haven’t been boosted or that merchandise sales aren’t on the way back up – especially after the return to blue – but we know that attendances have fallen.
And there has not been the big sales to make it any easier. When Cardiff were relegated, they made a £9.7m profit from player sales from the likes of Steven Caulker and Gary Medel. Since then, it has roughly been a case of breaking even.
Again, in the days of undisclosed deals, it’s tough to be accurate, but educated estimates and factoring in loan fees suggests Cardiff have more or less spent what they’ve earned.
Which is necessary.
Again, if we take the last accounts, then wages were around the £30m mark, taking up around 75% of the club’s income.
If income has dropped, the wage bill has to drop accordingly for the club not to rack up more debt.
Granted, some of the recruitment can be questioned over recent seasons, but it is why some big-earners – Kenwyne Jones a case in point – have had to be removed from the wage bill.
Having to pay up contracts in the case of several will have cost, but it least makes room in the salary costs. It is something Slade had to oversee, and it can be assumed that it is the same for Trollope.
And having been burned by Financial Fair Play last season – although that was somewhat harshly tied into Tan’s debt restructuring – Cardiff know more than most that they cannot afford to fall out of line.
THE SWANSEA CITY SITUATION
Financial Fair Play comes into play with Swansea too.
While there will be many wondering where they money is from the new moneymen in the Liberty boardroom, they too are ignoring the cost control rules in place in the top-flight.
Updated rules state that wage bills can’t increase by more than £7m a season, unless the club can show they have increased their revenue by the same amount.
Crucially, that does not include the extra television revenue which has seen clubs effectively ‘jump the shark’ when it comes to transfer value this season.
It was outlined when Jason Levien and Steve Kaplan were first revealed to be in talks that they would help the club have greater financial manoeuvrability, but ultimately weren’t going to start running the club in a different way to they have previously.
And FFP rules – with punishments from points deductions and transfer embargoes – mean they can’t even if they did.
It does tempt you to wonder how some clubs are getting around it, though some have managed to match increase in expenditure from player sales or existing huge commercial revenue streams. Again, perhaps it is no surprise that improving Swansea’s source of the latter has been mentioned several times with regards to the boardroom’s newcomers.
Swansea, as revealed earlier this year, have had to walk a tightrope with wages. Salaries are spiralling in the Premier League but Swansea’s income (at least not before the new broadcast deal) has not matched the same rate of growth; in the 2014/15 accounts wages increased by 12% while turnover – although breaking the £100m barrier for the first time – only went up by 5%.
It is interesting to note that the rules only count if the starting wage bill is above £67m, meaning you can exceed the £7m cap if it was below that figure. In other words, teams promoted from the Championship are able to boost their wage spending by a far bigger amount in their bid to stay in the Premier League, which could explain some of Middlesbrough’s big moves.
Of course, selling Andre Ayew and Ashley Williams for a combined £32m will see plenty wonder why that hasn’t been pumped immediately back in.
The Ayew cash is thought to have been accounted for by the deals for Borja Baston and Fernando Llorente, while there has been a spend of £11m on Alfie Mawson, Mike van der Hoorn and Leroy Fer.
But there is a danger of looking at ‘net spend’ (the sum difference between player sales and purchases). Not only does it ignore whether there was good value on either side of the deal, it also ignores a lot of the hidden extras that go on.
For example, net spend will not have accounted for the hike in wages to keep Gylfi Sigurdsson. An easy example is Ayew: his arrival at Swansea will have not gone down as a fee, yet with wages reportedly at £80,000-a-week, the yearly spend on his contract (around £4m a year) will have been in the books that have to be balanced.
Cash flow is not simple either. There is little chance that the money from Ayew and Williams will come in an up front fee, but rather in instalments over an agreed period. In other words, the bank balance doesn’t suddenly go up by £20m once a West Ham owner tweets a picture of the player in claret and blue.
Swansea have to be warned that sometimes risks need to be taken to make sure they stay competitive, but it’s fair to suggest they – like others – will have been taken aback by the explosion in the size of fees this summer.
But it goes to show the misnomer of many celebrating the money on offer from the new broadcast deals. The new sums on offer has simply inflated the market. Like in life, if the wages of every worker goes up, so does the cost of living.
The new TV deal has simply inflated the market
It won’t satisfy all and it doesn’t excuse some of the poor recruitment decisions made by both South Wales clubs in recent times, but there is a case of remembering that you can’t have it both ways.
Many Cardiff fans were keen for the club to find itself in better financial shape, something that seems to be happening.
Likewise, Swansea fans were keen to know that the share-purchase would not change the way the club has been run to jeopardise it financially.
To have both those things and get involved too heavily in silly season just doesn’t work. It’s not an excuse not to spend money, but does explain why there may not have been mega deals this window.
Of course, that won’t make it any easier when Bony scores from an Allen pass or when Marshall pulls off a penalty save for Hull.
But – in the modern world – that’s football.
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Re: Cardiff City and Swansea City's financial situations
Thu Sep 01, 2016 7:45 am
Getting rid of high earners like Dikgacoi, Le Fondre and Macheda is one thing ,and totally essential, but selling star players like Marshall on the cheap is quite another.
Once Trollope was appointed Head Coach is merely emphasized his weakness....even more so than Slade.
I believe he had no say on the sale of Fabio ( after using a formation perfect for him) and Marshall, after saying 'every player has his price'.
As Gilo rightly said Marshall's price is at least £8 million and letting him go for less was madness and desperation.
Signing Lambert is a positive, but we have no cover if he's injured.
You have to buy and sell to improve and we haven't done that.
Once Trollope was appointed Head Coach is merely emphasized his weakness....even more so than Slade.
I believe he had no say on the sale of Fabio ( after using a formation perfect for him) and Marshall, after saying 'every player has his price'.
As Gilo rightly said Marshall's price is at least £8 million and letting him go for less was madness and desperation.
Signing Lambert is a positive, but we have no cover if he's injured.
You have to buy and sell to improve and we haven't done that.
Re: Cardiff City and Swansea City's financial situations
Thu Sep 01, 2016 7:54 am
bluemun wrote:Getting rid of high earners like Dikgacoi, Le Fondre and Macheda is one thing ,and totally essential, but selling star players like Marshall on the cheap is quite another.
Once Trollope was appointed Head Coach is merely emphasized his weakness....even more so than Slade.
I believe he had no say on the sale of Fabio ( after using a formation perfect for him) and Marshall, after saying 'every player has his price'.
As Gilo rightly said Marshall's price is at least £8 million and letting him go for less was madness and desperation.
Signing Lambert is a positive, but we have no cover if he's injured.
You have to buy and sell to improve and we haven't done that.
Marshall was no way worth 8 million with the add ons it will be 5 million which was a fair price
Re: Cardiff City and Swansea City's financial situations
Thu Sep 01, 2016 8:23 am
I'm not a big fan of Chris Wathan but this is a very good article. It puts into perspective what's been going on.
Unfortunately, it's going to make it difficult for any team to break the monopoly of the top Premier League clubs, which makes Leicester's achievement last year even more remarkable.
I can't help thinking that the extension of FFP into the Premier League is preparation for a franchise system in the next few years though.
Unfortunately, it's going to make it difficult for any team to break the monopoly of the top Premier League clubs, which makes Leicester's achievement last year even more remarkable.
I can't help thinking that the extension of FFP into the Premier League is preparation for a franchise system in the next few years though.
Re: Cardiff City and Swansea City's financial situations
Thu Sep 01, 2016 9:27 am
wez1927 wrote:bluemun wrote:Getting rid of high earners like Dikgacoi, Le Fondre and Macheda is one thing ,and totally essential, but selling star players like Marshall on the cheap is quite another.
Once Trollope was appointed Head Coach is merely emphasized his weakness....even more so than Slade.
I believe he had no say on the sale of Fabio ( after using a formation perfect for him) and Marshall, after saying 'every player has his price'.
As Gilo rightly said Marshall's price is at least £8 million and letting him go for less was madness and desperation.
Signing Lambert is a positive, but we have no cover if he's injured.
You have to buy and sell to improve and we haven't done that.
Marshall was no way worth 8 million with the add ons it will be 5 million which was a fair price
As Gilo said, when will we actually get the add-ons. Last season alone he saved us from defeat countless times. He is an international keeper at his prime. Worth at least 8 million. A backward step and part of Tan's ploy. We need a fans' takeover asap.
Re: Cardiff City and Swansea City's financial situations
Thu Sep 01, 2016 9:40 am
bluemun wrote:Getting rid of high earners like Dikgacoi, Le Fondre and Macheda is one thing ,and totally essential, but selling star players like Marshall on the cheap is quite another.
Once Trollope was appointed Head Coach is merely emphasized his weakness....even more so than Slade.
I believe he had no say on the sale of Fabio ( after using a formation perfect for him) and Marshall, after saying 'every player has his price'.
As Gilo rightly said Marshall's price is at least £8 million and letting him go for less was madness and desperation.
Signing Lambert is a positive, but we have no cover if he's injured.
You have to buy and sell to improve and we haven't done that.
agree.
looking at some of the prices, i wince at the paltry £2.5-5m we got for marshall.
however, the market for goalkeepers is limited and highly dependent on there being vacancies. clubs will almost always find room for a quality outfield player, but with goalkeepers the timing has to be right. despite his undoubted quality, hull may have been the only serious bidders.
but £10-15m for 2 players bought by aston villa, plus a £20m bid for abel hernandez? £30m for moussa sissoko? £13m for ryan mason?
these fees are insane. the gap between the haves and have nots is massive now. aston villa have spent £50m in the championship! not difficult to see what is driving this though. it now costs £330 a year for the sky sports add on subscription alone. without champions league football and sky having half the PL games they used to get. what a f*cking rip off.
Re: Cardiff City and Swansea City's financial situations
Thu Sep 01, 2016 4:16 pm
bluemun wrote:wez1927 wrote:bluemun wrote:Getting rid of high earners like Dikgacoi, Le Fondre and Macheda is one thing ,and totally essential, but selling star players like Marshall on the cheap is quite another.
Once Trollope was appointed Head Coach is merely emphasized his weakness....even more so than Slade.
I believe he had no say on the sale of Fabio ( after using a formation perfect for him) and Marshall, after saying 'every player has his price'.
As Gilo rightly said Marshall's price is at least £8 million and letting him go for less was madness and desperation.
Signing Lambert is a positive, but we have no cover if he's injured.
You have to buy and sell to improve and we haven't done that.
Marshall was no way worth 8 million with the add ons it will be 5 million which was a fair price
As Gilo said, when will we actually get the add-ons. Last season alone he saved us from defeat countless times. He is an international keeper at his prime. Worth at least 8 million. A backward step and part of Tan's ploy. We need a fans' takeover asap.
Your deluded if you think he's in his prime at 31 ,he is not the keeper he was for us a couple of seasons ago if hull stay up and he plays at least 20 games for them we get 5 million plus
Re: Cardiff City and Swansea City's financial situations
Thu Sep 01, 2016 7:16 pm
It's quite clear in my mind that FFP is only making the bigger clubs even bigger. It's only a matter of time before the top teams make a break away league with other big clubs in Europe. It's inevitable the way things are going with TV...
Re: Cardiff City and Swansea City's financial situations
Thu Sep 01, 2016 8:55 pm
Huw Jenkins, in an article defending their summer dealings is saying their accounts to May will show a 'significant loss'.
Amazing considering the crazy tv money and that they aren't exactly known as big spenders.
Shows that they are paying high wages to attract the likes of Gomis, Ayew etc..
Amazing considering the crazy tv money and that they aren't exactly known as big spenders.
Shows that they are paying high wages to attract the likes of Gomis, Ayew etc..
Re: Cardiff City and Swansea City's financial situations
Thu Sep 01, 2016 9:29 pm
Lawnmower wrote:Huw Jenkins, in an article defending their summer dealings is saying their accounts to May will show a 'significant loss'.
Amazing considering the crazy tv money and that they aren't exactly known as big spenders.
Shows that they are paying high wages to attract the likes of Gomis, Ayew etc..
http://m.bbc.co.uk/sport/football/37251199
Re: Cardiff City and Swansea City's financial situations
Thu Sep 01, 2016 9:56 pm
Lawnmower wrote:Huw Jenkins, in an article defending their summer dealings is saying their accounts to May will show a 'significant loss'.
Amazing considering the crazy tv money and that they aren't exactly known as big spenders.
Shows that they are paying high wages to attract the likes of Gomis, Ayew etc..
Tim
They have made significant underlying losses in previous seasons, but it has been masked by their success in earning big profits on player transfers- see 2014/15 season as an example
Keith
Re: Cardiff City and Swansea City's financial situations
Thu Sep 01, 2016 10:07 pm
ccfcsince62 wrote:Lawnmower wrote:Huw Jenkins, in an article defending their summer dealings is saying their accounts to May will show a 'significant loss'.
Amazing considering the crazy tv money and that they aren't exactly known as big spenders.
Shows that they are paying high wages to attract the likes of Gomis, Ayew etc..
Tim
They have made significant underlying losses in previous seasons, but it has been masked by their success in earning big profits on player transfers- see 2014/15 season as an example
Keith
they've had to spend this year so probably be a big loss for them
Re: Cardiff City and Swansea City's financial situations
Thu Sep 01, 2016 10:08 pm
Hi Keith,
Yes I noticed that, crazy to think a club not known for being big spenders have to sell each year to cover their losses even with the crazy money around.
Maybe the Prem isn't the cash cow it's made out to be
Yes I noticed that, crazy to think a club not known for being big spenders have to sell each year to cover their losses even with the crazy money around.
Maybe the Prem isn't the cash cow it's made out to be
Re: Cardiff City and Swansea City's financial situations
Thu Sep 01, 2016 10:11 pm
wez1927 wrote:ccfcsince62 wrote:Lawnmower wrote:Huw Jenkins, in an article defending their summer dealings is saying their accounts to May will show a 'significant loss'.
Amazing considering the crazy tv money and that they aren't exactly known as big spenders.
Shows that they are paying high wages to attract the likes of Gomis, Ayew etc..
Tim
They have made significant underlying losses in previous seasons, but it has been masked by their success in earning big profits on player transfers- see 2014/15 season as an example
Keith
they've had to spend this year so probably be a big loss for them
I'd expect the big profits made on Williams and Ayew will more than make up for any fees for new players which will be amortised over the length of the players contracts
Re: Cardiff City and Swansea City's financial situations
Thu Sep 01, 2016 10:12 pm
Lawnmower wrote:wez1927 wrote:ccfcsince62 wrote:Lawnmower wrote:Huw Jenkins, in an article defending their summer dealings is saying their accounts to May will show a 'significant loss'.
Amazing considering the crazy tv money and that they aren't exactly known as big spenders.
Shows that they are paying high wages to attract the likes of Gomis, Ayew etc..
Tim
They have made significant underlying losses in previous seasons, but it has been masked by their success in earning big profits on player transfers- see 2014/15 season as an example
Keith
they've had to spend this year so probably be a big loss for them
I'd expect the big profits made on Williams and Ayew will more than make up for any fees for new players which will be amortised over the length of the players contracts
they signed two players for well over 15m each didn't they tho ?