Financials 17/18

[skiba]

the net spend on players would not be affected from daniel levy's own lips last month. I wouldn't expect us to start splashing the cash just yet.

This has been his stock response for years now and I'm always cautious about taking such statements at face value as there is always going to be an element of PR involved.

The figures are factual, free from spin and they show that had we not been building the stadium and training ground over the last 4 years we would have had an extra £380m of cash available to invest in the club.

 

[Lilbaz]

This has been his stock response for years now and I'm always cautious about taking such statements at face value as there is always going to be an element of PR involved.

The figures are factual, free from spin and they show that had we not been building the stadium and training ground over the last 4 years we would have had an extra £380m of cash available to invest in the club.

For years now our net spend has been close to zero. So what does that tell us?

 

[Archibald&Crooks]

For years now our net spend has been close to zero. So what does that tell us?

He said free from spin Levyboy

 

[Lilbaz]

He said free from spin Levyboy

Just saying don't expect to be splashing cash on players without a significant return from sales. Not sure how that makes me a levyboy. Been saying since last summer we need new investment, whether that is new owners or not so be it.

 

[Archibald&Crooks]

Just saying don't expect to be splashing cash on players without a significant return from sales. Not sure how that makes me a levyboy. Been saying since last summer we need new investment, whether that is new owners or not so be it.

oh dear. I didn't think you'd take it seriously, my bad, should have known better than to mention Levy

 

[skiba]

Bingo - accountant by trade ?

How could you tell?

 

[Lilbaz]

oh dear. I didn't think you'd take it seriously, my bad, should have known better than to mention Levy

Best not to bring peoples dads into it.

 

[spursfan77]

Just saying don't expect to be splashing cash on players without a significant return from sales. Not sure how that makes me a levyboy. Been saying since last summer we need new investment, whether that is new owners or not so be it.

I too suspect we will only spend what we bring in via sales like normal in the summer.

 

[DCSPUR]

It is interesting that wages may actually go down next year/ season for two reasons:
1. A lot of players going off the books and being replaced by fewer players coming in (at the risk of repetition: (Dembele), Fernando, GKN, Janssen, Aurier, Trippier, Vorm, Toby, Eriksen, probably Onomah)
2. No longer need staff at two stadiums

Of course some players will come in but I doubt we will see more ins than outs.

 

[skiba]

For years now our net spend has been close to zero. So what does that tell us?

That we have had to make savings and sacrifices to pay for the new stadium. One of these sacrifices being adopting a zero net spend transfer policy. From 2002 to 2012 we were the third highest net spenders behind only Chelsea and City. Why do you think this policy changed?

The stadium is built now, we no longer have to put anymore of our own money into it so where does that money go now? It could go on debt repayments but the revenues we will generate from the new stadium already covers these. Only the club knows the answer but I think it's a huge positive that the club have managed to stay so competitive under such financial constraints.

 

[Lilbaz]

That we have had to make savings and sacrifices to pay for the new stadium. One of these sacrifices being adopting a zero net spend transfer policy. From 2002 to 2012 we were the third highest net spenders behind only Chelsea and City. Why do you think this policy changed?

The stadium is built now, we no longer have to put anymore of our own money into it so where does that money go now? It could go on debt repayments but the revenues we will generate from the new stadium already covers these. Only the club knows the answer but I think it's a huge positive that the club have managed to stay so competitive under such financial constraints.

Levy has said that there will the net spend will not be effected. So if it was low it will stay low. At least for a while.

 

[Giovanni]

Levy has said that there will the net spend will not be effected. So if it was low it will stay low. At least for a while.

Clutching at straws perhaps buuuuttt.......

If our net spend was zero up until now and that remains the same surely we will have an extra 95m to spend to remain at a net spend of zero? (380m÷4 years)

 

[Lilbaz]

Clutching at straws perhaps buuuuttt.......

If our net spend was zero up until now and that remains the same surely we will have an extra 95m to spend to remain at a net spend of zero? (380m÷4 years)

I hope we spend a fortune in the summer and the players get us to the next level. I just wouldn't bet on it.

Some are reading the financials and already spending the money in their heads (it's human nature) if we don't though it leads to disappointment and anger. Seen it every year but every transfer window the same thing happens.

 

[LeParisien]

Exactly. Looking at the historical cash flow, the cash spent on fixed assets to June 2018 since Poch took over in 2014 is around £830m. £450m of this is through borrowing so £380m has come from our own pockets during this time. If we were to achieve the same on field success over the next 4 years (qualify for the champions league twice) we could effectively give Poch a further £380m to invest in players without giving him a single penny of the extra revenues generated from the new stadium.

This is the point many pundits and even some fans have been ignoring. The way we have been operating these last four years is not comparable to any other club and was only ever going to be temporary as we navigated our way through the construction phases of the stadium and training ground. We have been shackled to the tune of £380m during this period but now the training ground and stadium are complete and fully funded the shackles can now be removed.

Poch has done absolute wonders to have us competing where we have during this period and I imagine this why he gets so frustrated when the media compare us to our rivals.

Bingo - accountant by trade ?

Great posts @skiba

How do you know the debt repayments will be financed by increase in matchday revenue ? I’d have thought a significant chunk of that £380m will go into repaying the debt?

 

[danielneeds]

Great posts @skiba

How do you know the debt repayments will be financed by increase in matchday revenue ? I’d have thought a significant chunk of that £380m will go into repaying the debt?

This is the decision Levy’s got to make. He’s done the saving and scrimping prior to the move, now does he refinance the debt more long-term, or does he try to do what Arsenal did and pay it off as quickly as possible?

I think, as long as we secure the big naming rights deal he’s craving, that he’ll do a longer refinance of the loan, and pay it off very slowly like a mortgage.

 

[Lilbaz]

This is the decision Levy’s got to make. He’s done the saving and scrimping prior to the move, now does he refinance the debt more long-term, or does he try to do what Arsenal did and pay it off as quickly as possible?

I think, as long as we secure the big naming rights deal he’s craving, that he’ll do a longer refinance of the loan, and pay it off very slowly like a mortgage.

Arsenal are still paying for their stadium.

 

[skiba]

Great posts @skiba

How do you know the debt repayments will be financed by increase in matchday revenue ? I’d have thought a significant chunk of that £380m will go into repaying the debt?

It was probably a bit presumptious of me to assume the debt repayments would be covered by the revenues from the new stadium as @danielneeds says, the decision of how the debt is repaid is still to be determined and down to Levy. But for arguments sake let's say we 'remortgage' £650m of the debt over a payment term of 20 years at 5%. This would mean we would have to make annual payments of around £52m. If we assume the stadium will generate gate receipts similar to that of the Emirates we can expect match day receipts of around £100m. WHL generated match day receipts of around £45m so that would give us an extra £55m per annum to cover the payments. Thats before you factor in a naming rights deal and other income generated from the other events such as the NFL etc.

The above calculation is the kind of thing I have seen in recent articles and analysis on the net about the new stadium. It suggests that the stadium won't generate much surplus cash for the footballing side of the business as the majority will be going towards serving the debt and therefore the stadium won't really change how we operate until the debt is repaid. What these analysis ignore is that the way we have been operating these last 4 years has allowed us to direct £380m of our own money into construction projects and this is what I was trying to explain in my previous posts. These are now finished so if we continue to operate the same way without having to invest in these we will be generating a fair amount of surplus cash.

Think of it like saving for a deposit for purchasing property. Completing the stadium means we have saved enough money for the deposit and done the deal. We now have mortgage payments to make but these can be covered through increased gate receipts. So now we no longer have to save for the deposit and there is a decision to be made on how this area of the budget is to be spent.

 

[bubble07]

How much of the stadium debt has the club already paid?

 

[danielneeds]

How much of the stadium debt has the club already paid?

Difficult to say as we don’t know the total spent. But if it’s close to 1bn, then our loan facility is close to £650m suggesting we paid around £350m ourselves.

 

[Dzejkob]

https://cartilagefreecaptain.sbnati...ncial-report-matches-its-new-state-of-the-art

Really, really nice reading, easy to understand. Generally we are rich and yes, we can buy players.