Spending cap

[Howes tactically useless]

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It also shows that for the vast majority, the spending cap linked to TV income is effectively irrelevant, as their budget under squad cost control is already much lower than the mooted spending cap.

So, if we take Arsenal, their squad cost control budget is £337m (i.e. £481m adjusted revenue x 70%), which is nearly £200m less than the theoretical £518m spending cap (the lowest club's TV money x 5).

Personally, I don't think thiss whoile thing will help much, other than to potentially stop City getting further away on the wages / fees vs revenue.

Additionally this just realigns the theory of keeping the top teams at the top.

Stops promoted teams spending. They can’t speculate to accumulate.

The promoted teams need to spend what they can afford to stay up.

This all smells a bit top six driven to me.

 

[Howes tactically useless]

Squad Cost Control Ratio
The spending cap only acts as a backstop to the squad cost control ratio.

This ratio is calculated as the sum of:

• Wages of players
  
  
• Player amortisation
  
  
• Agent fees and cost of other intermediaries

Divided by the sum of:

• Operating revenue (adjusted for fair value, if required)
  
  
• Profit from player sales

So our total wages is £105m + NI (13% say) so £120m.

Player amortisation for 22/23 was £83m.

So keeping it simple that’s £203m. Already incurred.

So technically speaking we could only spend £13m net on players.

This is bollocks isn’t it.

 

[FadgewackeR]

Additionally this just realigns the theory of keeping the top teams at the top.

Stops promoted teams spending. They can’t speculate to accumulate.

The promoted teams need to spend what they can afford to stay up.

This all smells a bit top six driven to me.

Correct... It's UEFA driven, though it has synergies with the top 6 in our case. It's the greedy pigs.

We have to grow revenues dramatically. End of story. This cap means little, as we still have to comply with cost control ala UEFA.

For an indication of why it's continually stated we need to sell (while not meaning we're skint, or can't buy) - Leeds had a higher adjusted revenue than us in 22/23.

Adjusted revenue is what is used for cost control:

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[Howes tactically useless]

Correct... It's UEFA driven, though it has synergies with the top 6 in our case. It's the greedy pigs.

We have to grow revenues dramatically. End of story. This cap means little, as we still have to comply with cost control ala UEFA.

For an indication of why it's continually stated we need to sell (while not meaning we're skint, or can't buy) - Leeds had a higher adjusted revenue than us in 22/23.

Adjusted revenue is what is used for cost control:

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See my previous post where I have worked out we would already incur £203m of cost just staying still.

This totally devalues an owner trying to grow his/hers/their club with investment.

The only option to compete is to commercially drive revenues up.

Meaning those with already high levels can tank ahead of the pack.

The rules are there to keep everyone in the order.

 

[FadgewackeR]

So our total wages is £105m + NI (13% say) so £120m.

Player amortisation for 22/23 was £83m.

So keeping it simple that’s £203m. Already incurred.

So technically speaking we could only spend £13m net on players.

This is bollocks isn’t it.

Not sure on current figures (not referred back to recent accounts), but these projections are based on the actual 22/23 season data.

We've got CL money, Adidas and Sela... but - the overriding thing is that this spending limit thing means precisely nothing to us.

 

[FadgewackeR]

See my previous post where I have worked out we would already incur £203m of cost just staying still.

This totally devalues an owner trying to grow his/hers/their club with investment.

The only option to compete is to commercially drive revenues up.

Meaning those with already high levels can tank ahead of the pack.

The rules are there to keep everyone in the order.

Again, not sure on your numbers but presume you're correct - the rest - yes. It's essentially the same as it is now. It MIGHT affect Man City a bit, Man Utd could be impacted...Chelsea are special.

Everyone else it's not an issue for as the squadcost control keeps them from spending anywhere near the cap.

 

[Howes tactically useless]

Not sure on current figures (not referred back to recent accounts), but these projections are based on the actual 22/23 season data.

We've got CL money, Adidas and Sela... but - the overriding thing is that this spending limit thing means precisely nothing to us.

My figures are based on 22/23 aswell. So our income will have gone up. But with being in champions league our ratio would go down to 70%.

Regardless it’s the theory I am interested in. The fact we can grow income is not the point I am making. It’s the principle that if a team wants to spend they can’t unless they somehow grow income streams.

That’s wrong.

 

[FadgewackeR]

Conclusion
If the spending cap will genuinely be based on 5x the lowest TV money from the Premier League’s central distribution, then it will not really change a thing. At that level, it would not represent a hard salary cap in any way, shape or form.

The other element of the proposed new system, namely the squad cost control ratio which will restrict spending to 85% of revenue plus profit from player sales (70% for clubs in UEFA competitions) will remain the major challenge – with the spending cap itself making little difference.

However, the introduction of a spending cap could be the thin end of the wedge, as US owners increasingly wield more influence in the Premier League and try to replicate business models from their side of the pond. Once the principle has been established, it’s unlikely to be voted out and the direction of travel is likely to be towards tighter caps.

All that being said, it should be emphasised that the spending cap has not yet been approved, only the possibility to further explore such a system.

 

[Howes tactically useless]

Conclusion
If the spending cap will genuinely be based on 5x the lowest TV money from the Premier League’s central distribution, then it will not really change a thing. At that level, it would not represent a hard salary cap in any way, shape or form.

The other element of the proposed new system, namely the squad cost control ratio which will restrict spending to 85% of revenue plus profit from player sales (70% for clubs in UEFA competitions) will remain the major challenge – with the spending cap itself making little difference.

However, the introduction of a spending cap could be the thin end of the wedge, as US owners increasingly wield more influence in the Premier League and try to replicate business models from their side of the pond. Once the principle has been established, it’s unlikely to be voted out and the direction of travel is likely to be towards tighter caps.

All that being said, it should be emphasised that the spending cap has not yet been approved, only the possibility to further explore such a system.

If they use the spending cap but anything over and above that cap goes into a restricted pot where owners can’t take that out to protect the club. Then that would work.

But currently it just looks like a mechanism to maintain the status quo.

 

[FadgewackeR]

Just for flavour of what we're facing (despite our own commercial growth since 22/23) these next points illustrate well... £24m in the hole before any growth since 22/23.

Squad Cost vs Budget
By comparing actual squad costs with the budget, we can see how much spending capacity each club has – or alternatively how much it has to cut. In total, actual squad costs are lower than budget for the Premier League, but there are vast differences between each club’s status.

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At one extreme, we have three clubs with more than £100m spare capacity, namely Brighton £140m, Manchester City £116m and Tottenham £102m. On the other hand, Chelsea would have to massively reduce their spending by £130m.

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In other words, the squad cost control ratio is the part of the Premier League’s new system that will do the heavy lifting in terms of reducing costs, as opposed to the proposed spending cap, because no fewer than nine clubs will need to spend less to stay within the 85% limit (or alternatively increase revenue and player sales).

This list includes Chelsea, Leicester City, Newcastle United, Nottingham Forest, Aston Villa, Wolves, Everton, Southampton and West Ham.

 

[Howes tactically useless]

Just for flavour of what we're facing (despite our own commercial growth since 22/23) these next points illustrate well... £24m in the hole before any growth since 22/23.

Squad Cost vs Budget
By comparing actual squad costs with the budget, we can see how much spending capacity each club has – or alternatively how much it has to cut. In total, actual squad costs are lower than budget for the Premier League, but there are vast differences between each club’s status.

You must log in or register to see images

At one extreme, we have three clubs with more than £100m spare capacity, namely Brighton £140m, Manchester City £116m and Tottenham £102m. On the other hand, Chelsea would have to massively reduce their spending by £130m.

You must log in or register to see images

In other words, the squad cost control ratio is the part of the Premier League’s new system that will do the heavy lifting in terms of reducing costs, as opposed to the proposed spending cap, because no fewer than nine clubs will need to spend less to stay within the 85% limit (or alternatively increase revenue and player sales).

This list includes Chelsea, Leicester City, Newcastle United, Nottingham Forest, Aston Villa, Wolves, Everton, Southampton and West Ham.

This reaffirms what I said earlier my figures didn’t include agent fees.

That sucks.

 

[FadgewackeR]

This reaffirms what I said earlier my figures didn’t include agent fees.

That sucks.

It does, however, I think this point marks the start of us beginning to consistently be able to climb out of that hole. I'm not convinced we'll have a boat load of money this year, but that -£24m will be gone from future calculations due to the excellent work the commercial team are doing.

European football of some shape is really important for the commercial deals.

 

[Magnet]

So how much can we spend in this window?

 

[FadgewackeR]

So how much can we spend in this window?

Depends if we sell anyone Trev, but in all honesty - very few people will really know. I'm not sure. Could make a reasonable guess at it with some effort, but I can't be arsed.

 

[Magnet]

Depends if we sell anyone Trev, but in all honesty - very few people will really know. I'm not sure. Could make a reasonable guess at it with some effort, but I can't be arsed.

Obi is coming up this weekend. If we sell him we must get a fair amount based on poundage. It's not my thing but do you know any white slavers who might be interested?

Obi won't mind as it's for the good of the team.

 

[Howes tactically useless]

It does, however, I think this point marks the start of us beginning to consistently be able to climb out of that hole. I'm not convinced we'll have a boat load of money this year, but that -£24m will be gone from future calculations due to the excellent work the commercial team are doing.

European football of some shape is really important for the commercial deals.

Very true. The fact remains we are in a fantastic position to grow and become a regular challenger for the top six.

Something we couldn’t dream of under Ashley.

We also have some fantastic talents and assets at the club now.

The kid we are trying to steal off Arsenal looks like a Saka in the making.

 

[FadgewackeR]

Obi is coming up this weekend. If we sell him we must get a fair amount based on poundage. It's not my thing but do you know any white slavers who might be interested?

Obi won't mind as it's for the good of the team.

Well, my mam was a white slaver, but I'm not allowed to talk to her anymore... so sorry. Can't help.

 

[Magnet]

Well, my mam was a white slaver, but I'm not allowed to talk to her anymore... so sorry. Can't help.

I'm not sure being told to do the dishes when you're small actually counts TBF.

 

[Mick O'Toon]

So how much can we spend in this window?

£316,000,056.23p going on the current figures.

 

[Magnet]

£316,000,056.23p going on the current figures.

Now here is a man who obviously knows what he's talking about.