Yeah you are right. But if ImpsSaint has a 3% profit on his business he would be out of business, because he wouldn't be able to feed himself. For a football club the profit doesn't really mean anything, particularly one like ours which has changed so much in the last two years.
Well, exactly. Our 3% profit margin is after wages, so why would it not be in the corner shop analogy? If our profits were 3% before deducting wages, we'd be in big trouble...
This and this. It's calculated after taking into consideration wages and what you're paying yourself. It's sustainable as long as you're at least breaking even. But I'm not going to let myself get roped into this discussion any further because I have to get up at 8 AM to do bloody volunteer work.
Different levels of profit, we are talking 3% so if your a small business grossing 500 a week then that will leave you 15 quid after you have paid everyone- making a profit but not worth the hassle so you will go out of business. If your a big company the boards for most businesses will be looking for 30% return not 3% so the chairman could find himself out on his ear. No company can survive on a 3%profit margin as it does not allow for any downturn or recessions or the like. Sorry for the delay but different time zones and then I got caught up with the England batsmen actually playing well
And beyond that, sports clubs are rather different entities in terms of value. A corner store's value comes in its day-to-day profits; a sports club is, hopefully, an investment where the profit is realized upon sale of the asset. If the club remains around break-even and stays in the Prem long-term, the year-to-year profits/losses will be a footnote compared to the eventual sale price. Hopefully we don't find out exactly what that sale price might be for many years, though.
Sorry mate but that's a naive start to your post. Lots of businesses would be delighted with a 3% profit margin. Lots of businesses would be disappointed, but in today's economic climate many would take paying all the staff, all the bills, paying down some debts and have a lite bit over the line. 3% gross margin would be ****. 3% profit maybe considered good.
Wow. How do you go out of business making a profit? You may have tight cash flow management but not out of business. Your Bill Gates analogy is so different. That is about expectation not about going out of business.
I disagree. You are talking about 3% margin. People are talking about 3% profit which is different and after costs taking out. You did say margin, sorry. The report is about profit though.
GMI always said this forum was filled with accountants and lawyers... Bet he's laughing if he reads this!
Hmm, now the profit is announced, I wonder if they will pay out the contract on Nigel Adkins now - we could do with him back at Scunthorpe and if he has funds evenbetter
So if Saints are making a profit, why is Nic so against the new football finance rules which prevent a club making a LOSS of over £100 million over the course of three seasons?
I assume it's because the top clubs will, obviously, still be making more money than smaller clubs (no matter how well run they are), which will make the gap much harder to make up.
Matter of principle. That FFP risks putting a red rope across and sealing off the top 4-6 sides from the rest.
Well, as long as you don't intend to 'do a City', then I don't see how it's going to affect Southampton if you grow in a sustainable manner, raising your income streams and investing that in players and facilities and ways of further increasing your income streams. Smaller clubs may be disadvantaged in the short term but teams can still raise their income streams in the long-term which they can then invest in players, rather than buying players with no off-field investment (also known as 'doing a Portsmouth'). If it encourages sustainable growth, then surely it should be a good thing. Basically, small teams won't be able to 'do a City' and buy loads of players in the space of two seasons for loads of money.... But that's a good thing. Yes, City have benefited from the lax regulations that are present at the moment but you can't retrospectively change the system unfortunately.
You'll still be able to "do a city" I think, because losses are allowed to be secured against the owners' assets. Basically you can't "do a Portsmouth" and spend a club into bankruptcy before walking away scot-free anymore. That in itself is probably worth having new rules for.
Cortese is a product of the free banking system and probably isn't a fan of regulations and seems very much behind the belief of self regulation. Personally I think the proposals are fair and reasonable. The emotional attachment and importance of a football club to its community is too important to be damaged by the actions of an irresponsible few.
This. And I think there's enough examples to show self regulation doesn't work (the banks, the press, etc).
Plenty of company's went out of business making a profit in 2008 at the time Lehman Brothers went pop. It all depends on the financial gearing of the business - if you don't hold stock and provide a service for cash in advance or on delivery then you can make small profits or even losses for a sustained period of time and stay in business (eg Amazon who took 10 years to turn a profit). However, if you have to make large working capital investments (in stock and payment terms for your customers) it doesn't matter if you make a small profit you could quite simply run out of cash. Put simply, Sales is vanity, profit is sanity but cash is king!
