I'm advocating the owner put their own money in.
Not NCFC racking up 100 million debt, I have said this about 3 or 4 times.
I don't really get you're argument, you are talking about different types of investment.
I'm talking about the likes of Fernandez et al who spend there own money, you are not.
Yes, but one type of investment, if things go wrong, inevitably turns to the other. The players are contracted to the club, not the owner. Fernandes/Abramovich, whoever, allow the club to have wage budgets vastly beyond what they make from ticket sales, merchandise, etc, and cover the difference themselves. Whilst this set-up exists, everything is fine. The problem is not whilst the owner is there, it's when he (or she) isn't. If the owner decides to stop covering the difference between expenditure and income, then the club can suddenly have a huge hole in their finances. Let me tell you a story....
The most recent figure I can find right now for our wage bill is £18.4m annually. We can currently afford this. According to the new Financial rules, 13 clubs have wage bills of over £52m annually. Therefore it's probably a reasonable assumption that the average wage bill for the type of team we'd be looking to become is around that figure. So our new rich owner, Mr Whobitya Kokov provides the funding for a £52m wage bill, £33.6m annually. Conveniently this is also below the limit of the new financial regulations, so is perfectly plausible. Whilst the charming Mr Kokov is putting money in, that £33.6m isn't a problem. Our club go from strength to strength, challenging for a Europa league place, and maybe nicking a domestic cup. However, Mr Kokov has a thing for Thai Ladyboys, and decides buying a club in that part of the world would be more fun for him, so he leaves, selling the club for whatever he can get to whoever will take it. Chances are that person won't have a lot of money.
Whilst this is happening, the players still need paying, and there's a £33.6m hole in our finances. Most players are on 2-3 year contracts, and with time constraints on transfer windows, moving enough players out and in to close that funding gap is never going to happen in a single window, it'd probably take 2 years to do so. By which point, £33.6m is probably a kind estimate to the amount of debt we'd be in.
Now, on the playing side, these dramatic personnel changes will have had huge impacts on the quality and cohesiveness of our squad, so there's a very good chance we get relegated. Playing in the championship vs the PL is currently a loss of around £43m in TV revenue, and that gap will increase with the new TV rights next season. Chances are any players left over from the "good-old days" when there was money won't have relegation wage cut clauses either. So, after all the work done to cut our wage bill by the first £33.6m, we've now got to find another £43m in cuts to steady the ship again, with parachute payments only easing this slightly. So again, the squad (probably still our most valuable asset) is gutted. To reduce the wage bill, players are sold for far below their real value, and all the money from sales is just going to cover debt. After 1 season in the championship, £70m+ in debt doesn't seem that unrealistic.
So by this point, you've sold all your valuable players, are left with a squad of young players and rejects from other clubs, and are still hugely in debt. When we were promoted from the championship, only 3 teams made a profit that season: Watford, Leeds and Scunthorpe. The last 2 were both recently promoted, and both made money through player sales. If by this point the club are anything like a championship side, there's not going to be any profit to pay the debts off any time soon. Then people start to want their money back, the club can't afford it, so the administrators are called in.
So within 3,4 years of Mr Kokov leaving, the club are hugely in debt with no way to pay it, in administration, and probably spiralling towards League 1. All for a domestic cup and a couple of games against European sides you've never heard of.
It's a grim picture. As of last summer, Portsmouth had £130m in debt, from a very similar scenario. I suspect Portsmouth will be the first of many, as owners are not going to keep throwing money into a black hole, and start to want some money back. You can begin to see this at Blackburn, where the money from player sales clearly isn't all going back to the playing side. It might be ten, twenty, thirty years, but I'm fairly sure at some point the house of cards will come crashing down, and clubs like this are going to be having to face up to this scenario. Then your left with the top clubs in the Premier League being those ran like Arsenal, Spurs, West Brom, Stoke, Sunderland, Swansea and ourselves.
When you bring in a rich backer, you have little control over when they leave, and when they do they inevitably leave a huge gap in the clubs finances. That gap will very quickly mean debt! This is why nearly everyone on here likes our current, prudent model. It means we'll still have a football club to support in 30 years time.
