With the media beginning a fresh round of rehashing when it comes to Aston Villa’s well known financial troubles of late with HMRC and what we believe to be Dr Tony Xia’s ongoing search for small investors (at the very least) in the club to tide us over, whatever the true facts of our cash flow problems are – actual physical news is thin on the ground.
The club have kept stum as you’d expect, albeit slightly more information led assurances compared to the statements we have received, wouldn’t have gone amiss and could well have stemmed the anger and confusion of fans over this period.
Anyway, with recent articles on the topic as we try and separate the wheat from the chaff given all the contradictory reports and the various figures flying around – as well as just trying to slightly lighten the current mood – a comment I quoted from McParlandTheGreat on the forum concerning wages and a far better outlook on the Financial Fair Play hole we faced lifted a few eyebrows.
So here’s his full submission to give it greater context and so folks can understand how he came to the possible mid £20million wage cut – his source for the information and any allowable assumptions.
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McParlandTheGreat:
The BIG problem is the difference in TV income between the PL and the Championship. That, in turn, reflects the £13m max loss allowed in the Championship. It does mean that a Championship team simply cannot afford anything like PL wages, which creates a massive problem for teams relegated from the PL.
On the face of it, we’ve actually done a decent job in cutting player wages.
2015-2016: £93m
2016-2017: £61m
2017-2018: £39m
Going in the right direction. BUT, with the allowed loss for our last PL season of £35m now becoming a £13m allowed loss, there is a £22m hole appearing in our profit/loss account which has to be dealt with.
So it’s not so much that our wage bill is ridiculous (compared to our past wage bills it definitely isn’t), it’s that it won’t fit our current FFP situation. Yep, you might say, we should have taken this into account, and I would agree with you.
To put it a different way, we chose the wrong route ahead. Going for “experience” costs, it seems. But does it?
I had a look at:
It gives around £750k per week, which tallies with £39m per year.
The big earners going are Terry, Gabby, Snoddy, Grabban. Not 100% sure of the figures, but think they total around £220k per week. Samba, Johnstone, Onomah, Tuanzebe and Bunn going total around £50k per week. So £270k off the wage bill, leaving £480k per week or £24.96m per year.
If we could sell Gardner, Elphick, De Laet, Taylor, and Hogan it would free £135,000 per week, leaving £345K per week or £17.94m per year.
That almost fills the £22m black hole. And gives us whatever transfer fees we can negotiate.
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Now with speculation on our relegation that brilliant forethought from the muppets previously in charge had left ‘some’ players without relegation wage clauses, whilst the above might not be 100% accurate, like McParland, I think it’s probably a good guide as a number of players would’ve more naturally had default wage reduction clauses built in.
They might not have caused a massive loss individually but they would mount up depending on the number of players it applies to.
So to Merd’s take on the overall situation and his belief that known figures show the club is healthy, but for the immediate cash flow situation which has again been born out largely by the immediate breaking news a few weeks back – as well as by the strong rumours about seeking investment.
He’s not pretending the situation is great or without worry, but he feels fans have fallen into the trap of over thinking things owing to the scarcity of information.
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Merd:
I just feel that the press, who we all know can’t be trusted, lend themselves to us using tidbits of spurious information to prove our insecurities.
Last year under FFP we could sustain a loss of £83m, this year it is £61m. Add to that our reduction in parachute money makes the £40m “black hole” – hardly amazing journalism.
No new owner can make FFP disappear, no matter how rich. So we have to cut our cloth accordingly – we already knew this.
Wages had to come down, so the big earners have to go. Our turnover May 2017 was £73m and we made a loss of £7m from memory. Our wages for the entire organisation were £64m, so our fixed costs were £16m.
Our turnover will reduce by £18m to £55m this financial year which will not be reported on until May 2019. To me, this is a cash flow crisis, which people have rightly pointed out can destroy a company. Wages are down while others (Gil, Gollini etc) have been sold.
No private company will tell anyone jack, so why do we demand to know everything – it would seriously compromise any bargaining power that we may have in the market.
While Xia’s wealth is what people are fixating on, the position all along is whether we are self-sustainable. Looking at the sums, I think we are probably about there, although getting rid of McCormack and Richards would be huge for us. We need to recoup £6m to not make a loss on these two players (transfer amortisation).
Sorry for the long post but I think our long-term position is balanced and it is our short-term position that needs sorting. This is why Xia is looking for minor investment.
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So for anyone fumbling through the figures, the various reports and the claims made about the numbers, that might help clear some things up for you – whether clarity eases the concern is an entirely different question!
Join in the debate in the Tony Xia thread
