|CLUBS TOLD TO BE REALISTIC
(Friday 1st August 2003)
Football League clubs are being advised to keep a tight grip on their finances and set realistic targets by Deloitte & Touche in their Annual Review of Football Finance published on 30th July 2003. The review analyses financial figures from the 2001/2 season, a season where Football League clubs enjoyed their only full season of revenue from the now infamous ITV Digital deal.
The growth in revenue during 2001/2 resulted in the overall staff wages/turnover ratio falling substantially in all three divisions. The average for Division One clubs, who benefitted most from the ITV Digital deal, moved from 101% to 72% while the overall average for the Football League was 73%, the lowest since 1996/97.
Reviewing Wanderers figures from the same period shows the total staff wages/turnover ratio as 64% compared to 58% the previous season when the Club enjoyed £1m of additional FA Cup related revenue. Wycombe's low since gaining promotion to the Football League ten years ago was a 55% ratio recorded during the 1996/97 season when the annual turnover was £3.2m compared to £4.5m in 2001/2.
The impact of the collapse of ITV Digital on Wycombe has been minimal according to the financial experts at Adams Park but it did tempt some clubs to plan beyond their means. Paul Rawnsley, a senior sports business consultant at Deloitte and Touche Sport comments “Clearly, many Football League clubs need to reassess their goals and purpose. For all clubs, an annual balanced cash budget of income and outgoings is essential. For most, that means setting realistic ambitions to ensure clubs are preserved for the community and future generations. In many cases, Supporters Trusts may have a key role, particularly in rescuing clubs from trouble and ensuring problems do not recur”
Wanderers 'Limited by Guarantee' constitution already follows the recommended set-up of many supporters trusts and this has effectively caused a self regulating effect on the finances at Adams Park. This has minimised the risk of such financial fall-outs as experienced recently by Luton Town, Notts County, Oldham Athletic and Barnsley.
However, the challenge for any club, centres around the fact that the single biggest expense remains players wages. Dan Jones, director of Deloitte & Touche Sport, commented: "We hope we have seen both a peak in player wages and the bottom of the trough in club losses. In reality, we expect wages to nudge up at the top level, but hope that wages-turnover ratios – a concern Deloitte has voiced since 1993 – will fall at all levels of English football. It has taken nine years and a spate of administrations and financial pressures to force this issue to a resolution. We expect losses in the Football League to increase temporarily in 2002-03 but never again to exceed 2000-01 levels." The Football League have already recommended a salary cap for Division Three clubs and this is welcomed in the review. ”Salary caps at a team, not player, level can greatly help a club’s viability, as long as the rules are straight forward and sanctions strong” added Jones.
Wanderers are expected to return a loss approaching £450,000 for the 2002/3 season but this represents a cash loss in the order of £100,000 after taking into account the effect of depreciaton of fixed assets and writing down the value of players contracts.
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