[Archived] Rovers Accounts Review

[PAFELL]

Third and final instalment.

Answering questions-

Wages need to be seen against the context of a 17% increase in Prem wages which I believe was what the bosses of the 20 clubs shelled out in total between them last season. So a 20% increase is barely keeping ahead of the Joneses.

Let's look at specifics and as I have commented before, Rovers' 2007/8 wages figure was reduced by not having to pay Sparky and the taffs for one month probably saving over £300k (Sparky was reported to be on £2.25m so divide by 12 and add 10% for Employer's ERNI and that is a £200k saving on just him). So the correct base figure for 2007/8, assuming having a management team is the club's norm, was a bit over £40m.

Ince came in on about £1.5m if I remembered reading correctly but yes there were some hairy rumours about what the two dinosaurs he brought with him were earning. That was probably a saving over 6 months of perhaps £300k compared with Sparky but Sam I believe is on more than Sparky was and the additional top flight coaches and mind readers will not be being paid with fresh air either. I guess over the season, the cost of management excluding sacking compensation is up by over £500K.

Roque signed a new contract summer 2008 in case nobody noticed- £1.5m additional costs for him.

Yes Brad and Bentley were high earners but I would be amazed if Robo and Grella are on any less.

Then we brought in Messrs Diouf and Givet in January- add £1m each for half a season from those two.

So we are up to about £44m without discussing any increases for the other 50 or so individuals who make up the first team players and management cohort and there were quite a few contract renewals in 2007/8 which would impact 2008/9 as well as contract renewals during the course of last season.

One final point on wages, the £46.1m figure includes wages related costs- National Insurance being the largest additional item. With footballers now paying 50% in tax, I wouldn't be surprised if Rovers are not writing cheques to the value of nearly £20m to the Government in the current season.

Transfer fee payment terms are made very difficult to work out because managerial change costs are included in the player trading account. So how much got paid to Ince and when is impossible to calculate from the accounts and with so many transfer fees being undisclosed, there is an enormous amount of guesswork involved when it comes to estimating specifics. But it is fair to say any payments to Ince probably ended when he got the MK Dons job but I don't know if he took Archie Knox et al with him.

I think it is also fair to say that the best working assumption on transfer payments these days is that all fees get spread in equal instalments over the length of the players' contracts. So assume 25% per year for both incomings and outgoings. This get further complicated by contingencies including sell-on clauses.

We know that Arsenal got/are getting 40% of the profit Rovers made/are making on selling Bentley and that probably extends to the performance-related bit which would/might one day raise the fee from £15m to £17m. As Arsenal would get paid first from cash received from Spurs, Rovers probably are only just beginning to see clear net cash from the Bentley sale which was one of the reasons I was so passionately opposed to his sale. I bet Bentley wishes he'd stayed at Rovers as well!

The Rovers accounts note 25 explains what Contingent Liabilities are:

"Under the terms of certain contracts for the purchase of players' registrations, future payments may be due, depenedent upon the success of the team and/or the individual players. Similar terms exist in contracts for sales of players' registrations.

"Liabilities are recognised once the payment becomes probable rather than possible in relation to playing appearance and team performances. The maximum potential liability for amounts due to football clubs and other third parties for first team players is £5.4m (2008-£3.9m)."

That is a significant amount, probably being kept in the realms of the possible rather than probable by Rovers playing rubbish football at the moment! It probably includes quite a big number which would become due if all Rovers' transferred in Academy youngsters become first team footballers.

It must be stressed that accounting rules require only contingent liabilities to be disclosed and contingent assets are not shown except the £24.9m contingent asset from tax losses- the theoretical amount of tax the club will not pay if it keeps on being profitable based on the allowances for losses made in previous years. The contingent assets arising from clauses on players transferred out of the club (including selling on fees for all the youngsters the club has transferred out over the years) can only be guessed at by people reading the accounts.

Now, anyone still reading at this point will have seen my reference to the club "keeping on being profitable". To be honest this is where accounts and the non-accountant reader part company. Yes, Rovers have made book profits in the last two seasons but this is only after adding in the player trading account which is itself the product of player transfer fee amortisation. To illustrate amortisation, we paid £4m for Vince Grella and gave him a 4 year contract so Vince is amortised at the rate of £1m per year in the player trading account. If we sell Vince for £1m this year, the club would record a loss of £2m on him as £1m would already have been charged to the player trading account last year. Apply that principle across all the Rovers' playing squad and you end up with numbers in the accounts which are true and fair to accountants but pretty meaningless to the ordinary fan. No account is taken of whether the player was 38 (as Brad was when Villa bought him) or 18 as the same accounting rules apply. For what it is worth, Rovers made an accounting profit of £19m on player disposals in 2008/9 although transfer fees earned for RSC, Brad and Bentley and others were much more than £19m.

It is for this reason that football clubs are required to disclose what the directors consider to be a fair value of the playing staff at the year end. At 30 June 2009, the directors of Rovers valued the playing staff at the club at £47m (this is going to be fun seeing how certain posters work out how that number was arrived at). Most significantly, the equivalent number when Sparky was at Rovers was over £60m.

To wrap up, the best thing I can do is reproduce the key performance indicators from Tom Finn's Business Review:

From right to left the numbers are 2008/9 - 2007/8 - 2006/7 - 2005/6 - 2004/5. All figures are £m except the last 4 for obvious reasons!

Turnover 50.9 - 56.4 - 43.4 - 43.4 - 41.3

Wages 46.1 - 39.7 - 36.7 - 33.4 - 31.3

Other costs 11.3 - 10.1 - 9.9 - 9.4 - 9.0

Operating p/l (6.5)- 6.6 - (3.3)- 0.6 - 1.0 Negative numbers mean losses

Interest cost 0.8 - 1.6 - 1.0 - 0.7 - 0.5

Profit/(loss) (7.3)- 5.0 - (4.3)- (0.1)- 0.5

Player trades 10.9 - (2.0)- 0.9 - (6.8)- (5.5) Negative numbers mean net investment

Bottom line 3.6 - 3.0 - (3.4)- (6.9)- (5.0)

Cash movement (1.3)- 2.3 - (7.2)- 0 - 5.1

Net debt 20.3 - 16.9 - 20.1 - 13.8 - 27.8

League Place 15th- 7th - 10th - 6th - 15th

Attendance 23481- 23917- 21262- 21015- 22294

Wage/Turnover 90.6%- 70.4%- 84.8%- 77.0%- 75.8%

Live TV games 11 - 14 - 10 - 11 - 12

Thanks for all these reports you have done for us. Plus the explanation for non-accounting people like myself.

Breaking all that down must mean Rovers have to sell before they can buy - or have I misunderstood?

[philipl]

Yes we have to sell to buy.

Unless we drop below 13th-ish, we don't have to sell to live.

[Exiled in Toronto]

Wages need to be seen against the context of a 17% increase in Prem wages which I believe was what the bosses of the 20 clubs shelled out in total between them last season. So a 20% increase is barely keeping ahead of the Joneses.

Turnover 50.9 - 56.4 - 43.4 - 43.4 - 41.3

Wage/Turnover 90.6%- 70.4%- 84.8%- 77.0%- 75.8%

The average for the EPL is heavily skewed by the big 4 and the likes of City who are fuelling the inflation; there is no way we should be above such an average. I cannot believe that our peer clubs in this league are also above the average for the whole league. We have had a 20% increase in income over that time period and a 50% increase in salaries - that is not good management.

[philipl]

Putting things in context, Premier League wages were £768m on a £1.3bn turnover in 2004/5.

Wages have increased to an estimated £1.6bn on a turnover of £2bn in 2008/9.

So Rovers turnover increased by 20% over 5 years whilst the League's turnover increased by just over 50%.

Rovers wages increased by 50% whilst the League's wages increased by 105% in the same period.

Another way of looking at it is that Premier League turnover increased by £700m whilst wages increased by £840m over five years.

The reality is that the PL had brought wages under control in 2004/5- they actually fell by 3% that season. However, that was the year that PL clubs started being bought by foreign owners and it really is the naivety of foreign owners that has driven the League from profitability to massive debts and losses. Other than at Chelsea and Villa, foreign owners have been an unmitigated disaster.

[RevidgeBlue]

The average for the EPL is heavily skewed by the big 4 and the likes of City who are fuelling the inflation; there is no way we should be above such an average. I cannot believe that our peer clubs in this league are also above the average for the whole league. We have had a 20% increase in income over that time period and a 50% increase in salaries - that is not good management.

Have to agree, if philip is correct in his analysis and the huge wage increase is simply down to "normal" increases rather than extraordinary increases caused by management changes then we appear to be in a cycle of continually selling our better players Bentley Friedel RSC Warnock etc whilst at the same time still seeing wages rise exponentially.

Seems slightly odd.

[Steve Moss]

The good news is that there has to be a limited supply of billionaires willing to throw silly money into a football team. Eventually, the supply will dry up and, hopefully, a readjustment will occur. Rovers just have to hang on a few years until that happens.

[Exiled_Rover]

Rovers are hamstrung by several ridiculous contracts, but I suppose that's the nature of the league. There's so many players that aren't good enough for this league, yet pick up £20k+ a week in wages.

People like Pedersen, Roberts, Andrews, Zurab (good player, but we have cover), Salgado, Reid and Grella/Dunn (one of the two has to go, you can't continue to pay wages to players that aren't available on match days) could all leave tomorrow and not be missed. We've only dug a hole for ourselves here.

[Majiball]

Wages up from £39.7m to £46.1m. Incidentally senior football players and management increased from 70 to 84 so Sam got some of his huge staff into Ewood, majiball.

Whatever do you mean by that philipl?

[philipl]

I was indicating that the backroom staff has increased under Sam quite appreciably. I know you have been campaigning to bring yet more specialists in to get optimum performance from the players.

In principal, I agree that investing in the 18 players who are selected in terms of psychological preparation and attaining peak fitness is probably the best investment a club can make.

But in Sam's time, there has been at least one all out revolt by the players (Stoke away last season resulting in Tugay being denied a contract renewal and probably the Warnock sale).

Players appear mentally more unsuited than ever to the rigours of Prem football- MGP, Roberts, Benni, Di Santo and Kalinic unable to score etc etc.

We are no lomger the super fit team that Hughes sent out.

Just what are the additional staff we have taken on buying us? Or has Sam simply lost it and is simply replaying the demons that got him the sack at Newcastle?

[Majiball]

I was indicating that the backroom staff has increased under Sam quite appreciably. I know you have been campaigning to bring yet more specialists in to get optimum performance from the players.

In principal, I agree that investing in the 18 players who are selected in terms of psychological preparation and attaining peak fitness is probably the best investment a club can make.

But in Sam's time, there has been at least one all out revolt by the players (Stoke away last season resulting in Tugay being denied a contract renewal and probably the Warnock sale).

Players appear mentally more unsuited than ever to the rigours of Prem football- MGP, Roberts, Benni, Di Santo and Kalinic unable to score etc etc.

We are no lomger the super fit team that Hughes sent out.

Just what are the additional staff we have taken on buying us? Or has Sam simply lost it and is simply replaying the demons that got him the sack at Newcastle?

Sorry took that the wrong way.

I wouldn't say campaiganing but having been and seen the set-up and people involved when compared to other clubs I feel we fall way short.

Sam brought in Kean (replacment for Robinson) and McDonald only. Out went Matihas and Knox and Julian the Press-up master. So 3 out 2 in.

The trouble is we have very few specialists and this is the issue.

Howard is an awesome strenght and conditioning coach, but his reputation comes from Notlob time when Roden was responsible for the fitness aspect, so he's half of a whole. Whilst I have no doubt he's picked up a lot he doesn't have a sports science degree and so I wonder how deep his understanding goes in this aspect? Given we are not as fit as the rest of the teams around us I'll claim him to be steady and dependable in this field, but we need more. Number of sprints a game is a good indicator of fitness ours are very low. Howard needs more support for sure, its far too much to do all that himself and think of new novel idea's to get more out of the players. If Howard had a fitness guru with him he could develop novel idea's and research in his field & hopefully find new methods.

McDonald, again steady and dependable is what I have heard, he was part of the Bolton team and considering where he ended up league one, I'll hazard he wasn't one of the best in that team. I think its fairly safe to assume that he would have stayed in the premiership like a lot of that Bolton team did if he was that highly rated.

He already knew Howard and McDonald so would know what he would be getting in. Given we where in a relegation dog fight I don't blame him for taking that route.

However for us to move forward in this field, which we need to, we need more "expertise".

This is what the 3rd years get told.

Its now considered you must be an expert in the following fields to be a serious applied football scientist:

Nutrition

Physiologly

Psychology

Strenght and Conditioning

Training principles and design

Biomechanics

I only see one aspect being covered and thats ###### poor IMO. thats why I think it could make a big difference over-all, if we're just about holding our own at present what difference could expert in-put in those fields make to performance/recovery, 10% at a push to the whole of our playing staff. For me its a no brainer.

You'll have to send me a PM about the training incident I hadn't heard about that.

For me the big issue is what the wages are being spent on, we must get cleverer with our cash, because spending 46M on wages is serious money, especially when you consider our results and performances. I do not believe we are getting value for money in most aspects of Rovers and other areas are suffering badly because of this. Long term I really fear for the future of Rovers as we're plowing all our money into one aspect and that aspect is seriously letting us down at present.

It would cost less than one players salary, Kish on his 20K a week would easily fund say 4 on 5K a week. We could make some serious moves and come up ith some seriously novel idea's with 4 good minds working with Howard.

[JAL]

I was indicating that the backroom staff has increased under Sam quite appreciably. I know you have been campaigning to bring yet more specialists in to get optimum performance from the players.

In principal, I agree that investing in the 18 players who are selected in terms of psychological preparation and attaining peak fitness is probably the best investment a club can make.

But in Sam's time, there has been at least one all out revolt by the players (Stoke away last season resulting in Tugay being denied a contract renewal and probably the Warnock sale).

Players appear mentally more unsuited than ever to the rigours of Prem football- MGP, Roberts, Benni, Di Santo and Kalinic unable to score etc etc.

We are no lomger the super fit team that Hughes sent out.

Just what are the additional staff we have taken on buying us? Or has Sam simply lost it and is simply replaying the demons that got him the sack at Newcastle?

Ask big Sam philipl. Why not put your concerns to him directly and see what he comes up with.

Gary Megson has just had a pop at Allardyce on football focus for the state he found Bolton Wanderers in, by clearing little Sammy Lee of any blame - interesting.

[Guest Kamy100]

Gary Megson has just had a pop at Allardyce on football focus for the state he found Bolton Wanderers in, by clearing little Sammy Lee of any blame - interesting.

That was unfair on Sam, he left Bolton in a healthy state, however like Hughes he took all of his staff with him to Newcastle so when Sammy Lee took over things were chaotic.

[AndyNeil]

I've e-mailed out the Accounts to those who requested a copy ... if anybody else requires a copy, just drop me an e-mail to the above address.

COYB

The second 'lot' of Accounts have been e-mailed out to the people who e-mailed me ... again, if anybody else wants a copy, just drop me an e-mail to accountancy@fernhurstsolutions.co.uk

COYB

[JAL]

Sorry took that the wrong way.

I wouldn't say campaiganing but having been and seen the set-up and people involved when compared to other clubs I feel we fall way short.

Sam brought in Kean (replacment for Robinson) and McDonald only. Out went Matihas and Knox and Julian the Press-up master. So 3 out 2 in.

The trouble is we have very few specialists and this is the issue.

Howard is an awesome strenght and conditioning coach, but his reputation comes from Notlob time when Roden was responsible for the fitness aspect, so he's half of a whole. Whilst I have no doubt he's picked up a lot he doesn't have a sports science degree and so I wonder how deep his understanding goes in this aspect? Given we are not as fit as the rest of the teams around us I'll claim him to be steady and dependable in this field, but we need more. Number of sprints a game is a good indicator of fitness ours are very low. Howard needs more support for sure, its far too much to do all that himself and think of new novel idea's to get more out of the players. If Howard had a fitness guru with him he could develop novel idea's and research in his field & hopefully find new methods.

McDonald, again steady and dependable is what I have heard, he was part of the Bolton team and considering where he ended up league one, I'll hazard he wasn't one of the best in that team. I think its fairly safe to assume that he would have stayed in the premiership like a lot of that Bolton team did if he was that highly rated.

He already knew Howard and McDonald so would know what he would be getting in. Given we where in a relegation dog fight I don't blame him for taking that route.

However for us to move forward in this field, which we need to, we need more "expertise".

This is what the 3rd years get told.

Its now considered you must be an expert in the following fields to be a serious applied football scientist:

Nutrition

Physiologly

Psychology

Strenght and Conditioning

Training principles and design

Biomechanics

I only see one aspect being covered and thats ###### poor IMO. thats why I think it could make a big difference over-all, if we're just about holding our own at present what difference could expert in-put in those fields make to performance/recovery, 10% at a push to the whole of our playing staff. For me its a no brainer.

You'll have to send me a PM about the training incident I hadn't heard about that.

For me the big issue is what the wages are being spent on, we must get cleverer with our cash, because spending 46M on wages is serious money, especially when you consider our results and performances. I do not believe we are getting value for money in most aspects of Rovers and other areas are suffering badly because of this. Long term I really fear for the future of Rovers as we're plowing all our money into one aspect and that aspect is seriously letting us down at present.

It would cost less than one players salary, Kish on his 20K a week would easily fund say 4 on 5K a week. We could make some serious moves and come up ith some seriously novel idea's with 4 good minds working with Howard.

Excellent stuff Majiball.

JW and co. need to pull their finger out and sort it instead of just passing it on to the manager. That would be positive support.

[Silencio]

Sorry took that the wrong way.

I wouldn't say campaiganing but having been and seen the set-up and people involved when compared to other clubs I feel we fall way short.

Sam brought in Kean (replacment for Robinson) and McDonald only. Out went Matihas and Knox and Julian the Press-up master. So 3 out 2 in.

The trouble is we have very few specialists and this is the issue.

Howard is an awesome strenght and conditioning coach, but his reputation comes from Notlob time when Roden was responsible for the fitness aspect, so he's half of a whole. Whilst I have no doubt he's picked up a lot he doesn't have a sports science degree and so I wonder how deep his understanding goes in this aspect? Given we are not as fit as the rest of the teams around us I'll claim him to be steady and dependable in this field, but we need more. Number of sprints a game is a good indicator of fitness ours are very low. Howard needs more support for sure, its far too much to do all that himself and think of new novel idea's to get more out of the players. If Howard had a fitness guru with him he could develop novel idea's and research in his field & hopefully find new methods.

McDonald, again steady and dependable is what I have heard, he was part of the Bolton team and considering where he ended up league one, I'll hazard he wasn't one of the best in that team. I think its fairly safe to assume that he would have stayed in the premiership like a lot of that Bolton team did if he was that highly rated.

He already knew Howard and McDonald so would know what he would be getting in. Given we where in a relegation dog fight I don't blame him for taking that route.

However for us to move forward in this field, which we need to, we need more "expertise".

This is what the 3rd years get told.

Its now considered you must be an expert in the following fields to be a serious applied football scientist:

Nutrition

Physiologly

Psychology

Strenght and Conditioning

Training principles and design

Biomechanics

I only see one aspect being covered and thats ###### poor IMO. thats why I think it could make a big difference over-all, if we're just about holding our own at present what difference could expert in-put in those fields make to performance/recovery, 10% at a push to the whole of our playing staff. For me its a no brainer.

You'll have to send me a PM about the training incident I hadn't heard about that.

For me the big issue is what the wages are being spent on, we must get cleverer with our cash, because spending 46M on wages is serious money, especially when you consider our results and performances. I do not believe we are getting value for money in most aspects of Rovers and other areas are suffering badly because of this. Long term I really fear for the future of Rovers as we're plowing all our money into one aspect and that aspect is seriously letting us down at present.

It would cost less than one players salary, Kish on his 20K a week would easily fund say 4 on 5K a week. We could make some serious moves and come up ith some seriously novel idea's with 4 good minds working with Howard.

Great post. I remember when Bolton used to come to Ewood and would at least match Hughes' teams for fitness. It's clear that we are not in the same shape as we were then or as Bolron were then. If we could clear out the deadwood we could start to invest in this side of things more. We need a smaller squad with a big emphasis on fitness and coaching.

As an aside, did people not think that the edge in fitness we gained when Hughes arrived started to wain in his last 18 months. I certainly thought so. I wonder if this was down to Hughes or if lots of the players broke down. Sadly we still have lots of those players here and have added a few more duffers since.

It's essential we start shifting out the no-marks asap. We can only continue to punch above our weight if we lose some...

[Lathund]

As an aside, did people not think that the edge in fitness we gained when Hughes arrived started to wain in his last 18 months. I certainly thought so.

I felt the same thing. In his early days we always seemed to be in the games until the very end; we may not always have managed to get an equalizer or winner, but we usually looked to be fitter and sharper. Opponents were always closed down when in our half or near the halfway line, whether in the 1st minute or the 90th and so on. We weren't unfit towards the end, just didn't have that edge as you say.

A third potential reason as to why could also be that other teams caught up. They learned from what we, Bolton or other very fit teams did, and started doing some of the same things. After all it's a matter of relative fitness, not absolute.

[Majiball]

A third potential reason as to why could also be that other teams caught up. They learned from what we, Bolton or other very fit teams did, and started doing some of the same things. After all it's a matter of relative fitness, not absolute.

Perhaps they are resting on their laurels, SS has moved on leaps and bounds since then.