The Premier League yesterday released the details of how much each club earned as a result of playing within the richest football league in the world. The Swans will have earned just under £46 million pounds (£45,880,019 to be exact) from playing in the top flight which is a massive increase in turnover for a club that had revenues of just over £12m a year ago. When you add this income to the new season ticket, commercial and merchandise income then it’s pretty likely that the club will report a turnover next May of nearly £60m.
Whilst these are fantastic numbers and should make everyone smile, it is essential that every Swans fan understands that we can’t now start being blasé about money and shell out millions here and there just because the exact amount has been released. Let me explain why.
Well run clubs (and we are certainly one of these) will when they get into the Premier League be aware that even the lowest clubs will receive around £40m in payments. Knowing the minimum amount coming in is very helpful but that money doesn’t come all at once but at different stages throughout the season. So, even though the money was guaranteed, the club would have needed to budget and adjust their cashflow throughout the year to ensure they can continue to operate and pay the bills that need to be paid (such as wages).
I am not party to the finer details, but knowing some of the excellent people the club have behind the scenes, budgets and forecasts would have been made (based on when the Premier League made payments) and these numbers would have then been used to decide what the club can spend. There are fixed costs per month (player and staff wages, national insurance etc) which have to be met and there will then be ad hoc costs (such as payments for new players, bonuses, payments to suppliers etc) and juggling this and ensuring everyone is happy is no mean feat! You only have to look at our friends down the road and Portsmouth to see how easy it is to get into financial trouble.
So what you might say? Well, the point on the budgets above is that even though we have just got the exact figure for what the club will receive, I would suggest that at least 90% of that money was already allocated or included within financial plans that the club had. Putting it bluntly, were not mega rich now because this money would have already been factored into plans and payments over the course of the last 8 months.
Many (who will conveniently choose to ignore the real detail) will say yes that’s true but we operated ok before we got into the Premier League and so this £46m is going to be in addition to what we had whilst in the Championship. This is right and it is ADDITIONAL MONEY but what everyone then needs to consider is the mass of ADDITIONAL COSTS that the club has had to budget for. The list below is just what I can think of but I am sure there will be a raft of additional costs that the club would have need to pay out since we got promoted last May.
Payments we had to make when we got promoted – Maybe £7m
Remember Simon Clegg from Ipswich throwing his toys out of the Pram last year when he said the club owed them money for the Tamas Priskin deal? This would be a classic example of a payment that the club would have had to make as a result of getting promoted. In the results issued during the year, the club indicated that there had been a loss of some £8m in the previous year. I wouldn’t be surprised if nearly all of this £8m came from costs and payments that the club HAD to make as a result of getting promoted.
For example, it’s common knowledge that the club paid £500,000 up front initially for get Scott Sinclair but there were additional payments due if (and it became a when) the club got promoted. The club has been well run over the past few years and I feel sure in saying that we wouldn’t have incurred an £8m loss unless we knew money was coming in. That money has now become public knowledge but I am sure much of it was ‘allocated’ to achievement payments that we were contractually obliged to make
New player costs – £10-12m
As a result of getting promotion, we broke our transfer record to sign Danny Graham for £3.5m and we also shelled out money on Wayne Routledge (£1.7), Leroy Lita(£1.7), Michel Vorm (£1.7) and Jose Morreria (£0.7). There was also the costs of loan players such as the signing of Gylfi Siggurddson, Stephen Caulker and Josh McEachran (many don’t realise that clubs like Spurs & Chelsea would probably have charged the club just to let both young lads come on loan) and so when you tally these figures up, you are at £10-12m of expenditure just to strengthen the playing squad that we have.
New deals & revised contracts for current players in Aug 11 – £7-8m
In order to compete in the Premier League, you need to pay big wages and in order to be able to recruit strikers like Danny Graham, you need to be offering good wages. It’s clear that the club aren’t stupid with wages and won’t be paying £80k a week like other promoted clubs but there is no doubt that the clubs best players will certainly be on deals which I would guess to be between £15-25k per week.
We simply would not have been able to sign players like Danny by offering them £10k a week, it just would not have happened. Once Danny signed, the club then had other star players (such as Ashley and Nathan) wanting new deals and this would have been in addition to the rises that the players would have been contractually obliged to as a result of getting promotion. ]
A number of players signed new deals and so it’s pretty clear that our wage bill would have gone up by a large amount and I reckon this could be circa £7-8m over additional costs alone that the club would have had to budget for. We all know that we don’t have rich sheiks or oligarch’s pumping money in and so this money would have had to come from somewhere. Yes, you guessed it, part of the £46m.
Player Bonuses – £8-10m
When I started out as a young salesman, I was always happy when my boss offered me a good bonus in return for achieving good results. I felt it was fair that I got a decent basic wage but that if I really performed and achieved excellent results for the company, I should get more.
Player and manager bonuses are part of the fabric of football clubs and so I would be surprised with some 30 players on the books and 10 or so people in Brendan’s staff if this hadn’t cost the club between £6-10m during the course of the whole season. When you consider that it is rumoured that Steve Bruce asked for a £2m bonus from Wolves when he was interviewed for the job (if he helped save Wolves from relegation), the figure here could be too low but on the basis of a large squad and 8 months of football then I would think those figures could be pretty close.
New deals for current players in May 12 – £5m
As a result of proving themselves as Premier League players, agents will be booking appointments with Huw Jenkins soon or will have already started banging on his door. With progression comes additional cost.
If Jordan Henderson is worth £20m then god only knows what Joe Allen is worth after his debut Premier League season. In order to hang onto players like Joe, Ashley, Michel, etc the club will need to consider new deals for them or at least listen to what their agents say. Whilst it’s difficult to estimate this, I would think that you could be looking at additional costs of some £5-10m for this alone as wage increases in the premier league tend to be in the thousands and not the hundreds!!
Off the field cost increases – £5m
Whilst many might think that the club haven’t had to spend much off the field, if you had kept a close eye on some of the announcements throughout the season, then it is clear that the club have had to spend a lot off the field as well as on it.
The Premier League is a different world when it comes to media and most things and so there is no doubt that the club would have had a range of new off the field costs to cater for.
Upgrading parts of the stadium, relaying training pitches, hiring new staff, flying players to games etc are all examples of additional costs which the club have had to fork out. With the council short of money and the Ospreys skint, I bet that changes to the stadium would have had to be funded by the club as well and so I think that you can budget for £3-5m in additional costs as well as a minimum.
Off the field investments – £5m
We are all aware of the history that we have as a club and how we have progressed so far in such a short space of time. We are all aware that the players currently train and shower alongside fans and whilst its vital that the club stays close to its roots, the club will also have wanted to develop off the field as well. Investing in land or areas to build training facilities and academy’s will be something that the club will have wanted/be wanting to look at as well as stadium expansion being a key factor to consider in the club’s growth.
Land and investments like these are not cheap yet they are ESSENTIAL if Swansea City is to continue growing and prospering as we have over the last few years. It is impossible to put an exact figure on what these investments might have cost but I would not be surprised if they were a minimum of £5m at least and maybe more.
So there you have it. In the space of a few lines, you now have circa £45-50m of additional costs that the club have had to shell out in order to ensure we survived and more importantly prospered in the Premier League! What is more surprising when you look through this list is that the obvious costs (player transfer fees) are only 20% of the cost and it is for this reason why I urge all Swans fans to be realistic about where we are as a club and what money we have to spend.
There is no doubt that the board will have had their meetings and done their planning when they realised that the club had another year in the Premier League and there is no doubt that we will now have another £40m+ coming our way over the course of the next 12 months. There is also no doubt that some of the costs outlined above are Capital Expenditure costs and not on-going costs, so meaning they should not be required each year. However, when I hear people say ‘he will only cost £8m and he will only cost £5m, let’s go and sign them’ then it is clear that they haven’t done some of the sums that I have outlined above.
Brendan will have money to spend I am sure and we will no doubt bring some players of quality in to join what we have already. We should all look forward to seeing ‘quality player x’ joining us and be glad that we are progressing but let’s be realistic about where the Premier League millions are being used! We may have received £46m but I feel pretty sure, it’s all been accounted for.