Is Financial Stability In Sight.
Thursday, 17th Jul 2008 09:19
Is the first part of the road to financial stability in sight ?
The first thing I must state is that in writing this article i have had no insider information, nor have I spoken to anyone either inside or outside the Club, I am making several assumptions here, based on the information that has been in the public domain.
My first assumption is that after all the drastic cost cuttings both on and off the field, that our current situation is such, that based on an avergage gate of about 19,000, we would still make a loss of around £200 k a month.
However we could be about to cover these losses, if the money from Peter Crouch's sell on clause brings in say £600 k and we add that to the proposed transfer fee's of Safri £325 k and Skacel £1 million then we will have banked nearly £2 million pounds enough to cover our losses for the season, this being the case we can then start to trade a little in the transfer market.
Of course we will have to sell before we can buy and we will have to buy carefully, but we will probably have to be prepared to see Viafara, Rasiak, Davis and perhaps Stern John all offered to the highest bidder, in truth I would expect to see at least two out of the three outfield players go.
However if this was to happen and lets say we got rid of Viafara, John and Davis, I would surmise that not only would they bring in perhaps £1.5 million between them, money that could be used to strengthen the squad, given that we would be covering our losses with the previous incoming cash in the bank, but the monthly loss would have also eased in that over half of those losses would have reduced as all of the three mentioned would be on at least £10k a week each, possibly more, sell Rasiak as well and I would take a wild guess and say that the my assumed monthly loss would be equivalent to the monthly wage bill for these four players.
So to recap, from a financial point of view, if all of the above was to happen, including the sale of the last four mentioned, I would calculate that the club would be running at just about break even and would have about £3.5 million injected into the club with transfer fee's received.
Now saints supporters shouldnt assume that if this was the case, then the Club is back to running on an even keel and everything is hunky dory, the club would still be dancing to the tune of the bank, not to the degree that it was, but it would be highly unlikely that they would be able to spend most of that £3.5 million, the truth of the matter is that they would have to still be very cautious, but perhaps half of the cash might be spend, of course this would push up the wage bill again and therefore maybe put us back in the red on a monthly basis, but we would still have the money to cover this.
The bank will of course be looking at the monthly income before they loosen the purse strings, all of my assumptions have been based on a gate of about 19,000, if that turns out to be substancially less then the bank are going to keep a tight rein on the money, if crowds hold up and even increase then it will tempt the bank into loosening the purse strings in the january transfer window.
To be blunt the people who determine how big a club is are the fans, never before have Saints fans held such a big hand in the clubs future.
Of course based on the comments that I have seen over the past year about why fans have deserted over the past three years, its going to be a chicken and egg situation, the fans wont come back unless they see a drastically improved team and the club cant improve the team unless they have sufficient income through the turnstiles, income that not only starts to push Saints back into the black, but shows the bank that the road to recovery is not only being embarked upon, but is already up to the speed limit.
In truth the full financial recovery wount be achieved to the summer of 2009, then several more players will be out of contract and if they havent been off loaded already will take off more big chunks from the wage bill.
In many ways this has been an easy article to write, its a case of a few simple assumptions and mathematical calculations, they are hard facts, the soft facts are that the supporters now determine how quickly the club prospers, it will be all eyes on the opening weeks of the season, a massive drop in attendance will tell the bank a lot, whereas 20k plus gates strengthen the Clubs position.
Its a tough time for everyone involved, are you a "Supporter" or merely a "Fan"
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