|Are Town Becoming More Financially Efficient Or Still Wasteful?|
Written by Ole_Pablo_Ole on Monday, 3rd Sep 2012 11:33
There has been a lot of debate brought up recently as to whether Ipswich are doing the right thing by adhering to the Financial Fair Play (FFP) guidelines and refusing to give in when players or clubs demand too much in the transfer market. Whether it is the right or wrong approach is not something I will be discussing here but what I will be discussing is something crucial that I believe a lot of fans have missed.
As we are adhering to the FFP rules it is now more important than ever for the club to be financially efficient. I can see that the club are clearly trying to cut costs and limit their outgoings, but the question I find myself asking is; how well are they actually doing this?
Obviously the best way of assessing this is to look at the players that have been sold, bought and the overall wage structure at the club.
It is too early to fully judge the players that have been brought in but so far it looks like most of them are solid buys. Scott Loach, Luke Chambers, Daryl Murphy and Massimo Luongo all look capable at Championship level. Paul Taylor is rated very highly by everyone at Peterborough so hopefully there will be a lot to come from him too.
We can assume that all of the players that have been brought in are on wages below £15,000 a week so the club have a decent wage structure currently. Relying on a couple loan players is always a prudent method and the club are also using younger players like Jack Ainsley, Josh Carson, Luke Hyam and Ronan Murray to fill out the squad which will save them a lot of money.
The bad news is that the club have wasted a lot of money by letting players go for nothing.
Ipswich were in a bit of a difficult situation as their wage bill was well above what the FFP guidelines recommended but they still needed to bring players in. This meant that in order to complete certain transfers they had to release some players for free. It makes sense given the circumstances but you could also argue that the club could have been better off if they planned a bit better.
Everyone will remember the signings like Tamas Priskin and David Norris that were bought for high amounts, given big contracts then let go for free. Everyone thought those days were over but this summer we have seen Grant Leadbitter, Jimmy Bullard, Jaime Peters, Ryan Stevenson and Damien Delaney all leave the club for free.
Peters leaving is understandable as he hasn't played much under Paul Jewell, he was probably on low wages and probably terminated his contract with little compensation. The club probably tried to sell him for a small fee but there wouldn't have been many clubs after him.
The financial losses from the other players leaving for free can only be blamed on poor planning though. If the club could not agree terms with Leadbitter around this time last year then they should have sold him at that point or at the latest last January. Instead they kept paying him his over-the-top wages for the whole season then let him go for for free.
Given Bullard's injury problems he possibly should have been given a shorter contract but admittedly no one predicted that he would become as useless as he did. The club will have had to pay Bullard a substantial fee to get him to terminate his contract though.
Stevenson, like Peters, hasn't featured much and joined Ipswich for the small fee of £50,000 back in January. It came out this week that his wife wanted to move back up to Scotland so we let him go back to Hearts for free.
How nice of us to let Hearts have their player back for nothing just because his wife isn't happy! It may seem a bit heartless (no pun intended) but why should we let a player leave for free just because his wife hasn't settled? Surely the club shouldn't suffer because Stevenson has a problem with his wife. The other key point is that if the player was worth £50,000 in January then surely he is still worth at least that now.
Of course, £50,000 isn't a lot of money to a club like Ipswich but there is no point in wasting money especially as they are trying to run the club as efficiently as possible. If Hearts didn't want to pay that £50,000 then Ipswich should have told Stevenson that he is staying and he would have made a decent back up player. Overall, letting Stevenson go for free was a bad piece of business from Ipswich which summarises their occasional lack of common sense in the transfer market.
Damien Delaney is was in a similar situation to Stevenson in ways. The player was only going to be used as back up and he obviously wanted to being playing every week. However, Ipswich paid just under a million pounds for Delaney not too long ago, so why is he now worth nothing? He is an average defender who would have been useful as back up so it was another situation where the club should have either got a small fee for the player or kept him until January.
Now Ipswich have left themselves in a situation where they are short in numbers at the back and relying doing business when the loan window opens. Obviously if they have a great centre-back lined up to sign on loan then it would be easier to forgive the club's inefficiency at times.
Coming back to the original point, Ipswich have become more financially stable but are still making poor financial decisions at times. If the club want to be tight with money and not give in to unreasonable demands then that seems logical but they need to apply that logic when it comes to selling players too. With a bit of forward planning this is easily achievable and it will be unforgivable to see the club make the same mistakes in the future.
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|rosseden added 12:07 - Sep 3|
good blog, but i think youre somewhat missing the point, players have a value to the club which is higher at the start of the contract and slowly goes down towards the end of the contract, unless theyre under 25 / 26 ( like Taylor), or theyre world class (like Van Persie)
The club will view a player in financial terms as a single amortised cost over a 3 or 4 year period, a number which equates to 'total contract value' which is wages, signing on fee, purchase price, agent fee etc. They will offset this against the risk of letting them go at the end of the deal for nothing, or maybe selling them on......
Sort of standard procedure in much bigger businesses, but for some reason smaller businesses like championship football clubs, often use for their planning......
Look at Posh with Boyd - their best player apparently, worth only £250k? but Taylor worth £1.5m. Taylor on a 3rd of the money Boyd is on, so shifting Boyd for far less, still saves them a lot of cash if he doesnt want to extend his deal...... bit like Priskin, Delaney, Bullard etc. Norris / Leadbitter ofpted to go elsewhere, this is financially driven, if youre a free agent, instead of a club buyting your contract from another club, you get a bigger signing on fee. Our mistake then was not shifting them in the last year of their contract, something i think might happen with Lee Martin in Jan if we dont get his contract extended...... that said, if Martin is important to the team, and we need to stay up, the cost of goign down is much more of a loss than the missed fee for a player......
its a pretty complex model and i have written a blog explaining how it works, but i havent been brave enough to put it up yet as itll probabaly just start the usual moaners moaning!
|Ole_Pablo_Ole added 12:22 - Sep 3|
Fair points rosseden. I totally agree with Lee Martin, it is something that I now wish I mentioned in the blog.
My main point is that the club haven't sold players at the right time. I think most other clubs do their business differently too. I think that we should have either got Martin, Hyam and whoever else is out of contract to either sign a contract in this window or sell them. Losing Martin would be hard to watch but it would make it less painful if we got some decent money for him.
I see your point about the cost of relegation but I can't see us going down with or without Lee Martin.
I wouldn't worry about the moaners. I have written stuff for a different site where nobody comments and trust me it is better that someone disagrees to start a discussion rather than no one commenting at all lol. I always enjoy reading a variety of opinions too
|rosseden added 12:42 - Sep 3|
i think there is a fine line when it comes to selling a player. ie if youre going to recoup through the fee and the wages, whatever sum you spend on a replacement, then it makes sense, however, more often than not as everyone comes into FFP, people will see out contracts. I was doing the maths the other day, not many clubs will have the fund to spend big, unless you sell to the relegated clubs or to the premier league, and that assumes they have sold their squad back up to the premier league if its a relegated club, so there wont be many clubs with the funds to do much buying out of contracts of 'average' players, this in turn will knock down fees too....... i think the game in 5 years will be very different, much like it was very very different 5 years ago.....
I will probabaly post the money blog at some point when im feelign brave, i did another one which is here if its of any interest......
|Ole_Pablo_Ole added 15:03 - Sep 3|
Interesting points and I think you are right about where the game is going. More and more clubs will rely on free transfers or paying small amounts for players.
I'm not sure if we are at that stage yet though. Peterborough are the perfect example of a club that sells at the right time. They bought Taylor for £5,000 and sold him for around £2 million when he only has 9 months remaining on his contract.
I'd like to see us be a bit more crafty in the transfer market, I think the only good deal we have done is selling Wickham. The sales of Trotter and Rhodes should have been dealt with better.
|OldClactonBlue added 15:57 - Sep 3|
"The sales of Trotter and Rhodes should have been dealt with better". Blimey, what a revelation!
|Blue041273 added 17:49 - Sep 3|
I understand the financial inefficiency arguments. One of the difficulties is that it is very difficult to motivate a disaffected player particularly in a tight knit collective like a football squad. Unhappy players can disrupt team spirit. In such circumstances it may be argued that it is better to agree to let unhappy players go rather than keep them to no-one's real benefit. What I find unpalatable is that our policy is not only to let them go but settle their contracts as well. Talk about having your cake and eat it! A contract is a contract and players should be prepared to honour the terms in a professional manner whether or not they're unhappy, homesick, or just not getting enough games. It's not just Ipswich; Football seems so flush with cash that players (and their agents) seem to be able to screw clubs into the ground with impunity. Why have a system of contracts where one party is obliged to fulfil all it's obligations while the other can ride roughshod over the terms without recourse. Trouble is that it's cheaper for clubs to go along with this charade than enforce contracts in the courts if necessary. The Man City/Tevez saga was a case in point. In my view Stevenson and Delaney should have been forced to buy out their contracts before release was sanctioned or take their chances with the standard transfer practice.
|rosseden added 19:29 - Sep 3|
agree with the sentiment Blue041273, however, i suspect in most situations when a contract gets 'settled' to both parties agreement, the full value will not be paid for sure....... So it does become win - win
|brittaniaman added 08:55 - Sep 4|
old clactonblue: agree very much,, it all happened in the days of our Ex Dark Lord ??
10% sell on fee for Rhodes was absolutely ridiculous !! probably unheard of ???
20-25% should have been more realistic ? and I have heard of no sell on fee for Trotter?
Barry Fry knows about sell on fees because I am sure he will have sorted Taylors out !!!
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|Dissboyitfc added 08:01 - Sep 6|
A good blog and made some very good reading and i agree with most of what you said . I will be interested to see how how the Martin saga Develops . Watching Leadbitter move for free was disappointing , especially after the way other assets have walked for free. Traditionally we have never been a great selling club and have quite often allowed players leave for less than their market value. An example of this would be Terry Butcher , the best cb in the land leaving to join Rangers for 725 grand and at the time a good but inferior cb joined Everton from norwich for 900 grand. Seeing players leave for less than their worth is annoying to say the least.
Ryan Stevensons departure i believe was the correct move as was Delaney as was Peters as was Bullard. Lets guess and say that Stevenson was on 2.5 grand a week (could be a mile off) but he could of sat around and could well of moped with a grumpy missus at home. would not have taken long for his wages to have over taken the fee for him, at least it didnt cost us as it did with peters and Bullard.
Some times eggs have to be broken when making an omelette , interesting now to see where those released funds will be utilized ......COPYB
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