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[Blog] To Deal or Not to Deal, That is the Question?
Written by rosseden on Tuesday, 24th Apr 2012 10:05

So, my first blog, well, the first I have been brave enough to post here. The mammoth one called ‘The Business of Football and Money’ will come later in the closed season, it's massive, and far too much for a first attempt.

I have been motivated to write this based on the recent comments about our beloved club's apparent lack of ability to do early deals, or in some cases any deals, in the transfer market, and how this may pan out over time. The main catalyst for writing it, is the relatively unknown incoming Financial Fair Play rules, we will all be very much aware of in principal, even if we don’t all know the detail.

Having had a good read, the basis of the plan as far as I can work out is fairly straightforward, it means that clubs can only spend their actual turnover on an annual basis. This turnover can be boosted by player sales to offset any overspend, however, rich benefactors can’t pump money in willy-nilly. There are obvious loopholes, such as sponsoring your own shirts, your own ground etc, but it appears that these loopholes will get shut sooner or later, most likely sooner.

So what does this mean for ITFC? Well, I think there are a few things we need to consider, some which are very relevant at the moment with the current contract scenarios, each of which I will address with some comments later on: Contract Lengths
Contracts to fringe players
Contracts to unproven players
Pay rates within contracts
Increasing turnover levels

If we firstly consider contract lengths and pay rates together, for a solid first team player, the right age 20 to 26, clubs will often have to gamble on longer contracts, three or four years maybe, not only to protect the asset, but to ensure we retain a core of players.

There is still a lot of risk here, such as injury, lack of form, relegation (which I assume would be written into the contract). Outside of these core players, the contracts will diminish in initial length I believe.There will often be extensions written in as with Carlos Edwards or Jason Scotland currently at Town.

In real terms this is last year's David Norris situation, or maybe even Gareth McAuley. We will ALWAYS lose out to people who can be fringe Premier League players, the deals will be considerably higher every time from those clubs.

However, in the future I can’t see other clubs moving to offer 30+ year old players three-year terms, Pompey are finding this out the hard way, as administrator Trevor Birch is all too happy to tell us in every interview he does.

So, if we had 11 players on £10k per week, that’s a total of £5.72m per year, or between 35 and 36% of our budget, and these guys HAVE to perform throughout their contract to ensure things work out for them and for the club, or, if they screw up, they’re OK, but the club isn’t!

We then move onto the fringe players debate. How much is a fringe player worth? Well, this is the million dollar (or pound) question. If you had ‘fringe’ back-up for each position on £5k per week, (or £260,000 per year- which is still bloody good money) this would cost the club around £2.9m per annum, or between 18% and 19% of our total budget.

So, if we pause there, for a full first team on £10k per week, and a back up team on £5k per week, we have spent around 54% of our total budget. That’s before any ground costs, management wages and so on.

We then move into the youth/unproven area. What are these guys worth? How many should we have. Well, in recent years, they often got a two or three-year deal on good money (for someone who is essentially recently out of school). If we have another 11 of these, on say £1k per week, we spend £572,000 per year, or another nearly 4% of the turnover. Or do we go for 22 of them on half the money and run the risk of them not making it? Its a tough one.

Either way, were now up at 58% of our budget and we haven’t covered anything other than some wages. We still have to pay all the backroom guys, the Ticket Office, the shops, the management, the catering staff, the ground staff, security, police, transport to and from games etc.

Most businesses write down 20% of their budget as risk too, so that’s 58% on player wages of an 80% budget, or nearly 75% of the money available, if you allow for the risk element, as I believe we should.

Now, it hopefully starts to make sense why we are only offering unproven players vastly reduced terms. Or even established players lower terms, someone who is an unproven for us, might fit in someone else’s structure as a ‘fringe’ player, our main team player might fit in as a Premier League fringe player as McAuley did, and the deal goes up in line with that, so be it, that’s just how it has to be. It's the market rate/price/what they’re worth to the payer.

If someone else feels they’re worth more, then so be it. That’s just life. This will have to drop contract lengths, and the terms offered, more performance-based pay, and appearance-based add-ons or extensions. Too right, there’s nothing wrong with that. We can then choose to reward top performers. If people in football can’t see that, then they’ll get a shock when the bubble bursts!

There are 72 league clubs outside the Premier League. If each have 30 players (some will struggle to fund that number) that’s 2,160 players in total. If you were to consider how many players are registered to play in the league this year, I would hazard a guess it's more like 40% over this number. Something has to give somewhere.

Players and agents might be avoiding the prospect of this at the moment, but it's going to get very real over the next 24 to 36 months, a lot of first teamers will drop to fringe wages, fringe players will drop down through the levels and youth will get offered lower wages until they prove themselves.

Do I think this is a bad thing? Well, if you consider some of these ‘kids’ get £100,000 a year, no, I don’t think its bad. That’s a LOT of money by anyone's standards, and a 12-year career on that could set you up nicely at worst. I think the gravy train is seriously slowing down, but it’s about time it did.

We could just ignore the rules, there aren’t any punishments for two years after all, but, let’s consider that. Three teams down each year, that’s a total of six on parachute payments over two years.

It's been speculated by the media that at least four clubs have said they'll ignore the rules until there are punishments, plus there'll be the clubs coming down. That’s 10 teams potentially all banking on getting up, 10 teams into six promotion places doesn’t go, and that’s not even considering the other teams who might cause a surprise.

We could just try to drive up turnover, but this is a double-edged sword, the volume v margin debate will rage on here, something Simon Clegg is obviously testing the water with on ticket sales, shirt designs etc.

But either way, if the club did a great job and increased revenue by 10%, that's only two more first teamers. So it has to be that we pin our hopes on a Connor Wickham every couple of years. A big big gamble.

So, as I implied at the start, do we or don’t we do deals? Unless someone is going to go straight into our first team, and on top money, then can we really expect a lot of deals early? Not really. I'd like them to be sorted early, but the greed of agents and players will often mean they don’t get done.

What I do foresee though is a lot of good players and prospects without deals at the end of the transfer window taking whatever is available. Blackpool built a good portion of their squad that way when they went up, and, they nearly survived on it! I think more and more clubs will be doing the same over the next few years.

As a caveat, we could look the option of a legal challenge, but that opens a new can of worms. Other teams seem keen on the judicial review, as outlined here.




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Bleedingblue added 10:38 - Apr 24
Great blog! Found that very informative and has definately got me thinking. We have to do deals though, we need a GK,CB(2),CF and cover for full backs. About time football became sensible again, god I used to love that game on the megadrive!
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StortfordBlue added 11:00 - Apr 24
Great blog! Look forward to the other blog in close season!
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bluekeen added 12:00 - Apr 24
Amazing blog great shout !!! totally makes sense why 2nd / 3rd season youths are not being kept on


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afrodids added 12:17 - Apr 24
great blog fella I say sod the fair play it's time to speculate to accumulate if we make the right signings to get us to the PL and go over budget so be it. The 100m for getting in the PL pay any fine!!I'm not saying go totally mad with the money but we need to compete as we seem to be falling behind teams like posh, brighton etc in the transfer market. Get rid of the dead wood and bring in players who are proud to wear the colours. I believe it's promotion or bust for PJ next year so spend wisely MR jewel and take us back where we belong. onwards and upwards. COYB
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rosseden added 12:31 - Apr 24
thanks for the positive comments guys.....

re: afrodids.... im not sure there is any guarantee of promotion if we spend, thats the issue, look at West Ham and Leicester. Both could well stay in this league this year despite huge investment, and there are 8 more clubs who will be in the same boat over the next 2 seasons. Then consider:
Reading - little investement but stablily
Southampton - stability and momentum
Norwich - stability and momentum
Swansea - stability and momentum

2 of those four had to go down a divison to be able to re-group and push on, maybe we can do the same in this division. For the record, i dont think we'll go up next year, the year after i think we'll be play-offs, and i think were then in with a great shout through playoffs or the season after. All these teams who are 'investing' and ignoring the incoming rules could well be on the ropes in 2 seasons time, squads being broken up and potential administration to get out of contrats, and thats when i think the biggest chance to get up comes.... we shall see.......
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afrodids added 17:23 - Apr 24
That's a fair point as I don't think we need to spend the sort of money west ham and leicester however if we can't compete with the likes of posh,Brighton,burnley we will never get out of this league. Are these clubs really bigger than town! It's unfortunate that when we had money to spend we wasted it. I think keane has a lot to answer for an imo ruined our club and put us back years PJ has also made mistakes too. If we can remove the big earners from our payroll then I don't see why we can't be bringing quality players and spend more than the 50,000 spent in the jan transfer window posh spend 1 million on one player are we that poor that we can't compete with them for players! I'd like see us reach the play-offs,fingers crossed but I always like to stay optimistic :)
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aliCOYBmason added 18:20 - Apr 24
Thank you i now see this situation a lot better and more broadly.
I believe that jewell realises we cant have high earners who arent solid first teamers and proved this with the releasing of Martin Fulop when he realised he would not be first team keeper. Hopefuly we will still be able to sign a couple of centre back but maybe only one on first team wages as Tommy Smith is starting to shoe his worth, cover for fullbacks, a goalkeeper on first team wages and a striker. In terms of selling Bowyer and Bullard are both past it but hopefuly we can hang onto the likes of JET, creswell, Martin and Chopra who might fetch a sum of money.
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alfromcol added 19:46 - Apr 24
Great bog, thanks for your thoughts and information
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Dozzells_Bobblehat added 21:39 - Apr 24
Good blog, could do with some of the posters on here reading this and maybe , just maybe understanding that being a manager/ceo/owner isnt quite as easy as they think.
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Bergholtblue added 17:15 - Apr 25
A very interesting blog, with the points well laid out and discussed.

One problem I can see with your scenario is where one of the 'core players' on 10K a week loses form or gets injured and one of the fringe players on 5K a week establishes himself in the side. Will he now then want to be paid the same as the other first teamers and if we don't offer improved terms, they could well be off in the transfer window.

What worries me about this whole thing is that if we can't pay top dollar, we would not attract the best players, making success more difficult. The lack of success will see gates drop, meaning that it would be even harder to get the right players. I can see the whole thing spirralling out of control unless Town fans dig deep and boost attendances. It will be no good bemoaning Town's lack of ambition if attendances are down at 16,000 or less.
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Sibelius8 added 17:31 - Apr 25
Thank you. To blog or not to blog? That is the question.

In your case, Sir (or, Madam) Rosseden, ay, the blog's the thing.

Play on, and such an informative account of the present scene, and of the future acts in our second-tier drama, is ever welcome.

May there be fewer slings and arrows of misfortune next season....

Seriously though, thank you for the above. However, I fear that so many of our posters will prefer prejudice to a more thoughtful assessment such as yours - a point "Dozzells-Bobblehat" makes only too well.

I, and no doubt many others, look forward to your next contribution on this site.


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Guthrum added 18:05 - Apr 25
Good blog. Excellent overview of the situation - and the dilemma which faces football clubs over the next few seasons.
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HK_Bluey added 01:11 - Apr 26
Great blog! Seems to me that the key to his will be effective variablisation of the pay structure. Lower basic salaries (probably based on experience) supplemented by attractive bonuses for first team appearances and performance (goals, wins, points in the season etc). Maybe there could also be a link to revenues to encourage promotional activities. The world has changed and I believe those who adapt fastest and best will be well positioned in 2 seasons to benefit as the wheels start to come-off the gamblers. Thought your thoughts on this are very interesting and I hope our fans see the truth and keep the faith!

COYB onwards and upwards!
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Toepunt added 10:39 - Apr 26
I think that what we'll see during the period before fines are introduced is clubs getting top players in on lower wages but with large signing on fees. When the fines are introduced (in a couple of years time), the players will still be on lower wages and therefore within budget.
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Facefacts added 19:55 - Apr 26
Fab blog on Financial Fair Play (FFP). Fascinating to try to guess what will happen next. It's very difficult to know. I can only see Ipswich Town as a lower to mid table club in the npower Championship for the next two seasons, at best. Relegation may beckon, because we look to be trimming our squad early, but, even post Roy Keane,too many expensive mistakes have been made on player contracts, Bullard (dark glasses, chooses not to play against Hull City), Chopra (although I really like Chopra, he is not going to get us higher up the league with goals week in week out - unless he's got great players around him). Yet I did not argue with giving those players contracts at the time they were given. "No (FFP) punishments for two years" coupled with the desperation to stay in the npower championship means that great intentions to comply with FFP will go 'out of the window' when the need arises to buy our way out of the relegation zone. This season, I still can't get my head around how we looked doomed in January, lost Collins back to his parent club, we were desperately bringing in hopeless loanees, actually sacked a player in panic, but then suddenly went on a great run during which we only lost at the Amex. This left us with meaningless games at the end of the season for experimentation with the fringe players. The players and manager deserve great credit for that great run to shoot us out of the relegation zone like a bullet from a gun, but they don't know how it happened, they cannot bottle it and save it for next season. Andy Drury only came back from Crawley because those upstarts disrespected Ipswich Town in their valuation, and was excellent for that winning run. ALB stopped making costly mistakes for a few games. Loanees will always have to play a part as Premier League fringe players need match practice. One thing that is absolutely key is Paul Jewell's ability to judge a player. He is clearly a very fine judge of a player, but he also strikes me as a manager who would always rather trust an experienced player over a young player, which will become an expensive habit.
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