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The Wage Bill


CVByrne
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As Faulkner has said earlier this year, the club wage bill situation has been resolved. We've cut the bill down and combined with increased revenue due to new TV money we're back in the black. 

 

As has been reported more than once ( by essentially club mouthpiece the birmingham mail ) is that we can offer competitive Premier League wages to new signings but Lerner won't sanction any transfer fees.

 

So when we sign players on a free on a year or two year contract there's no need to say "high wages", wages don't matter anymore to us unless we give them long contracts. We have 70% of turnover to spend on wages and remain inside fair play rules.

 

How much were Senderos, Cole or Bedtner on? They didn't come from big clubs and will be on maybe 20 - 40k per week. 

 

They would not and could not be signed if we didn't have room for them on the books, and next summer we see end of wages paid to Hutton & Bent and Cole for that matter. 

 

The club is run as a business now, I'm sure Faulkner has told Lambert the amount we can afford on the wage bill and limited him to 1 or 2 year contracts. 

 

Take last years team and replace, Helenius, Baker & say Sylla with Bedtner, Senderos & Cole and tell me we don't have a more experienced and better team, add to hopefully less injuries and we're an improved squad.

 

Wage bill isn't an issue we need to worry about anymore. All clubs have to pay wages and most will use up most of the 70% they're allowed to pay their main assets, the playing staff.

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This is what I don't get. If wages are under control why cant the club afford to pay transfer fees. I'm not talking about Randy gifting us a player.

 

I am asking why the clubs finances cant support a transfer budget to keep us in the league?

 

I don't believe that every signing made in the premier league is a gift from each clubs Chairman.

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I think the current state of the club is as follows, 1. There's no money to spend, 2. The books are balanced and will remain so until the club is sold so there will be no big wages or long contracts 3. The remit is to stay in the league, nothing else 4. The club is planned to be sold inside the next 12 months which means the manager,staff and a lot of the players will be cleared out next summer or whenever the new owner takes over giving them a clear slate to rebuild.

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I'd imagine, if Randy is about to sell the club, he's not too keen to spend money on transfer fees.

 

He doesn't spend the money though. The club does and he funds the club if it needs it by loaning money which he can convert to Equity if he wants to. 

 

The reason is really down to not wanting to leave Legacy problems for new owners like transfer fee amortisation and longer contracts which come part and parcel with paying for players.

 

Technically too there is no money there as the club has debts to Lerner. So once wages are paid any excess cash left can go to repaying debt. 

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I'll explain the reasons we don't have money for transfers. 

 

Firstly if we sign a player now, for 4 years his transfer fee isn't paid up front it's amortised over the life of the contract.

That's simply untrue.

There's a difference between buying a player, and how it is accounted for.

Buying a player: the Fee will normally be paid at least 50% up front (now) with the remainder to be paid within 12 months. It varies depending on the country from which he is signed. So essentially the full cost is paid in 12 months or less.

The accounts deal record it differently. If we spend 8 mill (now) on a player, we get in exchange and 8 million pound player (now). so there's no immediate reported loss of value. The value of the player though declines over (say) a 4 year contract, by the cost divided by contract length (2 mill a year). But the money is spent long before the 4 years are up.

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I think we'll have a turnover of around £100m this coming season.

 

Our wages will be around £60m (we're still paying £4m a year for Bent and £2m a year for Hutton)

 

Overheads are around £20m.

 

Which leaves £20m to either spend on wages or transfer fees if we were planning on just breaking even.

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I'll explain the reasons we don't have money for transfers. 

 

Firstly if we sign a player now, for 4 years his transfer fee isn't paid up front it's amortised over the life of the contract.

That's simply untrue.

There's a difference between buying a player, and how it is accounted for.

Buying a player: the Fee will normally be paid at least 50% up front (now) with the remainder to be paid within 12 months. It varies depending on the country from which he is signed. So essentially the full cost is paid in 12 months or less.

The accounts deal record it differently. If we spend 8 mill (now) on a player, we get in exchange and 8 million pound player (now). so there's no immediate reported loss of value. The value of the player though declines over (say) a 4 year contract, by the cost divided by contract length (2 mill a year). But the money is spent long before the 4 years are up.

 

 

Thats basically what he said, though he used the word 'paid' rather than 'accounted for'.

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I think we'll have a turnover of around £100m this coming season.

 

Our wages will be around £60m (we're still paying £4m a year for Bent and £2m a year for Hutton)

 

Overheads are around £20m.

 

Which leaves £20m to either spend on wages or transfer fees if we were planning on just breaking even.

 

You think the wages will drop by 13 mil compared to april's accounts for the past year? Highly doubt it. IMO the total wages in next year's accounts will likely be very similar again, if not increased.

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I'd have thought we'd have given up trying to guess at what Villa's wage bill may or may not be for the season just gone or the season coming.

History on VT suggests it tends to make mugs out of people.

Edited by snowychap
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I'll explain the reasons we don't have money for transfers. 

 

Firstly if we sign a player now, for 4 years his transfer fee isn't paid up front it's amortised over the life of the contract.

That's simply untrue.

There's a difference between buying a player, and how it is accounted for.

Buying a player: the Fee will normally be paid at least 50% up front (now) with the remainder to be paid within 12 months. It varies depending on the country from which he is signed. So essentially the full cost is paid in 12 months or less.

The accounts deal record it differently. If we spend 8 mill (now) on a player, we get in exchange and 8 million pound player (now). so there's no immediate reported loss of value. The value of the player though declines over (say) a 4 year contract, by the cost divided by contract length (2 mill a year). But the money is spent long before the 4 years are up.

 

 

Yes you are correct rules are 50% up fron 50% in a years time, what I meant though was in FFP and Accounts the fee is amortised over life of contract. It fits in with my overall argument that we want as little legacy costs to any new owner hence no money for transfers and no long contracts. 

Edited by CVByrne
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I'd have thought we'd have given up trying to guess at what Villa's wage bill may or may not be for the season just gone or the season coming.

History on VT suggests it tends to make mugs out of people.

 

That was the reason I started this thread. All other threads have wages mentioned ad nauseam, when it's no longer an issue.

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There are some heroic assumptions being made here about our financial position and our ability to pay higher wages.

 

I would rather wait for the publication of the 2013-4 accounts before making bold statements about how our financial problems have been "resolved". And, when they are resolved, it would be rash to assume there will be much change in policy on the level of wage bill.

 

Basically, what Randy Lerner learnt the hard way was that - with the investment he could provide - we are not a big enough club to compete with the top clubs or even perhaps the next rank down in the transfer market.

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There are some heroic assumptions being made here about our financial position and our ability to pay higher wages.

 

Or direct quotes from Chief Exec and quotes from semi official club mouthpiece the Birmingham mail. 

 

So not in the slightest bit are they "heroic assumptions". I'd call them very valid assumptions re: wages. 

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Put simply :

 

transfer fees = Randy's concern (so not happening)

 

wages : the next guy's problem

 

If these kinds of wages do indeed pose a problem for the next guy, then we're in no better position than under Randy. 

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There are some heroic assumptions being made here about our financial position and our ability to pay higher wages.

Or direct quotes from Chief Exec and quotes from semi official club mouthpiece the Birmingham mail.

So not in the slightest bit are they "heroic assumptions". I'd call them very valid assumptions re: wages.

You haven't actually given us any of these direct quotes.
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