General Club Finances 2023

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[RyanioBirdio]

This is what Grant Ferguson said in an interview with Jerome Sale on the Dub on 1st March:
"The club (OUFC) will always have an unambiguous right to play at the stadium and call it home"
"An outright, unimpeached right to use 24/7"
Only words of course but at least he said it. If it can be put into a legal framework, we will have a much stronger safeguard than the AoCV covenant provides at the Kassam which is limited to 'football' being played there.

First time I’ve heard him say “the club” rather than “football”, but I’m glad that he has as it’s on record. Now it needs to be properly safeguarded in the terms of the agreement, which also need to involve a very clear framework in terms of finance, so that the club can’t be lumbered with unsustainable costs down the line or put in a position where the stadium owners, whoever they will be, can ramp up the charges at will.

Let’s see where this all is 12 months from now.

 

[Steve Gilbert]

First time I’ve heard him say “the club” rather than “football”, but I’m glad that he has as it’s on record. Now it needs to be properly safeguarded in the terms of the agreement, which also need to involve a very clear framework in terms of finance, so that the club can’t be lumbered with unsustainable costs down the line or put in a position where the stadium owners, whoever they will be, can ramp up the charges at will.

Let’s see where this all is 12 months from now.

I’m pretty sure it has been said that any lease with the council will favour the clubs long term future?

 

[warksox]

Now I’m not that clued up on this so maybe someone like @MarkG or @Colin B could explain…
How can we lose this much money but still meet EFL FFP rules?

It's confusing because each tier is subject to different FFP rules.
PL & Championship are subject to P&S (Profit and Sustainability) rules.
L1 & L2 are subject to SCMP (Salary Cost Management Protocol) rules.

• PL clubs losses cannot exceed £105m over any 3 season period
• Championship clubs losses cannot exceed £39m over any 3 season period
• L1 clubs cannot exceed 60% of revenue on player wages
• L2 clubs cannot exceed 55% of revenue on player wages

So in our case right now, the loss has no bearing on FFP rules. However, it's worth noting that the owners had to pump in £2m
via a share issue to give the wages budget an extra £1.2m headroom to maintain compliance with the rules.

 

[chuckbert]

I’ll have a lot more to say on this once the planning process is over, one way or the other. The narrative of how this all happened absolutely stinks.

Also, nobody has the moral right to rack up record debts in the club’s name, while putting millions of pounds against it for a stadium it’ll never own, yet will pay for whether people understand that or not. That absolutely stinks, and I’m surprised more people aren’t furious about that, honestly. If the club won’t own the stadium, it sure as hell shouldn’t be having the cost of getting it approved put against it.

I agree strongly with that last point. It is something that has surprised me in the narrative that has come out. I can understand that we would employ someone (NM) whose job it is to progress the stadium project, but when it comes to the consultants, architects, fees etc, I don’t understand why that tallies against the club. It feels like the club being exploited.

 

[chuckbert]

This is what Grant Ferguson said in an interview with Jerome Sale on the Dub on 1st March:
"The club (OUFC) will always have an unambiguous right to play at the stadium and call it home"
"An outright, unimpeached right to use 24/7"
Only words of course but at least he said it. If it can be put into a legal framework, we will have a much stronger safeguard than the AoCV covenant provides at the Kassam which is limited to 'football' being played there.

If the club decides the rent is way too high, how watertight is that right to play?

 

[RgYellows]

At the moment, it doesn't matter if the club folds with 10 million debt or 40 million debt, the result is the same and the only losers are the owners.

I think the fans sort of lose out if the club folds.

 

[Colin B]

It's confusing because each tier is subject to different FFP rules.
PL & Championship are subject to P&S (Profit and Sustainability) rules.
L1 & L2 are subject to SCMP (Salary Cost Management Protocol) rules.

• PL clubs losses cannot exceed £105m over any 3 season period
• Championship clubs losses cannot exceed £39m over any 3 season period
• L1 clubs cannot exceed 60% of revenue on player wages
• L2 clubs cannot exceed 55% of revenue on player wages

So in our case right now, the loss has no bearing on FFP rules. However, it's worth noting that the owners had to pump in £2m
via a share issue to give the wages budget an extra £1.2m headroom to maintain compliance with the rules.

Equity injections are assessed as "Football Fortune" by the EFL and count 100% against SCMP. So, in other words, we were the full £2m short of meeting it.

 

[QR]

It’ll be the current rate of loss plus several million in stadium project fees. Could be over 11m let alone 10m. Around £30,000 per day.

People can talk about sustainability and the need for a new stadium all they like, but these levels of losses won’t be wiped out by a 16,000 seater new build near Sainsbury’s. Especially when God knows how many tens of millions might be added to the club’s debt to pay for it, despite the fact that the club almost certainly won’t own anything in return. Nobody knows that Oxford United won’t be paying for at least a chunk of it, so for anyone to say otherwise would be unwise. We’ll need to be in the Championship year after year to stand any chance of sustainability, and even then, it’s not a given.

If the overall debt stood at £24m in June 2023 then it’ll be circa £35m by June of this year if the rumoured losses are correct. At the current rate of loss the club’s debt could easily be almost £50m by June 2026, at which point we could be playing in Buckinghamshire in front of 2,000 people, at least temporarily. That isn’t some sort of worst case, that’s based on the current rate of loss.

I believe the club’s debt has doubled in the last three years - it could well double again in the next three.

To say somebody has bet the house on this stadium coming off would be an understatement.

Agreed but is/was there an alternative that means we still have a professional club? We were buggered the minute Kassam took over and in a way we still are. I still can't get my head around why anyone is throwing such large sums our way.

 

[RyanioBirdio]

I’m pretty sure it has been said that any lease with the council will favour the clubs long term future?

That’s a very wishy washy term. It might as well be promising to “level up” the club given what it could ultimately mean. Regardless, you’ll forgive me if I don’t take what management or the council say as gospel before we’ve got a legally binding, publicly available lease agreement signed that backs up such promises. Until that point it’s nothing more than another case of “I will take you on a journey”.

Given three of the club’s biggest shareholders are still directors in active companies that helped to asset strip Reading - RFC Prop Co Limited and Reading Asia Holdings Limited - and that these same people could potentially end up owning pieces of a development that OUFC could be stuck paying for indefinitely, I’m interested in actions rather than words.

Then again, Williams and Ferguson are also claiming they don’t actually know for sure how it’ll be funded at all yet, which is in no way strange or concerning.

 

[RyanioBirdio]

Agreed but is/was there an alternative that means we still have a professional club?

Yes, and for far less money than the £150m currently being touted by the Chairman. Which I am certain will be less than the final amount.

Someone is spending more than double what it cost Brentford to build a bigger stadium in the most expensive part of the country just five years ago. It’s also come out that the club has spent 15% of the total cost of building Wimbledon’s new stadium just on planning and consultancy. Meanwhile, unlike both of those clubs, we’re out on our ear before anything can realistically be built.

The last thing I’ll say is this: Yes, “we are where we are”, but we didn't need to be, and nobody has a clue where “where we are” actually is. All anybody knows for sure is that the debt is spiralling at an increasing rate and the club is flapping in the press about how it doesn’t have much time. No s**t, lads.

A big year ahead. Off to Shrewsbury.

 

[SteMerritt]

Equity injections are assessed as "Football Fortune" by the EFL and count 100% against SCMP. So, in other words, we were the full £2m short of meeting it.

I'm sure you'll know Colin, is it the same at our level with infrastructure spending not counting to the spending rules? How much of the overspend falls into this category if that is the case?

 

[holdsteady]

Yes, and for far less money than the £150m currently being touted by the Chairman. Which I am certain will be less than the final amount.

Someone is spending more than double what it cost Brentford to build a bigger stadium in the most expensive part of the country just five years ago. It’s also come out that the club has spent 15% of the total cost of building Wimbledon’s new stadium just on planning and consultancy. Meanwhile, unlike both of those clubs, we’re out on our ear before anything can realistically be built.

The last thing I’ll say is this: Yes, “we are where we are”, but we didn't need to be, and nobody has a clue where “where we are” actually is. All anybody knows for sure is that the debt is spiralling at an increasing rate and the club is flapping in the press about how it doesn’t have much time. No s**t, lads.

A big year ahead. Off to Shrewsbury.

It’s a fair point about the cost of the stadium, it was always going to cost a bit more than Brentford’s in some respects due to the rise in cost of everything, but the counterweight is West London is more expensive than a bit of scrap land between Oxford and Kidlington.
If the owners want a high spec prestige stadium to their name rather than the fairly basic Brentford or Wimbledon grounds then they should be prepared to put some money themselves towards that, not just saddle the club with all the extra cost.
If they were /are willing to pay for the extras then more than willing to enjoy them, I don’t mind living off a rich man’s largesse, but not certain saddling the club with the extra cost is particularly fair.

 

[LeftSideLarry]

What an uplifting read this has become. Just what I need before I leave for Shrewsbury. Some very sobering posts.

Still, I’m sure we’ll all be screaming for the board to keep buying/paying players beyond the club’s means in the summer.

This is a games of high stakes poker, indeed.

 

[Victor1986]

Yes, and for far less money than the £150m currently being touted by the Chairman. Which I am certain will be less than the final amount.

Someone is spending more than double what it cost Brentford to build a bigger stadium in the most expensive part of the country just five years ago. It’s also come out that the club has spent 15% of the total cost of building Wimbledon’s new stadium just on planning and consultancy. Meanwhile, unlike both of those clubs, we’re out on our ear before anything can realistically be built.

The last thing I’ll say is this: Yes, “we are where we are”, but we didn't need to be, and nobody has a clue where “where we are” actually is. All anybody knows for sure is that the debt is spiralling at an increasing rate and the club is flapping in the press about how it doesn’t have much time. No s**t, lads.

A big year ahead. Off to Shrewsbury.

I absolutely share your concerns. The fee costs have got completely out of control - as you would expect with the architect's hourly rate starting at £300 rising to £600 for senior staff.

 

[MC Yellow]

When you are owned by billionaires from the other side of the world are they really going to listen? We are passengers on the ride, the only decision we get to make is whether we are on or off the rollercoaster, that’s it.

I said ages ago that this was s**t or bust, that this could well end with up with OUFC not existing, but that has been hanging over us all my supporting life.

People are getting jumpy because the scale of the debt but we have been in debt and without a ground for nearly 20 years now, OUFC has only been able to run because of owners putting money in for far longer than that, nothing has changed but the number of zeros involved, we have always been on the precipice.

I think the rate of increase in deficit just makes the potential to find another investor (should the current owners decide they had had enough of their play thing and pull the plug) that much harder.

20 years ago the deficit was £2 mil, now it’s over £24 mil and accelerating, so the pool of potential investors for a club that fails to make it to the championship and build a new stadium is almost zero, I suspect.

This is knife edge now. Lose the stadium, lose the investors, lose the club.

 

[Deanroger]

The stadium is a separate issue - and frankly, it has the potential to make all this other discussion irrelevant. If £100m+ of debt is going on the club's books to pay for that, then whether we lost £3m or £6m this past season is kind of lost in the noise.

And yes, I would 100% be in favour of a proper salary cap that forces every club to trade within their means. We would have a much smaller budget now (both in real terms, and comparative to our peers) though if we did. We would have to over-perform to get in the promotion race.


But let's be honest with ourselves in the mean time. We've been massively overspending. It's been blatantly obvious to anyone who knows anything about football finance that we've been massively overspending. And noone has been complaining. I saw tons of posts after we signed Goodwin about how we needed one more top striker, because you needed three quality options at this level.


Let me put it another way - we could probably reduce this deficit by £5m in 2024/25 if we a) released Browne, Henry, Murphy, McGuane & Edwards, b) sold Tyler and Cam, and c) replaced them all with bog standard lower league pros. You could argue that it's the financially prudent thing to do whilst we wait for the stadium to get the go ahead. Wanna speculate on what the reaction would be around these parts if we did that!?!

3 or 4 of those releases would make no difference to the playing side.

 

[QR]

Our everything is peanuts to them, I'm afraid.

Paradoxical that's actually quite reassuring!

 

[Ewes]

This thread is a very sobering read, with good background information and a range of views.

Folk on here have previously criticised my views and - rightly - asked ‘what is the alternative to spending huge money on a new stadium and saddling the club with debts’?

I agree we clearly need a new stadium and quickly. I don’t agree we need one which will cost north of £150M.

The club will be saddled with eye-watering and probably unmanageable debts for decades to come, assuming we survive that long.

We’d have to hope the stadium is capable of hosting a series of music concerts and international games each year so as to increase income and thereby trim the debt. The investors will want some dividends on their outlay.

I’m mystified as to why anyone will want to invest stupid sums of money in an already debt-ridden lower league club with only a training ground as an asset. I can only suspect that some might see it’s a vehicle for laundered money to be cleaned as there is limited realistic options to get a quick repayment. I suppose having a group of investors will minimise personal liabilities and risks but a group of investors will also bring a group of views about how the club is run.

One option that no one has mentioned yet, and isn’t covered by the poll, is the prospect of going bust and starting again. Scary on one hand but I personally would see my enthusiasm and interest increase if we ‘did a Bury’ and had a small ground we owned and were playing in the lower echelons of non-league. The romance of football would see us work our way back like Bury, Wimbledon, Stockport or Dorking have done and it would be fun to do that. It would help us start again with an affordable clean slate, field a team of local players, and maybe even be a supporter-owned club.

Yes we’d lose our league status and our history and it is a bit of a Doomsday scenario. But unless we’re incredibly lucky and income increases, the investors are benevolent, we gain a couple of promotions or sell a player for £10M then it’s not entirely unrealistic to see this happening within the next 10 years, especially if financial rules are tightened when the football regulator is formed.

 

[QR]

And noone has been complaining. I saw tons of posts after we signed Goodwin about how we needed one more top striker, because you needed three quality options at this level.

@tonyw you are one of my favouritist posters on here as you post much common sense in a clear, insightful, informative way. However...

Can you point to any set of supporters who in the history of football have demonstrated calling for the signing of crappier players or who have argued their club are doing too well and it must stop now*?

*That was in a shouty voice.

 

[Scotchegg]

I think the rate of increase in deficit just makes the potential to find another investor (should the current owners decide they had had enough of their play thing and pull the plug) that much harder.

20 years ago the deficit was £2 mil, now it’s over £24 mil and accelerating, so the pool of potential investors for a club that fails to make it to the championship and build a new stadium is almost zero, I suspect.

This is knife edge now. Lose the stadium, lose the investors, lose the club.

I know there will be many that will find this hard to hear, but beyond a couple of million the level of debt becomes irrelevant as it could never be repaid. I hate to quote Essex, but this is just numbers of a spreadsheet.

Even with the new stadium, the only way in which the owners will ever see a return on their investment is for Oxford United to have sustained success, for many years. And that is something everyone of us wants.

I know that the sort of figures being banded around are scary, but this should not come as a surprise to anyone. At the fans forum, Grant and Tim both said that it costs upwards of £5m to operate and with our current stadium situation there is no option other than the owners to cover this cost. They have done thar for several years already and have also spent millions on the training ground and the preparation work for the stadium.

We've also had competitive budgets for transfers in and wages that has increases year on year. It hasn't been spent well, and we still have a lot of big contracts that have reduced our ability to make the numbers of changes in players as Manning or Buckingham would have wanted. But we've still spent half a million in January and will spend heavily again in the summer.

I don't for a minute disagree with your final line, lose the stadium, lose the investors, lose the club. But in the mean time what else does anyone expect?