The Agony - 1st Season EPL Title lost due to 9 Points Docked With Everton

Just one point short despite being docked 9 points for going into administration.

The thing is, we were in financial difficulty from the start of the season, for which some of it i have to take the blame, spending our transfer funds without enough cash in the bank.

However, i expected more than £13M from Season Ticket Sales and in the January window when it was obvious we were out of pocket i tried to drum up a player sale that would get us out of debt.

A £37M deal that would see Moutinho go to Barca fell through(wages) which would have both gotten us out of debt AND given us enough in the bank to find a relatively good replacement.

The absolute worst thing about it all was the timing of the docking of points, we were just over £20M in debt in December, this had risen another 2 or 3 Million by the end of March and on the 29th of this month we finally went into administration and were docked points.

So with just over a month left of the season in which we were sat top of the EPL, well into the knockout stages of the UEFA Cup(which we won) and still in the FA Cup(finished runners up) the club FINALLY went into administration, despite the fact that in just a few weeks time we would be just about able to cover ALL our losses with the guaranteed income we were due.

This again i think is a failure of the game in which guaranteed future income is not recognised, i dont believe for a second that such a scenario would occur IRL with a team that was performing in all competitions and that had a guaranteed futureincome that see that debt completely cleared in just a few weeks.

On a different note, in season 2 we sold almost 4000 less season tickets than the previous year, despite having won(and coming 2nd) in the EPL, winning the UEFA Cup and being losing finalists in both the Carling and FA Cups.

Realistic? i think not.

I have to agree with everything you said; it's little things like the lack of flexibilty in sending you into admin and that season ticket sales went down after what would be a HUGE level of success IRL that really really detract from the game imo. The game does what it does well, but it doesnt come anywhere close to replicating reality yet imo, because it completely fails to recognise the differences and individuality of each club and it's circumstances.

I have to agree with everything you said; it's little things like the lack of flexibilty in sending you into admin and that season ticket sales went down after what would be a HUGE level of success IRL that really really detract from the game imo. The game does what it does well, but it doesnt come anywhere close to replicating reality yet imo, because it completely fails to recognise the differences and individuality of each club and it's circumstances.

This is why i have such a problem with new features, many are just not well thought out or tested enough to work in a realistic fashion.

The problem is SI believe it prudent to continue to add new features that they think will make the game more realistic, when in truth it often has the complete opposite effect.

If you cannot get it right leave it alone, there are still 100's of these issues every time you load up a new game, some you wont necessarily come across ever, whilst others you will witness many times a season and each time it happens its a reminder that this IS just a game and you start wondering why you are bothering to play at all?

Yes i know it IS just a game, but it used to be easy to become immersed in playing, whereas this is becoming less and less the case in recent times.

Well, if a club cannot pay its bills anymore, it goes into administration, no matter how much can be expected some months later. Also the administrator has to make sure that TV money goes where it belongs. After accumulating that much debt it's a fair guess that the current management would not just give the money back to the creditors.

(of course as no bills are issued or paid in FM, it's all a bit of fantasy involved here)

Well, if a club cannot pay its bills anymore, it goes into administration, no matter how much can be expected some months later.

(of course as no bills are issued or paid in FM, it's all a bit of fantasy involved here)

That's true, but i might ad that if you are looking a a certain to win the league or even come second the chairmen would deffintetly get some money from bank loan or personal assets.

This would be the normal procedure, and for a team like Everton (no offense) to achieve this much in the first season i think nobody would stand in he's way.

Am I right?

Well, if a club cannot pay its bills anymore, it goes into administration, no matter how much can be expected some months later. Also the administrator has to make sure that TV money goes where it belongs. After accumulating that much debt it's a fair guess that the current management would not just give the money back to the creditors.

(of course as no bills are issued or paid in FM, it's all a bit of fantasy involved here)

All clubs have proviso's in place with Banks, many based on such things like future income and the value of the squad etc.

In FM this is not taken into account and with the case of Everton going into administration, this is caused by just such a thing.

It is in fact similar to another issue which is that lets say i won the Quadruple with West Ham one season and the Board are delighted with my achievements, as soon as the next season starts they have forgotten the previous seasons success and are merely satisfied?

Ridiculous

All clubs have proviso's in place with Banks, many based on such things like future income and the value of the squad etc.

In FM this is not taken into account and with the case of Everton going into administration, this is caused by just such a thing.

It is in fact similar to another issue which is that lets say i won the Quadruple with West Ham one season and the Board are delighted with my achievements, as soon as the next season starts they have forgotten the previous seasons success and are merely satisfied?

Ridiculous

Don't mix up unrelated stuff. The confidence issue is indeed ridiculous and I'm sure there will be something done about it for FM10.

Those future payments will not even your balance at all, judging by my math skills. So you will still be in debt and there is still a structural problem. You are losing money and on top of that there are 20m left to be paid to whoever.

Of course, irl your club would talk to creditor and make arrangements for a payment delay against some interests, but FM doesn't model that. Now we can claim that the financial model of FM isn't great (which it seriously isn't) or look at ourselves and then questions ourselves why we have made that much debt in the first place. You are just bearing the consequences of your own actions here.

If you work in a business irl and you have trouble paying your bills (irl there isn't just a bank balance and nothing more, also irl football clubs have very rigid credit lines from their bank which I can tell you from personal experience) then you have to go into administration, even if there is money down the line. It's the law.

Don't mix up unrelated stuff. The confidence issue is indeed ridiculous and I'm sure there will be something done about it for FM10.

Those future payments will not even your balance at all, judging by my math skills. So you will still be in debt and there is still a structural problem. You are losing money and on top of that there are 20m left to be paid to whoever.

Of course, irl your club would talk to creditor and make arrangements for a payment delay against some interests, but FM doesn't model that. Now we can claim that the financial model of FM isn't great (which it seriously isn't) or look at ourselves and then questions ourselves why we have made that much debt in the first place. You are just bearing the consequences of your own actions here.

If you work in a business irl and you have trouble paying your bills (irl there isn't just a bank balance and nothing more, also irl football clubs have very rigid credit lines from their bank which I can tell you from personal experience) then you have to go into administration, even if there is money down the line. It's the law.

Absolute rubbish!

Man Utd are hundreds of millions of pounds in debt, why have they not gone into administration?

Simple, hundreds of million pounds worth of loans that are covered by future secure income, player value, what Old Trafford is worth both as a Stadium and as land, plus hundreds of other such things.

If the Glazers left Man Utd or Abramovich Chelsea, then yes both clubs would be in massive financial trouble, as would Everton had if whoever owned them had left and called in his debts, but that did not happen.

Debts do not equal cashflow.

I personally do have debts from a loan, but they are due in monthly loan rates. If I had that amount as a negative bank balance, such as you have at your club, I couldn't pay my bills. In the first case there is no problem, in the second I would go into administration if I was a business.

Absolute rubbish!

Man Utd are hundreds of millions of pounds in debt, why have they not gone into administration?

Simple, hundreds of million pounds worth of loans that are covered by future secure income, player value, what Old Trafford is worth both as a Stadium and as land, plus hundreds of other such things.

If the Glazers left Man Utd or Abramovich Chelsea, then yes both clubs would be in massive financial trouble, as would Everton had if whoever owned them had left and called in his debts, but that did not happen.

The difference is that Man U, Real Madrid and the likes are generating positive results on their bottom line. If you can't pay your interests (what the bank actually makes its money on), then you're in trouble. If you can, it doesn't really matter if you're a million or 100 million in debt, as it is simply a matter of time before the bank gets all the money, something it takes into consideration when providing the loan in the first place.

This is why the credit crunch hurts businesses, as they usually operate by trading debt and never accumulate any actual money, due to constant investments to improve their sales/production/whatever. It is actually a bad sign if a company has any cash on hand outside an emergency reserve, since the money could have been spent in a more profitable way than what little interest it accumulates on a bank account. Depending on your level of trust in the company, it could be an indication that they're not certain their investments can pay the bills (thus they need cash to cover the loss) or simply that the board of the company don't know how to run an effective business.

I do agree that the situation is a bit absurd, since the club would obviously be safely in the black at the beginning of the new season, due to highly increased TV revenues, player sales and prize money. But FM completely sucks in the economy department anyway, with the absurd amount of money you can make by winning the league and a couple of tournaments.

Here are a couple of screens from an Inter save after 2 seasons (and I converted the currency for your convenience, so you can see how absurdly rich you get):

And here is the league table to prove I already have pretty much the best team in the world (I won everything but the Coppa Italia):

Tbh, this is worse than losing money because at least you can fight back from a loss. Here, I've created a club that's so filthy rich that I could buy any two top tier players, or even a good quality starting 11, every 6 months (I get a similar budget at winter). It's frankly broken in the extreme because my revenue goes up and up and up, while my debt goes down, due to the fact that nothing is needed in game by now.

On a different note, we agree that the financial model so far sucks. Unfortunately the news bits about FM10 don't make me all that expectant in that area at all.

On a different note, we agree that the financial model so far sucks. Unfortunately the news bits about FM10 don't make me all that expectant in that area at all.

That we do mate!

Zinn - Thanks for the explanation.

The financial model isn't that great, an EPL team shouldn't go into administration with only £20m of debts. Football clubs are on a completely different planet to every other business. Any other business running up debts as football clubs do would of gone bust years ago.

It's good to see you accept some of the blame, and it's not a strange time to go bust. The 5th of April is when the taxman comes calling, and it is generally the Inland Revenue losing patience with unpaid taxes that forces clubs in England into Administration. Though I don't think that is possible in the game you always manage to pay your taxes unlike clubs in RL.

A little extra note, btw: The wage budget is a key area to help keep you absurdly rich. By keeping tight control of the wage budget, I'm currently making nearly 840.000 pounds every week. Add to that there are 52 weeks in a year and I end up making 43.6 million pounds in a single season on wage budgets alone (assuming I don't go completely insane with new contracts, players etc.).

Here's a screenshot to show it:

Now add TV revenue, combined cash prizes for entering and winning the CHL, making the semis in Coppa Italia, winning the Super Cup, the European Super Cup, winning the league and general income from ticket sales. Then the board usually throws a bit of extra cash at you for transfers durign each window and you're golden (especially if you don't spend most of it).

EDIT: No problem, Hammer

A little extra note, btw: The wage budget is a key area to help keep you absurdly rich. By keeping tight control of the wage budget, I'm currently making nearly 840.000 pounds every week. Add to that there are 52 weeks in a year and I end up making 43.6 million pounds in a single season on wage budgets alone (assuming I don't go completely insane with new contracts, players etc.).

Here's a screenshot to show it:

Now add TV revenue, combined cahs prizes for entering and winning the CHL, making the semis in Coppa Italia, winning the Super Cup, the European Super Cup, winning the league and general income from ticket sales. Then the board usually throws a bit of extra cash at you for transfers durign each window and you're golden (especially if you don't spend most of it).

EDIT: No problem, Hammer

You are talking about a club with an insane individual TV contract though.

Go and try doing that at Siena...

I think we're splitting hairs here. Regardless of whether the game has this modelled accurately in the UK or not, I think we have the right to expect a good match engine accurately simulating real life football. I think to expect the game to accurately reflect insolvency law and practice in 100 jurisdictions is probably a bridge too far....

You are talking about a club with an insane individual TV contract though.

Go and try doing that at Siena...

Spoilers: It doesn't matter what club you're doing it with, just the amount of time it takes you to get there. As I pointed out, if you actually start winning something, the money you make is absurd. Especially the profits you receive from the wage department.

For instance, I holidayed a season to start further in the game and even Valencia, with one of the worst economies you can find, had a budget of half what my Inter team has. In fact, I couldn't find any sort of half-known club that didn't have at least 10-15 million pounds to spend on transfers alone. In fact, even though the AI has done a **** poor job of managing the economics at Siena, they have a squad that's more than capable of reaching a good placement on the table.

So just because Inter had an easier way to absurd riches, it certainly doesn't mean the other clubs don't have it easy. It might take you 3 or 4 seasons with Siena to do what I did in two with Inter but it doesn't mean it's difficult. Make 5 year contracts with your players whenever possible and then keep your wages under strict control. For Siena, you probably also need to make a good deal or two by selling some after a season to go all the way to the 100+ million, but it certainly isn't impossible.

Spoilers: It doesn't matter what club you're doing it with, just the amount of time it takes you to get there. As I pointed out, if you actually start winning something, the money you make is absurd. Especially the profits you receive from the wage department.

For instance, I holidayed a season to start further in the game and even Valencia, with one of the worst economies you can find, had a budget of half what my Inter team has. In fact, I couldn't find any sort of half-known club that didn't have at least 10-15 million pounds to spend on transfers alone. In fact, even though the AI has done a **** poor job of managing the economics at Siena, they have a squad that's more than capable of reaching a good placement on the table.

So just because Inter had an easier way to absurd riches, it certainly doesn't mean the other clubs don't have it easy. It might take you 3 or 4 seasons with Siena to do what I did in two with Inter but it doesn't mean it's difficult. Make 5 year contracts with your players whenever possible and then keep your wages under strict control. For Siena, you probably also need to make a good deal or two by selling some after a season to go all the way to the 100+ million, but it certainly isn't impossible.

Not meaning to say that at all, just Inter get 70m or something in TV payments each year while Siena should get around 5m... and if you are making a profit of 50m per year with, that's exactly the TV money difference.

I agree that the financial difficulties of some clubs have never been suffieciently modelled into the game. Where are Chelsea's 500m debts? Why can Valencia spend a penny? That#s something I will look up in the editor before starting my first save on FM10 for sure...

Well, if a club cannot pay its bills anymore, it goes into administration, no matter how much can be expected some months later.

Simply not true, see Portsmouth at the moment and countless other clubs. They only enter admin when they cant pay now or in the future.

Simply not true, see Portsmouth at the moment and countless other clubs. They only enter admin when they cant pay now or in the future.

Portsmouth hasn't paid its wage bill, in order to meet its bank obligations - or else it would have gone bust (players, unlike the banks, are not so ruthless at demanding their money).

You can't do this in game. So the money goes to your players as a priority, rather than to the bigger debts, and so the club goes in to administration.

It also had to flog players all summer just to stay afloat. But here, no players have been sold, and the wages have not been deferred, so the club is screwed.

There is a reason why there is a managerial attribute in your profile that relates to financial discipline.

Here's a novel idea: manage your finances responsibly. Everyone seems to want to spend massive amounts of money on transfers and wages in FM. Try maximizing the talent you have on your squad and being sensible and somewhat conservative with your transfers.

If you spend your entire bank balance and put the club at risk without any assurance of results, then it's your problem if you encounter receivership that is unrealistic in the game. You could have avoided it by being disciplined financially.

There is a reason why there is a managerial attribute in your profile that relates to financial discipline.

Here's a novel idea: manage your finances responsibly. Everyone seems to want to spend massive amounts of money on transfers and wages in FM. Try maximizing the talent you have on your squad and being sensible and somewhat conservative with your transfers.

If you spend your entire bank balance and put the club at risk without any assurance of results, then it's your problem if you encounter receivership that is unrealistic in the game. You could have avoided it by being disciplined financially.

WHS^^

Just because you have a large transfer kitty doesn't mean spending all of it. Be realistic in what you really can spend. Don't spend on unneeded players, and always balance the books in terms of transfers. Develop players and buy low and sell high.

Look at it from the creditors' perspective:

1: The debt is not a structured, pre-arranged deal with the banks, but the result of extravagant wage and transfer policies

2: There is evidence the club is unable to offset the debt by selling its assets as their ongoing costs are more than the standard going rates

3: There are no cash reserves to draw upon, with only the intangible possibility of future success being used to guarantee repayment

4: The managerial team has a history of imprudence and is going to remain in place

5: Using the stadium as a guarantee for the debt is nonviable at a managerial level as its loss will put the club out of business

If I was looking at that as a creditor, I'd push for insolvency. Way too risky to remain involved.

Look at it from the creditors' perspective:

1: The debt is not a structured, pre-arranged deal with the banks, but the result of extravagant wage and transfer policies

2: There is evidence the club is unable to offset the debt by selling its assets as their ongoing costs are more than the standard going rates

3: There are no cash reserves to draw upon, with only the intangible possibility of future success being used to guarantee repayment

4: The managerial team has a history of imprudence and is going to remain in place

5: Using the stadium as a guarantee for the debt is nonviable at a managerial level as its loss will put the club out of business

If I was looking at that as a creditor, I'd push for insolvency. Way too risky to remain involved.

What, your actually sticking up for the game in this instance?

What a shocker

What, your actually sticking up for the game in this instance?

What a shocker

We lost a total of £2.25M first season and went into administration

Made a £45.6M profit season two

Jesus Hammer, that's a tight one mate.

Obviously I'm not even remotely bothered by it happening to Everton - I think it's hilarious. But, tbf, maybe in future the possibility of [guaranteed] future income will be taken into account. I'd have smashed my laptop though tbh.

What, your actually sticking up for the game in this instance?

What a shocker

Not necessarily. Just adding another perspective that you haven't taken into consideration. All you need is one major creditor pushing for his money and you'd be in trouble in this situation. Yes, rationally you should be able to cover your debts, and most creditors would recognise this, but, as the events of the last year have illustrated, rationality and money don't always mix.

If you go $20m into debt, it is a risk, no matter what. You cannot blame the game for treating this as the point of administration, as it well could be in real life if you have a creditor that needs immediate payment in order to protect his own solvency, or requires funds for immediate reinvestment. Why would either of these creditors take the risk burden when they don't have to?

Things are never as black and white as you like to make out, for example:

A £37M deal that would see Moutinho go to Barca fell through(wages) which would have both gotten us out of debt AND given us enough in the bank to find a relatively good replacement.

You thus recognised the danger of possible administration and actively tried to do something about it, but then complained the game was unrealistic when it happened. You can't have it both ways.

should all manage your finances better tut tut

I feel your pain

docked points just before kickoff on the final day of the season after the match was given 16.5million.

what made it worse was that we were tied on points with liverpool going into the last game for the final champions league spot. they drew their game I won mine...

now i know your going to say you should have managed you finances better but come on last game of the season?! Isn't there a cut off date in real life that if you pass the point deduction doesn't kick in till next season?

I feel your pain

docked points just before kickoff on the final day of the season after the match was given 16.5million.

what made it worse was that we were tied on points with liverpool going into the last game for the final champions league spot. they drew their game I won mine...

now i know your going to say you should have managed you finances better but come on last game of the season?! Isn't there a cut off date in real life that if you pass the point deduction doesn't kick in till next season?

It was suggested a certain club do that last season, and the Football League used common sense and said that if they stayed up, they would take the penalty next season rather than be relegated and take the penalty anyway.

It was suggested a certain club do that last season, and the Football League used common sense and said that if they stayed up, they would take the penalty next season rather than be relegated and take the penalty anyway.

Who was that for? I know that in Southampton's case the penalty was only going to be applied if they stayed up and the penalty would relegate them. If they went down, as they did, or finished safely in mid table then the penalty would apply the next season so they started with -10 points.

Who was that for? I know that in Southampton's case the penalty was only going to be applied if they stayed up and the penalty would relegate them. If they went down, as they did, or finished safely in mid table then the penalty would apply the next season so they started with -10 points.

Or something like that, yes.

That is unfortunate that you went into administration. I think that any game is going to offer a poor reflection of such a complex economic principle. This is because the game has to be playable for the 10-year old boy who is just getting into gaming and it also has to be enjoyable for the 30+ year old man (like me) who loves the game. That aside, I would say it is difficult for most teams in most sports in most countries IRL to turn any profit. Most barely scrape by or have some rich investor who uses the team as his hobby.

After reading through this thread and offering a reply, I decided to do a more thorough check on my team's finances. I manage the Kansas City Wizards in MLS. This time, I am starting my third season, having just won the MLS Cup and the Supporter's Shield from the previous season. I have been quite successful at KC, but have not been able to translate that success into more money for my team. We are currently $300,00 (U.S.) 'in the red.' This is with my team salaries of $23,419/week with a salary budget of $55,171/week. I have $0 for an allocation budget (transfer budget in MLS). These are great numbers but what kills me is that I have NO TV revenue, sponsorship of less than $1.2 million/year and total ticket revenue of just over $5.2 million/year. I realize that I am comparing making money in the U.S. to making money in England, but football is football. As I said in my previous post, most teams just don't make any money, regardless of their success.

That is unfortunate that you went into administration. I think that any game is going to offer a poor reflection of such a complex economic principle. This is because the game has to be playable for the 10-year old boy who is just getting into gaming and it also has to be enjoyable for the 30+ year old man (like me) who loves the game. That aside, I would say it is difficult for most teams in most sports in most countries IRL to turn any profit. Most barely scrape by or have some rich investor who uses the team as his hobby.

While the finances in the game are an issue (i.e. most clubs have no problems breaking even), it's not unfortunate as the OP knows he made a mistake with his own finances and tried selling players to get out of trouble.

While the finances in the game are an issue (i.e. most clubs have no problems breaking even), it's not unfortunate as the OP knows he made a mistake with his own finances and tried selling players to get out of trouble.

I would agree had i been languishing in the bottom 3, or in a relegation battle, but 5 or 6 points clear at the top of the EPL this would NEVER happen, not with just £20M worth of debt, which is peanuts in terms of the turnover of money in todays game.

I would agree had i been languishing in the bottom 3, or in a relegation battle, but 5 or 6 points clear at the top of the EPL this would NEVER happen, not with just £20M worth of debt, which is peanuts in terms of the turnover of money in todays game.

I don't think that's true. The OP's Everton basically did a Leeds and got the best and worst of it.

- This will never happen: A board giving you a budget that will guarantee you getting into £20m of debt.

- This may happen: A board giving you a budget that will guarantee you getting into £20m of debt, but this extra money will win you the Premier League (had it not been for administration, of course).

Because it's you, Garry, I asked my girlfriend about this. She works in prudential regulation and knows how this stuff works in fine detail.

Basically, your going 23 million into debt without a pre-arranged loan deal would have meant the banks evaluating your business in terms of short and long term risk. Your board would have to convince them that the guaranteed income you are picking up at the end of the season would cover the loan plus interest plus maintain your running costs for the next 12 months. They'd also have to convince them that the management team would follow less extravagant fiscal policies in the future. Finally, they'd have to provide some evidence they could cover the risk if the bank loaned them any more money.

For a bank to agree to extend the loan, they'd have to have evidence you could repay the 23 million plus at least an extra 16 million to cover interest and expenses. You'd thus have to be able to guarantee you could repay 39 million plus cover the running costs of the club for the next 12 months. If they felt that this was too risky, they will not extend you any more credit. They already know your assets are overvalued and, in the current market conditions, distressed land provides little chance of relief, so using your stadium as collateral won't go very far. Everton also are known to have less than rich shareholders, so they couldn't be used to guarantee continued trading if the banks were to continue the loan.

To refuse you credit means the banks need to cover 23 million in a fire sale. To extend credit means they have to evaluate that against a possibility of losing more than 39 million. They don't just exist to support your financial policies, but to make a profit. If they feel they cannot do that by supporting you, they will cut their losses. Her feeling is that in the current British climate you would be extremely lucky to be able to continue trading, as your guaranteed future income only covers a year long period and doesn't have any guarantee of continued trading beyond that period. As the management team would have no credibility when trying to argue they could guarantee the business as an ongoing concern as it was their policies that brought it to this state, the bank would likely cover its bases and not extend the loan, thus forcing the club to declare insolvency.

Arguably, FM fails to simulate this type of structure very well, if at all, and just declares administration when the debt goes over a certain amount. Even so, there is no guarantee that what you experienced wouldn't happen in reality, especially in a volatile financial climate.

Because it's you, Garry, I asked my girlfriend about this. She works in prudential regulation and knows how this stuff works in fine detail.

Basically, your going 23 million into debt without a pre-arranged loan deal would have meant the banks evaluating your business in terms of short and long term risk. Your board would have to convince them that the guaranteed income you are picking up at the end of the season would cover the loan plus interest plus maintain your running costs for the next 12 months. They'd also have to convince them that the management team would follow less extravagant fiscal policies in the future. Finally, they'd have to provide some evidence they could cover the risk if the bank loaned them any more money.

For a bank to agree to extend the loan, they'd have to have evidence you could repay the 23 million plus at least an extra 16 million to cover interest and expenses. You'd thus have to be able to guarantee you could repay 39 million plus cover the running costs of the club for the next 12 months. If they felt that this was too risky, they will not extend you any more credit. They already know your assets are overvalued and, in the current market conditions, distressed land provides little chance of relief, so using your stadium as collateral won't go very far. Everton also are known to have less than rich shareholders, so they couldn't be used to guarantee continued trading if the banks were to continue the loan.

To refuse you credit means the banks need to cover 23 million in a fire sale. To extend credit means they have to evaluate that against a possibility of losing more than 39 million. They don't just exist to support your financial policies, but to make a profit. If they feel they cannot do that by supporting you, they will cut their losses. Her feeling is that in the current British climate you would be extremely lucky to be able to continue trading, as your guaranteed future income only covers a year long period and doesn't have any guarantee of continued trading beyond that period. As the management team would have no credibility when trying to argue they could guarantee the business as an ongoing concern as it was their policies that brought it to this state, the bank would likely cover its bases and not extend the loan, thus forcing the club to declare insolvency.

Arguably, FM fails to simulate this type of structure very well, if at all, and just declares administration when the debt goes over a certain amount. Even so, there is no guarantee that what you experienced wouldn't happen in reality, especially in a volatile financial climate.

I could have a GF(well an ex) refute everything you just posted, but then we'll just end up in the same boat as usual, me trying to explain failings in the game that need improvement and you making up as many excuses as you can to the contrary.

I think the problem is more that the user isn't aware that administration is imminent rather than the financial model which is generally very good; better board-manager interaction regarding finances would help (e.g. message in January "sell some players or we'll be right on the limit of credit by May") and related questions in press conferences. I would like the option to defer payment of player wages in the game resulting in reduction in morale depending on the player's loyalty attribute.

My memory isn't very good, but wasn't there a case last season of a club going into administration near the end of the season when it still had an outside chance of getting into the playoffs.

Because it's you, Garry, I asked my girlfriend about this. She works in prudential regulation and knows how this stuff works in fine detail.

Basically, your going 23 million into debt without a pre-arranged loan deal would have meant the banks evaluating your business in terms of short and long term risk. Your board would have to convince them that the guaranteed income you are picking up at the end of the season would cover the loan plus interest plus maintain your running costs for the next 12 months. They'd also have to convince them that the management team would follow less extravagant fiscal policies in the future. Finally, they'd have to provide some evidence they could cover the risk if the bank loaned them any more money.

For a bank to agree to extend the loan, they'd have to have evidence you could repay the 23 million plus at least an extra 16 million to cover interest and expenses. You'd thus have to be able to guarantee you could repay 39 million plus cover the running costs of the club for the next 12 months. If they felt that this was too risky, they will not extend you any more credit. They already know your assets are overvalued and, in the current market conditions, distressed land provides little chance of relief, so using your stadium as collateral won't go very far. Everton also are known to have less than rich shareholders, so they couldn't be used to guarantee continued trading if the banks were to continue the loan.

To refuse you credit means the banks need to cover 23 million in a fire sale. To extend credit means they have to evaluate that against a possibility of losing more than 39 million. They don't just exist to support your financial policies, but to make a profit. If they feel they cannot do that by supporting you, they will cut their losses. Her feeling is that in the current British climate you would be extremely lucky to be able to continue trading, as your guaranteed future income only covers a year long period and doesn't have any guarantee of continued trading beyond that period. As the management team would have no credibility when trying to argue they could guarantee the business as an ongoing concern as it was their policies that brought it to this state, the bank would likely cover its bases and not extend the loan, thus forcing the club to declare insolvency.

Arguably, FM fails to simulate this type of structure very well, if at all, and just declares administration when the debt goes over a certain amount. Even so, there is no guarantee that what you experienced wouldn't happen in reality, especially in a volatile financial climate.

You are misjudging property value in your assesment, which is a major error. Training grounds, stadium, offices and other properties related to the club is worth a fortune and would easily cover a small debt like that. Also, TV revenue alone would have covered the necessary loan and in a real situation, the club would loan out or sell some of their highly paid squad members to get around paying them, easily granting a few million extra pounds in emergency funds.

Also, at least in Denmark, if a major creditor wishes to pull the plug on the club, it isn't possible to do unless creditors accounting for at least 51% of the total credit (might be more, I can't remember, but it has to be more than half) agrees to do the same. This is to prevent speculation, so someone won't simply buy up rivals and crash them by refusing to back their plans.

Then you also have to remember that most clubs and major corporations spread out their loans over many institutions. This relates to the security issue I mentioned, regardless of it being required by law in the UK or not, since it would obviously take the backing from the majority of these credit holders to declare the club bankrupt. After all, if a club had, say, 100 million spread to different creditors like 20 + 10 + 10 + 10 + 5 + 1 + 4 + 20 + 15 + 5, each number representing a different creditor, the first guy with 20 million would have an awfully hard time convincing the others to declare bankruptcy and sell with a loss. Especially if he is the first to receive money from a sale of property (this is usually set up in order of who provided payment to a piece of property first), meaning the others would not be guaranteed anything and some would legally be stuck with remaining debt, should the sale come below the total loans provided.

There are some obvious downsides to this model as well, such as it is actually easier for them to cut their losses if it gets seriously bad (which it wasn't in this example), as they are less dependant on payments from the company in question.

As Riz commented, though, it would be ridiculous to get all of this stuff in the game and accounted for in the trillions of countries present in the game. However, the absence of such systems is why the bankcruptcy in here seems silly and wrong. But you have to start making some trade-offs, since this IS a game after all. If OP hadn't gone overboard with spending and would have downgraded his team by shipping off some players in due time, it probably wouldn't have been an issue anyway. Although I do understand his frustration when it's so obvious that all debts would be gone after a couple of months.

I'll try to make the reasoning to why this isn't completely unrealistic a little clearer.

The basic position Everton find themselves in is being 23m in the red at the end of March and losing circa 3m per month. This means they will be close to 30m in the red by the time any prize money arrives, which won't fully cover the debt, thus requiring more capital in order to continue the day to day running of the club. We will work under the assumption they well need at least June and July covered as well. This means they will require an additional 12m on top of the 23m of debt they have currently accumulated.

Basically, Everton will owe creditors 35m prior to interest. Because of the nature of the loan, we can conservatively estimate an interest rate of 20%, adding another 7m to the debt. So, we are looking at an absolute minimum of 42m.

If the bank is not yet a major creditor, the chances are they will provide the extra loan as they have the legal right to be the first paid creditor if the club goes bankrupt. Covering this loan won't be a major risk. If, however, the banks are sole creditors, they will have to be confident that Everton can repay the full amount plus interest plus expenses in order to extend the loan to such a margin. Given that we know Everton's directors/shareholders are not financially sound, it is not a great stretch to argue that the banks are bearing the full brunt of the risk.

The banks thus have a simple decision to make. Continue to loan money or refuse any extension. This will be based on their confidence that the management team is able to turn performance around and start bringing in a profit on a consistent basis. The lump sum income of their prize money will not be given a huge amount of weight as it will immediately be sucked into debt repayment and is not a guaranteed year on year income. If the banks feel that this sum will just cover current debts before initiating yet another loan, they are unlikely to look on extension favourably. Furthermore, the management team will have no credibility as their extravagance and bad financial management has brought about this situation.

Although the stadium could be used as collateral for the loan, they will need to sell it if the situation worsens. The banks will be very aware that it is a distressed asset and won't bring in its full worth. They will also be aware of its intangible emotional meaning to the local communities and will be very wary that they'd be able to sell it to buyers who might find their investment vandalised or boycotted by locals. Given the current issues with the construction/real estate sector, the assets would be even more distressed. If they regard the stadium/premises as too distressed to be sure of covering the extra loan, they almost undoubtedly won't allow it. They thus have the option of asking the club to repay 23m now, or take the risk they won't be able to repay 42+m later. Which way to go is a simple risk management decision, with the refusal of extension far more likely in a volatile and distressed market. Future income plus player sales will cover the 23m already owed, plus interest, and the banks get all their money back with no extra risk.

If the banks reach that decision, then the club has the option to find capital from other investors, or re-mortgage the premises. If that is impossible or non-viable, then the directors have no choice but to declare bankruptcy as they cannot continue to meet the day to day financial requirements of the club. The OP needs to remember it is not the banks that declare bankruptcy, but his own management team.

For this to be totally unrealistic, as the OP suggested, we'd need to ignore all the above as possibilities and just accept that the banks would continue to bail out the club based on future earnings. They might well do so, but they might not. And, if they might not, then the scenario is not completely unrealistic, but realistically possible.

I have to agree with everything you said; it's little things like the lack of flexibilty in sending you into admin and that season ticket sales went down after what would be a HUGE level of success IRL that really really detract from the game imo. The game does what it does well, but it doesnt come anywhere close to replicating reality yet imo, because it completely fails to recognise the differences and individuality of each club and it's circumstances.

Yeah I get that too, don't understand how a team that has had another successful season would see a drop in season tickets??

I'll try to make the reasoning to why this isn't completely unrealistic a little clearer.

The basic position Everton find themselves in is being 23m in the red at the end of March and losing circa 3m per month. This means they will be close to 30m in the red by the time any prize money arrives, which won't fully cover the debt, thus requiring more capital in order to continue the day to day running of the club. We will work under the assumption they well need at least June and July covered as well. This means they will require an additional 12m on top of the 23m of debt they have currently accumulated.

Basically, Everton will owe creditors 35m prior to interest. Because of the nature of the loan, we can conservatively estimate an interest rate of 20%, adding another 7m to the debt. So, we are looking at an absolute minimum of 42m.

If the bank is not yet a major creditor, the chances are they will provide the extra loan as they have the legal right to be the first paid creditor if the club goes bankrupt. Covering this loan won't be a major risk. If, however, the banks are sole creditors, they will have to be confident that Everton can repay the full amount plus interest plus expenses in order to extend the loan to such a margin. Given that we know Everton's directors/shareholders are not financially sound, it is not a great stretch to argue that the banks are bearing the full brunt of the risk.

The banks thus have a simple decision to make. Continue to loan money or refuse any extension. This will be based on their confidence that the management team is able to turn performance around and start bringing in a profit on a consistent basis. The lump sum income of their prize money will not be given a huge amount of weight as it will immediately be sucked into debt repayment and is not a guaranteed year on year income. If the banks feel that this sum will just cover current debts before initiating yet another loan, they are unlikely to look on extension favourably. Furthermore, the management team will have no credibility as their extravagance and bad financial management has brought about this situation.

Although the stadium could be used as collateral for the loan, they will need to sell it if the situation worsens. The banks will be very aware that it is a distressed asset and won't bring in its full worth. They will also be aware of its intangible emotional meaning to the local communities and will be very wary that they'd be able to sell it to buyers who might find their investment vandalised or boycotted by locals. Given the current issues with the construction/real estate sector, the assets would be even more distressed. If they regard the stadium/premises as too distressed to be sure of covering the extra loan, they almost undoubtedly won't allow it. They thus have the option of asking the club to repay 23m now, or take the risk they won't be able to repay 42+m later. Which way to go is a simple risk management decision, with the refusal of extension far more likely in a volatile and distressed market. Future income plus player sales will cover the 23m already owed, plus interest, and the banks get all their money back with no extra risk.

If the banks reach that decision, then the club has the option to find capital from other investors, or re-mortgage the premises. If that is impossible or non-viable, then the directors have no choice but to declare bankruptcy as they cannot continue to meet the day to day financial requirements of the club. The OP needs to remember it is not the banks that declare bankruptcy, but his own management team.

For this to be totally unrealistic, as the OP suggested, we'd need to ignore all the above as possibilities and just accept that the banks would continue to bail out the club based on future earnings. They might well do so, but they might not. And, if they might not, then the scenario is not completely unrealistic, but realistically possible.

I read some of Everton's financial reports from 2008, since the game should be based around those, and while they're taking some risks, they're not due to pay anything of significance for another 5 years (4 now, since we're in 2009). You're also ignoring fixed income from CHL participation (OP finished second), TV money, reduced salary from player sales over the summer, income from said sales and god knows what else. Remember that the point of all these financial posts is that if the game allowed it, they would have easily paid off most of the debt and left a healthy chunk to run the club.

You make an error by simplifying an incredibly complex setup, as it is in the complexity you will find the balance. If you read their financial reports you might frown upon their foolishness on the transfer market (they took out further loans to buy players) but you'll realise they still have more than enough time to pay it off. The game appears not to take into account that their loans aren't due until 2013 or something and have little to no installments. Because one of the consequences of Everton's loans not being due until 2013 is that the current financial situation doesn't mean a damn thing to them unless their bank crashes. By then, the market have long since stabilised (it's already pretty stable now, the real estate market is just slow to follow) and thus their property value will have soared once more, enabling further loans and so on and so on.

But as I said before, when the game itself does not take these things into account and the board doesn't take your transfer budget to pay fairly small loans, it is impossible to simulate the real market. Although in game terms, it would be nice if the board were able to properly predict their financial situation within a year. Outside The Big Four, no one really considers Europe as a fixed income for the club and thus they should base their initial projection on expected season tickets sold and a certain average attendance and adjust accordingly along the way. Also, the board should simply be able to yank your excess transfer and wage budget to pay off loans.

All it requires for them to go into administration is the bank to refuse an extension to the loan and their not having liquid capital anywhere else and a board/shareholder group unwilling to cover the risk with personal investment. If the OP has spent all their liquid assets, and the bank vetoes extra loans, how are they going to raise the money to continue as a going concern. If they cannot pay wages, they have to file for administration. No other choice if they have no liquidity. There is absolutely no guarantee the bank would be willing to finance the day to day running of the club to a tune of 12m without asking some pretty serious questions about how the club got into this state and how they could ensure it wouldn't happen again. Basic management consultancy practice. If those answers weren't forthcoming, the bank almost certainly wouldn't take the risk.

There seems to be an assumption that the bank has to loan the money in such a situation. That is patently false. They need to measure the risks and take a decision based on that. If the club has hemorrhaged cash and the management team has no credibility, then the bank is more than likely to refuse financing.

It's a simple equation.

A business needs liquid assets to be able to continue. The OP over-extended and reduced the liquid assets guaranteed by the current loan to zero. The club went to the bank who, taking all things into account, refused financing. Secondary sources of capital were equally unforthcoming. Therefore, the club has to file for administration. The only question that needs to be answered is how likely or unlikely would it be for the bank to loan the club circa 12m at 20%. I haven't read anything in any argument to suggest that this would be a foregone conclusion in the real world, and thus it is not 'unbelievably unrealistic' for the club to go into administration in the game.

To make this decision, the future loans are very relevant too. The banks will be very worried that continued mismanagement will risk these repayments, especially so given the non-guaranteed nature of income over the next four years, so are very unlikely to risk any more. This would be especially the case in the midst of a banking crisis when all banks would be exceedingly unlikely to make any risky investment at all.

I am making no argument that it should have happened, just that it could happen. Any business that is unable to meet its immediate debts is at the mercy of investors' decisions. If they deem continued or new investment too risky, then the business has no choice but to call in the administrators.

I'll try to make the reasoning to why this isn't completely unrealistic a little clearer.

The basic position Everton find themselves in is being 23m in the red at the end of March and losing circa 3m per month. This means they will be close to 30m in the red by the time any prize money arrives, which won't fully cover the debt, thus requiring more capital in order to continue the day to day running of the club. We will work under the assumption they well need at least June and July covered as well. This means they will require an additional 12m on top of the 23m of debt they have currently accumulated.

Basically, Everton will owe creditors 35m prior to interest. Because of the nature of the loan, we can conservatively estimate an interest rate of 20%, adding another 7m to the debt. So, we are looking at an absolute minimum of 42m.

If the bank is not yet a major creditor, the chances are they will provide the extra loan as they have the legal right to be the first paid creditor if the club goes bankrupt. Covering this loan won't be a major risk. If, however, the banks are sole creditors, they will have to be confident that Everton can repay the full amount plus interest plus expenses in order to extend the loan to such a margin. Given that we know Everton's directors/shareholders are not financially sound, it is not a great stretch to argue that the banks are bearing the full brunt of the risk.

The banks thus have a simple decision to make. Continue to loan money or refuse any extension. This will be based on their confidence that the management team is able to turn performance around and start bringing in a profit on a consistent basis. The lump sum income of their prize money will not be given a huge amount of weight as it will immediately be sucked into debt repayment and is not a guaranteed year on year income. If the banks feel that this sum will just cover current debts before initiating yet another loan, they are unlikely to look on extension favourably. Furthermore, the management team will have no credibility as their extravagance and bad financial management has brought about this situation.

Although the stadium could be used as collateral for the loan, they will need to sell it if the situation worsens. The banks will be very aware that it is a distressed asset and won't bring in its full worth. They will also be aware of its intangible emotional meaning to the local communities and will be very wary that they'd be able to sell it to buyers who might find their investment vandalised or boycotted by locals. Given the current issues with the construction/real estate sector, the assets would be even more distressed. If they regard the stadium/premises as too distressed to be sure of covering the extra loan, they almost undoubtedly won't allow it. They thus have the option of asking the club to repay 23m now, or take the risk they won't be able to repay 42+m later. Which way to go is a simple risk management decision, with the refusal of extension far more likely in a volatile and distressed market. Future income plus player sales will cover the 23m already owed, plus interest, and the banks get all their money back with no extra risk.

If the banks reach that decision, then the club has the option to find capital from other investors, or re-mortgage the premises. If that is impossible or non-viable, then the directors have no choice but to declare bankruptcy as they cannot continue to meet the day to day financial requirements of the club. The OP needs to remember it is not the banks that declare bankruptcy, but his own management team.

For this to be totally unrealistic, as the OP suggested, we'd need to ignore all the above as possibilities and just accept that the banks would continue to bail out the club based on future earnings. They might well do so, but they might not. And, if they might not, then the scenario is not completely unrealistic, but realistically possible.

cool story, bro