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How much debt is too much?


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OK, I'm Sunderland, 3 seasons in, and I will admit that I have gambled with the future of the club, signing lots of players over 48 months, but I thought that the sooner I got a great squad the sooner I will be in a position to play in Europe and get revenue in that will eventually help shrink the debt. Anyway, I am currently losing about £500K a month, and I am £7m in the red, I have worked it out and estimate I am giving clubs around £2m a month in transfer fee's, a staggering amount.

In an effort to generate more revenue the board expanded the stadium, first by 5000 seats and then added another 4000 on in the Summer, meaning the capacity of the SoL is now just under 60,000. The stadium fills regularly and the gate receipts have never looked better, but it cost about £12m to add the extra 9000 onto the capacity. And I am starting to wonder if this was such a good decision, because it will take awhile before we actually start making profit on the ticket sales front.

I'm worried that all my hard work will be jeopardised because of administation (admittedly it is my fault) especially as I am currently 3rd in the league half-way through the current campaign and look certain to be playing Champions League football next season.

So, does anyone have any idea how much debt a club has to be in for the administrators to be called?

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Yeah I've found it weird that the board have continued to back me heavily despite the debt, in the past 3 Summer transfer windows I have recieved £10m in the first season, a similar amount in season 2, and in the Summer just gone I recieved £18m to improve the squad, plus extra money here and there for the January transfer window.

Not alot of business sense it seems.

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dont thinl Ellis is down as a sugar daddy, just keep going try not to strengthen for a year and if ya buy players make sure its paid up front and doesnt dip you further into the red get decent price money and you should be fine.

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u get prize money at the end of the season, which is a high ammount in the premier league. losing 500k a month = 6m a year. you only have to finish like 14/15th to get that money back in prize money. see the rules of the premier league for the exact ammounts but its like 1m a place. if your still well down after that then your going to have to be tighter for a while

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In Season 1 I took Newcastle 15 Million into the red with my bad financial control (too many purchases spread over 48 months). I figured the premiership TV money would pay it off next season, and I was correct.

I think you need to be pushing the team seriously into the red to go into administration. I had press and news messages all season about being cash strapped, but it never got any worse.

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I just played on a little bit, sold some Reserve players and then the board announced a new 3 year sponsorship deal worth £3m per annum, instantly the debt has been halved and I feel alot more reassured, if I can go far in the Europa League and finish in a Champions League place then I don't see why we cannot churn out profits for years to come. :)

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It's not the actual size of the debt that is the problem, it is whether your yearly income cannot match your yearly expenditure. Any size of debt is manageable if your income is equal to your expenditure on a year by year basis. Or even a 5-10 year basis if you have enough cash in your balance to cover the immediate shortfalls.

I play as Manchester United with a staggering 700m debt, and it is pretty easy to both manage the debt and sign quality players each season. The key issue being whether yearly income versus yearly expenditure is sustainable.

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In the premiership its very easy to think little of up to about 20m in the red. With prize money, and depending on the size of your ground you generally get a substantial boost over the summer months. Once you get into the top 4 and are playing CL football with the bonus money from that its very hard to cause yourself financial problems unless you then slip out of the top 4.

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