Lower league Finances.

Right. I have a sneaking suspicion that something is not quite right with English Lower League Finances, but am struggling to work out what it is.

Hopefully by creating this thread, one of you guys will either pick up on something that I have missed or it will become clear to me what the problem is or tha there is no problem at all.

So the nitty gritty.

I'm managing Hitchin in Conference South and it's December 2011

I holidayed season 1 (a la the dafuge challenge)

I took over FC Utd for season 2 and ran at a little profit before I was sacked for being useless.

Season 3 I took over Hitchin, finished 5th in Conference South and made a loss of £129,210.

Season 4, (half way through), I am sitting mid-table and have so far made a loss of £169,303.

So based on how things are at this stage of the season, I would guess that we will make a loss of about £300,00 this season.

So while it's not exactly great that we're losing money, it's not entirely unbelieveble either, (well not at least until you dig a little deeper).

So where is the money going?

Well other than wages there were no totals that seem large or unreasonable.

Last season.

Wages £270k

Bonuses £21k

Ground £22k

Tax £23k

Other £47k

Match day £59k

This season.

Wages £124k

Bonuses £7k

Ground £10k

Tax £8k

Other £22k

Match day £25k

So in the 18 or so months that I have been in charge we have gone from about £30k in credit to about £160k in debt.

I haven't spent a single penny on transfers or signing on fees and the only sizeable expense is wages.

So why am I spending so much on wages I hear you ask?

Well my wage budget is £4619 per week.

Any my wage total is £4758 per week.

So I am spending £139 per week more than am budgeted for.

That equates to £7,228 over budget per year.

Certainly nothing in the region of the losses we are experiencing.

So if I am not spending mone like there is no tomorrow, then why is my Chairman giving me a budget that will take the club into debt and ruin in a short time.

I haven't looked at the income totals yet but is this what you guys are seeing too?

I finished in the playoffs last season and am sitting comfortable mid-table this season so I wouldn't have expected particularly low attendance levels, (although I do play just about the most boring football on the planet).

Anyone experiencing something similar or have any thoughts on the matter?

I started with Hyde in BSN. First season my wage budget was $400k which equates to roughly to you wage budget. All players were already signed to 1 year contracts and i had no transfer budget. So financially i did nothing in that first year.

Despite that i recorded a loss of $200k which again is inline with the losses you are expecting.

The only reason i was able to get out of that hole was that i lucked out and got promoted to BSP the first year (by the skin of teeth). After first season of BSP i made a profit (my wage budget didnt go up much despite promotion) but not enough to make up for previous year of losses. It took two years of BSP to get me back in black. And both years my wage budget was essentially unchanged from my season in BSN.

So my conclusion is that in BSS/N teams run a deficit in hopes of getting promoted and the owner is willing eat that loss (indefinately?) in order to have that opportunity.

Jimbo... how many well off non league clubs are there?

If you spend your wage and transfer budgets it will by no means balance the balance sheet. At almost every club I have managed if I spent all of the allotted funds it would run me big into the red unless I won something big to add some income.

I don't fully understand why the chairman would provide a budget that would run the club into debt even if it was executed correctly.

Is it possible that the projected prize money would make up the difference?

Is it that the chairman expects the club to go into debt and will bank roll them if necessary?

Is it that the income earned in the end is not what was originally expected when the budget was released to you?

Lots of questions.

Do you know if you will be sacked if you stay within budget, win, but the club goes far into debt?

I havent played a non league side in FM09 but from some past experience I always found myself having to sell a player or maybe 2 to balance the books every year,the only way I progressed through the leagues was getting players good enough to sell to leave a transfer budget to buy better players(instead of free transfers)that same year or at least have cash in the bank for the following year to build on.

The only non-league clubs that can sustain the stated wage budgets are the ones who get in a decent crowd week in week out,

Plus many of the non-league clubs who have gone down the leagues may have done this due to debt related issues and could have out standing loans to pay off

I think you could get sacked despite sticking to the wage/transfer budget in FM08. One of the thing specifically addressed in FM09 was that manager is now only responsible for adhering to wage/transfer budget and putting a club into bankruptcy while following the budget guidelines doesnt affect your job status.

I can't cite an article to support it, but my recollection is that non-League sides do typically run at a loss on an annual basis, and have to rely on

- transfers of promising youth

- lucky Cup draws

- promising Cup runs, esp. with the prize money from the F.A. Cup.

That's part of why its such a huge deal for a Blyth Spartans to reach the Third Round and draw Premiership opposition.

(And to Fox Soccer Channel for showing me their last four F.A. Cup matches here in the States - quite enjoying watching it!)

The problem that I find with lower league finances is you don't even come close to balancing the books. Unless you get a ludicrously talented youngster there's no way you'll even get close to making up the debt by selling players. In my case it wasn't even like they allotted funds for a championship run where I can see running up a big deficit, we were allotted funds to avoid relegation and we were still in terrible shape by the end of the season.

I am currently managing Blyth, and obviously have been in the red, 50,000 worth. But with a good cup run I now have £25,000 in bank. it is very hard but not impossible.

don't think I will get much further in the FA Cup though, I drew Ipswich away in the third round.

One thing you have to be careful for is releasing players. That can really mess up the books if you don't pay attention.

Let's say you have a 10K/month wage budget and are on exactly 10K/month wages. Then you release a player on 1K per month on a 12 month contract on a free. You are now 1K/month under your wage budget. However, your total wages for that month will go up by 12K, because the released players total payout is considered wages in FM. If you then sign a new player on a 1K/month contract your current wages will be at 10K/month again, neatly at your wage budget. However, at the end of the year your total wages will not be 120K (wages*12), but 132K (wages*12 + released players wages). Your board will be happy, but actually you just did some creative accounting with the wage budget.

Overall I'd say you need to be at 50-75% of your wage budget to stay in the black and you should takes notes when you release a player out of a contract so you take those costs into account as well. Currently I am running on 12K wages on a 20K budget and I make between 3K and 8K clean profits a month in the BSP. This is without Cup revenue, that is just a bonus.

Cheers for the responses guys.

I don't think that I explained things clearly. I wasn't suggesting for a minute that the club should be running at a credit. I was just surprised that we were running at such a loss with minimal outlays in most areas of the balance sheet.

Nobby. Yeah I know that there aren't many.

Zappa. No, I didn't release a single player or member of staff.

Amaroq. Yeah, I would expect them to run at a loss too, but not on this scale.

Akaz. Yeah, in FM08 I was sacked for poor financial performance despite not spending a single penny on new players/sign on fees/contract terminationas, and never going over my wage budget by a penny. This instance is a little different in that I am over my budget so will have to take resonsibility.

Wez. Yeah, attendances might certainly be an issue in this, (as I am obviously managing a team that started off unplayable). I only have FC Utd to compar this to and maybe their increased reputation and fan base made them run at a profit despite the outlay to Bury FC for ground rental costs.

Cityull. You might have a point. I field weakened teams in Cup games as they suck big fat sweaty hairy ass. Maybe I will have to review that tactic.

Stokes. Yeah. In FM08 you could get sacked for poor financial performance despite staying within agreed levels,

The rule i try to use is, regardless of what the board say, i always try to keep my wages below gate reciepts! It does work and keeps you in the black, or gets you there in the first place!

I can't cite an article to support it, but my recollection is that non-League sides do typically run at a loss on an annual basis

I can cite an article

http://www.cambridge-united.co.uk/page/Boardroom/0,,10423~1465610,00.html

A (Blue Square premier) club being pleased that they've reduced their loses to ~£278,000 for the previous financial year, despite justifying any expense outside the original team budget.

Incidentally, this is not only applicable to non-league sides; the majority of football clubs (certainly in England) will run at an opperating loss.

The strange thing here is the apparent reduction in outgoings, versus the huge reduction in the bank account. I can only assume that either incomings are hugely down this season, of there was some decent windfall in previous seasons that improved the finances (although Jimbokav has been pretty thorough in what he's gone through, so I'd be surprised if he'd neglected something so obvious).

I'm currently in my second season of the Blue Square Premier with Witton Albion, I am exactly dead on my wage budget and have only brought in loan signings and free transfers and I'm losing 10k a month. Packing in a mighty 1,000 supporters on match day just isn't paying the bills so I'm having to rely on cup runs to bolster the finances.

If you get a couple of rounds in to the FA Trophy, Setanta Shield and FA Cup that's usually enough to see you through the season.

I'm not really sure how realistic it is, it does seem daft that the chairman would give you a budget that would ruin the financial stability of the club, but I just take it all as part of the challenge.

Wages may well be an issue, i got promoted from the BSS with Hitchin with a wage bill of £2.4k a week.

A tip for anyone at that level is get loads of home friendlies in pre-season against championsip sides, you can easilly rake in 100k-120k

I view that as cheating though so it's a bit of a no-no for me.

I might as well just edit my finances and give myself another £100k ecah season.

I lost £250,000 in my first season as AFC Wimbledon. This is despite an average gate of 2000+ and running at 75% of the wage budget.

I got promoted to the BSP and season ticket sales plus £80,000 tv money got me back into the black. I am now running at 50% of the wage budget and getting crowds of 3000+ to make a slight profit.

The cups are crucial, especially the FA trophy, if you get to the final at Wembley then a pot of gold will be waiting.

I wish I could give myself a pay cut as at £800 per week I am earning far more than my players. I don't need the money and I am quite happy to sit here playing it for free!

not sure if the finances are as "forgiving" as some might think!

i've taken Wrexham from BSP to the Championship (season 4 at the moment), and despite being under the wage budget, and reasonably successful (champions/treble winners in the BSP, League 2 champs, play-off winners League 1), attendances rising to 9500 on average (so far in my first Championship season), i've never had a transfer budget beyond season 1!

to detail:-

BSP - season transfer budget granted £10k (not bad for the BSP I suppose)

League 2 - season transfer budget granted 0 (or rather, the remnants of the previous seasons £10k, which came to the total of £4650 or summat!)

League 1 - season transfer budget granted 0 (again, the remnants of the previous 2 seasons budget, now down to £465 roughly!)

Championship - season transfer budget granted 0 (leftovers now down to £65 or something - what can you buy with that?!?)

at the end of each season, the club has mostly finished with a loss at the bank!

on promotion to the Championship, there was £1million TV money granted, which disappeared as it got swallowed up by £650k worth of club debt (there is no debt on the club as such, and no bank loan, but the club has been running at a loss over 3 seasons)....

it's just turned into the Jan transfer window, season 4, my first in the Championship, still no budget, and after checking the clubs finances again, we are down £200k - have no idea where the money is going to - only idea I have is that clubs at a lower league level, continually run at a loss due to operating costs plus players wages/bonuses/match fees/appearances/goals scored etc....

unless you have a larger fan base, e.g. Wolves, Sheff Utd/Weds etc, and can pull in more cash from attendances, not much is going to change, and if it does, it will be very slowly, and likely "success" based....

no doubt things will "improve", if I maintain Wrexhams existence in the Championship for a while and attendances continue to rise (mid-table safety at the moment), but ZERO transfer budget for 3 seasons? £65 budget for a season in the Championship??

incidentally, have had no cup runs to speak off since season 1, so no additional dosh there, and no players have been bought for substansial dosh, have had more success "swapping" players out....

quite a few clubs seem to be "entering" financial difficulties now, so seems to be endemic - Tranmere have just gone into administration in my game, and relegated from League 1 (would have been relegated anyway - i'm sure another club has fallen too, not sure which one though);

also Charlton (in the Championship now in my game) appear to be heading towards administration - finances are "insecure", and they have a huge playing staff, and as they are in the relegation zone, would have falling attendances....

I would say that life for any football club outside the Premiership (or the highest league in their country), is harsh to say the least!

I'm hoping for a board takeover, as there is no "bank loan" held against us, just the negative bank account at the moment!

Thanks for the detailed response, Riz. That quarter-mil loss is the number I had in mind as well, from previous reading and not from Cambridge.

Just an additional note... the lower league finances are actually still too forgiving in the game, as teams can be made profitable too easily. There may be several causes for this, one of the most likely being that the expenses for the smaller clubs are simply too small in the game compared to real life. For example when I've been playing as Cambridge in FM, I've always managed to make them turn a profit (compared to the loss figures discussed above) from the first season onwards (without any extra transfer income or huge cup runs).

I very much enjoy struggling around the lower leagues, and my favorite game was a lower league game where I was unable to turn a profit due to high outgoing payments (loan), and that tremendously limited my ability to bring the club up the league pyramid quickly.

It also presented very interesting decisions, like, "Do I sell this promising youth for 250k, despite the fact that he's a star player and I think that he's worth at least a million, but knowing that the 250k will cover our loss for the entire season?"

So I hope you lads will keep making lower-league club finances as realistic as possible!

so if you play as a club who rent there stadium to a lower league club do you recieve that additional income?

Currently playing as AFC Wimbledon, in my fourth season now. Three seasons spent in the BSS, first season in the BSP.

Even though I am 5k a month under the wage budget I am losing a significant amount of money per month. Had I not managed to fluke my way to the third round of the FA cup in the second season earning the club 300k in tv revenue on the way, the club would be in dire straits.

The frustrating thing during the third season (despite winning promotion via playoffs) was that Team Bath spent over 1 million pounds on players and one of their players was earning more money than my entire squad put together!!! I assume as they spent nothing in the first 2 seasons they were taken over during third season? They were also attracting players of a ridiculously high calibre. to put this in context my transfer budget is normally 2k a season.

Point being is that if you want your non-league team to be financially secure:

1/ Hope there is a lucrative takeover

2/ Hope your players get themselves fired up for FA cup games.

I am currently managing Blyth, and obviously have been in the red, 50,000 worth. But with a good cup run I now have £25,000 in bank. it is very hard but not impossible.

don't think I will get much further in the FA Cup though, I drew Ipswich away in the third round.

and by playing the game i gained £203,000

Nice! .

Does any one know if pulling out of the reserve league improves the finances?

I'm Caersws and even though I have been on or near my wage budget for the whole of my two and a half seasons, we've still been losing a few grand each year, which seems realistic.

Cheers for the response Riz:thup:.

Just to clarify though, my point wasn't that Hitchin were running at a loss, (as I would expect). My points was they were running at such a high loss.

Im currently managing Redditch in my second season :

1st season -11th in BSN , 1st Round of FA cup , decent cup runs.

Turnover - £250k

Expenditure - £350k

Net transfer spend - £0

Total wage costs - £235k

Profit/(Loss)- £65k in the red (Loss)

Start of this season (2nd season , played 1 game so far at home)

Turnover - £65k

Expenditure - £45k

Net transfer spend - £0

Total wage costs - £21.5kk

Profit/(Loss)- £19k profit

Just look at teams like Stafford Rangers IRL who have gone to the wall. Most clubs at non-league level only survive due to cup runs, big friendlies and a generous chairman. Hinckley United for example had a cup run the other year that paid the wages for a couple of years and have friendlies with the likes of Leicester and Villa on a regular basis drawing crowds of 2000+ when their avg. attendence is 540. Friendlies aren't cheating as another poster said. Its survival.

Freindlies may be survival.

Creating friendlies against teams who would not play a friendly in real life is cheating I think.

The example that was used in this thread was as follows.

A tip for anyone at that level is get loads of home friendlies in pre-season against championsip sides, you can easilly rake in 100k-120k

That;s not realistic so it is cheating.

Don't get me wrong, it's up to the indivudual how they play but I have no intention of doing it.

?? Not sure why you consider it unrealistic and cheating. Those kind of pre-season fixtures are a staple part of the July diet. Case in point in the last few seasons my club has hosted the likes of Palace, Charlton, Reading, Gillingham and Brentford. Even the bigger EPL clubs often like to have a very early run-out at a non-league club as they ease their way back towards match fitness.

Zoraster. I'm not saying that Conference North/South clubs never play Championship and even Premiership teams in pre-season. I'm suggesting that playing.....

loads of home friendlies in pre-season against championsip sides

And as a result.....

you can easilly rake in 100k-120k

Is unrealistic.

I hope you can see the difference.

Your example that your clubs have played 5 Championship sides over the last few pre-seasons, is not the same as hosting them all in the same season.

I try and get 1 decent friendly per season (League 1 or Championship), and have a decent defensive tactic I use in away cup game (well did until new patch) so garner enough money out of cups to survive financially. Problem really hurts if you have a really small ground and attendances.

If I have a really small ground and attendances I try and stay well below wage budget and operate on a very very small squad ie 16-18 total players not on youth contracts.. Injuries I have to cross fingers that I have cover, play someone out of position or use a youth player.