Financial

How to run a successful football club

Swansea City announced their financial results for the 2012/2013 season last week showing everyone how financial sustainability should be done in football.

They announced a healthy profit of £15.3m for the year ending May 31, 2013 from a turnover of £67.1m/ They made £14.6m profit the previous year proving this is no one off event. For comparison West Ham had a turnover of £46.1m in the 2011/2012 Championship season, a wage bill of £34.9m and losses of £25.4m. In our last full year in the Premier league (2010/2011) we had a turnover of £80.5m, a wage bill of £48.6m and losses of £18.5m.

Swansea are re-investing the ,majority of their profits into the completion of a new £6m Youth Academy training facility near the Liberty Stadium, plus an initial £5m on a new training complex at nearby Fairwood.

Swansea finished 9th place last season just one place in front of West ham but also managed a Capital One Cup 5-0 victory at Wembley which provided entry into this season’s Europa League competition. With this season’s extra TV money together with the Europa league one expect their profit to soar even higher next season.

The wage bill for Swansea in the 2011/2012 season amounted to to just £35m putting them top of the table on the wages per point criteria. Each one of their 47 points in 2012 cost them £735,000 while Man City paid £2,267,000 per point to earn their 89 points.

Swansea are just one of two Premier League clubs with zero debt. The club has also submitted plans to enlarge the Liberty Stadium, eventually to 32,000, to cater to current demand. 15,000 members of Swansea City Supporters Society Ltd owns 20 per cent of the Premier League club

When Leon Britton first joined the club in December 2002 aged 20 on loan from West Ham, the Swansea supporters’ trust partly raised the money to pay his wages, rattling a bucket around the north bank on the old Vetch Field.

If there is a financial & fan ownership model to aspire to follow it has to be the Swansea model and they don’t play bad football either!


Financial

How much is a player like Winston Reid worth?

If Winston Reid was up for sale (which he is not) or if West Ham were still a selling club (which our owners promise us we are not) There still remains possibility that the player himself has ambition to play in the champions league and could one day hand in a transfer request. We have to remember footballers are professionals with career ambitions and not wedded to one club like fans are. Loyalty with one club is rare these days. Even the legendary Bobby Moore joined Fulham.

So the question remains is how do you value an in form centre back like Winston Reid?. If you believe the papers then Arsenal values him at £6m but this probably just agent talk and a complete under valuation in today’s transfer market.

In a 2011 academic paper called The Valuation of Human Capital in the Football Player Transfer Market the conclusion in a nutshell was ’Value is what fools are willing to pay for it’

Never was that quote more true when Liverpool paid £35m for Andy Carroll and £20m for Stuart Downing only to sell them to West Ham for a fraction of that price earlier this year.

There are some factors which do determine the price whether the buyers are fools or not:

1) Squad Status

This player is an indispensable member of the team, This player is an important first team player

2) Age

The younger the higher value we can affix to a fee from the 21-25 range. The same for squad status: the higher the status, the higher value the fee.

3) Talent

Opta Statistics to determine whether a player is in the top 10% performers in their positions

4) League Factor

Like the European Golden Boot we can adjust the above talent for league factor and affix value of those factors. West Ham may not be so keen to pay a lot money for a Brazilian forward plying his trade for a small team in the Dutch league! Proved premier league experience adds further value.

5) Premium Position

Attacking Midfielders, central and wide areas in the final third of the field and forwards are considered premium. The problem with marginalizing the full back position or defence is that football is essentially a team sport and all players should be considered as equal. But that is not the case as a glance at the top transfer fees by position would suggest the goalkeeping position and full back positions are not essentially considered an area of the team where a team should spend plenty. There have been some anomalies with a handful of significant transfers of central defenders with Nesta, Ferdinand and Carvalho the more prominent names in the upper echelons of transfer fees and Dani Alves by far the most expensive full-back, on average, these positions command a smaller transfer fee than strikers for instance.

6) Adaptability

Certain nationalities notoriously had problems with adapting to the rigours of English football. South Americans are widely thought to have trouble adapting to the British game but it is more a case of the managers doing their in-depth homework on a player’s lifestyle, intelligence, attitude and personality as a person rather the footballer alone to provide a measure of cost certainty that their import can succeed.

7) Depreciation

“depreciation” basically amounts to a rental deal. Alex Ferguson paid a widely reported £10m for two years service of Carlos Tevez at £5m per season, while also paying his contract, How much would a club accept in depreciation? Arsene Wenger is probably the shrewdest manager around who is prepared to sell a player in his late 20s even at the top of his game for a significant return. Put this way, if Steven Gerrard was under his management, he’d likely be sold this summer whilst extracting maximum value for a player at the peak of his career but likely worth much less in 2-3 years as he settles into his 30s. Would he be right to do so? As a fan, NO! But in the real world, he is doing what the best managers do.

The “salvage” value is the theoretical sell-on fee when his contract expires (4-5 years) and this should prove an invaluable guide to the player’s actual price. How much “depreciation” would they be prepared to write off? 50%? 10%? What’s reasonable? Because a player can walk away from the club at the expiration of his contract, a club has the player for only a couple of years before they either make the decision to extend his contract and completely write off the transfer fee or make the decision to sell. For a two years rental, a player at the right age would prove no risk or profitable provided that player shows improvement or sustained performances.

8 ) Image Rights

What a player projects to bring in merchandising sales. This is a tricky subject as merchandising sales are variable rather then fixed. Clubs would have to release figures relating to the exact amount each player are thought to have earned for their clubs in their commercial activities.

Other Factors include: Games played previous season (36 for Reid last season) Goals scored, Size of buying club (modeled on stadium size) and
participation of buying club in continental club competitions.

One of the highest profile centre backs was also a product of our own West Ham Academy. In November 2000 we sold Rio Ferdinand to Leeds for £18m who later sold him to Manchester United for £30m in 2002. Chelsea bought the Brazilian Centre Back David Luiz for $25 million euros in 2011 but it is said they slapped a £50m price tag on him when Barcelona wanted him earlier this year.

I am not suggesting Winston Reid is a David Luiz or Rio Ferdinand but at their price tags Winston has to be worth at least £15m for any champions league team desperate for a good centre back. Winston ticks many of the boxes above to increase his value.

That said let’s hope we keep hold of him for a few more years yet. We need to hold out for a £50m bid from Barcelona ;-)


Nostalgia

Johnny Lyall's Claret and Blue Army

Amongst the best things about supporting West Ham, especially back in the 60’s and 70’s was the banter on the terraces. The cockney comedy takes a lot of beating with it’s unique style and terrace banter was at an all time high back in those days. One fans wit can lighten a moment or at least put a sense of perspective on the game we watch. To let Keith Coleman know he is “not mustard today” can make us forget we are losing 3-0, if only for a moment or two. However, just once in a while it takes just one fan to shout something against the trend, but yet have an amazing affect on everyone at the ground. One lone voice can start an avalanche on many a match day, but at an FA Cup semi final against Middlesbrough in April 2006 what happened bucked the trend of what had been conventional forever. Whoever the fan was that day, I am sure what he did was done on pure impulse, just like the cockney banter that has been heard at the Boleyn so often before.

John Lyall had of course passed away the week leading into the game and a period of silence before kick off had been organised to remember him. A wonderful servant to the club, John had his playing career at the Hammers cut short by a knee injury after just 36 appearances in the early sixties. He went on to manage the club from 1974 to 1989 and was much loved by the fans. John’s reign had seen our best ever finish in the League in 85/86, two FA Cup Final wins, a League Cup final and replay, a record winning margin in the old second division and two wonderful cup runs in Europe including another final. Most of the best ever football played at Upton Park was played under the man. But more importantly, anyone who had the honour to meet John, knew what a lovely unassuming person he was – a real gentleman.

Everyone at Villa Park that day had set themselves to show their respect before the match. The silence tribute was of course traditional to honour great men and woman of our game after their passing and anyone making any noise at all is frowned upon. One thing West Ham fans are famous for is their own way of showing respect. In another Cup semi final some fifteen years earlier it was “Billy Bond’s claret and blue army” that rang around the same ground, Villa Park, as our ten men lost 4-0 to Forest in a game where the cards had been unfairly dealt to us. What was unique of course was that the song was sung for 25 minutes non stop, even when we were conceding goals. Back to 2006 and one lone chant of “Johnny Lyall’s claret and blue army” as the silence was called for, started the whole West Ham army into the song. Many opposition fans booed the West Ham reaction to ignore the call for silence, but in hindsight I am sure they now understand that the song was much more fitting than the silence.

Both those semi finals made West Ham fans proud to be West Ham, regardless of the differing results of the two matches. Sometimes the results don’t matter.


News

Striker Injury Update

If like me you were wondering what has happened to Mladen Petric, I understand he has suffered a calf injury while warming up in the West Ham Development U21 match against Wolves U21 on 21st October. He is unlikely to return to full fitness until the end of November.

Ricardo Vaz Te is out with a dislocated shoulder he sustained at the Swansea away match. Although no estimate has been given for his return he suffered similar injury last season in the home defeat to Arsenal that kept him out for three months.

The latest news today is Andy Carroll has suffered a new setback with a stomach virus. It was hoped Carroll would return for the Chelsea home game on November 23rd but that now looks in doubt as the virus has delayed his training back to full fitness. I understand he is possibly targeting a return against his old club on 7th December.

However in more positive injury news Alou Diarra returns from injury by playing in the Development U21 team this evening at 7pm against Luton U21’s at Kenilworth Road. George McCartney will also playing along side him.

But Don’t worry we have Carlton Cole!


News

What You Can Do For Bobby Moore

Madam Tussauds are deciding which World Cup hero to immortalise in wax and are asking readers of their website to vote for which footballer they should put on display. The choice is between Maradona, Ronaldo, Beckenbauer, Pele and Bobby Moore.

So far Bobby is winning by a mile but just to make sure, please do your duty and vote HERE


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