It seems the media and the muppets (myself included) are convinced that a few clubs will be easily spending >100m net this summer. Indeed, looking at prices being bandied about, it would be nigh on impossible to sign 3 decent players for that.
And the reasoning seems to be 'prem money', and 'there's so much money in football'.
As a financial analyst, this doesn't really stack up though. Looking at the big clubs in England, all stats from the awesome Swiss Ramble website:
Chelsea: Posted a cash profit in 2014 of 19m, since then lost 21m and 70m. If you remove profit from player sales (thanks Luiz!) in operating terms Chelsea have lost over 200m in the last 3 seasons. If you switch to EBITDA, made 35m in 2016. So that's kind of the 'cash' to buy players.
Spurs: EBITDA of 48m.
Liverpool: 73m.
Arsenal: EBITDA of 82m.
City: EBITDA of 109m, financial profit of 24m.
Us: Big EBITDA of 192m, but financial profit of 49m.
So essentially you have a situation where, in theory, only 2 clubs make enough cash that they could spend >100m. (Us and City). But that ignores amortisation of previous years' spend, which leaves all clubs well shy of 100m of profit to use.
Fine, for City and Chelsea, it's obviously not an issue, they can always 'borrow' from other sources. But it's amazing that everyone seems to expect all this cash to be spent, when it's not really there. Even moreso when you factor that the pound has lost 20% of its value since this time last year.
Even scarier, clubs like Southampton, Palace and so forth only make c. 20m, and they're well run!
So I kind of don't get it. You'd expect something to give, and that something will likely be clubs operating at a loss, despite all the tv money. Madness.
And the reasoning seems to be 'prem money', and 'there's so much money in football'.
As a financial analyst, this doesn't really stack up though. Looking at the big clubs in England, all stats from the awesome Swiss Ramble website:
Chelsea: Posted a cash profit in 2014 of 19m, since then lost 21m and 70m. If you remove profit from player sales (thanks Luiz!) in operating terms Chelsea have lost over 200m in the last 3 seasons. If you switch to EBITDA, made 35m in 2016. So that's kind of the 'cash' to buy players.
Spurs: EBITDA of 48m.
Liverpool: 73m.
Arsenal: EBITDA of 82m.
City: EBITDA of 109m, financial profit of 24m.
Us: Big EBITDA of 192m, but financial profit of 49m.
So essentially you have a situation where, in theory, only 2 clubs make enough cash that they could spend >100m. (Us and City). But that ignores amortisation of previous years' spend, which leaves all clubs well shy of 100m of profit to use.
Fine, for City and Chelsea, it's obviously not an issue, they can always 'borrow' from other sources. But it's amazing that everyone seems to expect all this cash to be spent, when it's not really there. Even moreso when you factor that the pound has lost 20% of its value since this time last year.
Even scarier, clubs like Southampton, Palace and so forth only make c. 20m, and they're well run!
So I kind of don't get it. You'd expect something to give, and that something will likely be clubs operating at a loss, despite all the tv money. Madness.
