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Wednesday, 24 July 2013

Is It Worth Splashing the Cash?

There are those who are saying we should fly in the face of the new FFP rules and splash the cash on players and ignore the consequences in chasing promotion. Whilst on the surface that seems a beautiful dream it has extreme perils too.


Much of what I say will be based on previous teams and previous attempts to do this, and that just chucking money at the promotion issue isn’t always the great solution it seems. However, there are as many if not more occasions where it has resulted in success.

You could argue that the recent presence of QPR and Wigan, and the ongoing presence of Fulham owe more to wholesale financial investment rather than actual quality. Remember Fulham were in the doldrums football wise before al-Fayed took them up the leagues, before selling up this season. Although now cemented the size of their ground and relative size to neighbours means they are always going to overspend. Likewise Wigan, who flew up the leagues due to heavy investment, and QPR till their relegation looked the same? So investment reaps rewards!??

No, not quite. Leeds United will always be that classic case of spending to achieve success and when that success fails, not being able to pay those bills. Now we have the rich benefactor that is Fawaz but it still means these players are club employees with wages and all that goes with it. Fawaz insists he is here for the long term, but Forest fans can be all too aware the very worst can happen. I’m not quite killing Fawaz off, but the point remains, you have to plan frugally to avoid any potential long term disaster. In a similar vein, Fawaz sources of income could easily be hit hard and in those situations you cut off your main siphons of cash. That’d be Forest.

So moving back to Leeds, loading up on expensive players doesn’t mean they achieve that success, and when they don’t that bill to foot is hard. Because often everything in future budgets is related to where you think you will be. Leeds borrowed and budgeted against Champions League finances and when it didn’t happen the bubble burst.

Nowhere more illustrated than with Portsmouth, who will be ploughing their trade at such low ebb after chasing a dream they could never really afford. That’s a potential result of doing what we’re doing. I trust the al-Hasawi's have the best interests at heart, but you have to hope their heads match their hearts for that sake.

Anything in financial terms has a bubble where prices can inflate till it explodes. Football is no exception. So yes we could go out and spend the relatively modest to Premier League fees of £10 million on players, but in the Championship, that’s a gigantic figure. Clubs who spend anything above £2.5 million overall these days have splashed it around a little bit. So much of the division is made up of clubs who roughly cope financially, breaking even is a success. Further relegations are painful financially, and thats before potential sanctions should we fall into administration.

Another aspect of just going out and trying to buy success is that it just doesn’t always work. Yes you have quality players, but without the right blend it doesn’t work. Here we look at Leicester. They have spent big sums in the last few years, but they just don’t get the blend right, and have failed to achieve what they set out for. Comparing that to someone like Palace who were finacially in danger a few years ago and changed their entire structure and they achieved success.

It’s that Palace model which I think more clubs should aspire to. But the lure and promise of top flight football and the riches it brings forces the hand of club owners to chase the impossible dream. Not only is investment needed, but sound management.

So in essence should we spend those huge sums we are linked with spending? It’s a risk maybe worth taking, but it’s one that frankly scares me as the possibilities if we fail are being left with expensive players on huge wages. Is it a risk worth taking? Perhaps

The rules on FFP are quite clear though now, but the periods of reprimand have somewhat changed. Based on the football leagues website should we be promoted this year we would be sanctioned, BUT would avoid the transfer embargo placed had we done it any later? The fine would vary from 1% for £100,000 over spend to 100% for £10,000,000 or above (then shared amongst the clubs) Baring in mind we were running at apparently around £5-7mill deficit depending on your source for the period before this spate of spending, it makes you wonder if the al-Hasawi's have decided to risk it. There is a maximum loss of £8mill allowed, £3 if the chairman doesn’t inject equity. That or we are indeed about to announce a bumper sponsorship deal. This would offset the costs. Now at higher levels this is something they are aware of and have legislated for (there is a policy of setting market values on stadium sponsorship and suchlike) but what the exact rules are I’m unsure. Bear in mind the multi millions deals done for stadium sponsorship, we could certainly look at that revenue stream to justify a large spend and get round FFP.

That would certainly explain any splurges, I have seen said by others if there is an Algerian or Arabic connection, taking Guedioura to Kuwait, and the targeting of Algerian players (or perhaps Pep just recommended them, or has been used as a lure) Either way, it seems that the club have decided to spend. As a fan this excites me, naturally I want quality, but the realist is worried what the implications could be if we don’t go up. Although firmly in support of the al-Hasawi’s we have before looked at why they own us, wondering the motives. Hopefully the spin is right, Fawaz does love Forest, but there remain question marks. Namely they turned Everton down before taking over Forest. So what’s the aim? How many care as long as we succeed on the way?

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