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?

FFP And Moving Forward

Next season will be harder to achieve the aims of promotion. You cannot just throw money at the issue anymore. On that same counter hand, if you have a good manager and Billy Davies has shown he is more than capable then surely its good a chance as any. Because no-one can splash the cash you won’t get a few cash rich clubs chucking money around to try and get up.
That said it makes it harder as it involves financial income and spending x% of it. Clubs who are coming down from the Premier League will have parachute payments.It does make you wonder what QPR and all their extremely high waged players will do.

What you have to consider as part of this is that Ishmael Miller and Matt Derbyshire have quite excessive wages we are about to lumbered with. As it stands now they aren’t on our pay roll, their loan clubs taking that burden on, so that’s best part of £30k a week in wages being swallowed up. That’s a sizeable chunk of the financial leeway taken up.

It is surprising how many Premiership squad fillers are on wages big enough to make us baulk, and apparently Gonzalo Jara Reyes is included. Face it he’s an international player with a reputable nation in the top flight, of course his wages will be artificially inflated. I laugh when people reckon these players would come to us “for footballing reasons” no no, it’ll all be about wages.

That said, there might be a cooling on excessive championship wages, but that will just mean less players willing to step down from the Premiership, and therefore an even weaker Championship.

There are the loop holes of course that many mention. How about naming rights, sponsorship deals and suchlike. Yes there have been huge deals for some club. Manchester City tried circumnavigating rules with the impressive £100 mill deal for naming rights of their stadium by Etihad Airways. Coincidentally the ownership structure at both Etihad and City include the same big hitters. What is weirder is that that said airline as never turned in a profit in the 10-12 years it functioned before the deal, so how it afford that deal? Naturally very rich people with more money than sense. But that deal immediately flagged up this potential not just to clubs, but to the rules makers. It is said that there will be panels appraising any deals to see that they are market value and not skewed by club owners basically sponsoring the club vast sums to pump in cash. So no, I doubt we’ll see the al-Hasawi Kuwaiti Refrigeration Corp. sponsoring Forest. That Etihad deal will also potentially get round the rules by being for a vast complex of facilities as well the Stadium. Something we wouldn’t be able to explore, unless the extremely vague rumours of Fawaz targeting land on the other side of the River for development purposes.

These huge sponsorship opportunities are only open to huge clubs, but if we want the best and want to squeeze every penny to maximise our financial might then extra shirt sponsorship (above the names on the back) and Corporate branding of stands may be the next call. We are sadly limited in our earning scope. We don’t have a state of the art stadium to pimp out to various concerts or other sports to use for their own means for our financial gains. Yes, we did it before, but that was close to 10 years ago, and a lot more high spec stadiums exist now.

Now, we can’t try to find loop holes, although it’s clever, it’s also fraught with possibilities of retrospective action. Instead of fans suggesting this and that method to avoid paying that requisite % on wages, or trying to artificially inflate it, let’s just collate a talented fairly paid set of players. So let’s trawl lesser divisions and leagues for players to bring in, rather than Premiership squad members on way too much money.
Yes other clubs have flaunted rules before. Leicester with their administration to avoid paying full amounts of balances owed (and some clubs, I don’t know if Leicester did this too, but some avoided paying Charitable or Volunteer groups such as the St John’s Ambulance which I find deplorable)
So wastes of space in the squad really need to be shifted on and sharpish. But if you are Ishmael Miller why would you be expected to do your job elsewhere for less because of a new regime not liking the deals of a contract you signed and was agreed on? I love this argument fans have “oh he’s greedy because he wants to sit here and take money when he could go elsewhere” but no-one in their right mind would accept less money to do a similar job when they don’t have to.

What happens remains to be seen. There could be wholesale changes again, but that said a few teaks here or there could see this squad good enough.

Financial Fair Play Delayed?

One of the cornerstones of the last 2-3years of Nigel Doughty’s chairmanship before his untimely death was his belief in and determination to keep Forest in line with Financial Fair Play. His unwillingness to make large signings or dump a lot of money on wages like some of the promotion chasing brethren some say held us back from being promoted.

Financial Fair Play was meant to be introduced next season. Clubs, like in League One had caps of how much money they could spend of their turnover, i.e. 60%. This was stop clubs building up crippling wages which would bring them financial ruin as they chased promotion. It has been called a ticking time bomb, the financial mismanagement of some of these clubs, and to be honest it isn’t too far removed from what should have happened post ITV Digital Collapse.

However, the full details and signing off of this has not been ratified despite there being a deadline in the recent past and clubs won't meet again till the summer, far too late to be able to ring anything like this into play before the next season.

So it seems what was to be Doughty’s great lasting legacy of a club on sound footing may have been to no avail. Not that this is going to be scrapped, more postponed. There were opponents, notably those clubs who want to spend a lot to get promoted, i.e. West Ham. And it would stop clubs like Cardiff or Leicester from spending vast wages (Bellamy last season anyone, and as for Leicester’s wage bill)

The problem or so Ian Herbert writing in the Independent points out is that this all would become null and void should a team be promoted. Therein the Premier League they ramifications and penalties wouldn't be enforced and the club would escape. It's almost rewarding financial tomfoolery. Those who don’t get promoted would pay the double penalty of then falling foul of FFP. Until now.

And how would they be punished, well point dockings or denying promotion the next season would be likely. What could end up happen though is that some clubs take the NFL route of trying to fix wages and salaries to get round this, to effectively lower spend on wages with front loaded bonuses, or huge end of season benefits.

So all the efforts to bring the club to be fighting a fair fight and not just spunking cash up the wall chasing the dream, it seems has all, for now, been in vain.
Make no mistake, it is coming, but we’re just a little ahead of schedule. However if it is postponed it may make us a more viable option to buy as there is still a year to splash the cash.