Craven Cottage Newsround

Concluding b+w geezer’s Fulham Finances series:

Fulham’s finances –  thoughts arising

My reports on Fulham’s accounts have tried to keep my own views out of it, partly because I was forming them as I went along. This last bit is different — a personal summing up.

Two familiar theories about Fulham’s finances are polar opposites. The first, a regular theme of Private Eye magazine, is that the Club is a bottomless pit into which Mr Al Fayed pours money he will never see again — a huge extravagance. The Eye has never cared for our Chairman and jeers at him annually for spending so much on Fulham, quoting gleefully from the Accounts.

The opposite theory implies that the likes of Private Eye are naive — an unusual accusation to make of that organ — and that FFC will eventually be a good business investment. It is hinted sagely that `creative accounting’ hides the true picture, and with all that Sky money, the Chairman must be onto a winner really. No evidence is ever given to support this guesswork for the following reason.

In the case of a premiership football club (any club) its chief cost and its main sources of income would be impossible to cloud in accounting mystery even if anyone wanted to. I refer to players’ wages, matchday attendances and, above all, income from broadcasting. Common knowledge among all clubs, and analysed annually by Deloitte, these three realities underpin why the Premiership hasn’t paid off yet for Fulham. No amount of `creativity’ could make the bottom line positive as things stand.

Accepting that Private Eye is cruel but true about the past, may the opposite view be a pointer to the future?

In Blackburn’s latest accounts, its Chairman writes:

“The new television deal kicks in from July 2007 and it potentially transforms our business. Turnover of £40m+ could increase to £50m+. This would enable us to better service our debt and invest in the team. It will depend, however, on our ability to maintain wages around the current level, in which case the percentage will fall from the somewhat unhealthy 75-80% to a more sensible 65%. Of course, this will depend in turn, on what the other nineteen clubs do.”

For Blackburn read Fulham and about half a dozen other clubs. Wages are the key — transfer fees too, but at least you can receive those as well as pay them out, where wages are pure irrecoverable cost. The extra £10 million will not prove significant on  its own if wages immediately consume 75-80% of it.

So where does hope lie to improve Fulham’s finances? No single thing that’s realistic, in my opinion, but a combination of the following:

- increased demand, leading to the ability to fill the ground without heavy discounts;
- this followed by an increase in capacity to 28,000-ish and selling that out at full prices too.
- finishing much higher in the league, like Blackburn last season.

Add the residue of the new Sky money and add also an improvement in commercial income to match (again) Blackburn’s level, and the mix of all of these things would make our annual income reach £60 million-plus instead of £40m.

Keep in this division and keep plugging away and all of that may happen.

My series ends here. It is archived at http://cravencottagenewsround.wordpress.com/tag/fulham-finances/