Salford financial issues(again…)

[M j M]

Firstly Employer's National Insurance is excluded from the salary cap so add that on to their squad spend. But then there is the off-field team including the coaches, physios etc, back office staff for admin, finance functions, ticket office (unless covered by the rent). Salford employed an average of 64 people last year, which is probably the fewest in the league, but is still a large chunk of payroll on top of the playing squad. Then costs of training locations, transport costs, utility costs, all the other things associated with running a business.

Only the largest clubs in the league give any useful indication of breakdown of spend in their financial statements and most of those are distorted by the costs of running their stadia. But just as an indication, and obviously the scale of operation is very different, but if we look at the one big club that rents a stadium Wigan's total payroll was £5m for 119 employees.

Aside from their playing squad I really don't think there is any spending black hole waiting to be exposed at Salford, they almost certainly run the skinniest set of overheads in the league. For them it's a revenue problem.

[Dave T]

1 hour ago, Archie Gordon said:

A reminder that going into admin, etc., no longer causes a club to drop an IMG grade. It means you lose half your finance points.

Came here to highlight this...

"Under Minimum Standards a change will be made to the treatment of an Insolvency event. A grade deflation will be replaced with a grading points deduction. The rationale being that a Grade A club, moves to Grade B under ‘regular’ scoring mechanism, suffers an event, moves to Grade C, cannot partake in Super League or a Grade C club suffers an event, has nowhere to go and this could effectively be termination of membership by another route. From 2025 a deduction of 50% of the Finance pillar points score will be made (maximum 2.25 points deduction)."

[Tommygilf]

11 minutes ago, Dave T said:

Came here to highlight this...

"Under Minimum Standards a change will be made to the treatment of an Insolvency event. A grade deflation will be replaced with a grading points deduction. The rationale being that a Grade A club, moves to Grade B under ‘regular’ scoring mechanism, suffers an event, moves to Grade C, cannot partake in Super League or a Grade C club suffers an event, has nowhere to go and this could effectively be termination of membership by another route. From 2025 a deduction of 50% of the Finance pillar points score will be made (maximum 2.25 points deduction)."

In Salford's case that would drop them below Toulouse.

[dboy]

11 minutes ago, Dave T said:

Came here to highlight this...

"Under Minimum Standards a change will be made to the treatment of an Insolvency event. A grade deflation will be replaced with a grading points deduction. The rationale being that a Grade A club, moves to Grade B under ‘regular’ scoring mechanism, suffers an event, moves to Grade C, cannot partake in Super League or a Grade C club suffers an event, has nowhere to go and this could effectively be termination of membership by another route. From 2025 a deduction of 50% of the Finance pillar points score will be made (maximum 2.25 points deduction)."

So the worse your financial performance pilar score is in the first place - the less the punishment is!

50% of nowt, is nowt.

[LeytherRob]

12 minutes ago, M j M said:

Firstly Employer's National Insurance is excluded from the salary cap so add that on to their squad spend. But then there is the off-field team including the coaches, physios etc, back office staff for admin, finance functions, ticket office (unless covered by the rent). Salford employed an average of 64 people last year, which is probably the fewest in the league, but is still a large chunk of payroll on top of the playing squad. Then costs of training locations, transport costs, utility costs, all the other things associated with running a business.

Only the largest clubs in the league give any useful indication of breakdown of spend in their financial statements and most of those are distorted by the costs of running their stadia. But just as an indication, and obviously the scale of operation is very different, but if we look at the one big club that rents a stadium Wigan's total payroll was £5m for 119 employees.

Aside from their playing squad I really don't think there is any spending black hole waiting to be exposed at Salford, they almost certainly run the skinniest set of overheads in the league. For them it's a revenue problem.

1684939078_salford_red_devils_-_community_share_document_-_digital_(1).pdf

This is from the stuff on the crowd funder they put out. There was also a business plan doc (Microsoft Word - Salford RD Holdings CBS Business Planv2.docx) which seems to have informed this. I say this because there were some pretty ambitious attendance targets set that they missed which will be increasing the deficit.

 

Our projection for 2023 is a further 20% increase in average attendance, taking this figure to 5434. This ended up 4705 for 2023 and 4,646 for 2024. The target for end of 2025 was to be at 6k which i doubt they'll make.

 

 

[Barley Mow]

3 minutes ago, Tommygilf said:

In Salford's case that would drop them below Toulouse.

Assuming Toulouse don't drop points too. They will have to have a very good year to maintain their current score.

[dboy]

I don't think SRD are actually on track for a financial episode. 

They'll either get an investor, or they'll shift players on - either way surely they avoid a catastrophic issue??

[M j M]

27 minutes ago, LeytherRob said:

1684939078_salford_red_devils_-_community_share_document_-_digital_(1).pdf

This is from the stuff on the crowd funder they put out. There was also a business plan doc (Microsoft Word - Salford RD Holdings CBS Business Planv2.docx) which seems to have informed this. I say this because there were some pretty ambitious attendance targets set that they missed which will be increasing the deficit.

 

Our projection for 2023 is a further 20% increase in average attendance, taking this figure to 5434. This ended up 4705 for 2023 and 4,646 for 2024. The target for end of 2025 was to be at 6k which i doubt they'll make.

 

 

Thanks, that looks like a tight run ship, I don't think any other club will be running at those levels of overhead.

I wonder what %  of overhead the cap spend is - the original salary cap was 40% or 50% of income and I've never understood why that was abolished when the fixed limit was introduced rather than being retained alongside it.

[Just Browny]

1 hour ago, Celtic Roosters said:

I can remember when positions in Rugby League were decided by what players did on the pitch? Aaaah yes, the good old days. They seem like a distant memory now. Glad I'm not so involved now.

I'm pretty certain the quality of what Salford's players do on the pitch will be affected very quickly if the club goes bust or cannot afford to pay their salaries. As in any era.

Edited January 22 by Just Browny

[Exiled Wiganer]

I feel as if I am being slow today, as I have read 2 comments that seem at odds with one another. 

Here is my scenario: 

- I want to buy Salford and want them to be debt free and in Super League

- I make sure they tell IMG what they need to hear to make sure I get a place

- I am then happy for that club to flounder and die: ideally, they get enough cash to tide them over, then they can die quickly and I can start a new Salford, with a shiny clean balance sheet

- I may then be safely in SL in the following year, as the new approach to finance has a marginal impact on me at best

- once this is wrapped up I can drive round the creditors left with nothing shouting “Unlucky you massive losers!” 

Someone said that they would be relegated because they would lose a grade whereas someone else said that they would lose a proportion of a small number… 

Am I alone in wondering whether, if this is the case, the game has collectively lost its senses? 

[LeeF]

1 hour ago, dboy said:

Yes, but ones which dwarf the cost of a squad and venue?

We have worked out that they don't have a huge income, but can you suggest which costs are creating such a massive shortfall?

64 employees for YE 2023

Over £2.5 m of bank debt

but as others have posted above there are numerous other costs. 

Edited January 22 by LeeF

[Exiled Wiganer]

1 hour ago, M j M said:

Firstly Employer's National Insurance is excluded from the salary cap so add that on to their squad spend. But then there is the off-field team including the coaches, physios etc, back office staff for admin, finance functions, ticket office (unless covered by the rent). Salford employed an average of 64 people last year, which is probably the fewest in the league, but is still a large chunk of payroll on top of the playing squad. Then costs of training locations, transport costs, utility costs, all the other things associated with running a business.

Only the largest clubs in the league give any useful indication of breakdown of spend in their financial statements and most of those are distorted by the costs of running their stadia. But just as an indication, and obviously the scale of operation is very different, but if we look at the one big club that rents a stadium Wigan's total payroll was £5m for 119 employees.

Aside from their playing squad I really don't think there is any spending black hole waiting to be exposed at Salford, they almost certainly run the skinniest set of overheads in the league. For them it's a revenue problem.

Wigan’s stadium is now owned by Wigan’s owner. 

[Ackroman]

23 minutes ago, M j M said:

Thanks, that looks like a tight run ship, I don't think any other club will be running at those levels of overhead.

I wonder what %  of overhead the cap spend is - the original salary cap was 40% or 50% of income and I've never understood why that was abolished when the fixed limit was introduced rather than being retained alongside it.

Unless I'm missing something that's £2.4m of accumulated debt in 5 years. Pretty much the entire turnover from 2021. 

The other point is that a CBS is an FCA regulated body and if someone is not telling the truth about the reality and outcomes to get people to invest, I believe that's fraud.

[sweaty craiq]

I believe the debt is nearer £4m

[M j M]

8 minutes ago, Exiled Wiganer said:

Wigan’s stadium is now owned by Wigan’s owner. 

Yes but it's still rented by the Wigan company and, for the purposes of what we're looking at here (which is historical data anyway) the employment costs of maintaining and running it won't be born by Wigan.

[Dave T]

1 hour ago, M j M said:

Firstly Employer's National Insurance is excluded from the salary cap so add that on to their squad spend. But then there is the off-field team including the coaches, physios etc, back office staff for admin, finance functions, ticket office (unless covered by the rent). Salford employed an average of 64 people last year, which is probably the fewest in the league, but is still a large chunk of payroll on top of the playing squad. Then costs of training locations, transport costs, utility costs, all the other things associated with running a business.

Only the largest clubs in the league give any useful indication of breakdown of spend in their financial statements and most of those are distorted by the costs of running their stadia. But just as an indication, and obviously the scale of operation is very different, but if we look at the one big club that rents a stadium Wigan's total payroll was £5m for 119 employees.

Aside from their playing squad I really don't think there is any spending black hole waiting to be exposed at Salford, they almost certainly run the skinniest set of overheads in the league. For them it's a revenue problem.

A quick scan at Wire's accounts (I know it's not like-for-like) shows that we hired 131 staff and had remuneration costs of £5.9m. I expect that £5.9m is higher than Salford's turnover. 

[Dave T]

50 minutes ago, Exiled Wiganer said:

I feel as if I am being slow today, as I have read 2 comments that seem at odds with one another. 

Here is my scenario: 

- I want to buy Salford and want them to be debt free and in Super League

- I make sure they tell IMG what they need to hear to make sure I get a place

- I am then happy for that club to flounder and die: ideally, they get enough cash to tide them over, then they can die quickly and I can start a new Salford, with a shiny clean balance sheet

- I may then be safely in SL in the following year, as the new approach to finance has a marginal impact on me at best

- once this is wrapped up I can drive round the creditors left with nothing shouting “Unlucky you massive losers!” 

Someone said that they would be relegated because they would lose a grade whereas someone else said that they would lose a proportion of a small number… 

Am I alone in wondering whether, if this is the case, the game has collectively lost its senses? 

I don't think potential buyers have as much control of this situation as you portray.

[Dave T]

1 hour ago, Just Browny said:

I'm pretty certain the quality of what Salford's players do on the pitch will be affected very quickly if the club goes bust or cannot afford to pay their salaries. As in any era.

Indeed - comments like the poster you reply to does sound rather like the whole Union nonsense about the game being built on corinthian spirit and such nonsense.

 

[Dave T]

1 hour ago, dboy said:

So the worse your financial performance pilar score is in the first place - the less the punishment is!

50% of nowt, is nowt.

Yes, it does appear to be a little weak imo - however I do wonder whether this is a reflection of the precarious position of clubs. Unintended consequences of this could see a small handful of clubs relegated by going insolvent even if they then end up stronger with new owners.

[M j M]

4 minutes ago, Dave T said:

Indeed - comments like the poster you reply to does sound rather like the whole Union nonsense about the game being built on corinthian spirit and such nonsense.

It's relevant to our one of our other problem clubs rather than Salford but in this vein I was amused to recently see on Redvee (I know, I know) one poster attribute London Broncos' problems to Leeds refusing to go easy on them in the second half of the 1999 Cup Final, racking up 50 points rather than acting in the greater interest of the sport.

[M j M]

Not looked at Warrington's figures for a while but jeez they would be quite terrifying for a normal business with total payroll running at 94% of turnover. Thank God for Simon Moran.

Edited January 22 by M j M

[gingerjon]

10 minutes ago, M j M said:

It's relevant to our one of our other problem clubs rather than Salford but in this vein I was amused to recently see on Redvee (I know, I know) one poster attribute London Broncos' problems to Leeds refusing to go easy on them in the second half of the 1999 Cup Final, racking up 50 points rather than acting in the greater interest of the sport.

It is #toosoon to talk about that game.

[Worzel]

3 hours ago, Celtic Roosters said:

I can remember when positions in Rugby League were decided by what players did on the pitch? Aaaah yes, the good old days. They seem like a distant memory now. Glad I'm not so involved now.

Yes your "good old days" would have us believe that Salford were the 4th most important club in the league, whereas the truth as we can now see is starkly different. 

[dboy]

The rumoured takeover bid seems to be becoming a step closer to reality, so surely there's light at the end of the tunnel for SRD.

Edited January 22 by dboy

[RigbyLuger]

Hope it's closer than the fella who was going to buy them last year.