Tranche 2 & the Preservation of Power

[Third Lanark]

3 hours ago, Fawlty Towers said:

I see Aberdeen made a loss in their most recent accounts but the thing that stuck out for me was this part:

“A key criteria of a well-run, financially sustainable club is the wages to turnover ratio, and, during this period, we are sitting at a very healthy 54%.

Do we know from the accounts due to be presented at the upcoming AGM what our ratio was and for this season what it is?

https://www.bbc.co.uk/sport/football/articles/ce9g5edrl50o

Did Aberdeen not get £8 million from selling the Macedonian lad that was scoring plenty of goals for them? Can’t remember his name off the top of my head 

Which might explain why their finances are a lot healthier?

[Fawlty Towers]

5 minutes ago, Third Lanark said:

Did Aberdeen not get £8 million from selling the Macedonian lad that was scoring plenty of goals for them? Can’t remember his name off the top of my head 

Which might explain why their finances are a lot healthier?

The current accounts include the sale of midfielder Ylber Ramadani to Lecce but not the record fee received striker Bojan Miovski to Girona a year later, which will be included in next year's numbers.

[Third Lanark]

19 minutes ago, Fawlty Towers said:

The current accounts include the sale of midfielder Ylber Ramadani to Lecce but not the record fee received striker Bojan Miovski to Girona a year later, which will be included in next year's numbers.

The Dons have also been helped by excellent cup runs.  I’m sure they have made it to a couple of semi finals and maybe a final too last couple of years.  Unfortunately by comparison our cup run’s have been terrible 

[wes]

14 hours ago, Woodstock Jag said:

They have a different impact from one another because they’re doing different things.

One sees money go to the shareholder selling the shares, and no change in the assets of the company.

The other sees money go into the company, increasing its assets.

There is a change to the underlying value of the company. It has £20 of new cash reserves. The assets of the company are now £120.

The shares aren’t being issued for free!

Before the shares are issued, the company is worth £100. After the shares are issued it's worth £120.

Before the shares are issued, the shareholder with 72 shares has 72% of £100. After the shares are issued the shareholder has 60% of £120.

72% of £100 and 60% of £120 are both £72.

No, your shareholding is still worth £72.

No, it remains the same.

 

Thank you, If a £20 cash investment increases the asset value by £20, what then happens when the cash investment is spent. Does that overall value of the business return to £100.

A very small point which illustrates again that when we respect each others diverse viewpoint and work to the good of the club overall, we will do better.

[Jordanhill Jag]

5 hours ago, Lenziejag said:

This is typical of the type of thing you do. In 22/23 our admin expenses were £3.1M. Of that, £2M was wages and salaries. In a previous post WJ said they playing staff part was £1.7M(seems high). That leaves £1.4M of non squad costs. So, already to get from £280K loss to breakeven it is a 20% cut not 10%. That’s not taking account of stuff(like energy, insurances) that can’t be cut because they are tied in to contracts or might in-fact be going up. 
It is still feasible to breakeven now - but only by cutting the playing budget.

If you read what I said concerning the Forecast Losses 

If you identify you have a £280K Forecast Loss for the Season - which will use up all your cash Reserves and you will struggle to pay your debtors - you take steps to minimise the loss - you might not wipe it out - but you reduce it drastically  

 These would include Staff Recruitment Freezes - cutting Non Core Expenditure-  trimming costs to the basics of the Football Squad - Putting a Game on at Firhill & the Stadium - everything else - you spend what you can afford - if you cant afford it - don't spend it   

That's it - otherwise your Running Out of Cash & Going Bust - why that is controversial I have No idea ?

The Core Issue at PTFC can be summed up in one Word - Politics 

When Colin Weir bought the Club - multiple Groups Jockeyed for Power following the " Fan Ownership" statement - problem was - No one ever knew what was meant by Fan Ownership 

Jlo Board were of the Opinion that it was merely Share Ownership - TJF believed it was Fans Owning & having a major say in the Club - then the "Thistle Trust " appeared - No idea what it was they wanted 

Then it moves onto the next phase - Money - or the lack of it - where going bust - so Temporary Allegiances are formed an Interim Board is formed 

Only problem was - a lot of the Temporary & Interim - morphed into permanent - and the jockeying for Power & Positions Dominated - the Free Money from America meant that rather than get a Proper Board - Financial Controls - Structure to run the Club - in Place - it just carried on - not a Million Miles different from the last Board 

However a number of Red Flags were on the Finances and Budgets which were simply ignored with serious implications 

At the AGM when repairs were mentioned - a vague response was given reference Seats replacement etc etc - However everyone knew that there was large Capital Spend ( CAPEX ) Required on various aspects of the Stadium - No allowance in the Published Accounts 22/23 - No mention in Budgets for 23/24 - 24/25 - was Breakeven - despite the large CAPEX requirement  - that simply made Accounts & Financial Statements nonsense - then funny enough one of the reasons given for the Forecast Losses in 24/25 is large Stadium Repair Costs - also £400K part funded by Tranche 2 is needed to fix the JHS Roof 

The Board KNEW these things required cash - decided not to make allowances - and paint a Rosy Picture of Finances at the AGM - keep spending Money that we didn't actually have  

In the Financial Statement in the Summer the Board KNEW there was forecasted losses of £280K for Season 24/25 ( as opposed to Breakeven )  - decided to exclude that key info from the Financial Statement - which means we cannot Trust anything we are told on Finances going forwards  

Our Finances are a Mess because we are not getting proper Financial Controls in place - we are fed whatever Financial info that suits the various Agendas on multiple levels at that time 

The Strategy is to get Tranche 2( Buy Time ) - Hope we will get Free Money from other American Investors after it runs out - that's it - that's the Cunning Plan       

Now TJF seem to be OK with whats going on ( otherwise they would have taken action ) 

Deliberately excluded key info on Forecast Losses from an important statement on Club Finances is well not OK - whoever is responsible has to go   

TJF telling us that certain Positions eg there Rep on the Board were Temporary - then deciding - know what we will just make it permanent - isn't OK  -  how can we Trust what they tell us in Future ?  

Neither the Board nor TJF looking to reduce Spend on £280K Forecast losses that burnt up all our Cash Reserves - isn't OK   

Which goes back to my Original Statement - they have all been caught up so much in the Politics - Agendas - Positions - Egos - that actually Running the Club as a sustainable entity for Future Generations has been ignored 

Hence why the Club are now making Statements that by the End of the Season we will struggle to pay our Debtors 

What happens with a Statement like that - Your out the Door - New Directors are brought in - its not OK 

Change People - Change Direction - or we go Bust      

 

[javeajag]

3 hours ago, Woodstock Jag said:

IIRC Thistle’s wage/turnover figure for season 2022-23, based on the accounts circulated to shareholders in December 2023 was 72%.

72% is way too high ….even rangers are only at 66%……and needs to be reduced to around 60%. Funnily enough that just about gets you to break even. 
 

running the club at a loss is a choice and a very dangerous one l

[Lenziejag]

1 hour ago, Jordanhill Jag said:

If you read what I said concerning the Forecast Losses 

If you identify you have a £280K Forecast Loss for the Season - which will use up all your cash Reserves and you will struggle to pay your debtors - you take steps to minimise the loss - you might not wipe it out - but you reduce it drastically  

 These would include Staff Recruitment Freezes - cutting Non Core Expenditure-  trimming costs to the basics of the Football Squad - Putting a Game on at Firhill & the Stadium - everything else - you spend what you can afford - if you cant afford it - don't spend it   

That's it - otherwise your Running Out of Cash & Going Bust - why that is controversial I have No idea ?

The Core Issue at PTFC can be summed up in one Word - Politics 

When Colin Weir bought the Club - multiple Groups Jockeyed for Power following the " Fan Ownership" statement - problem was - No one ever knew what was meant by Fan Ownership 

Jlo Board were of the Opinion that it was merely Share Ownership - TJF believed it was Fans Owning & having a major say in the Club - then the "Thistle Trust " appeared - No idea what it was they wanted 

Then it moves onto the next phase - Money - or the lack of it - where going bust - so Temporary Allegiances are formed an Interim Board is formed 

Only problem was - a lot of the Temporary & Interim - morphed into permanent - and the jockeying for Power & Positions Dominated - the Free Money from America meant that rather than get a Proper Board - Financial Controls - Structure to run the Club - in Place - it just carried on - not a Million Miles different from the last Board 

However a number of Red Flags were on the Finances and Budgets which were simply ignored with serious implications 

At the AGM when repairs were mentioned - a vague response was given reference Seats replacement etc etc - However everyone knew that there was large Capital Spend ( CAPEX ) Required on various aspects of the Stadium - No allowance in the Published Accounts 22/23 - No mention in Budgets for 23/24 - 24/25 - was Breakeven - despite the large CAPEX requirement  - that simply made Accounts & Financial Statements nonsense - then funny enough one of the reasons given for the Forecast Losses in 24/25 is large Stadium Repair Costs - also £400K part funded by Tranche 2 is needed to fix the JHS Roof 

The Board KNEW these things required cash - decided not to make allowances - and paint a Rosy Picture of Finances at the AGM - keep spending Money that we didn't actually have  

In the Financial Statement in the Summer the Board KNEW there was forecasted losses of £280K for Season 24/25 ( as opposed to Breakeven )  - decided to exclude that key info from the Financial Statement - which means we cannot Trust anything we are told on Finances going forwards  

Our Finances are a Mess because we are not getting proper Financial Controls in place - we are fed whatever Financial info that suits the various Agendas on multiple levels at that time 

The Strategy is to get Tranche 2( Buy Time ) - Hope we will get Free Money from other American Investors after it runs out - that's it - that's the Cunning Plan       

Now TJF seem to be OK with whats going on ( otherwise they would have taken action ) 

Deliberately excluded key info on Forecast Losses from an important statement on Club Finances is well not OK - whoever is responsible has to go   

TJF telling us that certain Positions eg there Rep on the Board were Temporary - then deciding - know what we will just make it permanent - isn't OK  -  how can we Trust what they tell us in Future ?  

Neither the Board nor TJF looking to reduce Spend on £280K Forecast losses that burnt up all our Cash Reserves - isn't OK   

Which goes back to my Original Statement - they have all been caught up so much in the Politics - Agendas - Positions - Egos - that actually Running the Club as a sustainable entity for Future Generations has been ignored 

Hence why the Club are now making Statements that by the End of the Season we will struggle to pay our Debtors 

What happens with a Statement like that - Your out the Door - New Directors are brought in - its not OK 

Change People - Change Direction - or we go Bust      

 

This is the other thing you do !

[Woodstock Jag]

3 hours ago, Lenziejag said:

Ok. Fair enough. Apologies for misquoting. I guess the other footballing costs are bonuses ? 
I don’t think the charts change my point much. To get to break even it’s a 20% cut of non player costs.

I think bonuses are included in the footballing wage costs. Other is (from memory) things like pitch hire for training, medical bills… anything directly related to first team personnel and operations.

[Woodstock Jag]

1 hour ago, wes said:

Thank you, If a £20 cash investment increases the asset value by £20, what then happens when the cash investment is spent. Does that overall value of the business return to £100.

A very small point which illustrates again that when we respect each others diverse viewpoint and work to the good of the club overall, we will do better.

Obviously if the Club makes operating losses the value of the company decreases.

That is taken for granted here.

But the issuing of new shares has zero impact on the operating profits or losses of the football club.

[Jordanhill Jag]

5 minutes ago, Lenziejag said:

This is the other thing you do !

What “ other thing” I do saying we have to Change People Change Direction 

pointing out major failings on Finances ? 

[Lenziejag]

4 hours ago, Jordanhill Jag said:

What “ other thing” I do saying we have to Change People Change Direction 

pointing out major failings on Finances ? 

Nope.

[Jordanhill Jag]

1 hour ago, Lenziejag said:

Nope.

Well everything I said was true - so you will just need to live with it 

[Lenziejag]

9 hours ago, Jordanhill Jag said:

Well everything I said was true - so you will just need to live with it 

Saying cutting  £2M overhead by 10% would wipe out £280K loss isn’t true.

[jagfox]

Meep Meep!

[javeajag]

3 hours ago, Lenziejag said:

Saying cutting  £2M overhead by 10% would wipe out £280K loss isn’t true.

Reducing our wages to turnover ratio to 60% would eliminate the deficit and put us on a sustainable financial position. As well as being in line with good practice. It provides good cost control with the incentive to increase revenue if you want to spend more.

The question why does the board, TJF etc etc possibly even you ….do not want to do that ?

Edited November 24 by javeajag

[stolenscone]

Just popping in to check whether anything new has been posted in the last 5 pages?  No?  OK, I'll see you all again in another 5 pages time for an update. 🙋‍♂️

[G13 jag]

4 hours ago, Lenziejag said:

Saying cutting  £2M overhead by 10% would wipe out £280K loss isn’t true.

Could £280k be saved by cutting the large playing squad by 5 players and saving on their wages?

[jaggy]

2 hours ago, G13 jag said:

Could £280k be saved by cutting the large playing squad by 5 players and saving on their wages?

You mean sack them even though they’re under contract? I think we’d need to pay off the contracts.  And how many of our players are getting paid that much? Certainly not the ones we could afford to lose

[Woodstock Jag]

4 hours ago, javeajag said:

Reducing our wages to turnover ratio to 60% would eliminate the deficit and put us on a sustainable financial position. As well as being in line with good practice. It provides good cost control with the incentive to increase revenue if you want to spend more.

The question why does the board, TJF etc etc possibly even you ….do not want to do that ?

It's important to stress that the 72% figure I quoted was for season 2022-23. It was the year we lost more than £355k despite a near £100k wage subsidy coming in from the Youth Academy.

Absolutely it is desirable to reduce the wages to turnover ratio. No one disputes this.

The question is how you do it.

Aberdeen achieved it by spending more on player wages, securing better footballing outcomes (driving up gate income and prize-money from European competition) and through a player-trading strategy to generate higher turnover. They also increased their commercial revenues in the same period. Simply put, they took a punt that investment in the football team would be repaid in speculative income rewards.

Since 2022-23, at Thistle we have seen (stripping out the Rangers game) (a) a significant increase in gate revenue and (b) significant improvements in commercial revenue. There are several specific, undersold, commercial opportunities from deals signed pre-fan-ownership, which are set to expire in summer 2025 and 2026, which if even moderately well negotiated will see six-figure improvements in the headline commercial income figure. What we haven't seen (yet) at Thistle is a major change in is overall prize-money (last year's 3rd place finish broadly offset by less cup progress).

Once the 2023-24 accounts have been finalised and circulated to shareholders, we'll be able to see whether progress was made last season in getting the wage to turnover ratio down.

And the Club Board has already made clear that, in order to close the structural gap next season, it plans to cut the wage bill (mainly by operating a smaller footballing budget).

When you consider that, according to the 2022-23 figures, over 3/4 of the wage bill at Firhill was attributable to the playing and coaching staff, that suggests there is relatively limited room to reduce costs on non-footballing operations. Especially if you want there to be adequate staffing of the revenue-generating parts of the business.

[javeajag]

11 minutes ago, Woodstock Jag said:

Absolutely it is desirable to reduce the wages to turnover ratio. No one disputes this.

The question is how you do it.

By only spending 60% of your turnover on wages 

 

11 minutes ago, Woodstock Jag said:

Aberdeen achieved it by spending more on player wages, securing better footballing outcomes

How many times have we tried this ? It’s never worked and how much have Aberdeen lost in this time ?!

 

12 minutes ago, Woodstock Jag said:

they took a punt that investment in the football team would be repaid in speculative income rewards.

The words punt and speculative lead to administration

 

14 minutes ago, Woodstock Jag said:

significant increase in gate revenue and (b) significant improvements in commercial revenue. There are several specific, undersold, commercial opportunities from dea

As I said the more revenue you have the more you can spend but capped at 60%

it’s not rocket science 

[Woodstock Jag]

6 hours ago, javeajag said:

By only spending 60% of your turnover on wages 

But your turnover isn’t a fixed known figure in advance. It varies by several hundreds of thousands of pounds based how well your income sources perform, and several of them are very unpredictable (for example, football prize money and gate income).

Thistle has varied between having a turnover of anything between £2 million and £3.1 million in this division in relatively recent history.

If we are taking the lower of those two figures, you are suggesting that the total wage bill for the entire football club should be cut by more than £800k as against 2022-23 levels. Without in any way compromising footballing outcomes or off-field revenue generating operations.

If we are talking the higher of those two figures, that means only roughly a £100-150k cut in wages/social security/pensions. A very different, much more manageable, proposition.

Which figure should Thistle be using?

How should those cuts be achieved? Specifics. Pounds and pence.

6 hours ago, javeajag said:

How many times have we tried this ? It’s never worked and how much have Aberdeen lost in this time ?!

You are literally telling us that we should be trying to achieve a wage to turnover improvement akin to what Aberdeen achieved between 2022-23 and 2023-24. You are calling on Thistle to do that!

We are talking about Aberdeen’s situation where they (a) made £1.1 million profit in 2022-23 with a 74% wage to turnover ratio and (b) in 2023-24 made a £900k loss with a 54% wage to turnover ratio.

So either you:

(a) accept that the wage to turnover ratio isn’t everything, and that you have to take other things into account when assessing sustainability

or

(b) are saying we should cut the wages to turnover ratio even if it increases our operating losses!

Which is it?

6 hours ago, javeajag said:

The words punt and speculative lead to administration

When it doesn’t lead to the required footballing outcomes? Yes. Absolutely.

But in Aberdeen’s case, it’s been a resounding success, as they’ve slashed their wages to turnover ratio by spending more on their squad, using that as the means to generate revenue from gate income, prize money and player sales, and have improved their bottom line. Despite their £900k loss last season they have almost £7 million from the Miovski transfer in place for this year, and they’re right up at the top of the league.

All Clubs are taking some element of risk with what they spend. The question is what the sensible amount of risk to take is.

6 hours ago, javeajag said:

As I said the more revenue you have the more you can spend but capped at 60%

it’s not rocket science 

Capped at 60% of what turnover figure? Turnover calculated at what point? The previous season’s actual result? The average of the last 3 seasons? A forward looking forecast? Based on what revenue assumptions?

The Club’s turnover has varied between (slightly below) £2.5 million and (slightly above) £3.1 million in this division between seasons 2021-22 and seasons 2023-24.

Your 60% wages to turnover target has a more than £300k discrepancy depending on whether you take the lower or the higher of those figures.

So which figure does the Club pick?

A Club’s wage budget, once set, has relatively little flexibility to be reduced in-season in response to changes in revenue expectations. You can try to save money in the January transfer window. You can try to reduce staffing levels (though savings are always likely to be small given lay-offs involve severance payments). But it’s basically 80-90% baked in from August until May.

So what’s the approach here? Be specific. Do you take the most pessimistic possible turnover assumption (relegation prize money, low 2000s crowds, a £2 million turnover football club), and give yourself the task of cutting more than the entire non-footballing staff budget and more?

Or do you set the expected turnover figure higher, and keep on more of your playing and administrative staff, on the basis that this will generate additional income, with a successful football team and people being paid to deliver better commercial income for the Club, but in the knowledge that, worst case scenario, it might not?

Thats your dilemma. This is about trade-offs.

It’s not “simple”.

Edited November 24 by Woodstock Jag

[Lenziejag]

9 hours ago, javeajag said:

Reducing our wages to turnover ratio to 60% would eliminate the deficit and put us on a sustainable financial position. As well as being in line with good practice. It provides good cost control with the incentive to increase revenue if you want to spend more.

The question why does the board, TJF etc etc possibly even you ….do not want to do that ?

JJ’s premise is not to impact the playing squad. But theoretically, reducing the wages to turnover ratio to 60% would put us into a profitable position, assuming that downgrading the playing budget by so much wouldn’t have an adverse effect on league position and/or attendances.

[javeajag]

4 hours ago, Lenziejag said:

JJ’s premise is not to impact the playing squad. But theoretically, reducing the wages to turnover ratio to 60% would put us into a profitable position, assuming that downgrading the playing budget by so much wouldn’t have an adverse effect on league position and/or attendances.

Your point being ….l

[javeajag]

4 hours ago, Woodstock Jag said:

Thistle has varied between having a turnover of anything between £2 million and £3.1 million in this division in relatively recent history.

Then take 60% of the income of the league you are actually in and the revenue you ACTUALLY have. The answer to your question is to cap wage expenditure at 60% of revenue. Are you seriously saying we should actively get into debt cause it sounds like it ?

 

5 hours ago, Woodstock Jag said:

You are literally telling us that we should be trying to achieve a wage to turnover improvement akin to what Aberdeen achieved between 2022-23 and 2023-24. You are calling on Thistle to do that!

I am doing no such thing , you made that up. All I’m saying which seems to be causing you difficulties is that we should 

1 not spend money we don’t  have 

2. Cap the wage bill at 60% of turnover

3. Operate on a breakeven financial basis 

4. Not take a punt , speculate or any other dangerous action in the clubs finances.

5 hours ago, Woodstock Jag said:

All Clubs are taking some element of risk with what they spend. The question is what the sensible amount of risk to take is.

On multiple levels we are not  Aberdeen who lost money last season but were bailed out by a players transfer …..we are not in that position because we are fan owned.

 

5 hours ago, Woodstock Jag said:

It’s not “simple”

I remember working with HSBC years ago where their staff said HSBC meant How Simple Becomes Complicated …..you would love it there.

[Woodstock Jag]

9 minutes ago, javeajag said:

Then take 60% of the income of the league you are actually in and the revenue you ACTUALLY have. The answer to your question is to cap wage expenditure at 60% of revenue. Are you seriously saying we should actively get into debt cause it sounds like it ?

No. I'm asking you to explain how the turnover figure - for the purposes of preparing the season 2024-25 budget (or indeed any future budget) - which is premised on volatile future revenues - should, in your view, be calculated for the purposes of deciding to spend only 60% of revenue on wages.

In 2018-19 Partick Thistle had a turnover of £3.04 million.

In 2019-20 Partick Thistle had a turnover of £2.66 million.

In 2020-21 Partick Thistle had a turnover of £1.48 million.

In 2021-22 Partick Thistle had a turnover of £2.47 million.

In 2022-23 Partick Thistle had a turnover of £2.82 million.

In 2023-24 Partick Thistle had a turnover of over £3.1 million.

What turnover figure should Partick Thistle use for the purposes of the 2024-25 budget? Give me a number and a margin of error. I'll allow you, for the sake of argument, ±£150k. Tell us what it should be based on.

Without that number, we cannot meaningfully say what "60%" looks like for the purposes of deciding what the Club has available to spend on hiring people.

60% of the lowest of these figures is less than £900k. For the Club's entire staff. A figure broadly equivalent to Greenock Morton's playing budget.

60% of the highest of these figures is almost £1.9 million. More than double. And within £100k of what the Club's staffing budget was in season 2022-23.

What turnover figure should we be using, and why?

Jim likes calling TJF The West Wing of Partick Thistle.

Well in the words of Jed Bartlett: show me [turnover] numbers, Mrs Landingham!