Financial Implications of Lge 1 Relegation

[Derwydd]

From what I can ascertain the rules in Lge 1 are different.
1. You can only spend 60% of your income on wages
2. To increase income you can either sell players, or, invest money into the club as equity. e,g, Tan cant do an interest free loan where he gets paid back. He would have to buy shares.

Cardiff's latest accounts show 23m income 22m wages so they have a problem.

1. They are going to lose between 7 and 10m this year in TV etc revenue
2. If there is 5,000 less fans in attendance meaning 2m less/year income

So their income is going to drop from 23m to 11 to 14m with a wage bill of 22m

So they either have to have a massive clear out of high earners generating transfer profit and/or Tan is going to have to dump 10m into the club and not get it back until they are sold.


WHO ARE THE EXPERTS ON THIS. ENLIGHTEN ALL OF US

There are obviously ways around what I have said because Birmingham went down last season and would have suffered the same loss of income but only sold 1 player for 5m and spent 40m on new players including Standsfield for 18m. Euros

How could Birmingham do that if the rules are as above.

It would be nice to have clarity on this should the unbelievable happen and we go down

 

[Smurph]

I wouldn't be surprised if a lot of their players are on a decent wack which is going to make things harder for the club when it comes to shifting them on.

 

[bakajack]

I was talking about this with some friends last night, it really can't be overstated just how shafted Cardiff are right now.

Its only been a few years since they dropped out of the Premier League, they got a lot of players on wages that are unsustainable for the Championship let alone League One and I would be surprised if many of those have relegation clauses to reduce their salaries.

Tan the Man has been off the boil in regards to his love in with Cardiff City for a few years now, he isn't going to pump money into the club that he won't get back.

Added to both of those points is the significantly reduced income that they will have in League One. They have to sell or negotiate releases from contracts the vast majority of their squad and essentially do what Southampton, Ipswich and Sunderland did in previous seasons and scrap the whole thing and rebuild.

The biggest problem beyond all of that though is an owner who doesn't care and no leadership to guide them in a positive direction - that rebuild will be a monstrous amount of work and if they don't get anyone in who can do that competently then the slippery slope from League One to League Two beckons.

 

[eteb]

I wouldn't be surprised if a lot of their players are on a decent wack which is going to make things harder for the club when it comes to shifting them on.

They have the 7th highest wage bill in the championship! Absolutely bonkers considering the shit that they have

 

[Derwydd]

I believe Tan is currently owed 78m in interest free loans as per their last accounts

 

[Smurph]

They have the 7th highest wage bill in the championship! Absolutely bonkers considering the shit that they have

And we think our scouting department is crap

 

[bakajack]

Is anyone at all surprised that Ramsey has attacked the leadership of the club after less than a fortnight in charge?

 

[Ringwood]

They could sell a few to reduce the wage bill and add equity to the bottom line..

Salech, Robinson, O'Dowda and Colwill may bet interest from lower Championship or Scottish sides.

Big chasm still to bridge though

 

[Derwydd]

a little google says Tan has already spent 270m on them. At the end of 2013/14 Cardiff were in 178m debt but that 10 years ago. That would scare the bejesus out of me if we were being run like they run Cardiff.

Nice to have a rich benefactor but what happens if Tan wakes up Monday morning and goes eff it I'm done. 300m and all I've got is a league 1 club worth 25m. I am out. Sell club for 25m. They still owe me 78m in loans so I will get some of my money back. But eff it I'm done.

What happens to them then. Bust and bottom of the pyramid like happened to Newport. Start all over from tier 9 in the pyramid.

Please Mr Tan. Wake up tomorrow morning and say "eff it Im done"

 

[Derwydd]

From BBC report on latest accounts. 68m Tan 40m others. For a total of 108m in debt just on loans

The Malaysian backer, who took control of Cardiff in 2010, added another £11.83m worth of loans, bringing the total owed to the businessman to around £68m.

The club says that, as previously, the loans will be written off or converted to equity, while interest is also being waived. Tan has also provided a written commitment outlining his ongoing support, without which the club admits its future "would look much more precarious".

Loans from directors and other connected parties have also increased by an additional £11m, taking the total to £40.3m.

 

[Jackareme]

The ONLY thing is that Cardiff have invested in their academy (unlike our good selves) and have a raft of promising young players emerging.
Reports of their death might be greatly exaggerated, unfortunately!

 

[Derwydd]

Well Birmingham, relegated 50 pts bounced back but they brought in 40m of new players while only selling 1 for 5m

Huddersfield relegated 46pts, currently 10th, did a large squad over haul.

Rotherham, relegated 22 pts so not a fair comparison points wise to Cardiff's 44

Depends how Cardiff approach the problem. I suspect Tan will bank roll the bounce back

 

[Bulbo]

Well Birmingham, relegated 50 pts bounced back but they brought in 40m of new players while only selling 1 for 5m

Huddersfield relegated 46pts, currently 10th, did a large squad over haul.

Rotherham, relegated 22 pts so not a fair comparison points wise to Cardiff's 44

Depends how Cardiff approach the problem. I suspect Tan will bank roll the bounce back

It wouldn't surprise me if Tan did bank roll a recovery attempt, but I would be bloody suprised if the recruitment was any good. Historically he's spent a legitimate fortune on players and they've achieved absolutely sod all whilst raking it some of the divisions highest wages.

 

[Derwydd]

From what I am reading he has been trying to sell all his stakes in clubs since 2017. Sold 20% of Cardiff in 2020. His belgian team, Kortrijk, finished 15th of 16 and look like they are about to be relegated too.

If he is trying to get out of all the clubs this may be the final straw for him.

His net worth is currently 750 million. Was twice that in 2016. 300 million has been pumped into Cardiff. Given his other 3 teams need funding too. LA in MLS, FK Sarajevo, and Kortrijk in Belguim who knows he may throw in the towel.


Dec 21. Just 2 1/2 years ago he told WOL this.

A large part of my wealth has gone to Cardiff, all my family members want me to sell ASAP. What do I tell them in response? That when when the time is right we will, but the time is not right, yet. I believe we can make this work, that I can get some of that money back.

"I'm extremely involved, we still have plans and ambition.

"Cardiff is a big city, this is a big club, we should be in the Premier League. Get back up there and this time I can learn from the mistakes made previously, and look to stay there for 10 years.

"Do you think I would be putting in money every month, particularly during the pandemic, if I didn't want success?

"A big part of my wealth is invested here and I hope it is not completely lost. I believe it's possible to turn it around. I'm an optimistic person, I insist positive things can happen when others don't believe it's possible."

 

[Derwydd]

Anyway who si the expert on here for the financial fair play rules in league 1. How did Birmingham have a net spend of 35m on transfers in if the rules are the way I said in the initial post. And yes I know rules can be broken