I stumbled on a suggestion for one of our players last night which caused me to check out the rest of the squad and fortunately, or perhaps unfortunately, no one else at the club seems to warrant a suggestion. I checked out a few other high profile players and found a gem or two which I thought I’d share for your amusement.

[Note for Emile Heskey - Emile, leave this with me, mate,  I'll be contacting Google on your behalf. This is an outrageous slur!!]

Ashley Cole Is…

John Terry Is…

Steven Gerrard Is…

Frank Lampard Is…

Wayne Rooney Is…

Didier Drogba Is…

Dimitar Berbatov Is…

Well hello there. I’ve got to give a hat tip to Dirty Tackle for this achievement. That’s some fine work right there, sir!

David Beckham Is…

Ronaldo Is…

Emile Heskey Is…

Let me know if you find any funny ones yourself.

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Then again, maybe it is… eventually.

Maybe no one really remembers the runner-up, but they’re rightly rewarded with cold hard currency which is needed to help finance next year’s campaigns.  I’ve never made a secret of my opposition to the rich benefactor approach or my pride at the Villa way of doing things right now.  I’m pretty certain that I’m not in the minority there.

I want to see Aston Villa challenging for titles at home and abroad as much as any fan, but I recognise that’s not going to happen overnight and each small step of progress helps.  It’s not just about experience, although that’s a strong component, it’s also about the Benjamins.  Here’s a quick exploration of what’s on offer and why finishing 5th or 6th in the league matters.

League Cup

It seems that only the losers refer to the Carling Cup as a “Mickey Mouse” cup. Utd looked pretty happy to win it and you can be sure there would be plenty of Villa fans still celebrating had we managed to lift the trophy ourselves.

The carrot of a Europa League place is dangled to entice clubs to approach the competition seriously, but Man Utd wouldn’t be thrilled with that and will certainly qualify for the Champions League meaning that prize goes back to league position.

It would be disingenuous of me to call it a Mickey Mouse competition now that we lost, but in monetary terms it certainly is. The winner picks up a paltry £100,000, the runner-up £50,000 and the two losing semi-finalists £25,000 a piece. Of course there’s gate receipts and TV money along the way, but the financial rewards are still small potatoes.

We wouldn’t even be able to cover a week’s wages of two key first team players with our prize money from making it to Wembley, we’re obviously not going to be rushing into the transfer market all flush with our £50k in the back pocket.

The FA Cup

By contrast, as one of the four semi-finalists with at least a couple of live TV games in the competition, so far we’ve earned about £1.6m in prize money from the FA Cup. That would swell by a further £2.7m should we go on to lift the trophy at Wembley. Again, there’s also gate receipts and other media money to add to that.

OK, now we’re talking in millions, now you have my attention. So we’re pretty much certain to be walking away from the FA Cup with somewhere between £1.6 and £4.3m. Even if that’s used to upgrade training facilities or cover the cost of new coaches and scouts at the academy, that all helps as we move forward season on season.

Europa League

Even at this stage of the competition we see empty seats at every stadium, something really does need to be done to make it more attractive. The prize money has been increased, but there’s still a huge disparity with the Champions League.

The money isn’t bad, but with the cost of putting on the games and travelling, there are teams that aren’t even breaking even from competing and there’s a strong argument, especially considering our progress in the domestic cups, that we’re better off out of the Europa League this season.

Personally, I would have liked to have seen us competing if only for the experience. I’m not just talking about the players either, the logistics of organising the matches home and away would have been good for everyone at the club on top of last season’s campaign.

As far as the prize money goes, had we managed to get past Rapid Vienna we would have entered the group stage and been guaranteed 6 matches, 3 at home and 3 away, obviously. If we’d got out of the group and made our way through 5 ties – 9 games – to win the whole competition we would be looking at pocketing around £5.4m. Even with the TV money from the central market pool, it wouldn’t have been much more than £6.5m on offer.

With all the cost, logistics and risk, it’s clearly less lucrative than winning the FA Cup, but who can put a value on the experience?

Champions League

This is it. This is the mother load. All roads lead to the Champions League.

I may have caused a few sniggers recently when I claimed that we could actually do a job in the Champions League right now if we had to, but I’ll say it again, I’m convinced that we could. More recently, I revealed that last season we were the 25th largest club in Europe in terms of income. Obviously that would do absolutely nothing for us on the pitch right now, but it’s indicative of our position among the big hitters.

I’ll reiterate the point that the competition we face to actually qualify for the Champions League is tougher than a lot of teams we would face in the tournament. Our record against top half Premiership teams convinces me that we could do a job, it’s just the performance against lower teams that might cause fans to wonder.

Could we win it? Nah, don’t be daft! But we wouldn’t disgrace ourselves either and the rewards definitely make it worth the risk.

UEFA awards the teams in the group stage just under £500,000 for each of the 6 matches plus close to £3.5m just for making it that far. Add in the wins and draw bonuses and if you make it to the knock out phase you really start earning the prize money.

Looking at the teams that qualified for the first knock out stage, Inter had the weakest group stage record but even if they lose to Chelsea, their 2 wins, 3 draws and 1 loss mean that they’ll go home more than £11.6m richer and that doesn’t include any of the TV money from the now ONE BILLION EURO market pool.

The whipping boys of the group Liverpool failed to qualify from, Debrecen, lost all 6 games, scoring just 5 goals and conceding 19, but will still take £3m plus TV money back to Romania. To put things into context; their home stadium has a 10,200 capacity, £3m will be a massive amount of money for them.

Hey, if we fail to beat Chelsea in the FA Cup semi-final, Debrecen will have earned more prize money from those 6 Champions League games than we will have earned in the Carling and FA Cups combined!

Once the TV money is dished out, there will be a team or two among the semi-finalists this year that will receive £50m, or very close. Some of the factors that determine the share of TV revenue include position in domestic league and the size of the TV market in that country, so it’s impossible to say until the dust settles and the competition is over.

Premier League

I think that I’m right in saying that the Premier League were the first big sporting consortium to be renewing their TV deals following the global economic collapse and the conventional wisdom naturally suggested that they wouldn’t get as much as the last contract. Guess what, they got more.

The TV money is distributed across the 20 teams both equally and on a “merit” basis. 50% is shared evenly among the 20 clubs, although some of that money is used to assist the relegated clubs as they transition to life in the Championship – so called “parachute payments”. 25% is based on TV appearances with every club being guaranteed a minimum of 10 live games. The final 25% is distributed according to finishing position.

It matters where you finish. While it isn’t earth shattering, the gap between 5th and 6th place in Premiership prize money is more than a team earns for winning the Carling Cup. It matters where you finish. 5th is better than 6th.

Chasing The Dream

Winning is the ultimate reason for competing and no one really enters just to make up the numbers, do they? There can be only one winner in each competition though and in the Premiership that means there are 19 losers. The teams at bottom know that they don’t have a realistic chance of winning, should they turn the lights off, lock the doors and leave? It would look a very different league if everyone who knew they couldn’t win dropped out.

Of course that’s just silly. By competing to their highest ability and trying to move forward inch by inch they may well reach the point of competing at the very top. It may just be a an extra point or two per season improvement. It may just be an extra round in a cup further on average over 5 seasons or so, but each little baby step leaves the club in a stronger position than the season before.

Two seasons ago Portsmouth achieved the dream of winning the FA Cup and while they may have got to the final more through a kind draw (Man Utd aside) than an expensive team, they’ve clearly lived beyond their means for too long chasing the big dreams instead of taking baby steps. They are not alone.

How many Pompey fans would swap that day at Wembley now if it meant they had a little financial security?

The point is, what was their plan? Winning the FA Cup sent them into Europe, how did they plan to handle that? How did they plan to go a bit further in the league at the same time? What were they going to do the season after? And the one after that? How were they going to achieve consistent cup runs and/or European qualification?

It doesn’t have to mean that the alternative to going all guns blazing in an attempt to win titles is mid-table mediocrity, but you have to have realistic ambitions. Baby steps. Once you achieve one goal you move on to the next. It’s important to recognise each goal as a stepping stone to the next and not let the crowd that wants it all now re-frame that as a lack of ambition. Don’t let them tell you that aiming to achieve Champions League football next season is tantamount to aiming for fourth place. It isn’t.

Aiming to get in the top four this season gives us a foundation to aim for top 3 next, possibly assembling a team in the process that could have a realistic chance of challenging for the title the season after. Aiming for top four and being satisfied with top four now just creates the opportunity to shoot higher next time.

I’m hugely confident that if we continue developing along the path that we are that we’ll one day have the opportunity to see the Premiership trophy and or the Champions League trophy hoisted high by the Villa captain. That captain won’t be Stiliyan Petrov or Richard Dunne. It may not even be the James Milners or Ashley Youngs of the team. But I tell you, it might just be the Fabian Delphs or Marc Albrightons that we have coming through.

Now that’s a dream worth chasing!!

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February was a busy month, but with all the Carling Cup and FA Cup fixtures, there were only 3 Premiership games to capture the data from. It’s probably quite fitting since he’s consistently among the highest scoring players in every game that Brad Friedel finally win an AVC Player of the Month award himself.

Very well deserved and largely thanks to being the highest scoring player in the Tottenham and Man Utd games. It’s unquestionable that Brad has saved us points this season.

Player of the Month – February

• 1st – Brad Friedel – 7.41
• 2nd – Richard Dunne – 7.07
• 3rd – James Milner – 6.67

Previous Winners

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I couldn’t reveal my journey to you all before now, for fear of derision and at half time today in Reading I seriously questioned whether by mission had truly been successful, but by the time the referee blew his whistle to close 90 exhilarating minutes I knew that my work was complete and I was free to tell the tale.

I hunted for him in the four corners of the earth, my friends, but just days ago I finally found him in deepest Borneo. A lone, pathetic, twisted, evil man… Kevin Wilkinson. He is the one who had placed this despicable hex on our beloved club, the source of his bitter jealousy was easy to fathom when I stumbled upon him.

There, hanging from what appeared to be a table was a filthy, nauseating rag and as soon as I laid eyes upon it, though it was difficult not to turn away as the bile rose in my mouth, I knew immediately what horrors possessed this pathetic creature, Kevin Wilkinson.

I took the blue rag and even though just touching it caused my skin to blister, breaking out in ugly hives, I was able to throw it into the fire, releasing poor Kevin from his years of torment. Mr Wilkinson thanked me profusely for releasing him from this spell, but sadly I fear I was a little too late, for there in the corner of his primitive dwelling lay a doll with so many pins stuck into it it was difficult to make out the features.

That doll, my fellow Villa fans, bore an uncanny resemblance to Phil Dowd. Could it be? Could it be that Kevin Wilkinson had caused Phil Dowd to not send off Nemanja Vidic at Wembley last Sunday. Damn you Kevin Wilkinson, you go straight to hell, sir!!

So the good news is that this mission was a success and the curse has now been lifted!! We now have a fantastic opportunity to go score some points during the rest of the month, something we haven’t done for a few years now. It’s a packed schedule of course, but that’s what success does so you better get used to it!

I’m generally quite a modest chap, even if I do say so myself, but you really do have me to thank for this you know!

UTV

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In the other Semi-Final, Portsmouth will take on Spurs or Fulham.

Both matches will be played at Wembley Stadium over the weekend of 10 April and 11 April.

I suppose we haven’t done bad with cup draws so far this season, so it was probably inevitable that we would draw Chelsea. But there you go, they always say that you have to beat the best to win, so why not?

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We might as well just get ‘Aston Villa’ etched on one of the Wembley changing room doors permanently… after beating Reading 4-2 at the Madejski today, we’re off there again.  We don’t know who we’ll be playing in the FA Cup Semi-Final over the weekend of 10 April and 11 April yet, but the draw will be later today and I’ll update here.

If you ever wanted to see the epitome of football’s oldest cliche; ‘a game of two halves’, this was it. Villa were truly terrible for much of the first half and Reading were good value for their 2-0 lead at the break. Not that Villa didn’t create chances, but most of their play was sloppy to say the least. Errant passes, silly unforced mistakes, lack of movement, disinterest from certain quarters.

By contrast, Reading harried and hussled, at times showing some nice, fluid play. Their first goal came from a corner with the Villa back line unusually all drawn to the ball which was flicked on to an unmarked Shane Long at the far post to make the simplest of headers unchallenged.

The second goal capped off a move that illustrated everything Villa was failing to achieve. Passing, movement, intent, quality. (I should just add “poower” and then you can read that in your best Alan Hansen voice) Shane Long again with the goal; a simple tap in after Villa had been frankly sliced to pieces.

2-0 at the break. Martin O’Neill needed to come up with a special team talk, no doubt with the Ides of March on his mind.

Whatever he said, it worked. The Villa side that came out for the second half could not be more different from the 11 that played the first half. In fact, if I didn’t know better, I’d say that someone had sent a team of doppelgangers out for the first half and then the real Villa came out to play the second 45 minutes.

Ashley Young looked particularly fired up and seemed determined to find some freedom from all the attention he was getting in the first half, but most noticeably John Carew was now putting himself around and looking to influence the game after spending most of the first half in comparative anonymity. To be fair to big JC and Emile, they were isolated during the first period through a total lack of service. Both Milner and Downing looked different players in the second spell too.

Fittingly then, it was Ash who got the first goal back just 2 minutes into the second half ghosting in unmarked to thump a loose ball into the roof of the net. It was a goal that the build up thoroughly deserved and massively encouraging to see Ash fetch the ball from the net and send the supporters a signal of intent.

John Carew nodded in an unstoppable header to even the scoreline from a wonderful left footed delivery from Stewart Downing on the right. Again, Villa were really showing their quality at this point and thoroughly deserved to get the goal, but it showed the difference it makes when Carew is really interested. It was a brilliantly timed, determined run that saw him surge into the box at just the right time to stamp his authority onto the game. 2-2.

It was Carew again in the 57th minute with a relatively simple tap in, but once again it was the build up play that stretched Reading and created the space. Warnock made a pacy overlapping run past James Milner on the right, as is frequently his style and once he had the ball he dragged it back to the waiting Carew who could hardly have missed. 2-3.

Reading looked shell shocked after such a ruthless lesson in football from the visitors, but all credit to them; they fought back and we had a good old fashion cup tie on our hands. End to end, both teams with chances. Emile Heskey made a run to win the ball just outside the box that you would have thought belonged to Gabby had he been playing. He controlled the ball exquisitely to create a one on one chance with Reading keeper Adam Federici. Unfortunately it was a case of doing the hard part, but failing with the easier bit. That’s quiet a fine summary of Emile Heskey sometimes!

Reading continued to give us problems from corners and MON will want to be looking at why our back line were exposed on a few occasions today, but in the end it was fitting that John Carew was able to get his hat-trick by earning an injury time penalty and thumping the spot kick into the next post code in his usual fashion. 2-4.

So, there we have it. The March curse is lifted. We’re heading to Wembley for the second time this season. We’ve got a very busy, but very winnable Premiership schedule ahead of us. It’s an exciting month ahead!!

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I need to follow up on the third post (this one effectively replaces it), so here’s a quick recap of the day:-

• Firstly, I was exploring the Deloitte 2010 Football Money League Report which ranks and reports on Europe’s top 20 earning football clubs every year.  I discovered that Aston Villa are apparently catching the big hitters up and this year were in 25th place.
• We’ve been waiting for Aston Villa’s annual report to be submitted for the last few weeks, but with the revenue figure I discovered in the Deloitte report I was able to follow up on a post from last summer disputing the claim that there’s any kind of comparison at all between Doug Ellis and Randy Lerner when it comes to money spent on bringing new players to the club.
• Finally, I stumbled on an article from The Telegraph which discusses the amount of money that Randy has invested in Villa and cites the most recent accounts.  It turns out that they were filed last weekend so I had to put together a quick post on it, but as I was writing there were several things about the The Telegraph’s version of the accounts that didn’t make sense.

A reader contacted me late last night to offer to let me have copies of the accounts for both Reform Acquisitions (Randy’s Parent Group) and Aston Villa FC, which was fantastic as I’ve struggled to get hands on them myself. So, thank you very much for your help!

Credentials

The finance side of football has never been more important than it is right now. Pompey have recently achieved the dubious honour of becoming the first Premiership club to go into administration. I’ve frequently mentioned the unhealthy situations at Liverpool and Man Utd, plus we have the vulgarity of the manner in which Chelsea and, more recently, Man City are going about their business. If we’re talking about the top 4 clubs, only Arsenal deserve credit when it comes to the money side.

It’s absolutely right that fans take an interest lest they share some of the blame if the worst comes to the worst as seems to be happening on the south coast right now. I’m not well informed enough about what’s been going on in Portsmouth so I wouldn’t dream of pointing the finger at anyone, but, seriously, who thought the way they were operating was sustainable? If it’s true that Sol Campbell was being paid £100k a week, what did they think was going to happen?

Everyone has the right to voice an opinion and there will be no shortage on blogs such as this one, forums, newspapers, magazines TV and radio all giving their twopenneth. That means that we either have a country populated with an enormously high percentage of accountants, or there are an awful lot of people running their mouths on something they don’t understand.

So what about me, am I an accountant? Er, nope! I’ll happily put my hands up and tell you that I’ve very little experience or knowledge of corporate level accounts like the Aston Villa annual report I’m looking at right now. But I’m not a complete nub nub either. Without wanting to bore you with my life story or CV; I’ve worked within a corporate environment compiling weekly profit and loss accounts, so I’m not unfamiliar with the meaning and usage of terms such as ‘amortization’ and ‘depreciation’, but when you start talking about ‘loan notes’ and whatnot, you’ve gone over my pay grade.

An uncle of mine told me a long time ago that “bullshit baffles brains” and he wasn’t wrong, but Bruce Lee also said that “there’s always someone better than you”. Someone else, probably that Anonymous guy, also said “don’t bullshit a bullshitter”, but now I’m losing my point. My point? Ah, yes; if you’re a bullshitter, you never know when someone who does know what they’re talking about will come along and make you look stupid.

So I won’t bullshit you, don’t let anyone else bullshit you either.

OK, that’s the preamble over, if you’re sitting comfortably, let us begin…

The Telegraph Article

The Telegraph piece throws around some numbers that are contained within the reports, but sometimes their understanding of them seems questionable to say the least. They also wrap the financial element of the article up in a narrative based on assumptions that are flat out wrong.

On some of the main points, they are correct. The group turned over £84.2m, operating costs were £128m, but by the time you mess around with a little interest here, a bit of tax credit there, you end up with a net operating loss for the year of £46.15m. They actually quote the operating loss of £43.7m and later claim that it was £13m more than the previous year. No, the operating loss that year was £13m, not £13m less than £43.7 which would make it £30.7m. Getting a bit mixed up there Telegraph, ain’t ya!!

By the way, by the time you mess around with interest and whatnot with the previous year’s accounts, the net loss was £7.28m which is a figure that might ring a few bells and should be compared with the £46.15 from these most recent accounts. Don’t panic about that though, we’re not on some terrible downward slide.

I’m differentiating between the operating loss and net loss, despite the bottom line looking a few million worse than The Telegraph claims because one of the line items taken into account between the operating and net bottom line is what The Telegraph refers to later as “a profit on transfer dealings”, but that’s not a very good description and gives the wrong impression. I’ll come back to that though.

Wages

The Telegraph claims that “the loss is explained by a rise in player wages to £70.6 million, up from £50.4 million.” Well, there’s £20.2m so it doesn’t explain it fully, but they’re also not being entirely accurate here. Surprised?

The numbers are correct, but we’re not just talking about player wages here. Actually, we’re not just talking wages either, this is the total cost of enumeration to the club. When I used to pull the P&Ls together, I’d account for employee cost to the business at 110% of salaries and wages; the additional 10% being a decent estimate of employers’ national insurance and pension contributions etc.

In this case we’re not exclusively talking about players, we’re talking employees. We’re talking about everyone at the club: The players, the coaches, football management, commercial, marketing, operations, maintenance, administration, projects, even the match day stewards. Everyone. Well, the directors are the exception I believe.

It’s true, the staff costs have risen from £50.4m in 2007/08 to £70.6m in 2008/09 which is a 40% increase, but the full-time employee headcount has increased by 109 people which is 32% increase, so the increase in money isn’t totally out of line. Quite why we have so many new employees isn’t clear though and perhaps an explanation would be useful. The biggest increase comes under the heading of “Players, football management and coaches” where the number of employees has swelled from 86 to 134.

I wouldn’t jump to conclusions about the apparent increase in staff directly related to football matters. At first I assumed that we must have brought in an army of extra coaches, fitness experts, scouts, etc. However, for all I know, the Academy may have been accounted for separately prior to these accounts and this just reflects the absorption of an existing, but separate part of the business. I stress though, that’s me just throwing ideas around, I’ve no idea if that’s the case. If it were, I’d probably expect it have been specifically mentioned in the report.

Profit On Transfer Dealings

I’ll quote this paragraph from The Telegraph as it’s probably the most egregious:-

The purchase of Richard Dunne, James Collins, Stewart Downing, Stephen Warnock and Fabian Delph contributed to the rise in wages. The club still made a profit on transfer dealings however, thanks largely to the £12.5 million sale of Gareth Barry to Manchester City.

It was when I was writing about this article last night and I got to thinking about this section that the penny dropped that The Telegraph might be full of crap. If you’ve already seen that post you know what I’m about to say and if you didn’t, you still might have a good idea.

*knock* *knock* *knock* Hello?? McFly?!?! None of those “transfer dealings” took place during the financial year of 2008/09!! Basically, you’re just making this up, aren’t you??

They are just making it up, the accounts don’t delve into such level of detail I’m afraid. While it’s true that new players will “contribute” to any increase in wage costs, because of the massive salaries players earn it’s natural to jump to the conclusion that the players have caused the the bulk of the increase. If that were the case, let’s see how the wage bill jumps when those players are accounted for in the 2009/10 accounts!!

The “profit on transfer dealings” irks me the most. Like the other players, the Gareth Barry transfer to City isn’t included in these accounts, but it’s more the impression the article creates that we made more from transfer fees coming in from selling players than we paid out buying new players. Perhaps that’s just me, but that isn’t what it means.

If you’re interested, and I alluded to this at the top, the figure that The Telegraph are referring to is called “Profit on disposal of players’ registrations” and appears in the top most summary between operating profit/loss and net profit/loss. This is why i specifically mentioned it above; The Telegraph are in error by quoting a loss for the season, but also then quoting a detail within their article which isn’t included in the loss figure.

If you’re interested further; that same line item from the 2007/08 accounts was £11.8m and in these accounts for 2008/09 it was £2.9m. I think we all know that we didn’t make a combined profit of £14.7m in transfer dealings during the course of those two seasons.

Clearly what’s going on here is a little bit of accounting jiggerypokery. Yes, that’s a technical term.

***Warning – Overtly Technical Content Now Follows***

At the level we fans discuss transfer fees, we couldn’t possibly account for the complexity that’s really going on. We tend to stick to £X spent buying players, £Y gained through selling players so the net spend is £Z. I do the very same thing here all the time and try to keep tabs on the transfers page.

The reality is very different. We’re rarely talking about lump sum payments being made into and out of clubs, it’s more like frequent regular payments, possibly with some kind of balloon payment at the end. Off the top of my head, I believe there’s regulations about the time limit for paying for a player in full which makes sense. You can’t have clubs continually moving players around with nothing more than IOUs to back them up. There’s also things like sell-on clauses to murky the waters further.

Of course, the accountants are not satisfied with that, it’s way too simple. They get their hands on these transactions and then it gets really complicated!

Basically, buying players is referred to as “the acquisition of the registrations of new players” and the money spent an investment. The costs, which include not only the transfer fee payable, but also the associated costs of acquiring the registration (read: agents!), are capitalised and amortized over the term of the respective player’s contract.

Therefore, the profit on the disposal of the players’ registration is calculated by deducting the carrying value of the player and any sale costs from the sales proceeds.

So, that’s cleared that up then, yes?

Simple version – we can make a “profit” because we sell a player at more than his depreciated value on the balance sheet. It’s got nothing to do with the cost of buying new players during the same transfer window and may have little baring on what we paid for that player in the first place, depending how long he’s been an “intangible asset” on the books when he’s sold.

*** Technical Content Ends ***

I was very pleased to see that the actual amount specified in the Aston Villa FC accounts as invested on player acquisitions was £42,726,761 which is close enough to the ~£46m I generally throw around when talking about the net transfer spend in 2008/09. So, you know, basically; nur nur nur nur!!

Loan Notes and Whatnot

I’m going to avoid getting into this area too much before I understand the heady world of corporate finance at this level a bit better. Hopefully, if there are any real, bonafide accountants that have read this far, I haven’t butchered their trade too much and what I’ve written is close enough to reality. If I’ve made you cringe with my ignorance at any point, please let me know so that I can correct the record.

Randy Lerner has put a bunch of cash into Villa through Reform Acquisitions, that much I know. As far as I can see, the loan notes flow into Villa in sums of £10m here, £15m there and are on a 10 year term before they are to be repaid in full.

Now, I remember reading fairly recently that those loan notes charged a very acceptable rate of interest which gets paid to Reform Acquisitions. I haven’t looked deeply enough yet, but I don’t see those payments. The Telegraph claims that they are interest free, but since I’ve spent this time taking them to pieces, it would be intellectually dishonest to now make an appeal to their authority. I don’t know is the short answer.

There is mention of a management fee payable to Reform of £7,652,748, but to date it has not been paid. There was no such fee in 2008.

Debt

Last year, the level of debt was revealed and that became a major issue for certain people. People who I suspect understand these things even less than I do to be honest. Well, if the last reported net debt of £72m caused such fury, I can’t wait to find out what amazing insight we get when the new debt figure of £85m hits the streets.

Wait… what’s that? A debt is a debt you say? ZOMG, that’s amazing!!  You work on Wall Street, right??

*deep breath* OK, I’m glad there’s some football tomorrow, I’m pretty much done with all this financial mumbo jumbo for a bit!! Next week’s theme will be: “Sub-Prime mortgages and the global economic meltdown”* – don’t miss it!!

* 0% serious!!

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I didn’t expect to be following up the earlier post on the 2008/09 revenue so quickly, but I just spotted this article at The Telegraph which suggests that our accounts have now been filed, they’ve seen them and the revenue increase of 11% to £84.2 million is confirmed.

However, the not-so-sexy news is that we still made a loss. Not insignificant either.  £43.7 million in the red for the last financial year on top of the 30 odd million we lost the previous year. There’s all kinds of ways you can shift the numbers around to rationalise it, but without having a really strong grasp of corporate level financing, it would be easy to make a fool of oneself. However, if you consider that roughly £46 million was spent on acquiring new players during that period, well there’s your loss right there.

That’s a bit weak, it doesn’t quite work like that, but that’s one overly simplistic way of looking at it. If you further consider that except for a couple of players our squad is more or less there now and shortcomings can be largely financed by moving some of the periphery players on, then there’s not too much to be concerned about going forward. We’re past the point of needing to throw £40m at the transfer market every summer.

Wages

I’ve read reports recently that our wage bill has doubled in the time that Randy has owned the club up to £50m, but The Telegraph article is claiming that the total wage bill is now up to £70m, which they’re claiming goes some way to explaining the losses.

The problem is that they lose credibility with me when they start claiming that the increase in the wage bill is due to “the purchase of Richard Dunne, James Collins, Stewart Downing, Stephen Warnock and Fabian Delph”, but “the club still made a profit on transfer dealings however, thanks largely to the £12.5 million sale of Gareth Barry to Manchester City”.  Er, no, wrong! All those transactions took place during the course of last summer and can’t possibly be included in the 2008/09 accounts. Collins and Dunne were the last to join, coming in on deadline day September 1st. [UPDATE: As I suspected below, The Telegraph have got this completely wrong. NONE of those players are included in the accounts and we certainly did not make a profit on transfer dealings]

A problem that occurs to me there is that if all of the players I’ve just mentioned aren’t included in the wage increase in these accounts then we’ve got to be expecting another massive hike when the next set come out and do include them. The Telegraph also claims that we made a profit on transfer dealings, but however you slice or dice it, Villa haven’t received more than they’ve paid out in transfer fees for a long time!!

So I’m really not sure what to make of the article at that point and it would probably be better to refrain from commenting further on something that I couldn’t hope to understand without seeing the actual accounts personally.  And even then, who knows?

UEFA Regulations

The Telegraph also points out that with the coming financial regulations we’ll not only need to be breaking even, we’ll have to be standing on our own two feet and not relying on Uncle Randy to bail us out so much. This stings me personally as it wasn’t so long ago that I was extolling the virtues of our approach and how it will leave us not only in good standing, but ahead of our rivals when the rules are imposed.

Now the picture looks a little less rosy.  I’ll stand by the spirit of that post, we’re obviously not one of the clubs living outrageously beyond their means that are forcing UEFA to get involved, but we’re clearly now needing to be a little more prudent going forward.  These numbers do put a slightly different spin on things.

The bottom line remains that Randy has been extremely generous with the money he’s injected into Aston Villa, without being extravagant or, worse, reckless.  We’ve got debt, but it remains at reasonably manageable levels. We’re not selling our souls for a half billion in bonds like Utd or mortgaged up the kazoo like Liverpool.  We’re not close to breaking even yet either, but there’s clubs in far, far worse situations that us.

If you read the earlier post today about the Deloitte Football Money League report, some of that sweet, sweet Champions League action is looking mmmmm, mmmmmm, mmmmmm, tasty right about now.

[Update: I'm awaiting further information, but it sounds like The Telegraph is way, way off with this article. It's starting to look like not only are the details they're claiming here - the players etc - but the numbers they're quoting are completely wrong. More to follow when I have it]

[Update 2: This post has been replaced]

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Last summer I spotted a claim being repeated here and there that Aston Villa’s spend on transfer fees under Randy Lerner was really no better than under Doug Ellis if you expressed it as a percentage of the revenue. This seemed quite ludicrous, but I checked into anyway.

You can go check out the full post if you wish, but here’s the nutshell version:-

The first thing that struck me was that we only knew the revenue up until the 2007/08, meaning it was only possible to compare the spend under RL for two seasons; 06/07 & 07/08. Not only did it seem grossly unfair to put such a short record up against all the years that Deadly Doug had to establish his legacy, but extremely convenient as it also meant we had to ignore the ~£46m net spend for the 2008/09 season.

However, I worked the numbers I had anyway, which for Doug was 93/94 – 05/06 and Randy 06/07 -07/08 and came up with a Transfer Spend to Revenue Ratio for Doug of 12.49% and Randy of 15.87%. In the same ballpark perhaps, but when you’re dealing with tens of millions, 3 percentage points is no small change.

I went on in the post to demonstrate that a hypothetical 2008/09 revenue of £100m (which would have been an increase over the previous year of 33%) would give a Transfer Spend to Revenue Ratio for Randy Lerner of 29.03%. In fact, it would take revenue of £289m for the ‘08/09 season to keep the ratio for 3 years at the same ~15% rate. It was never going to happen.

Well, I now have the actual* 2008/09 revenue figure according to Deloitte which is….

…*drumroll*…

£84.2 million.

If you’re interested, that’s a 11.47% increase over 2007/08 and means that the real Transfer Spend to Revenue Ratio for 2006-2009 is 31.19%.

Doug Ellis @ 12.49% and Randy Lerner @ 31.19%. Yeah, nothing’s really changed, has it? Hopefully I can get back to writing about the Villa now instead of correcting the claims made by others.

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If you’re not familiar with the report and/or don’t fancy reading the full story at The Guardian, I’ll just summarise the top 20 below (figures are €million) :-

So that’s 7 of the 20 coming from England, with Newcastle bringing up the rear in 20th place. If you think anything like me then you’ve probably already realised that Newcastle are a sure bet not to make the top 20 next year and you might be a little curious about where Aston Villa are in relation to these teams. You’re absolutely right about Newcastle and, patience please, I’ll get to Villa in a moment.

Before I get to Villa, it’s worth just pausing to consider how much of the revenue shown above is derived from competing in the Champions League. Both Arsenal and Chelsea source 20% of their income from the UCL while at Liverpool and Man Utd that figure is 16%. That’s a massive amount of money to lose out on should one of them not make it, but that’s not earth shattering news, we all know that.

Werder Bremen may present a glimpse of a possible future for other clubs.  Of the top 20 teams, the revenue they received from Champions League made up the largest proportion of total income; 23%, and they didn’t qualify for the UCL this season.  The impact on revenue means that they too are highly unlikely to make the top 20 next year.

So that’s two teams that almost certainly will be dropping out of the top 20, is it possible that Aston Villa could gatecrash the party?  Where are Villa in all this anyway? 

I’m getting there, one more thing to think about.

Growth Of The Champions League

In 1992/93 the revenue sloshing around in the Champions League came to €45m. This year, that figure is projected to cross over the €1billion mark for the first time. The growth, especially since the turn of the millennium, has been nothing short of phenomenal.

Man Utd were the biggest beneficiaries from last year’s competition, despite not winning, earning €38m. This year, with a staggering 33% increase in UEFA’s central revenues from the competition, some of the top teams could earn in excess of €50m. To say that we’re missing out would give understatements a bad name.

‘92/93 was also the inaugural year of the Premiership and you should need no reminder that Villa finished 2nd which remains our best finish to date. Despite the revisionists’ attempts to paint Doug Ellis in a more flattering light than he deserves, frequently offering the false dichotomy that at least his corner shop stewardship of the club prevented us from following the examples of clubs like Leeds, Aston Villa missed out on more than just the title that season.

For better or worse, football changed forever in 1992 and, without the vision that clubs like Man Utd had, we were destined to just muddle our way through the next decade or so. During the opening season, Old Trafford’s average attendance was 35k while Villa Park was the 3rd best attended stadium in England, packing in 29k fans. Utd capitalized on the opportunities that the brave new world presented and increasing the capacity of Old Trafford is just one of many great indicators of how they grew the brand, the business and, more importantly, the football club. During 2006/07, RL and MON’s first season at Aston Villa, they were packing in more than 75k fans into Old Trafford. Villa Park? Dropped down to 8th position with 36k on average, a 1,000 or so more fans than Utd had been attracting through the gates 13 years earlier.

I’ve written about this many times, but I’ll reiterate; the change in fortunes for Villa since RL and MON came to the club are impressive enough in isolation, but when you consider not just where we were back in 2006, but where we weren’t, the distance we have come is even more impressive. We’ve not only turned 180 degree from the direction that we were heading, we’ve started making serious inroads into the lead that the top teams have had years to establish.

Last Sunday at Wembley we witnessed Man Utd sitting deep for periods and inviting us on to them to find a way through, hitting us on the counter. OK, we came up short this time, it’s something we struggle with and we probably don’t expect the likes of Utd to pay us that level of respect, but it was a clear indicator to me of the improvements on the field.

The point of this quick ramble down memory lane being to draw some parallels to missed opportunities during the early years of the Premiership and where the Champions League is now heading. We can’t afford not to be among the top teams in Europe and by that I’m referring to income.

So How Do We Rank In Europe?

OK, I took the scenic route, thanks for sticking with me. You are still with me, right? Hello??

You may not be surprised to learn that of the English teams, we were just behind Newcastle in 8th place. I’m not going to tell you the exact amount just yet, I have another post following this one where I’ll revisit a post from last year, but we were pretty close to the Geordies.

On a wider scale; we were actually the 25th biggest team in Europe during 2009/10 in terms of turnover. That’s pretty impressive and provides a very strong platform to continue the pattern of growth.

When you consider that there’s 32 teams in the group stage of the Champions League and we’re now among the top 25 earners in Europe, it goes someway to backing up my assertion that the competition for us to qualify for the Champions League is actually tougher than most that we would face when we get there.

We are ready for this.

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