BORO were the third biggest net spenders in a busy summer as Aitor Karanka completely rebuilt his first team. That came as a bit of a surprise.
Keeping a mental tally of the ins and outs (Boro shelled out for Kike, Husband, Clayton and Wildschutt but flogged Emnes, Jutkiewicz, Butterfield and Smallwood), it seemed the overall outlay was relatively modest on fees while the perception is always that a host of other ambitious sides are throwing cash about like a sailor on shore leave.
The Spanish supremo overhauled his Conquistadors by bringing in a dozen new signings and selling or releasing 13 players. Boro spent £4.9m but recouped £3.7m in a summer of frantic churn and finished with a net outlay of £1.2m. That is not a massive sum.
For instance, after very few cash departures, Boro spent more than that on deadline day last August when Kei Kamara and Jacob Butterfield came in. And that wasn’t long after Tony Mowbray had invested £1m on Albert Adomah.
This summer felt like for Boro it was more about moving the Football Manager style sliders from transfer fees towards wages, with most of the resources going into enhanced spending wages for players arriving on frees and on loan.
So it was a bit of an eyebrow-raiser to see Boro so high in the net spend table. That is a stark reflection of the changing economy in the Championship as Financial Fair Play starts to bite and clubs – even the relatively well-wadded ones, starting to cut back.
Boro’s total spend of It was far from the biggest spending spree in the division. The relegated sides all used their muscle to reshuffle their squads with Fulham spending £15m and both Cardiff and Norwich a fraction behind on £14.9 – but all three also flogged off a host of well rewarded relegation veterans in a desperate bid to lighten the top flight wage bill millstone and the trio all ended with a hefty net profit from the shake-up.
That will be needed to deal with a seismic shock of turn-over being slashed from £80m to £18m. They will need those savings AND the parachute money – big football’s mink-lined reward for failure – to meet their eye-watering wage costs close to the £30m mark.
Of the rest, the sides that fancy themselves as play-off contenders have made the biggest commitment overall: Wigan (with their season of adjustment behind them they look to be going for it this time under Uwe Rosler) spent a whopping £10m, Forest are funding a third successive promotion push to the tune of £8m, Brighton (ditto) shelled out £4m while Derby and Bournemouth both invested £2.5m each. But most of those sides also off-loaded a clutch of players to bring their net balance right down – or even turn a little profit.
In terms of net spend Wigan top the table with an overall outlay of £3m; Derby are second with £2.5m; then come Boro with a relatively modest £1.2m; then, surprisingly newly promoted Brentford who have spent £1m in a bid to consolidate.
What is perhaps more interesting is that, looking at the net spending table as a whole, Financial Fair Play regulations are clearly starting to bite.
Wigan, Derby and Boro have invested in a bid to challenge for promotion and Brentford to stay up. You can see their strategic aims clearly because they stand out against the trend. For most other sides in the division the name of the game is consciously clawing back cash to meet the lowered FFP ceilings.
The permitted over-spend this season has been reduced by £2m with another turn of the screw. Last season clubs shareholders were allowed to put in a total of £8m over the total revenue figure. This season that has been reduced and most clubs have tried to fund tighter target through selling players (which is easier than tackling wages directly as players are on fixed contracts and can be very hard to move on.)
Only seven of the 24 teams have clocked up a net spend and two more have broken even. The rest – 15 teams – have finished the transfer window in credit, which is an impressive feat in a difficult landscape.
And, noticeably, that includes sides that were among the promotion challengers last season. Not everyone has opted to gamble on spending as they fine-tune their squads. For most it was a summer of wheeler-dealing and trading down.
Brighton, who have lost in the play-offs two years running and have a new boss finished the window £6m in credit. That will come in handy as they are £120m in debt (mainly due to their new stadium) and have among the biggest wage bill in the division – although, it must be said, also the highest average attendances.
Reading too, who finished strongly last term, have retrenched. They also finished £6m in credit after a summer of sales and only very limited recruitment – five in, 15 out.
Ipswich, who hope to squeeze into the play-off frame this time after two years of belt-tightening, never spent a penny in fees but brought in eight players on frees and finished £3.75m to the good after sales; and Watford, who have ambitions of their own, also never paid out a fee but signed 10 players and finished slightly ahead overall.
For Boro – for Steve Gibson – the net investment in fees AND wages represents a significant gamble. Boro have done some severe pruning since relegation. Then they had a wage bill well over £25m. It was reduced slightly under Gordon Strachan but he was allowed to go on a significant ill-fated spending spree leaving Tony Mowbray with one hand – and one foot – tied behind his back as he tried to reshape the team AND cut the costs. Boro trimmed the squad, the wage bill, the behind the scenes set-up and non-football staff.
But the club remain ambitious. They have maintained an infrastructure and squad that is at a higher level than their current income with the annual deficit – of between £12-14m a year – paid by Steve Gibson. Under the FFP rules that can’t continue without some form of sanction. That means the club need to either get promoted quickly or sharply cut costs. Or dramatically increase revenue. And there’s the rub: the reality is that Boro are among the division’s financially restricted outfits.
The club has overall revenue and matchday take that is safely in the bottom half of the Championship financial tables. In the last period that figures are available for – 2012-13 – Boro came 14th in matchday revenues with just £4.6m: Crowds are relatively low against their rivals with ambitions, season ticket prices are exceptionally low for the division (yes, yes they are) and there are an unusually high number of concessions meaning the average take per head per ticket is under a tenner.
On the other hand Leeds’ matchday take was top with £9.9m while most of Boro’s main rivals take over £7m through the gate. Most – Forest, Derby, Brighton, Reading etc – not only have higher crowds by several thousand but also charge more, have a higher proportion of adults paying full whack and take per head is far higher.
And in this league there are few other sources of income. TV cash is negligible, sponsorships are much reduced and merchandising is down – the town centre club shop is closed and count the empty boxes and restaurant tables.
So in terms over overall revenue Boro were 10th on £4.9m. Again Leeds were top on £15m with Brighton on £10m and Wolves, Derby and Forest not far behind.
Meanwhile Boro have among the highest wage bills. In the last tables they came in at seventh at a fraction above £16m but chairman Steve Gibson has told the Gazette this summer’s recruitment has increased that and pushed it back towards the £20m mark.
Despite the financials being weighted against Boro, the chairman has funded a promotion push. He’s backed his manager and brought in the player he wants. And that’s a risk.
The sensible and prudent course would probably be to swim with the tide and try to reduce transfer spend (or even sell players) and reduce the wage bill. Boro could have sold several players this summer – they had formal bids for Adomah and enquiries for George Friend and Grant Leadbitter that were emphatically brushed aside. The sensible and prudent course would have been to accept those bids, bring in cheaper alternatives and write it down against the FFP target. That’s what the bean-counters would do.
But Steve Gibson isn’t a bean-counter. He is a businessman but at heart he is a fan. And he is desperate to see Boro get promoted. And he knows that the financial tide is turning against him and that time is of the essence.
Next year will bring another turn of the FFP screw and another £2m reduction in permitted spending. And three more teams will be bolstered by parachute payments. And the gap in revenue will grow. And it will be another year further away from the sale pitch profile that comes with being a Premier League club and having played in Europe. Memories fade.
For Boro to compete it is probably now or never. The chairman has backed his boss to build a team that can compete. But if they don’t go up…
It is a gamble for Boro mainly because of the timing and the lowering ceiling but I don’t think it is a financial risk with the long term financial security of the club.
If this season’s big push doesn’t quite succeed but is close then there is the possibility that Steve Gibson will bite the bullet, accept any embargo or sanction on the chin and opt to keep the squad together and have another crack. That will run an increased risk of exceeding the next year’s FFP targets by a far wider margin.
But if the tilt at glory falls well short then it may be time to sell to balance the books. And some shrewd recruitment in the past two years means Boro have a clutch of players they could easily sell at a profit… although that will mean downsized ambitions.
If the gamble fails you could see Boro at the other end of that net spending table next year.
CHAMPIONSHIP NET SPEND
N Forest £500,000
Bolton – £755,000
Sheff Wed -£820,000
**Blackpool figures can’t be finalised as they await a tribunal decision to put a price on Tom Ince after his move to Hull. That could put them well into the black.