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Nottingham Forest - Technically Skint

Nottingham Forest - Technically Skint

Nottingham Forest Finance Director John Pelling, was interviewed on the clubs` official site yesterday, where he outlined the current financial state of the club. He also went on to explain the effects that the new Financial Fair Play rules would have on the club and why NFFC had brought in fewer players than the manager and supporters alike were expecting.

The overriding message that Pelling was attempting to put across, was that FFP was going to have a big impact on every club within the Football League in the coming years. Although the ruling has yet to be accepted by the clubs, Pelling stated that there was widespread support for it and was accepted by the majority of Chairman, as a means to make clubs`more financially stable at a Football League meeting last year. Any penalties imposed on clubs` failing to comply with the new rulings, will not come into effect until the 2013/14 season. Despite this, he said NFFC were trying to get one step ahead of the game by preparing for it now.

Pelling spelled out the bleak facts about the finances at NFFC, saying that whilst the club had revenues of £15m last year, it made a loss of £12m. The shortfall was made up by Nigel Doughty, who pumped the money in to balance the books. Pelling went on to say that the club was expecting to reduce that loss to £11m this season and to fall into line with the new FFP rules when they eventually come into place, the club were hoping to reduce those costs further to £10m next season. Pelling said that the club had already this season effectively run out of money and that Nigel Doughty is writing monthly cheques to keep the club afloat and pay the bills.

There`s no doubting that the financial status of most football clubs` is dire and something has to be done to make them more financially responsible and stable. I think the majority of fans would see the need for this and would accept that every club has to live within their means. The idea behind FFP is a good one and on the face of it should be welcomed and applauded. The problem, as is always the case, is which clubs` will flaunt the rules and find a way round the sanctions in place stopping them from spending money they don`t have. In defence of NFFC`s eagerness to comply with the ruling, Pelling warned that big spending clubs` such as Leicester City and West Ham United, will "have very bad news coming their way unless they go up this season.'

Now I`ve long been a critic of Nigel Doughty and feel justified in being so. The reason for the criticism, which in my opinion climaxed during the January transfer window of 2010, is NFFC`s continued policy of chasing unrealistic targets, pulling the wool over the eyes of their supporters and pretending to be one of the division`s big hitters when it comes to signing players. The last major signing the club made (again in my opinion), was that of Robert Earnshaw back in 2008, when we paid Derby £2.65m. Many people will rightly or wrongly argue that in 2009 the club spent in excess of £5m on new talent, but that in the words of then manager Billy Davies, was "playing catchup" with the rest of the teams in the Championship. The squad was so lacking in terms of ability at that time, that a failure to make additions, would have meant another relegation battle, just to stay where we were.

I welcome the explanation from John Pelling about the state of our finances and the openness with which he spoke. I also welcome the fact that he acknowledges our failings in the transfer market and that we have not strengthened in the way both the manager and supporters were led to believe we would. The big problem that NFFC now face, is whether this strategy is what new manager Steve McClaren signed up to and whether it`s what he was promised when he joined. He has already gone on record saying he is unsatisfied with the way things have gone, after being given assurances that he would be allowed to spend money on strengthening the squad. It`s apparent from Pelling`s interview that no such strengthening will be carried out and that the £1.8m spent to date, will be our lot for this year. The financial future for Nottingham Forest is one of prudence and further cost cutting. That is not the strategy of a club aiming to regain its place in the top flight, it is however the strategy of a club hoping to retain its status in the division it`s currently in. NFFC could now stand for No Financial F****** Clout. If it turns out how the hierarchy at the club are hoping, it may turn out to stand for Not Financially F****** Clueless afterall.

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Click here to join in the debate on the club forum.

Writer:guinless
Date:Tuesday September 13 2011
Time: 8:50AM

Comments

0
All well and good. But if they lied to McClaren to get him in they're stupid. If they did the job is untennable. They've been lying to the supporters for years. The club is still a shambles whichever way you look at it!! they need to stop treating new mangers and the supporters like dumbfecks. They might be aiming to stay in this division, however the feeling they have created at the club is more likely to bring relegation. I do hope McC hangs in there, because I think he can turn it around, and also anyone else fancying a crack in the hotseat would have to be bloody mental!!!
RedSmedDownUnder
13/09/2011 09:31:00
0
All well and good. But if they lied to McClaren to get him in they're stupid. If they did the job is untennable. They've been lying to the supporters for years. The club is still a shambles whichever way you look at it!! they need to stop treating new mangers and the supporters like dumbfecks. They might be aiming to stay in this division, however the feeling they have created at the club is more likely to bring relegation. I do hope McC hangs in there, because I think he can turn it around, and also anyone else fancying a crack in the hotseat would have to be bloody mental!!!
RedSmedDownUnder
13/09/2011 09:31:00
0
Of course the most important thing is that the club doesn't go broke - however the owner should relinquish control as he does not have the dough(ty) to take the club where the supporters want it to be - it is like owning a Rolls Royce and not driving it coz you can't afford the gas - he should sell it on to someone who can afford to put money in. Otherwise it is a waste of time - being a competitive club and supporting one is all about it being able to do just that.....compete ! If we cannot strengthen the team we will not be able to compete so we will just stagnate and now the FD has been so open about our situation just watch clubs who are prepared to gamble come in and nick our players on the cheap coz they know we need the dosh. It is unfair on everyone if the club stands still - SELL IT TO SOMEONE PLEASE SO WE CAN ALL ENJOY THE THING WE LOVE - ps yes they did lie to the Manager coz we all saw/heard Martha at the press conference with Big Mac saying he would back him in the transfer market - all very shoddy and not good PR for the club
essexman
13/09/2011 14:42:00
0
Of course the most important thing is that the club doesn't go broke - however the owner should relinquish control as he does not have the dough(ty) to take the club where the supporters want it to be - it is like owning a Rolls Royce and not driving it coz you can't afford the gas - he should sell it on to someone who can afford to put money in. Otherwise it is a waste of time - being a competitive club and supporting one is all about it being able to do just that.....compete ! If we cannot strengthen the team we will not be able to compete so we will just stagnate and now the FD has been so open about our situation just watch clubs who are prepared to gamble come in and nick our players on the cheap coz they know we need the dosh. It is unfair on everyone if the club stands still - SELL IT TO SOMEONE PLEASE SO WE CAN ALL ENJOY THE THING WE LOVE - ps yes they did lie to the Manager coz we all saw/heard Martha at the press conference with Big Mac saying he would back him in the transfer market - all very shoddy and not good PR for the club
essexman
13/09/2011 14:42:00
0
But won't selling the club to another benefactor make no impression with FFP rules in place? The point of the interview seemed to be saying that it is losses that have to be kept under stricter control. So with the Forest income currently at £15 million a year (as stated by Pelling in the interview) any total expenditure over this amount means we are into losses. Thus having a new benefactor will make no difference unless he/she finds loopholes around the system or income increases sufficiently to allow a "loss" within the allowed parameter (but even then it will be limited to what could be achieved). It would seem that some form of FFP will come into place soon, but my opinion is that the teams should be wage capped as they are in L1&2. Without the TV money of the Premier League clubs like ours, and many others in the championship, cannot afford to pay their current wage bills. Pelling also stated that they have seen draft legislation proposed to govern this but my only criticism at this stage is that we are planning for a financial scenario in the future that isn't yet set in stone.
nvl
13/09/2011 16:38:00
0
But won't selling the club to another benefactor make no impression with FFP rules in place? The point of the interview seemed to be saying that it is losses that have to be kept under stricter control. So with the Forest income currently at £15 million a year (as stated by Pelling in the interview) any total expenditure over this amount means we are into losses. Thus having a new benefactor will make no difference unless he/she finds loopholes around the system or income increases sufficiently to allow a "loss" within the allowed parameter (but even then it will be limited to what could be achieved). It would seem that some form of FFP will come into place soon, but my opinion is that the teams should be wage capped as they are in L1&2. Without the TV money of the Premier League clubs like ours, and many others in the championship, cannot afford to pay their current wage bills. Pelling also stated that they have seen draft legislation proposed to govern this but my only criticism at this stage is that we are planning for a financial scenario in the future that isn't yet set in stone.
nvl
13/09/2011 16:38:00
0
The most obvious point here, that ND hopes flies over everyone's head, is the question: "who's responsible for the club running at a 12m loss"? If we'd bought a left back and a central midfielder to fill in foe McKenna two years ago in January we'd be in the Premiership now, or enjoying parachute payments, so it wouldn't matter would it? These losses don't just happen all by themselves, someone's responsible and since the buck stops with ND you have to lay this openly admitted incompetence at his door. By the way his absence from Twitter lately also makes a huge statement.
melgarion
13/09/2011 17:55:00
0
The most obvious point here, that ND hopes flies over everyone's head, is the question: "who's responsible for the club running at a 12m loss"? If we'd bought a left back and a central midfielder to fill in foe McKenna two years ago in January we'd be in the Premiership now, or enjoying parachute payments, so it wouldn't matter would it? These losses don't just happen all by themselves, someone's responsible and since the buck stops with ND you have to lay this openly admitted incompetence at his door. By the way his absence from Twitter lately also makes a huge statement.
melgarion
13/09/2011 17:55:00
0
Any buyer would be someone of more substance than the current owner obviously - so they would pick up and cover any debt and then have enough financial clout to cover any losses in future, whilst investing in the product (the squad) - maybe this is a pipedream but until the market is tested who knows who is out there who would be interested in a true sleeping giant - I wouldn't mind us being owned by a sheikh !!! With regards to the FFP rules you are correct - they have not yet been set in stone so therefore we may be trimming the budget for no reason - I can't see West Ham or Leicester going down the pan - if I built my budgets around possibilities then I would have no money to spend - Oh thats where we (Forest ) are at the moment - Yes we have to try to be frugal where we can especialy in todays market, but we have potentially a great product that can be marketed & promoted by investment. There is obviously another agenda that the owners are working to and are just using the FFP thing as scare tactics - The rsponsibility for the loss is the owners of course - but that seems to be the norm and as you say - if we had invested we would be in the Prem and bigger gates etc - More, dosh, marketability for the club and Doughty may have that Sheikh knocking on his door right now looking to line his pockets!!!
essexman
13/09/2011 21:08:00
0
Any buyer would be someone of more substance than the current owner obviously - so they would pick up and cover any debt and then have enough financial clout to cover any losses in future, whilst investing in the product (the squad) - maybe this is a pipedream but until the market is tested who knows who is out there who would be interested in a true sleeping giant - I wouldn't mind us being owned by a sheikh !!! With regards to the FFP rules you are correct - they have not yet been set in stone so therefore we may be trimming the budget for no reason - I can't see West Ham or Leicester going down the pan - if I built my budgets around possibilities then I would have no money to spend - Oh thats where we (Forest ) are at the moment - Yes we have to try to be frugal where we can especialy in todays market, but we have potentially a great product that can be marketed & promoted by investment. There is obviously another agenda that the owners are working to and are just using the FFP thing as scare tactics - The rsponsibility for the loss is the owners of course - but that seems to be the norm and as you say - if we had invested we would be in the Prem and bigger gates etc - More, dosh, marketability for the club and Doughty may have that Sheikh knocking on his door right now looking to line his pockets!!!
essexman
13/09/2011 21:08:00
0
I missed the live phone in with John Pelling but I would have liked to ask him this: How much of the 60 mill that Forest owes to ND is actually interest on the loans he owes to himself? At 10% per year that's 6 million a year due on 60 so I'd have to think that a big chunk of the 60 is actually interest on his investment that he has never received. If he'd put the money in as shares then he wouldn't be able to pay himself on it (at least you can't in Canada, admittedly a different tax structure) since a company can't pay dividends if it experienced a loss. Also, some people were discussing this the other day; if his Forest shares are owned by him personally, or the same holding company which owns his other business interests/shares, then he will be able to offset the losses against his his other income. That being the case and assuming he's in a 50% tax bracket, his net investment while Forest are losing 12 mill a year would only be 3 mill, a far cry from the 12 everyone keeps bleating on about.
melgarion
14/09/2011 18:15:00
0
I missed the live phone in with John Pelling but I would have liked to ask him this: How much of the 60 mill that Forest owes to ND is actually interest on the loans he owes to himself? At 10% per year that's 6 million a year due on 60 so I'd have to think that a big chunk of the 60 is actually interest on his investment that he has never received. If he'd put the money in as shares then he wouldn't be able to pay himself on it (at least you can't in Canada, admittedly a different tax structure) since a company can't pay dividends if it experienced a loss. Also, some people were discussing this the other day; if his Forest shares are owned by him personally, or the same holding company which owns his other business interests/shares, then he will be able to offset the losses against his his other income. That being the case and assuming he's in a 50% tax bracket, his net investment while Forest are losing 12 mill a year would only be 3 mill, a far cry from the 12 everyone keeps bleating on about.
melgarion
14/09/2011 18:15:00
0
If it was such a really big loss maker - ANYONE in business you would get out even if you are a 'fan' - I have no doubt that the debt is being offset and that technically it is nowhere near what they claim when the whole picture regarding his other interests are taken into account. I rememeber my dad saying to me in the Seventies that Notts County's board broke the Champagne out every time they didnt get promotion to Div 1 (old money) because they did not want to pay the higher wages - and that was then!!! - I really do imagine a similar picture in our Board room at NFFC - I say again we are stagnating - stick or twist - SELL THE CLUB OR INVEST - if you really love the club
essexman
15/09/2011 11:04:00
0
If it was such a really big loss maker - ANYONE in business you would get out even if you are a 'fan' - I have no doubt that the debt is being offset and that technically it is nowhere near what they claim when the whole picture regarding his other interests are taken into account. I rememeber my dad saying to me in the Seventies that Notts County's board broke the Champagne out every time they didnt get promotion to Div 1 (old money) because they did not want to pay the higher wages - and that was then!!! - I really do imagine a similar picture in our Board room at NFFC - I say again we are stagnating - stick or twist - SELL THE CLUB OR INVEST - if you really love the club
essexman
15/09/2011 11:04:00
0
They are some interesting points melgarion. My brother and I were trying to work out where the actual loss is. For example, assuming all the first team squad earn £10k a week and there are 22 players, that's 220k per week, or £11,440,000 a year. I know there are the management team and academy staff so if you stick on 3 more million you get to £14,440,000. The income of the club is reported as £15 million and in the absence of much transfer activity it is hard to see where the £12 million loss is, unless it is high interest debt repayments.
nvl
15/09/2011 19:38:00
0
They are some interesting points melgarion. My brother and I were trying to work out where the actual loss is. For example, assuming all the first team squad earn £10k a week and there are 22 players, that's 220k per week, or £11,440,000 a year. I know there are the management team and academy staff so if you stick on 3 more million you get to £14,440,000. The income of the club is reported as £15 million and in the absence of much transfer activity it is hard to see where the £12 million loss is, unless it is high interest debt repayments.
nvl
15/09/2011 19:38:00
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