What will it take to get this man?

djkoolaid777 · 2012-05-25T15:02:22.640188+00:00

Not gonna lie.. i think money could be spent wayyyyy better elsewhere

Thinkyt · 2012-05-25T02:37:08.990923+00:00

yeah its funny because i was thinking about this just today. whats to stop mansour from getting someone else trusted to start/buy a club, buy any player that mansour wants for whatever price, and then getting said club to turn around and sell it to mansour for a dollar? funny because on paper i think legally that gets around the ruling for ffp

RhettBomarGotPaid · 2012-05-24T21:55:20.193168+00:00

Definitely the same to you with regards to the conversation. I love calmly discussing differing opinions. It really opens your eyes to some things (like that video you linked me to). I was surprised to see Mansour spending money on so much more than just buying players. He's actually providing infrastructure for the club so that if he were to suddenly leave, although yes they'd be financially in shambles, but structurally and club quality wise from the youth system up they'd be in great shape.

Thanks for the congratulations and same to you as well. We beat Tottenham so that's always one of my favorite parts to every season.

RhettBomarGotPaid · 2012-05-24T13:26:58.929244-07:00

While I would agree with you in some regard, especially with regards to the sentiment of even lower teams than us, Man U, and the likes, its hard for me not to say that from a sporting perspective artificially creating yourself as a big club through massive injections of money is a very lousy way to become "the best."

I mean yes, the players are good and on the pitch they perform well (usually), but really, was Mancini's job even remotely difficult? He essentially had a blank check to make any team he wanted. So yeah, I guess at the end of the day Manchester City is the best team right now. But, the best club? In my opinion, not by a mile.

But, then again the original discussion was from a business perspective. So, at the end of the day, my opinions on the aforementioned really have no bearing on the matter.

speedx5xracer · 2012-05-24T18:31:59.697617+00:00

Rolf from Ed, Edd, and Eddy too?! Jeez he's been in a ton of shit.

boffer4life · 1 day

yeahhhhh.. i think i'll just do the same.. haha

RhettBomarGotPaid · 1 day

From a business perspective, its undeniably a reasonable thing to do, especially if Mansour and Abramovich are making more money because of the clubs even if they operate at a loss on an individual level.

However, I can't help but disapprove of the effects they have on the game. Aside from the whole "buying trophies" phrase that everyone throws around, which albeit is annoying as well, having a team cherry pick the best players from clubs year after year can get pretty irritating. Not to mention that they need only mention the slightest interest in a player and the sticker price for him goes up twofold. Its just unfair to have to deal with as a club who doesn't have the financial backing of what is basically an entire country (and that's from a fan whose team sits top 4 every year - I can only imagine what the bottom half of the table feels like).

However, as someone who tends to see things in black and white, I'm left with the dilemma of, "Where do I draw the line? What is acceptable in terms of how much a club can spend?" The problem is I don't know. So, when it comes down to it, although I'm annoyed at the way mega-rich clubs are run, I can't hate them for it. Because for all I know, their owners are profiting from it. And boy do I love money.

RhettBomarGotPaid · 1 day

I guess I will be more blunt too then. Having debt does not mean you're in the red. Arsenal right now has loads of debt from their stadium that they pay off constantly, yet they still run a profit at the end of the year, year after year, like clockwork. So please, explain to me how in any world that operating at a loss is better than running a profit?

My "argument" is not weak, its business fact. Debt is both healthy and sustainable, operating at a loss is neither. Get your facts straight before coming to me and telling me I'm wrong.

The mega rich clubs in question aren't close to turning a profit at all. Their numbers are shady at best because they're able to have money funneled to them by their owner that cover losses elsewhere. Lost 10mil on a deal gone wrong? Abramovich just says, "No problem," and gives Chelsea a no interest "loan" from another one of his enterprises and calls it even. In no way does doing that make it a better or more sustainable business.

Like I said earlier though, its perfectly possible that these clubs will continue to operate at a loss for the rest of their lives (provided FFP doesn't stop them and if their rich owners don't sell). But, the only reason they would ever do that is not because its a better business model (because its not), but because their owners make more money with their other enterprises from having the clubs around. But, again, what you're implying by saying operating at a loss is better than operating healthily with debt, is that these rich owners would rather lose money yearly than to turn a profit. I'm sure given the choice they'd choose the latter if they could.

So please, think about what you're saying before coming at me like I'm some child.

RhettBomarGotPaid · 1 day

I can definitely see your point. I don't think that Mansour doesn't know what he's doing and I can see why he's done what he's done if he's in it for the long haul. I was strictly arguing the difference between healthily carrying debt (such as Arsenal and United) versus operating consistently at a loss (Chelsea and City). The theories and policies I discussed assumed nothing changed internally at the club and they continued doing business as usual into infinite. You can carry debt and still make a profit, but you can't operate at a loss and make a profit.

As for that video you mentioned, I'd definitely be interested. Like I said earlier elsewhere in this thread, I love football and I love finance. So count me in.

RhettBomarGotPaid · 1 day

Well sure, they'd take a huge hit if they got relegated, but in all honesty, I can almost guarantee they wouldn't be done because they've got a solid fan base in behind them. But let's say they did implode and go bankrupt because of it. Them being relegated is about as likely a fire destroying a company's only factory and means of production. You carry insurance for emergencies like that, and in all honesty, it wouldn't be outrageous if the big clubs that consistently finish top 6 carry insurance for relegation. It's doubtful, but possible. Then again, I'm not their accountant either.

But, I'm not sure what you meant to prove by your above statement. If a club with massive debt and one with a massive operating loss were to get relegated, I'm pretty sure both would be in equally shitty of situations.

You carry and recycle long-term debt in a very controlled and calculated way. You do it when you can rely on a steady stream of income year after year. The larger your income, the more debt you can healthily take on. So, yeah of course, if a freak accident came along such as relegation, their income would take a dive and they would struggle to keep up with interest payments. But, like I said, welcome to any business, and like any business, I'm sure they aren't naive enough to not have safeguards in place if a freak scenario like that were to happen.

So, really, you're still wrong - healthily carrying debt is still better than consistently operating at a loss year after year.

RhettBomarGotPaid · 1 day

Well, an "unnecessary expense," yes. However, that doesn't change the fact that its an attractive one and comparatively cheap when compared to say player wages. I'll put this example in very simplistic terms with extremely low numbers for easy math.

Say a team has 10mil in cash on hand and are currently running a profit of 3mil per season. They want to buy a player, but there are two problems for them at the moment: a) the player will cost them 15mil in transfer fees, signing fees, agent fees, etc., and b) the wages he's requesting are 2.6mil/year.

They have the profit margin to allow it, but they don't have the cash on hand to complete the transfer. So, to get the player they want, they take out a loan for 5mil that will require them to pay 400k in expenses per year for 15 years (that interest rate could be ridiculous, I didn't bother to do the calculations to see if that's even reasonable).

But, anyway, with that loan. If they deem it to be a good decision for the club, allows them to operate above their normal means, and buy a player that they otherwise wouldn't have been able to. They now have the 15mil in cash (10 originally + 5 from the loan) and the 3mil/year in profit goes to 0/year in profit (3 - 2.6 in player wages - .4 in loan payments).

Now, 5 years later after his form has dropped a bit, they look to sell the player for 10 mil in the market. They've made no changes in the past 5 years so they've profited nothing and sat on zero cash. They take that 10 mil from the sale and pay off the rest of the debt to put them back at a profit of 3mil/year (getting rid of the player wages and debt expense).

So, at the end of it all, they lose 10 mil in cash upfront to get a player that they want immediately, rather than having to wait an extra 2 years to have the cash on hand.

Yes, this was very simplistic. Yes, this is not exactly how it works in the real world. But, this is a very basic model that shows how taking on debt can be healthy and allow a team to operate above their normal means. I realize Chelsea/City have infinite cash behind them from their rich owners so they essentially take on interest free debt, making loans even more attractive for these clubs, but it doesn't change the fact that for any club in a healthy financial position, taking on long-term debt in the right amounts is a very smart thing to do.

RhettBomarGotPaid · 1 day

I love finance and I love football, so I'd talk about either/both at any time :D

As for your VIP box comparison, I don't think I could have made a better one myself - its much more accurate than my cell phone accessory comparison. I think that is exactly what he's doing to be honest. I think he uses it as a way to help close business deals with his other enterprises, in which case like I said earlier, although City (as a single entity in his entire profile) operates heavily at a loss, the rest of his business may be prospering because of it and thus offsetting said loss.

Though, again, we won't know if that's the case for probably another 5-10 years because he won't see the true fruits of his labor over just these past 4 years. He'll want to be sure that trends are true and holding steady before selling and officially cutting his huge losses. If he doesn't end up selling in the next decade, we can safely assume he's making money elsewhere in his profile because of City or he just doesn't care that he's hemorrhaging it.

JayhawkCSC · 1 day

For anyone that doesn't know what all of this is about:

http://www.bbc.co.uk/news/uk-scotland-glasgow-west-18169502

rwhitt · 1 day

i'd still take our history over yours any day

RhettBomarGotPaid · 1 day

Essentially, financial doping is doing anything in terms of spending money that would otherwise bankrupt your company or plummet your stock on an exchange if you didn't have the financial backing of a rich tycoon such as Abramovich or Mansour.

Rich businessmen that swoop in to buy clubs treat teams like one of two things: a) segments of a larger holding company, or b) a toy that they don't care hemorrhages money. Either one is bad for the club in question because neither option can be sustained long-term. Its unfair for the club to be treated as such, when in the end, they'll eventually be sold off and left in shambles.

Refer to my two posts near the top that explain the difference between taking on debt and operating at a loss.

RhettBomarGotPaid · 1 day

Financial Analyst is actually my title where I work, so yeah you could say I work in finance :D However, it's for an orthopedic group so there ends up being not a whole lot of long-term financial analysis (my favorite kind of finance) and ends up being more short-term financial decisions. Fun nonetheless though - I love finance. You?

RhettBomarGotPaid · 1 day

Oh absolutely. My post was getting long as it was and I didn't think I needed to get into the good/bad debt part. I mean, with a name like bad debt, its safe to assume bad debt is usually, well, bad. You won't profit any money off of it just like you wouldn't off of operating at a loss.

However, it's important to note, one thing that needs correcting in your post is that

putting money into a project in business is only done when you think you are going to make more than you spent.

Well, actually that's not always the case. There are actually some circumstances where you know a project will lose money, but in the grand scheme of things, that project will actually make the company more money (yes I know that makes no sense, but that's business finance for you). It usually happens with projects that are interlaced with others, say making a camera accessory that will cost the company a loss of x amount of dollars to make and sell, but will actually make the company a profit of 2x dollars in camera sales because the people will buy more of those cameras because of those accessories.

Running a loss on that segment (the accessory line) may end up losing the company money, but they may make it up in another separate but somewhat related segment. From there it becomes a cost/benefit analysis of whether or not to keep the losing section.

Now for the interesting part. What type of segment is Chelsea/City? When it comes down to it, they operate at a loss consistently, which as stated before is definitely bad from an individual case by case perspective. But, we have to remember that Chelsea/City are just two of many businesses for their rich owners. So are they accessory lines? For all we know, Etihad Airways or one of Monsour's other businesses is making boat loads more money ever since they linked up with City. We don't know for sure and won't ever know until further down the line when they either a) continue to operate at a loss, or b) get sold off (meaning that they were just a bad investment).

Granted, all of the aforementioned assumes that Abramovich and Mansour treat these teams like businesses and not like play-things. Let's hope that the latter isn't true, because as much as I hate City and Chelsea right now, I'd hate to see a team's history ruined because a rich owner got bored and bankrupted his toy into the ground.

Edited for adding words/changing format.

RhettBomarGotPaid · 1 day

Actually, from a business stand point, having debt (loans, accounts payable, long-term-financing, etc.) is not a bad thing at all and on the contrary, is actually almost always healthy. Taking loans and accruing debt allows for more capital to grow the business and operate on a larger scale than would normally be possible. Debt is constantly being paid off as old debt comes to term and is recycled with new long-term debt, so realistically, a good business hovers around the same debt-to-asset and debt-to-equity ratio every year.

On the other hand, consistently operating at a loss is most certainly worse, because unless things change, at that point you will never be able to recover and fully pay off the debt that you have. So, to accomplish that you're left with three options:

You can do as you suggested, you can cut costs and sell off assets to make the money to pay off the debt. In theory that sounds real easy, but in practice its much, much, much more difficult to execute. Not only that, but you have serious factors to weigh if you choose that route. I won't drag this one out because honestly I could type a page worth, but basically, when people know you're selling because you're desperate to turn your operating loss into a profit, do you think they're going to go easy on you in the transfer market? Hell no. They will undercut every deal that you want because they know you're desperate for the cash and will take whatever you can get. And when you sell off all these players, your team obviously gets worse. Do you think that you would still be the same Champions League winning side without 1/4 of your team there? Doubtful. When you stop winning, your bandwagon fans go elsewhere (every successful team has them), and along with them, their money. So do you risk selling some of your team in the hopes of turning a profit only to have a chance at losing your current success and turning away bandwagon money? It's a fine line and again not as easy as you make it sound. So that leaves option two:
You can take on another loan to pay off the current debt coming to term. Down side to that though, if you have been consistently operating at a loss, the interest rate you'll be getting on that loan will be higher (worse) than the one you're paying off. So, when it comes time to pay off the new higher interest rate loan, unless you've turned your loss into a profit, you won't make those payments, and you'll need an even higher interest rate loan to pay that one off - a never ending cycle that eventually leads to the last option:
You go broke.

So all in all, no, having a consistent operating loss is far, far worse than having debt. Thus, the likes of Chelsea and Manchester City are in a far, far worse position than those operating with healthy levels of long-term debt.

RhettBomarGotPaid · 1 day

All the debt is from the stadium though. Every year, we consistently report a profit even after paying off the financing for building the stadium.

uggbug7 · 2 days

as a male i literally made this face when i read feb 16

uggbug7 · 2 days

yay for feb 16th.. i bet you did like i did and made this exact face when you read yours

godemperor117 · 2 days

i really hope for the sake of all the arsenal season ticket buyers that they lower the prices after they finish paying off the stadium debt. its honestly the only reason to have prices that they do. even if they froze the prices at these levels for the next 20 years, i still don't think inflation and the rest of the premier league would catch up. a few more numbers for everyone just because i wanted to seem them comparatively

arsenal's minimum (985) is 25.9% higher than the second highest minimum (tottenham - 730)
its maximum (1955) is 5.6% higher than the second highest maximum (again tottenham - 1845)
compared to the average of all the other 18 clubs' prices (southampton wasn't listed), arsenals minimum/maximum is 51% and 60.4% higher respectively (482.22/773.72)

in terms of cities (and these may be obvious to some people, but for people that don't know english culture i'm sure its not) excluding arsenal from the averages:

arsenal's tickets are 41.7%/40.1% more expensive than the rest of london (chelsea, fulham, qpr, tottenham, west ham - 574.7/1170.6)
arsenal is 40.7%/62.9% more expensive than liverpool (everton and liverpool - 584/726)
arsenal is 57.5%/65.1% more expensive than the 3 manchester clubs (city, united, and wigan - 419/681.67)

ll-FooFighter-ll · 2 days

i'd recommend either of them honestly.. theyre great material and wear really well.. like i said.. i think they should just be our jerseys lol

Shitty_Watercolour · 2 days

omg shitty_watercolour is a doctor who fan? you just became my favorite novelty account

edit: now that i think about it.. i should have added.. "not that you weren't already"

ll-FooFighter-ll · 3 days

kind of like how i'd prefer we just use our training jerseys from this year in red and in white instead next year.

just simple and easy on the eyes.. so simple its almost elegant

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