#FM17 : The Islanders III : How to Balance the Books

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People who have followed me for a while now will know that I typically like to balance the books when running a club.  I have my own personal way of doing it, which I shared on FM16 where I like to keep a club’s wage expenditure smaller than its income from gate receipts.  I like a football club to be self sufficient and I have always queried how the initial wage budgets FM give you are worked out.  They always destined to send you into financial melt-down.

My work at FC Ryukyu is no different.  Yesterday I introduced the squad I have put together for the 2016 season.  Trust me, I have not used all the €17,500 weekly wage budget the board said I had.  Far from it.  Why not?  As I mentioned, it would kill us financially.

Instead, I have done my usual sums on the back of a crisp packet and I will walk you through the financial grounding that will not only mean the club stays within its means (eventually) but it will one day be the financially strongest club in Asia.  Yeah, even bigger than them in Qatar and that lot in China.

So, a quick refresher course.  How do I work out what I consider to be our “Real Wage Budget” or RWB?

Firstly, I take the final season ticket sales number (you normally have to wait a few weeks for this).  Or, you can guess by taking the price of a season ticket and the amount of season ticket holders who had last season – should be on the club info page.

Secondly, I need to try and work out how make gate revenue will come in over the course of the season.  To do this, I estimate how many extra people (basically attendance less season ticket holders) will come through the gate.  You can always adjust the figures as the season goes on if you get it horribly wrong.  Take that number, say 100 extra people for argument’s sake and multiply it by the price of a ticket (again on the club info screen).

Add the two together, and you have your projected gate income for season.

However, I have also added in predicted match day earnings (corporate hospitality included) into the mix this time, just because.  You can work out the best way to do that, and I wouldn’t recommend doing that the first time if you are planning on following this method.

So, with that in mind I learned that my RWB for the 2016 season was…… €1237!  Bugger.  That’s staff and players.  And the weekly wage they’ve bunged me is €1700, so we are fighting a losing battle before I even recruit a player.  At this very early point I made a calculated decision.  It is clear that I cannot run a squad and staff on this figure – it would be impossible.  So I decided to keep it all as cheap as possible, hence going with cheap labour in young players but accepting that I needed to bring in a couple of experienced heads to help us through the season.  Staff wise, well I need a certain amount of staff to even compete, but I was sensible with it.

Once the 20 man squad was in place, and the staff recruited my weekly spend came in at €7538.  Ouch.  You might think this is failure, but it is purely phase one.  As the season goes on, the figures will become more real and I will have a better idea of how it all looks.  For me, the RWB is always an aim, not a must.  It’s fun to be successful as a team and come in beneath it though, don’t get me wrong!

This is how the game is projecting us to go financially for the first season – it is grim reading.

But, I will turn this around.  Some of the bigger earners will probably only be with us a year and the second season is always the more interesting one to me financially, when you know the patterns and trends.

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Ok, this screen shot is taken straight after our final league game of the season.  What does it tell me?

Staff and player wages actually have come in at €445,000 – this is a little confusing and I can only presume that the youth academy intake have added to this number, though I’d have thought reducing my wage from €1700 to €500 a week a couple of months ago, in fact around the same time as intake day, would have balanced this out.

We’ve spent more in travel costs than we have in player wages!  This must be down to the fact we are on an island (is FM that intelligent?!)

The academy and scouting is costing us about €150k a year to run at this point – a necessary evil I am afraid.

Have there been any pleasant surprises in our income?  There bloody well needs to be!

Thank the Lord for a bit of TV revenue – that €200k pays for the travel.

Our sponsorship monies aren’t too shabby, that and “other” pays for the academy and scouting.

I was €1k out on gate receipts, which wasn’t too bad for guesswork and gates were VERY disappointing really.

I was, again, €1k out on match day income but that makes sense if I was €1k out on gate receipts.

All in all, I now feel I have a good idea of how we run financially – and the annual loss of €500k was entirely expected and would have been far worse had I spent another €120k in wages over the course of the year.  But, I do need to trim the wage bill somehow.

So that is how I look at our finances and how I try and work out what our Real Wage Budget is.  God I take this game too seriously….

 

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