This week’s massive relegation six pointers did not go well. Whatever Scott Parker might have said publicly prior to facing Brighton and Hove Albion and West Bromwich Albion in the space of four days, Fulham needed more than just two points from those two games. The club are now staring at the possibility of a third relegation since Shahid Khan took over in 2013 and the impact of another drop from the top flight on this squad, the club’s overall finances and Financial Fair Play regulations would be considerable.
Heading back to the Championship would necessitate another summer rebuild. Fulham’s current side is heavily built around loan players, who would all leave. It is fanciful to think that Joachim Andersen, Ademola Lookman or Ruben Loftus-Cheek would be eager to play in the second tier and their current deals would make them too expensive in any case. The same certainly goes for Alphonse Areola, who on the basis of his excellent displays in a Fulham shirt would feel confident of finding a new club in one of the continent’s top divisions. The likeliest player to remain at Craven Cottage might be Mario Lemina, but that appears a stretch – especially with Genoa rumoured to have been interested in taking him back to Italy earlier this month.
The best of Fulham’s permanent playing staff would look elsewhere as well. Andre Frank Zambo Anguissa has already far exceeded the level of his previous performances at Craven Cottage, attracting both praise from the pundits and envious glances from elsewhere. Given the length of his contract and the impending financial pressures, a cut-price sale post-relegation could prove too tempting to resist. There’s a real chance that Aleksandar Mitrovic, despite his lack of form to date this term, could leave as well. He’s a proven goalscorer at international level, probably has his peak years ahead of him and the club would find it difficult to carry his wages in the Championship. Others might head for the exit too. Tosin Adarabioyo has reportedly caught the eye of Juventus already. Why play alongside Cristiano Ronaldo when you can take on Lincoln on a rainy Tuesday night?
Therefore, Fulham would be faced with the sort of enforced reshaping of their squad they have had to go through before. An aging and rather uninspiring squad, with many members of the ‘old guard’ coming to the end of their contracted years, would be asked to make an immediate return from the Championship – and we all remember just how tough a league that is. The club would surely have to bring in new signings, constrained by a limited post-Covid budget without any of the revenue earned from a sustained spell at English football’s top table. They might turn to youth, but an influx of too many youngsters risks both competitiveness on the field and stalling promising careers, as we saw under Felix Magath.
The Premier League revenue distribution model means that clubs generate incredible sums of broadcast revenue simply from participation in the competition. A finish in the relegation places can still be worth circa £100 million. Here is how the funds were distributed in Fulham’s last Premier League campaign, 2018/19:
Fulham’s 2019 accounts show that in 2018/19, Fulham generated £108.98 million from broadcast revenue streams, a 403.4% increase on the 2017/18 season prior, in which the team competed in the Championship and earnt just £21.65 million from broadcast revenue. It can, therefore, be assumed that these figures would be reversed on relegation. However, Fulham would receive £45 million in parachute payments from the Premier League to try and plug this gap. In the second season, parachute payments would drop to £35 million before vanishing completely for the third season as Fulham would have only completed in the Premier Division for one season before relegation.
The club would also suffer a relatively large drop in commercial income, as sponsors often hold clauses to reduce payments or even exit the sponsorship deal entirely. This is because sponsorship becomes less desirable with less visibility, decreasing the price that the club can demand. Fulham’s accounts show that commercial revenue increased 2.1 times upon promotion to the Premier League in 2018/19, from £8.47 million to £17.73 million, meaning that dropping out of the top flight may likely have the reverse affect.
Finally, matchday revenue would also theoretically decrease due to decreases in ticket prices and attendances. Matchday revenue is the most important revenue stream for football clubs, despite usually being the smallest, as its regularity allows clubs to pay operating expenses during the season. However, COVID-19 has meant that clubs have not been able to generate any matchday revenue for almost a year, setting aside a single game against Liverpool in December. Therefore, any change on matchday revenue from the 2020/21 season would be good, as it means that fans are back in stadiums and spending money.
Dramatic decreases in revenue may cause concern over Financial Fair Play (FFP). FFP is a set of financial regulations put in place by the Premier League and EFL, designed to ensure that clubs are living sustainably within their means by limiting the losses that they can make over a 3-year period. If Fulham are relegated come the end of this season, the FFP limit for 2021/22, measured from 2019/20-2021/22, will be £61 million. This is because for each Premier League season, the club can lose up to £35 million as per the regulations, whereas in the Championship, this drops to just a £16 million loss per season – which is especially tight when considering the much lower revenues.
To see just where Fulham lie in relation this £61 million FFP limit, the club’s main costs must be analysed. Just with any football club, Fulham’s main costs are the ‘total staff costs’, or wages, PAYE and pension payments. The 2019 accounts show that Fulham spent a whopping 141.8% of revenue on wages in the 2017/18 championship season, spending £54.3 million on staff costs compared to just £38.3 million revenue. In 2018/19, after the £100 million splurge, this had increased to £92.6 million. This shows just how wildly out of control the staff cost spending is, even with relegation wage drop clauses inserted, it would likely be much higher than turnover.
Fulham’s other major cost is the ongoing amortisation of transfer fees. Amortisation is an accounting process which spreads an initial cost, such as a transfer fee, over a set period of time, such as the player’s contract. If the player’s contract is extended, any remaining cost is spread over the extension period.
I have attempted to work out Fulham’s ongoing amortisation costs with the Fulham squad, using Transfermarkt’s reported transfer fees. Note that this is an estimate and that figures will be incorrect due to estimated fees and unknown amounts of depreciation and impairment.
By my estimation, the amortised cost of the current squad for the 2021/22 FFP period, without any incoming or outgoing transfers between now and the end of 2021/22, is a mind-blowing £119.34 million. The big 2018/19 spend really is coming back to bite us, explaining the shrewd spending this summer as well as the lack of any movement so far this January window.
For Fulham to pass the FFP regulations next season, if relegated, the club must generate enough revenue to come within £61 million of the total costs. This seems like a mammoth task. Fulham have already been stung by FFP, suffering a transfer embargo in 205 as a result. However, this time around, it would likely wreck even more havoc due to the costs that the club faces, threatening to send us back to the dark ages of battling relegation to League One under Kit Symonds.
So what is most likely to save Fulham this financial heartache? A strong run of results in the second half of the season, as remote a prospect as that appears on this particular Sunday morning, would be ideal. Failing that, a summer fire sale of some of our leading assets and a spot of creative accounting would be the best option. Now, where are those six wins coming from …
Excellent article which goes a long way to explaining our current predicament. Thanks for that.
Unfortunately, it also confirms just what an utter mess Tony Khan has made of our finances since he first got his hands on the keys to the vault.
In fact, it’s not just a mess-it’s a disgraceful picture of mis-management.
When you compare this to our neighbours, Brentford, who have continuously unearthed new talent and sold at tremendous profit-enough to finance the build of a brand new stadium, it really puts our pathetic efforts during the same period to shame.
I can’t imagine that Shahid Khan will be best pleased with Junior.
Not that the great man did any better when he had control-cue a shudder at the thought of Felix Magath and Kostas Mitroglou!!!
What a mess we find ourselves in now. It will be very hard to forgive Tony Khan if, indeed, we do succumb to relegation.
Still, part of being a Fulham supporter means having to be an optimist and, as long as we have half a chance, we have to continue the fight.
I know football is a game of two halves but our first half performance against West Brom showed the real quality that we have in the side.
What a team we could have with just one or two more astute signings. But, it is what it is and we just have to get on with it.
If we can snatch a couple of wins, it will do so much for our confidence and give us that much needed momentum to stay up.
So let’s get fully behind the team and put our disappointment and anger behind us.
The real battle starts against Leicester!
Fulham have always been classed as a good top six championship side but unfortunately not a premiership side. I have been a supporter for more than 60 years and as hard as they have tried and with so many different managers they will never be a settled premiership side. I can only see relegation again this season as they do not have the players who can win games on a regular basis – good in championship games but not good enough for the premiership.
What an excellent article I agree with Charles what a debacle Tony Khan has done to this Great Club that I have supported for 60 years we were excellent in the first half against West Brom but a different team came out for the second we were caught cold for there goal which showed a bit of naivety and again as against Brighton we kept losing the ball or giving it back to them,these were the same players who played in the first half, I thought Mitro did very well held up play where possible just a glimmer of hope if we get a couple of wins but now I think Mitros got to start he could be the catalyst for a few goals let’s hope we can’t rely on other teams around us to lose,every game now must be a cup final if not bye bye Premiership not sure about Parker as well now
A brilliant article. So good to see the detail for why we aren’t spending all Khans billions. I always assumed FFP but great to see this breakdown to help us as fans understand the detail. Incredibly depressing however! I just wonder how the cost of the new stadium factors into this? Presumably that also has a significant impact with short term FFP pain for long term gain?
This is the reality of FFP. When Al Fayed came in it wasn’t about and we spent far more than would have been allowed these days going through the divisions (most fun I have ever had as a Fulham fan). I believe Khan is something like 7 times as richer so imagine what we could do without FFP. Understand why it is there but it does seem unfair that a small club like Fulham can’t benefit more from our backing. Man City and Chelsea, although not a small clubs, managed to spend their way to the top before FFP came in. Once you are up there you are of course earning the consistent money to stay up there and keep it going. It is a crying shame that we don’t have that opportunity.
If you get it wrong once as we did with the £100 million farce you are then stuffed for years as this article so brilliantly details. I’d add to this £100 million an extra £10 million for knockhart….what the hell was going on with that?! He has been useless since he joined and couldn’t get in the team half the time last year. When every penny was so precious we then decide to pay that before somehow realising a month or two later that barely championship quality and shipping off on loan to Forrest. Forrest fans also seem to think he’s rubbish. Absolute joke.
We all knew we desperately needed a striker in the summer but at £25 million plus with the figures mentioned above for pretty much anyone decent we had no chance. Callum Wilson pains me….yesterday sums it up…..he wins a game for Newcastle yet again and we can’t beat a team that we should have destroyed but for missed chances. Over the season we have played far better than Newcastle but he has been the difference. if we had been ‘allowed’ to spend that kind of money on him you can almost guarantee that ours and Newcastle’s points tally would be reversed.
Khan has generally been shocking in the transfer market but 6 matches into the season (way too late of course after we had lost a load of games against mid to low table teams that we could have picked up plenty of points from) the defensive additions and lookman were all amazing for literally no money…perhaps more luck than judgement. It is so frustrating to be one decent striker away from safety. The new West Brom loan striker seemed to have something about him and as someone mentioned on here galatasaray…how have we not used the waste of space seri in a swap deal to actually get something out of one of the worst signings i premier league history?! That was an opportunity out of next to none with no one wanting to let anyone decent up front out on loan of course.
Out of my depression today I’m trying to find positives. For this season….I completely agree we needed 4 and probably 6 points from these two games and I think we are all starting to feel the first nails being hammered into the coffin. I think our only prayer has to be mitrovic coming good. Although he did nothing in front of goal yesterday his link up play and physicality holding the ball up was brilliant first half and like the old days. Perhaps a bit of confidence is returning. Amazing what a goal could do on top so if he can just somehow score one, even if it is some sort of triple deflection off his back side, he might go on a little run. He is capable of getting 7 or 8 in the second half of the season and if he does with our defensive record (after the first 6 games) we have a chance. I had given up after yesterday but we are in a better position than the great escape so anything is still possible so desperately trying to keep the faith.
If he doesn’t come good we do look doomed for relegation however. So trying to see the positives here as well. For me there are some. No chance as this article mentions of keeping the brilliant loan players that we have brought in. Gutting in itself as if we did stay up and we could keep them with a few top additions we’d have a young team that could do really well like villa have second season. Anguissa will have to be the money maker to try and balance the books and gutting as well. We did at least make a few brilliant young signings this year for the future and have excellent young players to come back in. Rodak comes back in….class keeper who got us up last year so no probs there. Robinson is absolute class and better than Bryan so better than last year. I am desperately hoping we don’t have to sell Tosin to balance the books as well. He is young and may be happy to give it a go for a year with us….he’d be one of the best centre backs in the champ. Hector clearly no good for the prem yet but was class in the champ…look at the difference he made when he came in and he got us up. Kongolo if he ever plays again?!?!?! We might even get aina cheap who would be excellent in the champ. We’d prob still have Reed, Cairney, Decoldover Reid, onomah, and cav in midfield…all good enough to get us back up as done it before. Who knows re mitro. Another reason we desperately need him to do well second half of the season is if we are going to cash in we want a decent fee for him so we can replace. And then there is lookman. I refer back to £10 frigging million for knockhart!! They want £15 million for lookman which might have been possible if we hadn’t spent that. Fanciful perhaps but if we could somehow keep him on loan again I think he’d rip the championship up. So all in all we could have the best defence we’ve had in the champ and with a little rejigging going forward we could still be well up there. Perhaps me just trying to be positive as I don’t want to think about going back to the Kit Symonds days!
On top of all this the vaccine is getting rolled out and with fans back next year (everything crossed) we’ll have a shiny new stand soon with the extra revenue that brings. If FFP only goes back 3 years and with the amortised cost reducing over time we will hopefully be in a position to spend again over the next few years. Let’s hope we can do some of that spending in the premier league, whether through the miracle of survival this year or promotion yet again in a few seasons. COYW
Brilliant article. A very worrying situation and surely means we need to complete this season with the players we have. Hopefully we will stay up, even if by a point. I guess if we do drop then the only omission from the scenarios painted is we may have a few bright talents coming through the ‘wonderful’ academy system. Past history suggests that is unlikely. The players really need to start performing now, every one of them.
As a fellow member of the ‘Supporter for over 60 years’ club, I, too, very much appreciate the article and comments (but unclear what ‘not sure about Parker as well now’ means…. Will be poached by another club? … Not up to the job?) What frustrated me most yesterday was the lack of urgency and speed shown when we were on top.
An excellent article indeed . What it shows us is that football is not a precise science but a very risky investment suitable only for those with deep pockets and a strength of purpose .
Please let’s not forget how much money our owners have invested into the club’s infrastructure ; the academy , additional land for an expanded training ground and over £115 m on a fantastic new stand which combined will help make the club far more sustainable in the future and an attractive investment proposition for other potential owners in the future .
Financial fair play , in my opinion , is hardly fair , as it penalises equity investment , to offset trading losses, as if it were the same as the building up of debt in a balance sheet that has to be repaid .
It strikes me as odd that a club’s owners can spend as much as they want on its land , stadium and facilities but is penalised if it wants to build a strong team that will succeed on the playing field and thereby attract more paying customers .
The argument that FFP promotes a level playing field totally ignores the fact that it acts as a significant deterrent to investment by football clubs and will lead to even more clubs entering the Premier league as one season wonders who dare not invest for the future because of the fear of FFP reprisals if they are quickly relegated back to the Championship .
Brian Clough would have probably given the players a bollocking at half time for not being three goals ahead. The team probably would not have expected that and it might well have guaranteed that they came out fighting as hard as West Brom did. So frustrating watching us create chances and not putting them away. If Cavani had been playing for us against Man Utd we would have beaten them.
Can’t be agree with the views expressed here. I have been a Fulham supporter for longer than I care to remember. Lots of lows & very few highs in that time. Unfortunately since our new owner came on board thoughts processes around player recruitment, head coach/manager, coaching staff appointments has not been good enough. After securing promotion through the play off we came up with a squad that lacked any quality particularly defensively & by the time that was addressed some damage had already been done. I personally have become more & more resigned to relegation this season based on results to date & the undeniable fact that we are a team that cannot for whatever reason compete over 90 mins. Finally I would add that Scott Parker’s record of just 2 wins with half the season gone is pretty dismal.
Think this article is a bit too bleak and negative.. let’s not forget they’re building us a glorious new stand giving us extra revenue.
We always knew going back down was likely, and think the league one rationale is misplaced.. yes we may need to sell anguissa and mitro etc, but they’d both surely get us 30+ mil each which will help cover costs and if tosin did leave he’d fetch 15-20 mil surely as on a long contract. And who knows who we sign next, who can be a star. Plus great academy prospects etc like carvahlo, jasper, stansfield etc.
As for players who leave, areola is replaced by rodak, Anderson for hector or kongolo etc, we’d still have one of the strongest championship squads to compete.
The season isn’t over yet, keep the faith guys and if we do go down it’s not devastating
I’m another member of the 60+ Club.
I recently bought the Ashwater Press book about Alan Clarke,which reminded me of our time in the old Division One during the Sixties.Every season we battled relegation.
Our fourteen years in the Premiership, though were much more successful. Yes there were a couple of close calls, but we were a solid Mid-Table team,and who can forget our European Run.
What did for us was that Al Fayed turned of the”tap”coupled with poor managers.
Finally we have been incredibly lucky with the Khans as owners when looking at the dubious ownership od so many other Clubs
Excellent piece by Louis and thought provoking comments from real FFC fans. As another long standing follower of the Club I have to say that reluctantly I’m in the Robert Thomas camp. All this nonsense that we belong in the top flight is really fanciful. Every fixture is really difficult and fills me with dread! This isn’t how it should be.
Thinking about the current situation, I can’t help thinking that Mitro is probably the key man in the puzzle. I’m old enough to remember a very similar centre-forward in a Fulham shirt, the great Bedford Jezzard. ‘Jezz’ was a big guy that played the way that Mitro is trying to play now. He played alongside Messrs. Haynes and Robson, and was an effective foil for both. His game seemed fairly simple. Get the ball up to him, he would cushion head it back to either and then move into space. With these players providing through-balls he would more often than not find the net. His threatening presence was usually enough to upset defenders.
I pray that our current striker can again find his true form, and start terrorising back lines again, for I think, taking everything into account, this is probably our best hope of staying in the division,
Let them play,
Only way to stay up now is throwing the dice! We need to play a similar game to Leeds. A bit of all or nothing, still better than a hard earned draw! The gap must now be closed, anymore of a gap and we might as well throw away the key. Assuming West Brom and Sheff U do not develop a world beater run!
This excellent breakdown of the financial implications of relegation make T Khan’s choice of Parker – a manager with almost zero experience – all the more baffling.
Why gamble and scrimp on the one position at a club who’s performance will have an impact on every other investment?
Promoting Parker off the back of coaching a youth team at Spurs and seven months as Jokanovic’s assistant was the equivalent of promoting someone from the post room to CEO, or NQT to headteacher.
And the reality is actually worse. T Khan is the real post boy who’s been promoted to CEO by his daddy. Parker is T’s mate who T promoted so he wasn’t the most inexperienced person at the club.
We were Al Fayed’s toy but he never treated us as such. He always took the business seriously. We are now S Khan’s son’s vanity side project and it shows.
I fear the Khan’s will get bored one day soon and sell up leaving us with massive debts and a shiny white elephant of a new stand.
Our current position is so precarious.
Great article