Given our comfortable position in the league table and some excellent performances in recent weeks, criticism of the club feels harsh.
But despite many positives on the pitch, there is a definite sense that ambition has been reigned in away from it, with transfer business limited and a notable shift in rhetoric from Jeff Shi over the last 12 months.
To help me form my own opinions about the club’s financial status and what they might be able to do this month and beyond, I got in touch with Dr Daniel Plumley, Senior Sport Finance Lecturer at Sheffield Hallam University.
I asked about the club’s ability to spend, how worried we should be about the idea of ‘self sufficiency’ and the Adama Traore situation. The answers I got back were interesting, so I’ve shared them below in unedited form for others to draw their own conclusions.
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Thanks for agreeing to answer my questions Dan. The club has alluded to the fact that Financial Fair Play has limited their ability to spend big on transfers in recent windows. How restricted do you think Wolves are, both in terms of their general financial situation and compliance with FFP? And ultimately, do you think if they don’t do any serious deals this month, it’s likely to be because they don’t want to or because they have limited movement in the market?
The FFP situation from 2017-2019 showed a cumulative loss of £60.9m. This is okay against Premier League FFP where the acceptable cumulative losses over three years is £105m. It is not okay against UEFA regulations but of course, the club already agreed a settlement regarding this with UEFA when they competed in the Europa League so no immediate concerns there. The loss for 2020 was £39.3m (we have to factor in the pandemic as a big part of that and the extra Europa League revenue was a big plus for Wolves during this period). No 2021 figures are available yet but we know that the FFP has been relaxed for 2020 and 2021 and that the break-even principle will be looked at as an average of those two years. So, we would lose the 2017 figure from the three-year rolling calculation and pick up the average of 2020 and 2021. For 2018 and 2019 the cumulative rolling loss is £37.7m so there is some room to work within the EPL regulations (but not the UEFA ones). The losses, therefore, become more of a problem in the next couple of years if Wolves qualify for Europe again. That said, we don’t fully know what is happening with FFP longer term so much of this is hypothetical for now.
More generally, we know there will be a reluctance to spend amongst many clubs in this window. It becomes a case of how much you want to risk (financially) and what is the reward. Wolves at the minute look relatively safe from relegation. This would be the biggest risk because the revenue reduces by £60m overnight if you get relegated. The turnover of Wolves in 2020 was £132.6m so you can see the hit if the worse was to happen. Looking the other way, it’s where the club see the target for this year. Do you look to push for 5th place and a Europa League group stage place? What are the thoughts on the Conference League internally etc.? Wolves took just under £20m from the Europa League in 2020 but the Conference League is not as high. They have invested in players since promotion and have had a net player trading loss (e.g. more expenses on players in and amortisation as opposed to players out) in the last 2 years. This was a £42m net player trading loss in 2020 and £35m in 2019.
As a result, I would expect that if they don’t do any serious deals this month then it is a combination of not wanting to based on the last couple of years, the pandemic and the current state of the market. They are not in a position, for me, to get into arms races for players and pay over the odds.
Another line the owners have repeated a few times is about the club becoming self-sufficient. This has caused some supporters to panic about their intentions and whether Wolves can eventually develop into a top-six club without serious financial backing from FOSUN. Are rich owners still able to make a big difference, even when restricted by FFP?
The club is not quite self-sufficient yet based on the loss figures mentioned above and other factors. There is negative equity in the business (which is because of their reliance on the owners) and the net debt position is £125m in the 2020 accounts. The majority of their liabilities are to the owners which is okay if the owners are planning to stick around and are willing to keep investing. The problem arises if they do not want to stick around and/or continue investing. The owners’ other businesses are also a factor here considering the pandemic and wider world etc.
Rich owners can still make a difference but there is the issue of FFP. You cannot just throw money at a club anymore and run up big losses. The other issue is the ‘big 6’. Wolves turnover was £132.6m in 2020. Contrast that to Manchester City (£478.4m), Manchester United (£509m), Liverpool (£489.9m), Chelsea (£407.4m), Arsenal (£344.5m) and Tottenham (£402.4m) (all figures 2020) and you can see the challenge for any club trying to break into that elite. Matchday and commercial revenue (as well as the Champions League) is where these clubs continue to pull away and this makes them stronger in the transfer market etc. The gap is huge and is only getting bigger. It’s quite a sobering picture for English football generally in truth and for Wolves it is about how do they try and grow to close that gap and how can they do it without just paying inflated transfer fees and wages. This is the biggest challenge for Premier League clubs like Wolves.
I do agree that the club becoming self-sufficient is important in the long-run because the owners won’t be around forever but it does cause problems with the above as attempting to become self-sustainable might mean cost-cutting and limited spending etc. which impacts the ability to compete on the pitch.
If you were drawing up a table of where you thought each club in the Premier League were in terms of spending power and the ability to invest in the team, where would you expect Wolves to be positioned? My uninformed view is that the Big Six are miles ahead of everyone else and the others (with the possible exception of Newcastle) are struggling with the same issues around FFP and the impact of Covid. Would that be close to accurate or are some of the other clubs in better positions?
You are absolutely spot on with that assumption that the big six are miles ahead (linked to some of my comments above). Newcastle would be next on the list of course given their takeover. Expect them to keep spending in January but they will have the challenge of trying to attract players to a relegation fight. Newcastle are also okay against FFP because of how Mike Ashley ran the club so he has left them in a good position financially, ironically.
You then look at those clubs that come next. Leicester, West Ham, Everton, Aston Villa would be names you would mention (despite the current league position for Everton and Villa). Leicester and West Ham would be 7 and 8 on the list I would say (after the big 6) because of Leicester’s performances in recent years and West Ham because of their current position, Europa League and a pretty good financial position (pandemic aside).
Everton, less so for me at the minute because they have spent big in recent years and are right on the limit of FFP. Aston Villa also seem to be looking to spend a bit this month and can attract good players so they would come into the top 10 probably at 9 on this list. I think you can then put Wolves in the top 10 or around that position as the next best in terms of spending power and ability to invest plus the attractiveness factor of where the club is currently and the style of play etc.
Brighton, Southampton and Palace probably come next and then there are a few clubs battling relegation and struggling etc. that you would probably group together in terms of attractiveness. Of course, there is some subjectivity based on the above but it won’t ever end up too far away from the current league positions and on-pitch performance which in turn influences revenue etc.
Adama Traore is into the last 18 months of his Wolves contract and it’s being widely reported he will be sold to avoid the prospect of him leaving for free next summer. A transfer fee of around £20 million has been spoken about, which many supporters believe is way too cheap. We know that contract length heavily influences a player’s valuation but to what extent?
The Amortisation principle is how clubs record player registrations on the balance sheet. Traore was signed for £18m in 2018 on a 5-year contract (August 2018). So the annual charge for his amortisation is £3.6m (£18m/5). Take the end of the 2021 season as a guide so he is three full years into his contract. In the accounts of the club, he is worth £7.2m in book value (£18m – (£.6m x 3)). Obviously, there is wage costs as well (rumoured to be around £11m in total over the course of his contract). Clubs may look to get some of this back when selling. Assuming roughly one and a half years left on contract means a wage cost of around £3.3m still to pay to him if he were to see out his contract. Determining a fee for an individual player is based on supply and demand, the clubs available financial resources (on both the selling and buying side), contract length and sometimes a release clause.
There is some subjectivity in determining player values of course but Transfermarkt as an example value him currently at £25.2m. If the club accepts they are going to lose him if he doesn’t want a new contract then it is better to sell him now in this window rather than in the summer or next year when his value will be lower. Given the above factors and market valuations, the club might view £20m as a good deal. They might want to push the value slightly higher to say £30m but it is difficult to see any club paying much beyond that given all the factors above which of course any buying clubs would be aware of as well.
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Thanks again to Dr Dan for answering my questions and giving a good amount of detail in each of his responses. It’s pretty much impossible to speak definitively because football finances are a complicated business and when it comes to transfers specifically, it’s clear that there is much more at play than your average tub-thumping supporter on Twitter takes into account.
For what it’s worth, my own thoughts, factoring in Dan’s responses, what we’ve observed the club do in recent times and some of the lines from Jeff Shi in Tim Spiers’ interview back in September, are as follows…
– Whether Fosun are reigning in their short term ambitions or not, there’s clearly room for the club to do substantial deals. It was widely reported by reputable sources they were prepared to spend big on the likes of Sanches and Botman in the summer, but only if they could structure the deal in a way that suited them. Jeff Shi stated in the interview referenced above:
‘We could have spent money on a player, the budget wasn’t an issue, albeit we can’t spend like Manchester City or Chelsea. We could easily have bought four or five players, but Bruno had the say on who he did or didn’t want. It’s not all about the budget, it’s about finding top players to come here, which isn’t easy. You need the player to be top quality, to want to move, the club (he’d be leaving) to want to sell and the fee to be more or less fair. Through the whole window, we were working collaboratively with Bruno every single day, trying 20 or 30 targets overall, but the coach was unsure about two-thirds of them, he didn’t think they were better than (what was already in) our squad.’
– The fact that they could do more deals then leads to the debate of ‘should they?’. Most fans will always say an emphastic yes and I agree that it perpetually feels like we’re two bodies short of feeling robust. But I do like that the club are selective about who they bring through the door and don’t bloat the squad with mediocre additions that can potentially do more damage than good.
– It also seems like serious consideration is applied to any additions we do make, whether or not those signings end up being successful. When you reflect on the summer window now, you’d say Sa, Ait-Nouri, Hwang and Trincao all seem like solid, considered signings, especially when you remember the latter two were ‘try before you buy‘. Again Jeff Shi’s comments in the summer have aged reasonably well:
‘Of course we can do better, but if you compare the squad to the end of last season, I think we’ve done a good job. The squad is larger, we have more fit players and we have players who are improving — look at Kilman. I can’t say it’s the best window, but it was good. We have a clear plan and every new signing is the player we think is right. Fans want to see players come in, but sometimes you have to be stubborn and understand what you want to do.’
– As we already knew, The Big 6 are in another universe commercially, so even if Fosun were prepared to bankroll the club indefinitely, FFP would always limit our ability to compete for the Champions League and to an extent, even the Europa League. To that end, perhaps we shouldn’t all laugh and be so critical about eSports and some of the quirkier commercial tie-ins the club have announced in recent times. The ambition behind these initiatives is to close the gap and ultimately have a chance of competing against the best more consistently. That doesn’t mean we won’t spend. Shi knows that the team on the pitch has to consistently perform as part of this growth:
‘My long-term view is how to make Wolves a big, strong company with commercial strengths, a larger fanbase and attractive products. To achieve that, Wolves have to do well. If we’re relegated, or always 13th, it doesn’t help. To improve the team, it’s a kind of fuel for the growth of the whole organisation, not the opposite. So we’re not desperate to get in the top six straight away, it’s about an upward trend, maybe it will take three or four years. Whether the trend is fast enough, I don’t know, but if it starts we’ll be happy, and that’s why we’re happy with Bruno because we see it starting.’
– I think Adama Traore will leave, possibly in January if the deal can be structured, but if not, in the summer. I don’t think Wolves have to sell to buy, but I do think a major sale will make them more robust in the market this month and increase the chances of additions. If Traore doesn’t go, we’re back to trying to find the right profile of player to improve the team and structuring deals to suit the club’s plan. Don’t rule out business, but don’t expect it either in a market where few clubs are doing big things.
– I remain satisfied the club are in good hands and although it’s fanciful we’re going to be raiding the top four any time soon, I think there are smart people making informed decisions at the top and while that’s the case, we should still have plenty to look forward to in the immediate future. Even if Fosun wanted to completely pull up the drawbridge and pay down the club’s debt to them, it’s not really in their commercial interests for the team (their asset) to suffer so I’m not sweating just yet about our prospects.
Thanks some good stuff here. One omission from the finance section is that the late ending to the 19/20 season had a profound impact on the annual results. Most teams adjusted their FYE’s to reflect the longer season but not Wolves. This means that a big chunk of Prem TV revenues will be in 20/21 but also the later stage prize/TV revenues from Europa league. Add to that the huge profits on Jota/Doc sales (versus very low amortised carrying values). I think we also got tasty add ons from Costa/Cav sales at same time.
I don’t believe that FFP is an issue anymore. But I am genuinely unsure on investment appetite. On one hand Wolves leak through Spiers the “sell big to buy big” mantra. But at the same time we see big interest in Botman, Sanches etc over summer without any sales.
Let’s see
Excellent article. Please thank Dr. Daniel for me. I know too little to critique but I am sure there will be others who have an opinion.
Thank you Thomas for your research and providing a considered and illuminating insight into a situation which is not as straightforward as some appear to think.
Yes thanks Thomas for your well considered and balanced piece .
Sadly I think they are now unable to do anything but be self sufficient due to the Party in China discouraging investment in football clubs so a slow build is the most realistic prospect .
We are still miles ahead of where we were a few years back so I am happy on that basis but my expectations of future progress up the pyramid are relatively low .
Thank you Thomas for this very illuminating article, and for the expert input of Daniel Plumley. And as Chris, above says, there may be good news when the 2020/21 accounts are published. Clearly, we are all up against it with the Big Six, who seemed to enrich themselves before FFP came into existence. They couldn’t get away with it now, but that’s no consolation when they are so far ahead financially. Your article just reinforces my view that we are in very good hands with Fosun, and are probably punching above our weight financially (and not just in the football pitch). It still makes my blood boil that Morgan was gifted the club, debt free, for a tenner. He didn’t even support Wolves.
Going forward, what’s in the best interests of Wolves is in the best interests of Fosun. And I look forward to us displacing one of the Big Six before long. No wonder those pathetic clubs wanted the Super League, because they knew that the party was over.
Sure Morgan didn’t do what we wanted for the first team, but his investment in the academy should not be overlooked, and cannot be overstated IMO. He also left the club on a sound financial footing, meaning that it was an attractive proposition for Fosun.
Don’t get me started on D**n S******s though…
I think Fosun are doing a great job.
You can quote a million statistical, economic graphs etc, contradicting me, perhaps but the essence of a ‘team’ is the combination of individuals, into a single, group, unit. Psychologically, this is extremely difficult, regardless of footballing ability and ‘buying’ apparently good players, who ‘psychologically don’t fit into the ‘team’ concept can be disastrous. Roger Johnson & Jamie O’Hara are prime examples of this. Whoever Traore plays for, he becomes the focal point, which doesn’t help the team concept of 10 other players. Tony Pulis noted that about Adama & I think Lage saw it straight away. Whoever we buy, the first priority is they can psychologically adapt to Bruno’s idea. Every football club in the UK has had to adapt to Corona restrictions, plus unrevealed, perhaps, Brexit transfer adaptability.
We are doing better now than ever on the football pitch.
Morgan sold the whole club for £35m, players and all.
Today we have at least one player worth £100m on his own.
Definitely think Fosun know what they are doing financially and they are ambitious.
One step at a time, three more FA Cup wins is all we need to get to Wembley again. Success brings ingreased revenue. Defo’ got the group of players to do that.
The mighty Wolves are coming after the big boys and it’s just round the corner.
In my opinion this is as informative an article as we’re ever likely to see on the way the club has been run financially over the period. My congratulations to all those who contributed.
For me, the conclusion is simple, Whilst no business can ever be run perfectly, Fosun continue to do an exceptionally good job. Very sensibly, they prefer to work hard but wait as long as is necessary for the right opportunities rather than take unjustifiable risks. This is how good businesses are run.
So when its all thrown into the pot of financial soup the more turnover you have no matter how it comes the more successful you will be .
Match day revenue would increase if investment was put into the Molineux but would it make that much difference ?
Over a period of time if the team continues successfully yes it would but then so will everything else the club is doing IF we remain on an upward curve albeit maybe only a slightly upward curve.
On the basis that relative success will slowly grow the club in order to close that gap on the big six i see us investing more on the playing side but only in a prudent way as we have to have a successful playing side to make the other parts work well.
This is not going to happen quickly so all the ones who want Fosun to put their hands in their pockets and pull out hundreds of millions to make a quantum leap need to think again because its not going to be that way.
Slowly slowly catch your monkey is an old ( maybe even Chinese ) saying and it would seem Fosun are taking that road and is it such a bad road to be on ? i think not.
We are all getting older and unfortunately some of us may not be around to see the ultimate success become the norm but under Fosuns astute leadership the ride to the top should be just as entertaining as when we eventually get there.
Conclusion after reading the article is that its like juggling chain saws… all of them must stay in the air at the same time or you will get your legs chopped off so a vastly experienced company like Fosun seem to me to be a much better option to own us rather than some others I’ve witnessed and to finish …(breathe)… from what I’ve seen of Traore recently he may as well bugger off to Barcelona swop him for Trincoa job done .
P.S i hope i live long enough !
Terrific article Thomas. I feel so much more informed than 10minutes ago.
It has largely confirmed what I already suspected though. Fosun are still committed to our club but the timescale has shifted. FFP has played a part, as has Covid. I don’t personally have any inside info on the Chinese Communist Party so will not presume to know what influence they weald. But FFP alone stops us throwing buckets of cash around.
It’s many years since I’ve enjoyed such success with the Old Gold and Fosun have given that to me. For that, I shall give them my full backing and gratitude. I count my blessings every time I proudly don my replica shirt.
All the speculation about whether Traore will be sold, to finance a mega buy or two, has, I feel, been put to rest by the above article.
We all know he is an enigma, but none of us know his mindset, nor what goes on behind the closed training doors of Compton between him, his agent ( coz they are insidious) and Bruno.
I think the person with the ultimate say is Bruno, and with the gentle way he has guided and improved all the players, except Traore, he will agree to selling him.
I’m not knocking Traore, I just think the tingle we get whenever he sets off on one of his runs is vastly outweighed by the frustration we get when they come to nothing.
A previous post recently quite rightly stated we are a team in every sense of the word, except Adama, and just as Nuno quickly weeded out beloved deadwood, such as Dave Edwards and Danny Baath, so Bruno should get rid of Traore.
What happens with the sale money is up to management, not us, we can only hope.
Also, it will be extremely interesting to see what, if any, positive improvements have taken place when the likes of Wily Boly, Pedro Neto and Jonny Otto return to full fitness.
If Bruno’s magic has had time to work, and those guys have gotten better by the same percentage as the rest of the squad, then we WILL have almost two excellent players for every position.
Y’all know my views about the Fosun bashing that goes on here and other social media platforms, and just as I will never convince 300 million Americans that murdering deer is not a sport, I will never be able to quiet the miserable, never satisfied “fans” who take great delight in complaining no matter how well we are playing.
So I won’t try.
But I for one will support whoever wears the old gold and black on the pitch, coz the football we are playing is as good as, and sometimes even better than, I have seen in my 60 years of Wolves worship.
And another thing, while I’m on a roll, is the different camera shots during tv broadcasts.
The crowd reactions to goals and good play is fascinating, and keeps my youthful spark alive when I see youngsters, teenagers, youths and old farts all intermingled, and all with sheer joy and rapture on their faces after we’ve scored.
That, as much as anything, makes this whole roller coaster ride worthwhile, and I thank you, Fosun, for helping this old fart maintain some semblance of youth, and for giving us all positive hope of even better things to come in the not too distant future.
You could say the same about all our frontline though in the League, i think Traore get’s singled out cos of the contract situ as most of us think he’s a wantaway. Given their game time, statistically i doubt Traore is much worse than the other strikers for chances missed and we don’t score enough goals for anybody to eclipse other players. Also we have no idea of the details in the contract issue, for all we know Wolves could be offering him £50k a week and won’t compromise. Saying he’s not a team player, not trying, bad attitude etc is just subjective with no basis in fact, he has his off days like the rest of the team. I think his shortcomings regarding his final ball are gonna be a constant though wherever he goes cos he’s never really ironed those out since arriving here apart from 2019/20 when him and Raul were on fire.
Thank you again Thomas. I’ve already commented above, and I hope that you can do a repeat of this exercise when our latest financial accounts are published. This should be required reading and homework for all Fosun knockers! Fosun are doing a splendid job of ‘juggling chainsaws’ (as someone said above). Unbelievably, some people on here accuse Fosun of acting like Steve Morgan in just selling players.
The thought occurs to me that Bruno would be a fine candidate to manage Man U. God forbid that should ever happen. The way he sussed those petulant cry-babies out last week at Old Trafford, and changed our system when they changed their system, was masterful. Dear Nuno would stand motionless on the touchline stroking his beard, whereas Bruno is all action, encouraging, provoking, directing, plotting from the touchline. I hear that it’s the same story in training, compared to Nuno.
Great article, good to get some clarity on this contentious issue. We could spend big and realistically get Conference League football next season. That just isn’t worth the punt, it’s a Mickey Mouse cup that could live in the shadow of the Caraboa Cup as regards achievement status. Not to mention the impact that would have on our domestic competitions playing two games a week most of the season. I think the article underlines the importance of the youth academy given the gap in revenue between us and the bigger clubs. Even if we sell Traore, ther’s no guarantee the right player will be available this window. We’re in good shape, our bigger problem will be holding on to our better players in the Summer.
Yes, Fosun has done an excellent job. Silva, Jordao and other young players will continue to develop and are players we in the future can build around. The latest rumor is that Wolves have made a bid on Monaco’s Badiashile (source Sky Sports), which is only 20 years old. And Carlos Salcedo, a Mexican defender, with excellent technical skills, able to play in several defensive positions have been mentioned available for “only” 6-7 mill. All the players linked with Wolves have been of the highest quality. Another rumor which I’m sure a lot of Wolves supporters don’t fancy, is Tottenham’s interest of buying Kilman. If we get 80 mill plus, I’d understand why the club would choose to sell him (because of the FFP) and invest the money in two or three players.
£80million????? where did you get that crazy figure from, he’s having a a great season but we’re barely past midway. Why would we sell, what’s the point of a youth academy iif we just sell them on.
– If the scenario was that we got 80 plus millions for Kilman, we would be able to sign Both Badiashile and Sven Botman. Two top players for one, perhaps even a third signing. It would strengthen the first team eleven and the squad. Plus Badiashile’s value will raise to the roof if he establish himself as one of the best defenders in the league. And the FFP wouldn’t increase, so we could spend other money on midfielders and strikers – increase the quality of the squad and youth academy.
We wouldn’t get £80m for him though, that’s just pure fantasy.
– Just a hypothetical scenario based on a rumor. The Kilman Spurs link was mentioned by the Molineux site (the sum in question wasn’t mentioned, but he’s already mentioned as a possible candidate for the England national team and Man U bought Maguire for 80 mill from Leicester). That’s not the point though. The point is that in the situation clubs like Wolves are, big sales may accelerate the evolution of the building process if reinvested wisely. Aston Villa spent their Grealish money in a good way and got good value for the money for instance.
Grealish was a first team player for many seasons before being sold for to Man City. Maguire had won a Premier league winners medal with Leicester. £80m is ridiculous, hypothetical or not. He’s a great player and worth serious dough but lets keep it real. Besides he’s not for sale so do one big six. He’s gonna help us win a trophy before we sell…..
– So you would say no to Sven Botman, Badiashile (or Caleta-Car) and Salcedo if it meant getting rid of Kilman?
That deal is not on the table and never will be so it’s a moot question. The article is about realities regarding this transfer window, your blog is about La La Land.
Everything is possible in january. No teams ideally want to lose their best players. That’s why the prices during the january window are so inflated. It’s the sellers market. Silly season. And by the way, everybody has its price. Neves goes for ca 100-120 mill, according to Lage ;=)))
But no-one is offering that or will offer that and that’s why Lage said it. This alternative reality you keep talking about doesn’t exist.
Harry Maguire never won the league with Leicester, he was still playing at Hull when that happened and Leicester signed him a couple of years later.
My bad Newt, he was indeed at Hull. It doesn’t negate my point though. He was an established international player who helped England reach the semi final in 2018 World Cup. The gulf between where he was at the time of his £80m transfer to Man U and where Kilman is now is huge. Nobody is paying £80m for half a good season in the Prem. Down the line, who knows, but definately not this or the next window.
– Well, only Man City has a better defensive record than Wolves. And clubs want to be ahead and be the first to the mill. But I agree, half a season is probably not enough empirical data to pay up such a huge amount of money for a player. Covid-19 is also pushing the prices down. Spurs wants a loan deal for Adama, with an obligation to to buy, because of the lack of transfer funds. The prices so far during this transfer window have been surprisingly sensible.
Thanks for that Thomas. Excellent stuff.
It seems that we are truly not in the same League as the Big Six, and are not likely to be in my lifetime.
Pity about that.
I don’t understand anything about money and finances.
The PMDG’er dishes out my pocket money weekly (not weakly) and I go off to the local sweetie shop and buy my sherbet lemons and then visit the newsagent to look longingly at the top shelf magazines before I get turfed out.
But I have one question that I’d like answered.
What would happen if we just said :- “Sod FFP! We’ll buy who we like and pay whatever it takes to get them.
I’m sure the likes of Man City have spent a lot more than they should have over the past years. Have they been punished?
Also, nobody seems to pay up front any more for players. My understanding is that Jota was sold to Liverpool on ‘Easy terms” and we still haven’t received full payment.
How does that count as far as FFP is concerned?
Anybody know?
Thanks DOOG.
To address some of your queries as far as my knowledge extends…
‘What would happen if we just said :- “Sod FFP! We’ll buy who we like and pay whatever it takes to get them.’
Flagrantly ignoring the rules would probably be a points deduction and a hefty fine at a guess.
‘I’m sure the likes of Man City have spent a lot more than they should have over the past years. Have they been punished?’
FFP wasn’t around when they were first taken over all those years ago so their owners got a launch pad to do what they wanted. That helped them secure plenty of assets before the rules were tightened. Since then they do stuff like getting Etihad to sponsor the corner flag for £100 million. Funnily enough, they’ve since voted against allowing Newcastle to do similar after their takeover. Almost like they want it to be a closed shop?!
‘Also, nobody seems to pay up front any more for players. My understanding is that Jota was sold to Liverpool on ‘Easy terms” and we still haven’t received full payment. How does that count as far as FFP is concerned?’
FFP counts against your yearly accounts so if the Jota deal was for a total £40 million and it broke down as £20 million year one and then £10 million for the next two it would significantly help Liverpool get a top player without compromising their FFP status, as the full cost is spread across multiple years. I remember Klopp commenting that they were surprised Wolves were prepared to let Jota go on such terms and that was what made the transfer so attractive to them, as they’d been linked to Sarr at Watford for similar money but they wanted more or all of it up front.
It shows how the system is fixed in favour of the big PL clubs. Were Citeh ever deducted points for their transgressions? No, and they would have raised bloody hell if anyone tried. It’s the ambitious but financially small PL clubs (like us) that would get it in the neck if we got out of line. In the EFL, many clubs have been docked points without mercy. The rules are there for a good reason but they should be applied equally, regardless of how esteemed the club is. It was disgusting that the Big Six got involved in the Super League because they could not have it all their own way in the PL anymore. Of course they will vote against Newcastle. What’s good for the goose is NOT good for the gander. Not so long ago the Old Firm in Glasgow wanted to play in English football, but their path was blocked by the usual suspects. Same story. Closed shop. Keep out. And don’t have the impertinence to expect fair treatment from VAR.
I think we could do that and ignore the European competitions we qualify for. (If we keep under the Premier League FFP rules, we won’t be punished by them)
Then in 5 years, after we stop overspending according to FIFA rules, and the three years of accounting roll off, we can then accept an invitation to the Champions League.
UEFA rules, not FIFA.
The thing I cannot understand is if Fosun were willing to stump up the funds for both Bowman and Sanchez in the summer why are they not willing to do so know.
And also do you thing Newcastle will be scared by the FFP rules I don’t think so.
The fault lys with the Premier League because they allowed first Blackburn them Chelsea and City to spend spend spend now other Clubs who have wealthy owners who want to invest are being restricted.
But the big question is if Fosun were allowed to invest as much as they wanted to, would they I for one don’t think they would now may be when they first took over but the world has changed since then especially regarding Anglo Chinese relations.
And that’s the crux for me they came in with a blaze of glory promising the earth and with in three years have selves there ambitions and more importantly for me the redevelopment of the stadium witch contradicts the self finance idea they keep pushing.
Thank you Thomas and Dr Plumley. What an excellent article, which for me has really shone a light on the murky world of FFP. Having an understanding of how clubs amortisation process works is invaluable. Hope others found it useful and we can understand the issues Fosun face, along side pressure from the mother ship too.
Brilliant stuff Thomas.
Once again ,well done and thanks for the lead article. The club in its entirety is now much bigger and more high profile than ever before and that is thanks to Fosun. It would make sense for Jeff Shi to come clean on where the club is coming from and its direction of travel or even appoint a director of football to be the focal point for communication , not just about transfers but also Academy and Women’s teams. Insufficient communication just creates a vacuum in the media which encourages rumour and gossip, 99% of which is garbage or made up to fill column inches or Sky Sports Sources.
What a fabulous idea and such great timing to ask an independent expert for their take on all things financial at the Golden Palace. ( I hope he isn’t a Sheffield Utd fan ).
It’s certainly food for thought and underlines how good Fosun have been for us to date, and the complexities of how to successfully grow a Premier League club. Not to mention the seemingly impossible task of breaking into the top echelons of the league. If only Fosun had bought us 15 years ago. I guess we already knew the system is stacked in favour of the BIG clubs.
Compete in Europe – damned if you do and damned if you don’t.
It would be interesting to hear Dr Daniel’s take on the relationship between Fosun, Wolves and Mendes/Gestifute.
Juggling greased chainsaws whilst walking a tightrope with your shoelaces tied together and suffering from hay fever might be less challenging than managing Wolves upward trajectory.
Putting this together was a super idea, excellently executed.
Thank you Dr Plumley and Thomas.
UTW
Imo there’s a north south divide. We are in the middle geography and financially and I’m afraid that’s where we’ll stay unless the the FA and FFP do the right thing and allow us the so called small clubs to compete fairly against the Cartel 6.
Geographically.
I’d hang up your keyboard now Thomas. You’re never going to write anything better than this.
The most balanced and informative piece of sports journalism I’ve read in a good while.
Probably helped along as it confirmed many of my amateurish assumptions.
Great article – well balanced and informative.
FFP is designed to look after the elite, both in Europe and here, that much we know. But don’t tell me Fosun didn’t know that when they came in.
Everything Dr. Plumley says is accurate, including the view that FFP is not the main constraint in the here and now. Mixed messages from Jeff Shi are a result of changing attitudes in Shanghai. Global politics are in play. But Fosun made a rod for their own backs back in 2017 with grand (and probably unrealistic) proclamations about Champions League participation.
My own view is that they are currently a bit too parsimonious and free with the FFP card. But that said we ARE now genuine top ten and we probably are the tenth biggest club in the country. That must be 20 or more places up in the hierarchy than we were when they came in.
So should we be happy with that?
Of course we should and in the main we are.
But the caveat Guo, Jeff et al is that we have stalled and treading water is in reality going backwards as others will catch up. So beware you don’t le it all slip through your fingers by inertia.
Still happy days though and I for one am really enjoying them. Wembley again definitely on the cards at least once.
If the rumours are true, everyone now wants to buy Traore.
Some (e.g. Tuchel and Moyes) are in the belief they can teach him to hit an 8 x 24ft rectangle from a few yards and others (e.g. Conte) that he can be turned into a defender.
I know we don’t get much coverage on Match of the Day, and if we are on you have to stay up late and wait until the last game on the show, but you’d think they’d have watched him play.
A magnificent athlete but I’ve lost all hope of him scoring or putting in a decent cross.
Still, all good for us if it means the price will be going up.
Do you think Jeff has an eBay account? I would suggest a 10 day auction with a “buy it now” option for £30million.
That should get us Sanches and leave a little change for Jeff to buy a Knighthood or even a place in the Lords.
Great idea for a ten-day auction of Traore.
I’ve never heard so many rumours about any player as I’ve heard about Traore. The truth is I guess that buying Traore is like buying a lottery ticket. If it comes off, you win big!
I’d prefer a direct swap: Traore for Werner
Not a great fan of Werner. Rather have Loftus Cheek.
Don’t Werner and Traore suffer from the same problem…..
– Werner hasn’t always had this problem, that’s the difference. Scored loads of goals for Leipzig. A change of football culture might do the trick.
– At his best Werner is one of Europe’s most dangerous backroom players, and one heck of a fox in the box. We lack that type of player. It would make Wolves very dangerous on counter attacks, and I think he’d thrive playing together with Jimenez in a 4-4-2 or 5-3-2. Interesting to see how Conte will use him, if he’ll use him at all.
Thanks Thomas, really good post. In this context the European feeder clubs Wolves have in Grasshoppers and Famalicão make a lot of sense too – widening our ‘catchment’ of (kinda) home grown recruitment rather than solely compete in the W.Mids where four other clubs are going after the same talent pool as us.
Jose
Good point about the sharing the local catchment area.
I’m never quite sure who is feeding who with Grasshoppers. It will be interesting to see how the deal with Kawabe works out.
Much has been said about how far ahead of everyone else the ‘top six’ are financially and the difficulty of breaking into that group but there is one very important asset within a club which money can’t buy and that is ‘ spirit’ and particularly ‘team spirit’. It’s small things like the star centre forward buying the tea lady a small gift on her birthday or players visiting sick children in hospital on Christmas Eve which truly warm the heart.
I watched both the Notts. Forest v Arsenal and Man. Utd v Villa matches on tv in the last few days and it struck me that I didn’t see a genuine smile on the face of an Arsenal or Man Utd. player throughout the whole of the 90 mins. They were just turning up to do a job ; ‘ team spirit’ seemed miles away. The contrast between them and the absolute joy on Jose Moutinho’s face when he scored against Utd. was stark.
I went on to reflect that the ultimate pleasure for genuine football fans does not come from trophies being ‘bought’ by billionaire owners but from those never to be forgotten moments when a team with ‘team spirit’ achieves the completely unexpected.
They’ve lost the true joy of winning ’cause they don’t lose enough.
Certainly agree with you here Bilko. I thought the same about those two games.
In regard to spirit , togetherness , and united purpose Wolves excel. There are several reasons for this. They have , again, an excellent coach in Bruno where each player is clear and confident about playing his part in the team. They are respectful and supportive of each other on the field. They have arguably the best captain in the Premier League whose influence both on and off the field is magnificent. And we have no prima donnas who believe they are a cut above the rest . The recent game against Manchester United demonstrated admirably what Wolves are about. But after the match , the media outlets were frothing at their sycophantic mouths about the cloud that has descended on Old Trafford.
The way I see it, Fosun were banking on growing the clubs revenue via the Chinese market, which is quite large. However, anti China rhetoric from western governments will most likely be reciprocated in China so selling an English football team in Beijing has become much harder. Even a club with a great name like ours.
However, these things go in circles so who knows, in a few years, we could all be best buddies again and, if Fosun stay the course, their plans could turn to gold.
And Black!!
Excellent assessment of the shifting sands vis a vis China, particularly the loss of our marketability there. This has clearly had a negative impact on Fosun’s enthusiasm to invest heavily in the cause / project.
FFP is stopping them investing PJB. That’s where revenue and China was supposed to come in.
I don’t blame Fosun at all for their slowdown. They can’t know what the future will bring no matter how many fortune cookies they get through.
I’ve just read on the BBC website that Newcastle are paying £25mil for 30-year old Chris Wood, with 3 goals to his name so far this season. Zero resale value I would have thought. God in heaven! What does this make Traore worth?
A brazzilion quid, to Newcastle, but sweet F A to others!!
It must be a cunning plan to weaken Newcastle’s relegation rivals, Burnley. They’ve triggered Wood’s release clause.
His nose will be in Newcastle before he’s left Burnleh!!
We can’t gloat too much- weren’t we bidding for Keifer Moore last window? As an aside, Adama was not on the pitch for the 2nd and 3rd goals against Sheffield. Reluctantly cash in and reinvest.
About 7 m. Traore hasn’t scored one yet, let alone 3! Lol.
The thing with Traore is, he won’t sign another contract so I say, reluctantly, sell now to the highest bidder.
Brilliant, thought provoking read Thomas.
This has brought back a number of insightful posts from bloggers that has been missing for some time. I like what you have done, intentionally or not.
Thank you
So Chris Wood has signed for Newcastle. £25 mil for a 30-year old. 3 goals so far this season. If we had signed him I guess most of us would have been surprised and underwhelmed. OK, he scored a hat trick against us last season but that was when Nuno’s system was in disarray. I don’t think Bruno would touch him with a bargepole. I think Kenny Jackett tried to sign him a few times, and came very close. I can’t remember the price, but no way would stingy Moxey pay more than we paid for Afobe, about £2mil. Wood would have been a good signing in those days, but he’s not where we’re at now. This shows how far we’ve come under Fosun. .
Newcastle have spent nearly £40 million on 2 x 30 year olds Trippier and Wood. If that is ‘ambition’ then so be it. Seems like panic to me but they could stay up on some of the lowest points ever. Seems to be 3 of 4 down there. Between Norwich Newcastle Burnley Watford none of whom are any where near averaging a point a game – which normally keeps you up. Excellent analysis by Thomas above. Much has been made of the ‘cold’ relations now on going between China and the West. I am certainly no expert but Fosun are an international conglomerate with interests widely across US and Europe. Including healthcare, tourism,fashion and banking. Relatively recently (2020) they acquired further interests in France and Italy. Why would Fosun suddenly lose interest in their investment in Wolverhampton Wanderers when they continue to be busy elsewhere across the globe ?
Not wishing to bring too much politics to the blog, the BBC have a series of three articles explaining the changes in China’s attitude to its participation in global capitalism.
These articles go some wasy to explaining why Fosun might be treading very carefully for the next 5 years and well worth reading:
https://www.bbc.co.uk/news/business-58579831
https://www.bbc.co.uk/news/business-58417234
https://www.bbc.co.uk/news/business-58784315
As for Newcastle, they’re desperate to avoid relegation. As we all know, getting relegated to the Championship is much easier than getting promoted out.
Because Mike Ashley ran the club very prudently the new owners don’t have any concerns with FFP in the short term and can chuck millions at the problem.
Brilliant article, yet again. Being honest, I admire the prudence of Fosun which safeguards our future (look at Derby et al.), but obviously miss some of the early Fosun excitement (albeit at the Championship level where they is perhaps more room for failure). That said, two thoughts: 1. Sometimes if the target looks like the most scientific fit, and the coach agrees, especially for a vital and under strength position (anyone play CM?), you might just have to pay that little extra. 2. Success can sometimes be a matter of serendipity, and you have to also play/pay for chance. The latter point can apply to some of the cheaper signings we’ve seen and some of the players that haven’t had a run – plus youngsters. I’m very excited to see more of Jordao, Giles, Cundle, and others. COYW!
A few personal conclusions :-
With special thanks to Thomas and the expert insight he has brought into this Blog BUT…there are some harsh realities we need to try to come to terms with
A) To get closer to the ‘ Rich6’ Wolves will need a smart cocktail of canny buying ( and selling) clever tactics (on and off the pitch) , shrewd Academy development, great team chemistry and brilliant coaching.
( I think we’re on track)
Big buck signings ( that got us out of Championship) just aren’t an option …for quite some years to come.
But that just means there’s no get rich quick solution
B) Traore has to go… Twenty mil or whatever
( I’m sad)
C) Maybe just maybe Fosun are in this for the long haul … by which I mean 20+ years. If so then my guess is that they will move carefully and patiently ( or occasionally impatiently) and with growing expertise.
( I hope so)
D) we are blessed with a wonderful football club now back
In the limelight , financially OK .and well- run .so let’s enjoy the ride. The eventual trophies will be all the sweeter to celebrate.
(OODCL)
I agree with pretty much all of that Marin. I would add that we need a continuing focus on expanding commercial revenue.
People scoff at Wolves Records, Fashion Esports et al but this is the only way to cement our success long-term.
Sad to say but it’s all about money.
Agree100% Wolfstroker
And getting stadium capacity up to 40000+ wouldn’t harm revenues either
By and large it’s a sport where filthy lucre counts