Post by Macmoish on Mar 1, 2011 7:41:13 GMT
Guardian/Matt Scott
Aston Villa must balance books after Randy Lerner's £200m investment
• Accounts reveal owner injected £200m into the club• Arsenal announce a six-month £6.2m pre-tax loss
Randy Lerner has plunged more than £200m into Aston Villa in the five years of his ownership, the Guardian can reveal.
Accounts lodged at Companies House last week for the Villa Park club's parent company, Reform Acquisitions, show Lerner has overseen the growth of revenues from £37.2m in 2006-7 – his first full season as a Premier League club owner – to £90.9m in 2010.
But alongside that strong growth has been the vaulting expansion of the wage bill. Villa's salary payments amounted to £22.4m in Lerner's first year, a just about sustainable 60% of the club's turnover. Today they have reached £79.9m or nearly 88% of the club's total revenues.
Losses last year were marginally down, from £46.1m in 2009 to £37.5m, but that was broadly attributable to the better returns from the transfer market. Booked net investment on players was down to £12.2m from £20m the previous year.
Yet still Villa are burning through Lerner's fortune. The US billionaire has injected £115.6m in equity and another £89.6m has come in through shareholder loans. Investments in player transfers alone have amounted to £138.8m but where it really counts – in the league table – there is precious little to show for it.
Villa finished 12th in Lerner's first season and sixth in each of the next three years; this season the former European champions have flirted more with relegation than courting the Champions League. Today they are 12th again.
The wages-to-turnover ratio is alarming because player wages are a particularly intractable problem. As Arsenal announced on Monday, in only six months they had achieved turnover of £120m yet the books did not ultimately balance: a £6.2m pre-tax loss ensued.
By no means are Arsenal in financial trouble; the loss in the interim accounts is attributable to a number of factors, not least a fixture list in which the Gunners play more often away than at home in the first half of this season. But the key contributor was the renegotiation of player contracts on more generous terms. "Every club has to compete for its own players," said Ivan Gazidis, the club's chief executive. "In the modern game that is true of every club." Not every club has a willing benefactor like Lerner but all must operate in an environment where wages are set by the most extravagant employers.
Yet even Lerner's patience is not inexhaustible and he wants the wages-to-turnover ration to return to 60%. Now Gérard Houllier will be called upon to deliver the managerial two-card trick that few have ever been capable of pulling off: bringing success with untried players from the club's own academy.
"We have an excellent academy with lots of very talented youngsters and Gérard is prepared to play them," said a high-ranked Villa insider. "You are locked into individual contracts but you are not locked into the overall bill. If you have a 35-man squad, with an average of two years on each there are plenty maturing each year. You always have that scope. And that is where the art of the manager has to be deployed."
So expect Villa to back away over the coming years from investing in more Stephen Irelands and Richard Dunnes in favour of attempting to win something with kids. It must be hoped Houllier will have a helping hand in that endeavour. Both Villa and Arsenal are members of the European Clubs Association, whose dialogue with Uefa helps shape the European regulatory environment. And both are looking to Uefa's financial fair-play rules as a means of stemming the flow of cash from club balance sheets.
"We shouldn't underestimate these rules; they will become a reality for leagues across Europe," said the Villa source.
"No one knows what kind of reality that will be because the rules must reflect the collective acceptance for football to be more sustainable than it is. But it is seeping into people's world view and it's going to help, hopefully, everyone get to a sustainable model."
Gazidis was still more forthright. "The escalation of player salaries to unsustainable levels means that those clubs who try to act responsibly find it more and more difficult," he said. "The extent the FFP are affecting decisions, we think that is healthy for the game. It influences not just those clubs whose spending has been above what their football revenues can sustain but also everybody else.
"I hope that Uefa will enforce those rules consistently and with transparency and I certainly hope that all the clubs who have supported it through the ECA will take the rules seriously." Fans of all but a tiny few clubs will depend on it.
www.guardian.co.uk/football/2011/mar/01/aston-villa-randy-lerner-accounts
TELEGRAPH/Paul Kelso
Randy Lerner ploughs in more money as Aston Villa wages soar
Aston Villa lost more than £37 million last season and were reliant on an investment of £25 million from owner Randy Lerner, taking his personal investment in underwriting the club to more than £200 million.
The loss, to the end of May 2010, of £37.6 million was £9 million less than in 2008-09, but it underlines Villa’s reliance on Lerner’s largesse and the huge cost of attempting to compete for Champions League football. It also demonstrates that, like many of their rivals, Villa have to drastically reduce their dependence on their benefactor if they are comply with Uefa ‘financial fair play’ regulations intended to force clubs to live within their means.
Controlling the club’s spiralling wage bill will be the main challenge.
Wages were up £9 million to almost £80 million in 2009-10, swallowing every penny of a £6 million increase in turnover. Wages now account for 88 per cent of the club’s £90 million turnover, among the highest rations in the Premier League.
While increased turnover lifted Villa into the top-20 earning clubs in Europe for the first time, they are more reliant on broadcast revenues, worth £52 million last season, than their rivals.
Matchday turnover at Villa Park was £24 million, £13 million less than Tottenham despite a larger capacity than White Hart Lane, and commercial income was £14.4 million. Losses were also offset by a profit of £18.3 million on the sale of Zat Knight, Gareth Barry and Craig Gardner.
Villa finished sixth for the third consecutive year last season but manager Martin O’Neill resigned on the eve of this season. A disagreement over the club’s future direction, and an apparent unwillingness to fund transfer purchases, are understood to have been factors.
Lerner has since funded the £23.5 million purchase of Darren Bent in the January transfer window, and the latest accounts for Villa’s parent company, Reform Acquisitions Limited, reveal the scale of Lerner’s investment in the club.
Since taking control at Villa Park in 2006 he has injected £205 million in the form of equity and loan notes to underwrite player purchases, infrastructure and losses.
Last season Lerner put in £25 million, £12.5 million via the issuing of new shares, with a further £12.5 million in loan notes repayable in 2019.
Lerner’s total equity investment in the club now totals £115 million, and the total loans stand at £90 million. Villa also has a bank loan of £20.5 million, £2.5 million of which has to be repaid by July 2012.
Despite the fee paid for Bent, Lerner is understood to remain committed to the cost-cutting agenda and the club is hoping to become more reliant on academy products such as Marc Albrighton and Nathan Baker to achieve this.
Club sources said they are confident that they will be able to comply with Uefa’s regulations by the time they are implemented in full at the start of the 2013-14 season.
Ashley Young’s future at Villa appears uncertain after the forward again ignored an opportunity to indicate he has an interest in remaining in the Midlands. “I have always said I will leave talks until the end of the season and that’s how it is,” he said.
With Manchester United, Liverpool and Tottenham thought to be interested in the sometime England international, Villa are understood to be pessimistic about their chances of keeping him.
www.telegraph.co.uk/sport/football/teams/aston-villa/8353550/Randy-Lerner-ploughs-in-more-money-as-Aston-Villa-wages-soar.html
Aston Villa must balance books after Randy Lerner's £200m investment
• Accounts reveal owner injected £200m into the club• Arsenal announce a six-month £6.2m pre-tax loss
Randy Lerner has plunged more than £200m into Aston Villa in the five years of his ownership, the Guardian can reveal.
Accounts lodged at Companies House last week for the Villa Park club's parent company, Reform Acquisitions, show Lerner has overseen the growth of revenues from £37.2m in 2006-7 – his first full season as a Premier League club owner – to £90.9m in 2010.
But alongside that strong growth has been the vaulting expansion of the wage bill. Villa's salary payments amounted to £22.4m in Lerner's first year, a just about sustainable 60% of the club's turnover. Today they have reached £79.9m or nearly 88% of the club's total revenues.
Losses last year were marginally down, from £46.1m in 2009 to £37.5m, but that was broadly attributable to the better returns from the transfer market. Booked net investment on players was down to £12.2m from £20m the previous year.
Yet still Villa are burning through Lerner's fortune. The US billionaire has injected £115.6m in equity and another £89.6m has come in through shareholder loans. Investments in player transfers alone have amounted to £138.8m but where it really counts – in the league table – there is precious little to show for it.
Villa finished 12th in Lerner's first season and sixth in each of the next three years; this season the former European champions have flirted more with relegation than courting the Champions League. Today they are 12th again.
The wages-to-turnover ratio is alarming because player wages are a particularly intractable problem. As Arsenal announced on Monday, in only six months they had achieved turnover of £120m yet the books did not ultimately balance: a £6.2m pre-tax loss ensued.
By no means are Arsenal in financial trouble; the loss in the interim accounts is attributable to a number of factors, not least a fixture list in which the Gunners play more often away than at home in the first half of this season. But the key contributor was the renegotiation of player contracts on more generous terms. "Every club has to compete for its own players," said Ivan Gazidis, the club's chief executive. "In the modern game that is true of every club." Not every club has a willing benefactor like Lerner but all must operate in an environment where wages are set by the most extravagant employers.
Yet even Lerner's patience is not inexhaustible and he wants the wages-to-turnover ration to return to 60%. Now Gérard Houllier will be called upon to deliver the managerial two-card trick that few have ever been capable of pulling off: bringing success with untried players from the club's own academy.
"We have an excellent academy with lots of very talented youngsters and Gérard is prepared to play them," said a high-ranked Villa insider. "You are locked into individual contracts but you are not locked into the overall bill. If you have a 35-man squad, with an average of two years on each there are plenty maturing each year. You always have that scope. And that is where the art of the manager has to be deployed."
So expect Villa to back away over the coming years from investing in more Stephen Irelands and Richard Dunnes in favour of attempting to win something with kids. It must be hoped Houllier will have a helping hand in that endeavour. Both Villa and Arsenal are members of the European Clubs Association, whose dialogue with Uefa helps shape the European regulatory environment. And both are looking to Uefa's financial fair-play rules as a means of stemming the flow of cash from club balance sheets.
"We shouldn't underestimate these rules; they will become a reality for leagues across Europe," said the Villa source.
"No one knows what kind of reality that will be because the rules must reflect the collective acceptance for football to be more sustainable than it is. But it is seeping into people's world view and it's going to help, hopefully, everyone get to a sustainable model."
Gazidis was still more forthright. "The escalation of player salaries to unsustainable levels means that those clubs who try to act responsibly find it more and more difficult," he said. "The extent the FFP are affecting decisions, we think that is healthy for the game. It influences not just those clubs whose spending has been above what their football revenues can sustain but also everybody else.
"I hope that Uefa will enforce those rules consistently and with transparency and I certainly hope that all the clubs who have supported it through the ECA will take the rules seriously." Fans of all but a tiny few clubs will depend on it.
www.guardian.co.uk/football/2011/mar/01/aston-villa-randy-lerner-accounts
TELEGRAPH/Paul Kelso
Randy Lerner ploughs in more money as Aston Villa wages soar
Aston Villa lost more than £37 million last season and were reliant on an investment of £25 million from owner Randy Lerner, taking his personal investment in underwriting the club to more than £200 million.
The loss, to the end of May 2010, of £37.6 million was £9 million less than in 2008-09, but it underlines Villa’s reliance on Lerner’s largesse and the huge cost of attempting to compete for Champions League football. It also demonstrates that, like many of their rivals, Villa have to drastically reduce their dependence on their benefactor if they are comply with Uefa ‘financial fair play’ regulations intended to force clubs to live within their means.
Controlling the club’s spiralling wage bill will be the main challenge.
Wages were up £9 million to almost £80 million in 2009-10, swallowing every penny of a £6 million increase in turnover. Wages now account for 88 per cent of the club’s £90 million turnover, among the highest rations in the Premier League.
While increased turnover lifted Villa into the top-20 earning clubs in Europe for the first time, they are more reliant on broadcast revenues, worth £52 million last season, than their rivals.
Matchday turnover at Villa Park was £24 million, £13 million less than Tottenham despite a larger capacity than White Hart Lane, and commercial income was £14.4 million. Losses were also offset by a profit of £18.3 million on the sale of Zat Knight, Gareth Barry and Craig Gardner.
Villa finished sixth for the third consecutive year last season but manager Martin O’Neill resigned on the eve of this season. A disagreement over the club’s future direction, and an apparent unwillingness to fund transfer purchases, are understood to have been factors.
Lerner has since funded the £23.5 million purchase of Darren Bent in the January transfer window, and the latest accounts for Villa’s parent company, Reform Acquisitions Limited, reveal the scale of Lerner’s investment in the club.
Since taking control at Villa Park in 2006 he has injected £205 million in the form of equity and loan notes to underwrite player purchases, infrastructure and losses.
Last season Lerner put in £25 million, £12.5 million via the issuing of new shares, with a further £12.5 million in loan notes repayable in 2019.
Lerner’s total equity investment in the club now totals £115 million, and the total loans stand at £90 million. Villa also has a bank loan of £20.5 million, £2.5 million of which has to be repaid by July 2012.
Despite the fee paid for Bent, Lerner is understood to remain committed to the cost-cutting agenda and the club is hoping to become more reliant on academy products such as Marc Albrighton and Nathan Baker to achieve this.
Club sources said they are confident that they will be able to comply with Uefa’s regulations by the time they are implemented in full at the start of the 2013-14 season.
Ashley Young’s future at Villa appears uncertain after the forward again ignored an opportunity to indicate he has an interest in remaining in the Midlands. “I have always said I will leave talks until the end of the season and that’s how it is,” he said.
With Manchester United, Liverpool and Tottenham thought to be interested in the sometime England international, Villa are understood to be pessimistic about their chances of keeping him.
www.telegraph.co.uk/sport/football/teams/aston-villa/8353550/Randy-Lerner-ploughs-in-more-money-as-Aston-Villa-wages-soar.html
