Financial prudence in FM – Part 1

Financial prudence and “living within your means” are becoming hot topics in the world of football these days with Platini’s Financial Fair Play looking to rein in the perceived excesses that are threatening to spiral out of control within the game. The merits of FFP and potential for success are topics for another forum and sharper minds than mine; but there’s no doubting that its introduction is prompted by a desire to introduce financial responsibility and general business principles to a sport which has, at times, sought to ignore such limiting factors to satisfy the egos of ambitious chairmen, dissatisfaction of ill-informed fans and hounding by irresponsible media.

Whilst we are all aware that FM is just a game and, once in a while, it can be fun just to splurge as much cash as possible, running a financially prudent club that returns a regular profit is something of an obsession of mine. Whether this is down to my Scottish heritage, my admiration for Arsenal or just because I’m good at it is tough to tell but I do find it incredibly satisfying being able to produce a successful team whilst spending a fraction of my rivals’ outgoings. Here are my tips on how I go about it.

This is part 1 of the article – it turned out that I had more to say than I thought I did!!

First things first, if you are as interested in the financial goings-on at real-life clubs then I cannot recommend The Swiss Ramble highly enough, it is a fantastically well-researched and well-presented blog which has opened my eyes massively over the last year or so.

On to FM though. So the first thing to note is that the financial engine is fairly straight-forward in the game. Within the Boardroom tab on your club screen, there is a section which deals with the club’s finances. This will give you a great deal on information on your current balance, the transfer budget you have available to you, the profit/loss you have been making, where your money has been coming from and where it has been going with a detailed breakdown of your playing staff’s regular salary. Used properly, this screen can be a treasure trove of information in finding out what you are doing right, where you can improve and what, if anything, is driving that recurring loss. We will keep coming back to this screen throughout the course of the article but I think it’s easier to break the tips down into various categories, starting with…

  • Basic Wages

It’s a general rule of thumb that if your wages exceed your gate receipts then you will make a loss, whereas wages which are within your gate receipts mean you are well on your way to returning a healthy profit. When the game works out what wage budget your board will grant you for the season, it will take into account the anticipated gate receipts as well as the tv money and expected prize money you will receive for meeting their expectations in the various competitions you’re in. This is particularly prevalent when you have qualified for the Champions League as the £6m-ish that you get for qualifying for the group stages can equate to an extra £100k+ per week. Depending on which league you are playing in, though, that tv money may come in as lump sum at the start or end of the season. Many players will be concerned that they are running a monthly deficit only to find themselves back in the black when the end of season pot is paid out.

When that salary budget is made available to you, it is not only listed as the total for your entire playing squad but the board also assigns limits for each type of contract which you can offer:

The “Allowed” column lets you see what limit the board has set for each type of contract and the rest of the columns give you a breakdown of how you are spending the budget assigned to you. An important stat for me are the numbers in brackets after each squad status, i.e. Key Player (1), First Team (8). This can be a very crude, but useful, indication that your squad is becoming bloated at the top end. Can any squad really support 15 key players and 9 first team players? Probably not. It’s worth keeping an eye on these, particularly when looking at new signings, and considering whether you need to move some deadwood on before bringing in a new player.

The “average” column can also prove useful when considering a new signing. Let’s say that you’ve recently qualified for the Champions League and are looking to bring in some extra quality. Your average outlay for a first team player is currently £15k per week but your new signing is asking for £50k. We all know that what one player gets, the others will want. Can you afford to increase your basic wage structure by £35k per week, not just for the new player but also the 6 or 7 others who will be coming to you shortly asking for similar renumeration? This will be particularly problematic for those players whose contracts are coming to an end. Using my screenshot above, I have a first team player who is on just £2800 per week, compared to an average of £17k . His contract has two years left to run and, having just checked, he’s looking for £12k per week now, a rise of half a million a year . Using the salary screen for forward planning like that will help you no end in the future.

Basic wages are obviously the biggest outlay when it comes to player salaries but there are also various bonuses and contracts which could end up costing you large sums if you aren’t careful. As such…

  • Contract bonuses and clauses

Each player and their bloody agent will ask you for a raft of bonuses and clauses to ensure they get the best deal possible. And by best deal possible, I mean fleecing you for every penny they can. These can range from appearance bonuses, goal bonuses and yearly wage rises to contract extensions after a certain number of games, sell-on fees and John Terry / Frank Lampard-esque clauses to ensure they are the best paid players at the club. If you aren’t careful with these clauses then they can end up costing you a fortune. Couple of examples:

1. Playing as Greenock Morton, you snap up Craig Gunn from Elgin for peanuts. He wants just £200 per week and you are delighted. HOWEVER, he also wants £200 per game and £150 per goal. Over the season, his basic wages cost you £10,400 but he plays 32 games and scores 18 goals – costing you an additional £9100, almost doubling the initial outlay. It might end up that his goals got you promoted and that money is more than worth it; however, it might not and you’ve just lost money that could have paid for a strike partner.

2. Chasing promotion with Leeds, you sign Jordan Rhodes.

You’re paying me how much?!

He knows he’s your best player and asks for 4 year deal on £14k per week and a “highest earner clause” which you give him as you’re certain he’ll bring you promotion. Promotion comes and you need better players for the Premiership. In comes Borja Valero on £35kpw and Mr Rhodes rubs his hands together as he starts getting the same. Survival is achieved and you start shopping to establish your place in the big-time. Your chairman has been generous and you are in desperate need of a new striker as Rhodes isn’t proving good enough for the big time. You bring in Yaya Sanogo on £65kpw. Jordan is grinning from ear to ear as he sits on the bench, seeing out the remaining two years of his contract on £65k per week as you are completely unable to sell him off, no-one else is willing to pay that sort of money you see. Instead of paying him £2.9m over 3 years, he’s now getting £9.3m plus bonuses.

All of that is a long-winded way of saying – be careful what clauses you give players as it can come back and bite you in the ass.

That is not to say that you can’t use bonuses, etc to your advantage. One of my favourite tricks is using appearance fees as a carrot to tempt older players into signing one year deals on minuscule wages. I often try to pick up older players for the sole purpose of using them to tutor my youth. As I have no intention of playing them, I will happily give them a £500 per week contract with a £5k appearance fee, rather than the £3k per week they were asking for. A bit underhand but it’s my money and I don’t like giving it away!

  • Older high-earners

I’ve already mentioned John Terry and Frank Lampard above, but there are countless examples of veteran players at various clubs who will be on an absolute fortune while their performances on the park no longer merit such an outlay. Players deteriorate over time, in FM as much as in real life, and yet their wage demands rarely drop in line with their performances.

It’s often said that Alex Ferguson knows when to sell a player. It’s a talent that many top-class managers possess and you’ll struggle to find a player, with the exception of Jaap Stam, that Fergie has voluntarily sold who has then gone on to prove the Scot wrong.  Recognising when a player has just passed his peak and is beginning to deteriorate is a skill and it’s one that will save you untold frustration and wads of cash. Wenger was great at this with the likes of Vieira, Petit and RVP ( 😉 ). Getting high-earners off the books whilst they still have sale value and before teams start baulking at their wage demands allows you to re-invest that money into younger up-and-coming players.

Just don’t “do a Milan” and get rid of your deep-lying playmaker because his knees are gone and he’s not worth a two-year contract. Whatever happened to Andrea Pirlo anyway?

3 thoughts on “Financial prudence in FM – Part 1”

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