Football Manager financial guide: Part 1 – How to create a stable club
written by Darren Smith
Hey guys, I have a rather special post for you today. Since Football Manager 2011’s release, I have created many guides on tactics, cheap players, wonderkids and how to win. But it just dawned on me there is one vital aspect we all forget about, our clubs finances. I am the worst gamer when it comes to spending beyond my means…I just think, ahh the owner will take care of that! The allure of so many world class regens and strikers with 20 for pace and finishing etc just draws me in. Well today I want to share a few tips on how to keep the clubs bank balance in order. This Football Manager financial guide should help you see a nice white figure, as opposed to a nasty red one.
Very soon I will be resuming my Newcastle United game. With this in mind I snook a quick peak at the in game finances. That certainly didn’t make for happy reading. Despite winning lots of trophies and enjoying a full capacity stadium, my cash flow is grim and doesn’t look like getting better any time soon. Getting carried away with my dreams of fame and glory meant losing track of the clubs bank balance which is now in the red. We also have £137 million of debt to clear by the year 2030…ouch!! Well, over the last few days I have used a pen, paper, calculator and cup of coffee to get my long term plan together. Today, I want to use this Newcastle save as a perfect example on how you can turn your club into a profitable business. Don’t expect easy answers, to spend ridiculous sums on players, or to offer Messi £300K a week ! It is impossible to have a healthy club and still enjoy that managing style. You’ll need to change your ways, but I find this makes the game more realistic.
Income – the happy part of finances?
First things first, lets take a look at the clubs income from last season and see how we can improve for next season. Just ignore anything that isn’t boxed in red. These cannot be controlled by our actions and therefore are not worth talking about. Actually, we could ask the chairmen to increase stadium capacity, but this is a one time thing, so we’ll leave it at that.
1. TV revenue – This can be improved by making it to the top flight and also the Champions League. Somewhere around £15-20 million a season is offered from the Champions League depending on how far we progress. Because my Newcastle team are already going the distance in both league and Europe, I can’t improve on this. But I’m sure you can. I made £73 million plus last year and that’s probably the maximum playing in England, this is what you could aspire to.
2. Players sold – Part of the game none of us like, but one we should pay more attention too. Below are my five steps to make money from your players.
- Invest in your youth and training facilities. The better they are, the faster your players will develop and much better youth players will climb through the ranks.
- Sell any dead weight. Look through your squad, highlight any players that won’t play or lack the potential to make it in your team and get rid of them. You can offload unwanted players by transfer listing them, then offer to clubs, still no luck then offer them for nothing and if all else fails just release the player on a free. You should be doing this every year!
- Send unused or young players out on loan and where possible charge clubs for this privilege.
- Buy players with potential for a good resale value, DON’T JUST BUY 27 YEAR OLD PLAYERS THAT HAVE REACHED THEIR POTENTIAL!! I will elaborate on this while explaining expenses.
- Selling players could fill the largest part of your income pie, so always look to make more money on transfers than you spend. I made just under £7 million last season, not bad, but if I’d followed the above and below steps it could have been much more. I WILL EXPLAIN HOW TO MAKE MORE MONEY ON TRANSFERS THAN YOU SPEND IN PART 2!
3. Prize money – This will vary depending on your division and level of club. My Newcastle side are battling in all competitions and getting into the Champions League final, therefore we make loads. Making the Champions League offers a huge windfall. Somewhere around £4 million can be earned just from reaching the group stages. Then you could make the same again by winning all your group games. Last season I made the final and earned a total of around £20 million from Champions League prize money.
Expenses – where and how to cut back
Most of us ignore finances because we can’t be bothered with tallying everything up and working out where its going wrong. Well I have spent a while looking through the potential pit falls within club expenses. Again ignore anything not highlighted within a red box.
1. Player wages – The devil of football finances. If you’re not careful these can spiral out of control. I started my Newcastle save with a wage bill of around £800K a week. Now my players wage bill totals a staggering £1.45 million a week. That is an increase of £650K within 4 years, how did this happen!! Simple really, I got greedy and wanted the best players available. Buying stars that weren’t too bothered by a move to Newcastle meant ridiculous wage demands. Below is what I’m up against and how I can bring things back down. Again look at the red boxes and try to do a similar analysis of your first team…
Do I really need 12 players with a key player status? No of course I don’t, this is just what I assigned them to gain the signatures. This came at a cost, the average wage of a key player within my Newcastle squad is £73K a week!! A total of more than £873K a week, this is more than most Premier League clubs spend on their entire squad. I aim to offload at least three of these so called key players over the next few seasons. Below is a list of my highest earners, the red boxes indicate which ones need offloading.
All four of the highlighted players were given inflated wages due to fear of losing them. In all reality, none are worth these extortionate wages. Steven Taylor threatened to leave with his contract running out, offering £110K was the only way to keep him. Afellay was offered such wages under a similar scenario and the list goes on…Basically, stop and think if you really need to offer a player such wages, or you could end up like me.
My plan is to offload Afellay next year, and at the same time buy an under 21 to fill the gap. This new player should be on a maximum of £40K a week. I also want to sell Taylor ASAP, as I already have the players to back his departure. Enrique can be sold next season too as I have good enough cover for him. Then we have Dudu who can be sold straight away, he is surplus to requirements now. So taking all these sales into consideration as well as the replacement player wages…we can save £303K a week, which equals £14.5 million a year!! I seriously suggest you take 30 minutes to analyse your squads wage bill in a similar fashion, you may be shocked at what you see.
2. Bonuses – I know offering a whopper bonus is the easy answer to good morale, but lets be sensible. I tend to offer high bonuses for the league and Champions League, but keep the domestic cups to medium. This isn’t exactly money smart as the league and Europe cost more in squad bonuses than domestic cups. From now on I will offer a medium squad bonus in the league and Champions League, but up the domestic cup bonus to high. In theory this could save me around £4 million a year, maybe even more.
3. Signing on fees and renewals – Another big expense as the agent and player tend to get greedy. The best way to avoid a big contract renewal signing on fee, is to offer the contract early. Maybe offer a player that is developing well a new contract 2-3 seasons before its expiry date. You will not save money by waiting for his contract to run down. Most players that are worthy keeping will just expect a bigger contract and signing on fee with every year that passes. So offer a new contract early and save some cash. As for new signings, you just need to be persistent. When considering their signing on fee demands, lower their initial request by 10%. seven times out of ten the new offer will be accepted. I paid £7.2 million for signing on fees last season. If I had used the 10% rule, I could have saved £720K.
4. Players bought – The easy answer here is not to spend as much. But anyone who knows me, should expect a better guide than that. Please bare with me as I explain the best way to make money. OK, so let me ask a question…how many times do you buy a player over the age of 24? Also how many times do you sell these players for more than you paid? I think I can answer that question and hopefully you see where I’m going with this. Basically you need to buy players with a reasonable sell on value. What I mean is try to buy young players cheap, so you can sell them off between the age of 27-29 (their peek age) for a huge profit after they’ve served a purpose. If you get organised, you should have the correct number of youth coming through to sell those older stars without losing quality. If you sell these stars just as they’ve reached full potential, you’ll only miss two further years of their best football, but will see a huge improvement financially. These extra funds could buy two or three amazing young prospects and the cycle goes on. Don’t get me wrong, I know this is extremely difficult, but you can’t expect to get rich by sitting around twiddling your thumbs.
A great example is one of my first signings. I bought Sergio Araujo for £1.3 million, four years later he is worth £7.25 million. At the age of 24 the Argentine is almost surplus to requirements because of the clubs growth. I reckon I could sell him for £15 million, something I wouldn’t have dreamed of until writing this guide. That is a profit of £13.7 million if I get a good enough offer. Below is a run down of my thought process.
- Every season look for a minimum of two under 21’s for a maximum transfer fee of £5 million. These players should have the potential to be worth £8 million plus within 6 years.
- When you receive an offer too good to refuse, accept it. Other than that try to sell these players when they reach their peak, after about 6-8 seasons or before.
- Using this cycle every single season, will make you rich in the long run. After 6 seasons in game, you should be making a minimum of £15 million every season from transfers but probably more.
- Because you are bringing in new youth every season, there should always be someone waiting to take over from the key players you sell. Therefore no loss of quality.
- This is completely down to your judge of talent and management in terms of buying for the correct positions.
Conclusion – How much money could I save
The answer here is a lot, but let me explain the figures. Below is how much I could save within the first two seasons by following the above guidelines (excluding the buying players with a sell on value rule.)
Player wages savings a year = £14.5 million
Squad bonus savings a year = £4 million plus
Signing on fee savings a year = £1.5 million
Total savings a year within first two seasons = £20 million
Now lets look at how buying youngsters with a sell on value works in numbers. Remember this could take 5-6 years to see any rewards from. This is also based on buying at least two players under 21 with a big potential sell on value every season. You must also sell them after a maximum of 7-8 years. Lets also say you pay a maximum of £4 million per player, and then manage to sell them for a minimum of £8 million 7-8 years later. This means you could make a minimum of £16 million every season after the first 5-6 seasons.
Remember, the figures above are based on my Newcastle game. You may not make as much depending on your financial situation, stadium, level of football or in game time. I am already gaining the maximum from match day revenue, TV revenue and prize money but you could still increase your current income in these areas a lot more than myself…just gaining Champions League football could earn an extra £25 million plus per season if you’ve not qualified yet. Equally, you may not have wasted money on wages like myself, and therefore won’t save as much in that area by following this guide. However, I guarantee that you can save money from something within this guide…if not, I don’t know why you’re reading it :) Only kidding.
Part 2 is a must read so don’t miss it!!
During part two of this Football Manager financial guide, I’ll be teaching you how to go beyond a stable club and get rich. It may be a little complicated and take some effort to put in place. But I promise if used correctly, it WILL work!! The post will be about buying youth with a sell on value, plus when and how to sell them while maintaining a quality starting XI. I have worked on a whole plan and cycle for this as well as a list of players with great potential sell on values to get you started. Part two will be tough to explain and structure. Therefore I’ll base it on my plan with Newcastle so you can see clearly what is required. Until next time, thanks for reading. :)