Counting The Cost Of Relegation From The Premier League
Relegation isn’t the end of the world for a Premier League team but it’s certainly expensive. With the season now over, the very best division’s present bottom three — Hull, Sunderland and Middlesbrough — will be having to make strategies to avert the fiscal flux that demotion will bring.
The strike could be cushioned, mainly by getting back up as soon as possible with the advantage of parachute payments, as Hull and Burnley were capable of doing last season at the very first effort, but that needs continued support from owners already set for substantial losses.
Accounting for the price of relegation
Having player assets that are sellable definitely helps.
Newcastle United won the Championship and their first try and while manager Rafael Benitez was able to refresh his squad to the tune of £54.74 million last summer, he did so at a huge profit of £30m, having been able to cash in last season’s players for a total of £85.72m — including Moussa Sissoko to Tottenham for £29.75m and Georginio Wijnaldum to Liverpool for £23.8m.
“Newcastle has underwritten themselves by those sales,” says Kenneth Guire, football analyst. “Mike Ashley (Newcastle United Owner), although all the other teams believe Benitez can purchase any player he needs, has spent the cash rather smartly.”
The fiscal reality of relegation from the Premier League inspires such choices that are cutthroat
Villa printed reports before relegation’s deleterious effects on financing have been totted up declaring a loss of £81m for the preceding financial year. Villa has several players on Premier League wages, unwanted by teams in the higher division.
“If a player’s standing hasn’t suffered there’s marketplace for the player at that level they are on, as well as the team which gets relegated is in a solid position because they’re able to create cash, and get the player off the wage bill,” said Maguire. “It is when a player ends up playing in the reservations or isn’t performing, then you must bring in more players and that is just going to raise your wage bill.”
Villa was purchased by Dr Tony Xia this past year from Randy Lerner a knockdown price near half the £150m price tag that Lerner had looked for when setting the team up on the market in 2014, for a reported £76m.
Having made £65m from TV sales last season, they are able to anticipate just £6m in 201617, whereas this season’s Premier League teams are receiving a minimum of £100m.
With the team in already “heavy fiscal pressure,” to use Maguire’s description, next season looks like make or break for Villa. The greater bulk of Tournament teams run behind Newcastle in second this year, losing £26m in last season’s unsuccessful promotion effort, with Brighton, at a large loss.
Bouncing back is hard
Villa might be approaching a worst-case scenario but rough times expect for teams that are relegated. Ellis Short, the owner of Sunderland, will need to drop badly in the event of relegation and set his team on the market last November for a guide cost of £240m. Throughout under and the division, there are teams who are paying the substantial fiscal results of their continued failures and have been not able to fight their way back to the Premier League.
Blackburn Rovers, with debts of £106m, teeter on the verge of relegation to League One. QPR are still fighting a legal fight to counter a Monetary Fair Play fine of £50m for breaking Football League rules in the 201314 season and last year the team’s leading investors wrote off £181m of debt. Sheffield Wednesday and Leeds United, both in playoff standings right now, are long-lost Premier League forces who had to reach rock bottom to restore themselves.
Manager Aitor Karanka might not survive his team scoring the least goals in the Premier League, although Boro didn’t break the bank in their own summer spending, with an outlay of around £34m.
Teams taking preventative measures
Some of the teams above the bottom three — Leicester, Swansea and Crystal Palace — have each made managerial changes this season in efforts to avert fiscal pain.
While Leicester has a reported 30 percent pay reduction assembled into contracts in the event of relegation, they would face the likely possibility of needing to sell their stars and would have a tremendous total wage statement for the Tournament. Last season’s winners increased their wage bill well in giving contracts that were new to Jamie Vardy and Riyad Mahrez among others and added their squad and high earners together.
Having a billionaire owner Vichai Srivaddhanaprabha will definitely help, needless to say, but work within the fiscal regulations of the Football League and the Thai duty-free magnate would need to bear significant losses. The unpopular removal of Claudio Ranieri became a requirement in those conditions.
For similar reasons, but on the different side of the drop zone, Norwich, relegated last May, fired Alex Neil “in the greatest interests of the team” as it became clear that a Tournament playoff position was dropping from sight. They cannot afford to be out of the big league, and this season is running at a £9m transfer gain, although having endured difficulties in the recent past, Norwich has been conservative fiscally.
The fiscal reality of relegation from the Premier League inspires such choices that are cutthroat and are an unfortunate part of counting the cost of relegation from the Premier League.