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STAINS OPERATING LOSS
Posted: Tue Dec 19, 2006 8:36 pm
by FROM A TO B
so how exactly can Stains who last season operated at a loss of £25,000 afford all of these players?
Cynical moi! :conf:
Even more confusing, after winning all the silverware available, they still can't run at a profit.
Re: STAINS OPERATING LOSS
Posted: Tue Dec 19, 2006 9:12 pm
by michael inch stoke
It says on teletext it was for the 2005 season.
I dont think you're being cynical, but i cant see what the fascination with saints is
Re: STAINS OPERATING LOSS
Posted: Tue Dec 19, 2006 9:57 pm
by cpwigan
They will also operate at a profit in 2006
Re: STAINS OPERATING LOSS
Posted: Tue Dec 19, 2006 10:12 pm
by ChrisA
Wigan operated at a massive loss even when we were winnng everything, pretty much most teams live just on, or even beyond their budget.
Re: STAINS OPERATING LOSS
Posted: Tue Dec 19, 2006 10:52 pm
by adrenalinxx
My mind just does not work with numbers so sorry if any of my posts seems strange but I have one question, how can an SL team actually operate at a loss?
Unless I'm mistaken the salary cap rule states clubs can only spend 50% of their income or the total value of the cap. If clubs can't afford the full value of the cap then they can only spend 50% of their income on wages, so what are they doing with the other 50%. I know there are other things that clubs spend money on but surely player wages have to be the majority.
If St Helens were operating at a loss the surely they don't have the income to afford the full salary cap.
Re: STAINS OPERATING LOSS
Posted: Tue Dec 19, 2006 11:09 pm
by DaveO
adrenalinxx posted:
If St Helens were operating at a loss the surely they don't have the income to afford the full salary cap.
If they earned say 6 million quid in gate money, prize money and sponsorship and this was their projected income for 2005 then the RFL would have had no qualms at letting them spend to the full level of the cap.
If during 2005 they blew what was left after paying the players wages and then spent another £25K on an end of season party thus incurring a £25K loss, it won't have meant their income was not sufficient to spend to the cap. Cleary at 6 million it would have been.
The cap level is set based on income and so long as you earn double the level of the salary cap in income you can spend half that on wages and then spend more besides on other things whatever they may be.
Clubs can't go on making a loss forever or they will go bust but it is quite conceivable a club could go bust having never broken the salary cap as I think was the case with London Broncos.
Dave
Re: STAINS OPERATING LOSS
Posted: Tue Dec 19, 2006 11:15 pm
by adrenalinxx
DaveO posted:
If they earned say 6 million quid in gate money, prize money and sponsorship and this was their projected income for 2005 then the RFL would have had no qualms at letting them spend to the full level of the cap.
If during 2005 they blew what was left after paying the players wages and then spent another £25K on an end of season party thus incurring a £25K loss, it won't have meant their income was not sufficient to spend to the cap. Cleary at 6 million it would have been.
The cap level is set based on income and so long as you earn double the level of the salary cap in income you can spend half that on wages and then spend more besides on other things whatever they may be.
Clubs can't go on making a loss forever or they will go bust but it is quite conceivable a club could go bust having never broken the salary cap as I think was the case with London Broncos.
Dave
Thanks that helped alot but if St Helens were operating at a loss in 2005 then wouldn't they have to make it up somewhere else and then wouldn't that start to effect the income for 2006, or do clubs just accumulate the debt.
Re: STAINS OPERATING LOSS
Posted: Tue Dec 19, 2006 11:21 pm
by cpwigan
Well Saints were losing vast sums before the present board too over. In 2005 they lost 25,000. They will report a profit for 2006 based on an exceptional year winning everything on offer. However, they do warn that in 2007 it will be much harder to make a profit with reduced gate revenue from 13 instead of 14 home matches.
The previous losses? I think most banks etc allow sporting clubs to build up debts. The problem comes when somebody suddenly calls in a repayment like the inland revenue or a former director.
Re: STAINS OPERATING LOSS
Posted: Tue Dec 19, 2006 11:30 pm
by DaveO
adrenalinxx posted:
Thanks that helped alot but if St Helens were operating at a loss in 2005 then wouldn't they have to make it up somewhere else and then wouldn't that start to effect the income for 2006, or do clubs just accumulate the debt.
They could just accumulate debt up to a point but they would have to pay interest on it if the debt was funded by loans or an overdraft. At some point if a clubs debts just kept increasing the creditors may call them in as they get a bit worried they might not get the money back they loaned the club.
So in my example of the £25K Saints spent on my theoretical end of season party was funded by a loan over five years but Saints kept making a loss the creditor might get worried that when five years was up they were not going to have the loan paid off. So they might call the loan in which would involve Saints selling some assets to pay the debt off.
We had to sell CP to pay our creditors!
As to making good the loss next season it depends on the state of their finances. If they have money in the bank then they could just fund the loss from that. If not then they would have to get an overdraft facility or loan to make good the loss because having spent the money it must have come from somewhere so wherever it came from they need to pay it back (but not necessarily all at once hence the overdraft or loan).
Dave
Re: STAINS OPERATING LOSS
Posted: Wed Dec 20, 2006 8:15 am
by highland convert
DaveO posted:
adrenalinxx posted:
Thanks that helped alot but if St Helens were operating at a loss in 2005 then wouldn't they have to make it up somewhere else and then wouldn't that start to effect the income for 2006, or do clubs just accumulate the debt.
They could just accumulate debt up to a point but they would have to pay interest on it if the debt was funded by loans or an overdraft. At some point if a clubs debts just kept increasing the creditors may call them in as they get a bit worried they might not get the money back they loaned the club.
So in my example of the £25K Saints spent on my theoretical end of season party was funded by a loan over five years but Saints kept making a loss the creditor might get worried that when five years was up they were not going to have the loan paid off. So they might call the loan in which would involve Saints selling some assets to pay the debt off.
We had to sell CP to pay our creditors!
As to making good the loss next season it depends on the state of their finances. If they have money in the bank then they could just fund the loss from that. If not then they would have to get an overdraft facility or loan to make good the loss because having spent the money it must have come from somewhere so wherever it came from they need to pay it back (but not necessarily all at once hence the overdraft or loan).
Dave
More to the point. If on the breadline as a club where will the funds come from for 2009. They need a major upgrade to stay in SL. Or will they take the drop? HC