QPR’s accounts for the 2023/24 season, which started with Gareth Ainsworth and ended with Marti Cifuentes, show a £13.5m loss, apparently just about squeaking the club under the FFP line for permitted losses over three years – Simon Dorset digs into the figures for LFW.
No one ever said it was going to be easy. Trying to extrapolate the data required from summary accounts to populate the far more detailed framework that defines Financial Fair Play was always going to rely on estimations and therefore be prone to error, so let’s just dive in the deep end with the FFP table based on my adopted practice from previous seasons and then take it from there.
A reduction in loss of almost £7m is a fantastic effort but, for the sake of clarity, the table shows a FFP breach of £3,705,000.
On the face of it, this dovetails perfectly with a statement made by Michael Beale in a meeting with representatives of various fans’ groups in the summer of 2022. He revealed that QPR needed to make a saving of £10m the following season to prevent breaching FFP. For a club habitually losing more than £20m a season, excluding any profit from player sales, halving this seemed a very tall order. A task made all the worse for the club apparently acquiescing to Beale insisting that he would only accept the managerial role at QPR in the first place if the likes of Ilias Chair, Chris Willock and Seny Dieng were not sold that summer. Beale revealed his true colours shortly afterwards when he jumped ship to Glasgow Rangers, but only after he’d contributed to backing the club into a very tight corner.
However, if these accounts were in breach then the club would already have been placed under EFL restrictions and business plan which hasn’t happened (Ronnie Edwards and Yang Min-Hyeok along with a clutch of development squad players were signed in January), so it’s safe to assume we’re just about the right side of the line. QPR CEO Christian Nourry has suggested in meetings we were not recognising all of the disallowable costs i.e. costs that do not count against your FFP calculation. This firmly points at our usual estimate of £4m for ‘disallowable costs’ being too low.
I took this figure from Swiss Ramble’s FFP calculations a number of years ago. In his analysis this year, which you can read behind a paywall (seven day trial available) here, he estimates that QPR were just about on the right side of the FFP/PSR line to the tune of £1m by taking £17m "healthy” expenditure (infrastructure, youth development, community and women’s football), £1m for the historic FFP fine and £2.5m Covid losses off the £59m loss QPR have posted for their three years.
As a remainder, the disallowable costs comprise expenditure on infrastructure projects, depreciation of fixed assets, youth development, community schemes and women’s football. The club’s fixed asset deprecation has risen by approximately £0.5m per season as a result of opening their new training centre in Heston.
Christian Nourry recently commented that QPR’s academy cost almost as much to run as a Category 1 academy. As a guide to the sums of money involved in running academies, when Swansea dropped theirs down to a category 2 back in 2020, they estimated that it saved them £4m per season so, at a conservative estimate, if Nourry’s claim is true, this could easily add £2m onto our disallowables each season. If I can track down anything more definitive on QPR’s disallowable costs I will produce an updated table, but currently I see little value in pulling numbers out of the air just for the sake of it.
As an aside, the FFP Amortised Cost Charge (please don’t ask me to explain) looks to me that it was stated incorrectly in the 22/23 accounts. It is the identical amount as the Amortised Cost Charge – EFL Loan (again, please don’t ask me to explain). I think it should be around £400k more. This would further improve the club’s FFP position
We can return to firmer ground in examining how the club reduced their loss by approximately £7m. This can be pretty much covered by four headings: player sales, increased revenue, decreased wages and decreased amortisation.
This is the area we need to improve most. The club continually state the importance of player sales and there does appear to be a bolder youth strategy in place. Hopefully the sale of Sinclair Armstrong to Bristol City, the promotion of some development squad players into the first team squad and signing some promising, younger players like Liam Morrison are all indicators of an improvement on this front.
The figures show a very commendable overall increase of revenue of 14% compared to the average of the last two seasons. The standout figure is the 76% increase in sponsorship and advertising, which is almost entirely due to the club finally waking up to naming rights. Our home matches are now played in the MATRADE Loftus Road Stadium with supporters watching from The Bhatia Stand and The Achilleus Security Stand while the players hone their skills at the TSG Elite Training & Performance Centre. Not quite at Stoke City levels of plastering Bet365 on anything and everything and claiming £10m income on it a season, but an improvement. Also, if the Swiss Ramble figures are right, the difference between us breaching FFP/PSR and not.
I was expecting a greater reduction in payroll cost, but it is worth noting that for the first time in five seasons (i.e. since we stopped receiving parachute payments) that the total payroll is less than the club’s total revenue. It is also worth noting that it is the second lowest payroll figure since our relegation from the Premier League. This table also shows a significant reduction in amortisation. This summer’s transfer activity, and several Cook/Colback/Frey/Andersen signings last year reportedly joining for low wages in year one offset by significant rises in year two, guarantees this will rise again in the club’s next set of accounts.
The improvements made in these four areas closely correlate to the overall reduction in loss. The even spread shows that they took a calm and measured approach to rectifying the problem.
The 2023/24 season was hopefully the exception. Coming on the back of two high spending seasons it had the potential to be fraught but would appear to have been managed very well. If the same clear thinking is maintained, we could be on an upward trajectory. Not only is the biggest loss we’ve made since getting relegated from the Premier League (with the notable exception of the season our FFP fine was imposed) rolling out of our equation, this season enjoys a far more lucrative Sky broadcasting deal and the FFP cost of living increase comes into play.
Now, about that 20 goal a season striker ……
Also by this author >>> Edge of the precipice – Column >>> Paying Dividends >>> Grounds for Concern >>> Gordon Jago: Leading From The Front >>> The Trust >>> Accounting for success >>> Gambling with FFP >>> The greater evil >>> Terry Venables: My first hero >>> QPR’s fairytale of New York
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