IPSWICH TOWN: Blackpool example is a good one to follow
- Credit: PA
Ipswich Town could do worse than follow the prudent example of Blackpool if they were to be promoted to the Premier League at the end of next season.
That is the view of Rob Wilson, football finance expert and lecturer at Sheffield Hallam University.
Town will be targeting a top-six finish next season following Mick McCarthy’s heroics this campaign and the former Republic of Ireland manager has form, having won the Championship title as a manager with both Sunderland and Wolves.
The Tangerines lasted a campaign in the top flight before being relegated in 2011, but only spent modestly in their attempts to mix it with the top flight big boys.
They missed out on an instant return to the Premier League last season, losing in the play off final to West Ham, but have been able to clear their debts, thanks to their promotion which was worth in the region of £90m, and have a healthy financial future.
Promotion for Ipswich next season could be worth almost £120m in the long run with the Blues receiving £60m for just reaching the top-tier and a further £59m in four year’s-worth of parachute payments, should they be relegated at the first attempt.
Nearly £80m in debt, owed mainly to companies belonging to owner Marcus Evans, such a feat would go a long way to edging Town out of the red and stabilising the club in the long term.
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“Blackpool had loads of debt on the balance sheet but promotion was worth £90m all told,” said Wilson.
“They said they were going to go into the Premier League and spend a bit of money, but no player was on more than £10,000 week - around half the average weekly wage in the Premier League. They also inserted relegation release clauses into their players’ contracts.
“Ultimately it did not pay off and they fell just short but, by going up, they were able to write off their debt and received parachute payments for the next four years, worth £48m.
“They just missed out last season and have struggled a bit this season, but the next few years should see them start to make strides up the league again.”
Clubs have proved that they can be competitive in the Premier League, while others such as QPR, with a wages-to-turnover ratio of more than 90%, have demonstrated that there are no guarantees for spending millions of pounds on transfer fees and wages.
“I would ask clubs: Is the selling price higher than the cost and can they pay their debts as they fall due?” added Wilson.
“There are three models when you get promoted. You can go for the all-out like Portsmouth and look what happened to them.
“Or you can go for the more conservative approach like Blackpool and just pay off all your debt and (be) more prudent. Or you look at the Stoke City model of incremental building.
“If they can sign one or two players on slightly higher wages they may be competitive.
“The likes of Norwich, Stoke and Swansea have looked at their projected revenue and operated on a relatively modest playing budget with stringent wage caps.
“They have also spent well though in the transfer market and had a bit of luck. Who knew Michu would be such a success in the Premier League when he signed for Swansea?”