you have to speculate to accumulate! Ferengi law of acquisition 123

Is there a distinction between capital investment and capital spending? Investment suggests (to me) something may generate revenue (unlike floodlights) or may appreciate in value (or at least have a resale value - unlike the extension to the East stand). I don't want to turn this into an argument about accounting technicalities, unless we really have to though (ie discussing specific figures).

You do and Rovers have. But now having got (more or less) where the club wanted to be, it needs stability. The money spent and invested in the past has earned an obvious return - but what is there to speculate for now? We can't get promoted to a higher, richer level and have to learn to live at this one.

To quote NH from the rallyround the robins interview:

'...we make losses year on year. These losses are underwritten by directors loans, sponsorship etc. Some of that has been planned as investment to get us where we are. However, that can't continue. This year, because of our well documented supply issues with Kooga and the economy in general the issue has been one the directors have prioritised. I've gone on record to say we now need to make the business self sustaining to continue the progress we have made.'

So the big question i'd be asking if i were a rovers fan would be 'what happens if the business cant become self-sustainable? Will the directors keep putting cash in or would they walk away? (or would they look to cut back on wage bills of players etc?)

Without detailed accounts it's difficult to speculate, however if you look at Hull for example, they allegedly have a turnover of £5m, with expenditure of £1.6m on players. Take off the reported £1/2m cost of the stadium and that leaves £2.9m to spend on all of the other costs. Hull have made reasonable profits up to (I believe) £300k in the last 3-4 years, leaving running costs and other expenditure around £2.5m+

Whilst each club will have a different cost base, there is obviously significant other expenditure involved in running a club.

I think one of teh biggest mistakes the RFL made was doing away with the 50% of turnover rule in the salary cap. Whilst the playing field wasn't level at least it brought about some financial prudence

I'd have thought the extension would be able to be capitalised as an improvement on an existing asset (the east stand). By depreciating the asset each month this ensures that the cost of the asset is split over its life span, possibly over 25 years, instead of taking the 'hit' to the P&L in just one period.

I agree.

That is kind of what I am asking. How can the club become self-sustaining? How many other clubs in SL are at least breaking even? For example I've seen it stated that Saints run at a loss, I think. However, if most of the others are 'sustainable', what are they doing differently? If you can't raise income then you'd look at cutting expenditure - but that has to be done in a way that doesn't in turn harm income. Quite a challenge.



It was a pain to administer and, as you indicate, meant a less even playing field. At about £1.6M, it is fairly conservative for the big clubs and even the smaller clubs should be able to spend a reasonable proportion of it without overstretching themselves. It is something I think the RFL deserve credit for. The gains of enforced prudence may be undermined by falling interest if the same big teams are perpetually dominant.

The fact that most clubs are run by fans dictates that many will pursue the dream and overspend. The 50% rule was one measure in place to try and limit it. If rovers made, say, £300k of losses last year they may have broken even if they'd spent £300k less on player salaries

Only Hull FC and Leeds operate at a profit. Would be a big ask for a club to become totally self-sustainable without the 13k plus average gates.

The salary cap is a bit of a joke though. I believe to spend upto the limit a club only needs 9-10k average or a decent backer meaning the profitable clubs dont get rewarded for doing being so.

So what we need is a Hetherington.


The cap is what it is, for now. If it went back to 50% it'd maybe make Rovers a more sustainable business, at a possible cost to our competitiveness. As a fan I guess the attractiveness of it will depend to an extent on your own club's turnover. A fan of a club with a very wealthy hobbyist backer would probably not want a cap at all.



A weaker team might be felt at the turnstile - maybe not a 1500 drop (roughly £300k over the season), but you never know. £300k is close to a fifth of the cap and would mean losing a couple of top-earners or having a very skinny squad - and the rich clubs would be that bit better too. With complex quota restrictions etc already in place, I think you need to allow businesses some freedom to make their own choices for their own set of circumstances.

Which brings me back to Rovers, their circumstances and what they should do now and in the future...

Ultimately, you have to balance income and expenditure otherwise you will go pop. I'd rather watch a lesser quality team than no team at all.

You have to cut your cloth accordingly which is why I only drive a Porsche rather than the Ferrari I'd rather have

very well put.

As already stated, all SL clubs bar Leeds and Hull make losses, and some fairly hefty ones too in some cases.

The problem for Rovers is that their sales line in terms of ticket income is constrained by the number of fans they can pull in currently. 8,500 average is probably not enough to break even. To drive more revenue there are therefore 2 options - build extra capacity and get more people in (which requires capital investment and additional marketing spend) or put prices up (done via the Club Rovers mechanic). So, assuming there isn't a drop-off in numbers, this will help boost the sales line.

Clearly the retail operation is a key profit driver. At FC, for example, our merchandise sales were over £1million last year, and if you buy good stock with accurate forecast volumes, this is highly profitable. From the customer experiences I've heard about, this is an area that needs completely overhauling at Rovers. Sponsorship is another big income line. No idea how Rovers compare to the competition here. There is huge upside in reaching a major final. Semi finals and play-offs are not that lucrative, but if you think that FC got upwards of 25,000 at Cardiff, Old Trafford and Wembley, there is big merchandise money there, provided you have addressed the retail operation issues and can acquire and shift product quickly and effectively. Much scorn was poured on a "derisory" £250,000 which FC earnt from their losing CC final appearance last year, but believe me, in the context of RL clubs' finances, it's a major windfall.

As far as costs go, sounds like you're choosing to spend at or near the full cap, and Morgan won't be one of SL's cheap coaches. Ground maintenance costs etc will be fairly fixed, so wouldn't have thought there was huge room for manoeuvre here, other than cutting costs in the youth set-up.

Indeed and spending less on player wages is an option. Rovers have taken a quick fix option to become competitive and draw in crowds, but investing in youth will hopefully provide us with some good players that don't cost a relocation premium. That said, the team and the game is ultimately the product and you have to provide the highest quality. Although in absolute terms there is an issue, relative to a number of clubs you'd think Rovers are not too badly off. Crowds of 8K+ must be worth £1.3M-ish, I'd have thought. Add in the the £1.2M from Sky, sponsorship, merchandizing etc and even sticking to the old prudent 50% they'd be spending close the current cap. How many clubs were in the black under the old system?

I agree sales merchandise could be improved - the staff I've dealt with have been nice, but there seems to be an issue with some of the systems.

Prize money is lovely, I'm sure - not least as it reflects success on the pitch. It would be dangerous for a club to become reliant on it though.

I wonder whether crowds are close to the best we can expect. They are similar to when Rovers were last really good. I still think East stand extension would be valuable. After that spending may be more about franchise criteria than business (this really is a highly regulated sport, now I think on it).

Although I think there may be things to learn from other clubs, including Hull FC, I'm not sure how valuable cross-city comparison, as the club's circumstances and recent histories are somewhat different.

Not a popular subject amongst HKR fans, which is a bit of shame IMO, given it is off-season. It might be a bit boring, but it is important. Fair play to Hull fans for the sensible responses.

To be fair you guys should meet in a pub and talk about this stuff. It`s going over my head! Soon as I heard the word turnover I did a tipple tail!!!! My kids was amused though!!

Balls to the finances come on you reds!

Thankyou Alisdair Darling.

TBF I wasn't suggesting any club would rely on a final appearance, just a reminder that, even if you lose, it's a big moneyspinner, not so much for the prize money but in terms of merchandise, if you get its operation right.

The issue for Rovers, if, as you suspect, you're there or thereabouts in terms of maximum crowds, is that everyone else runs at a loss and have similar indebtedness in their balance sheets. For some, like Warrington, it seems not to matter at all as Moran will bankroll the losses unreservedly. For others like Cas and Saints, they are lossmaking but own their own ground, so have stronger balance sheets. The rest is a ragbag with a range of negative net assets, underwritten by fans on the board. Whilst it's a nice aspiration to have to start recouping the losses of recent years, there isn't a role model club on 8,500 gates that turns in a profit, unfortunately.

I think your crowds are pretty much near their peak. A bigger capacity for big games such as the derby and Leeds would of course raise the average, but in general I don't think there's a massive increase to come...as you say crowds were at about this level at the height of your success.

there would probably be more money to be made on the corporate side with more boxes and restaurants etc.

merchandise and sponsorship seem to be the areas where rovers could improve financially.

Informative and interesting post, ta. I wonder then if the cap could be cut further - though we are already losing players to Union. Maybe we could trade cap between clubs - redistributive, but allowing those in profit to benefit and offer top players top wages. I think its probably a terrible idea but I'm too tired to work out why.

An interesting idea, but I suspect a bit complex for the RFL.

I'd say pretty much everyone who wants to watch rovers was watching them last season. it was your best year in over 20 years so I doubt there are too many more fans to come out of the woodwork