Finances in FM

[dalenichol]

So I was actually writing this question in my Your Game update but decided I'd throw it in its own thread so I can maybe expand on it later down the line so I'm pasting it below as I had it written in that post. 


Right, here's a question which is serious but might sound silly as I don't actually follow football super closely or understand the business side of things but...are finances within FM accurate to real life, do we think? If we remove COVID from the equation, is it really accurate to suggest that most leagues/clubs that aren't in the big 5 are realistically only just scraping by an existence?



So I mentioned our income and expenses to Hokster in an earlier post and obviously we're only making money because of our constant Europa League group stage appearances, which we've managed again this season (we even paid for some youth facility improvements!) and I remembered that the skin I use shows the finances of all clubs on the profile screen so I decided to take a look and the results shocked me a little.



So in a league of 14, only us and APOEL are currently in the black.

AEL: +£4M - Current Season Profit/Loss - +£2.8m - Sponsorship 400k -  Our income is £10m, made up of £3.6m in Prize Money and £2.5m in player sales. 

APOEL: +546K - Current Season Profit/Loss - +3.1m - Sponsorship unknown. No European football money and no player sales. Where is the money coming from? Sponsors?


Every other team in the league is in the red, ranging from 200k all the way to Anorthorsis Famagusta who are almost £6m in the hole. 

So what now? Give it 2-3 more seasons and every club, hopefully with the exception of us, could be looking at £5-10m of debt and no way out unless the make some European group stages and our position obviously isn't secured. 


I understand that some leagues have had clubs cease to exist in recent years, some more than others, but this really feels like if it was the real world the entire league would be close to closing down and it just doesn't feel right. 

I had a look at the Greek league and whilst it's not quite as extreme, it's very similar...if you're not one of the big Athens side then you're creeping into the red. 

[jawzy]

I feel in europeans smaller leagues outside bigger clubs the struggle is real.

Tns dominance of wales and the money they got from early stage europe has been a lifeline for them. They have also reinvested in the facilities over the years using said money.

The clubs that dont europe in wales defiantly are not making money in real life or the game.

Sponsorship/tv/wealthy backer and/or europe are only ways to generate profit.

Gates nearly feels like it doesnt cover wages anymore.

Need to find a real life club who is open about cash flow to know what goes on at its respective levels.

[dalenichol]

Yeah, like I completely understand that clubs in these leagues wont exactly be rolling in money, but it just feels a little excessive in the game?

I mean, this save is going to be redundant in about two seasons, because (and there already are top tier clubs that simply don't make any signings) clubs are going to be so much in debt that they wont be able to sign players in any sort of level to compete.

I'm not sure if it's the case that wages are overinflated in these custom leagues, or if sponsorship is underrepresented.



Mid post edit:

Just found a report online which showed that Cypriot football is indeed in a financial crisis, with all but one team recording a loss in 2019, with some as high as £6m in the red for the season.

www.parikiaki.com/2020/06/clubs-in-cyprus-are-overspending-puts-future-of-football-at-risk/

Oh well.

[jawzy]

wow, sounds worse in real life?

[dalenichol]

Yes and no. The bulk of the loss comes from one or two sides overspending to chase the european money, but none of them are doing particularly well, no

[hokster]

I think I remember reading something about this prior to COVID, that the combination of the globalization of the Big 5 and the failure to really fully recover from 2008 means that there's less local advertising and media money to steer towards smaller leagues, and many of the fans are spending their time and money following a big Prem, La Liga, etc club instead of their local team, which reinforces the spending of media and ad money on getting the rights to those broadcasts. This leads a lot of teams to gamble on chasing European money, with associated overspending. Analogous to what goes on in the lower tiers of English football and the shifting of financial incentives to push teams to go for promotion or bust, rather than sustainability.