There is no doubt it’s going to be tough for Blues this summer.
There is a raft of players out of contract to decide whether to retain or release mean that the squad could look very different next year while noise around some younger players only puts pressure on to those decisions.
Even with the potential of new guys in charge, there are financial challenges too.
As outlined on this website previously, “Profit & Sustainability” regulations are going to be an incredibly difficult challenge to meet thanks to consecutive seasons of heavy losses.
Assuming that Blues were at the limits this year, this means reducing an annual loss from around £25m to around £4m to stay with the threshold.
In other words, Blues need to find £21m in savings or new revenue to be at the limit.
We also know from painful past experience that ignoring the rules is not an option.
Had we entered a summer without the promise of a takeover, this article could very much have been a gloomy piece of prose.
However, the changes at the top mean that I think we need to look at what we can do rather than what we can’t.
Wages and Transfers
In the past, the most obvious place for Blues to look to save money would be to reduce wages and to sell players.
While new ownership should give us all hope for the future, I don’t think it’s ridiculous for them to look at how the wage bill could be improved.
The fact some contracts are coming to an end is going to help massively.
Take defensive pair Max Colin and Harlee Dean. While both have been consistent players for Blues and have been among the better signings the club has had in the last two years, their combined contracts ending saves the club at least £2.5m a year alone.
Now obviously they have to be replaced but if Blues can replace them with players on contracts closer to around £10k a week then there is still a £1.5m saving there.
Unfortunately, the other large deals on the books have a year to go: Neil Etheridge, Scott Hogan and Ivan Sunjic all earn in excess of £1m per year each in wages and bonuses.
Ivan Sunjic in particular I think needs to be moved on and there has apparently been some interest in him in Croatia, but I think it’ll be a big ask for a team there to pay all of his wages next year, let alone a transfer fee.
The other option for players like these would be to offer some sort of mutually agreed release; however that very much depends on the players as they are entitled to all of their contractual payments even if Blues decide to release them on a free.
The other way for Blues to raise money from players is of course to sell them.
While none of the older players seem to be attracting much in the way of interest, there has been interest in some of the younger players at Blues.
For example, there have been lots of reports about Jobe Bellingham moving to another club with Sunderland seeming to be the destination of choice.
I have to be honest and admit I don’t know the truth of such a move, but I do believe Jobe Bellingham will move on this summer.
There’s been some rumour that Jobe’s family aren’t happy with the younger Bellingham’s progress at Blues and from what I know, there’s probably more than a grain of truth in that.
While I don’t know if and for how much Jobe will move this summer, I will repeat my belief that the Bellingham family are owed a debt of gratitude by the club and if that debt is to be repaid by Jobe moving on, then I have no problem with that.
It’ll be interesting to see if George Hall moves on, with Leeds in danger of being relegated and having changed manager in the past few months. I’d like to see Hall stay if at all possible as I think he’s shown that he can be an important part of the squad next year.
Sell On Fees
It’s kinda ironic, but while I don’t think it’s likely Blues are likely to get a lot in transfer fees this summer, it might be two past transfers which once again deliver cash into the coffers.
The rumours surrounding Jude Bellingham have been swirling for months now and the press seem convinced that Jude will be moving from Borussia Dortmund for Real Madrid in the close season.
If Jude makes this move, it’ll be good news for Blues due to the sell-on clause in his transfer from Blues to Dortmund, which stands at 15% of the profit.
This means that if Jude moves for the rumoured £130m that Dortmund want for him, then Blues would receive around £15m from that clause.
Normally, Dortmund would pay out that clause as it is received from Real Madrid.
For example, if they received the payment in five six-monthly instalments Blues would get money over that period of time.
However, as with the original transfer fee Blues could pretty easily factor this money once it is certain of the value of the clause and schedule of payments.
This would then put all the money into the Blues account at once, less a percentage fee which the factoring bank would charge for the service.
Southampton’s relegation from the Premier League means that Che Adams could also be on the move this summer, which could also benefit the club.
Having checked my notes taken from sources at the time of Adams’ move to Southampton, I can confidently state that the sell on clause from that transfer is again 15% of profit.
I can also say from my notes that contingency payments in that transfer based on the number of appearances made by Che Adams and the fact he has made his international debut for Scotland means that Blues have received approximately £17.5m from his transfer.
This means that Blues will only receive money from Southampton if they sell Adams on for more than £17.5m.
Like the potential Jude transfer, it’s possible that it would be paid in instalments but once again, once the value and schedule are known it could be factored.
Bringing Other Revenue In
One of the things that I think the club has struggled with in past years is having a positive attitude towards bringing revenue in.
Recent decisions such as outsourcing the club shop to Just Sport Group and catering to Elior may have guaranteed some income to the club but feel to me more as cost-cutting decisions as it allowed the club to reduce its own head count further.
While neither of those deals concludes before next season, I hope in the future Blues takes both of these revenue streams back in house to help ensure it can grow this commercial side of the club for the future.
There are other things that the club can do to bring in more money in the immediate future, and I’m sure Tom Wagner and his colleagues are looking into them now with an eye on fixing the immediate P & S problems.
For example, I think there is an opportunity to make some cash by once again selling stadium naming rights now St Andrew’s will once again be owned by the same people as the club.
While I can understand that some fans may disagree, I think selling naming rights is pretty harmless and a good way to bring in cash. My hope would be that with new owners there may be new avenues for Blues to explore for this kind of deal which would bring in a healthy chunk of cash.
Likewise, with Boylesports’ shirt sponsorship deal elapsing at the end of the 2022/23 season there is a chance for Blues to explore interest in that kind of partnership. I think it’s unlikely Boylesports will renew due to the changing rules on advertising of gambling in football and I hope that with the potential for new owners there will be interest in the club from new quarters.
The one thing we have to bear in mind here is that any sponsorship deal has to be at what is called “fair market value”.
What this means is that while it might feel like a good idea to fix up a deal with a friendly company for an inflated amount to help get around the rules, it’s not allowed. The onus will be on the club to show that any sponsorship deal reached with a company is comparable to what could be achieved by other clubs in a similar position.
While this summer does present a test for the club in what it can do with recruitment, for me there is no longer a fear as to how bad it could be.
It’s important that we are realistic, and we understand the constraints that the recruitment team will be under. There will be no trolley dash this summer for players and finances will need to be kept on an even keel.
That being said, a change in ownership means a change in outlook for the club.
Rather than worrying about just what else will be cut back, I think now the focus will be on what positive things the club can do to bring in more money.
This switch of focus is important for the long term future of the club, because the more money the club can bring in, the more it can spend – and the more chance we have of success.
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