Do we make our money by buying low and selling high?

[Allezfan]

I've seen this argument (that we need to buy cheap because we make our money by selling players on) a few times and I just don't think it's true.

I think we can all agree that we don't make enough money. Our wage bill is modest in relative terms (about the tenth biggest in the league) and yet takes up most of our income so our transfer spending tends to be mostly earned by outs.

Since 1999, when Kenwright took over, we've spent 187.7 million pounds on transfer fees. We've largely earned that money by selling players for 171.1 million.

But of that 171.1 million not much was earned by buying low and selling high.

Rooney, Ball, Dunne, Vaughan, Rodwell and the like earned us 50 odd million and came through our youth system. Which is our big way of making money.

And a lot more of that money was made by selling for a loss, think of bakayoko, craig short, beattie, bilyaletdinov, kroldrup, yakubu etc.

A lot of our real bargains, we've kept a hold of a lot of them until they're too old for anyone to want to buy. Cahill for instance.

In terms of players we've bought and sold for a profit under kenwright. There's Arteta (8 million), Beckford (3 million), McFadden (3.5 million), Lescott (17 million), Neill (.8 million), Johnson (1.9 million), Kilbane (1.25 million), Bent (2 million), Barmby (.25 million), Hutchison (1.5 million), Dacourt (2.5 million) and Materazi (.2 million).

That's 41.9 million, over 13 years of selling and buying, comfortably less than our academy earned us. Only 22% of our transfer spending under kenwright has been funded by selling to buy.

That's 3.2 million a year we've earned by buying low and selling high under Kenwright. Getting to the knock out stages of the europa league gets you that in prize money, winning the FA cup gets you that in prize money, finishing three places higher up the league gets you that in prize money.

It is a myth that our main source of income is buying low and selling high, our main source of income is tv money and prize money, which you get by winning football games.

Our fans need to stop worrying about whether there's a sell on price for our players. It's simply not as important, even in cold financial terms, as whether those players can win us games.

 

[Baines' left foot]

I liked the bit where you said we spent money.

 

[Allezfan]

I liked the bit where you said we spent money.

16 million over 13 years.

Before Kone and Robles this year, that was closer to 8 million over 13 years. God bless, Bill.

 

[Goat]

Good read that, what I think you mean is clear.

Ken
Is
Wrong

 

[Baines' left foot]

16 million over 13 years.

Before Kone and Robles this year, that was closer to 8 million over 13 years. God bless, Bill.

Cool story bro.








Sorry mate I'm just bored. That is poo though.

It's interesting as I've often thought of us as a buy to sell team, believing it is something we do well. You say a lot of our "bargains" usually stayed with us so long that they had little resale value at the end of their time here, which is a good point but also highlights that the stats you've provided don't tell the whole story, not to discredit yourself, like.

What I mean is; for example, we bought Cahill for £1.5m or whatever, and we got £1m back for him, which is a loss, but in his prime he was probably a £12-£15m player, and obviously to get a player of that ability and that age then we would've had to have paid that. I know that sounds painfully obvious though, and doesn't particularly address the points you were making.

 

[Brownie]

We need to buy cheap because we've spent 16million over 13 years tho, that's the real argument.

 

[Brownie]

Cool story bro.








Sorry mate I'm just bored. That is poo though.

It's interesting as I've often thought of us as a buy to sell team, believing it is something we do well. You say a lot of our "bargains" usually stayed with us so long that they had little resale value at the end of their time here, which is a good point but also highlights that the stats you've provided don't tell the whole story, not to discredit yourself, like.

What I mean is; for example, we bought Cahill for £1.5m or whatever, and we got £1m back for him, which is a loss, but in his prime he was probably a £12-£15m player, and obviously to get a player of that ability and that age then we would've had to have paid that. I know that sounds painfully obvious though, and doesn't particularly address the points you were making.

I think you might need to 'go for a drive' mate.

 

[Allezfan]

It's interesting as I've always thought of us as a buy to sell team. You say a lot of our "bargains" usually stayed with us so long that they had little resale value at the end of their time here, which is a good point but also highlights that the stats you've provided don't tell the whole story, not to discredit yourself, like.

What I mean is; for example, we bought Cahill for £1.5m or whatever, and we got £1m back for him, which is a loss, but in his prime he was probably a £12-£15m player, and obviously to get a player of that ability and that age then we would've had to have paid that. I know that sounds painfully obvious though.

But that's the point, the benefit of our bargains is that they win us games on the pitch, not that they earn us money in the market.

This started because people were saying why buy mccarthy for 15 million when that's the maximum anyone pays for a non attacking DM with no CL experiences and we rely on sales to make us money.

All I'm saying is that we don't. We rely on not buying players we don't need. If we buy McCarthy and he improves us and we keep him until he retires then we've basically sorted having to buy DM for the next ten years which will save us more money than buying 4 different 5 million players in that time.

Our business model isn't one of massive turnover, where we buy low, sell high and then buy again, the way say Ajax in the 90s did business. It's one of buying players and then keeping them. Which is different.

 

[Tubey]

16 million over 13 years.

Before Kone and Robles this year, that was closer to 8 million over 13 years. God bless, Bill.

The only Kopite trait I wish we had more of - the ability to protest.

The papering over the cracks over the years has been astonishing.

 

[paulbefc]

It's a good point and I reckon generally you're right.

However, the fees for Bily and Rodwell have allowed us to be a top quality side for the past 18 months. The Bily money got us Jelavic and Gibson, plus Pienaar back on loan, turning our season right around and the Rodwell money allowed us to get Mirallas and Oviedo and keep that going for another year at least.

 

[Allezfan]

It's a good point and I reckon generally you're right.

However, the fees for Bily and Rodwell have allowed us to be a top quality side for the past 18 months. The Bily money got us Jelavic and Gibson, plus Pienaar back on loan, turning our season right around and the Rodwell money allowed us to get Mirallas and Oviedo and keep that going for another year at least.

And Rodwell was an academy player while Bily we made a loss on.

This sell on potential idea is that every player we buy we must be able to get a profit from when selling. Bily and Rodwell prove that we can get that money without actually doing that.

The academy and selling home grown players is where we make our big money, as depressing as that is.

 

[paulbefc]

And Rodwell was an academy player while Bily we made a loss on.

This sell on potential idea is that every player we buy we must be able to get a profit from when selling. Bily and Rodwell prove that we can get that money without actually doing that.

The academy and selling home grown players is where we make our big money, as depressing as that is.

Yeah, but the money we payed for Bily was from the sale of Lescott, who was a young player who would have a good sell-on value. I'm not sure I'm quite following you.

 

[Allezfan]

Yeah, but the money we payed for Bily was from the sale of Lescott, who was a young player who would have a good sell-on value. I'm not sure I'm quite following you.

I just think it's more important to buy a player who will do a good job on the field then one who can we make money selling.

I mean look at Cahill we bought them for 1.5 million, kept him for years and then sold him for less a million.

Or Distin, cost 5 million, will retire at the club.

If we finish 5th, win the fa cup and reach the knock out stages of the europa, then we earn about 20 million more in prize money and tv money etc than if we finish 17th, aren't in europe and do nothing in the cup. That's the real value of our players, not what we got for them.

We have done so well in the market, compared to our peers, in the large part because we don't go into it that often.

If we can bring in a 22 year old who improves us and keep him for ten years, it doesn't matter how much we paid for him. What matters is that position is sorted.

Buying cheap, selling high is what clubs with a high turneover of players like wigan, celtic and ajax do. Where every year they need to replace the star they sold last. We tend to hold onto our players for a few years at least. What we should be looking at, more than can we sell him for a profit, is will this player stick around long term because it's our ability to buy a jagielka and a cahill etc who stick around long term that has kept us competitive more than us buying low and selling high.

 

[njligernj]

Agreed. I've been banging on about this for a while but never bothered to do the maths. Great to see it laid out. A few teams do succeed with "sell to buy" but they have advantages we don't have (main team in a country with reliable CL access for high profile player displays, more money for wages etc.).

By and large most of the teams in or close to our position in the Prem just end up worse off or no better after they sell key players.

 

[eternal_defiance]

I think our youth system should be saving us money rather than us depending on selling our best young assets every one or two years as we have been doing under this regime. I do think we need to look for as many bargains as possible and on occasion, take a big profit on them and replace them with cheaper signings again. But it's very difficult. I don't think buy low sell high has been our business model necessarily. We didn't cash in on Saha when we could have sold him to a Turkish side or cash in on Cahill. We are very lucky our youth set up has been producing valuable players like Jeffers, Rooney, Ball, Rodwell. I guess it depends on the manager at the time. Martinez I'm sure will look to produce good young players and keep them at the club, whilst also making bargain signings and on occasion selling them at a profit. There's no other way really he'll have any real money to spend in the years to come, knowing our board.