Who do Fulham Need To Sell? A Financial Analysis

In order to work out who Fulham might need to sell this summer, we need to know how much money they can afford to lose in the coming season.

We can get a clue regarding how Fulham might perform financially next season by looking at the 2019/20 promotion campaign as a template. I previously estimated (here) that Fulham lost about £17m that season on the AEBT measure which is used for FFP purposes. Other commentators have also looked at the season and reached a similar conclusion.

The 2019/20 season was similar, financially, to the one coming up in a number of ways, for example, it was in the Championship, Fulham had first year parachute payments from the Premier League and they had a very similar squad to the one they have now.

There are, however, a couple of crucial financial differences between the 2019/20 season and the 2021/22 season ahead:

• Fulham started the 2019/20 season by selling Ryan Sessegnon for £25m
• Fulham loaned out some of their highest wage earners Andre-Frank Anguissa and Jean Michael Seri (also Fabri)

These things aside, I would expect other costs and expenses to be broadly similar to those which drove the £17m loss in 2019/20. Adjusting for the two factors above implies Fulham are facing a loss against FFP limits in the region of £45m to £50m.

This raises the question of how much Fulham can afford to lose next season and still be FFP compliant. This was the subject of my recent article here, where I identified that Fulham could probably lose around £27m and still be OK for FFP.

That estimate of £27m was actually at the low end of the range, and assumed Fulham went close to their FFP limits in the 2020/21 Premier League season. I reasoned that their activity in the January transfer window (just a single loan in) hinted at a club that was close to its limits, but it could also be true that Fulham was looking ahead to their position in the 21/22 season and decided to conserve more headroom.

If Fulham operated inside their limits in 20/21, then they could feasibly, have loss headroom of £45m for the coming season.

That being said, a loss this large would constrict the club on FFP for many years to come, so it is reasonable to assume that Fulham will want to reduce their FFP loses for the coming season by at least £20m if not more.

This article will focus then on how Fulham might best go about closing the current FFP gap ahead of the coming season.

Closing the FFP Gap

The main way Fulham can reduce their losses for the coming season is by selling players. The following section may require some understanding of the basics of football accounting, so you might want to check out the primer I wrote here, if the terms being used are unfamiliar.

When a football club sells a player, there are essentially three things which happen that have an impact on the FFP position for the coming season:

• The club makes a financial gain or loss depending on whether the amount of the sale is more or less than the players current carrying value on the club balance sheet.
• The club will avoid a charge to its profit and loss account for the amortisation of that players contract value for the season
• The club will avoid the expense of paying the players wages for the coming season.

Lets use Andre-Frank Anguissa as a quick example. It is reported that Fulham paid £25m for him in 2018 and he signed a 5 year contract on wages of around £3m a year.

If that is correct, Fulham would then value Anguissa’s contract as an asset at £25m and begin to amortise that value down to nothing over the life of his contract. So each year Fulham recognise and expense of £3m in wages and £5m in contract amortisation. By 2021, Anguissa has played out 3 years of his 5 year contract, so his carrying value is now £25m – (3 x £5m) = £10m.

For the coming season, Fulham can expect to experience a charge, as usual, of £8m for Anguissa (£3m wages and £5m amortisation).

But lets imagine someone buys Anguissa from Fulham for £22.5m. I have chosen this amount because according to the website transfermarkt.co.uk, it is his current market value.  If such a sale happens the Fulham’s financial positon improves because:

• They book a profit on the sale of £22.5m (the sale price) minus £10m (the carrying value) = £12.5m
• They avoid amortisation for the season of £5m
• They avoid paying wages of £3m

So the total FFP position is improved by £20.5m.

For this article I have performed the above calculation for every player in Fulham’s first team squad. I have used online sources to determine each player’s transfer value when bought by Fulham, current wage, contract length and market value.

Squad Value Overview

From my analysis, I would conclude that the current squad is quite expensively assembled, costing a little over £180m in transfer fees to put together. The majority of that outlay (about £102m) occurred following Fulham’s promotion to the premier league in 2018.

Of that £180m transfer fee expenditure, roughly £100m has already amortised and been recognised in the profit and loss account, leaving a residual carrying value of the playing staff of about £82m which, if none of the players are sold, will also amortise through the accounts over the coming few seasons. I estimate an amortisation charge for the 2021/22 season of £39.4m based on the current squad.

The estimated market value of the squad, at the moment, is £149m. This is bad news in that it is less than was paid in assembling it, but the silver lining is that this value is greater than the carrying value of the squad (£82m) which means there is potentially £67m of player value to be unlocked (if Fulham need to cash in on players for FFP reasons (and as set out above, I believe they do).

I estimate the salary cost of the squad to be £46.9m which combined with the amortisation cost of the squad of £39.4m gives a total cost of players, for the coming season, of £86.3m. If we add staff costs for the management team, the executives, social security costs and the costs of the rest of the Fulham club staff, then I would estimate a total staff cost of around £105m for the season. And that is with Fulham still in the market for new players at the time of writing.

Given the club can expect total revenue for the coming season, including parachute payments of roughly £65m, you can see why the club is facing such large losses.

Who should Fulham Sell To Close the FFP Gap?

As mentioned above, I have calculated impact of a sale at market value of every player in the Fulham squad. This information is summarised in the chart below:

For each player, the chart shows:

In green, the financial gain which would be booked by Fulham if they sold the player at their current market value as listed by transfermarkt.co.uk (which may or may not be accurate, but on the whole looks fairly plausible in most cases to me).  The size of the green bar is the market value less the current carrying value, which is calculated as the original transfer fee paid multiplied by the proportion of the players contract left to run.

In blue, an estimate of the financial impact of another year’s contract amortisation, if the player was to stay at the club for the coming season,

In orange, an estimate of the players salary, based on various online sources with a 20% reduction applied for players who I think probably have some sort of relegation clause reducing salary.

The players are ranked according to their impact on Fulham’s FFP position. You may note that some players are shown in yellow, these are players where the market value is less than the carrying value, so the sale itself books a loss. However, in all cases, selling these players still has a net positive effect on the FFP position due to the saving of wages and amortisation.

And of course, sale is not the only option available to Fulham, players could be loaned out but depending on the terms of the deal, this would typically only save the wages (orange) and perhaps generate a fee as well.

Note that Harry Wilson is assumed on the chart to have been bought by Fulham, however there is much speculation that this is a loan with commitment to buy.

So Who Should Fulham Sell?

This is largely a question of how important you rate the players on-field contribution to the club. But, looking at these numbers it is pretty clear that Andre-Frank Anguissa, if sold at market value, would make a massive contribution to improving the FFP position, indeed he would single handily close the gap mentioned at the top of the article.

Regardless of your feelings on the players ability and how important he might be in the Championship, I think it is hard to argue that Fulham can justify retaining his services, the financial incentives to sell are just too great.

But now that you have the numbers in the chart, let me know what you think, either in the comments here, on Facebook or Twitter? If you were Tony Khan, what would you do if £20m to £30m headroom needed to be created? Would you sell Anguissa or perhaps some combination of others (Tosin, TC, Onomah, Mitro, BDR)

Perhaps you would release the value in Rodak through sale now we have Gazzaniga? Which of our 6 centre-backs (7 with Denis Odoi) would you look to offload and who would you want to keep?

Let me know what you think!