This is a well thought out post Indeedio but where has all the money gone since we were last promoted?
The Club had signed players to get promoted that it still had to pay for/amortise.
The promoted team got new contracts, inflating the wage bill.
The Club then signed players for fees they had to start amortising and paid them huge salaries. (Valdes, Negredo). They also paid much bigger agents fees.
The wage bill rose from £32m to £65m all in.
The amortisation rose from £13m we couldn't afford to £28m that we could afford that season.
So the club spent a lot more on players, but especially their wages.
The club still made a profit of £11.5m that year to June 2017. Gibson took that back into Gibson O'Neill.
Then came relegation.
Turnover halved to £62m, but wage bill dropped only 25% to £49m, but was still 50% higher than the £32m we couldn't afford in the promotion season. We carried on paying players a lot of money which became 79% of the turnover (even with parachute payments)
Amortisation stayed high at £24m, so the club spent £73m on players and their wages in the Monk/pulis season. Almost 120% of turnover.
Gibson clearly had a go, but just couldn't have got things more wrong.
Then came the pulis season where he was apparently sorting everything out in the final year of parachutes.
Turnover fell but by just £6m, reflecting £18m profit on the disposal of players. (Ramires, Espinosa etc)
Wage bill dropped by £8m, but was still £40m, so still 25% higher than Karanka's promotion season.
Amortisation incredibly actually rose that season by £1m to £26m.
So players wages and amortisation cost were still £66m, way ahead of turnover and covering turnover plus profit from sales.
So there you have it.
Gibson reduced Group Undertakings by the £11m profit generated in the PL season. They spent virtually everything else on players and their wages.
The two seasons of parachute payments were completely wasted on players wages and amortisation of their fees. They sold players, made profit on their nett book value, but this still saw them lose money in the first season, and just about hold their own the second season.
Last season there was no parachute payment, reduced revenue, continued amortisation and wages and the club lost £31m. The wheels came off.
I think Gibson should have spent more to stay up and less when he came down. The numbers make that a no brainer.
But the biggest **** up was appointing Monk and pulis to waste so much money on players and their wages.
It beggars belief just how badly things were done since that great day against Brighton.