Dave Powell was the guest on this week's Claret and Blue Podcast, and he had a lot to say about Villa's financial position
Aston Villa and PSR - a detailed Q&A
Aston Villa and PSR - a detailed Q&A
The issue of the Premier League and PSR is one that is guaranteed to leave people with questions, and Aston Villa fans are no different.
Top of the agenda for Villa this summer will be raising revenue through player sales before June 30, as is the case for several other Premier League clubs looking to comply with financial regulations.
It’s a thorny issue for everyone and often leads to more confusion when people try to explain it.
After all, why should the club be selling players who have a role to play? Would it not be better to just keep them rather than weakening the side?
Some fans see PSR as penalising ambition and success, and holding clubs back when they want to drive forward.
It’s a complex subject matter, but luckily for us, Reach PLC's Business Of Football writer Dave Powell is happy to take your questions on it and explain what the current situation is at Villa. Dave also writes a brilliant football finance blog called The Bottom Line.
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In a special interview with the Claret And Blue Podcast, he dissects Villa’s current financial situation. We will publish the second-half of the interview tomorrow.
We hand the questions over to you.
Unai Emery's clipboard : Dave, What’s the point?
Dave Powell: Look, it's very difficult because the established elite, if I should put it for want of a better phrase, of English football, has been cemented for some time. Now that really should include a club like Villa because they are one of English Football's great sides. European cup winners, huge fan base, global appeal.
However, they weren't at the party when the party got started in a big way during the 90s and into the 2000s. They struggled competitively to really make the most of that opportunity during that period. To break up the revenue gap between those two sides, between those two groups, you've got the top six who have huge revenues, they can almost rely on year after year.
For some it's become challenging, Spurs always sits on the very edge of that really because competitively they're not always guaranteed to compete. It means that they can bank on huge revenues, broadcast fees, the global appeal that's come with them being the kind of five or six biggest teams of the Premier League.
For everyone else, and that includes, the likes of Villa, Newcastle, Everton, it's about how to close that gap. I mean, you look back at the Everton failed project under Farah Mishiri when he came in, his idea was to spend, spend, spend, and to try and artificially close that gap between Everton and the big six.
Now that failed and they didn't get the access to kind of European money which allows you to pay the bills, but Villa are in a similar situation obviously having spent time out the Premier League and it's only really in recent seasons that they've started to come back into the conversation for European football in a serious way, which is great.
They're in a difficult position at the moment because you're looking at the short term and they've got an influx of cash coming from the Champions League in this current financial year, which ends for Villa at the end of this month.
It changes the whole dynamic of the revenues of the football club, but obviously next season they won't have Champions League football. It's kind of a cruel set up, it's not rigged, the system, but the odds are stacked against those who try, because the ladder has effectively been pulled up a long time ago for clubs like Villa.
Aston Villa owner Nassef Sawiris
Aston Villa owner Nassef Sawiris(Image: Stephen Yang/Bloomberg via Getty Images )
Nassef Sawiris has spoken about this in the past, that it seems unfair on clubs who want to invest and can invest.
It's very difficult to tell a billionaire several times over that you can't spend this money on your team because the losses would be covered, of course they would.
But it's closing that gap artificially and rules are in place for that, they came about after the Portsmouth debacle where they spent and achieved, got to the UEFA Cup Semi Final, and played AC Milan, all sorts - a crazy ride.
They spent lots on big players and then it all went pop and they ended up in League One. Leeds too, they were Champions League semi-finalists. So basically, the system isn't rigged but it's been set up for so long and teams missed the boat at the key time to really latch on to becoming one of those groups of clubs where they could ride on those revenues every year.
They kind of got left behind and then with rules being introduced post Man City’s investment from their owners where the ruled didn't really exist then so they could go out and get Robinho and they could set up for success, but since then they've closed the stable door, the horse already bolted and everyone else is kind of left outside really and Villa are one of those.
Villa are in the game now and they are in the conversation. They have had access to a year of Champions League money, and they'll be in the Europa League next year, yes the money won't be as big but it'll still be impactful.
They have a manager who will probably take them to the latter stages and with success in that competition, comes the Champions League qualification.
But the key now for Villa is they're in the conversation to be able to start to disrupt the edges of what is a big six club and that takes a period of time, it doesn't take 12 months, 18 months, that takes a number of years. Newcastle are playing the long game and they're in a similar situation to Villa really.
So that's all Villa have to do with these, just make sure they stay in that conversation, add to the squad and create a bit of headroom every year, that will allow them to invest more and more. So there is a point to it, but it's not a quick fix solution.
Dan Rolinson: There's a fan on Twitter called Alex Berwick who I really like. I've seen him say that it feels like Villa's model is to go as big as you can, kind of take risks because unlike you mentioned Everton before, they weren't competitive and were allowed to recoup their investment via Europa League or Champions League football.
Because Villa have done European football three years in a row and the aim will be to do that now indefinitely, that's the target, whether we do it or not obviously is a different matter. But kind of go as big as you can. Villa can spend but you're going to have to make up for it every June if you don't realize those ambitions.
If you don t keep getting Champions League and you've overspent by 40 million let's say, come June you're going to pay for that. And that's almost like Villa's strategy in a way, kind of going big but you are going to make up for it.. So if we'd have got into the Champions League this season. And that helps next year's accounts. Maybe Villa can afford to get away with doing less player trading, but because that gamble didn't pay off on the final day of the season we now have to do a bit more to make up for the spending that we've done.
Dave Powell: It's exactly that, I mean if you look at clubs like Liverpool, they don't have to, there isn't much churn when it comes to players and the players they kind of alight themselves of are fringe players or they see a big profit, and they don't have that consideration, but it probably doesn't work for everyone.
So Newcastle for instance had to kind of build, it's very slow there, they've gone big in certain windows to land players and they've pulled back in the following window.
Whereas Villa went big, they've signed good players. And they went in January as well, committing lots of wages for that financial year, thinking that they will nail the Champions League qualification.
They didn't, but I think they probably had a better record in the Champions League than they were expecting, which means that it kind of closes that revenue gap between Champions League and Europa League money a bit for next season because they probably got more than they were expecting this season.
But it probably makes sense for them to go big because if you go big in a window and you add a couple of key players and then you have to kind of pull back in the next, you are at least adding kind of impactful quality.
Players who are going to get you over the hill. I think it's going to be the approach that Villa take now, I mean the only issue is ensuring that you have enough depth within your squad to be able to move players on for a profit or whether it is that kind of thing that happened last year where they had the Lewis Dobbin and Tim Iroegbunam deal which kind of was beneficial for both sides.
I think that was a bad reflection on the Premier League that this was how we have to do things.
I think Villa will probably be comfortable with the fact that they’ve added some quality. But also, if you look at the Jhon Duran sale in January, that's kind of the market which they should really be looking at, as well as looking at proven qualities, signing younger players, which they can move on for a profit.
You still have to do that, because they never, well, I'm not saying never, but certainly for a long time at least, they're not going to be able to fish in the same pond as Liverpool and Man City and Chelsea. I think just by doing it bit by bit, they'll get there.
But they just need to have enough players in the periphery to be able to make that player trading work so as they're not ridding themselves of their best players during windows to strengthen others.
I think that's the way it's going to be. It's going to be a slower process, like I said before, for Villa. It's kind of unfair that it has to pan out like that, but that's just the way the cards are dealt.
Jhon Duran
Jhon Duran(Image: Michael Steele/Getty Images)
Dan Rolinson: Probably the most common question we had from pretty much everybody, this one I've picked from Brett, simply says, do we have to sell a player or more by the end of June or not?
Dave Powell: I think the revenue that they've made from the Champions League this year plus they booked a profit on Jhon Duran of £52 million I think after his book value was kind of paid off and they made a really really handsome profit. I think that may have been the big deal which allowed them to get Asensio in and pay wages for Rashford, but I think gives them some wriggle room in terms of PSR.
The only issue is that PSR is a rolling three year cycle, and it took into account for the most recent period of 21-22, 22-23, 23-24, the Jack Grealish sale and everything else included. That meant they pretty much broke even.
So the following year was £120m, last year was I think £86m. That £120m from the first year and last year's losses means that you're factoring in the current financial year. I don't think Villa will make a huge loss because they've been able to rely on big revenues, but they potentially may make a loss, which means that they might have to trade.
I think they'll have enough to be okay, but I think they’ll have one eye already on it. If we don't have to do it before the end of June, then we can just factor that into the start of July. So it already alleviates some of the pressure that may exist. In the following financial year when they're going to have a season, not of Champions League money, but Europa League revenue. So I think that may be the way they'll do it.
I don't think there's going to be a mad rush like they had to last time to sell a player. I think the headroom won't be massive, but because of the success in the Champions League this year and the profit on the Duran sale, I think they'll be okay.
But I don't think it'll be a huge headroom for them. But I do think that they'll probably kick over anything they need to do in the following financial year because it'll take away some of the strain.