It's important to understand that there is no free cash flow in football. Clubs do not make an operating profit; revenues simply cover expenses. So there is no "cash money" at the end of each year that the owners can simply withdraw from the club, rather than re-investing it.

Football club owners make a return on their investment not year-to-year, but by increasing the value of the club over the longer term, then selling it for a profit because its revenue streams are greater and the club is, therefore, worth more than it was when they bought it.

To put it in very crude terms by way of an example:

Let's say Harris and Blitzer buy Palace for £2 million pounds (and Palace's annual revenues at the time of purchase are half a million pounds a year).

Every year following their purchase, the club generates 2 million pounds in revenue, and spends 2 million pounds to operate (wages, etc.) It breaks even.

But one year Harris and Blitzer rebuild the old stand (and the academy). As a result of the rebuild, with lots of shiny new hospitality facilities and better retail opportunities, annual turnover increases from 2 million to 3.5 million pounds.

The value of a club is a multiple of its turnover. Suddenly at, say, 5x turnover (a typical valuation of a club today), Palace is worth 5 x 3.5 million, or 17.5 million. Harris and Blitzer, who've taken no money out of the club during their period of ownership, walk away with a 14.5 million pound profit.

This is just an example, but it's broadly accurate regarding how things work. Nothing has happened to all the money the club has generated, other than it's gone to pay everyone from the bog cleaner to Wilfried Zaha. After the bills are paid, at almost every club, there is no money left.

Edited by sydtheeagle (27 Jan 2023 9.16pm)

Sydenham by birth. Selhurst by the Grace of God.

Having to sign players in the January window is a sign of poor continuity planning, it's not like the board haven't been here before to learn the lesson. Roy's final season's achievement was to keep us up and oversee those players who were soon to be out of contract. Pat's achievement in his first season was to take what was left of Roy's squad, add some promising newcomers and keep us up, whilst keeping an eye on academy developments with the ultimate aim of introducing them into the first team. In theory. But here we are in his second season, once again with players soon to be out of contract, and to be frank, not good enough for the PL, plus academy players not quite ready yet either.
What gets me is the deja vu aspect, the board failing to plan for continuity. PV's rebuild was always going to take a few seasons anyway.

All of us here (including me) have written acres of speculation about what we think might be going on. But what you've said above is pretty much a naked fact. Those two lines accurately state where the club is standing now.

Sydenham by birth. Selhurst by the Grace of God.

Yes, they did. And I think they were right. The next four days will tell us a great deal about Harris and Blitzer's determination to divest themselves of Palace, and their appetite for risk along the way to doing so.

I can't help but wonder if they have some sort of hedge against relegation in place which may be encouraging their lack of ambition. Since structured products are essentially a dark market and also one of their areas of expertise, there's no reason to think they couldn't find a counter-party if they wanted to and if they were funding such an instrument, they certainly wouldn't be making it public knowledge.

Edited by sydtheeagle (27 Jan 2023 9.44pm)

Sydenham by birth. Selhurst by the Grace of God.

You’re a broker the are you Syd?

I seem to remember Parish himself saying about standing still….

You've forgotten the small detail of the cost of building the new stand and academy. Circa £120m.

There's no way they're making a profit anytime soon after forking out for that.