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David Conn/The Guardian - who follows Clubs Finances Issues very closely
Queens Park Rangers' accounts reveal worrying future if relegated
Queens Park Rangers' recent accounts have revealed an increased wage bill and substantial losses pointing to a difficult future if the club are relegated
Queens Park Rangers increased their wage bill by £29m during 2011-12, their first season back in the Premier League, accounting for 91% of their increased income, and made a substantial loss, £23m. The club's new majority owner, the Malaysian airline entrepreneur Tony Fernandes, and his partners, paid in loans totalling £55m, while the family of the Indian steel magnate Lakshmi Mittal, who own 33% of QPR, lent £27m. A further £10m loan jointly held by Fernandes's company and the Mittals took the owners' total lending to QPR, which is interest free, to £92.5m.
The £23m loss and wage bill of £58m are revealed in the club's accounts covering the year to 31 May 2012, and then two further rounds of heavy spending on players followed, in the summer of 2012 and January this year.
Fernandes, a football lover based in Malaysia with a home in London, bought 66% of newly promoted QPR in August 2011, and, having hired Harry Redknapp, is now on his third manager in that time. QPR are bottom of the Premier League, four points from safety.
If they drop into the Championship, having spent a further £20.5m buying the striker Loïc Rémy and central defender Chris Samba in January, and signing Jermaine Jenas from Spurs, the effect on their finances could be shocking. Relegated clubs will receive parachute payments of £16m for the next two seasons, and £8m for two seasons after that, but their total income will shrink, and QPR's wage bill looks most likely to have increased since the £58m of May 2012.
Since the Premier League breakaway of 1992 the financial gap with the Football League has meant relegation has been catastrophic for many clubs, including Bradford City, Sheffield Wednesday and Nottingham Forest, although those clubs were not backed by wealth such as that wielded by the QPR owners.
The club declined to comment on the accounts, but in his chairman's notes introducing the figures, Fernandes said: "When, alongside my business partners, I purchased a majority shareholding ... my goal was to turn QPR into an established Premier League club. This remains my focus."
Neil Warnock, who took QPR up as champions in 2011, was backed to sign 11 new players in the effort to stay up, mostly experienced Premier League performers including Kieron Dyer, Danny Gabbidon, DJ Campbell, Joey Barton, Luke Young, Armand Traoré, Shaun Wright-Phillips and Anton Ferdinand.
Yet with that boosted squad struggling, Warnock was given only until 8 January 2012 when he was sacked and Mark Hughes was appointed manager. During that transfer window Hughes signed Nedum Onuoha from Manchester City, Djibril Cissé, for £4m from Lazio, and Bobby Zamora, £6m from another of Hughes's former clubs, Fulham.
Hughes's team did scrape Premier League survival by just one point despite famously losing their final game 3-2, after City scored two goals in injury time to win the Premier League title dramatically.
These accounts stop there, recording the £23m loss despite the eyewatering increase in income, £48m, from the lucrative TV and other revenues in the world's richest football league. After that Hughes undertook another hefty round of squad reinforcements, with contracts for 10 more experienced (and therefore well-paid) players including Park Ji-sung, Robert Green, Andy Johnson, Junior Hoilett, Ryan Nelsen, Samba Diakité, José Bosingwa, Júlio César, Esteban Granero and Stéphane Mbia. Several players did leave, including Paddy Kenny, Fitz Hall and Barton, sent off in that final match against City, who went to Marseille on loan.
Yet despite that strengthening and further inflating of the QPR wage bill, Hughes's team struggled and Fernandes acted again, sacking Hughes in November, and appointing Redknapp in the hope of a great escape. Redknapp was provided with the money in January to sign Rémy, Jenas and Samba, whose adviser, Walid Boujid, said Samba had not agreed to any reduction of his wages if QPR are relegated. "Under the guidance of our new manager, Harry Redknapp," Fernandes says in his notes, "we are hopeful that the club will secure its Premier League status going forward."
Despite the financial support from Fernandes and Mittal, whose son-in-law, Amit Bhatia, sits on the board, QPR seems to embody how not to handle Premier League promotion. Swansea City, who came up with QPR after winning the 2011 play-off, also increased wages substantially, to £35m, yet theirs was fully £23m less than QPR's wage bill. Swansea made a £17m profit, compared to QPR's £23m loss, and finished 11th. Since then Swansea have not splurged on players, but been credited with shrewd recruitment.
QPR's potential is still constrained by the Loftus Road capacity, just 18,500, and Fernandes says: "We continue to investigate options in relation to a new, larger stadium." However, no top London club except Arsenal has achieved a move in recent times, given the huge costs and practical planning difficulties in the overcrowded capital.
A new stadium, which might make QPR a sustainable Premier League club, is a much more distant possibility than the one they are currently fighting desperately to avoid: falling out of the Premier League, deeply in the red. Guardian
QPR accounts show wage bill doubled even before January's spending
• Latest set of accounts show club's financial challenge
• Wages-to-revenue ratio over 90% at end of May 2012
The scale of the challenge facing QPR if Harry Redknapp fails to keep them in the Premier League is laid bare in newly published financial results for last season, which show their wage bill doubled even before the latest spending spree.
The accounts, for the year ending 31 May 2012, show that the club's wage bill almost doubled from £27.6m to £58.5m in their first year back in the Premier League under Neil Warnock and Mark Hughes.
Thanks to increased TV income, revenue rose sharply from £16.2m to £64m. But the initial splurge on players including Shaun Wright-Phillips and José Bosingwa – followed by Bobby Zamora and Djibril Cissé in January 2012 – meant that QPR's wages-to-revenue ratio stood at over 90% even before spending in the last two transfer windows is taken into account. Of last season's Premier League clubs, only relegated Bolton and Blackburn had higher wages to revenue ratios.
In January, the record signings Loïc Rémy and Chris Samba were added to the squad in an attempt to keep the west London club in the Premier League under Redknapp, who had said he would only spend the money of owner Tony Fernandes if he felt the team could stay up.
Fernandes admitted in his directors' report that the board is "conscious of the need for expenditure to be closely monitored and controlled" but also the need to invest in the playing squad.
"A critical driver of any club's value is its presence in the Premier League and the club achieved its key objective for the 2011-12 season, by successfully securing its Premier League status for the coming season," he said. "The financial results reflect the club's focus on on-pitch success. There are a number of potential risks and uncertainties that could have a material impact on the group's long-term performance. These risks and uncertainties are monitored by the board on a regular basis."
The club, hampered by the size of Loftus Road, made an overall pre-tax loss of £22.6m according to the accounts, filed at Companies House this week.
The financial blogger SwissRamble has calculated that QPR have required cash injections of over £104m over the last four years, split between loans and capital injections to cover aggregate losses of £80m over that period. Its owners poured in £39m during 2011-12 alone. The club's net debt, all owed to its owners, stands at £88.9m.
Fernandes confirmed that he would continue to look for a bigger ground and said that his ambition remains to establish QPR as a Premier League club. "Under the guidance of our new manager, Harry Redknapp, we are hopeful that the club will secure their Premier League status going forward," he wrote in his statement.
"We are confident that the 2012-13 season will also see the club continue to make progress towards achieving their short-, medium- and long-term off-pitch targets."
Despite a victory at Southampton last weekend sparking some hope, the club remain bottom of the Premier League and four points from safety. Guardian
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LAST SEASON's TABLE AFTER 28 GAMES
And how things finished
|10||(10)||West Bromwich Albion||38||13||8||17||45||52||-7||47|
|17||(17)||Queens Park Rangers||38||10||7||21||43||66||-23||37|