Queens Park Rangers: The £89m Gamble on Premier League Survival

A Ninety-One Percent Problem

A wages to turnover ratio of ninety-one percent is not the sign of a healthy business. Yet this is the figure revealed in the Queens Park Rangers accounts for the 2011/12 season, made public yesterday. The club’s wage bill swelled by £29m during its first season back in the top flight, a rate of inflation that outstripped even the dramatic revenue increase that comes with promotion. Only Blackburn Rovers and Bolton Wanderers posted worse ratios last season.

While a rise in wages was inevitable following promotion in May 2011, this figure suggests a fundamental lack of control at Loftus Road. The new money flowing in is being consumed, and then some, by player salaries. This is the financial backdrop to the club’s lavish spending since last summer, a desperate attempt to secure survival while rooted to the bottom of the Premier League table.

Tony Fernandes and his fellow owners have gambled. They have gambled on staying up to receive the enormous television revenues that kick in next season, a deal so large that the club finishing bottom will receive at least £60m. The accounts to May 2012 show a loss of £22.6m, a figure achieved despite a £48m revenue increase from being in the Premier League. The debt stood at £88.9m, owed largely to the owners.

But these figures are already out of date.

Spending to Stand Still

They do not account for the summer arrivals of Park Ji-sung, Robert Green, José Bosingwa, Júlio César, Esteban Granero and Stephane Mbia, among others. Nor do they include the January outlay on Loïc Rémy and Chris Samba, whose transfer fees alone totalled £22.5m, almost precisely the amount the club lost over the entirety of the previous season. Players have left, of course, but many, like Joey Barton and Djibril Cissé, are only out on loan, suggesting QPR may still be contributing to their wages.

The club’s commercial position is hampered by its home. Loftus Road holds just 18,500 people, which limits matchday income. After an outcry over ticket prices following promotion, the current ownership has frozen them, but they remain the fifth-highest in the division. Building a new stadium is an expensive proposition for any club, let alone one whose top-flight status is so precarious. It is worth remembering that Andros Townsend, a recent bright spark for the team, is only on loan from Tottenham Hotspur.

If the gamble fails, the consequences will be severe. The parachute payments, though recently increased, will not come close to bridging the financial chasm that will open up. The £16m per year for two seasons, followed by £8m for another two, will not cover a wage bill of this magnitude, even with relegation clauses. The club's survival would then depend entirely on the continued goodwill of its extremely wealthy owners, Tony Fernandes and Lakshmi Mittal.

Such promises have been made at other clubs before, only to evaporate in the harsh reality of the Championship.

The View from the Bottom

The entire strategy is predicated on survival. The spending makes a kind of sense, but only if it works. Last weekend’s win at Southampton provided a glimmer of hope, but the club remains four points from safety. The financial results for the current season, which will be released next year, will make for grim reading if they are delivered from the second tier.

Everything rests on the next ten weeks. The high-stakes game being played at Loftus Road will be decided not in the boardroom but on the pitch, culminating in the final day trip to Anfield on the 19th of May.