In Steve Morgan’s post-relegation statement there was one paragraph in particular that stood out from the rest.

“It is the younger players who will play an essential part of the team going forward. These will be supplemented by recruiting new players for the challenge ahead. I confirm that funds will be made available for this purpose within the confines of the new Football League financial fair play restrictions.”

From our chairman’s defiant words, two questions immediately came to mind:

What exactly are the Football League financial fair play restrictions? What are the implications of these restrictions for Wolverhampton Wanderers?

In this article, I’ll answer the first question and attempt to shed light on the second.

Financial Fair Play

Clubs in League One must simply comply with a Salary Cost Management Protocol (SCMP).

This means limiting the amount a club can spend on wages as a proportion of turnover. For the 2013/14 season, a League One club can spend no more than 60% of it’s turnover on wages.

As a rough example then, if a club makes £20 million (from parachute payments, player sales, ticket sales, TV money, etc) then they can spend no more than £12 million (60%) of that money on wages.

Any club that fails to comply with this rule will be hit with a transfer embargo. The Football League state that they’re aiming to enforce this ‘at source’ meaning an embargo will come into force immediately when a club goes beyond the 60% threshold, not retrospectively.

You can read the full literature on Financial Fair Play on the Football League website here.

Parachutes and early birds

If a club can only spend 60% of it’s turnover on salaries, surely Wolves are immediately at a huge advantage?

After all, we’ll have easily the biggest turnover of any League One side, thanks to a £16 million parachute payment we’re due from the Premier League.

Additionally, with over 9,000 supporters signing up for an early bird, we’re already guaranteed to be one of the best supported clubs in the league, given that only 5 League One clubs had an average gate of over 9,000 last season.

When you add in shirt sales, sponsorship deals and other commercial initiatives, our financial might for 13/14 will easily dwarf that of any other side competing at our level.

It’s difficult to say what our turnover will be, but based on the most recent accounts (as discussed in this Fans Parliament meeting) I would conservatively calculate it’s somewhere in the region of £25-£30 million.

One big problem

You know what I’m going to say already.

Our current wage bill is widely reported to be £25 million.

That figure would account for a percentage much higher than the permitted 60% of our turnover for 13/14. It might even be 100%.

This does nothing more than confirm what we knew already, Wolves must trim the fat.

High earners, expired deals and easy wins

On the playing staff, our biggest earners are reported to be Roger Johnson, Jamie O’Hara, Kevin Doyle and Stephen Hunt.

By offloading just these four players, as much as £6.5 million could be shed from the annual wage bill. This alone would go a long way towards bringing us in line with financial regulations.

Stephen Hunt provides the easiest solution. His contract is up so the club have the option of offering him a new deal on more suitable wages or just letting him walk away.

Doyle will likely find a club, meaning Wolves not only get shot of his salary but also pocket a transfer fee. Double bubble.

Roger Johnson’s stock couldn’t be lower, but Wolves would likely give him away for nothing just to get his wages off the books and Johnson himself would probably take a pay-cut to end his Molineux nightmare.

O’Hara provides the most considerable problem. His terrible injury record and ongoing fitness concerns could make him unsellable. Would a termination be viable?

Outside ‘the big four’, there are some other easy wins.

Christophe Berra will walk for free. Ebanks-Blake could do the same. Jody Craddock will retire after a season in the wilderness. Their combined salaries would recoup another chunk. Loan signings like Peszko, Robinson and Gorkks will also go, further easing the burden.

By contrast, McCarthy stalwarts like Henry, Edwards, Foley and Ward are all tied to contracts on reasonable wages. If offers don’t come in, all could survive the summer coup.

Learning a lesson

Cutting wages isn’t the only way to comply with Financial Fair Play of course, there is a second method – boost turnover.

And by far and away the easiest way to do that is by selling your best players.

Get £5 million for Bakary Sako and the immediate financial picture looks much brighter, easing the pressure to offload others.

But one would hope Steve Morgan knows better.

Selling your top performers (like Fletcher, Jarvis, Kightly) isn’t just a bad exercise in fan PR, it’s also short sighted in a financial sense, moving the club further away from a return to the riches of the Premier League.

These days, Wolves realistically have just two jewels in the crown. One of which is Sako and the other is a player yet to even make an appearance – Leigh Griffiths.

The Scottish striker has been in red hot form for Hibernian and will attract interest. But is it worth cashing in on a player that could easily spearhead a promotion charge?

Surely the emphasis must be on getting rid of the players we don’t want to keep, rather than sacrificing those we don’t want to lose? Keep quality, cut quantity.

If that means rejecting good offers, turning down transfer requests and defiantly making want-away players honour their contracts, then so be it.

Buying power

Spending big on transfer fees isn’t a problem. The Financial Fair Play rules for League One only cover wages. This is a significant development.

If Steve Morgan wanted to give his new manager (or head coach) millions to spend on new players, he could.

As long as Wolves even out their wage bill so it equates to less than 60% of turnover, they can flex as much financial muscle as they like to secure an immediate Championship return.

Conclusions and takeaways

Despite the many details, it’s really a simple equation: get rid of the big earners and deadweights and the financial advantage we’ll have over our League One competitors will be gargantuan.

I’ll finish with my top 7 rules for financial and footballing success in 2013/14:

1. Get rid of the top earners as quickly and as efficiently as possible. Preferably sell Doyle, Johnson and O’Hara, but get them off the wage bill by any means necessary that doesn’t incur significant loss.

2. Sell any of the other players that have contributed to our downfall if offers are received. These include but aren’t limited to: Henry, Ward, Foley and Edwards.

3. Allow Berra, Craddock, Hunt and Ebanks-Blake to leave for free. The latter two could be offered deals on reduced terms if the new manager so chooses.

4. Return all loan signings to their parent clubs. In particular, do not contemplate signing Kaspars Gorkks.

5. Do not accept any offers for the club’s best players. Our best players consist of Sako, Griffiths, Sigurdarson and Hennessey.

6. Should any of the above players request a transfer, reject and block by any means necessary.

7. Assuming steps 1 to 6 have been executed successfully, invest money in new players to fill in the gaps around our best young talents and top performers.

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