It’s a question that every Wolves supporter (but no local journalist) has asked and that very few are qualified to answer.

Some have skimmed the surface, totting up player sales, parachute payments and Steve Morgan’s much talked-about £30 million pledge.

But few venture any further and you can hardly blame them.

Dipping a toe into the murky waters of holding companies and share capital is enough to send even the most enthusiastic wannabe-accountant running for the shore.

However, I’ve done some investigation, trawled back through the droplets of information that have seeped out from the club’s notoriously tight-lipped hierarchy to try and form some sort of semi-informed opinion.

These facts, figures and thoughts are by no means a definitive, forensic analysis, but perhaps do shed some light on a situation that’s seemingly been shrouded in darkness.

The books

At the most recent Fans’ Parliament meeting held on December 5th, Rita Purewal, the club’s Financial Controller (flanked by Jez Moxey) revealed that Wolves had posted a pre-tax profit of £2.16m for the financial year ending May 31st 2012.

To clarify that point, when last season ended with Wolves relegated from the Premier League, the club finished with a healthy profit of just over £2m.

This impressive return for the year comes despite shelling out circa £20m on the new Stan Cullis stand – quite an achievement.

The very next day, the Express and Star led with the headline ‘Wolves reveal a £4 million slump in turnover’, which to me is an astonishing editorial decision given the information available.

Yes, it is correct that Wolves experienced a drop in turnover (due largely to a reduced capacity as a consequence of the stadium redevelopment) but no way is that the story. The profit is.

As any businessman will tell you, ‘turnover is vanity, profit is sanity’.

At best, it’s poor reporting from our local paper. At worst, it suggests a worrying agenda.

But I digress.

This was the third consecutive year that Wolves posted an annual profit, banking £2.24m in the year ending May 2011 (season ending with final day survival against Blackburn) and a walloping £9.1m in the year ending May 2010 (season ending first year back in the Premier League).

In short, business has been booming since promotion in 2009, with cash piling up in the tills.

Despite this, Jez Moxey speaks with a half empty glass. He stated in December’s Fans’ Parliament meeting, ‘People tell us to speculate to accumulate and it’s a little concerning that we make only a £2m profit on a £60m turnover in the Premier League.’

It’s not concerning at all.

It’s actually a fantastic achievement for any football club to turn a profit in this climate, particularly with the unnecessary added expense of remodeling a significant part of the stadium.

What was concerning during this financial period was the performance of the team, as we sank like a stone to the bottom of the Premier League.

I find it disappointing that nobody on the Fans’ Parliament (or the local press), armed with the latest figures bothered to probe the club about their strategy.

It’s galling to think that they sat by last January watching the team sink, whilst stowing even more cash away to report a profitable bottom line.

Surely a significant sum should have been invested into the team in last January’s transfer window to maximise the chances of survival and maintain the injection of Premier League TV cash?

Lets pretend for instance, Mick McCarthy was given £20 million to spend and he’d bought two or three signings to improve the team.

If we’d stayed up, the club would have got that money back (and more) the following season through the riches of top flight football.

Had we been relegated, much of it could be recouped through player sales (as we saw anyway from the Fletcher and Jarvis transfers).

It’s a calculated risk, but far from going down the QPR route.

So why didn’t the club pursue this option to give us the best possible chance of staying up?

Well, they’d overlooked this tactic the two years previous and got away with it, so why not a third time?

Our first season back in the Premier League (09/10) we were in and around the bottom three in January, but only modest investments were made in the shape of loan moves for Adlene Guedioura and Geoffrey Mujangi-Bia. This despite the fact the club knew they were sitting on a substantial profit for the financial year.

The same again the following season (10/11); struggling at the bottom but only minor January business with Adam Hammill arriving for £500K and Jamie O’Hara coming on loan.

By last January, this had become a tried and tested tactic.

And in fairness, the temporary deals for Emmanuel Frimpong and Sebastian Bassong could have done the trick again, had injury not restricted their appearances (although Eggert Jónsson’s arrival remains a mystery).

But the fact is, Wolves were teetering on the edge of Premier League oblivion throughout their three-season stay, during which time the club flatly refused to alter their financial approach.

It was always likely that at some stage they were going to be found out.

Big purchases

In the summer of 2010, Wolves were the third biggest spenders in the transfer window.

The circa £18 million spent included record signing Steven Fletcher along with Jelle van Damme, Stephen Hunt and Steven Mouyokolo.

This fact is often used by the club to bat away accusations that they never seriously tried to establish themselves as a Premier League force.

It’s a fair point, but the reality is, they could afford it.

Despite the summer splurge, the year-end accounts remained firmly in the black.

This perfectly demonstrates the club’s financial philosophy of the last three years. Yes, they’re prepared to spend, but only against the money coming in.

Some might call this approach prudent.

But Wolves were undoubtedly guilty of playing it too cautious and in doing so gambling with their Premier League status.

Having a go doesn’t have to directly equate to doing a Portsmouth. Wolves could have invested significantly more in the team without financially compromising the future of the club.

But instead of going down kicking and screaming, we slipped away with barely a whimper.

The North Bank

There’s a strong argument to say that the cost of building the new Stan Cullis stand was £20m, plus our Premier League status.

When Steve Morgan and Jez Moxey both insisted that the money being ploughed into the stadium (from existing cash-flow) wouldn’t affect continued investment in the team, that was nothing more than wordplay.

Yes, there was continued investment, but on nowhere near the scale there would have been had the stadium redevelopment been shelved.

When the bulldozers arrived, coupled with the club’s already prudent approach, it meant that Mick McCarthy was forced to operate on a shoestring by Premier League standards.

According to this insightful article by Tim Nash (which by the way, is the best thing I’ve ever read on the E&S website), he had it confirmed that Mick wasn’t able to get the transfer targets he was interested in, both in the summer and the January prior to his sacking.

The club obviously thought that the money invested in Jamie O’Hara and Roger Johnson would suffice to keep us up last season. They weren’t alone. I, like many other fans, didn’t see us getting relegated with the squad we had at the beginning of the campaign.

But even when that theory was proved incorrect and they had a second bite of the cherry in January, they simply refused to dig deep. The stadium investment was pinching their bottom line and it would go against the grain to see outgoings exceed income.

Cue a third successive season of low-cost, low-risk loans, but this time no repeat of the magic trick and a downward spiral that’s yet to show any signs of stopping.

The £30million pledge

We all know that in 2007 Steve Morgan was gifted the club by Sir Jack Hayward, on the proviso that he pumped in £30million of investment.

This was an important promise and something supporters would like to know more about.

Of course, anyone whose read this superb article from football finance blog The Swiss Ramble, which was published way back in March 2011, would already be armed with considerable information.

During a much more forensic examination than mine, the finance expert provided good insight. Here’s an important excerpt:

Although it has almost become a truism that football clubs will be burdened by large levels of debt, Wolverhampton Wanderers are a glittering exception to this rule, and they are now in the happy position of being debt-free. In fact, after paying off bank loans of £3 million, the club is the envy of many others, as it is sitting on considerable surplus funds of £26 million, even generating interest for the last three years (as of March 2011).

Indeed, Wolves have been in a very healthy financial state ever since Steve Morgan took over in 2007, when he bought the club for a nominal £10 fee from Sir Jack Hayward, though he also had to pledge a guaranteed £30 million investment. This was duly provided by the club’s parent company, W.W. (1990) Ltd, increasing its issued share capital by £30 million, which was fully paid up by Morgan (25%) and his investment company Carden Leisure Ltd (75%), a subsidiary of Bridgemere Investments Ltd, based in Guernsey.

What we can say then with a degree of certainty is that the money promised by Steve Morgan has been invested into the club.

We can also surmise that Wolves are and remain a wealthy club, with money in the bank.

I’m no accountant, but if there was cash surplus of circa £26 million in 2011 and we’ve turned a profit every year since, there’s surely a not-insignificant amount still sitting in the pot?

In December’s Fans’ Parliament meeting, Jez Moxey didn’t want to discuss this, stating:

“Continuing to invest in the future of Wolves is our priority but we’re not getting into what money we have. It’s commercially sensitive.”

Compton Park

Investment in the future has long been the mantra of the club’s hierarchy and this line has been regularly trotted out in reference to the Compton Park development.

Steve Morgan describes this plan as win-win for everyone involved. This is the gist:

· The University of Wolverhampton have been paid to leave the site and will invest the money into a ‘new multi-million pound Science Facility on its City Centre Campus’

· St Edmunds Catholic School will relocate onto part of the vacated University campus and develop a new school with enhanced facilities.

· Wolves will extend their training facility onto St Edmunds to create an FA Premier League Category 1 Football Academy. They’ve also donated their existing indoor facility at Aldersley to the Community Trust.

· Redrow, Steve Morgan’s construction company, are building 55 luxury homes on the site.

On the surface then, everyone’s a winner baby (except maybe the local conservationists who opposed the development of a green belt area).

But surely nobody wins like Redrow and Steve Morgan?

I’m speculating now, but it doesn’t take a property magnate to deduce that 55 luxury homes averaging a cost of (roughly) £450,000 is big business. Those properties could (conservatively) fetch £25 million and a healthy profit.

Good luck to him I say.

He’s a successful businessman and if he can use his position as chairman of Wolves to generate opportunities and revenue for his other company, that’s his prerogative to do so.

But with a project like this, where there’s such obvious crossover between his business interests, supporters would appreciate greater transparency and reassurances that Wolves money isn’t being used to fund Redrow projects.

The financial intricacies’ of this development would make a fascinating piece for the local paper, but as yet, nobody (to my knowledge) has asked the question.

Why?

Relegation and bouncing back

Meanwhile, on the pitch Wolves have made a shambolic attempt to regain their Premier League status at the first attempt.

With relegation of course came a severe drop in projected turnover (40%), but no club was better prepared to cope.

After all, prudent financial planning meant we had cash in the bank, players contractually obligated to take wage cuts and substantial parachute payments (£16 million in the first year) to further soften the blow.

Jez Moxey defiantly proclaimed ‘we don’t need to sell our best players’.

We did anyway.

Reported fees for Jarvis, Fletcher, Kightly and Guedioura total a figure in the region of £30 million.

When you add this money to the parachute payments and whatever remains of the surplus and profits recorded during the three consecutive seasons of Premier League football, Wolves must surely be the cash richest club outside the top flight?

Even when you take into account significant summer shopping from Ståle Solbakken totaling somewhere in the region of £12-13millon for the likes of Sako, Sigurdarson, Doumbia, Boukari, Margreitter and the loan signing of Peszko, the well should not have yet run dry.

Why then, when January arrived, were we confronted with news of an urgent need to trim the wage bill?

No mention was made of this in the summer.

Back then the company line was we don’t need to sell.

Now we’re giving players away on loan to relegation rivals (Ipswich) and terminating the contracts of players who’d played every game under the new manager (Zubar). This despite being seemingly richer now, than we were back then.

Why then such a desperate need to trim the fat?

Conflicting information.

Of course the club might argue that they’re looking ahead towards a second season of Championship football (at best) and are prudently (there’s that word again) storing away the acorns.

Planning for the future they’ll say.

It’s a convenient line to beat supporters with who are rightly more concerned about the here and now.

Rumours circulating of a failed investment gamble by Steve Morgan coupled with zero investment in the team, ongoing cost-cutting exercises and a CEO telling us to mind our own business because it’s ‘commercially sensitive’, serve only to fuel the flames.

Is it any wonder then that supporters are asking the question.

Where has the money gone?