Chairman Jeff Shi has penned a letter to Wolves supporters.
Dear Wolves supporters,
We are approaching the eighth season since Fosun’s takeover in 2016. I am proud of the journey we have been on together, and the achievement and growth in that time.
I appreciate a lot the amazing and consistent support from our fans, since the very beginning. I am also happy that we have been able to deliver our fans perhaps the most successful era in the latter decades of Wolves’ history and we wish to continue delivering it for the long-term future.
We are working hard to try to improve our performance on the pitch at the moment, as we always do. We are also working hard to make sure the club have a long-term robustness and sustainability. The latter is equally important, because we’ve seen many cases in the football industry where short-term achievement could not bring long-term success. Even in recent seasons, we have seen a lot of clubs in the UK and around the world struggle to maintain a sustainable balance of both sporting performance and financial strength.
As we approach the start of a new season, I would like to take this opportunity to clarify a number of things for you…
First of all, Fosun remains committed to Wolves and has never had any plans to sell the club. The club is a long-term project and an important one for Fosun.
When we were in the Championship, when we were in the pandemic, when we’ve faced all kinds of challenges, on or off the pitch, the owners have always done their best to support us. They also share our happiness and excitement with every achievement, or positive step we make at the club, no matter how big or small.
As the owners and management of the club, one important thing we must learn and follow is the Premier League’s rules on profit and sustainability (formerly called financial fair play or abbreviated to FFP). Before the end of 2023/24 season there will be an annual test and we are going to make sure we pass it, as we have done in the last five seasons.
FFP sets a profit and loss limit for three rolling years, with a loss of £105m the threshold. We were very comfortable on FFP during the years just after promotion and before the covid pandemic, because of a relatively low wage bill, low-cost signings from the Championship and relatively stronger finishes in the league and Europe.
After a longer stay in the Premier League, we are now at a stage where we must pay even closer attention to FFP and manage it well. The first reason is the inevitable impact of covid on our revenue. Though we’ve put those years behind us, we still needed to invest more afterwards to fill the gaps caused by the pandemic, especially on squad strengthening.
Secondly, we once had a fantastic squad, built in the Championship then brought into the Premier League. However, after the ageing of some players and unexpected injuries, that squad had to be evolved year by year with a significantly increasing wage bill and player acquisition costs in the best, but also most expensive, league in the world.
Finally, in recent years we have made a lot of long-term investments into young talent that may not play for our first-team immediately, and those investments increase our asset value in the balance sheet but impact our profit and loss, especially in a net investment phase.
An additional factor to consider in our FFP management is that last January we invested much more highly in the first-team than we had anticipated, bringing in six players. It was a very unusual winter window for us, and it literally advanced the investment room originally left for this summer.
The positive thing is that FFP is based on a rolling number, season by season, so if we do manage it well this summer, next summer we will be more free financially.
We have been preparing for this challenge for a long time. Since the beginning of 2020/21 season, we have been consciously signing players and promoting academy talents to make us ready to replace important players when needed. We know some signings might need a longer time to grow and adapt before they can play important roles in the first-team, but the chance will come sooner or later because the squad is evolving every year. This summer, I hope, is a window where we may need less new signings, since many players in the current squad have developed well enough to take more important roles in the team.
To manage the evolution of a squad is not easy and we can’t make every signing right, however patience, composure and a long-term view is crucial, for growth of players and for the build of a squad over time.
The Premier League is very unpredictable and challenging, especially with new types of ownership at some clubs bringing unprecedented investment, with excellent people coming to this league as our competitors and also in a post-covid global economy. However, I am very confident in our squad, but we do need to be humble with a challenger attitude, as if it was our first Premier League season all over again.
In my experience, the performance on the pitch is not only defined by simple additions of players, but by team spirit, chemistry, momentum, morale, leadership, tactics, training, hard work and a variety of other factors. It is more about how we assemble, incentivise and guide the squad, therefore the work from the head coach and all the staff supporting him is also crucial.
Our head coach has undoubtedly done an excellent job since joining us last November. We hired him and his team at a very difficult moment and without a doubt they succeeded in the aims we set for them. Now, together with the players and all support staff, they are working hard again to prepare for the upcoming campaign.
Throughout the last seven seasons, I have never had a month where everything was perfect. The reality of running a football club is to continuously face issues and challenges, and then tackle them with solutions. FFP is one of the more short-term and benign challenges we have faced. The club has gone through much more difficult tests in the past and will do so again in the future.
However, we are still progressing every day, because we never lose; we win or we learn, as one pack.
Your sincerely,
Jeff Shi
