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24:16It's risen up to 2%. And as the previous guest said, it was sort of almost a negative number. So there is quite a step change there. But ultimately, you're right, there's been a lot of movements in financial markets, particularly currency markets, with regards to borrowing in a cheap currency, yen, and then investing in high yielding currencies across the world. It's called the carry trade. And that that has funded quite a lot of investment across the world. And if that starts to reverse, then that could have an impact, particularly in the US economy.

24:51Leanna Byrne:Now, Annabelle, Japan, it's an important whiskey market, isn't it? Do you currently sell there? We do. We export to Japan. So our goods are moving in the opposite direction. And, you know, indeed, the currency, the currency issues do impact us. It's a huge whiskey market. But as I'm sure everyone is aware, Japan now make their own excellent whiskey, which also makes it a very competitive one. So whilst it's not the most important market for us in the world, it is definitely one that we're trying to crack. So when the yen is close to a 40 year low against the dollar, does that make it harder to sell into the market?

25:28Leanna Byrne:OK. Yeah, exactly. Although, to be honest, I mean, it does. but we haven't been exporting there for a very long time and it's not like we're sending shipments every week. So the currency fluctuations impact us but probably what impacts us even more is the consumer confidence in Japan. That's what really drives, I think, how easy or hard it is to establish an acne. Yeah, because whiskey, I mean, it's capital intensive, isn't it? But your product, to make whiskey, I believe, I've never made whiskey before, But your product sits maturing for years before you sell it, doesn't it? Yeah, exactly. Exactly.

26:05And it's, you know, from an investment point of view, a whiskey business, a whiskey distillery is truly crazy. Yeah, we had to build a distillery from scratch and then you wait for three years until the first product is ready. Yeah, so for us, the key is, the key, the best environment for us to sell into abroad is one where the consumer is feeling great about the money in their pockets. And unfortunately, there's not many markets like that in the world at the moment.

26:32Leanna Byrne:Exactly. I mean, everything's gone up these days. all the input costs. And actually, oil has climbed again this morning. Brent crude is around$95.50 a barrel after another exchange of strikes between the US and Iran overnight. Raised fears about disruption to supplies. I mean, Freddie, we're always talking about this now. I mean, a couple of weeks ago, I mean, oil was back down, but now it's around$95 a barrel. What are investors most worried about here? Yeah, well, it's some of the byproducts off of our particularly diesel heating oil you know that's that's really the tightest part of the oil complex at the moment due to just low infantries and obviously we've got the winter months coming up and the steady build-up that needs to happen to ensure that there's enough fuel through the winter and so it's becoming increasingly tight across the markets but And obviously, you know, diesel feeds straight into transport costs, logistics costs, and again, into unfortunately costs of doing business for a number of companies.

27:37Leanna Byrne:Yeah, exactly. And Annabelle, how quickly do higher energy and those costs, how quickly do they feed through into your business? Well, the distillery itself actually operates off renewable energy. So we use sustainably harvest biomass from just around the corner on the west coast of Scotland. and in fact the whole distillery operates on in our tiny little area without fossil fuels however unfortunately we're not completely immune but it does take a little bit longer to feed through to our business as a result but of course lots of our suppliers still operate off fossil fuels so whether that is how our bottles are made or even the trucks that take the whiskey from the west case to Scotland to a shop in London or whatever it was, whatever it is, it obviously, it obviously does impact our business in that sense.

28:28Leanna Byrne:That's it. If you're exporting, you've got those transport costs. And when you've got fuel, the shipping costs rise, that puts pressure on your margins, I'm sure. So nobody's immune. That's it. All right. Okay. Well, we're going to be talking a lot more about football transfer spending in the second half of the programme. Also school uniforms, got a couple of texts in on that. We got school uniforms are a relic of impersonal industrial approach to education, which is largely inappropriate for the education we need in the 21st century. Interesting take. Also, hello, welcome to Wake Up to Money.

29:04Leanna Byrne:Sorry, hello, Wake Up to Money. I'm just on a roll there. We had a school uniform in first year of secondary school, but later on it was optional. Glory Vanderbilt jeans, very cool. I'll have to look what they look like. and Levi's jeans. I know what they look like. We look like a USA school. We were actually in Nacton High School in Ipswich. That was Yvonne Buckley in Ipswich and Suffolk. Sounds like a very cool school where you probably could have put a reality TV show or, you know, one of those films. But get the count. September's always busy. Whole Foods Market can help. Their September Stock Up event makes it easy to load your pantry and freezer with flavorful, nourishing food.

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30:24Leanna Byrne:Morning, welcome back to Wake Up To Money. So this morning we're talking about school uniforms. Many pupils will be heading back to school this week, kitted out with new bags, new blazers. But how much is all that new gear going to cost? We had a few interesting texts in on uniforms and people's just opinions on uniforms. So new rules on the uniforms. What does that mean for shops that supply those families. We're going to be speaking to a shop later. Just get in touch with us if you have any thoughts on uniforms and the cost of them, whether you like them or not. Just get in touch with us 85058 or 08085 909693 and of course if you're listening to us on BBC Sounds or the podcast, just use the hashtag WakeUpToMoney on social media.

31:09Leanna Byrne:Still with me, Annabelle Thomas, founder and chief executive of Nugneen Whiskey. Annabelle, would you ever think about bringing in uniforms for your staff? well actually we kind of do already have them nice um and yeah i mean it's not it's not really a uniform but um for my distillers who actually make the whiskey they do get you know work clothes and those are branded t-shirts and kind of practical trousers and most importantly safety shoes so for the team who are actually making the whiskey we do have a uniform of sorts the rest of the team not but um but yeah i mean i do actually think they find that very useful in particular because they're doing you know they're doing hard jobs sometimes and that impacts their clothes that sounds really silly but it's true and not having to wear their own clothes to work is is a positive and they look smart and everyone knows where they are and sounds comfortable as well good comfortable shoes t-shirt grant exactly exactly uh freddie cahoon investment director J.M.

32:15Leanna Byrne:Finn. I mean, Freddie, in the city, I'm sure there is a uniform of sorts. You can't really stray too much outside the box. Yeah, I mean, it's definitely suits dominate still the streets of the City of London and in the offices. However, I think there's more of a kind of softer suit culture now, sort of more branded, sort of trendy suits coming in, perhaps less ties and shoes as well. It's evolving, I think. Yeah, post-pandemic, I'm sure people were just like, we'll relax a little bit. Yeah, that's right. And sort of dress down days have come in as well later in the week on Fridays. Sounds nice.

32:53Leanna Byrne:All right. Well, let's talk about football transfer spending because the transfer window in England and Wales is now closed and it was a big one. Sandro Tenali has completed a move to Tottenham. It's the second highest amount of money the club's ever received for a player in a deal thought to be worth up to£100 million. Four-nine in football, Nottingham Forest have confirmed that midfielder Elliot Anderson will join Manchester City this summer. The 23-year-old will move for£116 million. Four-chelsea have completed the signing of England's Morgan Rodgers from Aston Villa for a British record transfer fee of£117 million.

33:29Liverpool have confirmed the signing of the French international Bradley Barcola, the winger from PSG. The 23-year-old joins for an initial£106 million with a potential... Enzo Fernandes. Manchester City have reached an agreement with Chelsea to sign the midfielder for a fee of£125 million. That is a joint British record transfer fee.

33:51Leanna Byrne:So over£3 billion has been spent overall, which dwarfs the£1.13 billion spent by clubs just five years ago. So with us is Chris Weatherspoon, football finance writer for The Athletic. Good morning, Chris. Morning, Liana. How are you doing? Yeah, I'm good. More than£3 billion. That sounds extraordinary, Chris. So how does that compare with previous years? Well, it is extraordinary. And we think it's more than last year, which was extraordinary. And last year was the big, oh my goodness, we can't believe how much these clubs have spent. And the other thing to say as well is these are just the reported transfer fees that get reported at the time.

34:33What we know actually from when clubs put their accounts out later in the day, the actual costs of these transfers are much more. You know, these transfer fees tend not to include agent fees, which are huge. The Premier League paid out like£460 million last year in agent fees. Wow. There's a transfer levy from the Premier League at 4 % of every transfer fee. So actually, we're looking at about£3.5 billion gross. It's probably closer to four.

34:59Leanna Byrne:Wow. What I find to be confusing, Chris, is that many of these clubs are still losing money. So what gives them the confidence to keep spending at this level? If this was the government, people would be complaining. They would, yeah. And I think, you know, there's an argument that, well, you know, it's a private asset or whatever. And, you know, like club owners and clubs can do what they want. But, you know, these things, they don't operate in a bubble. The Premier League might often seem like it's out on its own. but there's a pyramid there, there's a championship, there's three main divisions below it, there's divisions below that.

35:35This all has a massive knock-on effect, and you're right. Even in the Premier League, where there's never been more money in football, where clubs have never made more revenue, they've never actually lost more money. You know, last year, or sorry, 24, 25, the last year for when we have accounts, if we strip out paper transactions of clubs, you know, selling women's teams to themselves or selling the ground to themselves, they lost a collective billion pounds. And I guess the reason that they keep doing it is, you know, the owners, they're having to speculate to accumulate. You know, nobody apart from historically Manchester United, which is very controversial, none of them pay dividends.

36:12But what the owners do expect is they expect the value to appreciate. And then when they sell up, as we've seen in part with Liverpool recently, they'll make a lot of money then. And so that's where it stems from. The problem with it is, like I say, it doesn't happen in a bubble. and the knock-on effect is really, really damaging.

36:28Leanna Byrne:Why is so much money now circulating within the Premier League itself? So the Premier League's TV deal, like its domestic TV deal, is so much bigger than anywhere else. You know, like on average, even the bottom team just from TV money gets around£120 million a year. That's more than most clubs in other countries get for winning the league, for finishing top of the league. So that's, and it's years and years and years of that accumulating. We've also got, like what we just said there, we've got owners who are happy to lose money and happy to put money in. You know, despite these increases in revenue, we're actually seeing more and more owner funding go in.

37:09And just the advantage that the Premier League has over everywhere else, it's kind of, it's like this vicious cycle. And we see it now with kind of the promoted teams, the promoted teams who get promoted from the championship, they're having to spend ever more just to try and stay up, you know, this year. We reckon, and you know, it's a bit, we're very fresh off it. It's a bit like, you know, when they're counting the last votes in the general election, we're still trying to work it all out. But I reckon that the three promoted clubs spent over 450 million combined this summer just gone. And they'll still be favourites to get relegated.

37:46Leanna Byrne:it is interesting essentially what that spending means for the competitive balance i guess it's not just within the premier league or between english clubs right it also probably means something for the rest of europe too doesn't it it does and this is an absolutely huge problem and this is a really big problem football's got both within the premier league and beyond you know for all the premier league's the most watched league in the world and and it actually it's probably more competitive than other divisions there's only a very small slim figure of clubs who can actually win it which you know when we're talking about a sport here that's probably not great and that's probably only been perpetuated by this summer you know clubs who the richest clubs in the division are plucking the best players from the rest of the division at record levels so they're obviously going to be even better than they were before and then you're right you're exactly right.

38:38In Europe, because English clubs and even the middling English clubs who were getting those players plucked by the bigger ones, they earned so much more money that they're so far ahead of the rest of Europe. You know, UEFA has three main competitions and the second and third competitions, English clubs are routinely the favourites to win them now.

38:58Leanna Byrne:But I suppose, Chris, supporters of Premier, you know, big supporters of Premier League, they might say, that's just evidence the Premier League is super successful it earns the most money tracks the best players to the people in the European leagues that's tough for them you know I suppose it is but I guess we're talking about sport as well and I think the problem with it is really is that we're also seeing that trend or I expect we're going to see that trend within the Premier League itself as you know the best players continually move to the better teams you know we look at the teams at the top of the league now they effectively have if they don't have two first teams They've got one and a half first teams.

39:38They've got so much depth comparative to everyone else. And the problem with it is, there's nothing actually from that we're kind of rolling back from this and we're making the balance better. Everything points to the fact that we're making it worse.

39:52Leanna Byrne:Chris, there are already financial rules intended to control what the club spends. So why aren't they having more of an effect? Well, they're not very good. All right. the thing is you know we talk there's a new rule coming in the premier league and it mirrors one you ever it's called a squad cost ratio and the idea is controlling your squad costs which are you know naturally the biggest costs at a football club now in the premier league they're set at 85 percent of revenue and now the guy who's in charge of la liga pointed out right quite rightly um that nobody's going to be able to run the rest of their club off the remaining 15 percent so there's no real sustainability there but then the other point when we talk about competitive balance is these ratios they're tied to how much clubs earn now that just naturally means that the clubs like Manchester United you know like Liverpool, Arsenal they're all able to spend so much more than everyone else because they're kind of recurring revenues so the ones that aren't relying on performance, you know, match day and commercial.

40:57They're so far beyond everyone else. You know, if you're in UA for competition, if you're in Europe, your score cost ratio is 70%. That's your limit. In the Premier League, it's been set at 85%. And they say, you know, that'll keep things competitive. The problem is that at these rich clubs, 70 % of revenue is still significantly higher than 85 % elsewhere.

41:20Leanna Byrne:Freddie, I'm going to bring you in here. If so many football clubs are losing money, why do wealthy investors, why are they so keen in them still? What's the financial attraction? Well, perhaps one of the attractions is something to do with ego. That's sort of not financial, but I would have thought that there's quite a lot of kudos in owning a football club. And I think that's the point. I think from a financial perspective, you put in the investment in the early days, you try and build success, build a brand, and then look to sell it later on down the line. and make a tidy profit. So would you describe Premier League clubs as an attractive investment?

42:00I quite like companies that pay dividends. They provide you with a sort of, you know, you're paid for a bit of patience, as it were. But, you know, I think I'm too emotional as an investor. I think I'd get carried away in all the football results and not look at the financials properly.

42:18Leanna Byrne:Maybe, Freddie, Chris, maybe he needs to invest in Man United. That's the only one that's paying dividends at the moment. Well, even they're not anymore. That's true. Yeah, so this is the thing, very few of them do. And, you know, there's an interesting thing, certainly in football, in that it's kind of seen as a really bad thing if owners take money out. But the player wages, now don't get me wrong, I think the players should get the bulk of the compensation because they're the ones providing the product as you will. But the problem is, I don't think in any other industry you would pay your employees the level that they are paid relative to income.

42:55Because it's just incredibly damaging. We've talked about the Premier League here, but the knock-on effect is really bad. If we look in the EFL, even in League One, which is the third division in England, clubs are losing on average like£7 million a year. In League Two, it's rising up to like£3 million a year. And that's across 24 clubs. It's not like just one or two. On average, they're losing those amounts of money. And they're just really dangerous amounts of money. because the problem with that is these clubs, certainly down at that level, are entirely reliant on a benefactor propping them up.

43:27And if we get to a point where they either decide, you know what, I'm a bit sick of putting this much money in, or they simply can't afford it, which is increasingly likely with the sums we're talking about, that's when these clubs run into trouble. We've got a team like Sheffield Wednesday, who were in administration all last season, finished the league basically on zero points, effectively rendered the championship a 23-team league. I mean, when we talk about competitive balance, that's a very real and obvious impact.

43:55Leanna Byrne:I mean, Chris, if a club spends£100 million on a player and that player fails to perform, who ultimately bears a financial loss? It's not the player. No, it isn't at all. And it's not the agents who broke the deal and who are making, you know, millions on some deals. I mean, ultimately, it is the clubs, But also, I think we forget, you know, fans, perhaps rightly, look and think, well, why are my ticket prices going up? Why does no game really kick off at 3pm on a Saturday anymore? And that's all linked to what I would call dangerous overspending in the Premier League, in football. Because what we see, we've got years of evidence of it, is the more money clubs get, the more they just spend on wages.

44:42Like during COVID, revenues kind of collapsed for a little bit. They didn't collapse, you know, but they went down. Wages kept rising, transfer fees kept rising. So there's really, and the problem is, now that the rules are tethered to revenue, there's an incentive there for clubs to put prices up. And the reason they do that, the reason they justify it is, well, if we put prices up, we can spend more on players. The problem is, like I was saying before, the level the players are paid now is so high, and it's very damaging to, yeah, just to the whole, the economics of it. And, you know, like I say, they bring in rules, but really I think in any other industry these rules will be laughed at.

45:24You know, the Premier League's got rid of the rule now, but they had a rule where clubs were allowed to make adjusted losses. So it wasn't even just actual losses, it was just that you could take out good expenditure of$105 million over three years. Now, in what other industry would that be a good thing? You know, like in football, losing£105 million became a target because it was like, well, we'll be as competitive as we can up to that loss limit. In another industry, if you lost£105 million over three years, you wouldn't exist.

45:52Leanna Byrne:Oh, no. Very true. Very true. All right, Chris Weatherspoon, football finance writer for The Athletic. Thank you so much for joining us. I mean, Annabelle, sometimes in a business, you have to invest heavily in the hope of growing later, don't you? So when do you decide that's a sensible risk and when does it become reckless? us. Well, absolutely. And none more so than in whiskey, where we're investing so much ahead of when we're actually going to be selling the product. But, you know, I'm not a big football fan and I'm not very close to the finances. But hearing the discussion there, it certainly seems like the money being spent is completely crazy from a finance point of view, but also a little obscene in the context of the broader context that we're all operating.

46:33Leanna Byrne:I know it's just numbers that we can't really comprehend, isn't it? Absolutely. All right. Well, listen, I've talked about this for the whole programme. We are going to talk about school uniforms now. We're back to school for millions of kids in England and Wales this week. For families, that can mean a substantial uniform bill. So research for Nationwide suggests parents across the UK spend an average of£381 a year on uniform and sports kits, shoes, trainers, blazers. They're among the most expensive items. But from this week, the government has said that schools in England should not require parents and carers to buy more than three items of branded school uniforms.

47:10Leanna Byrne:So the government says that that will make uniforms more affordable. Lawrence Joyer is shop manager at Prestige Design and Workwear in Flittick in Bedfordshire. Lawrence, hello, good morning. Good morning, how are you? You all right? Yeah, I'm good. So how has trade been around this time of year for you? It's been good, to be honest with you. Yeah, it's been fun. I think the government, this thing's been on the, especially in the school industry for a couple of years. So ourselves at Prestige, we sort of changed our way that we were selling our garments anyway. So we were bringing school stocks down and we were changing things ahead of it.

47:49So when it did drop that we'd know, it's actually three items and four items. There's two different tier structures of it. But I think it would affect some shops. And it has affected us. But we've been very, very fortunate in the way the year's gone for us with this change. Because I think everybody in the industry was very concerned how it was going to work. But we've adjusted our prices accordingly to make it affordable for everybody.

48:25Leanna Byrne:So what exactly did you change about the products you stopped? Well, I think what we did, I think some schools, what we tried, the schools are the ones that tell the shops what to sell. So there's things like logoing on trousers and skirts, and that can really put the price up of those kind of garments. So we've already encouraged the schools last year to start thinking about dropping that out and changing that around. And we're just doing the best in the local, because we've got two different shops. One's not – the two different communities that we sort of look after, one is more affluent than the other.

48:58But we kept the prices exactly the same through both communities. And we always get comments on how cheap – how affordable our uniform is. So, yeah, we've just adjusted things. But I do think with the bigger uniform suppliers, I think what – because what they did was the government – The sports kit is one of the things that everybody was branding up. You know, there was some of the shops around, you know, socks and things like that. It's just ridiculous. You know, putting a school lug on a pair of socks is just stupid. So, you know, that was done. So we've sort of said, oh, we're not going to do any more of this kind of thing.

49:36Let's get it down. Let's get everything priced down right. But I think what will happen is, unfortunately, the big manufacturers of the school uniform who use the sports kit as well to bolster their sales because that's going to dramatically change. I do think that prices of the generic stuff like your blazers and your jumpers and your one bit of PE polo, for example, I think those prices will start rising. So because they're losing money from the other stuff that we're not allowed to sell. There's only really a guideline. It's sort of set in stone, but they do say, you can do it as an advisory you can have this as well but I think that's all going to change as things go I just think they'll put the prices up so what people were saving now I don't know if it will be like that in a couple of years time to be completely honest with you I don't know What about you Lawrence?

50:32Leanna Byrne:Can you actually make as much money selling those or does that actually reduce your margins? No I think well it does reduce the margins yes definitely and I don't know how many we're very fortunate because we do a lot of other stuff and I think we've sort of we've thought out of the box for a couple of years we've been bringing other things in but we do other bits and pieces as well we do workwear we do football kits all that kind of stuff so there's always something we're doing we're not a seasonal as such a seasonal business we work all year on other stuff as well but I think school uniform shops that are just seasonal which would be your summer holidays your half terms your Easter's I think they'll struggle I really do some of them I think a lot of them will probably go off the high street which isn't a good thing because the high street's falling apart anyway in many areas so I don't think I do get what the government I do get it I'm not you know but the regional the good shops are keeping their prices as low as they can but I do think prices will unfortunately rise for us but then you have supermarkets and larger sports retailers they're you know compete fiercely on price so how does that leave you?

51:42Well, yeah, well, we have to, I don't really know yet. It hasn't really, we've sort of jumped ahead of it. We're sort of a year ahead. We sort of did this last year. We know this was coming. So this year hasn't overly affected us on that because we were already sort of, that's all in our plans, you know, all in our budgets, all in our sort of yearly sort of meetings and stuff of getting that sorted. But I think it's definitely dropped, it's dropped a bit, but we're not in trouble with anything. Do you know what I mean? But I don't know what happened.

52:15Leanna Byrne:What about generally uniform shops? Do you think they're in trouble? Some of them are. We're not. But some of them are. And I think if they're not really, it's not saying we've got the actual, not saying we're actually the best at it, but I think you need to look at what you're doing. Because what will happen, what they're asking us to do, say for the PE kits for example they just say we're not going to have branded shorts which will be something like a colour in them or a logo on it so we just go black well then we've just bought black so and what will happen with parents if they're towing their children around doing a uniform shot which I remember doing it myself isn't the greatest day out so I think if they can go to one shop and it does everything generically so actually all you need is black shorts you don't just have a logo I'll have them anyway and you know and you can yeah you can just get it all done in one place and you know we can sell it at the same price as sort of the big sports we tell us yeah alright Lawrence Joy shop manager at Prestige Desire and Workwear in Flitig thank you so much for joining us lots of Texan and school uniforms some people love them some people hate them I love them and that is it from Wake Up To Money Five Lives So here's the first ball of this series All the cricket you laugh Check Robbie W Out lives on BBC Sounds.

53:35Smash straight back down the ground, this girl. Hear ball-by-ball coverage of the biggest competitions on the domestic and international circuits. It's a fourth week and it's the huge one. Jeez, wash. Settle down, tough as only. Cricket on Five Live Sport. Oh, I've lived every ball of this. Listen on BBC Sounds.

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