Foundry 42 Financials (UK)

rpmcmurphy

Copy/paste from the subreddit for anybody that cares about this stuff. F42 filed their accounts (and on time for once )

• Lease is ~£250,000 ($318,000) per year. ~5 years left to run.
• 221 employees, £10M ($12.75M) total wages in 2016 (132 @ £6m ($7.65M) in 2015).
• Average salary is £45,000 ($58,000). Total costs per employee £79,000 ($100,000) avg.
• Total costs increased expenses by 75%.
• Total costs were up to ~£17.5M ($22.3M) for the year (~£14.5M ($18.5M) in 2015).
• With 400 staff, $60,000 avg, and 75% non-salary expenses, that's around $42 million a year (insert x-files tune).
• Erin's remuneration in F42 rose from £193,000 to £236,000 including benefits ($246,000 -> $300,000). Solid 20% raise for successful work on SQ42.

https://beta.companieshouse.gov.uk/company/08703814/filing-history

Phry

Is that accurate? Erin was paid over a quarter of a million dollars? guess that means she hit the 50% tax on income level then.

MaxBacon

Yeah, gives one idea of how expensive it is to maintain a studio of that scale, 22 Million to maintain a studio of ~220 Developers per year.

The estimations of 40 million a year were about right, they were originally calculated on the norm of 60K average that was pretty close to its 57K per employee.

And people around still say CIG is all relaxed and have no motivation to finish and release the game... the crowdfund is clearly not generating enough to cover the yearly operation costs.

gervaise1

Directors expenses - plural. So CE, ER and Ortwin Freyermuth.  (Directors listed on page 2.)

However it does go on to list the highest paid director - which is the same so it is all to one person. So probably(?) all ER.

rpmcmurphy

Phry said:

Is that accurate? Erin was paid over a quarter of a million dollars? guess that means she hit the 50% tax on income level then.

Erin, CR's brother, is based in the UK and I believe the tax rate is 45% on £130,000 and above.

---

With their current staffing levels this studio accounts for ~50% of staff, it costs ~$1.63M p/mth so $3.25M p/mth for all staff (very rough estimate obv.).
Two years cost for this studio was ~$36M which is almost a quarter of raised funds...

Wizardry

MaxBacon said:

Yeah, gives one idea of how expensive it is to maintain a studio of that scale, 22 Million to maintain a studio of ~220 Developers per year.

The estimations of 40 million a year were about right, they were originally calculated on the norm of 60K average that was pretty close to its 57K per employee.

And people around still say CIG is all relaxed and have no motivation to finish and release the game... the crowdfund is clearly not generating enough to cover the yearly operation costs.

That is IF you believe they have no business partners/investors that we don't know about.
Square Enix runs their operation similar but have a finished product with no cash shop selling ships++.Square shut down all incoming money for what was it 2-3 months to make players happier with the product.Square also spent years developing an engine for the game with NO money coming in and scrapped that engine "Orange engine" for a newer one which again was changed,so lots of years and money spent before even making the game,yet they never once asked us for money to do it.

Even when Square went near bankrupt and was saved by FFVII,they still spent 85 million without asking us the gamer for any money.In other words they risked their business and own pockets in that they believed they could release a valuable product,so why can't Chris Roberts do the same?

In reality a LOT of work in contracted out and i know the ships were sub contracted to another business,so where is that added cost,are we trying to say that the VERY little SC has accomplished takes 300+million worth of money to get this far,umm ok so how does everyone else do it while attaining MORE of a finished product?

So perhaps we can't dispute the numbers,they seem to make sense,so where is the VALUE in the product,money in versus product out?If this was done under normal business standards the way most do it,this was over 300 million worth of money invested,does it look like Chris has handled the business and money in a professional mannerism or does it look like amateur hour?

MaxBacon

Wizardry said:

.....

That is all irrelevant to its cost.

We're talking about the industry standard, how much employees are paid, and calculating the industry norm we get to the conclusion that costs millions a month to pay wages alone. This financial report confirms the estimate was decently accurate.

Vrika

gervaise1 said:

Directors expenses - plural. So CE, ER and Ortwin Freyermuth.  (Directors listed on page 2.)

However it does go on to list the highest paid director - which is the same so it is all to one person. So probably(?) all ER.

It's all to one person.

Likely Chris Roberts and Ortwin Freyermuth take their salary through their US based companies.

MaxBacon

rpmcmurphy said:

Erin, CR's brother, is based in the UK and I believe the tax rate is 45% on £130,000 and above.

So if Erin is paid 300,000$ a year, he will actually be getting around 160,000$?

UK is certainly no US on that area haha

rpmcmurphy

MaxBacon said:

So if Erin is paid 300,000$ a year, he will actually be getting around 160,000$?

UK is certainly no US on that area haha

Depends on his deductibles but he's probably taking home ~£135,000 ($172,000)

Erillion

We have often been talking about the old industry rule-of-thumb that the cost for a game is:
10.000 $ per month per employee  for EVERYTHING (salaries, infrastructure, outsourcing etc.)

For 221 employees that would be 26,52 M$

F42 UK spends 22,3 M$ per year overall.

So they seem to be below industry average w.r.t. cost.


Have fun

rpmcmurphy

Erillion said:

We have often been talking about the old industry rule-of-thumb that the cost for a game is:
10.000 $ per month per employee  for EVERYTHING (salaries, infrastructure, outsourcing etc.)

For 221 employees that would be 26,52 M$

F42 UK spends 22,3 M$ per year overall.

So they seem to be below industry average w.r.t. cost.


Have fun

I thought most people were saying industry average was around $100,000 per year which would put $22.3M right about where it should be with the benefit that it would not appear as though they are underpaying their employees

Vrika

rpmcmurphy said:

Erillion said:

We have often been talking about the old industry rule-of-thumb that the cost for a game is:
10.000 $ per month per employee  for EVERYTHING (salaries, infrastructure, outsourcing etc.)

For 221 employees that would be 26,52 M$

F42 UK spends 22,3 M$ per year overall.

So they seem to be below industry average w.r.t. cost.


Have fun

I thought most people were saying industry average was around $100,000 per year which would put $22.3M right about where it should be with the benefit that it would not appear as though they are underpaying their employees

I think the $10 000 a month, or $100 000 a year, are so rough number we can't really judge whether Foundry 42 gets above or below the average. More like they're close enough to average that there's nothing special about their costs.

But they made $36 million in crowdfunding in 2016, breaking their own record, and Foundry 42 alone spent nearly two thirds of that money. With SQ 42's release date unknown, and Star Citizen's release clearly still some years away, I'm a bit concerned whether they're headed to releasing something finished, or a situation where they must panic-release to avoid going bankrupt.

psiic

So glad I managed to get all my money back. 

rpmcmurphy

Vrika said:

I think the $10 000 a month, or $100 000 a year, are so rough number we can't really judge whether Foundry 42 gets above or below the average. More like they're close enough to average that there's nothing special about their costs.

But they made $36 million in crowdfunding in 2016, breaking their own record, and Foundry 42 alone spent nearly two thirds of that money. With SQ 42's release date unknown, and Star Citizen's release clearly still some years away, I'm a bit concerned whether they're headed to releasing something finished, or a situation where they must panic-release to avoid going bankrupt.

Yeah that's true.

Apparently total headcount for 2016 was 383, if that roughly equates to $38M they were a bit shy of covering it. This year the total number of staff is up to 430 (as of April). I expect 3.0 will boost funding quite a bit but they clearly can't carry on like this for too long.

Kefo

Erillion said:

We have often been talking about the old industry rule-of-thumb that the cost for a game is:
10.000 $ per month per employee  for EVERYTHING (salaries, infrastructure, outsourcing etc.)

For 221 employees that would be 26,52 M$

F42 UK spends 22,3 M$ per year overall.

So they seem to be below industry average w.r.t. cost.


Have fun

Pretty sure you have been plugging away that is 10k a month per employee. Others come up with other costs based on industry standards and then adding 75-150% labor burden

Kefo

Vrika said:

rpmcmurphy said:

Erillion said:

We have often been talking about the old industry rule-of-thumb that the cost for a game is:
10.000 $ per month per employee  for EVERYTHING (salaries, infrastructure, outsourcing etc.)

For 221 employees that would be 26,52 M$

F42 UK spends 22,3 M$ per year overall.

So they seem to be below industry average w.r.t. cost.


Have fun

I thought most people were saying industry average was around $100,000 per year which would put $22.3M right about where it should be with the benefit that it would not appear as though they are underpaying their employees

I think the $10 000 a month, or $100 000 a year, are so rough number we can't really judge whether Foundry 42 gets above or below the average. More like they're close enough to average that there's nothing special about their costs.

Except that Erin gave himself(or his brother did) quite a pay raise for not delivering anything. Wish I could deliver no results at my job and get a massive raise lol

MaxBacon

Vrika said:
I'm a bit concerned whether they're headed to releasing something finished, or a situation where they must panic-release to avoid going bankrupt.

and @rpmcmurphy As long they keep performing as they did last year in terms of funding that covers the large majority of the operative cost, but not all.

It's highly delusional to even worry about bankruptcy, as every other company in this industry, if there's too much cost there are layoffs to adjust that cost, in the case of SC, to how much they fund per year, that shows to be decently close to the operative cost as it stands.

Vrika

Kefo said:

Vrika said:

rpmcmurphy said:

Erillion said:

We have often been talking about the old industry rule-of-thumb that the cost for a game is:
10.000 $ per month per employee  for EVERYTHING (salaries, infrastructure, outsourcing etc.)

For 221 employees that would be 26,52 M$

F42 UK spends 22,3 M$ per year overall.

So they seem to be below industry average w.r.t. cost.


Have fun

I thought most people were saying industry average was around $100,000 per year which would put $22.3M right about where it should be with the benefit that it would not appear as though they are underpaying their employees

I think the $10 000 a month, or $100 000 a year, are so rough number we can't really judge whether Foundry 42 gets above or below the average. More like they're close enough to average that there's nothing special about their costs.

Except that Erin gave himself(or his brother did) quite a pay raise for not delivering anything. Wish I could deliver no results at my job and get a massive raise lol

Most likely Erin has some bonus system where his salary is tied to Star Citizen's sales, or some other metric. Star Citizen made record sales in 2016, so it's no surprise that their leadership was able to get more salary.


Also, Erin can't give himself raises. Based on the paperwork, it looks like Foundry 42 Limited is owned by Cloud Imperium Games UK limited, which in turn is owned 85% by Chris, 10% by Ortwin, and 5% by Erin.

Chris is the one who decides Erin's salary.

MaxBacon

Kefo said:

Except that Erin gave himself(or his brother did) quite a pay raise for not delivering anything. Wish I could deliver no results at my job and get a massive raise lol

What I understand from this is, as CIG works with dollars, last year the GBP had a loss of almost 20% in value, hence the company can adjust his pay by 20% at no cost. More specifically turns into a 3% proper raise. @Vrika

Money is fun, they can increase wages on UK for almost 20% at no extra cost due to the GBP devaluation, thanks Brexit? xD

Vrika

MaxBacon said:

Kefo said:

Except that Erin gave himself(or his brother did) quite a pay raise for not delivering anything. Wish I could deliver no results at my job and get a massive raise lol

What I understand from this is, as CIG works with dollars, last year the GBP had a loss of almost 20% in value, hence the company can adjust his pay by 20% at no cost. More specifically turns into a 3% proper raise. @Vrika

Money is fun, they can increase wages on UK for almost 20% at no extra cost due to the GBP devaluation, thanks Brexit? xD

Erin is big enough leader that it's also possible. 

Their normal workers in UK should have salary in GBP so that they've became relatively cheaper, but with leaders the agreements vary more.

MaxBacon

Vrika said:

Erin is big enough leader that it's also possible. 

Their normal workers in UK should have salary in GBP so that they've became relatively cheaper, but with leaders the agreements vary more.

Yeah it's not unheard of companies paying attention to such, it becomes cheaper for the company to run the UK office and allows for these adjustments on wages at no-cost.

Let's put this: "Total costs were up to ~£17.5M ($22.3M) for the year (~£14.5M ($18.5M) in 2015)."

Now if we do the math, how much GBP was valued at 2015 vs 2016, you'll see that the 14.5M GBP in 2015 have been quite the same cost for CIG as 17.5M GBP in 2016 with its current valuation so if we convert the cost to dollars considering this we'll get different numbers.

rpmcmurphy

Hmm that doesn't sound right. While exchange rate obviously needs to factor in  they can't have virtually the same costs because head count increased significantly between 2015 and 2016.

Found this covering 2015 https://www.reddit.com/r/starcitizen/comments/4rvfbf/foundry_42_ltds_fy2015_financials_jandec_12m155m/

Turrican187

rpmcmurphy said:

Hmm that doesn't sound right. While exchange rate obviously needs to factor in  they can't have virtually the same costs because head count increased significantly between 2015 and 2016.

Found this covering 2015 https://www.reddit.com/r/starcitizen/comments/4rvfbf/foundry_42_ltds_fy2015_financials_jandec_12m155m/

If I took my Dollar to London a few years ago, I could buy an apple.
Because of the Brexit I can buy 2 apples for my Dollar now.
Nevertheless Erin can buy 17% more apples in 2016 for his GBP than 2015 (after inflation)
The F42 slaves on the other hand can buy less apples than 2015 because their overall income got reduced.

The US doesn't mind if you take your Dollar to Britain to buy apples, though they mind if you take millions of $ to Britain because this money is reduced from the country and therefore there'll be dragons tax consequences.

MaxBacon

rpmcmurphy said:

Hmm that doesn't sound right. While exchange rate obviously needs to factor in  they can't have virtually the same costs because head count increased significantly between 2015 and 2016.

Found this covering 2015 https://www.reddit.com/r/starcitizen/comments/4rvfbf/foundry_42_ltds_fy2015_financials_jandec_12m155m/

If the yearly cost increased by 20% (14.5M GBP to 17.5M GBP), then the currency devalues by almost 20% with the company working with Dollar, it evens it out.

Means that the company needs to put almost 20% fewer dollars in the UK to pay the same amount of GBP (tax-wise for one US company should be around the same).

So having one scrubbish superficial poke at it...

• 2015 did cost ~22million (USD)
• 2016 did cost ~23.6million (USD).

Say 2017 costs the same GBP amount as 2016 (17.5M), and assuming GBP maintains its current rate, it would cost them ~22million USD.

Imagine 2017 and GBP with its 2015 rate and a cost of £17.5M they would have to put up more 4.6million USD.

gervaise1

rpmcmurphy said:

Erillion said:

We have often been talking about the old industry rule-of-thumb that the cost for a game is:
10.000 $ per month per employee  for EVERYTHING (salaries, infrastructure, outsourcing etc.)

For 221 employees that would be 26,52 M$

F42 UK spends 22,3 M$ per year overall.

So they seem to be below industry average w.r.t. cost.


Have fun

I thought most people were saying industry average was around $100,000 per year which would put $22.3M right about where it should be with the benefit that it would not appear as though they are underpaying their employees

Both!

$10k per month or $100k per year ..... to keep the sums simple as much as anything and recognising that costs do vary country by country, state by state, we rarely have accurate staffing profiles etc. just headcount numbers that may not be for full years etc. And as for real data  - yeah.

In my view $22.3 or $26.5 are both "good enough" to inform our discussions. Its when we get posters saying staff only cost $40k a year you despair.