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Mr Popodopolous

The Championship FFP Thread (Merged)

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I don't post much, but just wanted to say how much I appreciate everything that goes into this thread. I may not understand all of the technicalities, but it's great to get an insight into how the outside constraints on finances work, and how the governance follows (or mostly doesn't!!) on from that. I can't imagine there are many forums (fora!!?!) with this level of discussion. Thanks again, TAc

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28 minutes ago, Try Again coatpile said:

I don't post much, but just wanted to say how much I appreciate everything that goes into this thread. I may not understand all of the technicalities, but it's great to get an insight into how the outside constraints on finances work, and how the governance follows (or mostly doesn't!!) on from that. I can't imagine there are many forums (fora!!?!) with this level of discussion. Thanks again, TAc

Well said, hear, hear!

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On 27/07/2019 at 10:18, chinapig said:

And still football journalists continue to ignore the issue. It couldn't be because it would take some actual work as opposed to regurgitating stuff from Pogba's Instagram and other such fluff surely?

On the other hand Alan Nixon, as an example, regularly tweets that FFP is pointless, and that owners that can afford to spend should be allowed to. He argues that EFL are punishing those that have the money, while allowing people like the owners at Bolton and Bury to ruin clubs, because they can’t cover the losses.

I’m not sure I agree, and it doesn’t excuse breaking the rules that do exist, but he doesn’t ignore the issue, and it’s a valid point of view.

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10 minutes ago, Leveller said:

On the other hand Alan Nixon, as an example, regularly tweets that FFP is pointless, and that owners that can afford to spend should be allowed to. He argues that EFL are punishing those that have the money, while allowing people like the owners at Bolton and Bury to ruin clubs, because they can’t cover the losses.

I’m not sure I agree, and it doesn’t excuse breaking the rules that do exist, but he doesn’t ignore the issue, and it’s a valid point of view.

Then he doesn't understand that the Bolton and Bury problems are not FFP issues. What he suggests would lead to some clubs being even more reckless than they already are and perhaps one of the big clubs his suggestion would give an even bigger competitive advantage to going the way of Bolton.

He is right to criticise the EFL but you don't solve a weakness in one area of governance by making another weaker.

Perhaps he should read David Conn's piece to get a better understanding.

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2 hours ago, chinapig said:

Then he doesn't understand that the Bolton and Bury problems are not FFP issues. What he suggests would lead to some clubs being even more reckless than they already are and perhaps one of the big clubs his suggestion would give an even bigger competitive advantage to going the way of Bolton.

He is right to criticise the EFL but you don't solve a weakness in one area of governance by making another weaker.

Perhaps he should read David Conn's piece to get a better understanding.

You misunderstand my post. He does understand that Bolton/Bury’s Problems aren’t FFP issues - his point being that EFL regs are punishing those that can afford to splash out, while allowing “fit and proper” owners to buy clubs they can’t afford to run.

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14 minutes ago, Leveller said:

You misunderstand my post. He does understand that Bolton/Bury’s Problems aren’t FFP issues - his point being that EFL regs are punishing those that can afford to splash out, while allowing “fit and proper” owners to buy clubs they can’t afford to run.

I see, thanks. Even the EFL now accepts the fit and proper test is inadequate and it is being amended but somebody could pass a stiffer test then indulge in the uncontrolled spending he advocates and bankrupt a club.

You need something like FFP to protect clubs from reckless owners "living the dream".

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31 minutes ago, chinapig said:

I see, thanks. Even the EFL now accepts the fit and proper test is inadequate and it is being amended but somebody could pass a stiffer test then indulge in the uncontrolled spending he advocates and bankrupt a club.

You need something like FFP to protect clubs from reckless owners "living the dream".

Your last line is is arguable though. The truly wealthy and supportive owners, like Lansdown will always put in as much cash as they feel they want to afford to achieve success. They aren’t a risk. Without FFP they may choose to inject £100m over three years instead of £39m. On the other hand, even FFP lets a bad owner take on commitments they can’t afford (as at Bolton). And if a Ken Anderson can let a club lose £39m before it is even investigated, then FFP doesn’t really achieve much - the club will be long gone before then if there is no capital injection to cover the losses. Nixon’s argument (as I understand it) is that the ordinary insolvency laws will come into play before FFP achieves any thing. FFP tends to punish the responsible owners as much as, if not more than, the irresponsible ones. Has FFP ever actually saved a club from disaster? 

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7 hours ago, Leveller said:

The truly wealthy and supportive owners, like Lansdown will always put in as much cash as they feel they want to afford to achieve success. They aren’t a risk.  

I'm not sure that's right. Eddie Davies had bottomless pockets when it came to Bolton... until suddenly he didn't, at which point all the player contacts that has been signed became unaffordable. Now look at them.

How much better to have clear rules linking expenditure to real income: rights, gates and sponsorship. That way, you stay afloat, whoever owns you.

It's not normal capitalism, which might be why it feels odd - the idea that a business should have rules which restrict investment IS unusual. But you can't have it both ways: either football clubs are community institutions which endure over generations, or they're normal businesses which go bust from time to time.

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7 hours ago, Davefevs said:

@Mr Popodopolous Derby buying Bielik for £10m, loaning Clarke.  They’ve trimmed their squad but how do you think this looks from their FFP perspective?

I think I saw something mentioned at the time of the stadium "sale" along the lines of the value being inflated so that it not only resolved their ffp issues, but gave them a bit of "surplus" to help this season.

Their new manager's recent press conference almost pleaded poverty, and their owners suggestion that sustainability was their new way forward, but if the proceeds of the stadium sale have given them a bit of wriggle room it would explain deals for Bielik and Clarke.

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On 31/07/2019 at 22:26, Leveller said:

Your last line is is arguable though. The truly wealthy and supportive owners, like Lansdown will always put in as much cash as they feel they want to afford to achieve success. They aren’t a risk. Without FFP they may choose to inject £100m over three years instead of £39m. On the other hand, even FFP lets a bad owner take on commitments they can’t afford (as at Bolton). And if a Ken Anderson can let a club lose £39m before it is even investigated, then FFP doesn’t really achieve much - the club will be long gone before then if there is no capital injection to cover the losses. Nixon’s argument (as I understand it) is that the ordinary insolvency laws will come into play before FFP achieves any thing. FFP tends to punish the responsible owners as much as, if not more than, the irresponsible ones. Has FFP ever actually saved a club from disaster? 

It seems to me that football operates outside of the normal common sense rules of business finance e.g. how many businesses would pay 90% (and sometimes in excess of 100%) of the income to staff in salaries? We all know this is because there will always be owners with deep pockets who are prepared to push the boat out in the quest for moving their club up the ladder towards football's "promised land".

I heard Bury's owner talking yesterday. He took over the club in January but says that they were/are paying some of their players £9000 per week and some on £6,000 per week weren't even featuring in the squad - they were a league 2 club last season with gates under 3,000!

You are right in saying that ffp cannot prevent a club having cash flow/insolvency problems - only a year ago Villa were on the verge of a winding up order because their owner was struggling to get money out of his country.  However, better to have something in place, to reign in reckless owners and especially those who might leave a club in the lurch when it goes wrong, then nothing at all.

When you mention Anderson, it raises a question about the tests the EFL undertake to approve a new owner as suitable - what used to be called the fit and proper person test - as it does seem to be as full of holes as ithe ffp rules! 

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9 hours ago, Davefevs said:

@Mr Popodopolous Derby buying Bielik for £10m, loaning Clarke.  They’ve trimmed their squad but how do you think this looks from their FFP perspective?

Interesting one.

I'm not sure Clarke is such a cost but we'll see I guess. Bielik though certainly would be!

I think regardless of stadium sale they would have been alright with it to June 2018, as I've had a bit of a look at their Sevco 5112 Limited accounts for 2015/16 and 2017/18- will post full workings on here in a few days.

Could've been in a bit of bother once 2015/16 dropped off as there was a large "Impairment of Goodwill" on the Sevco 2015/16 accounts of £21,198,000 or thereabouts and it is unclear whether this was playing side related or not, and if it isn't then it could have been eligible for deduction from losses/addition to allowable costs.

Mel Morris did mention something about £10-15m of players wages being off the wage bill after the season just gone, so unlike say Aston Villa and Sheffield Wednesday definitely moving in the right direction. Entirely possible they will sell some academy/fringe players too which could be profit on transfers, the Lampard compensation helps too.

On the flipside, if they have that residual value model could that store up a few problems? Those aging/expensive/out of contract players who left this summer commanded no fee so far as I can see! Then again, Cup run including big Cup ties, playoff final as the losing side keeps gate receipts all helpful of course. On the other hand after this season, that stadium sale drops off- I think it brought a decent whack of restructuring time personally, as their amortisation model seems to differ to most,  I don't know how much impact an addition of £10m Bielik will have right now.

EFL really needed to set a cap, a precedent- in short to benchmark- on valuations once Reading's sale and leaseback was done.

Their profit as a% of current Net Book Value sounds feasible and realistic and the EFL should have capped as that for FFP purposes- i.e. the owner can pay what they like on paper and in actual accounts it would appear as that, but for FFP it's adjusted downwards- that sort of thing. Quickest example- Madjeski worth £20m or so, purchase cost £26.5m, profit £6.5m (roughly). Therefore for Pride Park say, Net Book Value £42m, Profit £13.65m for FFP- as I say owner can pay what they like in reality but for FFP you only allow that %. So simple- it's clear, it has a precedent and it has a benchmark to weight against.

For Hillsborough that would have left Sheffield Wednesday right up shit street. Highly likely Aston Villa too.

Incidentally, once this season is up that stadium sale and leaseback induced "profit" drops off the accounts- new starting point for the projected in March 2021 is 2018/19. Similar goes for Sheffield Wednesday though the veracity of that particular transaction, well it's very odd.

They adjust down related party sponsorship transactions after all so a benchmarking of this would surely be similar, easier if anything!

Edited by Mr Popodopolous
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32 minutes ago, Mr Popodopolous said:

Interesting one.

I'm not sure Clarke is such a cost but we'll see I guess. Bielik though certainly would be!

I think regardless of stadium sale they would have been alright with it to June 2018, as I've had a bit of a look at their Sevco 5112 Limited accounts for 2015/16 and 2017/18- will post full workings on here in a few days.

Could've been in a bit of bother once 2015/16 dropped off as there was a large "Impairment of Goodwill" on the Sevco 2015/16 accounts of £21,198,000 or thereabouts and it is unclear whether this was playing side related or not, and if it isn't then it could have been eligible for deduction from losses/addition to allowable costs.

Mel Morris did mention something about £10-15m of players wages being off the wage bill after the season just gone, so unlike say Aston Villa and Sheffield Wednesday definitely moving in the right direction. Entirely possible they will sell some academy/fringe players too which could be profit on transfers, the Lampard compensation helps too.

On the flipside, if they have that residual value model could that store up a few problems? Those aging/expensive/out of contract players who left this summer commanded no fee so far as I can see! Then again, Cup run including big Cup ties, playoff final as the losing side keeps gate receipts all helpful of course. On the other hand after this season, that stadium sale drops off- I think it brought a decent whack of restructuring time personally, as their amortisation model seems to differ to most,  I don't know how much impact an addition of £10m Bielik will have right now.

EFL really needed to set a cap, a precedent- in short to benchmark- on valuations once Reading's sale and leaseback was done.

Their profit as a% of current Net Book Value sounds feasible and realistic and the EFL should have capped as that for FFP purposes- i.e. the owner can pay what they like on paper and in actual accounts it would appear as that, but for FFP it's adjusted downwards- that sort of thing. Quickest example- Madjeski worth £20m or so, purchase cost £26.5m, profit £6.5m (roughly). Therefore for Pride Park say, Net Book Value £42m, Profit £13.65m for FFP- as I say owner can pay what they like in reality but for FFP you only allow that %. So simple- it's clear, it has a precedent and it has a benchmark to weight against.

For Hillsborough that would have left Sheffield Wednesday right up shit street. Highly likely Aston Villa too.

Incidentally, once this season is up that stadium sale and leaseback induced "profit" drops off the accounts- new starting point for the projected in March 2021 is 2018/19. Similar goes for Sheffield Wednesday though the veracity of that particular transaction, well it's very odd.

@DerbyFan re Bielik post, looks like you are getting your house in order.

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1 hour ago, Davefevs said:

@DerbyFan re Bielik post, looks like you are getting your house in order.

Yes we are, I've said before the club knew they needed to, they have been saying it for a few years, from what we've been told at fans forums the amount of contracts ending helps a lot, we weren't getting value out of the wages we were paying, too many not playing or playing only a bit part, even with the residual value hit that we will presumably take.

It seems it's the wage bill that really hurts a club rather than transfer fees, within reason. I'd imagine we've cut at the very least £10m off the wage bill now, although expecting it to be a fair bit more to be honest, just depends on the ones coming in.

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53 minutes ago, Carey 6 said:

Is this true? Would he have to be classed as a youth team coach rather than a first team coach?

 

Gilmartin’s on more 😂😂😂

You would think that any contract including a playing role, would have to count towards FFP.

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Seems a weird loophole- because when you get compensation for a managerial or coaching departure, well that counts as income towards FFP so surely the whole wage bill should count towards it!

Especially if it includes a playing/coaching role.

Edited by Mr Popodopolous

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3 minutes ago, Davefevs said:

Gilmartin’s on more 😂😂😂

You would think that any contract including a playing role, would have to count towards FFP.

 

2 minutes ago, Mr Popodopolous said:

Seems a weird loophole- because when you get compensation for a managerial or coaching departure, well that counts as income towards FFP so surely the whole wage bill should count towards it!

Especially if it includes a playing/coaching role.

Interesting few comments here, 

 

Edited by Carey 6
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1 minute ago, Carey 6 said:

 

Interesting few comments here, 

 

Ah yeah, that has SCMP which has differences to our level FFP, officially known as P&S.

Ironically, the stadium sale and leasebacks of Derby and 2 others in a big way wouldn't have counted under SCMP but seemingly can under P&S- perhaps the reverse applies to our level?

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I'd refuse some of these FFP cheats entry to AG and tbh all the compliant or effort making clubs should refuse to play the pricks who act like this. In the same way as FFP cheats in theory can get excluded from the CL, I don't believe they're worthy to share a pitch with clubs who do or try to do the right thing.

Aston Villa are my big ones but Derby are beginning to push them and Sheffield Wednesday a bit closer IMO.

It's an emotive rather than a realistic view my opening gambit- but ******* hell- incidentally I don't believe Derby because of varied things, mix of loopholes and cost cutting would be in breach even if full Rooney wages paid for one season and one season only by the end of this season but other clubs really really need to do something about this shit.

Edited by Mr Popodopolous

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2 minutes ago, Mr Popodopolous said:

Daniel Storey's latest Tweet suggests he was conflating P&S and SCMP- all EFL FFP but both have differences.

I've also just seen that, so I take it Derby will have to factor in all of Rooneys wages into their FFP calculations?

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3 minutes ago, Carey 6 said:

I've also just seen that, so I take it Derby will have to factor in all of Rooneys wages into their FFP calculations?

Would've thought so yeah- still looking at the regs myself as on annual leave- hopefully the right ones as I know they got updated in recent times- to see if there's any reference to this one way or the other.

Like I said though what with stadium sale, one season and a large amount of surplus players departing might leave them ok for it for one season- and I mean one season only. Dunno how long his contract might be for.

On a side note, it does seem to me that certain clubs get done certain favours by others. West Ham subsiding Huglll wages or so it seemed eg, this? Maybe it's just my perception and in some ways with our Chelsea dealings we can't complain too much but I do wonder if certain ex PL clubs get players etc on more favourable terms than most! Contact cancelled so he can go join Derby for no fee in Rooney's case.

Edited by Mr Popodopolous
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4 minutes ago, Carey 6 said:

I've also just seen that, so I take it Derby will have to factor in all of Rooneys wages into their FFP calculations?

Yep!

£80,000 x 52 = £4.16m

The annual wage is then multiplied by the  the Mel Morris ffp coefficient.

The Mel Morris ffp coefficient is currently valued at 0, so multiplying £4.16m x 0 = 0 for ffp purposes.

 

 

 

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On 06/08/2019 at 11:03, Mr Popodopolous said:

Daniel Storey's latest Tweet suggests he was conflating P&S and SCMP- all EFL FFP but both have differences.

Certain areas of Academy expenditure certainly sit outside FFP though. If staff wages are included then are we missing a trick by not setting up weekly 5minute sessions with our first team squad and listing them all as player coachs? 

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Saw an interesting article on The Athletic- on FFP. Phil Hay the author- interesting to see Leeds view on some of the transactions of grounds etc that took place in the summer.

Quote

The Championship is where clubs and owners go to lose money. A chief executive who now works abroad once summed it up like this: “You’re going to make losses whether you want to or not. You just have to decide how much you’re going to lose.”

From time to time there are exceptions to the rule, like the nominal profit of £976,000 Leeds United turned in 2017. That would pay their current wage bill for less than a fortnight. And less again after tax.

England’s second division has long been a diverse field in which certain clubs overspend because they feel they have no choice and others overspend because they have the cash and the mood takes them.

What CEOs across the league noticed in this transfer window was a developing trend: that of a high proportion of teams heading for negative net spends, some by a very comfortable margin. Incoming fees have been vast: £15 million to Birmingham City for Che Adams, £20 million to Brentford for Neal Maupay, £20 million to Bristol City for Adam Webster. In a demonstration of the disparity with the Premier League, Brighton alone financed two of those signings (Maupay and Webster).

The mutual prudence of the clubs who pocketed those fees was not a coincidence. The Championship has been bound by Profit and Sustainability (PnS) rules for the past three years but in March, something happened. Birmingham City exceeded the losses permitted by the EFL and, on the guidance of an independent disciplinary commission, were deducted nine points.

“The Birmingham decision changed the world in this division,” Leeds chief executive Angus Kinnear tells The Athletic. “Everybody realised PnS had teeth.”

Birmingham’s breach of EFL limits, which allow a maximum loss of £39 million over a rolling three-year period, was public knowledge and widely discussed but no-one in the Championship was sure how the EFL would act. The end of the 2018-19 season marked the end of the first full PnS accounting window and Birmingham became something of a guinea pig: the only club officially in breach and the only club in harm’s way. Even the directors at St Andrew’s were in the dark about the likely consequences.

The lack of clarity was a frustration. “Every club wanted to be absolutely clear about the sanctions,” Kinnear says. “None of us were sure if there would be sporting sanctions or if the penalty would be financial. If it’s financial then a decision over whether to abide by PnS becomes an economic one, like in US sport if you breach the salary cap. If it’s a sporting sanction, like a points deduction, then that’s very different.”

Leeds made a big play of PnS – the EFL’s version of Financial Fair Play (FFP) – throughout the transfer window just gone. They concentrated heavily on ensuring compliance internally while trying to manage an external audience who questioned the numbers involved and, in some quarters, debated whether the club’s majority shareholder, Andrea Radrizzani, was merely being tight.

Radrizzani, a charismatic Italian who made a fortune through the sale of TV rights deals, is heavily invested in Leeds: £45 million for his original takeover, some £20 million to buy back Leeds’ Elland Road stadium from its private landlord two years ago and the person whom Kinnear calls whenever the club need additional funds.

A stake of around 13 per cent was sold by Radrizzani to the San Francisco 49ers last summer but the £11 million paid by the 49ers went back into the Elland Road accounts. Leeds are a perfect example of how life in the Championship works: the team with the biggest annual turnover in the league, losing more than £1 million a month.

In the first two years of the EFL’s PnS cycle — which began with the 2016-17 season — Leeds’ deficit stood at less than £4 million, a long way short of £39 million. But last year, as the wage bill inflated to more than £30 million, the yearly loss rose above £15 million despite a turnover of close to £50 million. (Leeds, commercially, have few serious rivals below the Premier League).

Certain costs are exempt from PnS calculations. Financial experts estimate that a category two academy, which Leeds have, removes around £1.2 million from the total annually, but United worried that another round of heavy losses this season would put them in breach. Even now, Kinnear says, their figures are extremely close to the limit.

The wage bill is where Leeds have stretched themselves most. According to Kinnear, it is two and a half times higher than it was when Radrizzani bought out Massimo Cellino in 2017, and not by accident.

“Over the past 10 years or so the club’s average finishing position in the Championship was around 12th and the wage bill when Andrea first came here was in line with that,” Kinnear says. “We’ve done a lot of analysis of this.

“There’s always the odd exception but, in general, a wage bill of £15 million or £16 million will get you a mid-table place. A wage bill of £25 million will get you into the play-offs. And over £30 million will get you promoted.”

Less than £10 million – the reality for a newly-promoted side like Charlton Athletic –will most likely bring about relegation.

“The reality when Andrea started was that players here weren’t being paid enough,” Kinnear says. “They were underpaid.” By acquiring goalkeeper Kiko Casilla from Real Madrid in January, United were committed to a wage of £35,000 a week.

When this transfer window opened, the club had three priorities beyond the new signings they were targeting: to retain their most important players and staff, including head coach Marcelo Bielsa; free the squad of fringe players who had no chance of playing and to cover their back against the EFL by selling a few who figured in the manager’s plans. Bielsa extended his contract in May and players unlikely to play under him became a hindrance when it came to complying with PnS — particularly in light of the threat of a points deduction. 

Most of the names who left were surplus. Caleb Ekuban took up an offer from Turkey, Yosuke Ideguchi went back to Japan and Tom Pearce joined Wigan Athletic. “In the past these were players who you might have kept to develop,” Kinnear says. “But with the way PnS is, it’s simple: you cannot afford to have them on your balance sheet. You cannot afford to have them doing nothing.

Other sales were more high-profile and politically sensitive, the type over which supporters fret. Tottenham Hotspur paid £9.5 million for Jack Clarke, though loaned the winger back to Leeds immediately. Pontus Jansson joined Brentford for £5.5 million – a transfer driven as much by deteriorating relations between the Swede and Bielsa – and Anderlecht bid £6.5 million for Kemar Roofe days before the window closed. Leeds had allowed Roofe’s contract to run into its last 12 months and could not tempt him with the late offer of improved terms. In all, Leeds estimate that £27 million has been raised through outgoing deals.

At points they had scope to make far more. Kinnear says incoming offers which Leeds rejected totalled £35 million, the largest of which was made for Kalvin Phillips. The 23-year-old, the player whose development at Elland Road has been most stratospheric on Bielsa’s watch, was the subject of an approach by Aston Villa but Leeds were always adamant that Phillips would stay unless he asked to leave.

“I can’t think of another team in the league who’ve kept a £20 million player,” Kinnear says. “That was very important for us.”

Bielsa fell into the same category as Phillips: someone who was irreplaceable in the same shape or form and who was worth the biggest coaching salary United have ever paid out. Bids for Luke Ayling, Adam Forshaw and Pablo Hernandez, none of which were ever publicised, also failed.

“This is where I get a bit frustrated about the criticism of Andrea’s financial investment,” Kinnear says. “If he was only thinking from a financial point of view, he’d have sold them.”

Fulham have worked in a similar fashion since their relegation from the Premier League, despite the tranche of parachute money which came with it. Anthony Knockaert, Ivan Cavaleiro and Harry Arter are expensive loanees but Fulham raked in £25 million by selling Ryan Sessegnon to Spurs on deadline day. Like Leeds and Phillips, one of their biggest priorities appeared to be the retention of Aleksandar Mitrovic and Tom Cairney. Manager Scott Parker described that as “vitally important”.

Leeds’ signings came to six, five of them on loan and one – Helder Costa – on a temporary deal which will automatically convert into a permanent move next summer. He will cost Leeds £16 million over the course of his permanent four-year contract – one of the most expensive purchases in their history – but an initial loan kept the first amortised payment to Wolverhampton Wanderers off the books for another 12 months. Bielsa does not often throw his weight about with transfers but he was relentless in pressing Leeds to get Costa signed as the days before pre-season ticked down. Wolves’ willingness to help made it happen.

At that stage, Elland Road was still being circled by rumours of imminent investment from Qatar Sports Investments (QSI), the Middle Eastern muscle behind Paris Saint-Germain. Officials at Leeds doubt that the reports had substance, which is not to say QSI might not have plans for the future, but the impact of an immediate injection of cash was nonetheless moot.

PnS rules limit shareholder investment and the club were close to the red line. “The reality is that if someone had given us £40 million, we couldn’t really have been able to spend a penny of it,” Kinnear says. “I mean, we could have made the academy look nice or built a new stadium (infrastructure costs do not count towards PnS) but not (spend it) on players. We were already right at the limit.

Leeds’ willingness to abide by PnS regulations hides a general feeling of contempt for them. The EFL’s structure has been plagued by suggestions of creative accounting and attempts by owners to circumnavigate the restrictions. Derby County are the subject of legal action from Middlesbrough after using the sale of Pride Park to owner Mel Morris to comply with EFL limits. Aston Villa and Sheffield Wednesday employed the same strategy, exploiting a loophole which the EFL is yet to close.

We’ve no complaints about those clubs doing that,” Kinnear says. “Our complaint is that the rules are so porous so as to be pointless. We think the loopholes need to be closed up because the rules aren’t fit for purpose. The permitted loss is an arbitrary figure which can’t be properly enforced.”

There are other ways of sidestepping costs, too. Clubs in the Championship believe one team last season kept a prominent player registered as an academy footballer to avoid his wages contributing to PnS. Yet despite the problems, Kinnear thinks fewer than 50 per cent of clubs want to see PnS revised.

Birmingham’s nine-point penalty came late in the day last season, a matter of weeks before the campaign finished. Now that the EFL has established clear sanctions, Championship boards expect that similar penalties will be enforced at the start of a season, potentially wrecking it before it begins. The maximum deduction of 12 points is deliberately punitive and too severe for clubs to treat with disdain. But all the while, the failure of the EFL to convince the Premier League to automatically impose sanctions on promoted sides tempts owners to go big regardless, in the hope of escaping the EFL’s claws before the governing body can strike.

Kieran Maguire, a specialist in football finance at the University of Liverpool who runs the insightful Price of Football Twitter account, believes few clubs are well served by the system as it is. “You’re damned if you do and damned if you don’t,” Maguire says.

Leeds and Bielsa did not look damned at Bristol City last Sunday, where their football outshone every other performance in the Championship over the course of the season’s opening weekend. The club added Eddie Nketiah to their squad before the transfer deadline, talking Arsenal into loaning them a striker who numerous clubs were crawling over glass to sign. Even Nketiah, a 20-year-old with a tiny amount of senior football behind him, commands a loan fee and a salary which, when all is said and done, will leave precious little change from Leeds’ sale of Roofe to Anderlecht.

“The days of Championship clubs buying six or seven players for substantial fees is gone,” Kinnear says. “That is until the market resets itself or until PnS rules evolve, which I think they have to.

Birmingham were bitten and the Championship is twice shy. For now, at least.

I think the Leeds situation is thanks in large part to their owner not sticking in the equity but a good article nonetheless. Interesting that Leeds one of the most compliant clubs, want reform.

Edited by Mr Popodopolous
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6 hours ago, Mr Popodopolous said:

Saw an interesting article on The Athletic- on FFP. Phil Hay the author- interesting to see Leeds view on some of the transactions of grounds etc that took place in the summer.

I think the Leeds situation is thanks in large part to their owner not sticking in the equity but a good article nonetheless. Interesting that Leeds one of the most compliant clubs, want reform.

Thanks for posting!

Have you read my DM yet? 😱

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Genuine question Mr P,  have you seen Bristol City FCs accounts to Oct 18?

A P&L £120m overdrawn isn't very FFP friendly is it? 

The club has a 60m negative Balance Sheet, by rights you're a massive GC issue.

You can't sell the ground as it is outside the football club assets.... How can you be so pious? 

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7 hours ago, OwlsonlineAdmin said:

Genuine question Mr P,  have you seen Bristol City FCs accounts to Oct 18?

A P&L £120m overdrawn isn't very FFP friendly is it? 

The club has a 60m negative Balance Sheet, by rights you're a massive GC issue.

You can't sell the ground as it is outside the football club assets.... How can you be so pious? 

Mr P will no doubt give a comprehensive answer but you do realise the club was FFP compliant in the period you refer to I assume and therefore had no need to game the system? I would think that is the definition of FFP friendly.

Of course with the finances being bolstered by player sales of something approaching £60m over the last 2 years there isn't any need to play fast and loose with the finances.

Your use of the word overdrawn in relation to the P&L is a bit odd as the P&L is not a credit facility but again there are accounting experts on here who may clarify the point for you.

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9 minutes ago, Olé said:

 

 

Thanks for posting. Predictable silence from the EFL. In the wake of the Bolton and Bury situations you would think they would be concerned about more reckless financial management but they have proved themselves incompetent at every step.

And of course the football media cries crocodile tears over Bolton and Bury but shows no interest in other clubs risking their future.

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I remember pointing out the differential in ground sale prices months ago. I am glad Kieran Maguire has re-emphasised, published and highlighted the fact.

One possible solutions

Set Madjeski Stadium as a benchmark- it appeared to be the first after all. Net book value was around £20m, sale price about £26.5m. 

By benchmarking in this instance I mean for FFP purposes as a % of the current NBV. Reading's was a (roughly) 32.5% profit. Set that specifically OR set in a 25-35% range- you have what you like on paper but as per related party sponsorship you simply set this bracket.

I'm sure there are others as well but EFL should've done this the moment Reading's transaction occurred.

Edited by Mr Popodopolous

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On 17/08/2019 at 01:57, OwlsonlineAdmin said:

Genuine question Mr P,  have you seen Bristol City FCs accounts to Oct 18?

A P&L £120m overdrawn isn't very FFP friendly is it? 

The club has a 60m negative Balance Sheet, by rights you're a massive GC issue.

You can't sell the ground as it is outside the football club assets.... How can you be so pious? 

Presumably you mean the debt to ownership in that? Not so relevant to FFP.

A lot of this will be infrastructure related expenditure IMO but will look again at this in due course, these areas a big note closely. I recall there was a large debt write off in League One in Jan 2014. £35m as per a BBC Article.

This isn't relevant to FFP.

FFP is something as a club we take very seriously- at times this is to the chagrin of some of our fans!

Could probably amend the ground sale issue to make it possible if we were so minded.

There are other fixed assets on our books that we can inflate in a transaction to a related party if necessary.

We know all clubs at this level are financially reliant on their owner to a lesser or greater degree- doesn't mean there aren't loss limits within this however.

Let's look at YOUR club in some detail shall we.

1. You extend accounting reporting period from May 31 2018 to July 31 2018- the due date from February 28 2019 to April 30 2019. That's fine, all legal within company laws.

2. Your owner says at a fans forum in JANUARY 2019 that if there us no promotion you'd be in BIG trouble.

https://www.thestar.co.uk/news/sheffield-wednesday-owls-chairman-dejphon-chansiri-admits-wednesday-need-to-solve-financial-worriesa-to-avoid-future-problemsa-183808?amp

3. He mentioned a breach by 8 figures.

4. The accounts that were already due by April 30th 2019 didn't actually appear until a month on and later still.

5. 11th July 2019 on your website- JULY!?

6. 16th July 2019 at CH.

7. At least they were dated and signed by due date yeah? Err- no! June 21st 2019- well past CH revised let alone initial due date!!

8. Any sign of it at Land Registry yet? Last time I heard there was not.

9. What definitive proof is there that this transaction was completed within, or at least began within the correct reporting period? Eg up to May 31 2018 or if revision accepted July 31 2018. EFL shouldn't accept it if not.

10. Does it show in the Cash flow statement in its entirety as a once off move? Derby's did, Reading's did. Can't say I saw it on first glance but will look again of course. Aston Villa's should in 2018/19 accounts...

I'm no fan of the Derby ground sale and leaseback but set against your clubs actions in this sense, they look a model of pure probity and have a halo above their head. Only club worse at this level financially speaking IMO were Aston Villa.

The one thing, you've FINALLY sold a striker, finally- Joao for several million. Non renewal of contracts also helps but you've signed a number of players too albeit on frees- loans from PL last season can't have been freebies. Lazaar, Aarons and Onomah I believe.

Rhodes was off the books which helps and a loan fee inbound too, but now back on and presumably on full wage. Management compensation- still though it's a nonsense tbh overall.

As for us.

Academy products sold for big cash represent pure profit. Lloyd Kelly £13.5m up front- that's £13.5m to offset losses. Bryan was around £6m, offsets very nicely. Reid- that had addons but offsets. Flint probably had a sell on fee to give part of and some remaining amortisation to offset against but a profit nonetheless. BIG Webster profit but then again sell on fee and remaining NBV- add ons too, add ons which may or may not have been hit last season, could complicate.

Overall we're compliant and we seem to have done this in the correct manner.

Edited by Mr Popodopolous
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1 hour ago, Mr Popodopolous said:

Presumably you mean the debt to ownership in that? Not so relevant to FFP.

A lot of this will be infrastructure related expenditure IMO but will look again at this in due course, these areas a big note closely. I recall there was a large debt write off in League One in Jan 2014. £35m as per a BBC Article.

This isn't relevant to FFP.

FFP is something as a club we take very seriously- at times this is to the chagrin of some of our fans!

Could probably amend the ground sale issue to make it possible if we were so minded.

There are other fixed assets on our books that we can inflate in a transaction to a related party if necessary.

We know all clubs at this level are financially reliant on their owner to a lesser or greater degree- doesn't mean there aren't loss limits within this however.

Let's look at YOUR club in some detail shall we.

1. You extend accounting reporting period from May 31 2018 to July 31 2018- the due date from February 28 2019 to April 30 2019. That's fine, all legal within company laws.

2. Your owner says at a fans forum in JANUARY 2019 that if there us no promotion you'd be in BIG trouble.

https://www.thestar.co.uk/news/sheffield-wednesday-owls-chairman-dejphon-chansiri-admits-wednesday-need-to-solve-financial-worriesa-to-avoid-future-problemsa-183808?amp

3. He mentioned a breach by 8 figures.

4. The accounts that were already due by April 30th 2019 didn't actually appear until a month on and later still.

5. 11th July 2019 on your website- JULY!?

6. 16th July 2019 at CH.

7. At least they were dated and signed by due date yeah? Err- no! June 21st 2019- well past CH revised let alone initial due date!!

8. Any sign of it at Land Registry yet? Last time I heard there was not.

9. What definitive proof is there that this transaction was completed within, or at least began within the correct reporting period? Eg up to May 31 2018 or if revision accepted July 31 2018. EFL shouldn't accept it if not.

10. Does it show in the Cash flow statement in its entirety as a once off move? Derby's did, Reading's did. Can't say I saw it on first glance but will look again of course. Aston Villa's should in 2018/19 accounts...

I'm no fan of the Derby ground sale and leaseback but set against your clubs actions in this sense, they look a model of pure probity and have a halo above their head. Only club worse at this level financially speaking IMO were Aston Villa.

The one thing, you've FINALLY sold a striker, finally- Joao for several million. Non renewal of contracts also helps but you've signed a number of players too albeit on frees- loans from PL last season can't have been freebies. Lazaar, Aarons and Onomah I believe.

Rhodes was off the books which helps and a loan fee inbound too, but now back on and presumably on full wage. Management compensation- still though it's a nonsense tbh overall.

As for us.

Academy products sold for big cash represent pure profit. Lloyd Kelly £13.5m up front- that's £13.5m to offset losses. Bryan was around £6m, offsets very nicely. Reid- that had addons but offsets. Flint probably had a sell on fee to give part of and some remaining amortisation to offset against but a profit nonetheless. BIG Webster profit but then again sell on fee and remaining NBV- add ons too, add ons which may or may not have been hit last season, could complicate.

Overall we're compliant and we seem to have done this in the correct manner.

Academy products amounted to around 30m (Reid, Kelly, Bryan).

Plus Flint 7m, Magnússon 2m, Eisa 2m (?), Webster 22m (some say 20m up front). So around 30m+ from those transfers.

60m+ from outgoing transfers.

Offset by incomings and expenses of course, and the club needs to keep an eye on wages and the amount of players we now have, but it would be difficult to see City in any sort of FFP bother especially given the increasing rises to off field income to take into account as well.

Not sure why the Sheffield lad thinks otherwise ?

Edited by bcfc01
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1 minute ago, bcfc01 said:

Academy products amounted to around 30m (Reid, Kelly, Bryan).

Plus Flint 7m, Magnússon 2m, Eisa 2m (?), Webster 22m (some say 20m up front). So around 30m+ from those transfers.

60m+ from outgoing transfers.

Offset by incomings and expenses of course, and the club needs to keep an eye on wages and the amount of players we now have, but it would be difficult to see City in any sort of FFP bother especially given the increasing rises to off field income to take into account as well.

Not sure why the Sheffield lad thinks otherwise ?

Is that inclusive of add ons though, the £30mish figure.

Thought the Reid fee had an element of add ons. Don't forget possible sell on clauses for Flint and Webster will subtract from it.

However these are small details- the thrust of your post I fully agree- we're in no FFP issues and while we have SL, MA and LJ at the helm this will not be a concern for us IMO.

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2 minutes ago, Mr Popodopolous said:

Is that inclusive of add ons though, the £30mish figure.

Thought the Reid fee had an element of add ons. Don't forget possible sell on clauses for Flint and Webster will subtract from it.

However these are small details- the thrust of your post I fully agree- we're in no FFP issues and while we have SL, MA and LJ at the helm this will not be a concern for us IMO.

I didn't include add-ons or sell-ons nor any other historical sell-ons in our favour such as Bolasie or Adomah (if any).

Just the fees in the public domain.

It all probably evens out or thereabouts.

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1 hour ago, Mr Popodopolous said:

Is that inclusive of add ons though, the £30mish figure.

Thought the Reid fee had an element of add ons. Don't forget possible sell on clauses for Flint and Webster will subtract from it.

However these are small details- the thrust of your post I fully agree- we're in no FFP issues and while we have SL, MA and LJ at the helm this will not be a concern for us IMO.

We aren’t in FFP trouble because we aren’t spending all of the transfer income / profit we make.

Some basic figures, approx figs:

- Income £25.0m

minus

- Wages £25.0m (think it’s likely to be nearer £30.0m)

- Operations Costs £10.0m

- Amortisation of Player contracts £11.0m

Profit...cough....loss:

- £21.0m 

take off £5.0m for ffp allowances means our starting position is about £16.0m loss.  “Little” Income streams, e.g. loaning players out, or Freeman sell-on money all help.

Now, some of that £11.0m amortisation is because we have bought players, so a bit chicken and egg.  £21.0m spent on recruitment is costing us £5.5m in Amortisation for those new players.

Of course had we spent nothing on improving our squad, we’d be in a fantastic financial position, but we’d probably be heading towards League 1 😱

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8 hours ago, chinapig said:

Thanks for posting. Predictable silence from the EFL. In the wake of the Bolton and Bury situations you would think they would be concerned about more reckless financial management but they have proved themselves incompetent at every step.

And of course the football media cries crocodile tears over Bolton and Bury but shows no interest in other clubs risking their future.

In the link I posted above the EFL chairperson briefly discusses the sale of stadia to owners and says,

Jevans touches on other issues, inevitably financial, such as the loophole of clubs selling grounds to their owners to improve the look of the books. “I wouldn’t use the word loophole, no, but what I do think is important is there is absolute clarity over the sale of fixed assets. We are sitting down with the Premier League, and looking at the wording of those rules. It’s noted.” Any risk of a breakaway from the Championship to form a Premier League 2? “No, not right now, there’s no desire from the clubs, the FA or the Premier League.”

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16 minutes ago, WarksRobin said:

In the link I posted above the EFL chairperson briefly discusses the sale of stadia to owners and says,

Jevans touches on other issues, inevitably financial, such as the loophole of clubs selling grounds to their owners to improve the look of the books. “I wouldn’t use the word loophole, no, but what I do think is important is there is absolute clarity over the sale of fixed assets. We are sitting down with the Premier League, and looking at the wording of those rules. It’s noted.” Any risk of a breakaway from the Championship to form a Premier League 2? “No, not right now, there’s no desire from the clubs, the FA or the Premier League.”

Thanks for pointing out. A pretty limp response by Jevans though, waffle about clarity and looking at the wording doesn't come close to adequate.

The only true part is that it's not a loophole, it's a rule specifically introduced to allow clubs to act recklessly because that's what some of them wanted to be free to do.

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4 minutes ago, chinapig said:

Thanks for pointing out. A pretty limp response by Jevans though, waffle about clarity and looking at the wording doesn't come close to adequate.

The only true part is that it's not a loophole, it's a rule specifically introduced to allow clubs to act recklessly because that's what some of them wanted to be free to do.

I do believe she represents an improvement on Harvey though...

That's not hard however!

On this, presumably there's some coordination with PL required? I'm still puzzled ad to how the change was given the green light and when..by whom as well!

Certainly not announced with any great fanfare. The League 1 and 2 regs don't, UEFA ones appear not to.

Edited by Mr Popodopolous

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7 hours ago, Mr Popodopolous said:

Presumably you mean the debt to ownership in that? Not so relevant to FFP.

A lot of this will be infrastructure related expenditure IMO but will look again at this in due course, these areas a big note closely. I recall there was a large debt write off in League One in Jan 2014. £35m as per a BBC Article.

This isn't relevant to FFP.

FFP is something as a club we take very seriously- at times this is to the chagrin of some of our fans!

Could probably amend the ground sale issue to make it possible if we were so minded.

There are other fixed assets on our books that we can inflate in a transaction to a related party if necessary.

We know all clubs at this level are financially reliant on their owner to a lesser or greater degree- doesn't mean there aren't loss limits within this however.

Let's look at YOUR club in some detail shall we.

1. You extend accounting reporting period from May 31 2018 to July 31 2018- the due date from February 28 2019 to April 30 2019. That's fine, all legal within company laws.

2. Your owner says at a fans forum in JANUARY 2019 that if there us no promotion you'd be in BIG trouble.

https://www.thestar.co.uk/news/sheffield-wednesday-owls-chairman-dejphon-chansiri-admits-wednesday-need-to-solve-financial-worriesa-to-avoid-future-problemsa-183808?amp

3. He mentioned a breach by 8 figures.

4. The accounts that were already due by April 30th 2019 didn't actually appear until a month on and later still.

5. 11th July 2019 on your website- JULY!?

6. 16th July 2019 at CH.

7. At least they were dated and signed by due date yeah? Err- no! June 21st 2019- well past CH revised let alone initial due date!!

8. Any sign of it at Land Registry yet? Last time I heard there was not.

9. What definitive proof is there that this transaction was completed within, or at least began within the correct reporting period? Eg up to May 31 2018 or if revision accepted July 31 2018. EFL shouldn't accept it if not.

10. Does it show in the Cash flow statement in its entirety as a once off move? Derby's did, Reading's did. Can't say I saw it on first glance but will look again of course. Aston Villa's should in 2018/19 accounts...

I'm no fan of the Derby ground sale and leaseback but set against your clubs actions in this sense, they look a model of pure probity and have a halo above their head. Only club worse at this level financially speaking IMO were Aston Villa.

The one thing, you've FINALLY sold a striker, finally- Joao for several million. Non renewal of contracts also helps but you've signed a number of players too albeit on frees- loans from PL last season can't have been freebies. Lazaar, Aarons and Onomah I believe.

Rhodes was off the books which helps and a loan fee inbound too, but now back on and presumably on full wage. Management compensation- still though it's a nonsense tbh overall.

As for us.

Academy products sold for big cash represent pure profit. Lloyd Kelly £13.5m up front- that's £13.5m to offset losses. Bryan was around £6m, offsets very nicely. Reid- that had addons but offsets. Flint probably had a sell on fee to give part of and some remaining amortisation to offset against but a profit nonetheless. BIG Webster profit but then again sell on fee and remaining NBV- add ons too, add ons which may or may not have been hit last season, could complicate.

Overall we're compliant and we seem to have done this in the correct manner.

Don't you just hate someone who can respond to a question by using rational argument based on factual information and without resorting to personal attacks on the poster or the use of unsubstantiated rumours or just by shouting ever louder?

In other words , a right clever dick!  :)

Seriously, in the murky and complex world of football club finances and ffp rules I do enjoy reading your posts and the way you are able to make the issues more understandable.

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One interesting thing to note for @OwlsonlineAdmin

One of those companies set up by your owner was liquidated fairtly sharpish.

To be expected of course that one of them might be.

https://beta.companieshouse.gov.uk/company/12062155/insolvency

If I had my way, I'd not allow FFP creative owners- especially Aston Villa's new ones if and when they return and yours and maybe the Rooney deal too Mel Morris into AG. I'd also make clear how such clubs have gained an advantage, should be in the programme notes, the website notes. Probably against some regulation or something but ethically speaking etc...

Are the bulk of fans aware? I'm not sure, but they certainly should be! Not just at City but Leeds, Millwall, Nottingham Forest etc etc- indeed at any club who has done it right! Would add some spice to atmosphere would it not?

Edited by Mr Popodopolous

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FFP, interesting at Sheffield Wednesday.

Not read the thread myself yet but...

The accounting period did not appear to be 2017/18 season on first glance! Only just made it into 2018/19 season too...

Can someone advise how this is a kosher transaction for that season??

Is it alright to backdate into a prior accounting period basically- or does Post Balance Sheet event cover it?

@OwlsonlineAdmin

Your club make Derby look positively angelic, some of these antics. I don't even approve of Derby's transaction!

Edited by Mr Popodopolous

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Read something quite interesting.

Villa Park? Registered as an asset of community value. Didn't realise this.

Under the LAW- not FFP, the LAW, such a transaction needs a 6 month window to be purchased by the community before any private buyer can do so.

Such a transaction done in the manner it was seems to break both the spirit of FFP and of quite a bit more importance, potentially it may break the law. Amazing. Had a 5 year deal on it as of January 2018...

Edited by Mr Popodopolous
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On 30/08/2019 at 22:29, phantom said:

20190830_171224.jpg

IMG_20190830_165923.jpg

IMG_20190830_165920.jpg

 

9 minutes ago, Mr Popodopolous said:

Read something quite interesting.

Villa Park? Registered as an asset of community value. Didn't realise this.

Under the LAW- not FFP, the LAW, such a transaction needs a 6 month window to be purchased by the community before any private buyer can do so.

Such a transaction done in the manner it was seems to break both the spirit of FFP and of quite a bit more importance, potentially it may break the law. Amazing. Had a 5 year deal on it as of January 2018...

O, what a tangled web we weave when first we practise to deceive!

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