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The Championship FFP Thread (Merged)


Mr Popodopolous
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10 hours ago, Mr Popodopolous said:

Good news

Think the estimate in the Autumn was 12 + 3 for the aggravated breach. Seems fairly consistent with the Autumn reports though and as such if it still holds, should be between 12-15 anyway- if there was a way to make it have the biggest impact that would be great i.e. this season if playoffs was likely or next season if not.

@solihull cider red Bolton just seems to be a mess, as the Dale Vince thread shows. Yet in FFP terms aok- they're a weird and possibly unique example because it is far more common for a club to be cash fine through a rich owner but in FFP trouble but so random for it to be in reverse- yet Bolton seem to be such a club!

The SCMP rules of 60% of turnover seem complex- perhaps they are being enforced more readily now but it's hard to say. Fairly sure our wage bill was >60% in League One in the 2 years under SO'D and Cotterill. Maybe there is some kind of exemption for existing contracts, don't really know though. Sunderland most definitely will be over and above 60%!

http://www.financialfairplay.co.uk/scmp.php

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With Tammy unbelievably staying at Villa and them adding Kalinic and Hause to their already highly expensive squad, they need denying promotion if they go up. 15-20 points and a transfer embargo, if as expected they charge through FFP.

If it looks like they won't stick it onto next season.

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Mr P -  a couple of question for you if I may:

- Could some of the clubs who may be in trouble with FFP avoid punishment by having a January firesale (I can see that Villa are not planning to do that but maybe Brum)?

- If a club was to get punished under FFP would they then start with a blank sheet of paper or could they risk being punished next season as well?

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Good questions @Loderingo

  1. They could. I mean it's debatable as to whether they would be able to raise enough in the case of Birmingham with cost of transfer, amortisation but they could reduce their punishment I am sure. Birmingham would probably need to sell Adams, Jota, Dean to name 3- but if they could raise sums to the right level then yes punishment could be avoided. Or if it was a bit above, punishment could be mitigated significantly as they would be showing big steps towards compliance, by having said fire sale within the required timeframe.
  2. This second bit is one area that is unclear to me. It's hard to say- I would say that if punished but still in breach then maybe a lesser punishment would be applied e.g. a fine or embargo if the club is showing concrete steps. For example if Birmingham had that firesale and were compliant for the 3 years to this season, they would still have the problem of the £37m loss last season (minus deducted costs) as the starting point and if there was anyone left worth selling, they may well need another to comply.

Aston Villa have been so flagrant in their approach that I would hope they would really get made an example of, even more than Birmingham. Lengthy embargo and insistence on compliance even after punishment or risk rolling points deductions. Whether that would stand up though, I don't fully know.

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Read earlier Derby maybe in trouble with FFP. Unsurprising in some ways, and yet given their cutbacks may not be entirely accurate.

This Tweet could be very revealing though- unsure how to interpret it but if they don't go up this year, could they have a big problem?

I haven't seen them as one of the worst offenders yet I maybe wrong, but if a load of contracts expire say and they have all been brought for fees...that could be a huge hit? Any accountants able to confirm?

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On 08/01/2019 at 12:15, Mr Popodopolous said:

With Tammy unbelievably staying at Villa and them adding Kalinic and Hause to their already highly expensive squad, they need denying promotion if they go up. 15-20 points and a transfer embargo, if as expected they charge through FFP.

If it looks like they won't stick it onto next season.

 

On 08/01/2019 at 12:58, Mr Popodopolous said:

Good questions @Loderingo

  1. They could. I mean it's debatable as to whether they would be able to raise enough in the case of Birmingham with cost of transfer, amortisation but they could reduce their punishment I am sure. Birmingham would probably need to sell Adams, Jota, Dean to name 3- but if they could raise sums to the right level then yes punishment could be avoided. Or if it was a bit above, punishment could be mitigated significantly as they would be showing big steps towards compliance, by having said fire sale within the required timeframe.
  2. This second bit is one area that is unclear to me. It's hard to say- I would say that if punished but still in breach then maybe a lesser punishment would be applied e.g. a fine or embargo if the club is showing concrete steps. For example if Birmingham had that firesale and were compliant for the 3 years to this season, they would still have the problem of the £37m loss last season (minus deducted costs) as the starting point and if there was anyone left worth selling, they may well need another to comply.

Aston Villa have been so flagrant in their approach that I would hope they would really get made an example of, even more than Birmingham. Lengthy embargo and insistence on compliance even after punishment or risk rolling points deductions. Whether that would stand up though, I don't fully know.

This is the problem with the season finishing before the financial year.  Villa could easily argue / include the sale of Grealish for £30m in early summer in their projected accounts to bring them within FFP for example.

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10 minutes ago, Davefevs said:

 

This is the problem with the season finishing before the financial year.  Villa could easily argue / include the sale of Grealish for £30m in early summer in their projected accounts to bring them within FFP for example.

Hmm, you're right- it's such a grey area. Their accounts run to May 31 2018 and I assume for 2018/19, it would be May 31 of this year.

Could they arrange a transfer for example and sell on seasons end- on the other hand thereby it being registered in this season for FFP purposes, even if the cash comes in next it would be in this years books.

 Summer window opens 1st June 2019, May 31st is when Aston Villa's accounts run to- as with my answer to question 2 by @Loderingo it's another area that's fairly unknown. Would probably have to be determined as to whether acceptable via lawyers or arbitration- some sort of test case.

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14 minutes ago, Mr Popodopolous said:

Hmm, you're right- it's such a grey area. Their accounts run to May 31 2018 and I assume for 2018/19, it would be May 31 of this year.

Could they arrange a transfer for example and sell on seasons end- on the other hand thereby it being registered in this season for FFP purposes, even if the cash comes in next it would be in this years books.

 Summer window opens 1st June 2019, May 31st is when Aston Villa's accounts run to- as with my answer to question 2 by @Loderingo it's another area that's fairly unknown. Would probably have to be determined as to whether acceptable via lawyers or arbitration- some sort of test case.

Payment terms could be whatever they want.  £1.00 on 31/5, £29,999,999.00 sometime after....they would include the £30,000,000.00 in this year’s player sales.

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8 minutes ago, Mr Popodopolous said:

Hmm, you're right- it's such a grey area. Their accounts run to May 31 2018 and I assume for 2018/19, it would be May 31 of this year.

Could they arrange a transfer for example and sell on seasons end- on the other hand thereby it being registered in this season for FFP purposes, even if the cash comes in next it would be in this years books.

 Summer window opens 1st June 2019, May 31st is when Aston Villa's accounts run to- as with my answer to question 2 by @Loderingo it's another area that's fairly unknown. Would probably have to be determined as to whether acceptable via lawyers or arbitration- some sort of test case.

I would hope ( perhaps over optimistically given football administrators track records)  that the onus is on a club, knowing how it's accounting period relates to ffp rules and requirements, to manage it's affairs accordingly and to avoid breaching ffp.

After the first 2 years of the 3 year cycle any club will or should  know pretty well where it stands with regard to ffp limits. Most of it's costs will already be known for the year ahead - wages, transfer fees already paid and amortised - and they can make a pretty accurate estimate of anticipated income . If those projected figures show they will be close to , or breaching, ffp limits then they have the summer and the following January window in which to make  transfers to bring costs down and to raise income, if that is to be their way of avoiding the problem. 

To use the argument in March ( when the projected accounts have to be produced) that they will be selling Grealish when the next summer window opens, and that the likely fee of £35m will bring them in line with ffp requirements, would be laughable.

The truth is they gambled in the previous 2 years on gaining promotion back to the prem and in so doing knew that they would be risking n ffp problem in the 3rd season. That failed, so they then had a choice to either go all out in the third season, and in so doing risk the consequences of ffp, or take action in order to stay within ffp. It looks like they chose the former, so they should not be given any wriggle room by fancy accounting arguments.

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11 minutes ago, Davefevs said:

Payment terms could be whatever they want.  £1.00 on 31/5, £29,999,999.00 sometime after....they would include the £30,000,000.00 in this year’s player sales.

Oh yeah, when I said payment terms I meant which year it would be in the books. As you say payment terms however they want- would hope though given Villa's accounts are (as it stands) to the day before the window opens that any transfer would have to be to before that date- so this January. I suppose there is a remote chance of him going abroad when the transfer windows differ e.g. if a Chinese club put in £30m bid in mid February their window is different to ours and that may count. You'd hope a move in Summer 2019 but with the cash flowing in the season before wouldn't fly though, but who knows.

@downendcity Fully agree.

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8 minutes ago, Mr Popodopolous said:

Oh yeah, when I said payment terms I meant which year it would be in the books. As you say payment terms however they want- would hope though given Villa's accounts are (as it stands) to the day before the window opens that any transfer would have to be to before that date- so this January. I suppose there is a remote chance of him going abroad when the transfer windows differ e.g. if a Chinese club put in £30m bid in mid February their window is different to ours and that may count. You'd hope a move in Summer 2019 but with the cash flowing in the season before wouldn't fly though, but who knows.

@downendcity Fully agree.

You can probably transfer a player whenever you like in theory....it is only being the registration that that passes in the window.  Whoever buys Grealish in this example, could make a downpayment?

@downendcity 100%

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On the FFP issue a specific case.

https://www.swfc.co.uk/news/2019/january/dejphon-chansiri-statement

Essentially Sheffield Wednesday could face a 2nd transfer embargo if they don't resolve by March.

Adam Reach is their most saleable asset IMO. Then you have Bannan though age may play a part and he's not been that productive this season and Forestieri with his off the field stuff- on paper a saleable asset, but that reduces that!

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On 11/01/2019 at 14:50, Davefevs said:

 

This is the problem with the season finishing before the financial year.  Villa could easily argue / include the sale of Grealish for £30m in early summer in their projected accounts to bring them within FFP for example.

Derby are in big trouble before FFP imo. Their squad is old for the most part and their best players are loanees. 

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9 minutes ago, JoeAman08 said:

Derby are in big trouble before FFP imo. Their squad is old for the most part and their best players are loanees. 

Do you mean independent of FFP or for FFP? Unclear.

Their squad is aging, they have sold a lot of good players and as you say mainly they are loanees in terms of their best. However those sales may have kept them from failing FFP- gambling on promotion this year?

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On ‎11‎/‎01‎/‎2019 at 15:20, Mr Popodopolous said:

Oh yeah, when I said payment terms I meant which year it would be in the books. As you say payment terms however they want- would hope though given Villa's accounts are (as it stands) to the day before the window opens that any transfer would have to be to before that date- so this January. I suppose there is a remote chance of him going abroad when the transfer windows differ e.g. if a Chinese club put in £30m bid in mid February their window is different to ours and that may count. You'd hope a move in Summer 2019 but with the cash flowing in the season before wouldn't fly though, but who knows.

@downendcity Fully agree.

To follow on from this debate (albeit a week later!), you would have to recognise them in the period in which the window opens. If they sold Grealish, the transaction wouldn't be able to happen until next year's accounts, i.e. after the 1st June 2019. That is because the risk and rewards of owning the player wouldn't transfer until the window was open. Obviously this differs if he went to a country without the window restrictions. 

Never thought I'd be having an accounting debate on OTIB!

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2 minutes ago, Coppello said:

To follow on from this debate (albeit a week later!), you would have to recognise them in the period in which the window opens. If they sold Grealish, the transaction wouldn't be able to happen until next year's accounts, i.e. after the 1st June 2019. That is because the risk and rewards of owning the player wouldn't transfer until the window was open. Obviously this differs if he went to a country without the window restrictions. 

Never thought I'd be having an accounting debate on OTIB!

That's roughly what I thought- thanks. No easy get out for Villa then as it stands?

Of all the transgressors, they and QPR are the ones I have the biggest issue with. Others should be punished absolutely.

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2 minutes ago, Mr Popodopolous said:

Do you mean independent of FFP or for FFP? Unclear.

Their squad is aging, they have sold a lot of good players and as you say mainly they are loanees in terms of their best. However those sales may have kept them from failing FFP- gambling on promotion this year?

Independent. They still have a couple saleable assets for sure but imo gambling on this season. Idk if they will fail FFP but they were lucky they could find loanees who had champ experience. They have a lot of massive wages probably coming to an end soon but they will need a rebuild in the near future if they do not get promoted. 

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2 minutes ago, Mr Popodopolous said:

That's roughly what I thought- thanks. No easy get out for Villa then as it stands?

Of all the transgressors, they and QPR are the ones I have the biggest issue with. Others should be punished absolutely.

Good thread by the way @Mr Popodopolous, I started developing a website analysing FFP but had to give it up due to work. The growing importance of it is quite interesting. I'm actually an accountant a football club and part of my role is analysing their FFP position. It's a Premier League club though so they're subject to slightly different rules. 

Yeah, I can't see a get out unless they get promoted this season. They really have gone gung-ho and show no signs in slowing down in terms of spending. 

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8 minutes ago, JoeAman08 said:

Independent. They still have a couple saleable assets for sure but imo gambling on this season. Idk if they will fail FFP but they were lucky they could find loanees who had champ experience. They have a lot of massive wages probably coming to an end soon but they will need a rebuild in the near future if they do not get promoted. 

Tend to agree- they seem to have been kicking the can down the road a bit.

The interesting thing about Derby- and it is a big unknown- is that while most clubs have amortisation straight line in the standard way, they seem to have players valued and sales or release depend on that- unique among football clubs. Could either bolster them or see them take a big hit this summer with all the out of contract players. Definitely unclear though, sounds like a boost on paper but then again...

 

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1 minute ago, Mr Popodopolous said:

Tend to agree- they seem to have been kicking the can down the road a bit.

The interesting thing about Derby- and it is a big unknown- is that while most clubs have amortisation straight line in the standard way, they seem to have players valued and sales or release depend on that- unique among football clubs. Could either bolster them or see them take a big hit this summer with all the out of contract players. Definitely unclear though, sounds like a boost on paper but then again...

Speaking of doing things differently, perhaps you will have an idea of how it works, but was thinking of Brentford. 

They have scrapped their academy. Academies don’r count towards FFP do they? Pretty sure they do not but you probably know. 

Anyway they now have a “B” team that travels across the country and Europe to play friendlies. Since this is not an academy, will this be added to their costs in terms of FFP? I know they say it is cheaper to run(2m academy 1m B team in a BBC article) but when FFP counts for so much is that not risky in your opinion? 

Get you may not know but if you do not don’t think I will find an answer!

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28 minutes ago, JoeAman08 said:

Speaking of doing things differently, perhaps you will have an idea of how it works, but was thinking of Brentford. 

They have scrapped their academy. Academies don’r count towards FFP do they? Pretty sure they do not but you probably know. 

Anyway they now have a “B” team that travels across the country and Europe to play friendlies. Since this is not an academy, will this be added to their costs in terms of FFP? I know they say it is cheaper to run(2m academy 1m B team in a BBC article) but when FFP counts for so much is that not risky in your opinion? 

Get you may not know but if you do not don’t think I will find an answer!

Can spend what you like on Infrastructure, Academy, Community, Womens football and possibly there are some other areas but they are the main ones. So yeah, they are excluded from FFP calculations.

"B" Team thing is a really good question. I think Brentford absolutely fine FFP wise, so £1m per season may not make a huge difference if the supply of talent to sell remains steady but consistent. Whether it would class as academy is hard to say though, could be argued it counts as sort of a de facto academy maybe?

@Coppello That sounds an interesting job- inside track if you like! PL? Pretty well impossible to fail the £35m a season max loss at that level surely, but the STCC provides a few possible headaches I suspect.

The STCC thing- is that £7m gross or net? i.e. If you sell a player who is on £50k per week it's £7m plus that saving? Definitely can imagine loopholes, particularly for bigger clubs (and Watford due to their tie-up with Udinese, Granada)?

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20 minutes ago, Coppello said:

Good thread by the way @Mr Popodopolous, I started developing a website analysing FFP but had to give it up due to work. The growing importance of it is quite interesting. I'm actually an accountant a football club and part of my role is analysing their FFP position. It's a Premier League club though so they're subject to slightly different rules. 

Yeah, I can't see a get out unless they get promoted this season. They really have gone gung-ho and show no signs in slowing down in terms of spending. 

In which case, can you answer a Q re amortisation, topical as if yesterday’s contract announcements.

Would O’Dowda’s 3+1 contract have been amortised over 3 or 4 years?

Iscthere any subtlety in a contract “extension” versus “new deal”....terms we hear banded around.  What would happen if COD signed a “new contract” in the summer?  Answer may defend on above answer.

19 minutes ago, Mr Popodopolous said:

Tend to agree- they seem to have been kicking the can down the road a bit.

The interesting thing about Derby- and it is a big unknown- is that while most clubs have amortisation straight line in the standard way, they seem to have players valued and sales or release depend on that- unique among football clubs. Could either bolster them or see them take a big hit this summer with all the out of contract players. Definitely unclear though, sounds like a boost on paper but then again...

 

I remember seeing this.  I guess they could maje their valuations work for them, but they would have to be careful to be consistent it they’ll have big swings each year.

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8 minutes ago, Mr Popodopolous said:

 

@Coppello That sounds an interesting job- inside track if you like! PL? Pretty well impossible to fail the £35m a season max loss at that level surely, but the STCC provides a few possible headaches I suspect.

Exactly right - you'd do well to make a loss that large with the TV money floating around. Yeah, the STCC can cause a headache but it's a bit of a crap rule in all fairness as there's a few loopholes, particularly for the larger clubs. The purpose of it was to stop teams splashing all of the new tv money on the new players and therefore you can only increase your wages by £7m a year. However, if you can prove you're not solely reliant on the TV money and have large commercial revenues, you can get past that rule. So it doesn't really affect the big 6 clubs but puts a massive stranglehold on the middle tier of clubs such as Watford, Palace, Southampton etc. I can see this rule being amended in the near future to be honest. 

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7 minutes ago, Davefevs said:

In which case, can you answer a Q re amortisation, topical as if yesterday’s contract announcements.

Would O’Dowda’s 3+1 contract have been amortised over 3 or 4 years?

Iscthere any subtlety in a contract “extension” versus “new deal”....terms we hear banded around.  What would happen if COD signed a “new contract” in the summer?  Answer may defend on above answer.

You'd amortise it over 3 years initially as there's no obligation to extend the contract and therefore the initial life is just 3 years. I actually don't know the answer to the second question as I've never really thought about it. I thought it was simply different wording calling something a new deal - obviously exercising an option to extend what happened yesterday is a little different. 

Regarding the amortisation you'd rebase the remaining "cost" of the transfer fee over the new period. For example, let's just take the COD example, using £3m as a transfer price (as dividing £2m over 3 years is horrible!): 

- We purchased him in 16/17 for £3m on a 3 year deal.

- We'd amortise that £3m over three years (£1m per year). However, let's say we exercised the option two years into the contract, you'd rebase the amortisation charge. So there's £1m left on the balance but now two years left of the contract. Therefore the charge would then change to £500k per year.  

That's a very high level summary and it obviously gets a little more complex than that. One of the good things about the sales of Bobby Reid and Joe Bryan in the summer is that they're academy graduates and would therefore not have any value on the balance sheet before their sale. Therefore, the transaction value will be pretty much pure profit which will help with things from an FFP perspective. 

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