The Championship FFP Thread (Merged)

[Mr Popodopolous]

1 hour ago, Hxj said:

For tax and legal reasons a 'Section 110 Reconstruction' took place, nothing to do with FFP.  It allows you to separate the 'Stadium Group' and 'Football Group' tax free.  This was the same technique used by Morris to separate the various Derby County enterprises.   

Thanks, tax and legal reasons then? Although was Sheffield 4 Limited strictly necessary for this?

By Derby County enterprises do you mean the 'Stadium Group' and 'Football Group' but also there were a range of subsidiaries of course included under Sevco 5112 but not the club- but the income went to the club while a fair few costs associated with them did not? 

1. Club DCFC Limited
2. Stadia DCFC Limited
3. The Derby County FC Academy Limited

As with the club all sat under Sevco 5112 Limited. This was in the 'Football Group'.

Edited April 21, 2022 by Mr Popodopolous

[Hxj]

1 hour ago, Mr Popodopolous said:

As with the club all sat under Sevco 5112 Limited. This was in the 'Football Group'

For shorthand and to help my memory the Football Group includes the football club and all parents and subsidiaries, similarly for the Stadium Group.

1 hour ago, Mr Popodopolous said:

Although was Sheffield 4 Limited strictly necessary for this?

There are various ways of achieving the same result, using a NewCo like Sheffield 4 is one way.

[Mr Popodopolous]

Had a quick look online, Fulham reportedly expect to pass FFP. No issues according to them.

The EFL loss limits vs their reported Covid claims make me think otherwise.

They also surprise surprise , support Parachute Payments- lack of alternatives apparently. Yeah sure there are...

Edited April 21, 2022 by Mr Popodopolous

[Mr Popodopolous]

Couple of estimates for Fulham

Using Swiss Ramble's Covid loss forecast as a bit of a base.

Using the EFL''s own criteria as voted on by clubs!

Plus SwissRamble for comparison sake.

 

Edited April 21, 2022 by Mr Popodopolous

[Mr Popodopolous]

Put it together and revised it in a bit of a hurry, one or two individual numbers don't quite align but the final estimates do.

That would be a 4 point deduction for the period to 2020/21 and once revised ie reset in the way it is for FFP, an adjusted Upper Loss not exceeding £38-39m for this season to avoid further penalties.

Edited April 21, 2022 by Mr Popodopolous

[CyderInACan]

Just catching up with this thread having been more invested in the “Derby . . . “ thread so apologies for likes on months-old posts! 

But to summarise. We don’t really know, do we. 

[Mr Popodopolous]

14 hours ago, CyderInACan said:

But to summarise. We don’t really know, do we. 

Ultimately not for sure no. Certain areas yes ie Depreciation and Impairment of Fixed Assets. Then Community expenditure is usually the Charitable Spend (Club Community Trust).

Women's Football you can take two ways to estimate, provided it's at CH. Is it the total expenditure or is it the loss? If not at CH it's pure guesswork.

Academy expenditure is hard yes. Have to use Academy as a starting point and I believe it's net of any Grants received. Aston Villa and ironically Derby before the owner went crazy and stopped publishing altogether listed Academy Expenditure in the consolidated accounts but that's extremely rare.

Promotion Bonuses, some clubs list these otherwise you have to trawl the media and see what is findable.

As for the future, the new proposals include a doubling of the loss limit but no excludable costs/allowances. That would simplify things massively and mean you could genuinely take the audited pre tax loss as a starting point.

Key issue then is what would EFL/PL/UEFA whoever consider a fair value for RPTs. Accounts may state X, FFP numbers may state Y.

PS. Just remembered, Gibson actually wanted FFP submissions to be made public in Spring 2019, but clubs voted it down.

Edited April 22, 2022 by Mr Popodopolous

[Mr Popodopolous]

Swiss Ramble on Middlesbrough. Aok to 2021, and more than likely aok IMO to this season.

Interesting to see how it moves into 2022/23 although Djed Spence is being linked with a £15-20m move to varied PL clubs, bidding war...joined as a free agent, that'll sort any issues and give them some cash to spend. If promoted, I expect they will go up compliant.

[Davefevs]

https://twitter.com/kieranmaguire/status/1519180666394533890?s=21&t=L3MJd9-FPH8HhcTcx-qNJg

[ExiledAjax]

14 minutes ago, Davefevs said:

https://twitter.com/kieranmaguire/status/1519180666394533890?s=21&t=L3MJd9-FPH8HhcTcx-qNJg

Interesting. I'm largely against position based pay outs. I think ultimately it bakes in anticompetitive payments and essentially makes it easier for clubs that finish high up to keep finishing high up. I'd like a baseline payment, plus perhaps a very small merit based payment.

Also I'd not heard before that IREF might actually be a part of the FCA. That seems odd to say the least. I suppose you might do thst initially whilst IREF establishes itself, but surely it needs to stand alone ultimately.

[Mr Popodopolous]

https://www.walesonline.co.uk/sport/football/transfer-news/cardiff-city-go-full-moneyball-23742593

Sounds like FFP might be biting a bit. Although it does not mention FFP at all, in fact they never do with Cardiff.

The interesting snippet there though is them apparently getting discounts and good ones on PL loanees. It can be done clearly even if of course they are not cost free- seems to imply quite hefty discounts?

Quote

Cardiff's wage structure will alter dramatically next season. While there is talk of a wage cap in the air, one source has told WalesOnline they will operate on an average wage structure, rather than a cap, per se. It means they want the senior squad to average out at a certain number, meaning if they push the boat out too far on one player's wage it will have a negative, trickle-down effect on others. We have been told that the wage budget Cardiff have to operate on next season will place them among the lowest in the division.

Oh also mentions that if they lose the Sala case, it's a 3 window FIFA imposed embargo!

Ah yes, the PL discounts bit.

Quote

Deals will have to be struck, as they were in January, to pay fractions of these Premier League players' wages. Cardiff managed to lop off a chunk of their salaries in the winter window and will have to be similarly stern at the bargaining table this time around.

They suddenly become more affordable PL loanees if this is the case, esp the younger ones. No reason we shouldn't get the same?

It's not solely down to FFP of course but it has to be playing a part given their general moderate income streams post Parachute Payments and on the £39m limit again.

The discounts for PL loanees though...

Edited April 27, 2022 by Mr Popodopolous

[Mr Popodopolous]

Further note.

This week or Saturday probably, maybe a few days longer due to the Bank Holiday weekend the accounts for a few more clubs/entities are due. Current club at this level. Both due end of April 2022 or a bit after.

Swansea City

The club, parent but the ones to look out for are probably the consolidator- Swansea City 2002 Limited. Due on 30th April 2022.

Relegated club albeit one who may bounce back.

Sheffield Wednesday

The following are due.

• Club
• Parent- Sheffield 2 Limited
• Stadium owning company- Sheffield 3 Limited
• Company who sits above Stadium owning company- Sheffield 5 Limited

There is a huge gaping hole in the FFP regs as I have mentioned before...what happens to yoyo clubs or clubs who go down.

Yes the transitional arrangements but this bit is clear as mud!

Quote

5              Clubs Ceasing to be Members of the Championship

5.1          If a Club is promoted or relegated out of the Championship Division that Club shall, notwithstanding promotion or relegation, remain bound by these as if it were still a Championship Club, until such time as it has complied with all of its obligations relating to its last Season as a Championship Club.

https://www.efl.com/-more/governance/efl-rules--regulations/efl-regulations/appendix-5-financial-fair-play-regulations/

Does it mean up to 2020/21 in this case or does it mean until the period including 2020/21 has been exhausted...

The latter being the case the restated accounts which show a £19m pre tax profit drop off and are replaced as the starting point by whatever the Covid season combined average would be.

It is two different systems but it is possible- see La Liga's separate financial regs running concurrently with the UEFA ones.

What's your take @Hxj ? It seems not exactly well laid out let's say.

Edited April 28, 2022 by Mr Popodopolous

[Mr Popodopolous]

The prior and starting point for SWFC and the parent. The parent includes more in the way of everything because it is June 21st 2019 to July 31st 2020 due to date of formation whereas the club itself runs from August 1st 2019 to July 31st 2020.

Club

This was only a few months into Covid, so no huge impact yet probably- was a £24.084m loss despite and inclusive of a £6.203m profit on disposal of Players/Employees. 12 months, easy to align.

Sheffield 2 Limited

Disregard for FFP purposes the Impairment of Goodwill...but that's still an £17.638m accounting loss incorporating a month and 9 days of the period to 2019 and then the 2019/20 season...this is despite and inclusive of a £15.385m Profit on disposal of players/ex management,. This appears to include the Bruce compensation as it happened in mid July and perhaps another player sold/loan fee. Rhodes? The Impairment of Goodwill is very much a one off but interested to put the other half of this or the club one together once it arises- on the other hand it'll include some other costs from the final month and 9 days of the accounts to/season of 2018/19.

Reason the two don't align is because date of Incorporation for Sheffield 2 Limited was 21st June 2019.

Edited April 28, 2022 by Mr Popodopolous

[Mr Popodopolous]

https://www.swanseacity.com/news/swansea-city-confirm-latest-accounts-1

Swansea lost £4.6m last year. Of course in the third and final year of Parachute Payments. No issues FFP wise to 2021 and none I expect to 2022 either.

Getting the wage bill down nicely, seemingly last season it was only £27.7m!? That's a total, inclusive of all staff- despite Ayew and then a loanee such as Hourihane to name 2 still being on the books.

Quote

The club employed an average of 244 members of staff, including playing staff, backroom staff and part-time matchday staff, during the year at a cost of £27.7m. This compared to 321 staff members at a cost of £40.2m the previous year – a reduction in staff costs of £12.5m.

Operating costs fell- one part of that will be the step down from a Category 1 to a Category 2 academy,

Quite a fall although some of that will be artificial due to lack of matchday staff and furlough I expect.

Overall though some very contrasting losses to Stoke on the face of it, two clubs who came down the same year and were on the same overall Parachute Payment structure- although until we see the full accounts we won't be able to see for sure.

Players such as Woodman, Guehi, Gibbs-White, Hourihane all there on loan- Palmer too.

Ayew in his final season.

Yet a wage bill and yes a bit artificially deflated on the non player side of only £27.7m.

Edited April 29, 2022 by Mr Popodopolous

[Davefevs]

No issues here.

[Mr Popodopolous]

None whatsoever. My only query would be is that looking forward as Parachutes end and Championship cash starts could it be an issue in a year or 2? However I expect they will cut their cloth as they have tended to do for most of the last 20 years,

[Mr Popodopolous]

Just waiting from this League on Sheffield Wednesday and West Brom now.

The latter utilised some kind of Covid extra time so don't have to submit until the end of June publicly at least. Sheffield Wednesday who knows. Should find out tomorrow or within the next few days...but who knows.

[Mr Popodopolous]

Oh yes there is one more who win the award for "Dog ate my accounting homework".

Derby! Nothing since April 2019 in the public domain! Although technically with a few of these it may only be 2019 and 2020 due to application for a Covid extension.

Quote

Derby County FC Limited

1. 2019
2. 2020
3. 2021?

Accounts overdue.

Club DCFC Limited

1. 2019
2. 2020
3. 2021?

Accounts overdue.

Stadia DCFC Limited

1. 2019
2. 2020
3. 2021?

Accounts overdue.

The Derby County FC Academy Limited

1. 2019
2. 2020
3. 2021?

Accounts overdue.

Sevco 5112 Limited

1. 2019
2. 2020
3. 2021?

Accounts overdue.

Gellaw Newco 203 Limited

1. 2019
2. 2020
3. 2021?

Accounts overdue.

That genuinely I dunno what to say! They've literally submitted nothing at all for Club, Parent, New Parent and the 3 subsidiaries in the consolidator for 3 years!!

It should be easy now- they gave indicative figures as the basis for the Agreed Decision/Sanctions. Put 2021 and maybe a year or 2 before onto website and publish them that way if no CH due to administration. If Indicative Figures align to actual accounts- and they should- and they follow the conditions laid out in the Agreed Decision then they could have released them months back.

Edited April 29, 2022 by Mr Popodopolous

[Hxj]

On 28/04/2022 at 14:51, Mr Popodopolous said:

What's your take @Hxj ? It seems not exactly well laid out let's say.

I agree @Mr Popodopolousbut I think that you are overthinking this.  If we take our favourite club Derby County as an example.  There are relegated in May 2022.  They are therefore required to comply with 'Championship FFP' for all periods to 30 June 2022 (or whenever their accounting date is).  So they can be sanctioned under the Championship FFP rules for the periods to June 2022.   Thereafter they fall within the League 1 rules.

Edited April 29, 2022 by Hxj

[Mr Popodopolous]

1 hour ago, Hxj said:

I agree @Mr Popodopolousbut I think that you are overthinking this.  If we take our favourite club Derby County as an example.  There are relegated in May 2022.  They are therefore required to comply with 'Championship FFP' for all periods to 30 June 2022 (or whenever their accounting date is).  So they can be sanctioned under the Championship FFP rules for the periods to June 2022.   Thereafter they fall within the League 1 rules.

Thanks @Hxj that makes sense. Although it does seem to let a relegated side off the hook somewhat...supposing they return straight back up would it be a new 3 year period commencing from 2022/23 or?

Quote

2019/20 and 2020/21- combined average

2021/22- SCMP although as part of a 3 year period...

...2022/23- 3 year assessment.

Bit irked at some of the signings they have been making considering relegation and an undoubted hit to income as a result. It doesn't sit well given the 3 year nature and the fact that the Hillsborough deal moving forward which got the deduction halved drops off the calculations after this season.

Am referring to Sheffield Wednesday here. I listed them elsewhere, have to say it's a pretty big anomaly.

Edited April 29, 2022 by Mr Popodopolous

[Davefevs]

40 minutes ago, Mr Popodopolous said:

Thanks @Hxj that makes sense. Although it does seem to let a relegated side off the hook somewhat...supposing they return straight back up would it be a new 3 year period commencing from 2022/23 or?

Bit irked at some of the signings they have been making considering relegation and an undoubted hit to income as a result. It doesn't sit well given the 3 year nature and the fact that the Hillsborough deal moving forward which got the deduction halved drops off the calculations after this season.

Am referring to Sheffield Wednesday here. I listed them elsewhere, have to say it's a pretty big anomaly.

I thought it worked like this:

club relegated to Lg1 21/22.

22/23 - SCMP rules apply.  Say they get promoted.

23/24 - P&S apply but £13m / 1yr

24/25 - P&S apply, but now 2 years, so £26m

25/26 - P&S apply, finally get to a 3 year / £39m cycle

Personally I don’t think staying within 60% is that easy for most clubs, Derby have in effect had to get their act together, gonna have a low cost squad.  If they go mad, they are gonna make like difficult upon promotion.

[Mr Popodopolous]

25 minutes ago, Davefevs said:

I thought it worked like this:

club relegated to Lg1 21/22.

22/23 - SCMP rules apply.  Say they get promoted.

23/24 - P&S apply but £13m / 1yr

24/25 - P&S apply, but now 2 years, so £26m

25/26 - P&S apply, finally get to a 3 year / £39m cycle

Personally I don’t think staying within 60% is that easy for most clubs, Derby have in effect had to get their act together, gonna have a low cost squad.  If they go mad, they are gonna make like difficult upon promotion.

Could well do although I look at Sheffield Wednesday, their wage levels and like I say...that's an idea though, didn't know that bit about the 1 year rules on return, 2 to £26m and so on.

Their peak income in recent years was £22m. In League One the TV money falls by £5m I believe, or mix of TV and Solidarity anyway- they could quite conceivably be on an Income of <£20m.

Then I look at their transfer activity- I listed bits of it elsewhere but...I know players left as well for sure and maybe I'm underestimating this side of things.

Summer 2021

1. Peacock-Farrell (Loan) Burnley- PL
2. Hunt (Free) Post us- Championship
3. Gibson (Loan) Everton- PL He was at Reading last year, young player though he is who were top 8 Championship.
4. Byers (Free/Undisclosed) Swansea- Championship
5. Wing (Loan) Middlesbrough- Championship (loan ended in Jan 2022)
6. Shodipo (Loan) QPR- Championship
7. Sow (Free) Waaljik- Eredivisie
8. Johnson (Free) Post Middlesbrough- Championhip
9. Gregory (Free/Undisclosed)- Stoke- Championship
10. Berahino (Undisclosed) Zulte Waregem- Belgian First Division A (their top flight)
11. Corbenau (Loanj) Wolves- PL (loan ended in Jan 2022)
12. Kamberi (Loan) St Gallen- Swiss top flight

In Autumn 2021 they added Mendez-Laing on a free.

Winter 2022 window

1. Dean (Loan) Birmingham- Championship
2. Storey (Loan) Preston- Championship
3. John-Jules (Loan) Arsenal- PL

Obviously Wing and Corbeanu left for varied reasons.

Plus retention of- and two of these I should note also renewed/altered terms.

1. Iorfa- also extended/renewed terms.
2. Dunkley
3. Bannan
4. Windass- also extended/renewed terms.
5. Paterson

On a potential income of £15-20m even with transitional rules. Does not sit well at all. Where they are sourcing them from these signings is crazy for a side relegated to the 3rd tier. This is a big hole in the rules if indeed it exists- strikes me as a very top-heavy squad for League 1.

https://en.wikipedia.org/wiki/Sheffield_Wednesday_F.C.#Players

Us on a higher income battling to stay within FFP- and then you see a relegated side different rules yes it seems, able to have this season of transfer activity.

Edited April 30, 2022 by Mr Popodopolous

[Hxj]

8 hours ago, Davefevs said:

I thought it worked like this:

club relegated to Lg1 21/22.

22/23 - SCMP rules apply.  Say they get promoted.

23/24 - P&S apply but £13m / 1yr

24/25 - P&S apply, but now 2 years, so £26m

25/26 - P&S apply, finally get to a 3 year / £39m cycle

The rules don't appear to have a different treatment for clubs promoted from League One.  Therefore my assumption has always been that the same cap applies £39 million over three years.

 

7 hours ago, Mr Popodopolous said:

Us on a higher income battling to stay within FFP- and then you see a relegated side different rules yes it seems, able to have this season of transfer activity.

In 2020 turnover was BCFC £16m SWFC £22m at the club level.

Wages were BCFC £27m SWFC £33m

Player Amortisation BCFC £12m SWFC £6m

Balance of player contracts left BCFC £25m SWFC £4m

I think that at 2020 SWFC were in a better financial position than we were.

 

Edited April 30, 2022 by Hxj

[Davefevs]

Looks like you are right.

So although you can go mad in Lg1 it only hampers you on promotion.

Ipswich’s accounts will be interesting.  What they do this summer will be even more interesting.  Ashton said their net spend last summer was neutral…which is BS.

[Mr Popodopolous]

Thanks both.

The rolling forward of the stadium transaction means no issue to 2021 IMO.

To 2022? Who knows. Think they'd pass a 3 year one however.

Would it therefore be fair to assume that if a club are Championship - League One-Championship that the £39m test applies?

Anything else would give a bizarre incentive for a side to relegate themselves out of an FFP issue.

Reading's Agreed Decision included an adjustment in the event of relegation. 

[Mr Popodopolous]

Small update- still no sign of the accounts.

Swansea's haven't shown in full yet though as I said Friday, can easily extrapolate chunks of it from their press release. Sheffield Wednesday? Neither a press release nor the accounts themselves- let alone appearing at CH...hopefully especially in the case of Sheffield Wednesday if they don't arrive in the next week or so, the appropriate embargo will be applied.

https://www.efl.com/contentassets/b3cd34c726c341ca9636610aa4503172/regulations-season-2021-22-final.pdf

The reason I say the next week even if technically due on Saturday just gone is due to the Bank Holiday weekend. That could stretch it out a bit.

Edited May 2, 2022 by Mr Popodopolous

[Davefevs]

Mr P

[Mr Popodopolous]

12 hours ago, Davefevs said:

Mr P

Thanks Dave. Had a quick look at Kieran's thread and here are the accounts in more detail, not looked at them yet.

https://www.swfc.co.uk/siteassets/pdf-links/may-2022/swfc-accounts--year-ended-31-july-2021.pdf

I've been quite hard on them in the last 3 years but credit where it is due, that's a big wage reduction. Amortisation looks strongly under control too and yeah they are releasing accounts pretty much on time now.

I give criticism where it is due and I shall give a bit of credit. Down to £21m was a snippet I saw- yes good stuff. I think that they and Chansiri not only because of the Imposed Business Plan but in their own right appear to be on the right road now.

Okay I see not quite as big as I thought- wages ie wages before NI etc but still down to £24m once all of that included- credit.

Edited May 3, 2022 by Mr Popodopolous

[phantom]

Not Championship yet, but potentially a side going to have problems

Burnley face 'significant' loan repayment if relegated, accounts show

Burnley would need to pay back "a significant proportion" of a £65m loan at the end of the season if relegated from the Premier League.

The loan was taken out as part of the club's takeover by ALK Capital in December 2020.

The information is contained in the release of the club's latest financial accounts to 31 July 2021.

The club does say in the event of relegation it is "satisfied" it would retain the support of its lenders.

However, the information is bound to spark concern among fans given the delicate position of Burnley in the Premier League table.

Widely condemned as a panic move by chairman Alan Pace, who led the ALK takeover, the decision has so far been vindicated by a run of four matches unbeaten under temporary boss Mike Jackson, including three successive wins.

That has taken Burnley, who have four games remaining, up to 16th in the table, two points clear of Everton, who are third from bottom but have a game in hand.

The financial state of Burnley has been debated since ALK's takeover.

In the latest accounts, it is confirmed that £102m-worth of debt has been taken on through two of its holding companies, £65m to Burnley FC Holdings Ltd and £37m to the Burnley Football and Athletic Company.

On the £65m loan specifically, it is outlined in the accounts that it attracts 8% annual interest. Only interest payments are made until December 2025, when the entire sum due is due to be repaid.

However, relegation brings that repayment date forward significantly, with a further "significant reduction of the loan balance" due in what is described as "a continuing relegation scenario" - if the club failed to return to the top flight.

"The balance can potentially be settled by various means, and the group's reserves are sufficient to enable a significant proportion of the balance to be settled by way of dividends if required," the accounts say.

The club has £50m in reserves - down from £80m in last year's financial results.

Over the year to July 2021, the club's turnover fell from £134m to £115m, which the club said was driven by "the lack of fan attendance" due to Covid restrictions "and the lower placed league finish at 17th".

It mean the club recorded a £3m pre-tax loss.

The accounts also state that following the end of the reporting period, Burnley advanced £10m to a "fellow group company".

 

TAKEN FROM: https://www.bbc.co.uk/sport/football/61317194

[chinapig]

My memory may be failing me but I'm sure I also heard recently, probably from Kieran Maguire or Matt Slater, that if they are relegated the club has to be sold back to the previous owners at a fixed price.