The Financial Aspect- Mix of Covid and FFP- Factor?

[robin_unreliant]

Surely they will be reviewing the FFP rules in view of Covid? If they can agree on a wage cap maybe that will be the new limit. If not, some kind of dispensation to include an estimate for unexpected losses due to grounds being closed/reduced capacity this season? 

[Mr Popodopolous]

My understanding is that it comes down to what clubs can agree on- clubs have to vote it in after all.

Wage cap would replace FFP if it comes in. Dispensation for Covid losses added to the £39m seems absolutely fine to me if the wage cap can't be agreed.

However if clubs cannot agree with the required majority on the way forward, I'm not sure what happens!

[Baba Yaga]

Apparently the PFA will take legal action against the EFL for introducing the wage cap. Not sure if they will be able to stop it entirely since in other sports like Rugby they have managed to implement, could get messy though and make it even more unlikely for a wage cap in the championship in the near term.

Current FFP rules giving the EFL the ability to hand out points deductions based on accounting losses are no longer fit for purpose in light of the pandemic, if it was me I would wave all breaches from the 3 year period including the 2019/20 season. I think there is a possible issue on the horizon with many clubs especially L1 and L2 going bust if the fans aren't allowed back soon, therefore I would propose some leniency rather than putting in an arbitrary amount for lost income due to covid especially if other clubs are falling out the league.

[Mr Popodopolous]

Maybe points deductions- apart from ongoing cases- would be waived but we would still have soft sanctions ie budgetary requirements, future financial information etc- that would actually help clubs with solvency in this situation.

I still consider it possible in our specific case though that Hughton and an overhaul this summer may not have been possible for the reasons I cited.

I'd be interested to know the PFA's legal arguments given that rugby seems to have a salary cap that is fine and dandy.

[IAmNick]

Just now, Mr Popodopolous said:

Maybe points deductions- apart from ongoing cases- would be waived but we would still have soft sanctions ie budgetary requirements, future financial information etc- that would actually help clubs with solvency.

I still consider it possible in our specific case though that Hughton and an overhaul this summer may not have been possible for the reasons I cited.

Could the clubs who think they'll survive COVID basically hold the others to ransom? If enough clubs think they'll survive on current FFP terms, they vote not to change anything so the others in the league will then get hit with the  points deduction, making those 16 guaranteed safe for that year and have a better shot at going up?

[Mr Popodopolous]

1 minute ago, IAmNick said:

Could the clubs who think they'll survive COVID basically hold the others to ransom? If enough clubs think they'll survive on current FFP terms, they vote not to change anything so the others in the league will then get hit with the  points deduction, making those 16 guaranteed safe for that year and have a better shot at going up?

Yep, that's quite possible- good point. I think there are a few who were close to it certainly even before COVID, let alone with!

[Bat Fastard]

3 minutes ago, IAmNick said:

Could the clubs who think they'll survive COVID basically hold the others to ransom? If enough clubs think they'll survive on current FFP terms, they vote not to change anything so the others in the league will then get hit with the  points deduction, making those 16 guaranteed safe for that year and have a better shot at going up?

It may be useful that we have a good voice at the top table. Mark Ashton should be able to help optimise any arrangements to suit BCFC.

[Baba Yaga]

1 minute ago, IAmNick said:

Could the clubs who think they'll survive COVID basically hold the others to ransom? If enough clubs think they'll survive on current FFP terms, they vote not to change anything so the others in the league will then get hit with the  points deduction, making those 16 guaranteed safe for that year and have a better shot at going up?

If a division was to be decided largely on who performs best in the year end accounts then the competition would lose much credibility, surely common sense would win in that situation. I for one would not be happy at all if BCFC voted for something like that.

[WarksRobin]

When you consider the reduced season ticket and match ticket income, no replica kit on sale, no shirt sponsor in place, no stadium income etc. the club finances look particularly stretched at the moment. 

[IAmNick]

10 minutes ago, Mr Popodopolous said:

Yep, that's quite possible- good point. I think there are a few who were close to it certainly even before COVID, let alone with!

I wonder if there'd be some resentment between the ones who may have survived regardless if rules were made more lenient. It'll be very political I'm sure!

8 minutes ago, Bat Fastard said:

It may be useful that we have a good voice at the top table. Mark Ashton should be able to help optimise any arrangements to suit BCFC.

Yeah, although....

4 minutes ago, Baba Yaga said:

If a division was to be decided largely on who performs best in the year end accounts then the competition would lose much credibility, surely common sense would win in that situation. I for one would not be happy at all if BCFC voted for something like that.

I agree. If we voted selfishly at the possible expense of other clubs I'd be very disappointed in us, even we did stand to gain from it.

[Mr Popodopolous]

It wouldn't be desirable to vote in that direction I tend to agree- there will be a lot of wrangling however I am sure.

[Bat Fastard]

9 minutes ago, Mr Popodopolous said:

It wouldn't be desirable to vote in that direction I tend to agree- there will be a lot of wrangling however I am sure.

The overhang from this crisis could blight a lot of the weaker clubs, who are already under huge financial pressure.  Many of the owners will have had their own financial prospects diminished and so be less able to rescue their clubs. None of this will be simple or egalitarian and it may well spell the end for some clubs.  The strongest left standing in the Championship will be best able to compete for promotion. Clearly those with parachute payments are in a position of major advantage, but clubs like ours may not be far behind after everything has shaken down. SL and MA should do all they can to get a deal that suits City and other clubs will be pushing for something that best suits them. Nothing will suit everybody in a competitive environment.  

[Phileas Fogg]

1 hour ago, Mr Popodopolous said:

Just reading the Sheffield Wednesday verdict and this paragraph would seem to have some relevance to us and indeed the bulk of clubs.

May or may not be decisive but something to bear in mind if we are critiquing appointments, spending etc. I've alluded to it but this puts it in more legal and detailed terms!

This bit feels pertinent for us (and a lot of clubs btw).

The Cash Losses, not so much- believe we're fine on that score. However @Phileas Fogg have you any thoughts on the bit in bold especially? Business Plan next two years ie to keep below £39m- combine that with Covid and I can see why we may have to defer things by a year- or why it's not impossible anyway.

IMO our 3 year losses to 2020 will fall into that category. To me, if Hughton wanted a big overhaul then a mix of Covid and this requirement would have caused us problems in this- not necessarily next- but this particular summer. Business Plan for future Trading ie keeping below the all important £39m looming large- all clubs who lose between £15-39m adjusted seem to have to submit this.

To be honest I’m not interested enough in FFP to try and understand that.

[davidoldfart]

46 minutes ago, Mr Popodopolous said:

Maybe points deductions- apart from ongoing cases- would be waived but we would still have soft sanctions ie budgetary requirements, future financial information etc- that would actually help clubs with solvency in this situation.

I still consider it possible in our specific case though that Hughton and an overhaul this summer may not have been possible for the reasons I cited.

I'd be interested to know the PFA's legal arguments given that rugby seems to have a salary cap that is fine and dandy.

“Apart from ongoing cases” otherwise the cheating Derby could just walk away from their punishment - which was due last week? Next week? Next season....oh i forgot this is Derby 

[RoystonFoote'snephew]

While I don't want to see any clubs going out of business I also don't want to see cheats prosper. If a clubs finances are in a state purely down to Covid then they should get relief and financial assistance, but I don't believe it would be unproper to ask them to show that. If prior to March they were heading for a FFP breach due to financial mismanagement they shouldn't be able to crawl out from under now. I'm also not convinced by the introduction of a salary cap and have grave doubts that a comparison can legitimately made with rugby union. I would need to see a lot more in financial comparisons to convince me that the argument is just. On the face of it to me the cost comparisons between English RFU Premier sides and football clubs in the EFL, especially the Championship, are miles distant. France might be an interesting benchmark where, I believe the rugby pro 14 does not have a cap, or if it does it far outstrips that of the English premiership. By and large I'd rather see the EFL be made to make FFP work. 

[Mr Popodopolous]

18 minutes ago, davidoldfart said:

“Apart from ongoing cases” otherwise the cheating Derby could just walk away from their punishment - which was due last week? Next week? Next season....oh i forgot this is Derby 

Still ongoing tbh- the latest reports suggested they were heading towards a points deduction.

Derby stuff has two complex and significant strands to it- the Stadium valuation and the amortisation method- throw in Covid disruptiuon and the fact that both Derby and Sheffield Wednesday are apparently being represented by the same guy and this can drag...

[Davefevs]

42 minutes ago, RoystonFoote'snephew said:

While I don't want to see any clubs going out of business I also don't want to see cheats prosper. If a clubs finances are in a state purely down to Covid then they should get relief and financial assistance, but I don't believe it would be unproper to ask them to show that. If prior to March they were heading for a FFP breach due to financial mismanagement they shouldn't be able to crawl out from under now. I'm also not convinced by the introduction of a salary cap and have grave doubts that a comparison can legitimately made with rugby union. I would need to see a lot more in financial comparisons to convince me that the argument is just. On the face of it to me the cost comparisons between English RFU Premier sides and football clubs in the EFL, especially the Championship, are miles distant. France might be an interesting benchmark where, I believe the rugby pro 14 does not have a cap, or if it does it far outstrips that of the English premiership. By and large I'd rather see the EFL be made to make FFP work. 

This is why the projected accounts for this season should have come in handy.  Bit like Student predicted grades, these were the (projected) financial results they reported to the EFL pre-Covid for accounting year end (May 31st in City’s case), so would’ve been based on “normal” revenue and costs.  Any club who projected compliance should be given a bit of leeway.  Any club who was projecting non-compliance should be dealt with appropriately.

[cider11]

Could they not keep it the same for 20/21 and have 3 year rolling losses at 39mil, but use an average of income over the previous 3 seasons for next seasons income. Only amendments where teams parachute payments they get changed to reflect what they would be paid next season. 
 

this way takes out the issue if don’t play any games in front of fans all season, refunds, drop in merchandise etc. 

[Mr Popodopolous]

22 minutes ago, cider11 said:

Could they not keep it the same for 20/21 and have 3 year rolling losses at 39mil, but use an average of income over the previous 3 seasons for next seasons income. Only amendments where teams parachute payments they get changed to reflect what they would be paid next season. 
 

this way takes out the issue if don’t play any games in front of fans all season, refunds, drop in merchandise etc. 

That's not a bad idea.

Could you expand on Parachute Payments point-how might these be amended?

Also agree with @Davefevs that using Projected Accounts as a key basis could be a way to go.

[cider11]

17 hours ago, Mr Popodopolous said:

That's not a bad idea.

Could you expand on Parachute Payments point-how might these be amended?

Also agree with @Davefevs that using Projected Accounts as a key basis could be a way to go.

I meant where a team is no longer in receipt of them for next season but they received them in the last 3 year period that would be set to £0 in the income for the coming season. 
If they’re still due parachute payments in the coming season they can put in what they’re due, and not the average they’ve received over the last 1-3 seasons. 

[Mr Popodopolous]

May as well make a small update on this.

The latest talk- though oddly no EFL statement yet confirming it- is that clubs have voted to roll up 2019/20 and 2020/21 into one season.

This means if the talk is correct...

OLD/current system:

Simple (ha!) but 3 year rolling so this season our cycle begins in 2018/19 to 2020/21, our big loss in 2017/18 drops off the books etc. 

Apparently reforming to:

2017/18- Season One

2018/19- Season Two

2019/20 and 2020/21- Season Three. 

Think the simplest way to explain is that loss or profit for last and this season added up and then halved. 

Once allowable costs factored in I think we can lose a total of £62m across 2019/20 and 2020/21. Many clubs are in a tighter spot.

Guess a problem comes in terms of teams going between PL and this League- they can lose up to £35m per season in the PL their 3 year period, at this level it's £13m. They must not get another advantage through a change.

[Mr Popodopolous]

This does though make me think a bit more that a higher budget manager may not have been the one. Hughton or similar wouldn't have been able to have spent all that freely this season.

Next summer though, many are out of contract. Different parameters. That £25m loss will finally be gone for good.

[Davefevs]

1 hour ago, Mr Popodopolous said:

May as well make a small update on this.

The latest talk- though oddly no EFL statement yet confirming it- is that clubs have voted to roll up 2019/20 and 2020/21 into one season.

This means if the talk is correct...

OLD/current system:

Simple (ha!) but 3 year rolling so this season our cycle begins in 2018/19 to 2020/21, our big loss in 2017/18 drops off the books etc. 

Apparently reforming to:

2017/18- Season One

2018/19- Season Two

2019/20 and 2020/21- Season Three. 

Think the simplest way to explain is that loss or profit for last and this season added up and then halved. 

Once allowable costs factored in I think we can lose a total of £62m across 2019/20 and 2020/21. Many clubs are in a tighter spot.

Guess a problem comes in terms of teams going between PL and this League- they can lose up to £35m per season in the PL their 3 year period, at this level it's £13m. They must not get another advantage through a change.

So, 100% (£22.3m loss), 100% (£14.0m profit), 50%, 50%, still £39m overall though?  Ta.

So, I see where your get 2 lots of £31m from.  Severely hamstrings you if you take those into 21/22 though!!

 

[Mr Popodopolous]

6 hours ago, Davefevs said:

So, 100% (£22.3m loss), 100% (£14.0m profit), 50%, 50%, still £39m overall though?  Ta.

So, I see where your get 2 lots of £31m from.  Severely hamstrings you if you take those into 21/22 though!!

 

Don't get me wrong, I'm not advocating pushing to that level- not least as we would be hamstrung quite a bit- more like the cushion we have! If we did push to that limit and got promoted off the back of it- and that could be as much through retention as recruitment or a mix of the two- then it would be worth it but I'd rather not roll the dice in that manner.

I think our allowable costs are £3-4m per year are't they?

£25m loss- 2017/18

£11m profit- 2018/19

Add back say £4m per season in allowables- might be lower in which case I'll look again.

£8m FFP loss- that's my starting point. For avoidance of doubt and happy to change if so, I['m using at this time the Bristol City FC Holdings for my calcs. I noted in the Derby written reasons that Sevco 5112 started to be used from I think 2016/17 so basing it on that for now.

That's £8m.

If we lost £22.3m this season just gone, we can lose £39.7m this coming season by my rough calculations- again adjust down if allowable costs a bit generous.

I don't want us to roll the dice in that way though, tbh- especially with all the uncertainty.

[Davefevs]

I notionally remove £3m each year.

 

[Mr Popodopolous]

May as well post a bit more on this.

As we know the January window is coming up. A bit of impetus might be good, especially if combined with players returning from injury but I wonder how much room for manoeuvre we will have.

Now there will be quite a few players out of contract this summer, some we should look to keep for first team, some look to extend to sell and a proportion we just let go.

This £25m loss also disappears from view- how much or little headroom do we have in January given the August amendments?

As of now it's:

2017/18- £25m loss

2018/19- £11m PROFIT

2019/20-? 

2020/21-? (Would be Projected at this stage).

These two are added together and then halved into a single averaged year.

Maybe £60m losses allowed over this and last season combined or close to, as the generally estimated figure is £3m allowable costs per season.

We should be in a useful position, so why do I think we are working under some sort of at least moderate oversight from EFL? Alongside a variety of other clubs BTW.

Cost of sacking LJ and McAllister as well as Holden promotion, Downing and Simpson hire all goes against FFP too.