Mr Popodopolous

Really hope Aston Villa get punished the worst- they seem to not even be paying lip service.

This January- just taken a look- they have:

• Brought Kalinic for £5.4m (a Croatia international keeper).
• Brought Guilbert for £4.5m from Ligue 1.
• Loaned in Mings, Hause and Tom Carroll.
• Kept Abraham.

Yes, they cancelled Moreira (half-season loan), Bolasie (half-season loan), loaned out Bree, Guilbert, Hogan (half season loans) and McCormack (went to one club, and then another) but their 3 year breach must be approaching huge levels.

@BTRFTG Will address your points fully later. To say on it briefly though it still seems a bit of a work in progress.

Quick update.

Birmingham surely now for the high jump. Selling Che Adams could have alleviated their 3 year loss quite a bit- 12 pts + 3 pts for an aggravated offence had been mooted? Would seem quite fair.

Aston Villa have made some cuts but I think a drop in the ocean set against their losses. Hope they're likewise going to get what they deserve this or next season. 15 points fair?

Sheffield Wednesday had a £15m hole apparently in the 3 seasons from 2015/16 to last season. They've hardly made swingeing cuts though they're in a bit or a better place than the other 2. Again a points deduction next season maybe?

Stoke if they don't go up this year, may have some issues next.

36 minutes ago, BTRFTG said:

The finances are all very interesting but does anybody know, real world, what the actual sanctions are for breaching FFP? There was talk of a fixed levy taken from TV monies but I'm not sure this has ever been sanctioned (why further push a club into debt if it risks their existence?) I know there have been a few transfer embargoes but are they that stringent? Seem to recall a few clubs who were constrained managing to take in players on loan if it was an emergency, they were over 6ft, bald or any other get-out they could summon up.

I believe it has been a work in progress but now they're getting somewhere.

They should have thought ahead really, the EFL etc- but then they are the EFL so what do you expect? Initially the punishment was pisspoor- a fine if you got promoted under the old rules and then you had to if you were the EFL fight for it and it got redistributed amongst the rest of the clubs. If you stayed down, a transfer embargo. Point is that was clearly inadequate.

The new 3 year rolling rules that began in 2015/16 mean that if you breach it you can get a points deduction for example, perhaps even get demoted from top 2 to top 6 or top 6 to out of playoffs.

In terms of transfer embargoes- they are pretty strict. Well Bolton's was anyway in 16/17 to last season. Birmingham's seems a bit too light but where they went wrong was signing a left back called Pedersen on a permanent deal when under embargo- that really pissed off the EFL and other clubs. They are the first big test case of this- hearing in February as they have put a horse and cart through the rules. Talk of up to a 15 point deduction for them, that is in this case 12 for the initial offence and 3 points for an aggravated breach (the aggravated breach as in signing Pedersen when they were under embargo).

Now the embargoes. They tend to mean the following:

• You cannot spend money on a player in the form of a transfer fee.
• You cannot pay an agents fee.
• You cannot pay a loan fee.
• You cannot register a player over a specified maximum wage (in Birmingham's case, it is possibly £10,000 per week).

This appears to be a soft embargo. A hard/full embargo means you cannot register players full stop.

At the same time, as well as punishment, the EFL don't want to cripple clubs or **** them over basically.

Bolton's was very strict at times- imagine being a Championship club unable to sign players on more than £4,500 per week! 

https://bolton.vitalfootball.co.uk/bolton-embargo-goalposts-moved/

This year will be the big test though- this is the first full 3 year cycle where you can argue discount a year for reasonable adjustment because rules changed from £5m loss in a season to sudden 3 year rolling (2015/16) and 2016/17-end of this season. Well a lot of clubs have surely flouted it to varying degrees. Birmingham's hearing in February will be very telling and should set a big precedent moving forward.

Accounts for this season, plus the prior 2 seasons will be assessed in March 2019.  EFL have all this info (ahead of Companies House in quite a few cases). Think full accounts for last season had to be submitted in December and accounts projected for this season by the clubs submitted in March 2019.

I'll have a go!

Purely focusing on us here and not the context, the rules the regs etc- we as with all regular Championship clubs can lose £39m over 3 seasons. We have fallen below this happily in the accounts between 2015/16 to last season, once the allowable costs- namely Infrastructure Expenditure, Youth Expenditure, Community Expenditure and Women's football expenditure all factored in.

BCFC Holdings Losses by season- before allowable expenditure:

• 2015/16- £14,798,070- Minus allowable expenditure of £2.7m.
• 2016/17- £6,346,035- Minus allowable expenditure of £4.5m.
• 2017/18- £25,164,281- Minus allowable expenditure of £4.7m

Total losses- £46,299,386- Minus allowable losses of £11.9m.

Total FFP adjusted losses therefore appear to be £34,399,386.

This is good because it means that 2015/16 losses are removed from the record and the starting point is therefore 2016/17 and that is before even taking into account the sales and cost reductions of this summer i.e. Hegeler, O'Neil, Steele all off the wage bill even though we got no fee.

Our current FFP position therefore would be based on the last 2 seasons and before taking into account this season, 2 year FFP losses of £22,310,316 which means we can lose if we wish up to £16.69m roughly this season in FFP terms (that's before the allowable expenditure).

I'm hoping after the big sales and some of the aforementioned players who departed without a fee but less wages that we may break even this season. If we break even this year and our allowable costs are say £4m, that would be a profit in FFP terms this season of £4m which would take our overall FFP losses for this and last season down to £16,464,281. Which would mean a good roll of the dice possible in 2019/20- by which I mean only sell if we want to and add some decent assets- not go nuts but add our decent assets.

If we are still at this level in 2020/21 and didn't  go on a wasteful spending spree next season or this January- sort of just spending because it's there- then we could have a big war chest in 2020/21, good scope to gamble if we wished.

As a little end note, not knocking the board or anything but last season had there been a guarantee it would have got us over the line, we could seemingly have added another £4.5m to the expenditure if other allowance based figures are broadly right- that's not on a fee that's total of wages, fee, signing on fee etc but we could have. The trade off would probably have been bigger cutbacks this season had the gamble not paid off and we may have been hamstrung moving forward for a year or 2.

Forgot to add- Transfer income or revenue gained by sell on fees offset operating losses. Quite important!

Adjusted Loss excluding Profit on Transfers or Sell on fee Revenue:

• 2015/16- £14,434,719 (Profit on disposal of Player Contracts £81,358). Other financial items took our overall losses to what they were which was £14,798,070..
• 2016/17- £18,515,320 (Profit on disposal of Player Contracts £13,603,739).  Other financial items took our overall losses to what they were of £6,346,035.
• 2017/18- £25,165,335 (Profit on disposal of Player Contracts £296,625). Other items took the losses to what they were of £25,164,281.

Basically our operating loss averaged out as it appears on the accounts is £19.37m per season. FFP exclusions over the 3 years appear to average a shade under £4m so we need an average of £2.37m per season of Profit on disposal of Player Contracts or a reduced wage bill or other expenditure by similar margins just to stay within FFP. This summer though should provide a huge boost moving forward.

Reduced amortisation also helps with this overall improvement in financial position- because I believe when a player is sold, their amortisation is therefore off the books. Same when they leave as a free agent. (That goes for Djuric, Hegeler, Magnússon, Engvall- but not Reid or Bryan as the latter were academy so zero amortisation cost. Flint kept renewing so there maybe some there too).

Not City or even Championship related, but I saw this online- here is a club I never assumed would slip into possible FFP issues- if indeed these projected accounts for last season (accounts overdue) but particularly moving forward for them, this and next, in the right ballpark.

RIP Emiliano Sala and David Ibbotson.

March 2019, perhaps the end of March 2019?

EFL have advance financial information- Companies House accounts while not the whole picture give a fair barometer, but the problem is that most clubs don't submit their accounts to Companies House until end of Feb, end of March.

As for the EFL- they received accounts for last season by December 1st of 2018, clubs had to submit them by then to the EFL (but not, confusingly, Companies House). I think they have to submit this season's projected accounts by March or end of March this year- given transfer window shut, a projection to May 31/June 30 2019 should be feasible.

Sanctions or otherwise (in theory) are based on the previous seasons 2 real accounts and this seasons FFI, also known as projected accounts.

There's a significant lack of public transparency on this however- commercial reasons probably dictate this.

Quote

 

Appendix 5 - Financial Fair Play Regulations

APPENDIX 5 FINANCIAL FAIR PLAY RULES

 

PART 1 – CHAMPIONSHIP FAIR PLAY RULES

 

Notes:

Capitalised Terms have the meanings ascribed to them in Regulation 1 or 16 of the Regulations of The League unless otherwise indicated.  The following Rules are supplemental to the Regulations.

This Part consists of the Championship Fair Play Rules which continue to apply for the purposes of reporting in respect of Season 2015/16, and the consequences arising from those reports.  Part 2 contains the Profitability and Sustainability Rules which are applicable for Season 2016/17 onwards.

 

1              Fair Play Requirement

1.1          All Championship Clubs are required to meet the Fair Play Requirement (as defined in Rule 1.2) for each Reporting Period (as defined in Rule 1.4) following the commencement of these Rules. The first Reporting Period for the purposes of these Rules will cover the 2011/12 Season but the consequences of failing to fulfil the Fair Play Requirement will not be effective until 1^st December 2014 (see Rule 6 below).

1.2          The Fair Play Requirement is a measure whereby a Championship Club’s Fair Play Result must be:

1.2.1       an amount equal to £nil or greater; or

1.2.2       an amount less than the aggregate of the Permitted Allowances (defined in Rule 5) in relation to the relevant Reporting Period.

1.3          The Fair Play Result is an amount equal to a Championship Club’s profit / loss before tax, after adjustment in accordance with the provisions of Rule 4.2.

1.4          A Reporting Period is the period over which a Championship Club is assessed for the purpose of the Fair Play Requirement.  For each Season the Reporting Period is (subject to Rule 2.2 or Rule 2.3) the immediately preceding 12 month period recorded in the Championship Club’s Annual Accounts.  For example, for those Championship Clubs with a financial year ending in the period May, June or July the Reporting Period for the 2014/15 Season is the 12 month period ending May, June or July 2014.

2              Variations From ‘Standard’ Reporting Periods

2.1          Championship Clubs may not adjust Reporting Periods for subsequent Seasons without the prior written consent of The League, such consent not to be unreasonably withheld.

2.2          If:

2.2.1       the Annual Accounts for any Championship Club are for a period other than the 12 months described by Rule 1.4, then that Championship Club must prepare 12 Month Accounts (as defined in Rule 2.3); or

2.2.2       any Championship Club has a financial year ending other than during the period May, June or July, then that Championship Club must prepare Additional Accounts (as defined in Rule 2.3).

2.3          The 12 Month Accounts and the Additional Accounts (as applicable) must be an additional set of full accounts (in the same manner and with the same degree of verified detail as if the Championship Club was obliged to lodge those additional accounts at Companies House) reviewed by the Championship Club’s auditor for a 12 month period ending during May, June or July so as to provide The League with a set of accounts aligned to the Reporting Period as defined in Rule 1.4.

 

3              Submission of Fair Play Information

3.1          By the 1^st December in each Season a Championship Club must submit its:

3.1.1       Annual Accounts;

3.1.2       12 Month Accounts; or

3.1.3       Additional Accounts,

for the immediately preceding Reporting Period together with a Fair Play Calculation (in the form prescribed by The League from time-to-time, and which as at the date of the implementation of these Rules is as set out in Part 1 of Appendix G) for the same Reporting Period (together the Fair Play Information).

3.2          References in these Rules to “Accounts” shall mean the Annual Accounts, 12 Month Accounts or Additional Accounts as applicable to that Championship Club.

3.3          By way of example, by 1^st December 2012 each Championship Club must submit it’s Fair Play Information for the financial year ending May, June or July 2012 (exactly which date will be determined by the year end date of the Accounts).

3.4          For the avoidance of doubt the Fair Play Information must be supplied notwithstanding the fact that for the Season covered by the Reporting Period the Championship Club was either a Premier League Club relegated into the Championship (Former Premier League Club) or a League One Club which was then promoted into the Championship (Promoted League One Club).

3.5          The Fair Play Information must:

3.5.1       relate to the Championship Club or if applicable (as detailed in Regulation 16.4) the Group of which the Championship Club is a member;

3.5.2       be approved by management, as evidenced by way of a brief statement (Board Statement) confirming the completeness and accuracy of the information (in the format required by The League from time to time and which as at the date of these Rules is as set out in Part 2 of Appendix G), and signature on behalf of the board of directors of the Championship Club; and

3.5.3       be accompanied by a statement confirming the completeness and accuracy of the information (in the format required by The League from time to time and which as at the date of these Rules is as set out in Appendix H) by the auditor of the Accounts.

3.6          The League may require a Championship Club to provide such further information as it deems necessary (acting reasonably) for the purposes of enabling The League to assess whether a Championship Club has fulfilled (or not) the Fair Play Requirement.

3.7          Any such request shall be made in writing (including by email to the Club Secretary) and shall be responded to in full within 10 Normal Working Days of any such request being made.

3.8          Each Championship Club shall, at all times and in all matters within the scope of these Rules, behave with the utmost good faith both towards The League and the other Championship Clubs (provided always that only The League shall have the right to bring any action whatsoever for any alleged breach of this requirement).  Without prejudice to the generality of the foregoing, Championship Clubs shall not manage their affairs or submit Fair Play Information which is intended to seek to or does take any unfair advantage in relation to the assessment of fulfilment (or non-fulfilment) of the Fair Play Requirement.

 

8 hours ago, JasonM88 said:

They’ve at least crashed into the freezing cold sea. Had they even made it to the island, they’d have struggled immediately with hypothermia. The air temp on the channel drops to around -8 at night. 

For sure- would have had big problems even had they made it to the island.

Could it have been searched on foot during daylight though  sooner than it has been- if indeed it has been? This Tweet was sent 10.36am on 22nd January- nearly 48 hours ago. No criticism at all of anyone searching, but in these things time can really make all the difference.

Saw this on Twitter in last 10 mins. Seems to be a lot of talk about it- any truth or??

Flares basically seen on an island that is (aside from birds and wildlife) uninhabited, an island near Alderney. I've honestly no idea, but seems to be a lot of talk about it on Twitter.

Police have done a half hour aerial search of the island, but nothing on foot yet apparently...Island called Burhou. World Heritage site.

Horrible news- let us hope that somehow everyone on board is found alive.

1 minute ago, Davefevs said:

I very much suspect there’s a trigger point in the contract that says the option has to be exercised by 31st January, or else the player is eligible to start talking to other clubs re being a free-agent in the summer.

Also, not sure how we deal with contracts til 30th June annually, but our accounts up to 31st May.  Would we amortise 11/12ths in the accounts?

Probably right- it does very get very complex in terms of rounding, 31st Jan would make sense for exercising an option in fact.

That's a good point that, maybe 1/12 would go into the next year or maybe it would be rounded to include the 1/12th. No idea however on this latter point.

13 minutes ago, Coppello said:

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. 

I wondered if given contracts tend to run out on 30th June for players.

If we renewed it, i.e. exercised the option at the end then it would be pure profit as 3 years is up and maybe treated as a new deal? However, doing it now which is give or take 2 and a half years in, would have the remaining balance- £500k in the £3m over 3 years scenario- set over the new lifespan of the deal i.e. now until June 2020? In other words, £500k/1.5 rather than contract run down, amortised £3m/3 then option exercised in say May or June 2019 which could in theory have a zero remaining balance.

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)?

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...

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.

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?

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!

Interesting thoughts today by Andy Holt the Accrington chairman- his Twitter account worth a look. I mean it'll never happen but if it did, it would solve the FFP bother at a stroke. Quite a long thread...

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.

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.

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?

1 hour ago, phantom said:

Notice Hollowhead is now saying he wishes he got the job - oh what fun we could of have had with him taking them down!

Could have completed what he started- in Jan 2001 he left them just outside the drop zone but with no home win all season in 6 months.

He's already got the impressive distinction of relegating 2 clubs in one season- could have got an award surely unique in football by not only doing that but returning to that club 17 years on and taking them down again!

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.

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.

33 minutes ago, Vincent Vega said:

Great point by Nixon....

I do see what he's saying, but really both A) and B) should be punished by the EFL- but for different reasons.