F F P / S M C P - The Difference Between L1 & The Championship

[Ian M]

There is a common misconception lately that in L1 we will be bound by FFP regulations but the reality is that we will be following the terms set by something called SCMP (salary cost management protocol) which limits us to spending 60% of our income on wages and no other constraints. It does not matter (from a transfer embargo or any other form of punishment point of view) if we make a financial loss.

Now using an example of 2 players where both have equal ability:

-Player A is contracted to a club, Player B is a free agent.

-Player A will cost us a fee of £350k, Player B is "free".

-Player B's agent argues that because we have saved paying that fee he wants us to pay his client an extra £2k a week over the course of a 3 year contract.

-On the face of it, Player B would save us £50k over 3 years but if SL is happy to fund a transfer fee (that will not be punished by any regulations), then signing Player A frees up £2k per week to spend on another player.

And that's ignoring any arguments where the player commanding a fee may be younger with more potential to improve in the future.

Apologies for repeating a reply I made on the Flint thread but I feel many people aren't aware of the difference yet and hope this explains it well enough.

[You Do The Dziekanowski]

Thanks for clearing that up, Is FFP next season then?

[Ian M]

Thanks for clearing that up, Is FFP next season then?

For Championship clubs. Not us.

[You Do The Dziekanowski]

For Championship clubs. Not us.

So this season is going to be a lot of help for when we go back up, Thank god for that

[Red Cloud]

It's amazing. everyone I know (which included me until Ian explained it on another thread) thinks we're under FFP, I'd never heard of SCMP before - everyone needs to read this, very well explained!

[Nibor]

I do hope this sinks in, thanks Ian.

[Taylor10]

It's amazing. everyone I know (which included me until Ian explained it on another thread) thinks we're under FFP, I'd never heard of SCMP before - everyone needs to read this, very well explained!

This.

Well explained. Cheers Ian.

[shepton red]

What constitutes income? If Steve Lansdown wants to sponsor the Dolman Stand for £15 m per year is he allowed to do this? Or is income the number of bums on seats? If it is the former don't really understand how this will effect clubs with benefactors?

[Bowie]

Thank god for this thread

Strange as it is, but free transfer aren't necessarily the way to go at the moment, especially if it means higher wages for freebies.

Stead is an example of a player who was very cheap (200k?) because his wages were so high, these are the examples we need to avoid

[Milo]

Hi Ian, I understood that the SCMP was the version of Financial Fair Play that League 1 Clubs have to follow. That's how I understand this article. In other words Financial Fair Play is still the appropriate term to use as an umbrella expression with the Salary Cost Management Protocol as the specific rules governing us next year.

Has anyone found a source of the exact rules on the internet? What I have found on-line is really vague and I'd like to read the rule book for SCMP if anyone can find it.

[Ian M]

Hi Ian, I understood that the SCMP was the version of Financial Fair Play that League 1 Clubs have to follow. That's how I understand this article. In other words Financial Fair Play is still the appropriate term to use as an umbrella expression with the Salary Cost Management Protocol as the specific rules governing us next year.

Has anyone found a source of the exact rules on the internet? What I have found on-line is really vague and I'd like to read the rule book for SCMP if anyone can find it.

I think a better way to view it is that SCMP is inspired by FFP. FFP is a set of guidelines created by UEFA that Championship clubs have almost universally adopted (with a few caveats which you can find explained online through a quick Google search).

L1 & L2 clubs have just one rile to follow, wages must not exceed 60% / 55% of turnover. Clubs submit a projected budget at the start of the season & must send updated projections up to December & a full set of accounts at the end of the season. If at any stage they fall behind the target they are placed under a transfer embargo. So if we get lower than expected attendances I'm the 1st half of the season we will be punished in the January window.

[eric04]

Even SO'D refers to it as FFP in his interviews.

[Timbo7]

What constitutes income? If Steve Lansdown wants to sponsor the Dolman Stand for £15 m per year is he allowed to do this? Or is income the number of bums on seats? If it is the former don't really understand how this will effect clubs with benefactors?

Income or turnover includes everything reported in the annual accounts as income or turnover.

It will include all revenue earned or otherwise received inclusive of ticket sales, commercial revenue and transfer fees. In theory it could be possible to "cheat" by exchanging phantom transfer fees between clubs (e.g. instead of swapping players between two clubs the clubs could each agree to pay the other a silly fee) and phantom sponsorships (e,g, uneconomic payments by benefactors for naming rights etc.) but if and when this happens I suspect the those who voted to apply the SCMP will demand that the League scrutinises any such deal to prevent abuse.

It is a fact that FFP is the name given to the rules applied at Championship level and to be applied (perhaps) by UEFA BUT it is also be used as a generic term to describe all or any similar measures including the SCMP applicable in the lower leagues.

In essence profitability (or size of annual loss) will not be regulated in League 1 and hence (he he is still willing) SL will be able to continue subsidising aspects of the club beyond players' wages - e.g. the academy, transfer fees etc.

[Ian M]

For those interested, I have found an excellent in-depth interview with Carlisle United's Managing Director John Nixon & Finance Director Suzanne Kidd which I will c+p below. Beware it's long!

When did SCMP come into play? This was something we did in League One two seasons ago, as a paperwork exercise, but there were no sanctions at that stage. That changed for this season when sanctions were put in place. League Two have been doing this for a few seasons now and the thinking behind it is to try to stop clubs from heading towards administration. The bar was set at 65% of your turnover on player wages at League One level this season and that will go down to 60% next season. League Two have been operating this successfully and they will actually go down to 55% for next season.

Has it definitely worked at League Two level, particularly with them adopting the framework before the rest of us? Even though the crowds and budgets are lower in League Two I think you would have to say that it has been a success. I think Port Vale are the only team who have had to go into administration recently in that division. Looking across the leagues, most of the teams who have gone into administration recently have been the bigger clubs who have been relegated from the Championship. That suggests that it has worked for the bulk of League Two clubs.

How does SCMP work? The idea is that you can only spend a certain amount of money on wages, and you have to keep between 35-40% of your turnover back to make sure you can pay all of your other bills. Some clubs in the Championship were spending over 100% of their turnover on wages and that clearly isn’t sustainable. If that happens it means that someone else has to put the extra money in, simply because clubs were making such massive losses and were then having to rely on what effectively had to be large donations of cash. These steps have been taken to counteract that, with the long term future of all Football League clubs in mind. In addition, there is also the Customs and Revenue aspect. They now report to the Football League on clubs who are in arrears or who have defaulted on their payments. Again, this goes some way to ensure you can only sign players you can afford. If you do default on payments to HMRC then you are placed under a transfer embargo until the situation is sorted out.

Is that a positive change? When we were in administration in 2004/05 the people we didn’t pay were the Customs and Revenue, because it's what you were able to call invisible money. For example, if you pay someone's wage at £500 a week, then £150 of that is tax. The physical payment made from that is £350, to the player, and you don’t actually spend the other £150. The easiest thing to do back then was to keep hold of it rather than give it to the government. Before this April we only used to report to Customs and Revenue once a year via an end-of-year tax return. Now we have the RTI [real-time information] system, which means we have to report monthly through the payroll software, and you can’t hide away from the payments you are due to make any more. At the end of any given month the Football League now have an agreement with Customs and Revenue which means that as soon as a club defaults on a payment they go onto a list. The Football League then immediately contact the club in question to enforce a transfer embargo. The most recent example for us was when we had two players lined up for a loan move to Accrington. It turned out that they had hit an embargo, because they had outstanding bills with other clubs, and they weren’t allowed to see the deal through. The same thing happened to Bury and they had to use the PFA to help them pay their wages during the month the transfer window was open. That got them through, but the following month they went back under an embargo. It can be a very strict system.

What goes into calculating the 60% of turnover level of player wage payments next season? There are a whole host of things you have to do to make your calculations and, in many cases, it has to be based on assumptions. The first thing you have to do is put in a forecast for what you think your turnover will be for the whole year. For this season we had to submit that on 22 June 2012. That was obviously before our players were even back for pre-season training. Within that forecast there have to be two figures – one for the season as a whole and one for where you think the club will be at the half way stage. The figures submitted in June have to be evidence-based using the audited accounts from the previous year. There is a reconciliation sheet to show your actual figures from the previous season against your forecast going forward, and the two figures have to relate to each other or it will set the alarm bells off with the Football League before you even make a start. You can’t, for example, predict that your shop will sell twice as many home shirts, that your attendances will be 9,000 a week or that you will sell two players for £1 million each. That would be seen as an attempt to artificially inflate your figures, and rightly so. You have to be very detailed in your assumptions and forecasts so that they [the Football League] know exactly where we think the income is going to come from. If there are big differences to the evidence-based submission from you previous season then you have to have a very good explanation as to why. As long as you have a good reason for changing the figures, that's fine, but it can’t be based on wild notions or ideas. A good example would be if you know that your ticket prices are going up. You can then show an increase on gate receipts based on that fact.

Are you allowed to forecast good runs in Cup competitions to bump the figures up? We always assume no progression in the cups as it’s the safest way to do things. That means if we do progress it becomes something of a financial bonus for the club. Any FA Cup money we do get comes directly from the Football Association, but we always enter a zero amount in that column on day one. You can actually guarantee some money from the highlights programmes, and we received an additional payment two seasons ago when we played Alfreton, but by far the safest thing to do with all cup competitions is to assume you will get nothing.

What other areas of turnover can we safely include in our forecasts? The obvious ones are season ticket sales, league match gate receipts and friendly game receipts. We normally get a good indication from our first batch of renewals of our season tickets as to what level we will be at. We build it up from there. We'll then assume that the same number of people will take out a direct debit as we had last year, and the remainder will pay up front. League gate receipts are based on the average crowd for the season just gone, and we know we are taking a significant drop in that this time round. We will be down to somewhere around the 4,200 mark once the Colchester game is taken into account. To calculate our net gate receipts we simply deduct the number of season ticket holders from the average attendance figure, and multiply it by the average entry price per head. Cup and friendly games are usually a round amount which is added to that figure. On the player side of it, we always use the ‘AN Other’ name to fill any gaps we have from those players who have been released or for contracts which have expired. We assume we are going to fill the gaps before the season kicks off and we forecast accordingly. Other relevant turnover includes things like the central payments we get from the Football League, which incorporates TV and radio broadcasting, but we don’t forecast for standalone TV appearances in any way. For some reason we very rarely find ourselves on the lists for televised matches, which can be very frustrating. There are other clubs who seem to get chosen almost week after week.

How important are attendances in relation to the final figures we achieve? Gate receipts are a big one for us because, as we say, the forecast going forward has to be evidence-based. In terms of attendances, that means that you have to predict like-for-like - with the odd spike if a so-called big team has dropped out of the Championship. We didn’t foresee an average drop of 1,000 over the course of this season at all and it meant that once we got to December we had to actively cut things back, simply because we weren’t getting the income levels we thought we would achieve. It was interesting for us to talk to people at the Football League just a few weeks ago because they commented on the fact that we'd got ourselves into a bit of trouble this season. The alarm bells had been ringing with them as we started to get closer and closer to our 65% level. The simple reason for that was that our forecast on gates was too high at the start of the season. We had budgeted against an average crowd of 5,200 from the season before and the 1,000 drop meant we lost a big chunk of our expected income.

Does the commercial side of the business come under the SCMP bubble? Yes, but again it is all evidence-based. What you do have to do with this type of revenue is forecast against your income from these streams after you have paid for the service in question. In other words you use the net figures. For example, if we pay for a meal in the restaurant at £15, and sell it at £17.50, it’s only the £2.50 (multiplied by however many meals you sell to your supporters) which goes forward into the forecast. That's the same for programmes, shop and lottery. Commercial income also includes Football League interactive revenue (earnings from the official website), kit royalties, associate director fees, ground boards, advertising space, donations, stand sponsorship, shirt sponsorship and player sponsorship. We also include car parking because that does bring a fairly big chunk into the club over the course of the season.

Is this part of the income stream what we used to call the football fortune? Yes, all other areas of income such as these were held under the football fortune banner. The solidarity money we get off the Premier League is included in that, along with the parachute payments for those clubs relegated out of the top flight. The net transfer income is included, but only for the cash you receive that year. For example, the payments for Richard Keogh were spread over three years and that would be reflected in the forecast for each of those three years. It starts to get complicated when you submit your P&L (profit and loss) figures for the year because the whole amount of the Richard Keogh fee would be included for the year in which he was transferred. Everything else in your SCMP forecast should be the same as your P&L account, apart from that one figure. The Football League reviews all of these documents and, if something isn't right, they'll come back to you for an explanation. All transfer income comes through the Football League anyway, so they are pretty much on top of that side of things.

There appears to be a loophole whereby you can boost your forecast and add to your turnover figures with a donation or a gift of an injection of money? This is the only grey area in the whole system - equity cash injections and accumulated profit. The equity cash injections are where the director's loan turns from a soft loan (flexible terms of repayment) into a donation (no repayment required at all). Basically, if you get a genuine donation then you can include it as part of your income. If it has to be repaid in any way then it has to be omitted. PFA contributions for medical insurance count as a donation, as do some of the fantastic things some of our own sponsors do. These often go under the radar at the request of the sponsor concerned, but it is something we greatly appreciate. Just to clarify, equity would be when somebody said they wanted to put £1 million into the club and they absolutely did not want it back. A loan would be if they said they would give you the same amount of cash but that they wanted it paid back in full, or in part, within an agreed repayment timescale.

Are any player wages not included in the final calculation of how much you spend on player wages overall? Only some players are taken into account when we put the list together. If you come down from the Championship, and you have players with a contract of three years or more, then you don't include them. The other category is the ‘Home Grown’ player. To qualify as ‘Home Grown’ the player needs to have been registered to his club, or any other English or Welsh club, for either three full seasons or for 36 months prior to his 21st birthday. That is a bid to try and encourage us all to develop our younger players. Every time a new player comes into Carlisle United our secretary Sarah [McKnight] is told whether or not he fits into the ‘Home Grown’ category. At the moment we have Potts, Todd, Beck, Lynch and Symington in that section, and Sean McGinty was also included when he spent a bit of time with us earlier in the season.

So the remainder of your players make up the total amount of player wages in the calculation you make? Yes, and they are placed under the ‘Contract Players’ section of the SCMP form. As part of the submission you have to include their contract start and end date, salary, signing on fee, forecasted appearance fees, associated bonus payments and any relocation fees they receive. Other player sections to be considered as part of the overall calculation are non-contract players, loan players and players on month-to-month contracts.

What happens if you are paying League One wages but find yourself relegated to League Two? There is no allowance for that at all. Bury, Scunthorpe, Hartlepool and Portsmouth will have to make their forecast as a League Two club in June even if all of their players are contracted for another season at their current wage level. They may find that puts them above the 55% allowed level, but they can then go to the Football League and explain why that has become the case. That’s why the Football League advise clubs to have clauses in player contracts to protect ourselves if we do get relegated. These clauses would then trigger a reduction of salary.

What happens if crowds are up, you’re involved in all cup competitions and shop sales are higher than usual come Christmas time. Can you spend the increased revenue despite having submitted a cautious initial forecast? Yes, you can use all of the extra revenue as you see fit. When it comes to your mid-season forecast you can increase the figures to reflect the facts, if you are enjoying a good season, and that will allow you to do more work during the January transfer window. The first half of this season is a good example of that. Our gate receipts from the Tottenham game, plus the fact we were at home in the JPT and the FA Cup, meant we went into the transfer window with a bigger pot of money than we’d forecast.

You mentioned alarm bells ringing at the Football League. How exactly does that happen? Once you get within 5% of your forecast you find that you are on an automatic transfer stop, imposed by the Football League. That doesn’t mean they will completely stop the transfer from happening, but you have to provide assurance that any business you do will not take you over the 65% mark. We had to do that with Sean O’Hanlon because the reduction in attendance figures took us very close to our 65% level this time round. We were able to offset that with the Football League because both Paddy Madden and Alessio Bugno had moved on. They were still on our forecast but they had actually left the club. If you do go over the 65% level then you are hit with a complete and immediate transfer embargo. That happened at Swindon and the only way they could get back below the level was to sell a player without the manager knowing about it. That ultimately led to him leaving the club, as we all witnessed. The only time you wouldn't get an embargo would be if it was a 'one in-one out' situation. Even then you would have to prove that you had less than 24 players in your squad when the business was transacted and that the salary of the player coming in was going to be less than 75% of the salary of the player going out. It’s all very complicated and it has to be handled sensitively to make sure you stay within the rules.

Do you see SCMP as a positive thing going forward? Yes, it is a positive step. It should start to bring us all onto a more level playing field. We have to be honest and say that it hurt us this year because we had such a drop in attendances. There was a big difference between our forecasts and the actual crowd numbers who came to the games, and that meant our hands were tied when it came to submitting our second set of figures half way through the season. The Football League produced a benchmark document to show where we are compared to others and there were some frightening figures on there. There are clubs who are starting the year in excess of the 65% level and it will take a lot of remedial work for them to pull it back.

Does it change as you go up into the Championship? We have no choice but to adhere to this at League One and League Two level. Financial Fair Play comes into play at the next levels up, and that’s an attempt to bring that division into line with the Premier League and the attempts we are seeing from UEFA to regulate their spending. The top level clubs can’t continue to make huge losses and that’s why so many of them have needed to have someone pumping money in to keep the thing running. Manchester City did it by selling their stadium naming rights, and we have recently seen that clubs like Charlton, Norwich and Southampton have achieved success on the back of spending a lot of money. It’s good when it works, but we’ve all seen what happens to those other clubs who have gambled and failed. In some cases they have almost dropped out of sight.

What can we expect from this system in the future? I think it will evolve and come in line with business standard quarterly accounts. Clubs will end up with an average salary they pay and that will be taken from one or two big earners, four or five smaller earners and a larger group which sits somewhere between the two. I can see that we will have to make these forecasts more frequently, particularly with the loan windows being open for as long as they are. The nature of the business now means it is much more likely for us to bring in a player from a bigger club who is on decent wages during a loan window, than it is for us to sign someone for a lot of money during the same transfer window. The key is for us to find players who fit into the structure and who will enhance the club. That’s why it is important for us to maximise all of our revenue streams, whether that’s attendances, shop sales, merchandise or whatever. The simple fact is that the more turnover we achieve, the more we can do in the transfer market and to improve the infrastructure of the club as a whole.

[Ian M]

To those that read it, how do you interpret the "home grown player" description? Does this only apply to players under 21? To my understanding, if Arsenal & Aston Villa have held the registration of Wynter & Williams for 3 years, those wages won't count towards SCMP next season either (& Wynter's the season after too if we stay down & follow SCMP).

If I have interpreted that correctly it makes our Summer transfer business even better. SO'D said earlier this Summer that with the clauses we were already spending 80% of the amount we could spend on wages this season (whether that 80% presumed that Heaton, Carey & Nyatanga would sign offered contracts I don't know). Since then we have signed:

Fielding - who (if reports are to be believed) will have his wages subsidised by Derby next season.

Wynter - wages don't count towards SCMP

Williams - wages don't count towards SCMP

Flint

We have also managed to come to some arrangement with Foster to cancel his contract which could well be weighted in our favour as the lad was keen on a move back North.

I was a little worried that SCMP was going to lead to us failing to meet its targets and being handed a transfer embargo but now I think there's even scope to add one more first teamer to the squad without putting us in any immediate danger.

[eric04]

Thanks for posting that, really interesting. I wonder who the clubs are who are already way over their 65%?

Interesting that Carlisle basically had to sell Paddy Madden to get a deal through. Worked out well for Yeovil but maybe not Carlisle in the end.

Other interesting bit was the cash injection loophole. It seems SL could buy us lots of players on fees but as long as he doesn't want that money back if doesn't count in our profit/loss calculation. As someone else pointed out, it's why we are better off chasing players in contract rather than free transfers who want a bigger wage.

[GoingUp]

So what happens if you are at your turnover % limit and come january window due to poor form/injuries your near the bottom, you would have to sell first before taking on new players.if thats right then clubs would be ill advised to use up all the budget available at the start of the season wouldnt they?

[Ian M]

So what happens if you are at your turnover % limit and come january window due to poor form/injuries your near the bottom, you would have to sell first before taking on new players.if thats right then clubs would be ill advised to use up all the budget available at the start of the season wouldnt they?

But if a club holds back in case they need to spend in January to fight relegation they will potentially not be as strong as they could be between September & December and be further adrift than had they spent in August. Also because they are performing badly I guess their crowds would be down and the 10% they may have held back on initial budgets will have disappeared due to the updated downsized projected turnover and they couldn't sign anyone anyway.

[semblar]

My guess is that if a club looks like it will be a bit short, we would have some additional special offers spring up in the run up to Christmas, to boost the matchday takings....

[Philly The Kid]

The "Home grown" wording is vague...does it mean 3 years at age 19, at the same club? that hasn't been explained adequately. If not, then, as you say, Wynter and Williams appear to be excellent acquisitions (in the SMCP side of things). If so, then it would certainly put clubs off picking up young British talent discarded by PL clubs' academies. I can't see this, if the purpose is to encourage development of young British players, then it surely must be 3 years up to age 19, at any club...we'll see on that...

The other pleasing thing is that it seems to have been well received by the likes of Carlisle, with an acceptance that going forward it will be tweaked and improved. There seems to be an acceptance that things couldn't carry on the way they were.

So some short(ish) term pain, for long term gain seems to be what clubs feel is the right thing to do in order to put their houses in order.

That said, someone will find loopholes and ways around things, they always do, so I suspect that things like naming rights on the new stadium or the tarted up Ashton Gate will be crucial...

Thanks for posting that Ian...very informative!!!

[GoingUp]

But if a club holds back in case they need to spend in January to fight relegation they will potentially not be as strong as they could be between September & December and be further adrift than had they spent in August. Also because they are performing badly I guess their crowds would be down and the 10% they may have held back on initial budgets will have disappeared due to the updated downsized projected turnover and they couldn't sign anyone anyway.

[Eagle Eyed]

Unfortunately I don't think those at the top of football explained FFP / SMCP at all well when they introduced it. Everything you've said is correct Ian.

[GoingUp]

It still seems risky to me because spending all your budget at the start of the season wont guarantee success and the higher attendance that you intimate so you would have to sell players (which would have to be some of your most vaued and best) to be able to bring in ones on the same or lower wage as the ones they replace.teams that are doing well also quite often look for 1 or 2 new faces in january to hopefully seal their promotion spots so I really think some room for manoeuvre should be left by not using all the budget pre season.

[eric04]

We're in a pretty strong position then really. One of the larger clubs in the division (in terms of crowds) and with a chairman prepared to pay fees which he could write off.

[havanatopia]

I do hope this sinks in, thanks Ian.

Clearly not to Jake unless its his poor attempt at humour.

Thanks also Ian. Appreciated.

[Timbo7]

To those that read it, how do you interpret the "home grown player" description? Does this only apply to players under 21? To my understanding, if Arsenal & Aston Villa have held the registration of Wynter & Williams for 3 years, those wages won't count towards SCMP next season either (& Wynter's the season after too if we stay down & follow SCMP).

If I have interpreted that correctly it makes our Summer transfer business even better. SO'D said earlier this Summer that with the clauses we were already spending 80% of the amount we could spend on wages this season (whether that 80% presumed that Heaton, Carey & Nyatanga would sign offered contracts I don't know). Since then we have signed:

Fielding - who (if reports are to be believed) will have his wages subsidised by Derby next season.

Wynter - wages don't count towards SCMP

Williams - wages don't count towards SCMP

Flint

We have also managed to come to some arrangement with Foster to cancel his contract which could well be weighted in our favour as the lad was keen on a move back North.

I was a little worried that SCMP was going to lead to us failing to meet its targets and being handed a transfer embargo but now I think there's even scope to add one more first teamer to the squad without putting us in any immediate danger.

Many thanks for posting the interview - easily the most informative piece I have read to date on the subject

It is indeed good news that Williams and Wynter will fall outside the capped figure until they are 21 - it seems like the League's plan is working for the time being at least. I do fear that this exemption (if tested) will fall foul of EU employment law as it plainly favours young English/Welsh players (plus other nationalities growing up in England/Wales) contracted to Arsenal and Villa over other young Europeans contracted to Royal Antwerp, Lille and Legia.

I understood SO'D's budget prediction to have included only current contracts (i.e. it did not include offers subsequently made to Heaton, Nyatanga and Carey). What is far less certain is the detail of the turnover projection and therefore the risk of lower than forecast season ticket sales or matchday revenues. Having said this, it does now seem clear that there is nothing in the SCMP to prevent a mid-season equity injection to avert a transfer embargo - provided SL still has an appetite for this.

[Ian M]

Many thanks for posting the interview - easily the most informative piece I have read to date on the subject

It is indeed good news that Williams and Wynter will fall outside the capped figure until they are 21 - it seems like the League's plan is working for the time being at least. I do fear that this exemption (if tested) will fall foul of EU employment law as it plainly favours young English/Welsh players (plus other nationalities growing up in England/Wales) contracted to Arsenal and Villa over other young Europeans contracted to Royal Antwerp, Lille and Legia.

I understood SO'D's budget prediction to have included only current contracts (i.e. it did not include offers subsequently made to Heaton, Nyatanga and Carey). What is far less certain is the detail of the turnover projection and therefore the risk of lower than forecast season ticket sales or matchday revenues. Having said this, it does now seem clear that there is nothing in the SCMP to prevent a mid-season equity injection to avert a transfer embargo - provided SL still has an appetite for this.

I imagine that we may see a situation whereby if we aren't looking to add players as our season is going ok we would just accept an embargo but as you say, if we needed to bring in a new face, bang donation of £1m, hello transfers

However, whilst that is ok at this level, I would have thought the full FFP regulations which apply at Championship level (based on UEFA's own system - which has seen Cavani become unaffordable for Man City!) would guard against such an act..... But we'll save that thread for when it applies to us

[Ian M]

To those that read it, how do you interpret the "home grown player" description? Does this only apply to players under 21? To my understanding, if Arsenal & Aston Villa have held the registration of Wynter & Williams for 3 years, those wages won't count towards SCMP next season either (& Wynter's the season after too if we stay down & follow SCMP).

If I have interpreted that correctly it makes our Summer transfer business even better. SO'D said earlier this Summer that with the clauses we were already spending 80% of the amount we could spend on wages this season (whether that 80% presumed that Heaton, Carey & Nyatanga would sign offered contracts I don't know). Since then we have signed:

Fielding - who (if reports are to be believed) will have his wages subsidised by Derby next season.

Wynter - wages don't count towards SCMP

Williams - wages don't count towards SCMP

Flint

We have also managed to come to some arrangement with Foster to cancel his contract which could well be weighted in our favour as the lad was keen on a move back North.

I was a little worried that SCMP was going to lead to us failing to meet its targets and being handed a transfer embargo but now I think there's even scope to add one more first teamer to the squad without putting us in any immediate danger.

I have realised that Reid, Bryan & most of our other youngsters will also not count towards SMCP.

[Ian M]

Bumped for RalphMilnesLeftFoot & RedZepperin.

[spudski]

When the board and SL and managers refer to FFP...they are referring to the same thing... lets not try and confuse issues please.