The Championship FFP Thread (Merged)

[Mr Popodopolous]

Was pondering doing this over Christmas but decided to wait a bit. Birmingham's financial results though and their losses inspired me to make this thread and wonder how clubs are placed and whether we may have an advantage over them in the future i.e. next season.

• Aston Villa- Surely failed it over the 3 years to this season. However we only have their results for 16/17 at this time, technically compliant between 15/16 and last season but not by much. So far, out of FFP total of £13m, they lost £6.5m in 16/17 after allowable costs removed. Can lose post said costs another £32.5m over the 2 seasons to the end of this season with parachute payments decreasing...In trouble surely. No results for last season yet.
• Birmingham- Failed! Missed it by varying calculations, £11.4m, primarily through their big loss last season of £37.5m!! (FFP allowances take it down to 'only' £34.3m). Surely require a points deduction this season or next- the double whammy comes that after this season, their starting point will be that £34.3m loss which means they can lose £2.35m per season after costs to 2020/21- huge challenge...oh and wages last season apparently 200% or so of turnover.
• Blackburn- Hard to say as Venkys London results differ a bit to their accounts, the latter of which hasn't been published for last season. However should be compliant this year due to relatively low loss in 16/17 plus an excellent saleable asset in Dack if they need. Probably will be alright but won't be able to push the boat out without sales etc .No results for last season yet though Venky's London a good estimate and should be fine for this year, after unsure.
• Bolton- FFP no problems at all. Their problems seem to be cash based as opposed to FFP but nowhere near the loss limit of £39m I think thanks to a small loss in 2016/17 of £4.4m, or if we're taking the 3 years into account to last season, they lost only £6.1m in 2015/16 and that's before deducting any costs. Transfer embargo and wage limits surely helped them quite big in this respect. However since the lack of investment form owners, they probably won't roll the dice even though they most definitely could. No results for last season yet.
• Brentford- No accounts for last season but before any deductions, lost around £13.7m over 2 seasons i.e. 15/16 and 16/17 and if the starting point last season, their position even better. Player sales still probably necessary most years but with Benham and his wealth, combined with the excellent results for 16/17 they can pick and choose a bit- perhaps even roll the dice one year. Similarities to us model wise? However we have the better facilities, higher gates so our model is like a Brentford Plus IMO. No results for last season yet.
• Derby- In a bit of a tight spot for the 3 years to last season but probably compliant. Also been making some big sales in recent years which helps to offset a bit, £22.5m over 15/16 and 16/17. No results for last season yet.
• Hull- The Allams don't like spending money and want out. Their FFP position is fine but could face a cash crunch with the reduction in parachute payments- very unexpected revival for them also. Seem to be placed okay but it may change and can depend on the owners too. Parachute payments end after this season- £41m, £33m then...£0.
• Ipswich- Absolutely no issues with FFP, problem for them looks like being relegation- departures of McCarthy, Waghorn, McGoldrick and Garner in one summer the final straw.
• Leeds- I'd have thought fine FFP wise, may change a bit if Bielsa is on a big whack. Spent a bit last 2 seasons, however made a small profit in 16/17 plus made sales each summer too. No results for last season yet.
• Middlesbrough- Should be fine FFP wise, but spent a lot last season- big sales too though. This and last season saw Parachute Payments of £41m and £33m- but they run out from next season. No results for last season but big sales this summer surely helps?
• Millwall- Released results. Not a big spending club but could give it a go if owners wanted. Roughly lost £18m before exclusions in the 3 years to last season, if we include the 2 years before this then it's about £10.85m over 2. Nowhere near.
• Norwich- Parachute Payments gone this season, but a low loss in 16/17 and a good profit- lot of wriggle room and may even be fine for next season too given the 3 year cycle starting in 17/18 to next saw a good profit and writedown of players also removes future costs. Usually fairly prudent aren't they?
• Nottingham Forest- Fine for this season probably, owing to a relatively low loss in 16/17, player sales and Brereton sale for £7m- academy sees it as pure profit. Next season though if they don't go up could see a different picture. Maybe like another Birmingham but not quite as bad- hamstrung though most definitely, but not necessarily a total disaster. No results for last season yet.
• Preston- Should be fine FFP wise. Not exactly big spenders, could give it a go if they wanted. Lost about £4m in the 2 years to 16/17, which is exceptional for Championship IMO. No results for last season yet.
• QPR- The most punished so far and yet it wasn't enough. Should due to Parachute Payments be compliant for the 3 years to last season and even the 3 years to this season. Thereafter? A huge challenge- their income will plunge by between 40-50% next season. Lost about £17.4m in the 2 years to 2016/17. No results for last season yet.
• Reading- Lost after excluding their loan write off about £19.62m to the years of 15/16 and 16/17. Should be fine for the 3 years to last season and low losses in 16/17 mean fine for this- next season is where their problems should begin, that is if they stay up. No results for last season yet.
• Rotherham- No bother at all. Lost £2.6-£2.7m in total pre exclusions the 2 seasons to 16/17. Could probably give it a go if the chairman wanted but they probably are fairly happy with their lot. No results for last season yet.
• Sheffield United- Lost about £14.2m before exclusions in the 2 seasons to 16/17. No bother surely? About £5.7 in 16/17, can't see them being in trouble though expenditure has increased. Brooks sale a big profit. No results for last season yet.
• Sheffield Wednesday- FFP trouble surely? Especially given how the losses more than doubled in 16/17, surprised they haven't had to flog Reach, Bannan and Forestieri- at least not including certain players in the squad gave a message they were trying to do something albeit a bit too late. No results for last season yet.
• Stoke- Bit of a surprise but they might be in trouble. Certainly next season ones to watch for that- they lost £31.9m or thereabouts and though it included write-downs of around £29m and the PL has a higher loss limit, when that cash plunges...surely if they are midtable in January 2020 say, they start some big sales, if not sooner. However they also made that loss despite all that TV money and a profit on player sales of £22m that season...could the firesale be sooner?? Relegation wage clauses.
• Swansea- Profit of almost £13m in 2016/17. That stands them in very decent stead for FFP this season, made big player sales too this season though not necessarily always big profits with amortisation etc. Think absolutely fine FFP wise and probably next season too. Possibly even started cutting a bit too much too soon, but then again if their owners don't invest much it maybe quite needed. No results for last season yet. Relegation wage clauses.
• West Brom- Posted a profit of £32,147,000 in 2016/17. Should be absolutely fine FFP wise for this season, but last season that huge profit apparently transformed into requiring a bank overdraft. No results for last season yet. Relegation wage clauses.
• Wigan- Should be absolutely fine for the 3 years to this season- final year of Parachute Payments saw a profit of £4.3m in fact. After that, it gets tougher- can't see them troubling the top of the League in any case. No results for last season yet.

Therefore as we can see- and I really should present it on a spreadsheet or something- while there are still quite a few financial positions to be finalised, we actually are in not too bad a position and definitely if we only add steadily next season too, then summer 2020 we can really splash the cash. Or we could roll the dice a little next season, knowing that it would be restricted the following season- though a big sale of Kelly would change the equation significantly.

The question I guess is whether it will be enforced correctly but clubs in big trouble at this stage include: Birmingham, Aston Villa and Sheffield Wednesday. Those with a decent challenge ahead of them may include Derby, Middlesbrough, Nottingham Forest, QPR and Reading. Blackburn and Wigan will see money tight. The unknowns include the PL relegated sides but Stoke seem in trouble. Teams like Bolton, Millwall, Preston and Rotherham actually could have a go but can't see their owners doing this. Brentford also maybe able to have a go and I can see their owner trying it.

6 of these sides will leave the division at the end of the season- hopefully one is us upwards (though unsure that's so likely). Of those looking like coming up, Sunderland may well be a danger next season as naturally big club, Portsmouth seem to have momentum but beyond that not too much to worry about. As to those likely to enter from PL. Huddersfield will be able to splash the cash if they want, sure their accounts absolutely fine and you throw in the higher loss limits PL, parachute payments, their likely profit last and this season...Southampton of course a big club at this level so maybe a danger but unsure of their finances, seem a fairly sensibly run club though financially speaking. Fulham haven't clicked but should barring a firesale have enough to be up the higher end.

Seem to be quite a few clubs who will be in trouble or hamstrung however over next season and the season after...opportunity for us maybe? Has to be enforced correctly though or we may as well scrap it!

[nickolas]

None will get in serious trouble as can you seriously see the EFL penalising Villa, Derby etc as the big boys?

Pointless rules being set with FFP as EFL dont seem to have the bottle to follow through with punishments. 

[downendcity]

You rightly  say, the question is whether ffp will be enforced correctly, but the real question is after being enforced correctly, will the EFL apply the appropriate penalty?

If, say, a club like Villa are found in breach, secure promotion but are only hit with a fine, then it will make a mockery of the whole ffp excercise, because the reward for "cheating" far outweighs the penalty. It is cheating if a few clubs think they can ignore the rules that the rest of the clubs are following.

Until now, most fas feel that clubs like QPR and Bournemouth "got away" with it by securing promotion but only getting a fine, albeit in QPR's case the fine would have crippled the club when they were relegated back to the championship and on that basis wriggled out of the real penalty with a much reduced fine. The only way to avoid this feeling remaining is to make sure offending clubs are hit hard. If that means pints penalties that prevent a club being promoted, then I'm all for it, as it will exorcise clubs to manage their finances with in ffp - the way the majority are trying so to do.

6 minutes ago, nickolas said:

None will get in serious trouble as can you seriously see the EFL penalising Villa, Derby etc as the big boys?

Pointless rules being set with FFP as EFL dont seem to have the bottle to follow through with punishments. 

That's why I posted the above!

Not only can I seriously see them punishing a club like Villa or Derby, but think they have no option if their ffp rules are to have any credibility going forward.

I've commented a number of times previously that in the past the EFL's hands were tied when it came to ffp breaches ( e.g.  QPR and Bournemouth) as the breach was only confirmed once the season had ended , by which time said clubs were promoted and the EFL could then not apply a penalty to what was then a premier league club.

The new rules mean that they will know of a breach in March of this year so they now have the means - including points penalty - to penalise offending cubs before the end of the season an, if appropriate, prevent them being promoted. 

 

Edited January 4, 2019 by downendcity

[Mr Popodopolous]

That's the crux of the issue- not only must they punish but the appropriate punishment must be applied.

Personal take is the harshest punishments should be reserved for those most blatantly disregarding- QPR and Aston Villa. Genuinely Birmingham and Sheffield Wednesday for all their gambling, have at least made some efforts- albeit too little too late. They both have made certain adjustments e.g. certain players unavailable for selection, presumably higher waged to try and get to leave. Aston Villa though seem to be sticking their fingers in their ears singing to the EFL and the other 23 clubs singing 'La La La, I can't hear you.' Birmingham and Sheffield Wednesday seem to be incompetence as much as recklessness and should undoubtedly be punished- Villa though seem to have a dislikeable dose of arrogance and entitlement thrown in for good measure. I'd piss myself if all their claims of Purslow found a loophole are for the wrong FFP i.e. PL and CL and leaves them up high and dry. If enforced rightly, then Villa need to pay a visit here...

Edited January 4, 2019 by Mr Popodopolous

[Always Believesham]

Sheffield Wednesday announced that they were under an embargo 20minutes before the season started and Birmingham were unable to register one of the players they signed, until certain criteria had been met - they’ve both been punished but was that as a result of FFP?

Does anyone know who is currently under embargo? These would be prime candidates to have their accounts poured over in the spring.

Also, I appreciate the point about Bolton, they have seen the kinds of problems these rules were set up to avoid! Could they be in even more trouble if they went down? ie. Are league one’s SCMP rules still set so that salaries cannot be greater than 60% of turnover?

[Mr Popodopolous]

5 minutes ago, solihull cider red said:

Sheffield Wednesday announced that they were under an embargo 20minutes before the season started and Birmingham were unable to register one of the players they signed, until certain criteria had been met - they’ve both been punished but was that as a result of FFP?

Does anyone know who is currently under embargo? These would be prime candidates to have their accounts poured over in the spring.

Also, I appreciate the point about Bolton, they have seen the kinds of problems these rules were set up to avoid! Could they be in even more trouble if they went down? ie. Are league one’s SCMP rules still set so that salaries cannot be greater than 60% of turnover?

QPR are as part of their settlement, but that maybe a one window thing- it wasn't clear. Definitely shouldn't be however! Birmingham were but can now sign players under very strict conditions, think Sheffield Wednesday were but won't sign anyone anyway and Aston Villa aren't but probably should be- probably will be in the summer! Don't think anyone else is.

Possible that one or all of the last 3 are under a business plan where they work with the EFL. 

The other interesting thing that makes it a bit harder for public analysis is that so few clubs have released their accounts for last season! Only 7 thusfar (plus we can have approximations based on Blackburn Venky's London e.g., probably not a huge difference)  the EFL will have the financial info for last season and projected accounts for this season by March/end of March I think.

[Davefevs]

7 minutes ago, Mr Popodopolous said:

QPR are as part of their settlement, but that maybe a one window thing- it wasn't clear. Definitely shouldn't be however! Birmingham were but can now sign players under very strict conditions, think Sheffield Wednesday were but won't sign anyone anyway and Aston Villa aren't but probably should be- probably will be in the summer! Don't think anyone else is.

Possible that one or all of the last 3 are under a business plan where they work with the EFL. 

The other interesting thing that makes it a bit harder for public analysis is that so few clubs have released their accounts for last season! Only 7 thusfar (plus we can have approximations based on Blackburn Venky's London e.g., probably not a huge difference)  the EFL will have the financial info for last season and projected accounts for this season by March/end of March I think.

Think Villa are fine until they submit their predicted accounts in a couple of months.

By that time Birmingham will have had their hearing, and if the EFL think they want to come down hard on Villa, they need to set a precedent with Brum to leave Villa’s lawyers with no wriggle room.

Great 1st post MP.

[downendcity]

3 hours ago, Mr Popodopolous said:

That's the crux of the issue- not only must they punish but the appropriate punishment must be applied.

Personal take is the harshest punishments should be reserved for those most blatantly disregarding- QPR and Aston Villa. Genuinely Birmingham and Sheffield Wednesday for all their gambling, have at least made some efforts- albeit too little too late. They both have made certain adjustments e.g. certain players unavailable for selection, presumably higher waged to try and get to leave. Aston Villa though seem to be sticking their fingers in their ears singing to the EFL and the other 23 clubs singing 'La La La, I can't hear you.' Birmingham and Sheffield Wednesday seem to be incompetence as much as recklessness and should undoubtedly be punished- Villa though seem to have a dislikeable dose of arrogance and entitlement thrown in for good measure. I'd piss myself if all their claims of Purslow found a loophole are for the wrong FFP i.e. PL and CL and leaves them up high and dry. If enforced rightly, then Villa need to pay a visit here...

While I can understand the sentiment i.e. punishing most harshly those that have breached most flagrantly, I would disagree for one simple reason.

The minute  an "exception" is made, for whatever reason, you can bet your bottom dollar that further down the line other clubs caught out, will use every legal device possible to use previous examples as justification for a more lenient punishment.

At the start of each season, each club knows the ffp rules and especially now that a 3 year financial cycle is being applied, it's not as if they can't see it coming ! All clubs are in the same position so why should one club benefit, no matter how hard they tried, if they gain an advantage by breaking a rule to which other clubs have adhered?

For a club like Villa, they have enjoyed parachute payments for 3 seasons, and we all know they have splashed the cash in an ( so far unsuccessful) attempt to gain immediate promotion back. If they fail ffp, and do so because they have been unable to shift high earners off the wage bill this season, then it is a problem they should have thought about, and addressed. far sooner, especially if other, more prudent clubs, have prejudiced their own promotion chances by keeping their financial house in order?

 

 

[Mr Popodopolous]

6 minutes ago, downendcity said:

While I can understand the sentiment i.e. punishing most harshly those that have breached most flagrantly, I would disagree for one simple reason.

The minute  an "exception" is made, for whatever reason, you can bet your bottom dollar that further down the line other clubs caught out, will use every legal device possible to use previous examples as justification for a more lenient punishment.

At the start of each season, each club knows the ffp rules and especially now that a 3 year financial cycle is being applied, it's not as if they can't see it coming ! All clubs are in the same position so why should one club benefit, no matter how hard they tried, if they gain an advantage by breaking a rule to which other clubs have adhered?

For a club like Villa, they have enjoyed parachute payments for 3 seasons, and we all know they have splashed the cash in an ( so far unsuccessful) attempt to gain immediate promotion back. If they fail ffp, and do so because they have been unable to shift high earners off the wage bill this season, then it is a problem they should have thought about, and addressed. far sooner, especially if other, more prudent clubs, have prejudiced their own promotion chances by keeping their financial house in order?

 

 

Yeah, hadn't thought of it like that.

In no way should clubs who have breached get off scot free- a) Out of fairness and consistency b) Because other clubs have made big, sometimes huge sacrifices to comply. All breaches should be punished but I believe the EFL have a bit of a sliding scale as to the severity of the breach, the intent behind it and the severity of punishment gets decided on these factors. Aston Villa are a particularly flagrant case, they barely seem to acknowledge its existence. I suppose I worded my post a bit poorly but what I was trying to say is that Aston Villa are undoubtedly the worst, the most blatant- their losses for this season especially must be huge. They won't officially be in breach until March 2019 most likely- if they miss the playoffs this year any potential points penalty should be applied next season.  Same goes for Birmingham, same goes for Sheffield Wednesday. Those are the big 3 atm IMO.

Edited January 4, 2019 by Mr Popodopolous

[downendcity]

9 minutes ago, Mr Popodopolous said:

Yeah, hadn't thought of it like that.

In no way should clubs who have breached get off scot free- a) Out of fairness and consistency b) Because other clubs have made big, sometimes huge sacrifices to comply. All breaches should be punished but I believe the EFL have a bit of a sliding scale as to the severity of the breach, the intent behind it and the severity of punishment gets decided on these factors. Aston Villa are a particularly flagrant case, they barely seem to acknowledge its existence. I suppose I worded my post a bit poorly but what I was trying to say is that Aston Villa are undoubtedly the worst, the most blatant- their losses for this season especially must be huge. They won't officially be in breach until March 2019 most likely- if they miss the playoffs this year any potential points penalty should be applied next season.  Same goes for Birmingham, same goes for Sheffield Wednesday. Those are the big 3 atm IMO.

It's potentially complicated, but I tend to see it in terms of what a club has gained.

If, say, Millwall were in breach in mid table,  and with a small overspend then a fine would probably be completely suitable.

Picking on Villa! If Villa were in breach and at the time were riding high, in say 3rd/4th place, the danger is that a fine would represent little punishment if they went on to secure promotion. Iy would also effectively be a kick in the teeth for the other play off teams who have kept within ffp limits. Accordingly, that's when I think a points penalty should be applied sufficient to take the club out of the promotion race.

I know there will be many who say that if that happened the club penalised would take legal action , and that the EFL would not apply such a punishment in order to side step the problems such legal action could entail. Back to the point I made in my earlier post, unless the EFL take such action then they might as well discontinue ffp as it can have no credibility or teeth unless it is seen to be working as designed. As a post script, I would like to think that if the EFL ducked out of punishing an offending club, then other clubs would take their own legal action demanding ffp penalties be applied or the offending club be thrown out of the football league for breach of rules!

 

[Mr Popodopolous]

12 minutes ago, downendcity said:

It's potentially complicated, but I tend to see it in terms of what a club has gained.

If, say, Millwall were in breach in mid table,  and with a small overspend then a fine would probably be completely suitable.

Picking on Villa! If Villa were in breach and at the time were riding high, in say 3rd/4th place, the danger is that a fine would represent little punishment if they went on to secure promotion. Iy would also effectively be a kick in the teeth for the other play off teams who have kept within ffp limits. Accordingly, that's when I think a points penalty should be applied sufficient to take the club out of the promotion race.

I know there will be many who say that if that happened the club penalised would take legal action , and that the EFL would not apply such a punishment in order to side step the problems such legal action could entail. Back to the point I made in my earlier post, unless the EFL take such action then they might as well discontinue ffp as it can have no credibility or teeth unless it is seen to be working as designed. As a post script, I would like to think that if the EFL ducked out of punishing an offending club, then other clubs would take their own legal action demanding ffp penalties be applied or the offending club be thrown out of the football league for breach of rules!

 

That's broadly speaking how I tend to see it too. A fine has its place if a side has gained little and breached little. Points penalty at the top end and maybe the bottom end if there are sides below at the bottom who are in breach and a side below compliant I dunno say Rotherham 22nd and Birmingham 20th something like that. If Birmingham get the mooted 15 point deduction next season say, then that's not an impossible scenario in fact!

Wholly agree on your last point too. Clubs who have complied should take legal action if the EFL try to dodge punishing an offending side- as you say if when it comes to it the correct and appropriate punishments are not applied then basically there's no point in having it anymore. For to name a few, plenty of bottom half clubs run within realistic means. More significantly, ourselves, Sheffield United, Middlesbrough arguably, Norwich and Leeds to name 4 or 5 in the top half run correctly, taken moderate to big hits to stay compliant so it has to be enforced. There's probably a few more in a similar boat.

Edited January 4, 2019 by Mr Popodopolous

[BTRFTG]

I take it the OP is an accountant and, if so (and don't take this the wrong way,) would take everything they say with a pinch of salt (for that's how accountants operate.)

We were discussing City's position the other day post SL's informative talk to the Senior Reds.

If we're only allowed to lose £39m over 3 years (we claim the larger amount as SL has personally increased his equity in the football club to cover its unsustainable losses,) I don't see how it is the football club lost £39.9m during the last 3 year period without being punished ( the £23.4 would also have breached the single year limit?) Perhaps there's some indexation discounting involved that drops the overall number just under the limit?

I also don't fully understand how FFP relates to wider activity other than football and whether or not (as in our case) allowances are able to be made? The football club doesn't own beneficial control in Bristol Sport, The Stadium Company or the Holding Company, so presume ffp relates wholly to its accounts and nothing more?

I believe the football club at present has net liabilities of £60m. And though SL may be happy to write that off as and when it's his time, it has to be worrying for the future.

[Davefevs]

4 minutes ago, BTRFTG said:

I take it the OP is an accountant and, if so (and don't take this the wrong way,) would take everything they say with a pinch of salt (for that's how accountants operate.)

We were discussing City's position the other day post SL's informative talk to the Senior Reds.

If we're only allowed to lose £39m over 3 years (we claim the larger amount as SL has personally increased his equity in the football club to cover its unsustainable losses,) I don't see how it is the football club lost £39.9m during the last 3 year period without being punished ( the £23.4 would also have breached the single year limit?) Perhaps there's some indexation discounting involved that drops the overall number just under the limit?

I also don't fully understand how FFP relates to wider activity other than football and whether or not (as in our case) allowances are able to be made? The football club doesn't own beneficial control in Bristol Sport, The Stadium Company or the Holding Company, so presume ffp relates wholly to its accounts and nothing more?

I believe the football club at present has net liabilities of £60m. And though SL may be happy to write that off as and when it's his time, it has to be worrying for the future.

There are allowances, such as Academy costs.  MrP will give you a fuller answer.

[Xiled]

Really interesting topic and even with allowances for the uncertainty of recent accounts, it backs up the feeling that teams like Villa are in a perilous place without promotion this season.

One of the problems that I see is that without comprehensive penalties being applied to the FFP flouting clubs, the Championship will continue to be a 'death zone'. Clubs cannot exist sustainably at this level. If Preston and Rotherham can't do it, none of us can with the level of footballing talent that exists in this division.

If FFP is applied properly and parachute payments cease to be the enormous incentive that they have been to date then clubs will have to bring their overall squad value down in line with the money that is actually available to them without year on year multimillion pound losses.

In reality, that's never going to happen because enough club owners will continue to flout the rules or gamble on coping with FFP penalties.

So, for a club like City there's a choice. Push for promotion and then exist within our means in the Premiership. Or be the big fish in a small League 1 pond.

Talk of sustainability in the Championship is a non-starter.

[Mr Popodopolous]

On 04/01/2019 at 20:14, Xiled said:

Really interesting topic and even with allowances for the uncertainty of recent accounts, it backs up the feeling that teams like Villa are in a perilous place without promotion this season.

One of the problems that I see is that without comprehensive penalties being applied to the FFP flouting clubs, the Championship will continue to be a 'death zone'. Clubs cannot exist sustainably at this level. If Preston and Rotherham can't do it, none of us can with the level of footballing talent that exists in this division.

If FFP is applied properly and parachute payments cease to be the enormous incentive that they have been to date then clubs will have to bring their overall squad value down in line with the money that is actually available to them without year on year multimillion pound losses.

In reality, that's never going to happen because enough club owners will continue to flout the rules or gamble on coping with FFP penalties.

So, for a club like City there's a choice. Push for promotion and then exist within our means in the Premiership. Or be the big fish in a small League 1 pond.

Talk of sustainability in the Championship is a non-starter.

Spot on, excellent post.

It's possible for example Leeds someone like this could turn a small profit every so often (and be within FFP) or the lower clubs if they sell sell sell- but if they do that they go down. Overall I agree fully- sustainability at this level a non-starter, PL we can exist within our means or a top end League One side with Cup runs, a strong youth policy, regular sales and yeah some times but not too much in the Championship could see sustainability. Don't think anyone would want the latter however- I know I wouldn't!

[Mr Popodopolous]

On 04/01/2019 at 18:59, BTRFTG said:

I take it the OP is an accountant and, if so (and don't take this the wrong way,) would take everything they say with a pinch of salt (for that's how accountants operate.)

We were discussing City's position the other day post SL's informative talk to the Senior Reds.

If we're only allowed to lose £39m over 3 years (we claim the larger amount as SL has personally increased his equity in the football club to cover its unsustainable losses,) I don't see how it is the football club lost £39.9m during the last 3 year period without being punished ( the £23.4 would also have breached the single year limit?) Perhaps there's some indexation discounting involved that drops the overall number just under the limit?

I also don't fully understand how FFP relates to wider activity other than football and whether or not (as in our case) allowances are able to be made? The football club doesn't own beneficial control in Bristol Sport, The Stadium Company or the Holding Company, so presume ffp relates wholly to its accounts and nothing more?

I believe the football club at present has net liabilities of £60m. And though SL may be happy to write that off as and when it's his time, it has to be worrying for the future.

I can get into it more properly tomorrow but tbh an accountant? I wish  good money they're on...I digress.

Allowances. Academy expenditure is one, Community is one, Women's football is one and there are some more I cannot recall off the top of my head. It takes us below £39m over 3 years but not by much, but enough. The one year loss thing doesn't apply as it used to as it is a 3 year rolling loss limit. £39m + allowable costs. Say for arguments sake £20m lost in year 1- if your previous 2 years are £19m or less then you comply. Then if for example the year preceding the £20m loss is £6m then you can lose £13m the following season. Then that £6m gets wiped out and you start on £20m and can lose about that (£19m) over the following 2 seasons- so about £9.5m per season.

Say allowable costs £4m per year- you add £4m to your accounting loss so in short FFP Loss + Allowable/Deductible Costs=Accounting Loss. Is my broad understanding of it. It's the FFP loss that has to be £39m over 3 years but if it's say £45m and then you knock off £4m per year then your FFP loss is £37m even if total loss that appears in accounts when added up is £49m over 3 years say.

[downendcity]

6 hours ago, Mr Popodopolous said:

I can get into it more properly tomorrow but tbh an accountant? I wish  good money they're on...I digress.

Allowances. Academy expenditure is one, Community is one, Women's football is one and there are some more I cannot recall off the top of my head. It takes us below £39m over 3 years but not by much, but enough. The one year loss thing doesn't apply as it used to as it is a 3 year rolling loss limit. £39m + allowable costs. Say for arguments sake £20m lost in year 1- if your previous 2 years are £19m or less then you comply. Then if for example the year preceding the £20m loss is £6m then you can lose £13m the following season. Then that £6m gets wiped out and you start on £20m and can lose about that (£19m) over the following 2 seasons- so about £9.5m per season.

Say allowable costs £4m per year- you add £4m to your accounting loss so in short FFP Loss + Allowable/Deductible Costs=Accounting Loss. Is my broad understanding of it. It's the FFP loss that has to be £39m over 3 years but if it's say £45m and then you knock off £4m per year then your FFP loss is £37m even if total loss that appears in accounts when added up is £49m over 3 years say.

Good News!

EFL have appointed Dianne Abbott as their head of ffp compliance.

 

[downendcity]

On 04/01/2019 at 20:14, Xiled said:

Really interesting topic and even with allowances for the uncertainty of recent accounts, it backs up the feeling that teams like Villa are in a perilous place without promotion this season.

One of the problems that I see is that without comprehensive penalties being applied to the FFP flouting clubs, the Championship will continue to be a 'death zone'. Clubs cannot exist sustainably at this level. If Preston and Rotherham can't do it, none of us can with the level of footballing talent that exists in this division.

If FFP is applied properly and parachute payments cease to be the enormous incentive that they have been to date then clubs will have to bring their overall squad value down in line with the money that is actually available to them without year on year multimillion pound losses.

In reality, that's never going to happen because enough club owners will continue to flout the rules or gamble on coping with FFP penalties.

So, for a club like City there's a choice. Push for promotion and then exist within our means in the Premiership. Or be the big fish in a small League 1 pond.

Talk of sustainability in the Championship is a non-starter.

Until club owners/chairmen/chief execs pay players only what a club can afford, and not what the agents demand or say their player is worth, we will see the current position continue. 

How many businesses have employees wages running in excess of the income the business generates and expect to stay in business?

It's madness and needs owners/chairmen/chief execs to grow a pair and start saying no to agents demands. 

 

[Mr Popodopolous]

Good news

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

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

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

Edited January 7, 2019 by Mr Popodopolous

[RedRaw]

Some interesting financial reading and figures from twitter.....go to SwissRamble's feed for lots of charts

 

 

Edited January 7, 2019 by RedRaw

[Mr Popodopolous]

£40m bank loan??

Should we be worried...would SL/Pula Sports or whoever (i.e. in reality SL) be a guarantor of this loan or would it fall on the club...?

Edited January 7, 2019 by Mr Popodopolous

[Always Believesham]

2 hours ago, Mr Popodopolous said:

Good news

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

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

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

I was chatting to a Birmingham fan at the weekend - admittedly he doesn't pay a great deal of attention to the finances but assumed they were in some pretty dire straights - the Brum/Villa debate up here is; is an aggravated breach worse than blatantly flouting the rules? Without getting into the realms of valuing players as assets (which I don't think you can do) there isn't much difference. Previous reports suggested a possible 21 points could be docked but 12 + 3 makes sense because it makes an example without limiting the EFL's options for future cases.

I was trying to navigate the SCMP rules before posting - it looks like, any contract signed before September of the season a team was relegated can be excluded. Sunderland would be fine I assume, City had an exemption based on the ground being developed I think? But we did also have a remarkably small (but perfectly formed) squad for that season. 

[Loderingo]

Agree that the Football League need to make an example of someone, with punishment now rather than years down the line (a la QPR).

As Villa had 20 seasons in the Prem before they came down, I'm assuming they would have started with a blank sheet of paper and 0 losses.  I'm guessing the temptation was to put all those losses into the first 2 seasons and gamble on going straight back up.  They really should be able to get back up without having to break the rules as they are the biggest club in the division.

I read a prediction on Sky the other day that Man City could be banned from next season's Champions League over FFP.

It's worth remembering the reason it came in was to stop more situations like Portsmouth/Leeds/Luton (where often the local businesses who were creditors suffered more than the football club)

[Mr Popodopolous]

34 minutes ago, Loderingo said:

Agree that the Football League need to make an example of someone, with punishment now rather than years down the line (a la QPR).

As Villa had 20 seasons in the Prem before they came down, I'm assuming they would have started with a blank sheet of paper and 0 losses.  I'm guessing the temptation was to put all those losses into the first 2 seasons and gamble on going straight back up.  They really should be able to get back up without having to break the rules as they are the biggest club in the division.

I read a prediction on Sky the other day that Man City could be banned from next season's Champions League over FFP.

It's worth remembering the reason it came in was to stop more situations like Portsmouth/Leeds/Luton (where often the local businesses who were creditors suffered more than the football club)

Yes and no, not exactly.

In practice yes. However the reality, not so much. When Villa came down, they would have had the PL loss limits- which are much higher than Championship- as their starting point. Therefore in 14/15 and 15/16 they could lose a max of £35m per season and £13m in Championship. Put in FFP deductions and they easily satisfied it.

Last season, gets trickier- 14/15 results wiped out, ignored and 15/16, 16/17 and 17/18. Now we don't know 17/18 results yet but when deductions etc factored in, yes it's likely they passed it- albeit max loss plus deductions now £61m (£3m+£13m+£13m rather than £35m+£35m+£13m). Now they are in the Championship and it's their third season here that £35m gets changed into a £13m and their total losses allowed falls to £39m over 3 years. In theory they could have failed it in 16/17 or last season but definitely didn't in the first and probably didn't in the 2nd. This however is highly likely the season they will fail it- and it could well be a big fail! Struggle to see how they won't tbh.

Edited January 7, 2019 by Mr Popodopolous

[downendcity]

20 minutes ago, Mr Popodopolous said:

Yes and no, not exactly.

In practice yes. However the reality, not so much. When Villa came down, they would have had the PL loss limits- which are much higher than Championship- as their starting point. Therefore in 14/15 and 15/16 they could lose a max of £35m per season and £13m in Championship. Put in FFP deductions and they easily satisfied it.

Last season, gets trickier- 14/15 results wiped out, ignored and 15/16, 16/17 and 17/18. Now we don't know 17/18 results yet but when deductions etc factored in, yes it's likely they passed it- albeit max loss plus deductions now £61m (£3m+£13m+£13m rather than £35m+£35m+£13m). Now they are in the Championship and it's their third season here that £35m gets changed into a £13m and their total losses allowed falls to £39m over 3 years. In theory they could have failed it in 16/17 or last season but definitely didn't in the first and probably didn't in the 2nd. This however is highly likely the season they will fail it- and it could well be a big fail! Struggle to see how they won't tbh.

This touches (sort of) on a point made in an earlier post i.e. aggravated breach vs flagrantly flouting the rules.

Although Villa would have had premier league loss limits, relegation would have given them 3 years of parachute payments which I presume these are classed as income. If so, then prudent management would have seen the parachute payments used to offset/cover the more stringent EFL ffp limits. However, Villa's owner chose to throw their financial resources into the playing squad in an attempt to secure a quick return to the prem and financial salvation.

As already pointed out in this thread, ffp was introduced to avoid the Pompey/QPR situation when, in particular, a club drops out of the prem and cannot meet commitments because of overstretched budgets etc. etc. Unless there is a section in the ffp rulebook that gives special dispensation to relegated clubs,  so that they can throw financial caution to the wind in order to gain a quick return to the prem, then they deserve no different consideration from any other club.

When lots of clubs, like us, are trying to progress towards promotion, but are doing so as prudently as possible and while keeping within ffp lists, why should other clubs be viewed as though they have special circumstances,  just because they were previously  in the prem, but are no longer? £100m "prize" money for finishing in the relegation spots, plus huge parachute payments should enable any club should mean relegated clubs are given less leeway, not more ( I know that Villa didn't get £100m and the current levels of parachute payment when they were relegated, but what they did receive put them well ahead of much of the championship from a financial point of view).

 

 

[Mr Popodopolous]

12 minutes ago, downendcity said:

This touches (sort of) on a point made in an earlier post i.e. aggravated breach vs flagrantly flouting the rules.

Although Villa would have had premier league loss limits, relegation would have given them 3 years of parachute payments which I presume these are classed as income. If so, then prudent management would have seen the parachute payments used to offset/cover the more stringent EFL ffp limits. However, Villa's owner chose to throw their financial resources into the playing squad in an attempt to secure a quick return to the prem and financial salvation.

As already pointed out in this thread, ffp was introduced to avoid the Pompey/QPR situation when, in particular, a club drops out of the prem and cannot meet commitments because of overstretched budgets etc. etc. Unless there is a section in the ffp rulebook that gives special dispensation to relegated clubs,  so that they can throw financial caution to the wind in order to gain a quick return to the prem, then they deserve no different consideration from any other club.

When lots of clubs, like us, are trying to progress towards promotion, but are doing so as prudently as possible and while keeping within ffp lists, why should other clubs be viewed as though they have special circumstances,  just because they were previously  in the prem, but are no longer? £100m "prize" money for finishing in the relegation spots, plus huge parachute payments should enable any club should mean relegated clubs are given less leeway, not more ( I know that Villa didn't get £100m and the current levels of parachute payment when they were relegated, but what they did receive put them well ahead of much of the championship from a financial point of view).

 

 

Fully agree with this post. No special dispensation for relegated clubs, was just explaining how the loss limit changed over time.

It's their challenge to meet and they seem to have failed to do so! Fully agree, no leeway- I'd further harmonise the rules too by scrapping in due course the £35m loss limit for PL clubs relegated, though I don't know how realistic it would be. However, they are already at an advantage with huge parachute payments (albeit a much higher cost base too), why should they have an extra £44m in Year 1 and though it drops, an extra £22m in Year 3?

Doing some rough calculations before factoring in wages admittedly, their profit on transfers lower than 16/17 for last season and so far this. Combined with parachute payments dropping by £8m last year from £41m-£33m then this year £15m. Wages will undoubtedly (surely)? have dropped...just a question of how much they failed by IMO and as such should be punished with a big points deduction plus embargo.

[Vincent Vega]

Great point by Nixon....

[downendcity]

12 minutes ago, Vincent Vega said:

Great point by Nixon....

Are Man A and Man B both Lee Tomlin?

[Davefevs]

10 hours ago, Mr Popodopolous said:

Good news

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

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

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

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

[Mr Popodopolous]

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.

[Vincent Vega]

4 minutes ago, Mr Popodopolous said:

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

In fairness to him , I think that's the point he's making. At least that's how I took it.

[Vincent Vega]

Double post

Edited January 7, 2019 by Vincent Vega

[Vincent Vega]

13 minutes ago, JamesBCFC said:

Surely Man A should only be punished if the calories of the meal are more than he's allowed on his diet?

(Have I taken the analogy too far?)

Only if Man A is a celiac vegan with a nut allergy 

[Mr Popodopolous]

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.

Edited January 8, 2019 by Mr Popodopolous

[Loderingo]

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

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

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

[Mr Popodopolous]

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.

Edited January 8, 2019 by Mr Popodopolous

[Mr Popodopolous]

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?

Edited January 11, 2019 by Mr Popodopolous

[Davefevs]

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

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

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

 

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

Good questions @Loderingo

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

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

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

Edited January 11, 2019 by Davefevs

[Mr Popodopolous]

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.

Edited January 11, 2019 by Mr Popodopolous

[Davefevs]

14 minutes ago, Mr Popodopolous said:

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

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

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

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

Edited January 11, 2019 by Davefevs

[downendcity]

8 minutes ago, Mr Popodopolous said:

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

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

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

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

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

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

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

[Mr Popodopolous]

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.

Edited January 11, 2019 by Mr Popodopolous

[Davefevs]

8 minutes ago, Mr Popodopolous said:

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

@downendcity Fully agree.

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

@downendcity 100%

[Mr Popodopolous]

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...

 

Edited January 18, 2019 by Mr Popodopolous

[Mr Popodopolous]

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!

Edited January 18, 2019 by Mr Popodopolous

[JoeAman08]

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

 

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

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

[Mr Popodopolous]

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?

[Coppello]

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

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

@downendcity Fully agree.

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

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

[Mr Popodopolous]

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.

[JoeAman08]

2 minutes ago, Mr Popodopolous said:

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

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

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

[Coppello]

2 minutes ago, Mr Popodopolous said:

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

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

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

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

[Mr Popodopolous]

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...

 

Edited January 18, 2019 by Mr Popodopolous

[JoeAman08]

1 minute ago, Mr Popodopolous said:

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

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

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

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

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

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

[Mr Popodopolous]

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)?

Edited January 18, 2019 by Mr Popodopolous

[Davefevs]

20 minutes ago, Coppello said:

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

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

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

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

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

19 minutes ago, Mr Popodopolous said:

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

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

 

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

[Coppello]

8 minutes ago, Mr Popodopolous said:

 

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

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

[Coppello]

7 minutes ago, Davefevs said:

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

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

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

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

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

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

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

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

[Mr Popodopolous]

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.

Edited January 18, 2019 by Mr Popodopolous

[Davefevs]

37 minutes ago, Mr Popodopolous said:

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.

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?

[Mr Popodopolous]

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.

[Davefevs]

16 minutes ago, Mr Popodopolous said:

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.

...and probably something we don’t really need to worry ourselves about 

[Bristol Rob]

Out of interest, when is it likely to be known if clubs have exceeded the FFP allowances?

Seems strange that it might occur after the transfer window closes.

[Mr Popodopolous]

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.

 

 

Edited January 24, 2019 by Mr Popodopolous

[downendcity]

2 hours ago, Bristol Rob said:

Out of interest, when is it likely to be known if clubs have exceeded the FFP allowances?

Seems strange that it might occur after the transfer window closes.

FFP is calculated over s 3 year rolling period, the first of which comes up this March. This means that clubs have effectively had 3 years notice of the day of reckoning.

If , as I am sure they do, they maintain management accounts, and they are properly conversant with ffp rules( ignorance of the rules is not a defence) they will know how close they are to the limits well before now.

I'm guessing most clubs financial year end will be around March/April time , and if so, they have 2 windows from the end of their second year until the ffp reckoning. If they are aware that they might be close to breaching that should give plenty of time to make transfers that would redress the problem.

 

 

[Mr Popodopolous]

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.

Edited January 25, 2019 by Mr Popodopolous

[phantom]

@Mr Popodopolous

Have been chatting about our FFP position, not sure if you have posted it in another thread but like you did a breakdown of others can you do one on us please? 

[Mr Popodopolous]

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).

Edited January 30, 2019 by Mr Popodopolous

[Davefevs]

Flint’s amortisation would’ve been pretty minimal, so having paid a sell-on percentage to Swindon, he probably went through the accounts as a £6m profit.

[BTRFTG]

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.

[downendcity]

12 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.

My understanding is that financial penalties are still available, although I'm not sure about any sort of levy on TV money, and that transfer embargoes can still be applied. I know Forest, Brum and Wednesday have had embargoes enforced, but am not sure if this was through FFP breaches.

However, with the change to a 3 year rolling accounting period for ffp, the first deadline for which we are fast approaching, the big change is the ability of the EFL to deduct points. Because clubs have to provide projected accounts in March of the third year, it means the EFL will be able to assess whether they have breached ffp limits before the end of the season. That means if the circumstances justify it, they can make a points deduction that potentially prevents a team achieving promotion if they have breached ffp limits.

The key with points deduction is whether the EFL will do it, especially if it involves a club like, say, Vila, and it would deny promotion. However, I think they would have to if they are to ensure that all clubs adhere to ffp rules and limits. Points deduction is the real sanction for breaching ffp