The Championship FFP Thread (Merged)

[Davefevs]

I hope Mr Chansiri follows due accounting standards!

[Ostrich]

24 minutes ago, Mr Popodopolous said:

Leicester, although fair to say their fans on forum seem sceptical. How well they understand EFL FFP I question, £83m adjusted Upper Loss Limit to 2023-24.

They are also set to sign a GK for £6m..a £92.4m pre tax loss in Year 1 or the present cycle ie 2021-22 to now.

 

It’s just our fans being in denial and also just not getting it. I think what our fans aren’t getting is that there’s choices to be made about how we allocate our budget and that’s the FFP factor here - we could have signed Doyle permanently but that would mean not signing someone else etc.

They spent all last summer in denial about it and that’s just going to be repeated this summer along with the smattering of people who think everyone but us is just ignoring it (an irony for one of few clubs to actually pay a penalty for breaking it).

It’s clear we need outgoings to do what we want and need to do. That seems too slow atm.

[Mr Popodopolous]

6 minutes ago, Ostrich said:

It’s just our fans being in denial and also just not getting it. I think what our fans aren’t getting is that there’s choices to be made about how we allocate our budget and that’s the FFP factor here - we could have signed Doyle permanently but that would mean not signing someone else etc.

They spent all last summer in denial about it and that’s just going to be repeated this summer along with the smattering of people who think everyone but us is just ignoring it (an irony for one of few clubs to actually pay a penalty for breaking it).

It’s clear we need outgoings to do what we want and need to do. That seems too slow atm.

Thanks, this makes more sense. In theory the wages may have been slashed by 50 pct plus all of the departures but usually clubs come down in a stronger FFP position.

Barnes as pure profit will help, sure there will be a few more too- strong squad still by the look of things .

At least Leicester look likely to be trading. Cardiff are baffling me at the minute, are they hoping it falls their way in respect of (RIP) Sala.

Edited July 14, 2023 by Mr Popodopolous

[Mr Popodopolous]

One other thing.

Took an hour to read the Sheffield Wednesday forum about varied issues and ideas.

I could be wrong but there could be a misconception or two at play here on the thread on there..not digging out anyone but just trying to unpick it.

1) The suggestion that Sheffield Wednesday are paying Chansiri for the stadium. Maybe, maybe not. I took it as more like he was putting in X in loans or a good chunk of it being cash flow for the stadium payments but reclaiming Y in loans so drawing down the loan account over time but differently to how the thread suggested. It's the rent they are paying him/Sheffield 3 Limited.

2) The idea that repayments would impact upon FFP. Cash Losses yes, Cash Flow yes but not Profit and Loss- such Loan Repayments do not go in Profit and Loss or Before Tax! If there is interest attached that goes via Profit and Loss but loan repayments are Cash Flow and not Profit and Loss.

Edited July 14, 2023 by Mr Popodopolous

[Mr Popodopolous]

Read a bit more, and poster on there suggested that perhaps the £30m is cash flow loss or cash loss for the upcoming season not Profit and Loss.

Although I would question how with the rise in revenue, the wage bill not exactly being enormous.

I doubt that there are major transfer credits either by this point (doubt there are major transfer debtors either too btw).

Edited July 15, 2023 by Mr Popodopolous

[Mr Popodopolous]

Thought I would have a basic look at our friends over the  Bridge and some rough Projections as to what they may require as a baseline barring of course any kind of travesty such as an undeserved Sala windfall. Taking finances as they likely are..I don't have spreadsheets to hand I do it more clunkily perhaps, more basic anyway.

[Mr Popodopolous]

Despite what some of them may say, the £39m still holds so anyway.

I'm using Cardiff City Holdings not FC. I maybe mistaken in which case I'll happily revise accordingly but I assume that to be the FFP reporting entity.

A £26.639m loss before tax a basic income of £20.038m.

Now they did have some games behind closed doors didn't they iirc due to Covid again as Wales went into a mini second lockdown or restriction. That may add something to their Gate Receipts.

Perhaps with World Cup player revenue and one less League and Cup game behind Closed doors their Revenue will be more like £21-22m. Otoh their Covid add-backs will be £0 and their transfer profit on disposal will be around £3m down?

[Mr Popodopolous]

Allowables that we know of:

Depreciation

£2,525,000

Charitable Community Spend

£1,489,764

Intangible Assets other than Player Registration

N/A

Those that we don't:

Academy

Is a Category Two, might £1.5m be a reasonable bet?

Women's Football

The Cardiff City Ladies account just seems to be dormant, I have no real idea how much clubs may spend on this even though it's exempt.

Total allowables maybe £5.5-6m? I dunno.

Let's assume an income of £22m laat year and the same again this year upcoming even if averaged as £22m x 2.

As it stands may be £1m in transfer profit last year.

They need to cut their total operating Costs down to £36m and £36m using some assumptions and averages.  Still a work in progress but loan write-offs are also excluded from the loss limits..their position is difficult to reconcile atm.

Edited July 16, 2023 by Mr Popodopolous

[Mr Popodopolous]

In short, it looks to me as if an average FFP loss not exceeding £10.5-10.75m across 2022-23 and 2023-24 is required.

Was about £17.5-18m in Year One alone which included the aforementioned £2.5m in Covid add-backs.

They have a squad size at present now, of 32.

Edited July 16, 2023 by Mr Popodopolous

[Davefevs]

This was my very simplistic look at Cardiff, just basing it on a realistic loss of £20m last season and this.

As you can see those levels bust FFP.

Of course they may have clawed more back than the basic Covid allowances.  But I’m not sure where they are either increasing income / reducing costs to bring loss levels down.  They must be playing a very tight game with FFP.

[Mr Popodopolous]

2 hours ago, Davefevs said:

This was my very simplistic look at Cardiff, just basing it on a realistic loss of £20m last season and this.

As you can see those levels bust FFP.

Of course they may have clawed more back than the basic Covid allowances.  But I’m not sure where they are either increasing income / reducing costs to bring loss levels down.  They must be playing a very tight game with FFP.

The figures do differ slightly Dave based on Holdings v Club but I do agree with your overarching point.

I'm convinced that they've put some kind of hoped for income or write-back relating to the sadly deceased Sala in their future projections. Not anything like the £100m but maybe of the fee..or reversal of provision for said fee.

When they failed FFP under the old rules, they did try and argue that a debt write off made them profitable but it wasn't accepted so they have form.

https://www.cardiffcityfc.co.uk/news/2016/january/club-statement-15th-january-2016

 

 

Edited July 16, 2023 by Mr Popodopolous

[Hxj]

On 14/07/2023 at 22:41, Davefevs said:

I hope Mr Chansiri follows due accounting standards!

Ah - but what are the correct accounting standards - this is not a standard season ticket by any stretch of the imagination.

The tickets run until the end of the tenth season following Sheffield Wednesday's next promotion into the Premier League.  That could be 11 years if Wednesday get promoted in 2023/24 or 61 years if they get promoted in 2083/84, or forever if they never get promoted.

The club has therefore incurred, potentially, an unlimited cost (assuming the club always loses money) for a limited income.  Therefore for accounting purposes the company should include all the income as income in the year the ticket is sold and in the same year an amount significantly higher that the income as costs relating to the provision of those services in the following years.

I suspect that the tickets are more of an indication of need to generate cash, than a detailed study of the accounting standards.

Edited July 16, 2023 by Hxj

[Hxj]

On 14/07/2023 at 20:38, Owl Visiting said:

There's an argument currently going on Owlstalk about the reason you can't pay with a credit card.

I suspect that the tickets fall outside the terms of the agreement between the club and the credit card service provider.  Given that a service is being purchased and the terms are such that it could go on for an indefinite period, the credit card service provider is potentially liable to refund the whole cost during that indefinite period (if the services are not provided or the season tickets terminated) then the risks far outweigh the benefits of a 1.5% fee.

[Davefevs]

24 minutes ago, Hxj said:

Ah - but what are the correct accounting standards - this is not a standard season ticket by any stretch of the imagination.

The tickets run until the end of the tenth season following Sheffield Wednesday's next promotion into the Premier League.  That could be 11 years if Wednesday get promoted in 2023/24 or 61 years if they get promoted in 2083/84, or forever if they never get promoted.

The club has therefore incurred, potentially, an unlimited cost (assuming the club always loses money) for a limited income.  Therefore for accounting purposes the company should include all the income as income in the year the ticket is sold and in the same year an amount significantly higher that the income as costs relating to the provision of those services in the following years.

I suspect that the tickets are more of an indication of need to generate cash, than a detailed study of the accounting standards.

I only saw it mentioned Chansiri was selling a 10 year season ticket….none of this.  Having now seen their website, I sounds a massive gamble!

[Hxj]

44 minutes ago, Davefevs said:

Having now seen their website, I sounds a massive gamble!

Feels more like an act of desperation than anything else. 

[Mr Popodopolous]

Hmmm...

[chinapig]

42 minutes ago, Mr Popodopolous said:

Hmmm...

Not surprised. They gambled on keeping Brereton-Diaz and lost out on maybe £20m. They now have to pay the price so to speak.

[Mr Popodopolous]

1 minute ago, chinapig said:

Not surprised. They gambled on keeping Brereton-Diaz and lost out on maybe £20m. They now have to pay the price so to speak.

Blackburn fans are dismissing it but they would I suppose.

Article implies it's tied to Indian Government and Venkys but definitely one to watch.

[Mr Popodopolous]

They're still technically linked to the Championship.

Fulham and FFP..do.we wonder? Some small suggestions on Twitter that Shahid Khan is frustrated as he cannot spend as much as he would like.

However their losses are huge. Have been for years so I wonder. £72m to 2022-23 and £83m to 2023-24 would be their adjusted Upper Loss Limit.

Pre-tax losses

2019-20- £48,112,000

2020-21- £93,516,000

(Average before tax £70,814,000).

2021-22- £57,017,000

2022-23- ?

2023-24- ?

Pretty small  incoming.

Edited July 16, 2023 by Mr Popodopolous

[Rob26]

On 14/07/2023 at 14:14, Mr Popodopolous said:

Fined due to FFP.. 

Man United!?

By UEFA and it I assume is the period ending 2022-23...actually seems it is the period ending 2021-22!

However this was a favourable cycle for them, link in The Sun originally but the Daily Mirror now.

https://www.mirror.co.uk/sport/football/news/breaking-man-utd-fine-uefa-30467784

This is pre-dating their £149m pre tax loss in 2021-22, ie includes Covid losses which were only allocated as €15m bizarrely and if that's the case then Stoke, and potentially Nottingham Forest and Fulham need looking at further. I'll have to find some kinda Settlement or judgement.

You could absolutely revisit Everton based on this, whereas Aston Villa, Leicester and Wolves are okay to 2022 and probably 2023. 

Implications for the EFL @Davefevs @Hxj   Looked at hsong this criteria, Stoke, Nottingham Forest and maybe Fulham would all look interesting.

On 14/07/2023 at 14:26, Davefevs said:

I don’t believe EFL nor PL clubs are subject to the UEFA FFP stuff unless they are competing in Europe….it’s why even the PL limits are different to UEFA.  I’m sure @Hxjwill correct me and make me look foolish!

yeah you only comply with uefa's more stringent ffp if your in europe in the season, so does not matter for others, but interesting that they are saying no we are only taking 15m of losses when it seems the premier league and efl havent taken that approach yet, unless everton is the test case where they try to limit the allowable losses and see if it sticks. maybe if it does then they will look at others who have clearly taken advantage of the situation

On 14/07/2023 at 18:04, Mr Popodopolous said:

I'm sorry to hear that, 10 year season tickets is good for cash flow short term maybe for planning long term but smacks of gambling really. What sort of take up was there in the past and this before Covid and inflation etc. Borrowing against the future.

Agreed. I don't believe the £30m figure for one moment. Makes no sense whatsoever.

Unless he is going to have a late late splurge and put it all on red for a **** or Bust promotion push. That would be a fairly disastrous idea IMO and seen no evidence but is it rhetorically possible.

That's worrying. Self sufficiency is a good thing on one level but at this level of football it can be a problem. Or at least consign a side to the bottom 3rd. The loan(s) against Hillsborough hopefully he can cover and clear. Accounts are due out at end of July for all 4 companies so not long now to get a handle on it.

I thought it looking at it, have a weaker squad so far than you came up with, certainly depth wise. I thought it to some extent when we came up in 2014-15 and had a quiet summer but nothing quite like that.

its much more than a 10 year season ticket, read the terms and conditions, its 10 year season ticket from the start of the first premier league season when they are promoted. These tickets could essentially be a 50 year ticket if it takes them 40 years to get back there or even a whole life ticket if they never do again. https://www.swfc.co.uk/tickets/10-year-season-ticket-faqs/ https://www.thestar.co.uk/sport/football/sheffield-wednesday/sheffield-wednesdays-10-year-season-ticket-offer-is-back-4218280 its 10 years max if you pass away (and someone inherits the remaining years) but is 12 years minimum in the even they are promoted this year or next year. 

no idea how its covered in accounts, but this has been done in the past so must of passed the smell test or been part of the reason they gone done by ffp, so they should know how to apply it. would make sense you have to put the revenue in each of the next 10 years accounts, but then maybe they should have zero revenue until they are promoted to the premier league then they can take a tenth every year in the books :laugh:.

they did this before in 2020, so in reality they have a bump in cash flow but since they owe them at least 11 more seasons of football (and realistically probs way more :laugh:) they have taken zero actual revenue other than match day spends from these people as they still owe everything promised in the first place.

probs isnt as bad as it sounds tho as will only be a limited amount of tickets for this offer (when you read these things easy to think of everyone getting in on it and them making a mint, rather than a thousand or so what is probs the reality in the uptake), hence why its been closed off for several years (the faq reads like it was done in 2020 last)

 

On 14/07/2023 at 20:38, Owl Visiting said:

Is that right? I didn't know that. There's an argument currently going on Owlstalk about the reason you can't pay with a credit card. One guy is adamant that it's because the credit card would likely expire during the 10 year period, and others calling it a cash grab.

For those that can afford it though it's a good deal because the 10 years don't start counting down until we reach the Premier League, so in theory if we didn't get there for another 10 seasons then it'll last for 20 years.

If you sit on the South stand it'll set you back 8 grand, and on top of that you'd be gambling that any future owner honours the details above.

yeah putting it on finance would mean the finance company are liable for what is deemed as a high risk company on a potential whole of life service if they never get promoted due to uk finance laws. if sheff utd go bust you can get your money back, and if they were never promoted you could probs argue that they were never going to so lost a tickets for the rest of your life 

On 14/07/2023 at 22:41, Davefevs said:

I hope Mr Chansiri follows due accounting standards!

well this was done in 2020/21 I think that is immediately after they got done for FFP. so it must of been looked at while they were under full monitoring, but interesting how you apply it, 

one way you could argue is the minimum amount of years split the revenue up between them all, so £4.5-8k split over 12 years and the rest is free of charge

or a more accurate way (which I would think would not happen as gives them no revenue at all potentially) is wait till promoted then split over 10 or 12 years depending when it takes place and the years before are zero revenue years.

In reality I doubt its going to be a massive FFP needle moving amount of cash. how many of these will they actually sell? 1000 max? thats possibly £5m-6.5m if you average out the £4500-8000 ticket price.

they may have a more limited number available if they are just topping up what they gave out previously. They not going to be high sellers, even 1000 may be a stretch 

[Davefevs]

I think it’s fair to say having read some more about the 10-Yr season ticket and @Hxj’s posts….it’s bonkers.

[Rob26]

I asked KS about the tickets and he said it needs spreading out revenue over the length of the contract, which i take as how ever long it takes

but he also said this about what he heard last time on the numbers of the uptake on this offer last time, so its likey to be quite a small uptake, probs alot better than last time tho with them not having a points deduction 

 

Edited July 17, 2023 by Rob26

[Mr Popodopolous]

2 hours ago, Rob26 said:

yeah you only comply with uefa's more stringent ffp if your in europe in the season, so does not matter for others, but interesting that they are saying no we are only taking 15m of losses when it seems the premier league and efl havent taken that approach yet, unless everton is the test case where they try to limit the allowable losses and see if it sticks. maybe if it does then they will look at others who have clearly taken advantage of the situation

This is what I hope should happen. Everton with €£170m to £220m didn't just raise the bar but pushed it into the sky but otoh I'd love to know how UEFA calculated down from €281 was it for Man United down to €15m!  One seems too high and one seems too low.

Here is my ideal solution pertaining to Covid and FFP for the EFL moving forward and yes the PL too. Not fully formed though.

1) Take the £5m x 2 and £2.5m as the base line for the EFL as we hope.

2) Obviously clubs can legitimately prove their losses are greater and:

A) Gate Receipts

B) Wider Matchday Revenue

C) Commercial Revenue

D) Corporate Revenue

Feel free to add any widely used categories.

Obviously provable losses in these categories should be rubber stamped and waved through.

Where I have a problem is as follows:

A) Transfer Profit foregone.

B) Amortisation written down and attributed to Covid as impairment seeking to exclude it entirely.

C) Excessive losses for whatever reason in Year 3- ie the Year whereby revenues and activities were much closer to 2018-19 the final year that was pre Covid and had zero disruption. Hence the £2.5m allowance.

The test should be two-fold, perhaps three-fold.

1) What amount of losses are attributed to transfer market related activities for each club. That alone isn't grounds for a referral.

2) Exclude transfer market related losses from the calculations as these are clearly unusual items.

3) That alone doesn't mean a referral is required. Where a referral may kick in is if excess Covid losses or transfer losses are material to FFP compliance for one or even more than one of the periods ending 2021, 2022, 2023 or 2024. There was no stand-alone test for 2020 therefore the combined average of 2020 and 2021 was the one.

A) 2017-18, 2018-19, 2019-20 and 2020-21 average Test. Exclude Covid related transfer market activity.

B) 2018-19, 2019-20 and 2020-21 average and 2021-22 Test. Exclude Covid related transfer market activity.

C) 2019-20 and 2020-21 average, 2021-22 and 2022-23 Test. Exclude Covid related transfer market activity.

D) 2021-22, 2022-23 and 2023-24 Test. Exclude Covid related transfer market activity.

Then re-run the results and see how it plays out, if material shift from compliant or not refer!

Edited July 17, 2023 by Mr Popodopolous

[Mr Popodopolous]

TL:DR

Condensed version.

If transfer related Covid claims adjusted out tip a club over limits, only then would be a referral or referrals be required. If not then carry on. That's what I mean by material.

Edited July 17, 2023 by Mr Popodopolous

[Hxj]

1 hour ago, Rob26 said:

he said it needs spreading out revenue over the length of the contract

I don't agree for the reasons stated earlier, but would be interested in why he thinks that (other than because it's a 10 year season ticket (which in itself is incorrect)).

 

[Mr Popodopolous]

If there is any truth!

Good times for us..even if it's not as high but multiple a good vindication for SL, Gould and Pearson!!

Sanctions, Business Plans or maybe targets or some combination I hope.

Edited July 17, 2023 by Mr Popodopolous

[Mr Popodopolous]

Interesting (shock??) Tweet by Ian Gay.

Says he spoke to Steve Lansdown a couple of months ago and the EFL are still analysing Covid numbers.

I believe we are fine come what may even if the usual EFL £5m x 2 and £2.5m across the board were used. Semenyo sale and continued sensibility saved us but I wonder about a few others.

Edited July 17, 2023 by Mr Popodopolous

[Mr Popodopolous]

Bring it on, a comprehensive review of all the periods in question. Clubs should welcome it if there will be one.

[Davefevs]

13 minutes ago, Mr Popodopolous said:

Interesting (shock??) Tweet by Ian Gay.

Says he spoke to Steve Lansdown a couple of months ago and the EFL are still analysing Covid numbers.

I believe we are fine come what may even if the usual EFL £5m x 2 and £2.5m across the board were used. Semenyo sale and continued sensibility saved us but I wonder about a few others.

For avoidance of doubt, Ian is referring to the “personal chat” he had with Steve, where there just happened to be a 150-200 Senior Reds in the same room!!!

[Mr Popodopolous]

Ha that explains it! Maybe he and a little chat to him afterwards but either way I'd love to ask SL a few questions about Stoke and maybe Nottingham Forest, slightly greyer Fulham and even back to 2018-19 Aston Villa.