The Championship FFP Thread (Merged)

[Mr Popodopolous]

Bit on Wolves. Seems their FFP issues are quite pronounced but if they batten down the hatches they can spend more next season if they stay up.

https://www.wolves.co.uk/news/club/20230803-jeff-shi-letter-to-supporters/

[Mr Popodopolous]

Small update on Nottingham Forest.

They're reportedly bidding £20m for Ibanez from Roma and fee less clear but for Turner from Arsenal so bonus dispute issue or not they don't seem to be changing mindset.

The slightly odd thing about Nottingham Forest, is that there was supposed to be a case for Lamouchi vs them at CAS in 2022 but that seems to have disappeared.

Edited August 4, 2023 by Mr Popodopolous

[Mr Popodopolous]

Parachute Payments and Barnes or not, I still there is potential for Leicester's losses to exceed allowances to this season. Remember loopholes such as Fixed Asset disposals and seemingly the Reading method don't count towards P&S anymore.

Making some crude assumptions here yes:

In 2022-23:

Improvements

*Wage bill  £10m.

Maybe amortisation  A couple of million

Profit on Disposal of Players  £67-68m (Net of remaining Book Value and sell on clauses).

Interest payments?  Some debt was written off so maybe a bit 

Further costs/plausible Revenue Falls

TV money  £15-20m on account of no European football, maybe PL prize money went up a bit or down a bit.

Fresh amortisation  About £5.9m on account of new signings.

Rodgers sacking  Depends how done but could have added a lump sum or be amortised over a period of time.

Wouldn't surprise me if a pre-tax loss of £35-40m was recorded last sesson even with the Maddison and Fofana disposals.

Edited August 6, 2023 by Mr Popodopolous

[Mr Popodopolous]

Their relegation clauses will kick in but even with the sale of Barnes and Hirst the Profit on Disposal effectively halved.

Even with Parachute Payments, TV money surely down £50-60m.

Amortisation removed on departure of the several players earlier in the summer, perhaps wage bill down £80m but some fresh amortisation added from new signings and those in January effectively doubling those transactions. 5.5 year deals makes it easyish to calculate. Amortisation from free transfer departures maybe down £20-25m, similar again in wages.

Assuming 50 pct wage reductions on relegation which could be too high.

Struggling to see compliance as it stands at this second. Big caveat being, outbound transactions can still occur.

Edited August 6, 2023 by Mr Popodopolous

[Mr Popodopolous]

If Maddison fell into this season then lop £33m or thereabouts off last seasons Profit on Disposal and add to this. Which means the FFP position to 2022-23 is the suspect one and Leicester should have been placed under a Business Plan. They weren't so..you can't include that Maddison profit twice however. 

[Mr Popodopolous]

FFP and Sunderland.

Good thread. I expect they are more than fine but possibly they're operating closer to the Lower rather than the Higher Loss Limit.

[Mr Popodopolous]

I wonder how the rules between divisions will apply with club a that move between PL and Championship, the one I am still interested in is Leicester. I believe that Leeds and Southampton are definitely in line anyway.

[Ostrich]

7 minutes ago, Mr Popodopolous said:

I wonder how the rules between divisions will apply with club a that move between PL and Championship, the one I am still interested in is Leicester. I believe that Leeds and Southampton are definitely in line anyway.

Why do you think there’s any issue for us up to 22/23. I think the extension of the accounting period got Maddison into last year so we should be fine.

Your calculations above suggest we’re likely fine if flying a little close. Villa report near enough 15m in youth development costs - imagine we’re looking at similar which shows how much adjustment probs needs making from headline figures.

[Mr Popodopolous]

5 minutes ago, Ostrich said:

Why do you think there’s any issue for us up to 22/23. I think the extension of the accounting period got Maddison into last year so we should be fine.

Your calculations above suggest we’re likely fine if flying a little close. Villa report near enough 15m in youth development costs - imagine we’re looking at similar which shows how much adjustment probs needs making from headline figures.

Oh no it's to the 2023-24 season. I believe Leicester are fine to 2022-23.

I'm trying to project to the upcoming season, I also think Birmingham, Cardiff, QPR are 3 others with questions.

I've never sought to argue that Leicester are at risk of breaching to 2022-23.

My mix of adding some items and guesswork for annual allowables is £20-25m per season.

Edited August 13, 2023 by Mr Popodopolous

[Davefevs]

1 hour ago, Mr Popodopolous said:

I wonder how the rules between divisions will apply with club a that move between PL and Championship, the one I am still interested in is Leicester. I believe that Leeds and Southampton are definitely in line anyway.

What bit of the rules are you wondering about?

[Mr Popodopolous]

2 minutes ago, Davefevs said:

What bit of the rules are you wondering about?

Still yet to post.

Two handbooks, set to pick out the relevant parts. I know the £83m bit but the PL seems to have no restriction on Disposal of Fixed Assets and P&S unlike the EFL.

Little bit sketchy as to when exactly a relegated side must submit FFI.

Edited August 13, 2023 by Mr Popodopolous

[Davefevs]

3 minutes ago, Mr Popodopolous said:

Still yet to post.

Two handbooks, set to pick out the relevant parts. I know the £83m bit but the PL seems to have no restriction on Disposal of Fixed Assets and P&S unlike the EFL.

Little bit sketchy as to when exactly a relegated side must submit FFI.

I thought that was gonna be it from something you posted last week.

My guess - based on what we we do when a team comes up from Lg1 to Champ - is that they have to restate their FFP submissions based on the rules of the Championship.  So they wouldn’t be allowed to use stadium sale profit from the point the rules changed.  They of course get the annual limit as you state.  Just like a Lg1 promoted club, can’t use Owner Investment for the years they were in in Lg1 in their P&S cycle.

[Mr Popodopolous]

13 minutes ago, Davefevs said:

I thought that was gonna be it from something you posted last week.

My guess - based on what we we do when a team comes up from Lg1 to Champ - is that they have to restate their FFP submissions based on the rules of the Championship.  So they wouldn’t be allowed to use stadium sale profit from the point the rules changed.  They of course get the annual limit as you state.  Just like a Lg1 promoted club, can’t use Owner Investment for the years they were in in Lg1 in their P&S cycle.

Yes, makes sense.

I know that the 2022-23 accounts have to go to the League by 31st December 2023 which is a new one and the PL too, dunno how FFI for the existing and following season fits there.

1st March for the current season Projections as per but I do believe it's a matter of debate as to whether Leicester are on track to meet the £83m P&S to 2023-24.

Edited August 13, 2023 by Mr Popodopolous

[Mr Popodopolous]

Birmingham seem to be increasing their activity a bit, yes Bellingham £10m sell-on, Chong about £2-3m profit and Jobe about £1.5m initial fee so pure profit.

However the baseline is a £25m pre tax loss for 2021-22 and the same again for last season.

Revenue may rise with a fresh sense of optimism and the ground redevelopment completion- surprised to see £5-10m forecast by some fans on their forum however as a Year on Year prediction. Although arguably a well-run Birmingham should be hitting £25-30m at this level.

Still a hike in income of £5m being conservative as per their forum, perhaps even £10m..in one year. 

Reckon their allowables are £5m per season, add in Covid losses of £2.5m..comes to £56.5m when added to £39m and subtract up to £50m in the prior 2 seasons ie their pre-tax losses.

Means that they can perhaps lose only £6.5m before tax.

[Rob26]

nice doc on how to "comply" with ffp :laugh:

[Mr Popodopolous]

Ah there it is.

Yeah sounds like it was early on in Man City and their rise a lot of it.

Had a quick skimread of the transcript, but if they're guilty even if past not present, the whole foundation of their success is tainted and there should be severe punishment.

Edited August 14, 2023 by Mr Popodopolous

[Mr Popodopolous]

Anyway, with the suggestions that the Allowable Losses maybe £25m given the Academy expenditure similar to Aston Villa, some small revisions.

Leicester City Part 2

2021-22

Loss Before Tax

£92,496,000

Inclusive of Player Trading Profit

£9,206,000

Allowable, well let's say

£25m

Plus Covid losses as per accounts

£1.36m

P&S Loss

Probably around £66,136,000

2022-23

Likely Wage improvement

£10m 

Likely Profit on Disposal Improvement

£67.554m

Reduction in Cost of Covid Testing

£0.33m

Added costs/Loss of Revenue

Amortisation attached to new Signings

£5.545m

Loss of European Revenue v increase in PL TV money or just loss if none

£10-20m

Sacking of Rodgers

Surely that cost a few million??

Possible P&S Loss

£5-20m

[Mr Popodopolous]

Trying to extrapolate to this year will be a hell of a job, which may risk some double going by.

We can add amortisation for this season and the amortisation added in Janaury 2023 which was abour a half year which will now be a full year.

Probably £40-45m from players who left tbis summer combined amortisation and wage savings.

Profit on Disposal so far around £40m.

Wages down £80m? Again that factors in double counting as in players who left vs players who remain but had their contracts fall.

TV revenue down maybe £60m and thst could be conservative- when the dull PL distributions for 2022-2023 are published, this will help to extrapolate.

[Rob26]

12 hours ago, Mr Popodopolous said:

Ah there it is.

Yeah sounds like it was early on in Man City and their rise a lot of it.

Had a quick skimread of the transcript, but if they're guilty even if past not present, the whole foundation of their success is tainted and there should be severe punishment.

I'd imagine they will get away with just some fines (without admitting guilt) from the premier league too 

I feel they authorities put in place the harsh sanctions etc they know will get appealed and don't fight it back equally because deep down I think these FFP laws if they were challenged if they are strictly legal then I think teams like this would find holes in it and potentially bring the whole system down. 

That's why I think they just agree to guilt and fines in the end coz they know its something that higher courts can probs over turn

[Mr Popodopolous]

24 minutes ago, Rob26 said:

I'd imagine they will get away with just some fines (without admitting guilt) from the premier league too 

I feel they authorities put in place the harsh sanctions etc they know will get appealed and don't fight it back equally because deep down I think these FFP laws if they were challenged if they are strictly legal then I think teams like this would find holes in it and potentially bring the whole system down. 

That's why I think they just agree to guilt and fines in the end coz they know its something that higher courts can probs over turn

It's hard to say tbh. Perhaps you are right but these EFL clubs have wealthy owners too and in the case of QPR battled for some time and eventually some sort of fudge was found, but the Football League certainly went into bat to defend the rules.

They pursued Bournemouth and Leicester for some time and their battle v Derby got a strong judgment in their favour even calling the audited accounts into question. All of them will have quite good lawyers all told.

There are stipulations that can basically see clubs suspended or kicked out if they take it to higher courts, fixtures postponed etc so that would be a risk for all parties.

I see what you mean though, a challenge to the rules in and of themselves rather than the sanction perse but again I wonder if that could be grounds for expulsion or suspension from the League system.

I seem to recall reading on a QPR forum that the League were threatening to refuse to allocate them any figures at one stage. Perhaps that would have been an outcome had they appealed to a higher court.

Edited August 15, 2023 by Mr Popodopolous

[Mr Popodopolous]

Oooh excellent. If it filters down all the better.

If he has got this correct it could mean that the Projected Breach could be grounds for dropping a deduction in the Spring. If he's right it needs to filter down to this level too.

In other words sort by March or else kinda thing.

Are my hopes too high @Hxj  ? I know you keep a close eye on the regulatory changes. The fact they are now checking accounts for last season in December encourages me in this respect.

Edited August 15, 2023 by Mr Popodopolous

[Mr Popodopolous]

The best scenario would be the League or CFRU and CFRP having multiple bites at the cherry.

A) 3rd Year goes in, shows over- some kinda sanction there and then and reset it to years in ezces of a £13m P&S Loss to £13m and a year below or at £13m remaining at the figure.

B) Projected in March show hopes to comply, which prove incorrect come the summer.. League charge in Summer or Autumn.

C) Someone like Derby that can take time to work through, if grounds going come back and charge later.

Ideally though A) and then B) in certain instances. C) Shouldn't really be a factor but someone like Stoke well their Covid losses need pushback, someone like Nottingham Forest perhaps 3rd Year Covid losses a problem.

Edited August 15, 2023 by Mr Popodopolous

[Mr Popodopolous]

The one I also don't get slightly.

Bournemouth v Wolves. Both passed the Test to 2022-23, I'm sure but there are some similarities yet differences:

*By dint of consecutive PL seasons, Wolves are operating at £105m plus allowables. Oh they spent a lot.

*Bournemouth are operating at £83m plus allowables by dint of one Championship and 2 PL.

*Bournemouth being a Category 3 Academy for years, finally up to Category 2 but expenditure on allowables likely higher for Wolves than Bournemouth. Wolves incidentally have been a Category One for a while.

*The amortisation added by Bournemouth even last year stepped up in Janaury. Although how much did the swing from Parachute Payments in Year 2 to PL money assist.

Think they've spent £140-150m gross on fees since promotion Bournemouth and had a £55.5m pre tax loss in the year of Promotion. Granted Promotion Bonuses excluded, maybe £15m there, few million in allowables probably and £2.5m to Covid losses.

Plus no player sales at profit last season unlike 2021-22. Otoh did the takeover clear interest payable on the debt.

Edited August 15, 2023 by Mr Popodopolous

[Mr Popodopolous]

Okay found the PL rule. Article by Matt Hughes prompted me on it.

That'll be most of the PL then..maybe Brentford and Brighton aside??

Well tbh maybe more than those two but it should capture quite a few sides.

Edited August 15, 2023 by Mr Popodopolous

[Hxj]

6 hours ago, Mr Popodopolous said:

The fact they are now checking accounts for last season in December encourages me in this respect.

It's a move in the right direction, but very slow.  My preference would be to force all clubs to have an accounting date of 31 May, submit final accounts by 14 June, and resolve all FFP issues by 14 July.  Anyone who thinks that 14 days is way too short should work with a US listed company where 7 days is normal.

This interested me in respect of FFP limits in the regulations, not sure if there is a misprint or an actual change, I've changed the formatting but they seem to have lost a year!:

1.1.15 P&S Calculation means, save as indicated below, the aggregation of a Club’s 
Adjusted Earnings Before Tax for T, T-1 and T-2. 

(a) Season 2020/21 only, the P&S Calculation shall be the aggregation of:
            (i) the mean of the Adjusted Earnings Before Tax of T and T-1; and 
            (ii) the Adjusted Earnings Before Tax of T-2; and 

(b) Season 2021/2022 only, the P&S Calculation shall be the aggregation of:
            (i) the Adjusted Earnings Before Tac of T; and 
            (ii) the mean of the Adjusted Earnings Before Tax of T-1 and T-2.

(c) Season 2022/23 only, the P&S Calculation shall be the 
aggregation of:
            (i) the Adjusted Earnings Before Tax of T; and 
            (ii) the Adjusted Earnings Before Tax of T-1; and 
            (iii) the mean of the Adjusted Earnings Before Tax of T-2

 

I also like the timescales for CFRP hearings, effectively the rules say 2 months from the CFRU decision.

[Mr Popodopolous]

1 hour ago, Hxj said:

It's a move in the right direction, but very slow.  My preference would be to force all clubs to have an accounting date of 31 May, submit final accounts by 14 June, and resolve all FFP issues by 14 July.  Anyone who thinks that 14 days is way too short should work with a US listed company where 7 days is normal.

This interested me in respect of FFP limits in the regulations, not sure if there is a misprint or an actual change, I've changed the formatting but they seem to have lost a year!:

1.1.15 P&S Calculation means, save as indicated below, the aggregation of a Club’s 
Adjusted Earnings Before Tax for T, T-1 and T-2. 

(a) Season 2020/21 only, the P&S Calculation shall be the aggregation of:
            (i) the mean of the Adjusted Earnings Before Tax of T and T-1; and 
            (ii) the Adjusted Earnings Before Tax of T-2; and 

(b) Season 2021/2022 only, the P&S Calculation shall be the aggregation of:
            (i) the Adjusted Earnings Before Tac of T; and 
            (ii) the mean of the Adjusted Earnings Before Tax of T-1 and T-2.

(c) Season 2022/23 only, the P&S Calculation shall be the 
aggregation of:
            (i) the Adjusted Earnings Before Tax of T; and 
            (ii) the Adjusted Earnings Before Tax of T-1; and 
            (iii) the mean of the Adjusted Earnings Before Tax of T-2

 

I also like the timescales for CFRP hearings, effectively the rules say 2 months from the CFRU decision.

Agree it is still too slow. However if maybe raises hopes with me that deductions could occur in the season or is that still a bit of a pipe dream based on your reading?

Yes that would assist for the most part but what of contentious moves ie if there is a disputed value of Related Party sponsorship Transaction? That can take time to investigate, which isn a problem when it comes to promotion.

Very good spot! That must be a misprint, otherwise if not then this new format would throw the P&S system into chaos.

This bit it seems a whole new section. Any idea exactly what the whole Call-In aspect might be.

Edited August 15, 2023 by Mr Popodopolous

[Mr Popodopolous]

[Hxj]

13 minutes ago, Mr Popodopolous said:

still a bit of a pipe dream based on your reading?

I'd say a lot of a pipe dream.  Currently it is technically possible to get an 'in year' deduction if you are failing FFP and fail to agree or don't keep to a budget, but not actually for an FFP failure.  I still believe that on principle you can only penalise FFP failures once you have passed the end of the accounting period, as until then nothing is final.

 

20 minutes ago, Mr Popodopolous said:

whole Call-In aspect might be

I think it's a neat way of giving another level of review allowing an alternative view.  The interesting point is that there is no time limit on a 'call in' so for instance a dodgy club is never really safe.

[Mr Popodopolous]

1 minute ago, Hxj said:

I'd say a lot of a pipe dream.  Currently it is technically possible to get an 'in year' deduction if you are failing FFP and fail to agree or don't keep to a budget, but not actually for an FFP failure.  I still believe that on principle you can only penalise FFP failures once you have passed the end of the accounting period, as until then nothing is final.

That makes sense, I suppose the real risk is that a club get promoted if and when they are on course for a Projected breach, I am thinking of the likely candidates for promotion and FFP to overlap simply Leicester due to the fact that £92.4m lost in 2021-22 and the others who may have issues- Birmingham, Cardiff, QPR- don't look all that likely be troubling the top end IMO.

4 minutes ago, Hxj said:

I think it's a neat way of giving another level of review allowing an alternative view.  The interesting point is that there is no time limit on a 'call in' so for instance a dodgy club is never really safe.

That is encouraging. I have a few in mind.

Aston Villa and their sale and leaseback of certain assets ar substantial profit set against a prior Impairment of said assets.

Stoke- The ridiculous £40-42m in indirect Covid losses.

Then the possible Nottingham Forest to 2021-22, that third year of Projected Covid losses was all that saved them IMO.

Then maybe maybe not Fulham but they lose so much that they surely merit some further scrutiny.

[Mr Popodopolous]

Surely though the FFI aspect would enable an in-season breach?

If a club lose in excess of £15m them they have to submit the next 2 years FFI. All joined up, a Projected breach can bring a deduction maybe.