The Championship FFP Thread (Merged)

[Mr Popodopolous]

May as well ask, @Hxj @Davefevs

Others too. @ExiledAjax legally how this may sit.

I labour this point a fair bit but surely we aren't the only ones at risk of breaching to 2023. Stoke for one, Reading for another although all deals require some kind of EFL approval.

Surely Stoke in particular need some significant scrutiny, £30m in Impairment and £11m in transfer add-backs, the former not excluded from 2019-20 but eliminated in its entirety from the FFP calculations- straight line it retrospectively over the term of contract or to the point of disposal for P&S purposes OR re-add it to the 2019-20 losses again for P&S.

The latter...again just don't include it in P&S, it's hypothetical so you may as well ask to include the playoff final windfall or the Cup run. Yes I know pet auditors may have signed off but they're not infallible, see Smith Cooper and the Delves.

Do the EFL need to go after them or indeed refer them to that new body that they've appointed. Financial unit?

Because I have this crazy feeling that we'll be the last side docked points under this old P&S system whereas Stoke for much higher losses and dodgy accounting will somehow get off the hook.

As in much bigger costs albeit bigger revenue and bigger pre tax losses but far bigger write offs and subsequent ability to exclude future amortisation sees them edge it.

Won't be a big or disastrous deduction If we get one but that's beside the point.

Edited August 26, 2022 by Mr Popodopolous

[ExiledAjax]

12 minutes ago, Mr Popodopolous said:

May as well ask, @Hxj @Davefevs

Others too. @ExiledAjax legally how this may sit.

I labour this point a fair bit but surely we aren't the only ones at risk of breaching to 2023. Stoke for one, Reading for another although all deals require some kind of EFL approval.

Surely Stoke in particular need some significant scrutiny, £30m in Impairment and £11m in transfer add-backs, the former not excluded from 2019-20 but eliminated in its entirety from the FFP calculations- straight line it retrospectively over the term of contract or to the point of disposal for P&S purposes OR re-add it to the 2019-20 losses again for P&S.

The latter...again just don't include it in P&S, it's hypothetical so you may as well ask to include the playoff final windfall or the Cup run. Yes I know pet auditors may have signed off but they're not infallible, see Smith Cooper and the Delves.

Do the EFL need to go after them or indeed refer them to that new body that they've appointed. Financial unit?

Because I have this crazy feeling that we'll be the last side docked points under this old P&S system whereas Stoke for much higher losses and dodgy accounting will somehow get off the hook.

As in much bigger costs albeit bigger revenue and bigger pre tax losses but far bigger write offs and subsequent ability to exclude future amortisation sees them edge it.

Won't be a big or disastrous deduction If we get one but that's beside the point.

Pop, all I know is that it's in our interest for Stoke to succeed with their £30m impairment gamble.

[Mr Popodopolous]

3 minutes ago, ExiledAjax said:

Pop, all I know is that it's in our interest for Stoke to succeed with their £30m impairment gamble.

Ok thank you EA- maybe I should cross my fingers a little the other way...sounds like that particular issue isn't finalised or settled, remember too the £11m they sought to put in addition for transfer profit add-backs.

I'd say a vote of clubs for such items would be fair.

[Hxj]

16 minutes ago, Mr Popodopolous said:

Do the EFL need to go after them or indeed refer them to that new body that they've appointed. Financial unit?

I think you have misunderstood the position.  The EFL board no longer have any input into monitoring FFP compliance.  That is the role of the new unit, who review and investigate and refer where appropriate to the disciplinary panel.

I understand that the Stoke position is progressing.

[ExiledAjax]

3 minutes ago, Mr Popodopolous said:

Ok thank you EA- maybe I should cross my fingers a little the other way...sounds like that particular issue isn't finalised or settled, remember too the £11m they sought to put in addition for transfer profit add-backs.

I'd say a vote of clubs for such items would be fair.

So far as I am aware the EFL/the new unit are dealing with each Club on a case by case basis. We have made our case, and Stoke have more publicly made theirs. 

Our 2021/22 accounts will be published in a couple of months' time. 

I would keep your powder dry until then.

Edited August 26, 2022 by ExiledAjax

[Mr Popodopolous]

15 minutes ago, Hxj said:

I think you have misunderstood the position.  The EFL board no longer have any input into monitoring FFP compliance.  That is the role of the new unit, who review and investigate and refer where appropriate to the disciplinary panel.

I understand that the Stoke position is progressing.

I think I may well have misunderstood- on the one hand I support it, independence etc. Otoh I like the idea of club votes on acceptable items to include or otherwise, for example the fixed asset profit exclusion came through this means and I support it.

Oh so Stoke might not be home and dry yet...ha erm well, their fans seem to consider that they have cracked it or they talk of FFP issues in the past tense.

[Mr Popodopolous]

16 minutes ago, ExiledAjax said:

So far as I am aware the EFL/the new unit are dealing with each Club on a case by case basis. We have made our case, and Stoke have more publicly made theirs. 

Our 2021/22 accounts will be published in a couple of months' time. 

I would keep your powder dry until then.

Okay that is definitely of interest, thank you. Makes some sense, although feels illogical if we got a deduction and Stoke scot-free.

I will actually yeah, these will be of real interest- I predict fwiw a pre tax loss of £23-24m, minus the usual £5m in allowables and £2.5m in Covid permitted allowables- but the basics aside, the Covid allocations and claims will be really interesting to see, hope they appear in the Holdings accounts.

[Hxj]

22 minutes ago, Mr Popodopolous said:

Otoh I like the idea of club votes on acceptable items to include or otherwise, for example the fixed asset profit exclusion came through this means and I support it.

I think we all do - well on here anyway

Currently the clubs and Board set the rules and the Financial Unit applies them.

[Davefevs]

1 hour ago, ExiledAjax said:

Pop, all I know is that it's in our interest for Stoke to succeed with their £30m impairment gamble.

Does this mean we are looking at an impairment allowance, rather than a “lost” transfer profit allowance?

If so, how fair is Stoke’s £30m versus anyone else’s?  Forest had put a figure of £8m in their accounts for 20/21 as a projection for 21/22, plus prior years.

[ExiledAjax]

8 minutes ago, Davefevs said:

Does this mean we are looking at an impairment allowance, rather than a “lost” transfer profit allowance?

If so, how fair is Stoke’s £30m versus anyone else’s?  Forest had put a figure of £8m in their accounts for 20/21 as a projection for 21/22, plus prior years.

I'm not sure to be honest. I've got no detail of the nature of our discussions with the EFL or new unit. All I've been told is that we've made submissions that are broadly in line with the comments made in the press by Gould in (I think) January, and that we're watching the Stoke situation with interest.

Edited August 26, 2022 by ExiledAjax

[Mr Popodopolous]

48 minutes ago, Davefevs said:

Does this mean we are looking at an impairment allowance, rather than a “lost” transfer profit allowance?

If so, how fair is Stoke’s £30m versus anyone else’s?  Forest had put a figure of £8m in their accounts for 20/21 as a projection for 21/22, plus prior years.

This is an interesting distinction.Covid impairment as with Stoke has the dual benefit of exclusion at the time and reduced cost, ability to shift on a free moving forward.

Whereas lost notional lost profit of course affects the current cycle hut moving forward maybe not so much. Impairment excluded for covid can be more effective.

Stoke's looks a massive outlier at our level. Remember too that Stoke have put in for both impairment and lost profit. Combined total of the two attributed to Covid was some £40-41m.

Nottingham Forest different again, iirc £8m x 2 and a projection of £12m but think was not solely allocated to lost profit but their total Covid loss and projected loss albeit without a breakdown.

[Davefevs]

49 minutes ago, Mr Popodopolous said:

This is an interesting distinction.Covid impairment as with Stoke has the dual benefit of exclusion at the time and reduced cost, ability to shift on a free moving forward.

Whereas lost notional lost profit of course affects the current cycle hut moving forward maybe not so much. Impairment excluded for covid can be more effective.

Stoke's looks a massive outlier at our level. Remember too that Stoke have put in for both impairment and lost profit. Combined total of the two attributed to Covid was some £40-41m.

Nottingham Forest different again, iirc £8m x 2 and a projection of £12m but think was not solely allocated to lost profit but their total Covid loss and projected loss albeit without a breakdown.

It’s an interesting one isn’t it.  If you’re allowed to impair and offset against P&L for FFP, you can reap the rewards on a sale, as potential transfer profit will be greater.

[Mr Popodopolous]

9 minutes ago, Davefevs said:

It’s an interesting one isn’t it.  If you’re allowed to impair and offset against P&L for FFP, you can reap the rewards on a sale, as potential transfer profit will be greater.

Definitely although I was told a while ago that for e.g. a Stoke scenario they would need releasing or selling at remaining value only ie no profit in the season or two after. If e.g. Liam Lindsay was impaired to £500k from a remaining book value of £1.5m, that portion would be written off for Covid but they could only sell him for a max of £500k in that period.

Not the best example, better example would be writing down to zero, that write down being excluded due to Covid and the player going ASAP on a free.

On the flip side It's going to make him easier to offload, that £1m still isn't amortised correctly "because...Covid" and there will be wage savings from the date of offload.

Other part of equation would be to re-add profits foregone if the write-down was to be reversed or reworked straight line- really no small exercise 

Edited August 26, 2022 by Mr Popodopolous

[Mr Popodopolous]

https://www.dailymail.co.uk/sport/sportsnews/article-11145327/amp/Watford-accused-working-16M-Hassane-Kamara-deal-sister-club-Udinese.html

Whether anything will come of it I don't know but am glad that Championship clubs have hit out...another loophole to be amended??

Says in the article that Championship clubs and analysts accept that no rules were broken but what about fair value clause.

[Port Said Red]

10 hours ago, Mr Popodopolous said:

https://www.dailymail.co.uk/sport/sportsnews/article-11145327/amp/Watford-accused-working-16M-Hassane-Kamara-deal-sister-club-Udinese.html

Whether anything will come of it I don't know but am glad that Championship clubs have hit out...another loophole to be amended??

Says in the article that Championship clubs and analysts accept that no rules were broken but what about fair value clause.

It's an international problem so I am not sure there is much that can be done in isolation. 

[Mr Popodopolous]

31 minutes ago, Port Said Red said:

It's an international problem so I am not sure there is much that can be done in isolation. 

Tend to agree.

You'd need Serie A in on it and I've no idea what their domestic FFP rules are like, while you'd also need UEFA involved. However iirc their concern is about dual ownership of clubs in their competitions.

Their primary concern in this sense is with regards to clubs in their competitions or set to qualify for them. Udinese used to qualify for Europe relatively frequently but not for a while now, Watford well have they ever? Graham Taylor era in 1980s aside maybe.

Hence UEFA probably wouldn't be too concerned about this particular arrangement...perhaps Nottingham Forest and Olympiakos would have grounds to be more wary due to the fact that the latter are European perennials and fall under UEFA FFP too.

My back of a matchbox solution is to exclude anything exceeding the remaining book value from FFP calculations, ie if Kamara's remaining book value £3.5m, goes for £16m- profit of £12.5m. Just include the £3.5m in the FFP numbers. Starting point anyway.

Edited August 27, 2022 by Mr Popodopolous

[Mr Popodopolous]

The other bit I don't fully get, is that Watford's statement references cash flow.

While there is a Cash Losses section of FFP too, I don't see how this wouldn't bolster the profit and loss which is the primary means by which FFP/P&S is measured.

Are Watford just being disengenous here or might it just in fact be a move to bolster cash flow...don't see how it wouldn't boost the profit either tbh.

[Davefevs]

1 hour ago, Mr Popodopolous said:

The other bit I don't fully get, is that Watford's statement references cash flow.

While there is a Cash Losses section of FFP too, I don't see how this wouldn't bolster the profit and loss which is the primary means by which FFP/P&S is measured.

Are Watford just being disengenous here or might it just in fact be a move to bolster cash flow...don't see how it wouldn't boost the profit either tbh.

Firstly, transfer profit is at least £13m (£16.5m minus £3.5m initially paid), I’ve not bothered bringing amortisation into the equation.  So it boosts P&L for this season.

Secondly, you don’t get all of your PP money on July 1st, so Watford may well have a Cashflow issue, that they’d rather not have to solve by getting a secured loan from football’s favourite bank - Macquarie Bank.  No doubt that doesn’t come cheap.

So, they generate £x million of cash by transferring a player out, getting some cash in, and then getting the player back on loan for at least this season.

Voila!  Cashflow sorted, nice juicy amount in the transfer profit figures…and they still get access to the player.

Wrong, plain wrong.

[Mr Popodopolous]

8 minutes ago, Davefevs said:

Firstly, transfer profit is at least £13m (£16.5m minus £3.5m initially paid), I’ve not bothered bringing amortisation into the equation.  So it boosts P&L for this season.

Secondly, you don’t get all of your PP money on July 1st, so Watford may well have a Cashflow issue, that they’d rather not have to solve by getting a secured loan from football’s favourite bank - Macquarie Bank.  No doubt that doesn’t come cheap.

So, they generate £x million of cash by transferring a player out, getting some cash in, and then getting the player back on loan for at least this season.

Voila!  Cashflow sorted, nice juicy amount in the transfer profit figures…and they still get access to the player.

Wrong, plain wrong.

I totally agree. He joined Watford on a 3.5 year deal for however much so that sounds right- it has to boost the profit as you say.

Good point that, noticed a range of clubs borrowing off them, interest payments or fees will be competitive..mostly for the Bank.

Agreed.

Couldn't agree more. Profit on disposal, interest free cash flow AND keeping the player for another season, that distorts the market horribly. Means they can play harder ball over Sarr and Joao Pedro- wrong, plain wrong is all that needs to be saif.

[Mr Popodopolous]

Just purely on us.

I was thinking about this the other day, in theory such was a combination of our headroom and the covid roll-up and assuming accounts and transfer profit etc the same..this was before Covid costs were formally excluded so we have to go back to 2020-21.

We could have spent in 2020-21, a further by my estimates...this is not solely on fees but a combination of wages, amortisation, loan fees and agents fees- but before promotion bonuses and before Covid costs accepted, ratified.

A further £28m plus whatever contractually obliged in promotion bonuses and still remained compliant to 2019-20 and 2020-21 combined average. That's averaged at £14m across the two seasons.

Or and again pre Covid losses we could if all as IRL spent maybe £15m more last season plus promotion bonuses. Maybe a bit more!

Of course no promotion would have meant absolute disaster this season probably!

Of course depending on when things were finalised maybe we could've added another £10m to the combined average years ie 2020-21 but averaged at £5m, that's again pre promotion bonuses or £7.5m if 2021-22 the shit or bust year.

Edited August 28, 2022 by Mr Popodopolous

[Port Said Red]

21 hours ago, Mr Popodopolous said:

Just purely on us.

I was thinking about this the other day, in theory such was a combination of our headroom and the covid roll-up and assuming accounts and transfer profit etc the same..this was before Covid costs were formally excluded so we have to go back to 2020-21.

We could have spent in 2020-21, a further by my estimates...this is not solely on fees but a combination of wages, amortisation, loan fees and agents fees- but before promotion bonuses and before Covid costs accepted, ratified.

A further £28m plus whatever contractually obliged in promotion bonuses and still remained compliant to 2019-20 and 2020-21 combined average. That's averaged at £14m across the two seasons.

Or and again pre Covid losses we could if all as IRL spent maybe £15m more last season plus promotion bonuses. Maybe a bit more!

Of course no promotion would have meant absolute disaster this season probably!

Of course depending on when things were finalised maybe we could've added another £10m to the combined average years ie 2020-21 but averaged at £5m, that's again pre promotion bonuses or £7.5m if 2021-22 the shit or bust year.

At the risk of sounding a little ghoulish, how does Bakers retirement affect matters? I am assuming as he had another year on his contract, that a deal was done, but also assuming we have some sort of insurance for these situations?

*Edit* Sorry I have just realised this has been asked and answered elsewhere. 

Edited August 29, 2022 by Port Said Red

[Mr Popodopolous]

There are some murmurs on Twitter by some of their fans that Birmingham making the double signing from Man United- Chong returning possibly permanently and a rumoured LB called Mejbri on loan from them, could tip them over the edge FFP wise.

Presumably they have until March at the earliest like everyone else so not sure how that'd work but one to keep an eye on- my numbers have them okay to 2022-23 but like several others perhaps an issue next season (though the UEFA changes may save a few).

Imagine if somehow we fell foil of it this season then the UEFA changes that sees the loss limit jump saved any or all of:

Birmingham

Cardiff

Stoke

West Brom

All feasible for different reasons, as I think some or more if at this level could have an issue to 2023-24. Plus if Nottingham Forest come straight back down. Reading too maybe?

I would argue that the current FFP cycle should run until 2023-24 and THEN adopt UEFA regs from2024-25 because it could see us straining lots of sinews to avoid then seeing several clubs edge off the hook as their breach was likely NEXT season not this.

In other news, Stoke fans still seem relatively relaxed about FFP.

Edited August 29, 2022 by Mr Popodopolous

[Mr Popodopolous]

One more bit. Had another quick look at the (now massive) EFL regs for 2022-23, I will look properly later but it is both interesting and positive to see the amortisation schedule listed and Impairment for that matter.

Stoke's £30m write-off claim in the context of these rules looks suspect no? I never noticed these sections before but looks like a potential breach to me...

Edited August 29, 2022 by Mr Popodopolous

[Mr Popodopolous]

Yeah, at this level in particular the combination of differing loss limits, Parachute Payments and FFP is creating a real issue. Perhaps it already is here.

Only Weat Brom are underachieving a bit 

Edited August 30, 2022 by Mr Popodopolous

[Davefevs]

Precedent set???

[Mr Popodopolous]

Well well, that is interesting...you can bet that all and especially the bigger the club the bigger the League, of those Covid losses exceed vastly £5m x 2 and £2.5m x 1!

I wonder if therefore we could dip back into the FFP profit for 2018-19 and if the surplus keeps us compliant at all times (T-4) then maybe that can be utilised to fill this hole especially given our actions and past compliance.

I am assuming that this is for the Reporting period ending with the combined average of 2019-20 and 2020-21.

Was going to post a few bits on the Semenyo thread in relation to the FFP scenario, still might but perhaps this negates the issue.

Man City have made major major sales this summer so anticipate they will be fine for subsequent periods. Unsure about the orh4rs...Chelsea sold a major batch of youth products.

West Ham I've been wondering about for a little while, Napoli their results would be interesting as they've generally struck me as quite compliant, pissing off some of their fans in the process.

PSG on one level surprises me slightly as it still contained 2017-18 major player sale profits and some subsequent okay player sale profits..I would have thought their bigger issue comes to 2021-22 and maybe 2022-23.

[Mr Popodopolous]

Sevilla and Borussia Dortmund also surprise me a bit. Lazio also to an extent.

Edited September 2, 2022 by Mr Popodopolous

[chinapig]

43 minutes ago, Davefevs said:

Precedent set???

Any club at risk of breaching P&S is sure to claim a precedent. Stoke come to mind and we seem to be buddies with them on this so I'm sure Gould will be all over it.

[Mr Popodopolous]

My early view as to how this might cross over fwiw.

The problem is well there are a couple.

A) The lack of real-time monitoring let alone future monitoring in the UEFA version.

b) The Reporting Period. This pertains to the period ending in 2020-21 or in tbis instance the joint 2019-20 abs 2020-21 average. For which domestically punishments and future Business Plans were handed out last Autumn (Derby and Reading although both were 'Agreed Decisions'). Possibly some othrrs are still undergoing analysis and investigation.

c) Agreed Decisions of course reduce the severity of what the EFL may push for. E.g. an aggregate of Derby's 3 periods in breach would have totalled 17 whereas the Agreed Decision saw 9 with 3 more suspended up to summer 2022.

Reading smashed it and on breach alone would have got 12 but got 6, 6 more suspended until end of June 2023 tied to a range of metrics plus a future Business Plan of course- however that suspended -6 being activated wouldn't mitigate against punishment for a further breach in itself.

d) UEFA FFP as it stands afaik doesn't have points deductions, or if it does they have never been activated. Ban from a competition for a year or 2 is the highest punishment, ie CL although never seems to affect sides from the top divisions..Malaga maybe?

Does the EFL have this T-4 mechanism? Nope- question is whether UEFA just invented it or what.

e) EFL seems more about embargoes, deductions, relative real time monitoring and now seemingly future monitoring. UEFA unless a side has already breached seems not to utilise the future elements.

Edited September 2, 2022 by Mr Popodopolous

[chinapig]

1 minute ago, Mr Popodopolous said:

UEFA FFP as it stands afaik doesn't have points deductions, or if it does they have never been activated. Ban from a competition for a year or 2 is the highest punishment, ie CL although never seems to affect sides from the top divisions..Malaga maybe?

Weren't AC Milan banned from European competition for a year?