UEFA ease FFP regs due to Covid

[Mr Popodopolous]

Firstly, I wonder if it will have a knock on effect here ie in the Championship or if we are still going to subject to Covid adhere somewhat to this as a League.

Secondly I am interested in people's interpretations here- seen quite a variety on Twitter, a common consensus from fans appears to be spend big- but I believe it to be somewhat more nuanced.

The measures/alterations as follows, below are listed as:

• the assessment of financial year 2020 is postponed for one season, and will be assessed together with the financial year 2021;
• the 2020/21 monitoring period is curtailed and only covers two reporting periods (financial years ending in 2018 and 2019);
• the 2021/22 monitoring period is extended and covers four reporting periods (financial years ending in 2018-2019-2020 and 2021;
• the financial years 2020 and 2021 are assessed as one single period;
• the adverse impact of the pandemic is neutralised by averaging the combined deficit of 2020 and 2021 and by further allowing specific COVID-19 adjustments.

Layman though I am, it sounds like if you lose £20m in 2020 and £10m in 2021, your FFP loss- this is net of a) Allowable costs and b) Covid would be £15m for that period.

Not fully sure of this though- doesn't sound like a license to open the spending taps entirely.

This AFAIK has not been replicated to date at PL or EFL level, ie the Profitability and Sustainability regs.

@Coppello how do we view this? License for clubs backed by wealthy individuals to go on a bit of a spree? Tweets certainly suggest so, albeit by fans of clubs with wealthy owners!

[Davefevs]

Sounds like to get a season to go shit or bust, and if you fail you have a season to get your act together.  Risky!

[downendcity]

Given the current situation, and with a complete lack of any certainty as to the  impact of the virus in the short to medium term, I would have thought the reasons for ffp i.e. financial prudence and clubs spending within their means, has never been greater.

However, given the lengths some clubs went to to side step ffp even when things were "normal" I would not be at all surprised to see some clubs "going for broke".

[Davefevs]

2 minutes ago, downendcity said:

Given the current situation, and with a complete lack of any certainty as to the  impact of the virus in the short to medium term, I would have thought the reasons for ffp i.e. financial prudence and clubs spending within their means, has never been greater.

However, given the lengths some clubs went to to side step ffp even when things were "normal" I would not be at all surprised to see some clubs "going for broke".

Agree.....we however will be sensible....and I’m happy with that.

[The Gasbuster]

8 hours ago, Mr Popodopolous said:

Firstly, I wonder if it will have a knock on effect here ie in the Championship or if we are still going to subject to Covid adhere somewhat to this as a League.

Secondly I am interested in people's interpretations here- seen quite a variety on Twitter, a common consensus from fans appears to be spend big- but I believe it to be somewhat more nuanced.

The measures/alterations as follows, below are listed as:

• the assessment of financial year 2020 is postponed for one season, and will be assessed together with the financial year 2021;
• the 2020/21 monitoring period is curtailed and only covers two reporting periods (financial years ending in 2018 and 2019);
• the 2021/22 monitoring period is extended and covers four reporting periods (financial years ending in 2018-2019-2020 and 2021;
• the financial years 2020 and 2021 are assessed as one single period;
• the adverse impact of the pandemic is neutralised by averaging the combined deficit of 2020 and 2021 and by further allowing specific COVID-19 adjustments.

Layman though I am, it sounds like if you lose £20m in 2020 and £10m in 2021, your FFP loss- this is net of a) Allowable costs and b) Covid would be £15m for that period.

Not fully sure of this though- doesn't sound like a license to open the spending taps entirely.

This AFAIK has not been replicated to date at PL or EFL level, ie the Profitability and Sustainability regs.

@Coppello how do we view this? License for clubs backed by wealthy individuals to go on a bit of a spree? Tweets certainly suggest so, albeit by fans of clubs with wealthy owners!

Mr P;

In layman’s terms, does this mean that if Villa are relegated, they are likely to escape the punishment which appears to be due ?

Cheers.

[Mr Popodopolous]

2 hours ago, The Gasbuster said:

Mr P;

In layman’s terms, does this mean that if Villa are relegated, they are likely to escape the punishment which appears to be due ?

Cheers.

I'll do my best but it's complicated and I'm not fully sure yet.

AFAIK nothing has yet changed or been decided at EFL level FFP. This is for UEFA and the two have some differences.

I'd be surprised if existing cases were just disregarded though!

Specifically about Aston Villa, it's my view that their situation requires full investigation by the EFL for the 3 years to May 2019. I think it's a live issue and up in the air.

[downendcity]

16 minutes ago, Mr Popodopolous said:

I'll do my best but it's complicated and I'm not fully sure yet.

AFAIK nothing has yet changed or been decided at EFL level FFP. This is for UEFA and the two have some differences.

I'd be surprised if existing cases were just disregarded though!

Specifically about Aston Villa, it's my view that their situation requires full investigation by the EFL for the 3 years to May 2019. I think it's a live issue and up in the air.

Surely any suspension of ffp can only relate to the current season and possibly next, addressing the consequences of the pandemic.

The issue with Villa  relates to the possible breach of ffp in the season(s) prior to their promotion,  during which time the ffp rules and penalties were in place and applicable to all championship clubs, including Villa.

 

 

[Mr Popodopolous]

9 minutes ago, downendcity said:

Surely any suspension of ffp can only relate to the current season and possibly next, addressing the consequences of the pandemic.

The issue with Villa  relates to the possible breach of ffp in the season(s) prior to their promotion,  during which time the ffp rules and penalties were in place and applicable to all championship clubs, including Villa.

 

 

Yeah agreed. That makes sense. I'd also like on that note to see Reading investigated properly even if amendments as they were in a soft embargo last summer and surely quite close despite asset sale and leaseback, Aluko loan fee and other items which we are unsure should have counted.

Im still of the view that normal FFP + Covid adjustments (checked by EFL hired auditors) should apply but who knows what clubs will vote on or what the EFL will propose.

[Coppello]

11 hours ago, Mr Popodopolous said:

Firstly, I wonder if it will have a knock on effect here ie in the Championship or if we are still going to subject to Covid adhere somewhat to this as a League.

Secondly I am interested in people's interpretations here- seen quite a variety on Twitter, a common consensus from fans appears to be spend big- but I believe it to be somewhat more nuanced.

The measures/alterations as follows, below are listed as:

• the assessment of financial year 2020 is postponed for one season, and will be assessed together with the financial year 2021;
• the 2020/21 monitoring period is curtailed and only covers two reporting periods (financial years ending in 2018 and 2019);
• the 2021/22 monitoring period is extended and covers four reporting periods (financial years ending in 2018-2019-2020 and 2021;
• the financial years 2020 and 2021 are assessed as one single period;
• the adverse impact of the pandemic is neutralised by averaging the combined deficit of 2020 and 2021 and by further allowing specific COVID-19 adjustments.

Layman though I am, it sounds like if you lose £20m in 2020 and £10m in 2021, your FFP loss- this is net of a) Allowable costs and b) Covid would be £15m for that period.

Not fully sure of this though- doesn't sound like a license to open the spending taps entirely.

This AFAIK has not been replicated to date at PL or EFL level, ie the Profitability and Sustainability regs.

@Coppello how do we view this? License for clubs backed by wealthy individuals to go on a bit of a spree? Tweets certainly suggest so, albeit by fans of clubs with wealthy owners!

I've had a feeling this would come and I'm in two minds about it. It means that football can continue as normal if the wealthy owners back the club which does not promote sustainability. All other businesses are having to live within their means at the moment to survive so you could argue why can't the big football clubs which fall under the scope of UEFA's FFP do the same? Even more so when the big clubs are less reliant on the ticket income and could comfortably survive on broadcasting revenues alone. 

If it trickles down to the EFL, which I suspect it will, it could make a lot more sense. Given that our primary source of income is matchday revenue, many clubs in this division will breach FFP even if they acted prudently. I think we need a loosening of the rules this year but not to the extent that those with wealthy backers can go on a spree. It would make sense to adjust the accounts based to have a notional 'ticketing income'  based on an average of the past few years. Clubs can therefore act a little more sustainably without completely curtailing the transfer spend. However, you could argue this means that clubs are not living within their means. 

[Mr Popodopolous]

For those who are interested, a great thread by Swiss Ramble. Now granted it's about the Big 6 but how they might comply or otherwise- their excludable costs are very big, also some explanations as to how the UEFA adjustments might work.

[Mr Popodopolous]

On 20/06/2020 at 14:58, Coppello said:

I've had a feeling this would come and I'm in two minds about it. It means that football can continue as normal if the wealthy owners back the club which does not promote sustainability. All other businesses are having to live within their means at the moment to survive so you could argue why can't the big football clubs which fall under the scope of UEFA's FFP do the same? Even more so when the big clubs are less reliant on the ticket income and could comfortably survive on broadcasting revenues alone. 

If it trickles down to the EFL, which I suspect it will, it could make a lot more sense. Given that our primary source of income is matchday revenue, many clubs in this division will breach FFP even if they acted prudently. I think we need a loosening of the rules this year but not to the extent that those with wealthy backers can go on a spree. It would make sense to adjust the accounts based to have a notional 'ticketing income'  based on an average of the past few years. Clubs can therefore act a little more sustainably without completely curtailing the transfer spend. However, you could argue this means that clubs are not living within their means. 

Thanks for the summary.

Think it's not a huge surprise as you say. Some of the operating losses of 2 of the big 6 are prone to getting are quite interesting however I largely agree with this paragraph- they could survive certainly, I think I know what tout mean though in Covid times they aren't reliant on the ticket revenue and will be fine either way?

I'm in two minds on this one too though I of course understand the Imperative. I do like your idea of notional ticketing income based on the average of last few years- how about Projected Accounts too, all clubs submit these at start of March in existing season for P&S purposes- that's the T, T-1 and T-2. Would have thought it not beyond the EFL now it is run by Parry who is far superior to Harvey to work something out using your idea and these factors as a starting point. Maybe add refunded Ticket revenue back in for FFP, keep wages deferred as wages deferred but on the flipside don't exclude them the following season. Or exclude the deferral now and exclude the excess for FFP ie treat it as usual, for FFP purposes.

The downside of doing it at EFL level of course is some clubs. Reading- I think their compliance  to June 2020 is surely in some doubt. That's a starting point. I don't want them e.g. wriggling off the hook given a soft embargo last summer despite many exceptional items. However they pale into insignificance compared to:

Aston Villa. I have serious qs about their compliance, I struggle to see why- but this could be my lack of knowledge of the finer points of accounting coming through- why a stadium sale paid for in the form of other loans receivable is an acceptable method for FFP? I also wonder about the price given St Andrews sold for £23m IIRC and Pride Park was downgraded to £49-50m from £81.1m. Plus Leicester City, an interesting comparable, was £41,582,000 as of May 2014, and depreciated carrying value for comparison was £37,236,000. Included within it was non-depreciated land, to the tune of £9,555,000.

In May 2019, it was valued on a market value current use basis. £43,500,000. Compared to depreciated carrying value on same date of £39,153,000, included with that the non depreciable land of £11,025,000.

I digress but you can see why I and I'm sure I am not alone have significant q's about Aston Villa and their 3 years to May 2019- cannot risk letting them off the hook! I'd be surprised if Parry and the other clubs consider it unfinished business, especially given Derby and Sheffield Wednesday got charged well after the period in q. Very interested in your thoughts too of course.

The other thing, "Exceptional Operating Income". HS2 x 2- Year 2 was £14.4m IIRC- is there a case to exclude the 2nd lot for FFP purposes given how it was classified?

[Mr Popodopolous]

From that detailed yet informative Swiss Ramble thread, a couple of good snippets.

I wonder which clubs ie big hitters in European competition- or even medium but regular hitters could be in trouble with this?

It doesn't open the door to nation state spending, IMO, as some fans and pundits suggest however. Or if it does it's something that needs to be put right again sharpish! I think their reading of it is a bit on the simplistic side, some of the journos etc.

Because you know, net of covid and I mean legitimate covid adjustments, there isn't an enormous change. It kicks the can down the road a bit but if you spend £100m extra on fees and wages that's still weighted and you need to make good on that within a year or two! Or at least chunks of it...yet a podcast I am listening to from the date basically had one of the lines in its descriptor/preview below:

Quote

- UEFA opens door to nation-state spending

Is simplistic and misleading.

The two journos I think are Duncan Castles and Ian McGarry.

I assume they would be checking these figures for ridiculous inflation of revenues or deflation of costs in 2022 over the two years and I also assume they wouldn't just let anything and everything go in terms of RPTs e.g. Usmanov at Everton. They also need to get on the case about Qatar at PSG, that naming rights deal was many times its true value apparently.