FFP - League 1

[daored]

I have a question about the impact of relegation to league 1 to the football club from a financial perspective. Obviously I hope this won’t happen. 

What is the cost to Bristol City FC if the worst was to happen and we were to be relegated? For starters, we would surely see a reduction in crowd size and in particular away fans at the Gate. Plus reduced TV revenue and commercial operations, both resulting in a reduction in revenue. 

Our wage bill is still eye watering, against a percentage of our turnover and we surely wouldn’t be able to sustain in league 1. There would likely be a fire sale of players due to a number of our players not wanting to play league 1 football, at a reduction of what we paid for them. 

We all know our losses last year will be huge taking into account Covid , I was discussing this on the FBC podcast with Ian and he mentioned SCMP ? Must admit I have never heard of it.

Hopefully , relegation will not happen but financially what’s the impact on the club if we were to be relegated . I mentioned possible administration but was told this wouldn’t be the case ?

[Hxj]

It depends upon what you mean by impact.

For purely accounting purposes (everything else being even) relegation will increase losses by around £10 to £12 million.

The P&S rules are different, a club newly relegated to League One can spend 75% of it's income on football squad wages, there is no FFP as we know it and all other costs such as amortisation are ignored.  The standard limit is 65%.

Plus any donations (without cap and as opposed to loans) from the owner are treated as income.

So if the total football income was £20 million the club could spend £15 million on wages.

If SL gave the club £20 million they could spend a further £15 million on wages. 

Administration is highly unlikely on relegation

[RobintheRed Red]

3 hours ago, daored said:

I have a question about the impact of relegation to league 1 to the football club from a financial perspective. Obviously I hope this won’t happen. 

What is the cost to Bristol City FC if the worst was to happen and we were to be relegated? For starters, we would surely see a reduction in crowd size and in particular away fans at the Gate. Plus reduced TV revenue and commercial operations, both resulting in a reduction in revenue. 

Our wage bill is still eye watering, against a percentage of our turnover and we surely wouldn’t be able to sustain in league 1. There would likely be a fire sale of players due to a number of our players not wanting to play league 1 football, at a reduction of what we paid for them. 

We all know our losses last year will be huge taking into account Covid , I was discussing this on the FBC podcast with Ian and he mentioned SCMP ? Must admit I have never heard of it.

Hopefully , relegation will not happen but financially what’s the impact on the club if we were to be relegated . I mentioned possible administration but was told this wouldn’t be the case ?

Was told we would lose 7 million in t.v rights

[Kodjias Wrist]

4 minutes ago, RobintheRed Red said:

Was told we would lose 7 million in t.v rights

Thats a hell of a lot for our level. Im assuming some contracts include relegation wage drop clauses. 

[Simon79]

51 minutes ago, Kodjias Wrist said:

Thats a hell of a lot for our level. Im assuming some contracts include relegation wage drop clauses. 

Having watched the crap so far,  I’m presuming we are only paying League One wages! COYR 

[RobintheRed Red]

11 hours ago, Kodjias Wrist said:

Thats a hell of a lot for our level. Im assuming some contracts include relegation wage drop clauses. 

Yes mate worrying times .

[Marina's Rolls Royce]

It is a very sad comment that in early November we are discussing implications of relegation.

There's still time to dig ourselves out but it involves yet more complicated and expensive upheaval which maybe the owners just don't want.

[Loco Rojo]

19 minutes ago, Marina's Rolls Royce said:

It is a very sad comment that in early November we are discussing implications of relegation.

There's still time to dig ourselves out but it involves yet more complicated and expensive upheaval which maybe the owners just don't want.

Agree. I think it shows the level of confidence the OTIB fan base has in the squad and their ability to turn this mess around. 

[Davefevs]

Here’s how it works in Lg1/2

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

[Bris Red]

16 hours ago, Hxj said:

It depends upon what you mean by impact.

For purely accounting purposes (everything else being even) relegation will increase losses by around £10 to £12 million.

The P&S rules are different, a club newly relegated to League One can spend 75% of it's income on football squad wages, there is no FFP as we know it and all other costs such as amortisation are ignored.  The standard limit is 65%.

Plus any donations (without cap and as opposed to loans) from the owner are treated as income.

So if the total football income was £20 million the club could spend £15 million on wages.

If SL gave the club £20 million they could spend a further £15 million on wages. 

Administration is highly unlikely on relegation

So in a sense it is still possible to spend above and beyond your means to get out of league one?

Agree with other posters that its sad that we are even contemplating it this early in the season..

[Bedred31]

Am I right in thinking that under NP the wage bill has fallen form 60m to 40m pa?

[Davefevs]

1 hour ago, bris red said:

So in a sense it is still possible to spend above and beyond your means to get out of league one?

Agree with other posters that its sad that we are even contemplating it this early in the season..

It’s probably easier to spend big in Lg1 as long as owners are putting money in, rather than in loans.  The danger is going for it so much that if promoted you can’t run under Champ FFP.  Ipswich for example are going big time, but may find they’ve got little wiggle room to improve if they get promoted.