FFP amendments - covid allowances

[CyderInACan]

 

[Bristol Rob]

I have no idea if this is good or bad news Reg, I thought we lost a lot more due to the 'vids.

[ExiledAjax]

COVID

As a result of a number of Clubs highlighting that the pandemic continues to have an adverse financial effect despite a return to full capacity stadiums, Clubs have opted to reintroduce COVID add backs into the P&S calculation for season 2021/22.  The impact is that Clubs will be able to claim lost revenues or exceptional costs directly relating to the pandemic up to a value of £2.5m for the reporting period 2021/22. Clubs can claim up to £5m for seasons 2019/20 and 2020/21.

Accounting for Player Registrations

Clubs are now required to provide a Player Registration schedule that will ensure greater transparency in respect of information that includes but is not limited to players wages, sell-on rights, registration costs and amortisation.  These new requirements follow the principles of the UEFA Club Financial Fair Play Regulations.

In addition, EFL Clubs have agreed that a mandatory requirement for the amortisation of Player Registrations on a straight-line basis should be included.

Introduction of Monitoring for Forecasted Breaches

With a priority to ensure future compliance with the P&S rules, Clubs have agreed that where a breach is forecasted in future years then the League should have the ability to impose a business plan or appropriate monitoring requirements.

Edited February 17, 2022 by ExiledAjax

[054123]

Just now, Bristol Rob said:

I have no idea if this is good or bad news Reg, I thought we lost a lot more due to the 'vids.

That’s what I thought, but it does say ‘up to’ so not just a case that clubs can allow a flat 5m for Covid losses.

Despite suffering some slings and arrows, I actually think the club have done the right thing in being upfront and open with our accounts.

[Mr Popodopolous]

9 minutes ago, ExiledAjax said:

Introduction of Monitoring for Forecasted Breaches

With a priority to ensure future compliance with the P&S rules, Clubs have agreed that where a breach is forecasted in future years then the League should have the ability to impose a business plan or appropriate monitoring requirements.

This bit is something I wondered about a few days ago- it seems that now they can, unlike in past cases where most were punished and some had got away!! Had this and the stadium rule been in place with Aston Villa, they absolutely would have failed or been Embargoed- this means we and varied others, could be in a business plan or appropriate monitoring requirements as soon as Summer 2022, it's a gamechanger- but not necessarily in a good way!

Aston Villa fans would doubtless say "Compliant in every respect" but had it been in place back then we would have seen some quite different outcomes probably- but ironically perhaps less points deductions.

Edited February 17, 2022 by Mr Popodopolous

[ExiledAjax]

Just now, Mr Popodopolous said:

This bit is something I wondered about a few days ago- it seems that now they can, unlike in past cases where most were punished and some had got away!! Had this and the stadium rule been in place with Aston Villa, they absolutely would have failed or been Embargoed- this means we and varied others, could be in a business plan or appropriate monitoring requirements as soon as Summer 2022, it's a gamechanger.

It is, but it's good I think. Means that you can no longer as effectively speculate in the hope that you get promoted before reality bites. It's good to try and make some of this stuff less reactionary. And yeh, I think we could potentially be under some sort of 'enhanced monitoring' unless we get that one big sale to show future compliance. Interesting it doesn't say at what point the forecast is made. Is it ongoing? monthly? quarterly? just when accounts are published?

Nothing around Parachute Payments though, so that elephant is still very much in the room.

[Mr Popodopolous]

2 minutes ago, ExiledAjax said:

It is, but it's good I think. Means that you can no longer as effectively speculate in the hope that you get promoted before reality bites. It's good to try and make some of this stuff less reactionary. And yeh, I think we could potentially be under some sort of 'enhanced monitoring' unless we get that one big sale to show future compliance. Interesting it doesn't say at what point the forecast is made. Is it ongoing? monthly? quarterly? just when accounts are published?

Nothing around Parachute Payments though, so that elephant is still very much in the room.

Agreed but in the sense of freedom to move this summer, it could bite quicker than we think.

Not read the EFL statement in full yet, only the snippets on here but to the best of my knowledge, it is T-2 and T-1 and then Projections for T...and then if that figure or if T exceeds a certain number, clubs have to submit T+1 and possibly T+2 to the EFL. Presumably T+1 and T+2 can be future monitoring and in theory or where appropriate, enhanced monitoring or a Business Plan can kick in.

Edited February 17, 2022 by Mr Popodopolous

[Mr Popodopolous]

As for the £5m bit...that's not good news for us, unless it is again being poorly reported a £5m cap- but many others in good company- would not help us much. A further £2.5m for this season is alright but nothing amazing but helps us a bit more than some of my worst case scenario modelling.

Having said that, a reasonable number of clubs could also face issues.

Edited February 17, 2022 by Mr Popodopolous

[ExiledAjax]

3 minutes ago, Mr Popodopolous said:

Agreed but in the sense of freedom to move this summer, it could bite quicker than we think.

Not read the EFL statement in full yet, only the snippets on here but to the best of my knowledge, it is T-2 and T-1 and then Projections for T...and then if that figure or if T exceeds a certain number, clubs have to submit T+1 and possibly T+2 to the EFL. Presumably T+1 and T+2 can be future monitoring and in theory or where appropriate, enhanced monitoring or a Business Plan can kick in.

Well I hope they've agreed a proper way to estimate the value of player sales in future years.

[Mr Popodopolous]

Interesting to see- Stoke for example have put £30m in Player Impairment and £8m in other Covid costs in the 2019/20 accounts alone.

The big one there is of course £30m in Impairment- the contentious one. The other claimed costs frankly look normal and reasonable.

Edited February 17, 2022 by Mr Popodopolous

[ExiledAjax]

1 minute ago, Mr Popodopolous said:

The big one there is of course £30m in Impairment- the contentious one. The other claimed costs frankly look normal and reasonable.

Can you see that getting through in light of this attitude from the EFL and its clubs? I'd say that if allowed it rather flies in the face of the kind of stuff they are setting out here. Nice try by Stoke, but I'll be surprised if it's allowed.

[Mr Popodopolous]

12 minutes ago, ExiledAjax said:

Can you see that getting through in light of this attitude from the EFL and its clubs? I'd say that if allowed it rather flies in the face of the kind of stuff they are setting out here. Nice try by Stoke, but I'll be surprised if it's allowed.

I struggle to see how- if that is disallowed then surely they have a problem to 2021, let alone 2022 and beyond.

Derby are another, they seem to have argued £20m in Covid costs in the administrators reports, a world away from £5m allowance and £2.5m allowance this year- something about £30m in Player Valuations too but would have to look again- but with no actual Published Accounts for just under 3 years...this will benefit some of the lower income clubs who usually also have a lower cost base as a result- these had less to lose so will have less to offset. I cannot find the bit about Derby but am convinced I read it somewhere, the £30m bit.

This kind of number was pushing towards my worst case scenario- I'd say we could be in trouble! Still working on several projections- to be clear, trouble isn't to 2022 let alone 2021, it's to 2023!

Edited February 17, 2022 by Mr Popodopolous

[ExiledAjax]

1 minute ago, Mr Popodopolous said:

I struggle to see how- if that is disallowed then surely they have a problem to 2021, let alone 2022 and beyond.

Derby are another, they seem to have argued £20m in Covid costs in the administrators reports, a world away from £5m allowance and £2.5m allowance this year- something about £30m in Player Valuations too but with no actual Published Accounts...

We said £12m(ish) right? Do I remember that correctly?

[Mr Popodopolous]

Just now, ExiledAjax said:

We said £12m(ish) right? Do I remember that correctly?

Think £11m in 2020/21 and I guess you could say £2-3m for the drop from peak in 2018/19 to 2019/20.

[1960maaan]

I won't pretend to have a handle on this, and how it might alter what we can and can't do.

What I have enjoyed is looking at the reply on Twitter. Seems every Derby fan has come out and demanded their points and money back.
One is repeating this and ignoring anyone that mentions it's for Admin points deduction. Great fun though.

If I've read it right though, would we be a little further away from any FFP risk of penalty ?

[Mr Popodopolous]

6 minutes ago, 1960maaan said:

If I've read it right though, would we be a little further away from any FFP risk of penalty ?

I fear the opposite- £48m in losses in the combined period, halved- then lop off £5m per year in allowances and then lop off a further £5m over the 2 years for Covid allowances and that leaves a loss of £16.5m- okay a lot of rounding there, for P&S purposes.

Passed to 2021, passed to 2022...but to 2023 I fear big problems albeit the £2.5m this season will be welcome but no it doesn't feel like good news on the face of it. That said I can be a bit pessimistic/cautious/conservative/risk averse when it comes to FFP.

Gregor and the good news bit...the only bit I can see is if people were expecting a) No Covid allowance at all and b) Nothing for 2021/22. Other than that, I don't understand his argument.

Edited February 17, 2022 by Mr Popodopolous

[Mr Popodopolous]

Suppose a crucial question that has not necessarily been covered- as a result of these amendments will the EFL still be seeking points deductions for breaches?

Past and recent precedent suggests yes, and I can see some clubs kicking off if not but it is a question worth asking...I still think yes FWIW.

[Davefevs]

1 hour ago, Mr Popodopolous said:

Interesting to see- Stoke for example have put £30m in Player Impairment and £8m in other Covid costs in the 2019/20 accounts alone.

The big one there is of course £30m in Impairment- the contentious one. The other claimed costs frankly look normal and reasonable.

1 hour ago, ExiledAjax said:

Can you see that getting through in light of this attitude from the EFL and its clubs? I'd say that if allowed it rather flies in the face of the kind of stuff they are setting out here. Nice try by Stoke, but I'll be surprised if it's allowed.

Yep, as I suspected (hoped?) putting an impairment in your company accounts doesn’t mean it’s gonna count for P&S!!  We will see how this is factored in.

Assuming it’s £5m for 19/20 and £5m for 20/21, I’m assuming it’s only those limits if you lost that much, I.e. if you only lost £2m in 19/20 you can only offset £2m.

The £2.5m is a bit of a bonus though, now the two years are set at a max of £5m.

Putting the following figs into my xls (£2.4m 19/20, £5.0m max 20/21, £2.5m max (21/22), it actually has little impact.  I’d initially put the same for 19/20 and £10.4m in for 20/21, but because it’s halved it’s really only £6.4m excluded.

Now we get £2.4m + £5.0m = £7.4m halved is £3.7m plus the new £2.5m equals £6.2m.  So we are about £0.2m worse off.

So still over next year, but still not much by my reckoning.

Edited February 17, 2022 by Davefevs

[ExiledAjax]

44 minutes ago, Davefevs said:

Yep, as I suspected (hoped?) putting an impairment in your company accounts doesn’t mean it’s gonna count for P&S!!  We will see how this is factored in.

Assuming it’s £5m for 19/20 and £5m for 20/21, I’m assuming it’s only those limits if you lost that much, I.e. if you only lost £2m in 19/20 you can only offset £2m.

The £2.5m is a bit of a bonus though, now the two years are set at a max of £5m.

Putting the following figs into my xls (£2.4m 19/20, £5.0m max 20/21, £2.5m max (21/22), it actually has little impact.  I’d initially put the same for 19/20 and £10.4m in for 20/21, but because it’s halved it’s really only £6.4m excluded.

Now we get £2.4m + £5.0m = £7.4m halved is £3.7m plus the new £2.5m equals £6.2m.  So we are about £0.2m worse off.

So still over next year, but still not much by my reckoning.

So we still need a bit of transfer income to make sure we stay within the limits. 

[Davefevs]

Just now, ExiledAjax said:

So we still need a bit of transfer income to make sure we stay within the limits. 

Or cut costs, e.g. wages, smooth amortisation, etc, etc.

We have 2 windows and 15th months to sort!

Edited February 17, 2022 by Davefevs

[Mr Popodopolous]

Am I misinterpreting something quite big here?

I take/took the £5m allowance over 2 years to be the max Covid allowance- so £48m-£5m-usual allowances (£5m x 2)=£33m.

£33m/2=£16,5m. That knocks the claims of £10-15m, perhaps £15-the lower end of £20m out of the park if so.

[GrahamC]

2 hours ago, 1960maaan said:

I won't pretend to have a handle on this, and how it might alter what we can and can't do.

What I have enjoyed is looking at the reply on Twitter. Seems every Derby fan has come out and demanded their points and money back.
One is repeating this and ignoring anyone that mentions it's for Admin points deduction. Great fun though.

If I've read it right though, would we be a little further away from any FFP risk of penalty ?

Yep, everyone & his dog is also saying we are losing £412k a week (very old news, we’ve reduced our wage bill by a third since then & of course actually have income this season, unlike back then) plus are saying we’ll get a points deduction, when Gould actually said it was “possible” in future, not definite.

Not going to waste time arguing with them as it would take the rest of my life.

[Mr Popodopolous]

The £412k per week is our average over 20 years IIRC, although probably before Transfer Profits ie Operating Losses most likely.

15 minutes ago, GrahamC said:

we’ve reduced our wage bill by a third since then

This would move the dial somewhat but what's the source? Main figure that's been floated is £6m- if it's £10-10.5m down on last season in addition to the amortisation decrease that's a big swing.

[054123]

21 minutes ago, GrahamC said:

Yep, everyone & his dog is also saying we are losing £412k a week (very old news, we’ve reduced our wage bill by a third since then & of course actually have income this season, unlike back then) plus are saying we’ll get a points deduction, when Gould actually said it was “possible” in future, not definite.

Not going to waste time arguing with them as it would take the rest of my life.

Agreed. 

We’ve been upfront and honest and merely said things might be difficult at the of 22/23.

We published all accounts in a timely fashion and haven’t tried to mis represent or hide anything (ahem…Mel Morris).

Lots can happen over the next 18/24 months.

Lets see where we are then.

we won’t be alone.

Edited February 17, 2022 by 054123

[GrahamC]

10 minutes ago, Mr Popodopolous said:

The £412k per week is our average over 20 years IIRC, although probably before Transfer Profits ie Operating Losses most likely.

This would move the dial somewhat but what's the source? Main figure that's been floated is £6m- if it's £10-10.5m down on last season in addition to the amortisation decrease that's a big swing.

Pretty sure that was a Nige quote after the release of a dozen players last summer, might have been during that interview that he said he did “wearing civvies” a t-shirt & shorts.

[Mr Popodopolous]

If we've cut the wage bill by £6m as per a couple of reports and I've interpreted the Covid figures correctly I fear an 8-figure hole to 2022/23. Equivalent in terms of tariff to an 8-9 point deduction for the period ending 2022/23.

Certainly won't be alone though it's notable reading other Championship forums the lack of concern and debate about the issue so far.

Just now, GrahamC said:

Pretty sure that was a Nige quote after the release of a dozen players last summer, might have been during that interview that he said he did “wearing civvies” a t-shirt & shorts.

Thanks, will have a look back. Most reported  figure I've seen is £6m per season however and does it account for the new additions?

[Mr Popodopolous]

One interpretation from the Stoke forum too.

If you forecast a breach and are up front, work with EFL does this avoid a points deduction?

Again my guess would be no but it is an interpretation.

[GrahamC]

7 minutes ago, Mr Popodopolous said:

Thanks, will have a look back. Most reported  figure I've seen is £6m per season however and does it account for the new additions?

Honestly don’t know.

Those departures will have included some big earners, such as Diedhiou, Hunt, Paterson, Watkins, Lansbury & Walsh. Plus probable lower end earners like Rowe, Adelakun, Gilmartin & Mariappa.

Mawson will have been on big money as a loan signing, too.

We also shed Nagy, Wollacott, Nurse, Opi Edwards, Hinds from the wage bill & presumably Hearts have made a significant contribution to Moore’s wages.

If you look at those we brought in only James is probably on a decent amount, Weimann & Baker took rumoured 50% pay cuts to stay & Simpson, King, Atkinson & Tanner will be on relatively low wages.

[Mr Popodopolous]

On a side note, Page 804 and beyond of the Administration thread on Dcfcfans worth a look- fuming!!

They are speculating about legal action, points back- 2 or 3 points is the ballpark figure I am seeing. Suggesting that this £5m allowance is to let us, Middlesbrough, Stoke and likely more off the hook!

Edited February 17, 2022 by Mr Popodopolous

[RUSSEL85]

I think we will sell one of young prospects to a prem club in the summer, I feel we will have no choice.