FFP what's the timeline?

[The Humble Realist]

A while ago there were a lot of concerns that we (and about half the league) wouldnt make the numbers to comply with FFP.

Hopefully there will be an update on our own position as the fans forum this week but what is the timeline for FFP?

In particular:

When will we know if we havent complied (officially)?

When might points deductions or punishments be handed out ?

Would points deductions apply for this season?

Surely if multiple teams were going to face points deductions the EFL would get on with it for the sake of the competition?

[Mr Popodopolous]

It's genuinely hard to say definitively, unfortunately.

We appear to be among the worst placed as it stands although there are several other candidates although 3 got promoted! I think some or all of Bournemouth, Fulham and Nottingham Forest would have had issues. I heavily question Stoke too.

I hope we get updated in a transparent and honest manner, I was also hoping that 2021-22 accounts maybe out by tomorrow evening- still might of course!

3 hours ago, The Humble Realist said:

In particular:

When will we know if we havent complied (officially)?

Presumably either March/April 2023 when the in-season Projections go in, or next summer after our updated numbers from those March projections go in.

A January windfall would fix the issue instantly, as would a Webster or perhaps even Brownhill sell-on.

3 hours ago, The Humble Realist said:

When might points deductions or punishments be handed out ?

In theory, the season following the breach as with Birmingham and Reading. However I would suggest that on paper anyway, the EFL have the right to hand down an instant deduction in the Spring.

However:

Sheffield Wednesday

They were docked 12 points ahead of 2020-21 having been charged in November of 2019-20 for a breach in the 3 year period ending 2017-18. Covid played a part in the timeline here...(eventually halved to 6 on appeal in November of 2020-21).

Derby

Were initially charged in January 2020 so the season of 2019-20 for a breach in the 3 year period ending 2017-18- so much has been written about that but they eventually won their case in August 2020 so arguably ahead of 2020-21 while further wrangling went on during that season and they lost their appeal during that season. It dragged on during summer of 2021 into 2021-22 and I think the EFL even begun analysing their accounts for 2014-15 again to see if there was an overspend under the new criteria for the period ending 2016-17 (there was).

Agreed Decision eventually ratified in mid November 2021, proposed in late August 2021. Both 2021-22.

The periods covered by the agreed decision were:

1) 3 years of 2014-15, 2015-16, 2016-17

2) 3 years of 2015-16, 2016-17, 2017-18

3) 3 years of 2016-17, 2017-18, 2018-19

4) Including Covid period, 2017-18, 2018-2019 and combined average of 2019-20 and 2020-21.

For that to go so far back be ratified in November 2021 is mental.

3 hours ago, The Humble Realist said:

Would points deductions apply for this season?

In theory yes, in practice probably not. I'd argue that the improved future monitoring powers pertaining to a potential future breach, and the EFL winning their case v Birmingham in 2020 about upholding the principle of an Absolute Obligation make it more valid now than in the past.

3 hours ago, The Humble Realist said:

Surely if multiple teams were going to face points deductions the EFL would get on with it for the sake of the competition?

See all above, you'd think so but who knows! Plus we won't know until March at the earliest unless we agree to it before then.

It would likely by at the very worst 4 pts in our case..and perhaps half of that.

Besides our Projected losses for Covid may not align with EFL voted limits or indeed if we argue on a certain item, the EFL may view differently and a Disciplinary Commission could be needed for a determination? Which adds further time and uncertainty.

Edited October 26, 2022 by Mr Popodopolous

[The Humble Realist]

31 minutes ago, Mr Popodopolous said:

It's genuinely hard to say definitively, unfortunately.

We appear to be among the worst placed as it stands although there are several other candidates although 3 got promoted! I think some or all of Bournemouth, Fulham and Nottingham Forest would have had issues.

I hope we get updated in a transparent and honest manner, I was also hoping that 2021-22 accounts maybe out by tomorrow evening- still might of course!

Presumably either March/April 2023 when the in-season Projections go in, or next summer after our updated numbers from those March projections go in.

A January windfall would fix the issue instantly, as would a Webster or perhaps even Brownhill sell-on.

In theory, the season following the breach as with Birmingham and Reading. However I would suggest that on paper anyway, the EFL have the right to hand down an instant deduction in the Spring.

However:

Sheffield Wednesday

They were docked 12 points ahead of 2020-21 having been charged in November of 2019-20 for a breach in the 3 year period ending 2017-18. Covid played a part in the timeline here...(eventually halved to 6 on appeal in November of 2020-21).

Derby

Were initially charged in January 2020 so the season of 2019-20 for a breach in the 3 year period ending 2017-18- so much has been written about that but they eventually won their case in August 2020 so arguably ahead of 2020-21 while further wrangling went on during that season and they lost their appeal during that season. It dragged on during summer of 2021 into 2021-22 and I think the EFL even begun analysing their accounts for 2014-15 again to see if there was an overspend under the new criteria for the period ending 2016-17 (there was).

Agreed Decision eventually ratified in mid November 2021, proposed in late August 2021. Both 2021-22.

The periods covered by the agreed decision were:

1) 3 years of 2014-15, 2015-16, 2016-17

2) 3 years of 2015-16, 2016-17, 2017-18

3) 3 years of 2016-17, 2017-18, 2018-19

4) Including Covid period, 2017-18, 2018-2019 and combined average of 2019-20 and 2020-21.

For that to go so far back be ratified in November 2021 is mental.

In theory yes, in practice probably not. I'd argue that the improved future monitoring powers pertaining to a potential future breach, and the EFL winning their case v Birmingham in 2020 about upholding the principle of an Absolute Obligation make it more valid now than in the past.

See all above, you'd think so but who knows! Plus we won't know until March at the earliest unless we agree to it before then.

It would likely by at the very worst 4 pts in our case..and perhaps half of that.

Besides our Projected losses for Covid may not align with EFL voted limits or indeed if we argue on a certain item, the EFL may view differently and a Disciplinary Commission could be needed for a determination? Which adds further time and uncertainty.

Thanks,  a real detailed explanation of something that is obviously very fluid. 

Good to know that even though its unclear when...between now and the spring things will step by step become a little clearer.

 

I guess we will.know a lot when the accounts are published 

[Gol]

Private companies have to file their audited accounts within 9 months of the companies year end I believe our year end is 31 May, so in theory the end of February 23, though last year we filed our accounts in December/ January. time  Under EFL rules, the deadline for a points deduction to be applied this season is the 4th March 2023. I would imagine however the draft accounts are already with the auditors at this time  and the EFL has had sight of them already. Whilst @Mr Popodopolous has given a very detailed post on past deductions. I believe this years will be more complex as the clubs mention were in financial difficulties prior to Covid, this years 3 year cycle will show the full impact of Covid. I think it will depend on how far away we are from the relegation spots and the amount of points deducted as to whether we accept it this  season

links where I got this info if anyone is interested

https://www.icaew.com/technical/financial-reporting/uk-regulation-for-company-accounts/filing-requirements-for-uk-companies

https://www.efl.com/-more/governance/efl-rules--regulations/efl-regulations/section-3-the-league/

https://find-and-update.company-information.service.gov.uk/company/03230871/filing-history

[Mr Popodopolous]

@Gol

Interested in the 4th March 2023 deadline in particular?? That seems strange because you can only truly assess a) The numbers but b) How the numbers were reached over time methodology wise.

Is this bit a new rule then, the 4th March 2023 deadline? The EFL definitely should have received some draft numbers- there is also the factor of Future Financial Information, whereby clubs submit if they fall within a certain range their Projections for T+1 and if applicable, T+2.

While accounts to CH agreed 9 months the EFL can get info sooner, much sooner where required.

Could the EFL not hand down a deduction first and then go to appeal/adjudication thereafter if Projected numbers show a breach?

Edited October 26, 2022 by Mr Popodopolous

[Simon bristol]

Do you have a likely loss for this year estimated yet mr p?

[ExiledAjax]

1 hour ago, Gol said:

Private companies have to file their audited accounts within 9 months of the companies year end I believe our year end is 31 May, so in theory the end of February 23, though last year we filed our accounts in December/ January. time  Under EFL rules, the deadline for a points deduction to be applied this season is the 4th March 2023. I would imagine however the draft accounts are already with the auditors at this time  and the EFL has had sight of them already. Whilst @Mr Popodopolous has given a very detailed post on past deductions. I believe this years will be more complex as the clubs mention were in financial difficulties prior to Covid, this years 3 year cycle will show the full impact of Covid. I think it will depend on how far away we are from the relegation spots and the amount of points deducted as to whether we accept it this  season

links where I got this info if anyone is interested

https://www.icaew.com/technical/financial-reporting/uk-regulation-for-company-accounts/filing-requirements-for-uk-companies

https://www.efl.com/-more/governance/efl-rules--regulations/efl-regulations/section-3-the-league/

https://find-and-update.company-information.service.gov.uk/company/03230871/filing-history

The accounts are already audited. They are ready to publish but the club are in discussions with the EFL re FFP. I suspect that now that Gould's future is decided the next job is to release the accounts.

[Mr Popodopolous]

13 minutes ago, Simon bristol said:

Do you have a likely loss for this year estimated yet mr p?

I have several estimates for our position to the season ending 2022-23 although I haven't looked for a while!

I reckon that last season we made a pre-tax loss of £23m or thereabouts. The big unknown is how we try to allocate it due to Covid.

Using the EFL voted on limits, so would say our FFP loss looks as follows:

2019-20 and 2020-21 combined average- £14m (after Covid allowances, FFP allowances and combined average). T-2

2021-22- £15.5m (after the £2.5m Covid allowances and the above). T-1

2022-23- Needs to be £9.5m in FFP terms or £14.5m, maybe £15m at a push in accounting terms. That £2.5m Covid allowance falls off so maybe an £8-8.5m improvement needed from last season to this. T.

Edited October 26, 2022 by Mr Popodopolous

[Davefevs]

9 minutes ago, Mr Popodopolous said:

I have several estimates for our position to the season ending 2022-23 although I haven't looked for a while!

I reckon that last season we made a pre-tax loss of £23m or thereabouts. The big unknown is how we try to allocate it due to Covid.

Using the EFL voted on limits, so would say our FFP loss looks as follows:

2019-20 and 2020-21 combined average- £14m (after Covid allowances, FFP allowances and combined average). T-2

2021-22- £15.5m (after the £2.5m Covid allowances and the above). T-1

2022-23- Needs to be £9.5m in FFP terms or £14.5m, maybe £15m at a push in accounting terms. That £2.5m Covid allowance falls off so maybe an £8-8.5m improvement needed from last season to this. T.

What he said pretty much.

[Mr Popodopolous]

I also would estimate that using those parameters we could be £2-3m in the red this season however...

Baker- Would it be fair to get some kinda add-back? Given we are honouring the final year of his deal my view is yes, net of any insurance for him if we have it of course.

Cup run- A big tie if we beat Lincoln would help, if at home. Even more so if we win said big tie and get another!

Covid Losses- EFL day £5m x 2 and then £2.5m but SwissRamble reckoned ou4 Covid losses for the 2 reasons in the £17-18m bracket. That would or could or would improve it by £3.5-4m for my £14m for the 2 Covid years.

What about creative accounting? If we went back and stuck say £10m of Impairment in the joint 2 Covid seasons,  it would increase that baseline loss to £19m but relieve some obligations from the next 2 season's. The impact would also be halved because all revenue and losses added and halved in those 2 years so even though additional impairment is £10m, the averaged impact would only be £5m.

Not talking about doing a Stoke either, you still account for the impairment but you just accelerate it, the £10m of it to say 2020/21 when Covid impact was at its peak.

Edited October 26, 2022 by Mr Popodopolous

[Gol]

1 hour ago, Mr Popodopolous said:

@Gol

Interested in the 4th March 2023 deadline in particular?? That seems strange because you can only truly assess a) The numbers but b) How the numbers were reached over time methodology wise.

Is this bit a new rule then, the 4th March 2023 deadline? The EFL definitely should have received some draft numbers- there is also the factor of Future Financial Information, whereby clubs submit if they fall within a certain range their Projections for T+1 and if applicable, T+2.

While accounts to CH agreed 9 months the EFL can get info sooner, much sooner where required.

Could the EFL not hand down a deduction first and then go to appeal/adjudication thereafter if Projected numbers show a breach?

I believe it came about when Leeds where going through all their troubles, they were already relegated from the Championship so put themselves into administration to try and avoid the a points deduction the next season, ihe rules were changed to avoid any similar attempts in the future https://www.theguardian.com/football/2007/may/04/newsstory.leedsunited1.

 

Please see @ExiledAjaxresponse if the accounts have been audited it makes the EFL's position a bit more secure.  the only elephant in the room now is Covid, we could argue that prior to Covid we were not in danger of breaching FFP rules, that Covid was an act of god, which affected us due to our player trading strategy. we are in unknown territory with this!  Purely guesswork but I imagine there will be a punishment this season which is not as severe as previous ones given out.

19 minutes ago, ExiledAjax said:

The accounts are already audited. They are ready to publish but the club are in discussions with the EFL re FFP. I suspect that now that Gould's future is decided the next job is to release the accounts.

Thank you for that, makes sense I would guess it will be a similar time as last year.

[ExiledAjax]

2 minutes ago, Gol said:

Thank you for that, makes sense I would guess it will be a similar time as last year.

The club had hoped to publish in October but I suspect the discussions around Gould's future delayed it. Not great to publish when there's public speculation over your CEO's future. That's now settled so I'd expect to see accounts some time soon.

Definitely something to ask about at the fans forum tomorrow night - if you're attending.

[chinapig]

14 minutes ago, Gol said:

Please see @ExiledAjaxresponse if the accounts have been audited it makes the EFL's position a bit more secure.  the only elephant in the room now is Covid, we could argue that prior to Covid we were not in danger of breaching FFP rules, that Covid was an act of god, which affected us due to our player trading strategy. we are in unknown territory with this!  Purely guesswork but I imagine there will be a punishment this season which is not as severe as previous ones given out.

Derby argued that they would have been fine without Covid, trying to avoid admitting that the underlying problem was their reckless financial strategy, and were rightly given short shrift. Most clubs will not breach FFP despite Covid so the claim doesn't stand up.

Our strategy was also reckless (Nigel called it bonkers), gambling that we would sign or develop a steady stream of players to sell on for big money and that the market would continue to inflate.

If I was the EFL I'd be telling Steve that a man with his expertise ought to have known that markets can go down as well as up so he should not have doubled the wage bill but built in some resilience.

[Davefevs]

34 minutes ago, chinapig said:

If I was the EFL I'd be telling Steve that a man with his expertise ought to have known that markets can go down as well as up so he should not have doubled the wage bill but built in some resilience.

Yep, don’t put all your eggs in one basket.

 

@Mr Popodopolouscouple of excellent posts from you

[Lanterne Rouge]

2 hours ago, Gol said:

I believe it came about when Leeds where going through all their troubles, they were already relegated from the Championship so put themselves into administration to try and avoid the a points deduction the next season, ihe rules were changed to avoid any similar attempts in the future https://www.theguardian.com/football/2007/may/04/newsstory.leedsunited1.

 

This is how I remember it. The rules were changed so the system couldn`t be gamed like that again. IIRC Ridsdale was at Leeds at the time?

[phantom]

Just confirmed at the fans forum by Richard Gould we were well within FFP last season and no problems this season either 

[chinapig]

33 minutes ago, phantom said:

Just confirmed at the fans forum by Richard Gould we were well within FFP last season and no problems this season either 

Yes, good news and something of an achievement, especially in reducing the playing budget (Richard gave credit to Nigel for that).

Notable that he said that the EFL have allowed adjustments for the collapse in the transfer market.

Still big losses, though £10m less than last year, so nobody should expect us to be in a position to start spending money on players.

Edit: Richard now says we are confident we won't get a points deduction, which is slightly different. Mind you he's such an impressive man I'm confident in his confidence!

Edited October 27, 2022 by chinapig

[Davefevs]

31 minutes ago, chinapig said:

Yes, good news and something of an achievement, especially in reducing the playing budget (Richard gave credit to Nigel for that).

Notable that he said that the EFL have allowed adjustments for the collapse in the transfer market.

Still big losses, though £10m less than last year, so nobody should expect us to be in a position to start spending money on players.

Edit: Richard now says we are confident we won't get a points deduction, which is slightly different. Mind you he's such an impressive man I'm confident in his confidence!

Seems that a £38m loss down to circa £28m loss is higher than my estimates, but transfer add back is saving us.  Hope the accounts give a good break down of what we have managed to add-back and in which years.

[Mr Popodopolous]

I was there tonight, my first one. Quite enjoyed it.

£28m? I had it down as £23m but it definitely sounds like the Football League have been rather understanding. That is great news bout the financials!

Edited October 27, 2022 by Mr Popodopolous

[Davefevs]

Just now, Mr Popodopolous said:

I was there tonight, my first one. Quite enjoyed it.

£28m? I had it down as £23m but it definitely sounds like the Football League have been quite understanding. That is great news.about the financials!

Our next task is where is that £5m come from that we didn’t have in our estimates!!!

All will become clear in the next couple of weeks 

[Son of Fred]

On 26/10/2022 at 16:55, chinapig said:

If I was the EFL I'd be telling Steve that a man with his expertise ought to have known that markets can go down as well as up

Maybe Steve went to the same finance school as Kwasi Kwarteng

Edited October 27, 2022 by Son of Fred

[ExiledAjax]

1 hour ago, Mr Popodopolous said:

I was there tonight, my first one. Quite enjoyed it.

£28m? I had it down as £23m but it definitely sounds like the Football League have been rather understanding. That is great news bout the financials!

And this is why I've been more pessimistic than you. Think I may have said high 20's loss rather than mid 20s. It's next season that could be dicy if we don't sell for big dollar in the next two windows.

If the new info is that the EFL are on our side re FFP then great. This is what I meant when I say my info was old. I didn't have an update on the EFL position.

I couldn't attend/watch tonight but am hoping it goes up on YouTube.

Edited October 27, 2022 by ExiledAjax

[Davefevs]

23 minutes ago, ExiledAjax said:

And this is why I've been more pessimistic than you. Think I may have said high 20's loss rather than mid 20s. It's next season that could be dicy if we don't sell for big dollar in the next two windows.

If the new info is that the EFL are on our side re FFP then great. This is what I meant when I say my info was old. I didn't have an update on the EFL position.

I couldn't attend/watch tonight but am hoping it goes up on YouTube.

Do you think they will be transparent in the accounts or the summary they put out in terms of the add-backs?

[Mr Popodopolous]

1 hour ago, ExiledAjax said:

And this is why I've been more pessimistic than you. Think I may have said high 20's loss rather than mid 20s. It's next season that could be dicy if we don't sell for big dollar in the next two windows.

If the new info is that the EFL are on our side re FFP then great. This is what I meant when I say my info was old. I didn't have an update on the EFL position.

I couldn't attend/watch tonight but am hoping it goes up on YouTube.

Thanks EA.

Ngl, I was a little worried on occasion about the period ending 2023-24 but at the same time, high earners and most of the amortisation out of contract in summer 2023 I thought it may balance out in any event, although this assumed a loss several million lower last season.

The accounts will be rather interesting though as that loss seems..well higher than I was thinking. Less revenue, more costs, acceleration of costs??

[ExiledAjax]

7 hours ago, Davefevs said:

Do you think they will be transparent in the accounts or the summary they put out in terms of the add-backs?

Yes. 

@Mr Popodopolous. I think 23/24 is answered by the EFL being favourable on add backs. It had been indicated to me that if that did not happen we could potentially be in a £(25)m FFP hole in 23/24. That would obviously be problematic and would necessitate the sale of our brightest young assets. Hence my caution and pessimism over the past few months.

However it sounds like the answers last night suggest that the £(25)m scenario is now very unlikely, and I expect the accounts and the accompanying materials will clarify that.

That is all excellent news. It obviously does not mean we're off to sign a £15m striker or CB, but it means we're steady, and still well on the road to being a prudential club.

Edited October 28, 2022 by ExiledAjax

[GrahamC]

The inference I took from last night (this certainly isn’t my area of expertise though) was the case put forward by the likes of Stoke, saying the pandemic period was exceptional, seems to have been accepted.

Pretty sure that RG also said our case that we budgeted on incoming transfer funds (seems weak to me, but heigh ho) has also been taken into consideration.

If it is £28m that’s still really high & so the next challenge, assuming we avoid a relegation fight, is to reconstruct the squad next summer with about half of it out of contract.

It was made very clear last night an offer to any of them of even their current terms would be the exception & we are actively looking at those who are out of contract elsewhere now.

[Topper 123]

1 hour ago, GrahamC said:

The inference I took from last night (this certainly isn’t my area of expertise though) was the case put forward by the likes of Stoke, saying the pandemic period was exceptional, seems to have been accepted.

Pretty sure that RG also said our case that we budgeted on incoming transfer funds (seems weak to me, but heigh ho) has also been taken into consideration.

If it is £28m that’s still really high & so the next challenge, assuming we avoid a relegation fight, is to reconstruct the squad next summer with about half of it out of contract.

It was made very clear last night an offer to any of them of even their current terms would be the exception & we are actively looking at those who are out of contract elsewhere now.

No graham the players that are out of contract haven’t been visited yet but as was said at meeting these players will first have to earn a new contract and as it stands championship wage contracts have dipped by 20-30% so it will be at a reduced wage 

[Davefevs]

1 hour ago, GrahamC said:

If it is £28m that’s still really high & so the next challenge, assuming we avoid a relegation fight, is to reconstruct the squad next summer with about half of it out of contract.

It was made very clear last night an offer to any of them of even their current terms would be the exception & we are actively looking at those who are out of contract elsewhere now.

2 minutes ago, Magger1 said:

No graham the players that are out of contract haven’t been visited yet but as was said at meeting these players will first have to earn a new contract and as it stands championship wage contracts have dipped by 20-30% so it will be at a reduced wage 

I suspect tentative discussions have taken place to see each other’s opening gambits…and that is possibly informing a direction of travel that means we will look elsewhere in the market next summer, ie the current players want too much and the club feel they can better value elsewhere.  Obviously both sides have room to compromise if they want.

 

[Mr Popodopolous]

I thought the transfer add-back idea when first floated and this isn't a slight on the club or Richard Gould or anyone, was basically ropey and a bit opportunist when first announced and I believe it about any club looking to hide behind Covid for FFP.

See also Stoke and their £30m impairment AND £11m in transfer profit, see Everton and their frankly absurd £170m in 2 seasons, some of which maybe half at least was linked to the transfer market.

I don't think it was guaranteed we won't but reading between the lines of that well you have to use language a bit diplomatically at times...our conduct from summer 2021 too perhaps helps, no loans for 2 years, no transfer fees this summer- quite different to Stoke IMO, we have shown significant restraint and self-sacrifice although the loss seemingly being as high as £28m is a bit of an eye-opener.

[Davefevs]

4 minutes ago, Mr Popodopolous said:

I thought the transfer add-back idea when first floated and this isn't a slight on the club or Richard Gould or anyone, was basically ropey and a bit opportunist when first announced and I believe it about any club looking to hide behind Covid for FFP.

See also Stoke and their £30m impairment AND £11m in transfer profit, see Everton and their frankly absurd £170m in 2 seasons, some of which maybe half at least was linked to the transfer market.

I don't think it was guaranteed we won't but reading between the lines of that well you have to use language a bit diplomatically at times...our conduct from summer 2021 too perhaps helps, no loans for 2 years, no transfer fees this summer- quite different to Stoke IMO, we have shown significant restraint and self-sacrifice although the loss seemingly being as high as £28m is a bit of an eye-opener.

I agree…will be interesting how we communicate this in the books and the summary to fans.  Suggests we’ve gone more down the Forest route.