FFP

[Nocountryforoldjack]

As a championship club how much are we allowed to spend on the squad before we break the rules and how much did we spend last season. I'd like to know how close we are to breaking the rules?

 

[Martyn - Derwydd]

Its a long story and the accountants find ways to move things around anyway but

A club is allowed to make a combined approx 43m loss over 3 seasons which we were pretty close to after the 23/24 accounts were released a few months ago. But we have had another financial year since then so only the club knows what the current years loss is

Transfer payments are staged over the period of the contract. So for example Innoussa cost approx 5.5m. The deal with his club is 1/2m up front and then approx 1m a year over the next 5 years. So Innousa wont show in this years results as 5.5m. it will only show as 1/2m

Also factor in clubs who ignore the rules like Leicester did the season they got promoted. They knew what they were doing and belived if they got back into the premiere league they would be untouchable in terms of points deductions even if they got relegated back to the championship.

Prem Lge and EFL amended the rules after they did that and they will now pay a price this season ie points deduction

 

[NWJack]

Its a long story and the accountants find ways to move things around anyway but

A club is allowed to make a combined approx 43m loss over 3 seasons which we were pretty close to after the 23/24 accounts were released a few months ago. But we have had another financial year since then so only the club knows what the current years loss is

Transfer payments are staged over the period of the contract. So for example Innoussa cost approx 5.5m. The deal with his club is 1/2m up front and then approx 1m a year over the next 5 years. So Innousa wont show in this years results as 5.5m. it will only show as 1/2m

Also factor in clubs who ignore the rules like Leicester did the season they got promoted. They knew what they were doing and belived if they got back into the premiere league they would be untouchable in terms of points deductions even if they got relegated back to the championship.

Prem Lge and EFL amended the rules after they did that and they will now pay a price this season ie points deduction

I may need correcting but this is unless you are promoted / relegated into a different jurisdiction. So some teams (Leicester, Leeds and now likely Birmingham and Wrexham? ) roll the dice and breach deliberately to get promoted within the 3 years. Which makes a mockery of the whole thing.

 

[Martyn - Derwydd]

I may need correcting but this is unless you are promoted / relegated into a different jurisdiction. So some teams (Leicester, Leeds and now likely Birmingham and Wrexham? ) roll the dice and breach deliberately to get promoted within the 3 years. Which makes a mockery of the whole thing.

The prem & EFL made changes in relation to prem/Championship. Not sure if the EFL is doing anything about the 2 different set of rules the championship versus league1/2 operate by. And yes I was wondering how Bham could do a net spend of 30m at the start of last season

 

[Martyn - Derwydd]

There's got to be a legitimate way around the league1/2 rule which says you can only spend 60% of your turnover on players wages. Almost every team that gets relegated to league 1 is running at 90 to 110% wages to turnover when they go down.

Cardiff are something like 23m and 22m. They will lose approx 7m in tv revenue next season which will drop their turnover to 15m versus 22 spent.

60% of 15m is 9m so how they get from 22m down to 9m is well, teams dont do it. So there has to be a legitimate way around boosting that 9m back up

Owners cant loan the club 10 or 15m and affect the FFP. Against the rules so

 

[bytholwyn]

The key thing for us is the allowable deductions for the academy, women's team and infrastructure. Our academy spend alone was £4.5 million in the last financial year, an astonishing amount for a Cat 2 academy. We should be comfortably within the allowable spend, although further big incomings will need to be balanced with big outgoings.

 

[Nocountryforoldjack]

Its a long story and the accountants find ways to move things around anyway but

A club is allowed to make a combined approx 43m loss over 3 seasons which we were pretty close to after the 23/24 accounts were released a few months ago. But we have had another financial year since then so only the club knows what the current years loss is

Transfer payments are staged over the period of the contract. So for example Innoussa cost approx 5.5m. The deal with his club is 1/2m up front and then approx 1m a year over the next 5 years. So Innousa wont show in this years results as 5.5m. it will only show as 1/2m

Also factor in clubs who ignore the rules like Leicester did the season they got promoted. They knew what they were doing and belived if they got back into the premiere league they would be untouchable in terms of points deductions even if they got relegated back to the championship.

Prem Lge and EFL amended the rules after they did that and they will now pay a price this season ie points deduction

Thank you very much for this explanation,I appreciate it. Can I ask why the rule is based on loss rather than money spent. If I spend 50 million on a squad that wins promotion that then nets me 180 million I've not lost any money but if I spend 50 million and I get relegated and lose 50 million then I break the rules. All very confusing.

 

[Martyn - Derwydd]

Thank you very much for this explanation,I appreciate it. Can I ask why the rule is based on loss rather than money spent. If I spend 50 million on a squad that wins promotion that then nets me 180 million I've not lost any money but if I spend 50 million and I get relegated and lose 50 million then I break the rules. All very confusing.

The Premiere League and the EFL are 2 separate organizations.

If you spent 50m, ie over spend creating a loss in your current financial year(combined with the 2 previous financial years) and go above 43m total loss combined then you have broken the rules and get points deductions.

The fact that you then get promoted and get 150m in a separate organization and league doesnt fly anymore as leicester will find out shortly.

They did what you describe. Thought they could avoid a penalty by going up and then coming down with money in the bank. But the Prem Lge and EFL got together over the last year and changed the rules so now Leicester will get points deduction regardless of if they made a 100m profit this year from the Premiere

 

[bakajack]

The Premiere League and the EFL are 2 separate organizations.

If you spent 50m, ie over spend creating a loss in your current financial year(combined with the 2 previous financial years) and go above 43m total loss combined then you have broken the rules and get points deductions.

The fact that you then get promoted and get 150m in a separate organization and league doesnt fly anymore as leicester will find out shortly.

They did what you describe. Thought they could avoid a penalty by going up and then coming down with money in the bank. But the Prem Lge and EFL got together over the last year and changed the rules so now Leicester will get points deduction regardless of if they made a 100m profit this year from the Premiere

Indeed Leicester are getting the book thrown at them as we speak, they rules lawyered themselves out of getting a points deduction two years ago by arguing the loophole between the two organizations as the Premier League had been extremely keen to keep the EFL out of their jurisdiction.

When that was turned against them two years ago they took an extremely dim view of that and closed that loophole. Now Leicester are facing a points deduction from the EFL and also potentially a points deduction in their next season back in the Premier League.

 

[Londonlisa2001]

Its a long story and the accountants find ways to move things around anyway but

A club is allowed to make a combined approx 43m loss over 3 seasons which we were pretty close to after the 23/24 accounts were released a few months ago. But we have had another financial year since then so only the club knows what the current years loss is

Transfer payments are staged over the period of the contract. So for example Innoussa cost approx 5.5m. The deal with his club is 1/2m up front and then approx 1m a year over the next 5 years. So Innousa wont show in this years results as 5.5m. it will only show as 1/2m

Also factor in clubs who ignore the rules like Leicester did the season they got promoted. They knew what they were doing and belived if they got back into the premiere league they would be untouchable in terms of points deductions even if they got relegated back to the championship.

Prem Lge and EFL amended the rules after they did that and they will now pay a price this season ie points deduction

“So Innousa wont show in this years results as 5.5m. it will only show as 1/2m”.

Sorry, but that’s not correct. You’re getting confused between cash and profit and loss. And PSR works on profit and loss.

 

[Martyn - Derwydd]

“So Innousa wont show in this years results as 5.5m. it will only show as 1/2m”.

Sorry, but that’s not correct. You’re getting confused between cash and profit and loss. And PSR works on profit and loss.

OK. But still. Inoussa is a 5 year contract and if we paid 6m for him that is 1.2m per year affecting P/L isnt it. Versus a 3 year contract which would hit for 2m/year.. A difference of 3/4m per year just on one deal.
I am no accountant. I think you are so I will defer to your accounting knowledge

 

[Londonlisa2001]

OK. But still. Inoussa is a 5 year contract and if we paid 6m for him that is 1.2m per year affecting P/L isnt it. Versus a 3 year contract which would hit for 2m/year.. A difference of 3/4m per year just on one deal.
I am no accountant. I think you are so I will defer to your accounting knowledge

Contract length matters a lot to PSR. Which is why we are now giving longer contracts. But the payments made over the life of that contract (actual cash out the door) makes no difference.

 

[Martyn - Derwydd]

Got it

 

[monmouth]

1.2m over the full accounting year.