Financial Fair Play (general thread)

[SirHarryHotspur]

Thanks.

Why haven't they had all transfer deals (inwards) suspended until all overdue amounts are cleared ?

No idea, when they get back under EFL jurisdiction which will be next season in the Championship that may happen.
There are two sets of different rules one for PL and another for EFL , Leicester are currently being investigated for breaking PL rules but at the moment they are a Championship club under EFL jurisdiction so its all a mess with money being the root of all evil.
When you look at the amount of money Sheffield Utd are late paying , Levy's pay and bonus would just about pay it all off.

 

[Frozen_Waffles]

Four tweets in this thread. TLDR: Relative to other PL sides we are about as healthy as it's possible to be re the new PSR/cap.

Thanks for sharing, Kieran Maguire is the only guy out there (as far as I know) breaking this down for us. Excellent work.

We all knew but Chelsea and Newcastle are really up shit creek, people will say they'll just sell to Saudi, but I find it more unlikely, not just whether the Saudis will still invest, but also whether you could persuade players to go over there.

Also Arsenal don't have massive wiggle room and this (I believe) doesn't account for Rice and Havertz. So I'd be surprised if they make any big moves in the transfer market. They'll be the ones to watch next year ffp wise, although their CL run will help them out.

The wage bill is the big one, clubs will want to get the high earners off the books, just as we have this season. Very few clubs can afford to pay 200k a week plus wages for a player, so this will have the effect of pushing down transfer fees and leading to a lot of free transfers.

The massive difference is we've been very careful with our wage budget, we have no one over 200k, Son being our closest. And only 4 players over 150k (including Werner). Our wage stats are actually skewed because of Kane (not sure if included), Lloris, Dier and Peresic. We are probably less than 50% currently wages to earnings with those players taken out.

That is of course ignoring the 'elephant in the room' Ndombele.

Which leads us to be in a fantastic position going forward. For the first time in forever we have the potential to out power big clubs regarding wages.

It might even lead to the possibility of hand picking some of the best players of Chelsea. Newcastle and a few others. In theory of course.

Considering the Liverpool owners are stingy, Uniteds wage budget and Arsenals huge spending we could be only behind City when it comes to signing players within the PL in the Summer.

We've already seen it with Bergval and Dragusin, but players picking us over 'bigger teams' could become common place.

I mean if we are going for the next big player and we can offer the best wages, the best facilities, hopefully CL football, PL football and living in the capital. That's before you discount the clubs that can't even attempt to sign players that puts us in pole position.

So in short, as long as City don't want a player we have a very good chance of getting them. Even if we sign our 'perfect' targets in the Summer - Williams, Ederson, Eze etc we'll probably still be in a better position than the majority of clubs wage wise.

FFP - not the hero we wanted, but the hero we needed.

 

[SirHarryHotspur]

Will it get settled before the end of the season

Everton lodge appeal over second points deduction

Everton lodge a formal appeal against their second points deduction for breaching the Premier League's financial rules, BBC Radio Merseyside understands.

www.bbc.co.uk

 

[Marty]

Will it get settled before the end of the season

Everton lodge appeal over second points deduction

Everton lodge a formal appeal against their second points deduction for breaching the Premier League's financial rules, BBC Radio Merseyside understands.

www.bbc.co.uk

Honestly whether they get two, four or six points deducted probably won't matter in terms of relegation.

But the principle of this not being over and done with when the season ends is a disaster for the league.

 

[SirHarryHotspur]

More figures for everyone to pulverise their brains with, a lot of it seen before but it's all nice and tidy in one place.

https://www.bbc.co.uk/sport/football/68713522

 

[dontcallme]

I've really not kept up with the rules of FFP but feel I should try to get my head round it more.

One thing that keeps getting mentioned is how selling youth products is best as it is pure profit. This seems like a crazy way to run the system as if anything you'd think FFP should be promoting youth development for teams to integrate their own players, not develop them to sell for a profit.

In another thread a poster mentioned how us selling Ndombele for a nominal fee would be terrible for us from an FFP standpoint. This summer we'd love to sell Ndombele and Reguillon who cost us around £70m combined. But we'd take big losses on both if we do sell.

Is what the other poster said correct and we're better off from an FFP standpoint at keeping players until they run out of contract instead of selling at a loss?

 

[Yid-ol]

I've really not kept up with the rules of FFP but feel I should try to get my head round it more.

One thing that keeps getting mentioned is how selling youth products is best as it is pure profit. This seems like a crazy way to run the system as if anything you'd think FFP should be promoting youth development for teams to integrate their own players, not develop them to sell for a profit.

In another thread a poster mentioned how us selling Ndombele for a nominal fee would be terrible for us from an FFP standpoint. This summer we'd love to sell Ndombele and Reguillon who cost us around £70m combined. But we'd take big losses on both if we do sell.

Is what the other poster said correct and we're better off from an FFP standpoint at keeping players until they run out of contract instead of selling at a loss?

For example, let’s say a club signed a player for £50m on a five-year contract. Amortisation means that, rather than the player costing £50m in the year he was signed, they would cost the club £10m in the books each year, or in other words, an annual amortisation fee of £10m.

As for player sales, the profit or loss made on a sale is calculated by taking the subtracting the player’s book value (their remaining amortised value) at the time of the sale from the transfer fee that has been received. So, continuing on with the original example but three years later; the player has now cost the club £30m (£10m X 3 years) of the initial £50m fee meaning his book value is now £20m (£50m-£30m). Therefore, if the club sell the player for £25m, this allows them to book a £5m profit (£25m fee- £20m book value) on the deal for the player in that year’s accounts.

Furthermore, and this is where academy graduates come into it, if a player has a book value of £0, this enables clubs to book a straight profit on a player sale, with the profit being the amount of the fee they have received (e.g. a £50m sale=£50m profit).

I guess it depends on how much we still need to pay of the original fee Vs what fee we could get now. Taking a loss (on what's left Vs fee) wouldn't be a good thing if finances are tight.

 

[tom4s]

Somewhat related, I really liked this article on the state of modern football and how financial inequality is bad for the sport by Jonathan Wilson
https://unherd.com/2024/04/can-thomas-piketty-save-football/

 

[brasil_spur]

I've really not kept up with the rules of FFP but feel I should try to get my head round it more.

One thing that keeps getting mentioned is how selling youth products is best as it is pure profit. This seems like a crazy way to run the system as if anything you'd think FFP should be promoting youth development for teams to integrate their own players, not develop them to sell for a profit.

In another thread a poster mentioned how us selling Ndombele for a nominal fee would be terrible for us from an FFP standpoint. This summer we'd love to sell Ndombele and Reguillon who cost us around £70m combined. But we'd take big losses on both if we do sell.

Is what the other poster said correct and we're better off from an FFP standpoint at keeping players until they run out of contract instead of selling at a loss?

The easiest way to think of it is that each player we have has a cost on our club accounts.

If we buy a player for £50m on a 5 year deal then each year we own him he depreciates by £10m. So start of Season 1 his on the books cost is £50m, start of season 2 his cost is £40m and so on until the end of his contract when his on the books cost is £0.

So the profit we make depends on the players on the books cost at the point we sell him.

In the example above, if we sell the player at the start of season 5 then his value is still £10m, so we will only see the profit on any value above £10m. If the club buying him pay us say £12m then we’ll see a £2m profit here.

If we bring a player through our academy or if we bought a player say 3 years ago on a 3 year deal and his on the book cost has gone done to zero then whatever we sell a player for will be profit.

Because Ndombele is now in the last year of his contract with us it doesn’t matter how much we sell him for as in any scenario the maximum loss we can take on him now is the same as his last year on the books cost depreciation.

 

[luRRka]

http://archive.today/2024.04.24-171237/https://theathletic.com/5441916/2024/04/24/premier-league-salary-spending-cap/

Clubs voting on Monday on new anchoring rules. Key points below -

Based on the concept of “anchoring”, the de facto salary cap would limit the amount of money any club can invest in their squads by tying it to a multiple of what the lowest earners get from the league’s centralised broadcast and commercial deals.

When the idea was first suggested last year, the top-to-bottom multiple its backers had in mind was 4.5 but, with several clubs strongly opposed to the cap, the league is now suggesting a looser multiple of five.
The hope is that the cap will operate as a backstop to the more fluid squad cost rule, which ties the amount clubs can spend to their own revenues, and raising the multiple should placate the idea’s biggest critics.

Chelsea, city and utd oppose it (shock).

If anchoring was in effect last season, the cap would have been £518million, five times the £103.6m that Southampton, who finished 20th, earned in centralised revenues, with Chelsea spending more than that on wages, amortised transfer fees and payments to agents, with Manchester City not far behind.

 

[Westmorlandspur]

The easiest way to think of it is that each player we have has a cost on our club accounts.

If we buy a player for £50m on a 5 year deal then each year we own him he depreciates by £10m. So start of Season 1 his on the books cost is £50m, start of season 2 his cost is £40m and so on until the end of his contract when his on the books cost is £0.

So the profit we make depends on the players on the books cost at the point we sell him.

In the example above, if we sell the player at the start of season 5 then his value is still £10m, so we will only see the profit on any value above £10m. If the club buying him pay us say £12m then we’ll see a £2m profit here.

If we bring a player through our academy or if we bought a player say 3 years ago on a 3 year deal and his on the book cost has gone done to zero then whatever we sell a player for will be profit.

Because Ndombele is now in the last year of his contract with us it doesn’t matter how much we sell him for as in any scenario the maximum loss we can take on him now is the same as his last year on the books cost depreciation.

That’s a bit of a statement. Is there any chance that anybody is going to give us any money for him.
On the other hand if we get 10m we’ve made 1m profit.
I think they might have to pay him off .

 

[Westmorlandspur]

http://archive.today/2024.04.24-171237/https://theathletic.com/5441916/2024/04/24/premier-league-salary-spending-cap/

Clubs voting on Monday on new anchoring rules. Key points below -

Based on the concept of “anchoring”, the de facto salary cap would limit the amount of money any club can invest in their squads by tying it to a multiple of what the lowest earners get from the league’s centralised broadcast and commercial deals.

When the idea was first suggested last year, the top-to-bottom multiple its backers had in mind was 4.5 but, with several clubs strongly opposed to the cap, the league is now suggesting a looser multiple of five.
The hope is that the cap will operate as a backstop to the more fluid squad cost rule, which ties the amount clubs can spend to their own revenues, and raising the multiple should placate the idea’s biggest critics.

Chelsea, city and utd oppose it (shock).

If anchoring was in effect last season, the cap would have been £518million, five times the £103.6m that Southampton, who finished 20th, earned in centralised revenues, with Chelsea spending more than that on wages, amortised transfer fees and payments to agents, with Manchester City not far behind.

Problem for the top 7 or 8 clubs in Europe is that they will have to comply with uefa rules. Starts next season at 90% of revenue on wages, agents fees, transfers and amortisation. Going down to 70% after 2 more seasons. One or two teams will struggle with that, especially Villa.

 

[Westmorlandspur]

Thanks for sharing, Kieran Maguire is the only guy out there (as far as I know) breaking this down for us. Excellent work.

We all knew but Chelsea and Newcastle are really up shit creek, people will say they'll just sell to Saudi, but I find it more unlikely, not just whether the Saudis will still invest, but also whether you could persuade players to go over there.

Also Arsenal don't have massive wiggle room and this (I believe) doesn't account for Rice and Havertz. So I'd be surprised if they make any big moves in the transfer market. They'll be the ones to watch next year ffp wise, although their CL run will help them out.

The wage bill is the big one, clubs will want to get the high earners off the books, just as we have this season. Very few clubs can afford to pay 200k a week plus wages for a player, so this will have the effect of pushing down transfer fees and leading to a lot of free transfers.

The massive difference is we've been very careful with our wage budget, we have no one over 200k, Son being our closest. And only 4 players over 150k (including Werner). Our wage stats are actually skewed because of Kane (not sure if included), Lloris, Dier and Peresic. We are probably less than 50% currently wages to earnings with those players taken out.

That is of course ignoring the 'elephant in the room' Ndombele.

Which leads us to be in a fantastic position going forward. For the first time in forever we have the potential to out power big clubs regarding wages.

It might even lead to the possibility of hand picking some of the best players of Chelsea. Newcastle and a few others. In theory of course.

Considering the Liverpool owners are stingy, Uniteds wage budget and Arsenals huge spending we could be only behind City when it comes to signing players within the PL in the Summer.

We've already seen it with Bergval and Dragusin, but players picking us over 'bigger teams' could become common place.

I mean if we are going for the next big player and we can offer the best wages, the best facilities, hopefully CL football, PL football and living in the capital. That's before you discount the clubs that can't even attempt to sign players that puts us in pole position.

So in short, as long as City don't want a player we have a very good chance of getting them. Even if we sign our 'perfect' targets in the Summer - Williams, Ederson, Eze etc we'll probably still be in a better position than the majority of clubs wage wise.

FFP - not the hero we wanted, but the hero we needed.

Arsenal will have to pay 30m for Raya in the summer because they loaned him due to ffp so wouldn’t think they have that much room to manoeuvre.

 

[luRRka]

Arsenal will have to pay 30m for Raya in the summer because they loaned him due to ffp so wouldn’t think they have that much room to manoeuvre.

They have CL money this year which should help them a fair bit

Edit - not massively but a little bit

 

[superted4]

Problem for the top 7 or 8 clubs in Europe is that they will have to comply with uefa rules. Starts next season at 90% of revenue on wages, agents fees, transfers and amortisation. Going down to 70% after 2 more seasons. One or two teams will struggle with that, especially Villa.

I thought I read somewhere that the 90% started this season. Haven’t a clue where I read it (if I did at all!)

 

[brasil_spur]

That’s a bit of a statement. Is there any chance that anybody is going to give us any money for him.
On the other hand if we get 10m we’ve made 1m profit.
I think they might have to pay him off .

The point is that if his final year value on our books is £10m and we keep him for his final year then we have £10m to write off at the end of the year (June). If we sell him for £0 in July then we also write off £10m, we just do it at the start of the financial year rather than the end, but from a PRS perspective it’s all the same year that we write down that £10m.

If we get any money for him then that nets off the £10m. He’s out of contract next summer so we’ll get nothing then. So we might get a nominal £2-3m fee this summer which is better than nothing, although in reality I reckon we’d be happy with just having him off our books.

 

[brasil_spur]

Problem for the top 7 or 8 clubs in Europe is that they will have to comply with uefa rules. Starts next season at 90% of revenue on wages, agents fees, transfers and amortisation. Going down to 70% after 2 more seasons. One or two teams will struggle with that, especially Villa.

90% was this season. Next season is 80% and then 70% the following one.

 

[BehindEnemyLines]

I've really not kept up with the rules of FFP but feel I should try to get my head round it more.

One thing that keeps getting mentioned is how selling youth products is best as it is pure profit. This seems like a crazy way to run the system as if anything you'd think FFP should be promoting youth development for teams to integrate their own players, not develop them to sell for a profit.

In another thread a poster mentioned how us selling Ndombele for a nominal fee would be terrible for us from an FFP standpoint. This summer we'd love to sell Ndombele and Reguillon who cost us around £70m combined. But we'd take big losses on both if we do sell.

Is what the other poster said correct and we're better off from an FFP standpoint at keeping players until they run out of contract instead of selling at a loss?

It depends........he has 1 year left on his contract and an amortised book value of ~£12m with ~£8m/year in wages

1. if we retain him then we would take the £12m amortisation charge plus about £8m expenditure in wages.
2. if we loan him out we would still get the £12m amortisation charge, but we might get a loan fee and the other club pay the wages.
3. if we sell him then we would effectively still get the £12m amortisation charge, but it would be offset by any fee received.....and we wouldn't have to pay the £8m expenditure in wages.

Financially, the worst option is the first.......unless we intend to play him. The other two options depend on how much any loan fee or transfer fee is...........however, Profit & Sustainability (our FFP) is calculated over a rolling 3 year period, and we might prefer to take that hit early (if we sell before 30th June it hits current year) or later (after 30th June will hit next financial year), and this all depends on what our current P&S leeway is and what our spend plans are.

It is worth remembering that amortisation is effectively a balance sheet valuation change - the money has already been spent, so it is effectively a paper accounting adjustment........whereas, the players wages and any transfer or loan fee are changes in cashflow (real money).

Put very simply:
Balance Sheet = a net valuation of a business at a set point in time (net assets minus net liabilities). If there has been a change in the value of an asset or liability over the course of the year (i.e. a players value decreases or amortises), then this needs to be reflected in the accounts).
Profi&Loss (P&L) is the change in money over a period of time (normally a year).......so all the income less all the expenditure to provide a trading profit or loss figure.......any balance sheet adjustments (such as interest, tax and amortisation) are made to the bottom line figure to give the accounting profit/loss.

Hopefully that all makes sense?

 

[Westmorlandspur]

What about paying him off. Will not have the amortisation but will cost a fair whack of his salary.

 

[brasil_spur]

What about paying him off. Will not have the amortisation but will cost a fair whack of his salary.

Will still have the amortisation, you can’t stop that. At the moment you sign a player you commit to an amortisation of his value over his contract length. If you sell or release him at any point the remaining amortisation amount simply hits the books at that point in time.