FFP

Keith Patel · Dec 31, 2016

Interesting to see that everyone seems to have passed FFP for last season, including the promoted teams. Forest are the only club facing an embargo purely down to the fact they haven't bothered to submit their accounts!

http://www.efl.com/news/article/2016/efl-financial-fair-play-sky-bet-championship-3492432.aspx

An initial review of the 2015/16 Sky Bet Championship FFP submissions indicates that all clubs met the ‘Fair Play Requirement’ introduced under the competition rules in 2012.
It would mean for the first time since the FFP regulations were agreed by all league clubs that no team from the Championship (who provided a submission) will exceed the maximum permitted deviation, which was set last season at £13m (£5m loss plus £8m shareholder investment). Failure to meet the deviation limits has previously resulted in clubs facing financial sanctions or an FFP embargo.

Promoted clubs Burnley, Middlesbrough and Hull City all stayed within the fair play regulations whilst two of the sides relegated to Sky Bet League One – MK Dons and Charlton Athletic – also met the requirement.

However, Bolton Wanderers - also relegated to League One – have not submitted a 2015/16 FFP return or audited accounts and as a result will remain under FFP embargo.
One other Championship club (Nottingham Forest) is still to submit a copy of its audited accounts and failure to do so will result in an FFP embargo from January 1, 2017. However, their FFP return does suggest that they would meet the Fair Play requirement. Once the audited accounts are submitted any FFP embargo would be lifted.

I was sure Derby were over spending, their wage bill must be massive. Anyone surprised?

We're the Stripes · Dec 31, 2016

I really do not see how Derby could've passed it based on the following transfer activity: https://en.m.wikipedia.org/wiki/2015–16_Derby_County_F.C._season#Transfers_in

Comparing to our accounts - where's their extra leeway coming from?

Triggaaar · Dec 31, 2016

Bullshit

nwgull · Dec 31, 2016

Derby get similar crowds and commercial income to us. I can't understand how we came right up to the limit last year with our transfers of 9-10m, and they also comply despite transfers of 24m and the wages commensurate with those fees.

Justice · Dec 31, 2016

They should just scrap the whole thing seeing as QPR made a mockery of it.

LVGull · Dec 31, 2016

Triggaaar said:
Bullshit

https://m.youtube.com/watch?v=1lRIQGU2RRk

AmexRuislip · Dec 31, 2016

Suppose Brighton were deducted points?

Apologies if already posted.
Found this report!

Submitted by WG on Fri, 30/12/2016 - 13:34

Ed Thompson has come up with a new analysis of the financial fair play (now 'profitability and sustainability') rules in the Championship as his original one contained a mistake, not surprising given the complexity of the rules and the uncertainty of their application.

Consider this hypothetical scenario. It has been known for some time that Brighton and Hove Albion have been close to breaching the rules, although how close is difficult to assess on the available data.

The Football League can impose draconian punishments. Suppose the Seagulls were found in breach of the rules in March/April and suffered a points deduction that affected their chances of promotion. The club would want to appeal to the Court for Arbitration in Sport, but that might mean that the end of the season was reached with a lack of clarity about promotion.

http://www.footballeconomy.com/content/suppose-brighton-were-deducted-pointsNew Rules

This season (2016/17), new ‘Profitability and Sustainability’ rules operate in the Championship; for the first , clubs will be assessed over 3 seasons (rather than just a single season). This change brings the Championship clubs into alignment with the Premier League – both have ‘Profit and Sustainability’ rules that are now fully aligned. Crucially, this harmonisation of the rules comes with the blessing of the Premier League - so we shouldn’t see any repeat of the stand-offs that arose (and are still ongoing) with QPR and Leicester. Previously, the Premier League bosses refused to help the Football League collect the ‘Fair Play Tax’ fines for clubs that overspent but won promotion – this lack of support significantly undermined the Football League and severely impacted on the effectiveness of the Football League punishments.

There are a number key changes:

The assessment is carried out in March (rather than December)
The maximum loss limit is now £13m per Championship season (or £5m a season of the owner does not inject equity to cover losses).
Losses are assessed over three seasons (rather than just over the single, previous season)
The assessment of each club’s finances is a combination of a historic assessment (looking at figures for the two previous completed season) and an assessment over the season currently taking place

The last point is particularly significant; in addition to historic account information about past seasons, clubs now have to submit a financial projection for the season that is still taking place. All the information has to be with the Football League by the 1 March. The Football League have confirmed that they are aiming to have any punishments announced before the end of the season.

Rule confirmation text supplied by Football League:

This can be summarised in a table for this season:

Any punishment for breach of the rules will be determined by an independent panel (the ‘Fair Play Panel’).

But what are the potential punishments? Previously the Football League has only been able to either; fine promoted clubs (a fine the Premier League didn’t help them collect), or impose a transfer embargo for historic overspending (which always like a stable-door/horse scenario). With this change, a wide range of punishments are now available. Nothing is off the table; the Football League are now able to impose a points deduction during the current season, or demote a club from an automatic promotion position into the play-offs (or out of the play-offs altogether). Transfer embargoes are also available (with the earliest one potentially applying during the Summer 2017 Transfer window.

Moving from an assessment over one season to an assessment over three seasons has presented some challenges. Interestingly, rather than introduce the changes on a staggered basis, the Football League has introduced the change in one go. The contentious issue here is that for some clubs, a historic ‘rogue’ season which the club had put behind them, suddenly becomes part of the assessment criteria. Where this has happened and where a transfer ban has previously been imposed and subsequently lifted (eg Fulham, Forest, Cardiff), it seems unlikely that the Football League would apply a further punishment if the projections for the current season show the club is currently operating within the £13m maximum loss figure.

Maximum loss limits

Championship clubs will be allowed to lose an average of £13m a season (or £5m if the owner doesn’t inject cash into the club to cover the loss). Hence, a long-standing Championship such as Brighton, is able to lose up to £39m over the three-season assessment period.

Clubs are permitted to exclude some expenditure (Youth development spend, Charitable Community spend, and Women’s Football spend). For a Championship cub this rarely exceeds £500k per season (and is usually less).

Clubs relegated from the Premier League are allowed to make losses of up to £35m in respect of any season spent in the top flight – this should allow clubs to better manage the transition.

The following table illustrates how the maximum permitted loss for Championship clubs is dependent on the league they were in during the two previous seasons.

Limits for clubs in Championship in 2016/17 season

*Maximum loss is assessed in March/April 2017 based on submission relating to two previous seasons plus projection for 2016/17

It is important to appreciate that the Premier League will continue to carry out their FFP test ('Profit and Sustainability') for clubs in the top flight – these will work in the same way and take place at the same time as the Championship assessment is carried out, but with the Premier League carrying out their tests.

As with the Championship, the maximum overspend will be determined by the club’s division during the three rolling seasons.

The following table illustrates how the maximum permitted loss for Premier League clubs is dependent on the league they were in during the two previous seasons.

Limits for clubs in Premier League in 2016/17 season

*Maximum loss is assessed in March/April 2017 based on submission relating to two previous seasons plus projection for 2016/17

Are there any clubs facing punishment?

There are probably two clubs worth discussing:

Brighton & Aston Villa

Brighton

Brighton have been on the edge of promotion to the PL for several seasons and have released some figures for 2015/16. Although their full accounts are not released, they have advised that they made an Operating Loss of £25.9m last season (up from £7.4m the previous season) – in previous seasons, the Operating Loss figure also represented their Loss For Financial Year figure.

The club acknowledged that last season’s increase in losses was largely due to additions to the playing squad; it also appears that a lack of profit on player trading has impacted on this figure (for example in 2013/14 they made over £6.3m profit – largely on Ulloa).

The club cancelled a number of contracts this summer but don’t appear to have made any appreciable profit on player trading so far in 2016/17. The figures for the current season should have improved but it is hard to see them getting over the FFP line without some further action. Based on some educated guesses, it looks like they may fail the FFP test by around £10m this season.

Of course this is all heavily caveated, and it is entirely possible that the club will have sufficient exclusions to get over the line. However on the face of it, it does look like Brighton could be in some trouble. It certainly suggests the club won’t be big net spenders in January. And even if the club is close to the limits, it would be within their gift to resolve any problem by trading players for a profit in the January window (although that wouldn’t be popular and could impact on their promotion push).

Moving further into the world of conjecture, it would be interesting to speculate on the punishment a club would receive in March/April if it was on course for securing a promotion slot but had overspent in the process. The Football League have often been fairly draconian and it is possible that such a scenario would result in a points deduction (a transfer embargo, imposed at the end of the season would probably be supported by the Premier League but certainly result in other clubs crying ‘foul’).

The problem with applying any punishment beyond a transfer embargo is that it would probably be challenged by the club – however, no-one would want a scenario where promotion isn’t settled by the end of the season and where, potentially, CAS (Court for Arbitration in Sport) were involved.

http://www.financialfairplay.co.uk/championship-ffp-rules-201617.php

Triggaaar · Dec 31, 2016

LVGull said:
https://m.youtube.com/watch?v=1lRIQGU2RRk

Brilliant.

Nixonator · Dec 31, 2016

AmexRuislip said:
http://www.financialfairplay.co.uk/championship-ffp-rules-201617.php

They have inserted a 25.9M operating loss in an FFP loss table? Great reporting.

It also states that loss exclusions rarely exceed 500k?

Calling [MENTION=31]El Presidente[/MENTION]

Blue Valkyrie · Dec 31, 2016

Nixonator said:
They have inserted a 25.9M operating loss in an FFP loss table? Great reporting.

It also states that loss exclusions rarely exceed 500k?

Calling [MENTION=31]El Presidente[/MENTION]

I think our stadium depreciation figure alone blows the '500k' out of the water.

warmleyseagull · Dec 31, 2016

This is b****x. The club has already said that last year's accounts complied with FFP. The author has forgotten that depreciation is also an excluded expense. Possibly TB capitalised some of his debt as share capital increased so the £15m limit applies. One way or the other, I have complete faith in TB and management.

El Presidente · Dec 31, 2016

Nixonator said:
They have inserted a 25.9M operating loss in an FFP loss table? Great reporting.

It also states that loss exclusions rarely exceed 500k?

Calling [MENTION=31]El Presidente[/MENTION]

Adopts John Inman voice 'I'm free'

Some expenses are excluded for FFP calculations, so my estimate is

Accounting loss £25.9m

Add back:
Depreciation on stadium and Lancing £4.9m
Academy category 1 running costs £5m
Transport subsidy (suspect FL will allow this as a unique cost of running the Albion) £1.2m
Other allowable costs £2m

FFP loss £12.8m

I anticipate losses to be at least £30m for 2016/17 and could touch £40m if we are promoted once bonuses are paid out.

Blackadder · Dec 31, 2016

El Presidente said:
Adopts John Inman voice 'I'm free'

Some expenses are excluded for FFP calculations, so my estimate is

Accounting loss £25.9m

Add back:
Depreciation on stadium and Lancing £4.9m
Academy category 1 running costs £5m
Transport subsidy (suspect FL will allow this as a unique cost of running the Albion) £1.2m
Other allowable costs £2m

FFP loss £12.8m

I anticipate losses to be at least £30m for 2016/17 and could touch £40m if we are promoted once bonuses are paid out.

Interesting last line El P, For some strange reason, I was thinking about this earlier today. Can't the club insure or, ahem, bet on the club going up to meet these bonuses? I have no idea of the legal implications.

AmexRuislip · Dec 31, 2016

El Presidente said:
Adopts John Inman voice 'I'm free'

Some expenses are excluded for FFP calculations, so my estimate is

Accounting loss £25.9m

Add back:
Depreciation on stadium and Lancing £4.9m
Academy category 1 running costs £5m
Transport subsidy (suspect FL will allow this as a unique cost of running the Albion) £1.2m
Other allowable costs £2m

FFP loss £12.8m

I anticipate losses to be at least £30m for 2016/17 and could touch £40m if we are promoted once bonuses are paid out.

Thanks [MENTION=31]El Presidente[/MENTION], I got a big boggled eyed reading all that lot :down:

Nixonator · Dec 31, 2016

El Presidente said:
Adopts John Inman voice 'I'm free'

Some expenses are excluded for FFP calculations, so my estimate is

Accounting loss £25.9m

Add back:
Depreciation on stadium and Lancing £4.9m
Academy category 1 running costs £5m
Transport subsidy (suspect FL will allow this as a unique cost of running the Albion) £1.2m
Other allowable costs £2m

FFP loss £12.8m

I anticipate losses to be at least £30m for 2016/17 and could touch £40m if we are promoted once bonuses are paid out.

As I thought. So the doom-mongering in that article about us potentially facing a whole host of penalties is entirely baseless I presume?

It appears to suggest that permitted losses rarely exceed 500k whereas based on your predictions ours are in excess of 13M.

El Presidente · Dec 31, 2016

Blackadder said:
Interesting last line El P, For some strange reason, I was thinking about this earlier today. Can't the club insure or, ahem, bet on the club going up to meet these bonuses? I have no idea of the legal implications.

In theory they could take out some form of insurance, but given we were one goal from promotion last season the premiums would be prohibitively expensive.

Blackadder · Dec 31, 2016

El Presidente said:
In theory they could take out some form of insurance, but given we were one goal from promotion last season the premiums would be prohibitively expensive.

Point taken. Best stick to 94th winners at Birmingham. :wink:

Anyway enough of Finance, we only have 8 minutes of this year left. Happy New Year.

Blue Valkyrie · Dec 31, 2016

Only a handful of Championship teams run Category 1 academies with the associated cost.

The '500k' is very poorly researched, which suggests the other figures in the report are just as random.

Guy Fawkes · Jan 1, 2017

nwgull said:
Derby get similar crowds and commercial income to us. I can't understand how we came right up to the limit last year with our transfers of 9-10m, and they also comply despite transfers of 24m and the wages commensurate with those fees.

If i've got this right, their £24m in transfers wont all be counted as a part of this years losses, the transfer fee would be broken down into equal amounts over the length of their contracts so, say if they all signed 4 year contracts, that would only add £6m per year to their losses but over 4 years

Everest · Jan 1, 2017

AmexRuislip said:
Brighton

Brighton have been on the edge of promotion to the PL for several seasons and have released some figures for 2015/16. Although their full accounts are not released, they have advised that they made an Operating Loss of £25.9m last season (up from £7.4m the previous season) – in previous seasons, the Operating Loss figure also represented their Loss For Financial Year figure.

The club acknowledged that last season’s increase in losses was largely due to additions to the playing squad; it also appears that a lack of profit on player trading has impacted on this figure (for example in 2013/14 they made over £6.3m profit – largely on Ulloa).

etc etc etc

This site is run on a not-for-profit basis by Ed Thompson.

I am a Financial Projects manager working for one of the world's largest banks.

I have been described by the Independent on Sunday as '“One of the country's leading analysts of Uefa's Financial Fair Play regulations”

Some "leading analyst" if he can't even use the right figures

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