Forest and FFP

[Tubby-McFat-Fuc]

There's a line in the FFP stuff which mentions exaggerated sponsorship deals. So they won't be able to get around it that way.

Without study it, I think this is where the whole thing will come crashing down.

The FA are basically saying to a business, you cannot go and get sponsorship unless we approve of it.

I can see how they can get away with banning alcohol or cigarettes deals, but not for anything else. Its against the law of the land, and as we found out with Bosman, if one of these rules are challenged in law, they generally don't stand up. I just cannot see how the Football League can apply these rules if they go against UK law. If company X want to pay Company Y £z for a advertising deal, then who are the FA to set any limit of what is paid?

 

[Hotchilidog]

Disagree, our turnover last year was £22 million, clubs coming down from the PL get £18 million in parachute payments alone, so they have a huge head start over us.

But compared to non-parachute teams we would have an advantage, and over time that should count for something. It should certainly cement us in the top half/playoff shake-up at the very least.

 

[Blue Valkyrie]

Without study it, I think this is where the whole thing will come crashing down.

The FA are basically saying to a business, you cannot go and get sponsorship unless we approve of it.

I can see how they can get away with banning alcohol or cigarettes deals, but not for anything else. Its against the law of the land, and as we found out with Bosman, if one of these rules are challenged in law, they generally don't stand up. I just cannot see how the Football League can apply these rules if they go against UK law. If company X want to pay Company Y £z for a advertising deal, then who are the FA to set any limit of what is paid?

Of course they can pay what they like for sponsorship.

No one is stopping that.

The issue is that the sponsorship doesn't count as income for FFP purposes if it is too high. But the sponsorship can still be paid and received.


I think FFP is going to fall apart, by the way, with no meaningful penalties imposed, and it'll be back to wild west financing imediately after the FFP rules are set aside.

 

[drew]

I understand the rules and the proposed penalties of which I am aware. However I've looked at this for ten minutes and I can already see obvious ways in which a club like Forest can bend the rules, adjust their accounts so they miss out one year but can demonstrate they are not missing out in the current year and therefore no penalties are due. That's the bit I think is bollocks. if you have failed to meet FFP you should lose points. You shouldn't be able to just say oh yes, we have spent £20 million over the allowed loss, but this season we won't. By that point they have already gained a huge advantage over everyone else so how can that be fair.

On a separate note I just can't see how it can be legally enforceable. How can you legally stop an owner of a business investing as much money as they want into it? The whole idea of it is flawed.

How can they adjust their accounts to miss out a year? The FL website says that the accounts have to be submitted on the 1st Dec so in theory the latest financial year would be the 1/12/13 to 30/11/14 but in practice they wouldn't be able to prepare the accounts in the space of a day! I don't know whether decrees what period actually applies as the FL website indicates financial year whereas previously talk has been of the financial year.

With regard to enforcing it, the league have a set of rules voted in and therefore to remain a member of the league you abide by those rules.

Errr..........because by the time the accounts are published Forest, and I don't know why they're being singled out, could have been promoted, and FL points deduction wouldn't be applicable in the PL.

Unless Forest miraculously make the play-offs and win, they will be a championship team when, if it is shown they have breached the limits, the embargo is imposed in Jan 15. In effect, they have one transfer window left before sanctions take effect. They may well gamble in the close season and spend big knowing they can't sign anyone from January onwards and presumably if they then got promoted in May 15, the embargo would then change to a fine.

Shirt sponsorship. One way around FFP is to sponsor the shirts for £25 million via an off shore company re Man City. Now surely then FL will look at this but in our defense we have the highest home gates and so should be able to say the sponsor believes they are getting their monies worth. Similarly QPR are on TV a lot and so can say the same thing.

Sponsorship deals have to be at the market rate and there has been a lot of talk of Forest who, I understand, have had all the money from their 5 year shirt deal up front.

Sounds very good but it seems very strange that the path taken by the League to ensure 'sustainability' has been to restrict the amount owners can invest in the club without penalties! Most businesses would be attempting to encourage, not discourage, investment. By all means restrict the amounts clubs can borrow but to prevent investment in other ways such as equity purchase, sponsorship etc is counter-productive.

I think the answer is in the name, Financial Fair Play - clubs that don't have rich investors feel it is unfair that they should be able to attract better players than they can - well that's life - it's not fair.

If the League had simply restricted the loans any club could have on their books to a fixed amount this would have done far more to stabilise the financial standings of clubs than the current system.

But the problem is that owners aren't investing in clubs they are creating debt for the club. Perhaps if owners agreed to underwrite every single debt of the club then fair enough, but they don't.

 

[glasfryn]

It is matters like this that Blatter and his lapdog Plattini did what they are paid handsomely to do: ensure football is unified in getting its act together and banish all leagues/countries from their competitions if clubs are allowed to flaunt the rules. Another argument for nothing is going to happen then.

clubs and countries flaunt the rules about racism,homophobic chanting,and all Blatter and Platini do is sit there and smile or look the other way, I will say at least our FA and FL are doing a fair job on the line, so lets hope they stick to the FFP rules and hit these clubs hard

 

[saafend_seagull]

I'm deeply jealous of Blackburn, Bolton and Forest. I mean just look at their attendances (Bolton, Blackburn), grounds (Blackburn, Forest) debt (all three) and league position (all three), I wish we were them.
What a strange strange statement.

Why are people moaning then?

They've all had success and are all far bigger clubs than us.

 

[Creaky]

But the problem is that owners aren't investing in clubs they are creating debt for the club. Perhaps if owners agreed to underwrite every single debt of the club then fair enough, but they don't.

Precisely why I am saying that FFP should address the problem of debt, not investment, with FFP.

It is NOT money put into clubs via equity purchase or inflated sponsorship deals that cause financial problems - it is debt that does that.

 

[Blue Valkyrie]

Why are people moaning then?

They've all had success and are all far bigger clubs than us.

Forest is bigger, yes - former European champions. The other 2 definitely not.

 

[Blue Valkyrie]

Precisely why I am saying that FFP should address the problem of debt, not investment, with FFP.

It is NOT money put into clubs via equity purchase or inflated sponsorship deals that cause financial problems - it is debt that does that.

Indeed. FFP has the wrong target. It's the debt, that the club is liable for, which is the problem.

 

[LlcoolJ]

Parachute payments skew the whole thing wildly and frankly imo make a mockery of ffp.

This is the most important point in all of the debate.

Yes, the original (FIFA/UEFA) idea was to assist the biggest clubs and prevent another Chelsea/PSG/City gatecrashing the party (however they've tried to dress it up). A ****ed up idea anyway, but then it got worse.

FFP in The Championship is supposed to increase sense and sustainability into the insanity of the scramble for cash which is most of the division. A great idea.

All it actually does is give a massive advantage to the teams it should punish. Those who spent a fortune they didn't have to get to the PL and then got relegated.

Parachute payments ensure that Championship FFP is the worst misnomer ever. "FAIR" Being the redundant word.

 

[andy1980]

I would like to get something clear in my head about FFP. If Tony wants to he could put £500 million into the club tomorrow, buy and spend £300 million on the King Alfred Complex, build the hotel near the Amex and an Ice rink for another £50 million, and build a park and ride for the city of Brighton with the remaining £150 million.

Then lease out King Alfred complex for £5 million a year, hotel and Ice rink for another £5 million a year and Park and ride for a further £5 million a year, therefore increasing Brightons annual income by £15 million by non football purposes. Is this allowed?

 

[Rugrat]

Precisely why I am saying that FFP should address the problem of debt, not investment, with FFP.

It is NOT money put into clubs via equity purchase or inflated sponsorship deals that cause financial problems - it is debt that does that.

Indeed. FFP has the wrong target. It's the debt, that the club is liable for, which is the problem.

Absolutely correct.

The one aspect that I think would be difficult to control is the rich shareholder coming along and pumping £xM into a club that then go out and sign a bunch of players on multi year contracts and the rich shareholder then exits and leaves the club with the commitment.

There are ways to manage that I guess by setting up escrow accounts or such like where forward commitments need to be covered from "sensible" projected revenue (i.e. not dependent on promotion) or cash deposits

I think those arguing for the level playing field approach, where investors can't try to buy success are merely pissed off that it's something that goes on. I don't like it either but no less than the obscene way TV money is splurged on the minority, when the majority and grass roots are largely impoverished by comparison

 

[MarioOrlandi]

Does this mean the likes of Forest, Bolton, QPR and Blackburn have to stand on the naughty step and say sorry?

 

[father_and_son]

On a separate note I just can't see how it can be legally enforceable. How can you legally stop an owner of a business investing as much money as they want into it? The whole idea of it is flawed.

Because the FL "licence" all the clubs to take part in their leagues. Failure to abide by the T&Cs will result (ultimately) in the licence being revoked and the club being unable to participate in any FL division.

It is "legal" as there are plenty of laws governing contracts - which all the clubs will have signed. The owner can pump as much money as he wants into a club but without FL approval his club won't be taking part in any of the FL controlled leagues and unless they are already in the PL, won't get there either because of the agreements between FL & PL about promotion/relegation. SO they do really hold all the aces, if they chose to actually play them!

 

[drew]

Precisely why I am saying that FFP should address the problem of debt, not investment, with FFP.

It is NOT money put into clubs via equity purchase or inflated sponsorship deals that cause financial problems - it is debt that does that.

Indeed. FFP has the wrong target. It's the debt, that the club is liable for, which is the problem.

Great, so exactly how does the debt materialise then? Bad financial management.
How would you propose that debt is dealt with then?

This is the most important point in all of the debate.

Yes, the original (FIFA/UEFA) idea was to assist the biggest clubs and prevent another Chelsea/PSG/City gatecrashing the party (however they've tried to dress it up). A ****ed up idea anyway, but then it got worse.

FFP in The Championship is supposed to increase sense and sustainability into the insanity of the scramble for cash which is most of the division. A great idea.

All it actually does is give a massive advantage to the teams it should punish. Those who spent a fortune they didn't have to get to the PL and then got relegated.

Parachute payments ensure that Championship FFP is the worst misnomer ever. "FAIR" Being the redundant word.

You think the system is better as it was then? Fact is the FL have no control over parachute payments as they are made by a separate organisation. One thing that would help relegated clubs would be player contracts that had relegation clauses in them that reduced pay accordingly but the PFA would fight that.

Absolutely correct.

The one aspect that I think would be difficult to control is the rich shareholder coming along and pumping £xM into a club that then go out and sign a bunch of players on multi year contracts and the rich shareholder then exits and leaves the club with the commitment.

There are ways to manage that I guess by setting up escrow accounts or such like where forward commitments need to be covered from "sensible" projected revenue (i.e. not dependent on promotion) or cash deposits

I think those arguing for the level playing field approach, where investors can't try to buy success are merely pissed off that it's something that goes on. I don't like it either but no less than the obscene way TV money is splurged on the minority, when the majority and grass roots are largely impoverished by comparison

I don't see that FFP is aiming for a level playing field at all. Bigger clubs will always generate more income and therefore have more to spend. The only way that smaller clubs can competed will be to generate far more non-football income than they do at the moment.

 

[Creaky]

I would like to get something clear in my head about FFP. If Tony wants to he could put £500 million into the club tomorrow, buy and spend £300 million on the King Alfred Complex, build the hotel near the Amex and an Ice rink for another £50 million, and build a park and ride for the city of Brighton with the remaining £150 million.

Then lease out King Alfred complex for £5 million a year, hotel and Ice rink for another £5 million a year and Park and ride for a further £5 million a year, therefore increasing Brightons annual income by £15 million by non football purposes. Is this allowed?

All that is allowed but the non-football related income and/or profit wouldn't be included in the FFP calculations.

All the above money could go into the football clubs accounts though as loans leaving it with a massive debt should any of the above projects fail it would be the club that was at risk.

On the other hand the money could be invested by way of additional equity purchase leaving the club debt free and earning an additional £15m which the League still wouldn't allow for FFP purposes.

 

[Rugrat]

I don't see that FFP is aiming for a level playing field at all. Bigger clubs will always generate more income and therefore have more to spend. The only way that smaller clubs can competed will be to generate far more non-football income than they do at the moment.

Agree that FFP isn't about creating a level playing field ... it was my interpretation of what some others have been saying on this, and other similar, threads

 

[MarioOrlandi]

Absolutely correct.

The one aspect that I think would be difficult to control is the rich shareholder coming along and pumping £xM into a club that then go out and sign a bunch of players on multi year contracts and the rich shareholder then exits and leaves the club with the commitment.

There are ways to manage that I guess by setting up escrow accounts or such like where forward commitments need to be covered from "sensible" projected revenue (i.e. not dependent on promotion) or cash deposits

I think those arguing for the level playing field approach, where investors can't try to buy success are merely pissed off that it's something that goes on. I don't like it either but no less than the obscene way TV money is splurged on the minority, when the majority and grass roots are largely impoverished by comparison

Oh you mean Portsmouth, Mega rich investor sells out to another even more Mega rich investor who sells off the family silver and does a runner. Meawhile the first mega rich investor returns as club saviour but only until his original investment is repaid (or I'll sell the ground). Then they both meet up in Monaco and split the proceeds.

 

[Creaky]

Great, so exactly how does the debt materialise then? Bad financial management.
How would you propose that debt is dealt with then?

With exactly the same penalties that are currently proposed - The level of allowable debt for clubs in the League could be set and any club borrowing above that figure would face sanctions. The amount a club owes by way of loans is known more or less on a daily basis and sanctions for breaching the rules could be implemented almost immediately.

You think the system is better as it was then? Fact is the FL have no control over parachute payments as they are made by a separate organisation. One thing that would help relegated clubs would be player contracts that had relegation clauses in them that reduced pay accordingly but the PFA would fight that.

They could be treated in exactly the same way as non-football related income is currently and not allowed for FFP calculations - if FFP was based on debt level though they would be irrelevant.

I don't see that FFP is aiming for a level playing field at all. Bigger clubs will always generate more income and therefore have more to spend. The only way that smaller clubs can competed will be to generate far more non-football income than they do at the moment.

I agree and said so earlier - life is not fair.

 

[Creaky]

Oh you mean Portsmouth, Mega rich investor sells out to another even more Mega rich investor who sells off the family silver and does a runner. Meawhile the first mega rich investor returns as club saviour but only until his original investment is repaid (or I'll sell the ground). Then they both meet up in Monaco and split the proceeds.

And had that 'investment' originally been made not as a loan but by way of the much maligned 'Forest style sponsorship' or equity purchase it would have been nigh on impossible for them to have done that.