Forest and FFP

[Triggaaar]

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.

I imagine the FL are aware of that, but it's not workable to stop clubs giving security on loans etc. If clubs were prevented from running at a huge loss it would help. Foreign owners (including northern monkeys) that have no real interest in a club will just ditch it when it's not giving what they want, and if that club has been set up to run at a huge loss, there's more chance of it going bust. The bigger the premier league riches, the more owners will gamble on getting there, and clubs that don't make it (and they can't all make it) can be left in a mess.

 

[Deleted member 22389]

https://uk.eurosport.yahoo.com/news/football-fair-play-worry-reds-131847207--sow.html

 

[Rugrat]

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.

No, that's not even remotely what I mean and can't see where you get that idea

The Portsmouth situation was created by leveraging the clubs (over valued) assets and making financial commitments in the form of contracts that they didn't have the income to cover

Precisely what I'm suggesting doesn't happen actually!

 

[Creaky]

I imagine the FL are aware of that, but it's not workable to stop clubs giving security on loans etc. If clubs were prevented from running at a huge loss it would help. Foreign owners (including northern monkeys) that have no real interest in a club will just ditch it when it's not giving what they want, and if that club has been set up to run at a huge loss, there's more chance of it going bust. The bigger the premier league riches, the more owners will gamble on getting there, and clubs that don't make it (and they can't all make it) can be left in a mess.

But it is workable to set the level of loans a club can take on without facing sanctions - certainly every bit as workable as setting the level of losses a club can make. Not only that but should the loan levels set be ignored by owners then sanctions would be immediate, in essence foiling the gamble.

It would be the owners who would be at risk if they decided to gamble on reaching the Premier League as money they invested to do so would either have to be tied up in shares or given as a straight 'gift' via sponsorship deals to the club.

 

[Triggaaar]

But it is workable to set the level of loans a club can take on without facing sanctions - certainly every bit as workable as setting the level of losses a club can make.

I'm not sure you're right. In such a situation, when a club needs money to pay their players etc, the only option they'd have is for their owner to pay and write the money off. Not all owners can do that, so clubs (with high debt) would immediately be in trouble.

 

[drew]

https://uk.eurosport.yahoo.com/news/football-fair-play-worry-reds-131847207--sow.html

Not great journalism as I'm not sure you can be fined and have a transfer embargo, it's one or the other depending on if you get promoted or not. Also, the article doesn't appear to question the validity of the sponsorship deals in relation to FFP.

 

[Creaky]

I'm not sure you're right. In such a situation, when a club needs money to pay their players etc, the only option they'd have is for their owner to pay and write the money off. Not all owners can do that, so clubs (with high debt) would immediately be in trouble.

The club would still be able to take out a loan but sanctions preventing them from increasing their risk would immediately kick in by way of a transfer embargo which would not be lifted until the debt had been repaid.

 

[MarioOrlandi]

No, that's not even remotely what I mean and can't see where you get that idea

The Portsmouth situation was created by leveraging the clubs (over valued) assets and making financial commitments in the form of contracts that they didn't have the income to cover

Precisely what I'm suggesting doesn't happen actually!

Are you trying to say that has never crossed their minds?
So we know the ffp limit for our division is £8 mill, what are the limits for the two lower divisions?

 

[Triggaaar]

The club would still be able to take out a loan but sanctions preventing them from increasing their risk would immediately kick in by way of a transfer embargo which would not be lifted until the debt had been repaid.

So how would they sell their expensive players?

 

[Alex Alex Dawson oo! oo!]

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.

I think these loans would be the Community Stadium Ltd that owns the Amex and the Lancing facility (or will do so when it's complete). CSL is not the Football League member so it would be the stadium at risk not the football club (ie BHAFC Ltd).

 

[Rugrat]

Are you trying to say that has never crossed their minds?
So we know the ffp limit for our division is £8 mill, what are the limits for the two lower divisions?

I'm not suggesting what has or hasn't crossed there minds, I'm not privvy to their thinking.

But, I am totally convinced that FFP could have been constructed a whole lot better.

 

[Creaky]

The lower Leagues don't have FFP restrictions instead they voted for a Salary Cost Management Protocol, SCMP).

This is not based on losses but restricts League 1 clubs to spending a maximum of 60% of turnover on player's wages and League 2 to 55%.

 

[LlcoolJ]

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.

I'm completely in favour of a system which benefits sensibly run clubs that generate their own income and don't overspend.

With the massive increase in parachute payments by the PL, the current FFP system just creates more chance of a closed shop with only clubs that have been in the PL able to compete financially in the Championship.

This is obviously not what it was designed to do and so currently I'd say it's not fit for purpose. If you look at last season's Championship teams' income, the parachute payments are scary, and that was before they were increased.

Of course, if we scrape our way up this season I won't care about this at all and will support FFP wholeheartedly.

 

[andy1980]

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.

I guess this is the scenario I had in mind. In this scenario it would mean that Brighton would match parachute money from the premiership (£60 million over 4 years) in a sustainable way. Yet we wouldn't be allowed to use it towards FFP, while they can. If this is really true then the system is all screwed up for sure.

 

[Creaky]

I guess this is the scenario I had in mind. In this scenario it would mean that Brighton would match parachute money from the premiership (£60 million over 4 years) in a sustainable way. Yet we wouldn't be allowed to use it towards FFP, while they can. If this is really true then the system is all screwed up for sure.

Non-football related income is not taken into account in FFP calculations - if it were then a company like Microsoft could buy a club, make it a subsidiary company and then spend whatever they liked on players without making the slightest dent in the mother company's profits.

 

[andy1980]

Non-football related income is not taken into account in FFP calculations - if it were then a company like Microsoft could buy a club, make it a subsidiary company and then spend whatever they liked on players without making the slightest dent in the mother company's profits.

I guess you are right. There would be a whole new can of worms opened about fairness, and most definatly wouldn't address the real issue of player wages, but would make clubs more sustainable.

I'm not actually sure how I would feel if we became a subsidiary company of someone like American Express at least we could compete financially with most clubs in England. It might be the way football has to go if it doesn't address it real issues.

 

[drew]

Just for the sake of clarity and for those interested, the attached is the response from the Football League with regard to accounting period :-

Thank you for your email.

Championship Clubs must submit their accounts by 1st December each year to coincide with their FFP submission (FFP Rules, previously 1st March as per Reg 16 http://www.football-league.co.uk/regulations/20130704/section-4-clubs_2293633_2125725 )

League 1 and League 2 Clubs must submit their accounts in line with Companies House deadlines – i.e. 9 months after their year ends. (Reg 16)

We do not have any regulation that prescribes when a club must have its financial year-end, however, the majority have a May/June/July year end in order to align with the Season. If a Championship Club was to have a year-end outside May/June or July, it would have to submit accounts and an FFP calculation for a 12 month period covering the Football Season in order to be consistent with the relevant review period for FFP purposes.

Thank you for contacting The Football League.

Regards,

Andrew Pomfret
Customer Services Officer
The Football League Limited
www.football-league.co.uk