The new rules for Financial Fair Play (FFP) announced by the Football League Championship earlier this week provoked head scratching, chin rubbing, calculator tapping and cynical indifference in equal measure from Albion fans.
The latest incarnation of FFP (which I suspect won't be the last), attempts to address some of the criticisms of the 'old' (i.e. current) rules, which were deemed by some to give clubs relegated from the Premier League too great an advantage over more established FL members.
For the most recent season (2013/14), Championship clubs were allowed a maximum loss, after exclusions, of £3 million. On top of this, the club owner was allowed to put a further £5 million into the club, but only in the form of shares, not loans.
Panic
For a club such as the Albion, this was a pretty hard task, as the losses for 2012/13 were a record £14.7 million. However, anecdotal evidence and comment from Paul Barber, the club's £480,000 a year CEO, suggested that the club was confident of making this target, even before the sale of Liam Bridcutt and Ashley Barnes during the financial year ended 30 June 2014 for around £4 million (the departures of Leo Ulloa and Will Buckley took place after the financial year end).
As previously mentioned, some costs, such as infrastructure and youth development, are excluded from FFP calculations, but my calculations produced an FFP loss of around £11 million, that the club had to reduce during Oscar Garcia's tenure at the club.
Clubs in the Championship get money from four sources: fans, commercial partners, TV income and payments from the Premier League.
Ask
It is this final item that causes the greatest discrepancies between clubs. Bolton, relegated to the Championship in 2012, received £19 million from the Premier League in the form of parachute payments during 2012/13, compared to the Albion's £4.8 million. Those figures are before the Premier League boosted parachute payments, so that now over the four year period that parachute payments are on offer, former PL clubs receive a total of £60 million, including an eye watering £27 million in the first year following relegation.
(As a side note, Bolton also generated more money from the hotel at the Reebok than they did from gate receipts, £6.5 million to £3.7 million. This may explain why Tony Bloom wants to develop the Amex complex with a hotel, open 365 days a year, compared to the stadium, effectively open about 25 days a year).
Heaven Knows I'm Miserable Now
The new rules attempt to bridge the gap between those clubs receiving parachute payments and those that do not.
The rules do not affect the current season, so the Albion will 'only' be allowed to make an FFP loss of £2 million, although Uncle Tony can top this up with a further £4 million.
The main changes kick in from 2015/16. Losses are capped at £2 million as before, BUT owners can now, if they wish, put in a further £11 million a year in the form of shares (as before, not loans), to effectively allow a loss of £13 million.
Clubs which require such injections of capital by owners are subject to extra scrutiny by the Football League overseers (once again, it's BMWs and Caribbean holidays for the accountants who inevitably will be employed to perform this role).
Stop me if you think you've heard this one before
There is a further change too, to remove some of the 'lumpiness' arising in the accounts in a single year, the clubs will be assessed over a rolling three year period. So that the losses of £13 million in a year become £39 million over three years.
The logic behind this is that it removed the distortions caused by selling a player for a large fee, which can have a significant impact on the accounts of a single season, and make the previous/consequent years' accounts look poor by comparison.
It would therefore appear that (for example) a club could lose £35 million in a year, provided that it can convince the Football League that it won't lose more than £4 million in the two subsequent years.
Strangeways here we come
Looking at the rules, there will be winners and losers, as there are whenever rule changes arise. Paul Barber's comments that the Albion voted for the changes for 'the greater good', caused my eyebrows to raise higher than Lewis Dunk's clearance into the East Stand last Tuesday against Wigan.
My perception is that the club voted 'Yes' because it was in the interests of Tony Bloom, and his desire for the Albion to play in the Premier League, rather than an egalitarian wish for more fairness or to protect clubs from the spectre of administration.
That's not a bad thing for anyone who wants to see the Albion sitting at the top table, but to claim that the changes are for the greater good is about an accurate a statement as saying there were 23,000 at the Amex for the last home game.
Read more about the Albion's finances
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