Leicester City losses 2012-13 - £34m

[Triggaaar]

By setting the rules it would be establishing what levels of debt a club might reasonably incur. Like in any business that would be linked to the levels of income historically and projected (meaning sensible). Simply applying a one size fits all across all clubs in the same tier is one of the absurdities (imo)

That would be so difficult to fairly implement. A limit on losses makes perfect sense. It's the rules on what expenditure is and isn't allowed, the time it takes them to establish the losses, and the punishments I don't agree with.

Of course incurring debt to build infrastructure is "fine" as long as that build produces an asset that is sensibly valued (another thing the FL could/should police)

So when we're building the Amex, and find that the price of steel has gone up, we have the get the FL in to say whether we can carry on building? Again, that's too difficult to implement. The FL can't do everything, and if club's overspend on infrastructure, that's their mistake. What the FL should do, is stop clubs - not accidentally overspending on players, but deliberately overspending, in a gamble to reach the promised land.

Limiting losses is fine but not as a single instrument .. as another poster said, if I won the lottery and wanted to give the club £10M as a gift I can't

Yes you can (at least if FFP was set up to my spec). And they can buy a player with it. They just can't use the figure as income in their FFP calculation - so if they're already losing £8m a year on players, then they wouldn't be able to use it.

... if I wanted to give the club £10M and take a % of the "equity" I can't ... if I want to give the club £10M and have my name on the shirt for a season I can't. All because the FL say it isn't sustainable? It may well not be repeatable but I fail to see how it isn't or wouldn't improve the overall financial well being of the club

As explained, you can do all of those things, and any club would be grateful.

Filing accounts quarterly would be too onerous and very volatile given the way finances work.

It wouldn't even have to be quarterly, they could simply make it so clubs had to file some accounts (specific details the FL need) at the end of March (for example). Player sales and wages wouldn't change from then, so the FL could check they were meeting the rules. Points deductions for those that aren't compliant.

I can lend the club £100M and make it repayable in 10 years with no instalments .. job done. As far as I can see I stay within FFP rules (wait to be corrected) but in 10 years the club goes bust. How did FFP help?

Firstly, FFP as I'd like it would not take your loan into account in their calculations. It's not a profit or loss. So the club would struggle to spend that £100m. They wouldn't be able to spend it on players or wages. If you deliberately want to make a club go bust though, it's not the FL's job to stop you. Limiting losses would help reduce the amount of trouble clubs get into though.

 

[Guy Fawkes]

Surely it has got to the point where several clubs in The Championship group together and threaten legal action against the FL because they're following the rules and are being shafted by adhering to FFP.

Why is that though? - The only way you'd make it a truely even playing field is to give all the clubs in each division exactly the same to spend on players (maybe through central contracts so that the clubs hire the players from the FA rather than own them outright otherwise clubs with bigger incomes will always be ahead of clubs with smaller incomes (crowd size, advertising, merchandise sales, etc) regardless of extra cash being funded by owners to prop some clubs up

If clubs break FFP and are not promoted, they can't sign anyone until they can show that they have balanced the books again so if 8 clubs break it, only 3 can get promoted and therfore 5 arn't able to retain or buy players. The teams promoted are facing a fine if they go up so if an owner is prepared to pay that (and spend excessive money getting a team promoted) wouldn't he have done that anyway so it wouldn't have been a competitive season as they would have the best squad even without FFP in place so not much will have changed in that case.

But if clubs like your Millwalls and other mid table teams can start to recruit players that will keep them in the division without causing them to run up massive losses in doing so then this will mean that there are less administrations and therefore more local businesses arn't negatively impacted by it.

Surely FFP will benefit them greatly rather than 'shaft them' by reducing costs, they are a team, after all that isn't necessarily expecting promotion but if they upset the odds then great. Teams that come up from league one (hopefully) won't have to break the bank to try to stay up either by investing in expensive players on higher wages that the club is used to paying (and can cripple them if relegated because they lose so much income but still have the players under contract)

 

[Rugrat]

That would be so difficult to fairly implement. A limit on losses makes perfect sense. It's the rules on what expenditure is and isn't allowed, the time it takes them to establish the losses, and the punishments I don't agree with.

So when we're building the Amex, and find that the price of steel has gone up, we have the get the FL in to say whether we can carry on building? Again, that's too difficult to implement. The FL can't do everything, and if club's overspend on infrastructure, that's their mistake. What the FL should do, is stop clubs - not accidentally overspending on players, but deliberately overspending, in a gamble to reach the promised land.

Yes you can (at least if FFP was set up to my spec). And they can buy a player with it. They just can't use the figure as income in their FFP calculation - so if they're already losing £8m a year on players, then they wouldn't be able to use it.

As explained, you can do all of those things, and any club would be grateful.

It wouldn't even have to be quarterly, they could simply make it so clubs had to file some accounts (specific details the FL need) at the end of March (for example). Player sales and wages wouldn't change from then, so the FL could check they were meeting the rules. Points deductions for those that aren't compliant.

Firstly, FFP as I'd like it would not take your loan into account in their calculations. It's not a profit or loss. So the club would struggle to spend that £100m. They wouldn't be able to spend it on players or wages. If you deliberately want to make a club go bust though, it's not the FL's job to stop you. Limiting losses would help reduce the amount of trouble clubs get into though.

It's a good discussion but I think too difficult to express properly either way via a forum .. but imposing debt limits at club level isn't difficult. Oh and if the price of steel goes up no it doesn't need approval, just a realistic market appraisal of the value of the asset when complete .. standard stuff.

I'll bump into you at the Swan one day and we can sort it all out so that everyone's happy!!

FFP is still a crock of shit btw

 

[Triggaaar]

Oh and if the price of steel goes up no it doesn't need approval, just a realistic market appraisal of the value of the asset when complete .. standard stuff.

So you've got planning permission, you've started the build - the FL has to watch your spending as you go, and when they realise you're going to spend more that the market value of the asset when complete, what do they do? Do you have to stop building, and leave the construction half complete? I think you're over-complicating things.

I'll bump into you at the Swan one day and we can sort it all out so that everyone's happy!!

Always got young offspring with me, so never make it to the Swan.

FFP is still a crock of shit btw

Only because the FL are spineless. If I were in charge, things 'd be different I tell thee.

 

[Guy Fawkes]

That would be so difficult to fairly implement. A limit on losses makes perfect sense. It's the rules on what expenditure is and isn't allowed, the time it takes them to establish the losses, and the punishments I don't agree with.

So when we're building the Amex, and find that the price of steel has gone up, we have the get the FL in to say whether we can carry on building? Again, that's too difficult to implement. The FL can't do everything, and if club's overspend on infrastructure, that's their mistake. What the FL should do, is stop clubs - not accidentally overspending on players, but deliberately overspending, in a gamble to reach the promised land.

Yes you can (at least if FFP was set up to my spec). And they can buy a player with it. They just can't use the figure as income in their FFP calculation - so if they're already losing £8m a year on players, then they wouldn't be able to use it.

As explained, you can do all of those things, and any club would be grateful.

It wouldn't even have to be quarterly, they could simply make it so clubs had to file some accounts (specific details the FL need) at the end of March (for example). Player sales and wages wouldn't change from then, so the FL could check they were meeting the rules. Points deductions for those that aren't compliant.

Firstly, FFP as I'd like it would not take your loan into account in their calculations. It's not a profit or loss. So the club would struggle to spend that £100m. They wouldn't be able to spend it on players or wages. If you deliberately want to make a club go bust though, it's not the FL's job to stop you. Limiting losses would help reduce the amount of trouble clubs get into though.

Certain areas arn't included in the FFP results including investment in infrastructure. A club could spend £200m on a new ground on an annual income of £10m (tv money, gate receipts, etc) and still meet FFP

 

[seagullsovergrimsby]

Why is that though? - The only way you'd make it a truely even playing field is to give all the clubs in each division exactly the same to spend on players (maybe through central contracts so that the clubs hire the players from the FA rather than own them outright otherwise clubs with bigger incomes will always be ahead of clubs with smaller incomes (crowd size, advertising, merchandise sales, etc) regardless of extra cash being funded by owners to prop some clubs up

If clubs break FFP and are not promoted, they can't sign anyone until they can show that they have balanced the books again so if 8 clubs break it, only 3 can get promoted and therfore 5 arn't able to retain or buy players. The teams promoted are facing a fine if they go up so if an owner is prepared to pay that (and spend excessive money getting a team promoted) wouldn't he have done that anyway so it wouldn't have been a competitive season as they would have the best squad even without FFP in place so not much will have changed in that case.

But if clubs like your Millwalls and other mid table teams can start to recruit players that will keep them in the division without causing them to run up massive losses in doing so then this will mean that there are less administrations and therefore more local businesses arn't negatively impacted by it.

Surely FFP will benefit them greatly rather than 'shaft them' by reducing costs, they are a team, after all that isn't necessarily expecting promotion but if they upset the odds then great. Teams that come up from league one (hopefully) won't have to break the bank to try to stay up either by investing in expensive players on higher wages that the club is used to paying (and can cripple them if relegated because they lose so much income but still have the players under contract)

The clubs who voted in favour of FFP were under the impression that any clubs who overspent and gained promotion would be fined and the money distributed to those clubs who played by the rules. There was an incentive to remain within budget knowing a windfall payment was due for remaining prudent.

 

[Not Andy Naylor]

Business legitimacy pretty much covers this. Even then I am not sure that the clubs themselves are being used, to launder money. I would imagine due to scrutiny a lot of the money passing through clubs is traceable, there is likely to be easier ways to achieve this. I might be wrong though.

In one case, the club was bought IN ORDER TO launder money. And the Premier League didn't even notice. Which is why I suspect that clever or crooked accountants will enable clubs to evade FFP to a large extent.

 

[Rugrat]

So you've got planning permission, you've started the build - the FL has to watch your spending as you go, and when they realise you're going to spend more that the market value of the asset when complete, what do they do? Do you have to stop building, and leave the construction half complete? I think you're over-complicating things.

Always got young offspring with me, so never make it to the Swan.

No ... it's not complicated at all and a fairly standard approach to capital projects

This story will run and run .. no doubt will still be going when your kids have grown up

 

[Creaky]

That would be so difficult to fairly implement. A limit on losses makes perfect sense. It's the rules on what expenditure is and isn't allowed, the time it takes them to establish the losses, and the punishments I don't agree with.

I'm not convinced that limiting losses does make perfect sense especially when certain types of losses are considered 'acceptable'.

It's not losses that force businesses into administration but debt and lack of cash flow.

A club makes a £50M loss, the owner buys £50M of additional equity to cover the loss - another club makes a £5M loss and the owner lends the club £5M to cover the loss - yet another club makes a £1M loss but the shareholders refuse to inject any further capital into the club to cover that loss - which of the three is in the greatest danger of going into administration and which the least?

 

[El Presidente]

In one case, the club was bought IN ORDER TO launder money. And the Premier League didn't even notice. Which is why I suspect that clever or crooked accountants will enable clubs to evade FFP to a large extent.

Are you saying the PL chickened out of giving punishment, or at least they weren't kean?

 

[Acker79]

Are you saying the PL chickened out or giving punishment, or at least they weren't kean?

I think you've made a typo there, el p.







It should be "chickened out on giving punishment".

 

[El Presidente]

I think you've made a typo there, el p.







It should be "chickened out on giving punishment".

Noted AK47!

 

[Shropshire Seagull]

I firmly believe that the root of the problem lies in player wages.
The answer would be a cap - based on / linked to the club's income - but not on an individual player level, a salary "pot".
So, you can still have a "Rooney" in your squad but this may leave very little money for others.
You could maybe have a smaller squad, but higher paid - running the gauntlet with injuries of course.

But I fundamentally believe the sky-high player salaries are what is killing the beautiful game.

 

[Not Andy Naylor]

Are you saying the PL chickened out or giving punishment, or at least they weren't kean?

The Fit-and-Proper Persons test failed in that the PL chose to believe that the ultimate beneficial owner was one person when it turned out to be a wanted man in another country. Then Richard Scudamore publicly said he didn't understand what had happened at that club. And eventually that club left the PL, so ceased to be their problem.

Just a few examples of the continual failure of governance in football. I have no reason to expect it to change.

 

[El Presidente]

Just a few examples of the continual failure of governance in football. I have no reason to expect it to change.

True, the governing authorities are still trying to convince us that awarding the World Cup to Qatar was done for footballing reasons, and with that degree of ethics, they can hardly be expected to apply F&P tests to club owners with any degree of objectivity.

Never mind, at least the FA gave us a feast of football on Sunday at the League Cup final, shame the middle band of seats, given to corporate hospitality types, on the half way line was empty for the first 15 minutes of each half. Why can't the FA do the decent thing and extend half time to at least 60 minutes so as to give these stalwarts of the game time to finish their three course meals and do a deal or two.

 

[Guy Fawkes]

The clubs who voted in favour of FFP were under the impression that any clubs who overspent and gained promotion would be fined and the money distributed to those clubs who played by the rules. There was an incentive to remain within budget knowing a windfall payment was due for remaining prudent.

So your saying that a fine if you go up (paid to charity because it was the only way that the PL would accept the concept) and, if you don't get promotion, a transfer ban which could also mean clubs failing to re-sign players already on your books if they are going out of contract can't be considered an incentive then to stay within the ffp rules ?

 

[spring hall convert]

You forgot money-laundering.

And tax avoidance.

 

[Triggaaar]

Certain areas arn't included in the FFP results including investment in infrastructure. A club could spend £200m on a new ground on an annual income of £10m (tv money, gate receipts, etc) and still meet FFP

Yes I know. I can't see the problem with that. Other rules to protect clubs could include forcing certain debts to be turned into equity.

No ... it's not complicated at all and a fairly standard approach to capital projects

I disagree. If a standard business is half way through a build, and it's going over budget, some backers could pull out. The company will then have to find new funding, and decisions will be made on the expenditure needed to complete the build compared with the cost of completing the build. The money spent to that point will be irrelevant. That wouldn't work for the FL trying to force clubs sticking to a budget.

I'm not convinced that limiting losses does make perfect sense especially when certain types of losses are considered 'acceptable'.

It's not losses that force businesses into administration but debt and lack of cash flow.

Small businesses suffer most from cash flow problems. Businesses that make a profit can sort out cash flow issues. And FFP will help with cash flow too. Currently, clubs are able to sign players on huge wages that the club can't sustain. If FFP were properly implemented, then it would limit the amount the club is able to commit to wages, which would limit their cash flow problems.

A club makes a £50M loss, the owner buys £50M of additional equity to cover the loss - another club makes a £5M loss and the owner lends the club £5M to cover the loss - yet another club makes a £1M loss but the shareholders refuse to inject any further capital into the club to cover that loss - which of the three is in the greatest danger of going into administration and which the least?

To be honest, it's impossible to tell with such limited facts. A properly implemented FFP would be a big issue for the first club. If the third club is ManU, you can be sure that there'll be plenty of people ready to cover that £1m, and take ownership. If the first club is Torquay, then it's over as soon as the owner loses interest.

But your point is that it's not only about losses, and of course I agree. The FL could have rules about loans being turned into equity.

The FL could seriously limited clubs losses if FFP was well implemented, and that would improve their chances of staying out of administration.

 

[Not Andy Naylor]

True, the governing authorities are still trying to convince us that awarding the World Cup to Qatar was done for footballing reasons, and with that degree of ethics, they can hardly be expected to apply F&P tests to club owners with any degree of objectivity.

Never mind, at least the FA gave us a feast of football on Sunday at the League Cup final, shame the middle band of seats, given to corporate hospitality types, on the half way line was empty for the first 15 minutes of each half. Why can't the FA do the decent thing and extend half time to at least 60 minutes so as to give these stalwarts of the game time to finish their three course meals and do a deal or two.

I think you'll find that was a Football League event. Same applies though ...

 

[spring hall convert]

The one problem I have with FFP - well, the MAIN problem, there are a few - is that once it at settles down and is being adhered to, it will basically sort clubs out by their potential fan base size.

Follow a small club? You won't ever progress higher than the lower end of Championship unless the club charges £50 a ticket because the attendances will be smaller, advertising smaller, merchandise sales smaller etc etc.

Why SHOULDN'T someone be able to fund the progress of a traditionally smaller club if that is what they want to do with their money?

I have no problem with that, as long as if they go bust, then they start again. No administration, no football debts first. Unless every penny owed is paid back they are wound up and they start again from the bottom.