QPR still on a collision course with Football League

November 13, 2014

Although Championship clubs voted for new FFP rules on 6th November, QPR are still on a collision course with the Football League. The rule changes do not expressly alter any sanction applied as a result of the club's overspend during 2013/14.

Although QPR’s accounts have not yet been released, it is inconceivable that they would have been able to keep losses below the threshold for the 2013/14 season (£3m maximum loss, or £8m if the owners injected £5m equity). Looking the most recent accounts it appears that QPR are heading for a fine of around £27m to 35m (plus an additional £5m if [as appears] the owners did not injected the £5m equity by June).

It is interesting to look at what lies ahead for QPR.

Although they are now in the Premier League, QPR are still required to submit their FFP return to the Football League by 1 December.  The Football League will then assess their financial results and advise the club of the amount Fair Play Tax to be levied. However, this could be a drawn-out affair - Tony Fernandes has nicknamed himself “Fight it Fernandes“ and advises that he intends to challenge the legality of the Fair Play Tax.

QPR may decide that they do not wish to play ball and may decide that they do not wish to provide their financial results to the Football League by 1 December. However, this would have its consequences. Any club that fails to provide their return will have their results (and any fine) assessed by the Football League against the club’s published accounts (due some time around March).  However, if the club doesn’t make a voluntary return in December, the rules state that the club will not be able to make use of the ‘exclusions’ such as promotion bonuses paid to players and youth development & community expenditure.  If QPR decide not to play ball, it could end up costing them several million pounds extra. The club will need to balance up their desire to fight the rules with their desire to reduce any potential fine.

Once the Football League have assessed their financial results for 2013/13, they can expect to be sent a request for payment – the rules state that they will be given just 14 days to pay.

Assuming QPR do not simply hand over the cash, the Football League has a few options. One option is to register a claim with the Premier League against QPR. The FFP rules explain that in this scenario, the club would:

.. be deemed to have explicitly authorised The League to notify the Premier Leauge of such non-payment and to register the same as a debt due to The League for the purposes of rule C.51.

Technically, the Premier League would be required to withhold any TV revenue due to QPR and pay it over to the Football League.  However, this course of action seems unlikely owing to the sometimes complicated relationship between the Football League and the Premier League. The Premier League have intimidated that it is not willing to help collect the Fair Play Tax. The Premier League fear that depriving one of their member clubs of a substantial amount of cash would undermine the integrity of their competition.  The Football League evidently don’t have any appetite for pressing this matter with the Premier League in the courts.  Consequently, if QPR don’t pay-up, it seems likely that the Football League will ask QPR to pay-up at whatever time in the future the club get relegated from the Premier League. If the Football League carries out its threat, QPR’s entry into the Championship would only be possible if the club pay their fine – if QPR refuse, they would potentially be excluded from the Football League and sent to the Conference. This potential course of action was confirmedby Football League Chief Executive Sean Harvey at Soccerex. Interestingly, it is unclear whether QPR would be allowed into the Football League from the Conference if they had the same owners and the fine was still unpaid.

Of course, ‘Fight It’ Fernandes may be successful in challenging the Fair Play Tax in the courts. Ben Rumsby in the Telegraph writes that a legal concept termed lex mitior may come to QPR’s aid as a consequence of the fact that that the rules will be changed in 18 months.  However it is also quite possible that QPR’s case may well be undermined by a clause in the current rules which states that in relation to the Fair Play Tax, the promoted club will ‘be deemed to have irrevocably waived the right to raise an objection’.

None of this changes the fact that QPR were not in the Championship when the rules were introduced and feel they have been harshly treated.  However time is not on their side – they are currently amongst the favourites for relegation and the uncertainly caused by a protracted legal and relegation battle would make life very difficult at Loftus Road.

 

Which Championship clubs can expect to receive a Transfer Embargo?

October 30, 2014

With Championship clubs due to submit their Fair Play information to the Football League by 1 December, it is worth considering which clubs are likely to have breached the rules and the likely impact.

Looking at the Championship clubs, 9 are viewed as being ‘Likely’ or ‘Very Likely’ to receive a Transfer Embargo from January.


The Football League will look back at the season 2013/14 and determine which clubs exceeded the permitted loss limits for that season. During 2013/14 clubs were ab...


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Was FFP the reason for high-profile 'Loan&Buy' deals this transfer window?

September 3, 2014

During the Summer 2014 Transfer Window we saw a number of deals where a player was loaned for 12 months, with the option to buy at the end of the loan. There were a number of reports that FFP was the reason for this type of transaction and it is worth exploring the issue.

There are a number of reasons why clubs might want to enter into a 'Loan&Buy' deal:


To get round a spending cap

Under the UEFA FFP sanctions, Man City and PSG were give a net player spending restriction (in addition to other sa...


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Championship FFP rules ‘undermined’ by Premier League

May 26, 2014


Last week, the Championship clubs voted on a number of potential changes to the existing FFP rules. However, as none of the tabled amendments could muster the required 75% of the vote, the rules will remain as they are.  Huddersfield issued an excellent summary of the proposed changes and outlined their disappointment that ‘real-time’ monitoring of finances was not approved.

Under the current rules a ‘Fair Play Tax’ is levied on all clubs that gain promotion to the Premier  League but ...


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Reports of record €60m (£49m) fine for PSG and Man City

May 6, 2014

Following recent press reports, we now have a much better idea about the sanctions that are reportedly being offered to Manchester City and PSG. It is now up to the clubs to decide whether to accept the terms or risk a potentially more severe punishment. The punishment reported in the press raises a number of interesting questions:


Why is City’s fine so large?

When City filed their accounts, on the face of it they looked to have nominally passed the FFP Break Even test (after permitted exclus...


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Man City failure of FFP test - a matter of choice

April 30, 2014

So, now we know that Man City (and PSG) failed the FFP Break Even test. However, this was no accident. Man City didn't fail the test because of an oversight - they failed because they chose to fail. The following analogy is helpful: 

I recently handed my son £5 to buy some sweets, telling him to spend no more than £1. Inevitably, he came back with quite a lot of sweets having spent about the £1.50. He didn't exceed the budget because he wasn't able to count - he just evaluated the pros and ...


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The Benefactor Model - permitted in League 1 and 2

April 23, 2014

The Football League has clarified an important aspect of how their FFP rules operate within League and League 2. Interestingly, the FL have confirmed that their Salary Cost Management Protocol (SCMP) rules permit 'benefactor' owners to finance a club's ongoing losses (something that is restricted within UEFA, the Premier League and Championship rules). 

The League 1 and League 2 rules require clubs to submit regular financial forecasts to the Football League. Only if a club is operating within...


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Would Hull City be allowed into the Europa League next season?

March 9, 2014

 Following today’s FA Cup semi-final draw, supporters of Hull and Sheffield United must feel there is every chance that they could secure a Europa League place next season. This could be achieved either by getting through to the final and beating Wigan, or simply by getting through to a final against Arsenal. Unlike the League Cup, the losing FA Cup Finalist will be rewarded with a Europa League place if the winners have already qualified for UEFA competition.  Arsenal would need to finish ...


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Will Liverpool face any FFP punishment?

March 6, 2014

Since Tuesday's release of Liverpool’s annual accounts for last season (2012/13), fans have been asking whether they will receive a punishment for breaching the Break Even rules.  Unfortunately the FFP rules aren’t straight-forward and it is only when you produce a projection of this season’s finances that you can see how the land lies.

As I advised a couple of days ago, Liverpool will be assessed for FFP compliance over three footballing seasons - they will be able to compete in the Cha...


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Liverpool’s accounts raise interesing question of ‘fairness’ of FFP

March 4, 2014

Last Friday UEFA held an FFP update in Nyon which provided some excellent information about the current process – however it also gave rise to a number of interesting questions.

UEFA explained that the teams that potentially faced punished for an overspend during the first Monitoring Period are those professional teams that qualified for UEFA competition in 2012/13 and had a Break Even deficit in the 2011/12 season. Although the Monitoring Period looks at accounting performance over two seas...


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