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 able to make losses up to £3m for the season (rising to a maximum of £8m if the owner was prepared to put their hand in their pocket to inject equity [i.e. not loans] into the club to cover the difference).

Some expenditure is excluded (such as charitable donations, promotion bonuses, and youth development expenditure).  N.B. Championship Youth Development costs are unlikely to be much over £700k.


Club

2012/13 profit/loss

Transfer ban likelihood

Notes

Birmingham

-£4m

Very likely

Results released in HK for 2013/14 suggest losses above threshold. Owner  unlikely to have inject equity

Blackburn

-£36.5m

Very likely

Club have already stated a transfer ban is to be expected

Blackpool

£4.6m

Unlikely

Bottom of table with well-documented issues but costs seem to be under control

Bolton

-£50.6m

Very likely

Club over £160m in debt and recent press reports that club may be sold.

Bournemouth

-£15.3m

Very likely

The 12/13 loss related to L1 – costs will have increased since then. £5.75m  cash for Lallana in July unlikely to be enough to remove ban for Summer

Brentford

-£6m

Hard to call

Likely to need  an equity injection from owner and probably OK if injection made

Brighton

-£14.8m

Unlikely

Advocates for FFP who have cut costs to meet thresholds. Equity injection will probably be required.

Cardiff

N/A

Not possible

Ex PL club so no ban possible until 2015/16

Charlton

-£6m

Hard to call

Likely to need an equity injection from owner and probably OK if injection made. New owners net spenders this season.

Derby

-£7.1m

Unlikely

Sold naming rights to stadium last season but will need equity injection. Tfr profit last season and subsequent spending suggests club will be within limits

Fulham

N/A

Not possible

Ex PL club so no ban possible until 2015/16

Huddersfield

-£4m

Unlikely

Advocates for FFP and want interactive FFP controls

Ipswich

-£9.8m

Unlikely

Club cut costs and McCarthy announced “we are keeping to FFP rules, I’m damn sure not everyone else is”

Leeds

-£9.4m

Likely

It is hard to envisage either owner having injected the equity to cover losses over £3m. Sale of McCormack for £10.4m will help 2014/15 results.

Middlesbrough

-£14m

Very likely

Owner likely to inject equity but despite cost-cutting, unlikely to be within threshold

Millwall

-£1.9m

Very unlikely

Costs under control and don’t appear to have paid a transfer fee for last two seasons

Norwich

N/A

Not possible

Ex PL club so no ban possible until 2015/16

Nottingham Forest

-£17.1m

Very likely

Likely ban reported by local press. Club spent heavily last season and reinvested sales proceeds in Summer on new signings.

Reading

-£2.3m

Hard to call

Parachute payments will have helped considerably but whether they cut costs enough is hard to call. New owner in place before end of financial year so equity injection likely. Key player sales will help 2014/15 position.

Rotherham

-0.5m

Very  unlikely

A club used to keeping costs under control

Sheffield Wed

-£3.7m

Unlikely

Appear to have kept costs under control and require minimal (if any) equity

Watford

£0.2m

Unlikely

Low net spend over last two seasons

Wigan

£0.8

Very unlikely

Parachute payments and sale of McCarthy for £13m should see Wigan OK

Wolves

-£30.4m

Very likely

Hard to envisage losses in their promotion-season from L1 being below threshold.

 Of the three clubs that were promoted to the Premier League last season, Leicester and QPR are expected to have incurred total fines or around £50m in total:

Club

2012/13 profit/loss

Fair  Play tax likelihood

Notes

Leicester

-£34m

Very likely

Fine could easily be around £20m

Burnley

-£7.6m

Hard to call

Owner likely to have injected equity and any fine (if there were one) would be very low (i.e. less than £250k)

QPR

-£65.4

Very likely

Fine probably somewhere between £27m and £35m


How the embargo works

Any embargo would be applied before the start of January Transfer window. Under the ban, a club could still players however they will only be able to sign a player if it is on a ‘one a one-out, one in’ basis where both the following conditions apply:

  • The club has fewer than 24 registered players, and
  • The incoming player has wages of below 75% of the departing player.

Once an embargo is applied a club can apply in March to the Football League to have the ban removed. However the removal of the ban cannot take place until 31 May 2015 and will only occur where the club has submitted Interim Information that confirms the club is on target to pass the FFP test in the following December (i.e. relating to the 2014/15 Season).

It is therefore possible that some of the clubs that start their transfer embargo in 1 January 2015 will not have their ban removed during next summer’s transfer window.

Possible changes to the FFP rules

On 6th November Championship clubs are due to meet to discuss and vote on new FFP rules. The current version of the rules were voted in by member clubs in April 2012; meetings to update the existing rules took place towards the end of last season but clubs could not agree on a new measure.  Any new rules are unlikely to impact on any transfer embargoes due to be applied in January (although they could potentially impact on any transfer embargoes relating to summer 2015.

With so many disparate interests and different financial positions amongst clubs in the Championship, gaining a consensus on one set of rules or approach is again likely to prove difficult.

 

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