Premier League update their FFP rules

April 25, 2016

Premier League clubs have voted to continue their Short Term Cost Control (STCC) rules; updated rules will come into effect from next season (2016/17) and will apply for three-year duration of the next TV deal.  The STCC rules first came in three years ago and are designed to help ensure sustainability of the top-flight clubs by ensuring that clubs don't spend the TV deal on hugely increased wages.

Clubs will be able to increase their wage spend by £7m each season from 2016/17 to 2018/19 (an increase from the £4m a season during the current TV deal). Clubs can exceed this £7m cap if they generate increased revenue from commercial income, player trading and Match Day income. The Premier League rules are explained here - however they are a little complicated and this diagram should help explain how the rules will work for next season:

It is interesting to note that the rules allow a newly promoted club to immediately increase wages to £67m if they wish. So we could, in theory, see a club like Brighton increase their wages from somewhere around £18m (excluding promotion bonuses) to £67m over the summer. Currently, the Championship clubs not in receipt of Parachute Payments only get around £5m in TV revenue - the new TV deal in the Premier League will be worth around £100m from next season. Promoted Clubs could therefore immediately increase wages to £67m and still have plenty of cash to spare in their first season. What could possibly go wrong?

Interestingly, we have seen a recent trend for newly promoted clubs doing rather well in the Premier League and the rules certainly help newly promoted clubs to compete. Watford brought in 16 new signings during last summer and we could see the newly promoted clubs act in a similar manner. Although it can be a challenge to get newly acquired players to gel quickly, the newly promoted clubs generally operate from a low salary base and can work off a clean slate and can make maximum use of their wage allowances. Established Premier League clubs often don't have this flexibility and are often hampered by a glut of long-standing players on high wages, with many often out of favour and purchased by a previous manager (as Sunderland, Aston Villa and Newcastle can testify). These established PL clubs can't always get as much bang for their buck as the promoted clubs (who will also usually have a more long-standing and more recently successful manager).

 The rules that allow clubs to refer back to 2013/14 will, however, give some extra flexibility to the clubs that have been in the Premier League since that season.  The following table shows how the longer-standing clubs are affected by the rules and how most of these clubs are therefore allowed a higher wage increase if they wish. The clubs that are showing in red actually should have no significant issues - clubs have been able to write large commercial deals since 2012/13 on the back of the relentlessly increasing appeal of the Premier League (eg Chelsea's Yokohama tyres deal); the rules don't materially hamper the longer-standing, larger Premier League Teams. It is also important to appreciate that the current Premier League Profit and Sustainability rules are still in place - these rules sit alongside the Short Term Cost Control rules and ensure clubs don't lose more than £105m over three rolling seasons.

It is interesting to note how Man City have benefited from their rather calculated decision to classify Mancini's pay-off as 'wages' - this inflated the club wages and, assuming it isn't contested by the PL, would allow more scope for wage increases (if required). Of course, City have increased Commercial Income since 2013/14 (largely from state-influenced Abu Dhabi companies) so have additional capacity for wage increases in any event.

 

How to work round FIFA’s ‘anti-trafficking of minors’ rules

January 31, 2016

It’s not a popular view but; all credit to FIFA. It must have taken some guts to investigate and then impose transfer bans on Real Madrid and Atletico Madrid for contravening their rules on signing players aged under 18. The rules are in place to prevent clubs from hoovering up young, mainly impoverished teenagers, then transporting them round the world in the hope a few of them can make a profit for the clubs and agents.

Under FIFA’s Article 19, the only scenario that would permit a playe...


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Leicester accused of 'creative accounting' in bid to avoid £8m charity bill

January 13, 2016

OK, admittedly, the above headline has been deliberately created for maximum impact (and to make a point). However it is not with some validity - I will explain.

During their promotion season, Leicester spent heavily (by Championship standards) on wages. When you exclude around £9.4m of bonuses paid for gaining promotion, their wage bill was just short of £27m (for comparison Derby’s last reported wages were £13.5m).

The Championship FFP rules in place when Leicester were promoted (2013/14...


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Premier League Profit & Sustainability rules for 2015/16

January 4, 2016

Premier League Profit & Sustainability rules for 2015/2016 4 Jan 2016

For the current season (2015/16) there are two elements to the Premier League’s financial constraint regulations. The rules can be found within the 2015/2016 Premier League Handbook.

The Premier League shy away from calling these rules ‘Financial Fair Play’ but they have pretty-much the same aim: a set of rules and regulations to ensure financial sustainability. The two elements are:

1. Profit & Sustainability

2. Short Te...


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Platini announces FFP rules to be 'eased

May 18, 2015

The announcement that FFP rules are to be 'eased' has left both critics and supporters of the rules wondering what this means for the European football.

The FFP rules and their concept of 'break-even' look set to stay, but crucially, the rule that prevents a wealthy owner from injecting cash into the club to fund losses appears about to be scrapped. In many ways this isn't hugely surprising; UEFA's 'sustainability' argument always looked the most vulnerable in respect of a wealthy benefactor ...


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QPR's accounts released and heading for £50m fine

March 14, 2015

QPR’s controversial accounts were released this week.  As anyone following this story will be aware, the club recently announced profits via a vague Press Release which claimed that surprisingly low losses of just £9.7m had been made in 2013/14.  A number of people raised questions about how this could have been achieved without some accounting ‘slight-of-hand’ (see my previous article).

Now we have the accounts, it transpires that the club owners wrote off £60m in loans and classed th...


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QPR figures not all they seem

March 2, 2015

QPR issued a press release on 2 March to announce that the club had improved on losses of over £65m in 2012/13 and had made losses of just £9.8m in 2013/14.  Not only that, but the owners had paid off loans of £60m. On the face of it, a terrific improvement and stories about the club being hit by a £30-£40m FFP fine were clearly wider of the mark.  However, things are not quite as they may initially seem

The improvement was both stunning an unexpected. And as we know, when something seems...


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The Championship Embargo and Premier League's role in the rule change

December 13, 2014

New spending constraint rules have been voted-in by Championship clubs. The new rules replace the term "Financial Fair Play" with the term 'Profit and Sustainability' and crucially do not come into effect until next season (2015/16). The actual vote was a close run thing with 6 clubs voting against the change (Ipswich and Charlton were amongst the clubs that voted against the new rules).

The deferral of the implementation of the rules means that clubs must keep to the 'old' limits, and keep lo...

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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 ac...


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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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