Browsing Archive: April, 2012

Financial Fair Play rules introduced into the Championship

Posted by Ed Thompson on Sunday, April 29, 2012,

Championship clubs have voted 21-3 in favour of introducing strict new Financial Fair play rules.  Clubs that overspend will be punished with a Transfer embargo. The details are attached here.

Plans to introduce a model that restricted clubs to spending a percentage of their turnover have been abandoned in favour of 'breakeven' model that restricts the level of losses a club can make.  In the face of practical and legal challenges (outlined in my previous article), the first sanctions will not...


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Transfer Bans to be imposed next season in League 1 and League 2

Posted by Ed Thompson on Sunday, April 29, 2012,

League 1 and 2 clubs have agreed to continue the Salary Cost Management Protocol (SCMP) and impose transfer embargos on overspending clubs from the start of next season (2012/13).

Under the SCMP, clubs needing to restrict spending on wages to a percentage of their turnover (55% in League 2, and 65% in League 1 reducing to 60% in 2013/14).  Clubs are required to submit regular up-to-date budgetary statements and forecasts throughout the season. The League will impose a transfer embargo as soon ...
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Scottish Premier League to impose "newco" rules following Rangers collapse

Posted by Ed Thompson on Wednesday, April 25, 2012,

The fall-out from Rangers financial collapse continues. Scottish Premier League (SPL) clubs will vote on new rules at the end of April that would be applied if a club enters Administration or if it suffers liquidation and is replaced by a new club (or "newco").

In future, any club entering administration would be docked 15 points (or 1/3 of their points at the time of the insolvency event, if that is a greater number of points).

Significantly, any "newco" would also be docked 10 points from the...


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City's FFP challenges and the implications for UEFA

Posted by Ed Thompson on Thursday, April 19, 2012,

There has been a great deal of interest recently in whether Manchester City will pass UEFA's FFP test for the first Monitoring Period. The debate merits an explanation of how the FFP rules will apply to City and the implications for the club.

The first UEFA Monitoring Period covers the two seasons either side of the 2012 Summer Olympics (the 2011/2 and 2012/13 season. Clubs have to report losses below E45m (or £38m) over this two year period (i.e. an average loss of no more than £19m a seaso...


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UEFA issue clearer FFP explanation

Posted by Ed Thompson on Sunday, April 15, 2012,

The full UEFA FFP rules have been criticised as being overly-long and difficult to understand. To overcome this, UEFA have issued a summary guide which they distributed as part of a press pack.  It is recommended reading for anyone wanting to gain a better understanding of Financial Fair play. I have attached a link and have also put this on the FFP Explained page.

FFP Press Kit EN_FINAL_en _1_.pdfFFP Press Kit EN_FINAL_en _1_.pdf
Size : 505.653 Kb 
Type : pdf


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FFP for Championship proving unexpectedly difficult and facing punishment delays

Posted by Ed Thompson on Sunday, April 15, 2012,

Article published 5 April 2012

Football League proposals for the introduction of Financial Fair Play rules appear to have run into difficulty and a delay in implementing the rules looks increasingly likely.

In June 2011, the Football League (FL) announced that Financial Fair Play rules would be introduced into the Championship from the 2012/2013 season.  The FL set out a schedule that would have seen the proposals circulated and then ratified at their Quarterly Meeting of all 72 clubs in Februa...


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UEFA publishes their 8 punishments for breaching FFP rules

Posted by Ed Thompson on Sunday, April 15, 2012,

Article published 4 April 2012

At the UEFA conference in Istanbul, UEFA ratified three more disciplinary measures for clubs that breach FFP rules.  As I outlined in my article on 7 Feb, five measures had previously been agreed at the Nyon Conference in January. The full menu of punishments now reads:

  1. Reprimand / Warning
  2. Fine
  3. Deduction of Points
  4. Withholding of Revenue from UEFA competition
  5. Prohibition to register new players for UEFA competitions;
  6. A restriction on the number of players that a club ma...

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Spending for a Competitive Advantage

Posted by Ed Thompson on Sunday, April 15, 2012,

Article published 1 April 2012

At the Soccerex conference in Manchester, one of football's foremost Administrators, Trever Birch  (with Leeds and Portsmouth on his CV), outlined how  "the Championship is a scene of carnage with clubs pursuing the Holy Grail of promotion, losing between £5 million £10m a year and a third of them spending over 100 per cent of turnover on wages."  Birch had previously explained that the problems at Portsmouth had resulted from the club aiming to gain a 'competi...


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UEFA close door on legal challenge and talks tough

Posted by Ed Thompson on Sunday, April 15, 2012,

Article published 29 March 2012

Last week was an truly excellent week for Platini and saw him secure approval from the European Commission to the Financial Fair Play rules. Platini has been concerned that any excluded club may challenge the legality of the punishment (hence he recently bolstered his legal dept) (see article from 16 March).  Approval from the European Commission was essential for Platini as he has now closed the door on any legal challenge.  He must have been delighted to see t...


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Ticket prices subsidised by club losses

Posted by Ed Thompson on Sunday, April 15, 2012,
Article published 22 March 2012

Analysis by www.financialfairplay.co.uk reveals the increased ticket price that clubs would need to charge if they were to manage on a 'break-even' basis and if the ticket prices were increased to account for the shortfall.  The study of Premier League finances reveals that fans receive match-day ticket subsidies averaging at £25 per ticket.  Although Man City's place at the top of the subsidy table will surprise few, the level of loss per ticket sold (£161) i...


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Spanish Tax debt causes stir in Germany

Posted by Ed Thompson on Sunday, April 15, 2012,

Article published 20 March

Last week, questions were asked in the Spanish parliament about the amount of tax that was owed by Spanish clubs to the government.  The government was forced to admit that it was owed  €752m in back taxes (including 48m owed by Barcelona and 155m owed by Atletico Madrid).  The issue was quickly compounded by the Sports Minister Miguel Cardenel brazenly announcing that they were looking at ways that debt could be written-off.  The reaction from German clubs w...


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UEFA boosts legal dept to face FFP challenges

Posted by Ed Thompson on Sunday, April 15, 2012,

Article published 16 March 2012

David Conn of the Guardian is one of the most informed journalists regarding FFP. He has contributed to a particularly interesting article produced by CNN.  He outlines that UEFA are "readying themselves for legal challenges from top clubs and sending out a clear message they will be able to counter them," Conn points to the strengthening of the UEFA licensing and legal team with the appointment of top English lawyer Alasdair Bell."

http://edition.cnn.com/2012/03...


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The German footballing model

Posted by Ed Thompson on Sunday, April 15, 2012,

Article publishe15 March 2012

Dan Storey at football365 has written an excellent article on the German footballing model. He makes some interesting points:

  • A minimum of 51% of each club must be owned by the club's members
  • Club members have the ability to directly affect the running of the club
  • A season ticket for Borussia Dortmund costs £152 for 17 domestic home games and one European game
  • Average attendance in the Bundesliga last season was 42,690 (7,000 more than the Premier League)
  • Due to the...

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Fans heavily subsidised by high-spending clubs

Posted by Ed Thompson on Sunday, April 15, 2012,

Article published 11 Mar 2012 

With UEFA keen to ensure clubs' expenditure matches their income, we have carried out some high-level analysis of the subsidy levels that fans currently enjoy.   Looking at two clubs currently in the media spotlight (Man City and Portsmouth), we have calculated how much extra the average fan would have to fork-out if they were to pay the market rate for their ticket (based on the club operating on a break even basis).  

The results are fairly staggering. Man City ...


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Chelsea hit hard by AVB adventure

Posted by Ed Thompson on Sunday, April 15, 2012,

Article published 10 Mar 2012

Under FFP regulations the cost of acquiring a player's contract (i.e. the transfer fee) has to be written off over the life of the contract.  However, the same restriction does not apply to other contracts. The cost of acquiring a manager's contract (eg.  André Villas-Boas) can be written-off immediately as a one-off hit against that year's financial results.  When Chelsea sacked Ancelotti, they decided to write off the cost of paying up his contract AND the cost...


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Sanctions to be ratified on 20-21 March in Istanbul

Posted by Ed Thompson on Sunday, April 15, 2012,

Sanctions to be ratified on 20-21 March in Istanbul 7 Feb 2012

At the 24/25 Jan Executive Committee in Nyon, a number penalties for failing to meeting FFP criteria were agreed. Three sanctions are still to be approved and will be tabled at UEFA EXCO in Istanbul at the end of March.  The Media Pack has been attached at the foot of this article and outlined the penalties as follows:

Potential Sanctions
  • Reprimand / Warning
  • Fine
  • Deduction of Points
  • Withholding of Revenue from UEFA competition
  • Prohibitio...

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The bell tolls for Pompey

Posted by Ed Thompson on Sunday, April 15, 2012,

The bell tolls for Pompey 2 Feb 12

If Michel Platini lies awake at night wondering about the wisdom of pressing ahead with FFP regulations, he might do well to consider events at Portsmouth.

Pompey went in Administration in 2010 having run up debts of around £135m. The club had adopted a wage structure that could only ever be sustained through cash injections from the Gaydamak family. Once the funds dried up, the club found they could not pay the wages and Administration followed.

In a recent i...


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Rummenigge calls for City to be banned - Mancini takes the bait

Posted by Ed Thompson on Sunday, April 15, 2012,

Rummenigge calls for City to be banned - Mancini takes the bait 6 Dec 2011

A public argument has broken out between Bayern Munich and Man City over the penalties for breaching Financial Fair Play regulations. In an interview with Austrian website www.90minuten.at Bayern CEO Rummenigge makes a stinging attack on City’s spending and expressly calls for UEFA to exclude them from European competion..  Rummenigge explains:

“I recommend that Uefa should think of harsh punishments, otherwise there...


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Novel punishment proposed for FFP breaches

Posted by Ed Thompson on Sunday, April 15, 2012,

Novel punishment proposed for FFP breaches 26 November 2011

With a UEFA committee due to meet in January to determine the punishment tariff for FFP breaches, an interesting suggestion has been proposed by a blogger at http://www.maracanazo.com/ .  UEFA's previous plan to impose a transfer ban for certain FFP breaches seems to have hit the buffers (due to restraint-of-trade issues and the fact that control of player registrations rests with FIFA and national associations, rather than UEFA).  Th...


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UEFA shelves Transfer Ban punishment

Posted by Ed Thompson on Sunday, April 15, 2012,

UEFA shelves Transfer Ban punishment 24 November 2011

The Telegraph published a significant FFP article which maintains that UEFA have had to withdraw one of the proposed punishments for exceeding the Break Even deficit. The use of a transfer ban was put forward as a favoured punishment at the ECA in September (see article below). However it appears such a ban would fail the EC's restraint-of-trade rules.  This seemingly leaves UEFA with only three options:

  1. Levy fines as a punishment (however t...

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Media confusion over first Monitoring Period

Posted by Ed Thompson on Sunday, April 15, 2012,

 Media confusion over first Monitoring Period20 November 2011

In the rush to comment on City's recently announced £195m loss, a number of columnists have submitted incorrect copy regarding the duration of the current Monitoring Period.  The error seems to have started in a Press Association article on 18 November and has been included in a number of separate articles, including those in the Guardian, Telegraph and Mail.  To clarify, the current Monitoring Period lasts for TWO years (not three...

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City downbeat over meeting FFP criteria

Posted by Ed Thompson on Sunday, April 15, 2012,
Article published 18 November 2011
Man City today announces losses of £195m for 2010/11 season. Significantly they have taken a distinctly downbeat tone over whether they can meet the FFP criteria for the first Monitoring Period.  The club announced:

"As we undertake the club's commercial transformation, we are cognisant of the incoming Uefa financial fair play regulations and consequently we continue to maintain positive and ongoing dialogue with all appropriate football authorities."

Being 'c...

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Platini discusses watered down punishments

Posted by Ed Thompson on Sunday, April 15, 2012,
Platini discusses watered down punishments 15 Oct 2011
Although the UEFA rules on Financial Fair Play, quite clearly spell out the punishments for clubs which overspend (non-compliance=no licence to compete), Platini has this week discussed imposing lesser punishments for rogue clubs (see link below).  In the Der Spiegel interview Platini discussed 'a range of possible sanctions' with exclusion being one of them.  Interestingly, the concept of reduced punishments such as fining clubs and/or im...

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Chelsea outline their plan for Financial Fair Play compliance

Posted by Ed Thompson on Sunday, April 15, 2012,
Chelsea outline their plan for Financial Fair Play compliance 9 Oct 2011
Steve Tongue in the Independent on Sunday pulled together an excellent article on the challenges faced by Chelsea in order to comply with the Financial Fair Play rules.  Bruce Buck (Chelsea's Chairman) outlined the 4 actions the club will be taking:
  1. Reduced spend on transfer fees for new players
  2. Reduced spend on wages
  3. Increased sponsorship income (possibly including selling stadium naming rights)
  4. Increased match-day incomes
Of...

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FFP catches Sunderland Short

Posted by Ed Thompson on Sunday, April 15, 2012,
FFP catches Sunderland Short 5 Oct 2011
It was interesting to see that Sunderland used 'Financial Fair Play requirements' as part of the justification for Niall Quinn's change of roles. In a move that signalled the increasing frustration of club owner Ellis Short, Quinn was this week replaced as club Chairman. In an unusual move, Ellis Short now becomes club Chairman.  Quinn will now focus on "developing Sunderland's profile and business interest overseas". Clearly,
all is not well at Sunderlan...

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Chelsea decision long overdue

Posted by Ed Thompson on Sunday, April 15, 2012,
Chelsea decision long overdue 4 Oct 2011
Stamford Bridge have known for some time that they need to improve the income generated from their Stamford Bridge stadium.  With a capacity of 42,000 and generating around £82m of match-day income each season, the stadium compares particularly poorly to Arsenal who are able to generated around £122m over the same period.  Of course Arsenal have the benefit of a shiny new stadium and wisely decided to build extensive corporate facilities in a successf...

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Owners asked to dig deep

Posted by Ed Thompson on Sunday, April 15, 2012,
Owners asked to dig deep 2 Oct 2011
With the financial reporting season upon us, the impact of FFP is starting to hit home with club owners.  Although clubs are able to report a deficit of up to E45m during the current two-year Monitoring Period, clubs are only able to record this level of loss if the owners are willing to put their hands in their pocket and inject Equity that will cover all any deficit amount over E5m.  Where the owners are not willing to subsidise the club in this way, the m...
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Arsenal can only break even

Posted by Ed Thompson on Sunday, April 15, 2012,
Article published 1 Oct 2011
Arsenal are viewed by UEFA as a role model - they play nice football, are not owned by a 'Sugar Daddy', they have built a lovely new stadium and operate on financial model that will seemingly ensure FFP compliance. UEFA will therefore have been pleased to read Arsenal's recent financial results (their last ones to be produced before the first Monitoring Period).  Although Arsenal announced a profit of £15m before tax, they recorded a profit of just £2.2m once tra...

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How to solve a problem like Carlos

Posted by Ed Thompson on Sunday, April 15, 2012,
Article published 28 Sep 2011
Following Tevez' refusal to come of the bench against Bayern, a number of pundits proposed that Tevez should be 'sacked' or be 'left to rot in the reserves' for the rest of his contract. Other than the employment law issues surrounding these two proposals, there would also be a FFP impact:

Sacking option
Tevez was signed two years ago for a reported fee of around £45m/£48.  Under FFP rules, his value will have been 'amortised' or written-down and he now has a 'boo...

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Inter do not expect to meet FFP requirements

Posted by Ed Thompson on Sunday, April 15, 2012,
Article written 9 Sep 2011
Further light was shed on Inter's role in proposing lenient FFP punishment at the ECA conference, when Massimo Moratti, the Inter General President, announced that Inter are not ready currently meeting the FFP requirements. Suddenly it all becomes clear...



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European Club Association sub-group proposes FFP leniency

Posted by Ed Thompson on Sunday, April 15, 2012,
Article published 8 Sep 2011
Following the dissolution football's elite club organisation 'g14' in 2008, UEFA has sponsored the creation of the European Club Association. At the ECA conference in September, board member Ernesto Paolillo,(Internazionale General Director)  chaired a sub-group which convened to propose the penalties that they felt should apply for FFP breaches. Although all UEFA documentation is clear (i.e. non-compliance = no licence), surprisingly, the group proposed that the p...

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Will the Etihad money be enough for City?

Posted by Ed Thompson on Sunday, April 15, 2012,
Article published  22 Aug 2011 
Etihad's reported £400m deal over 10 years includes a provision to spend around £100m on developing the stadium complex.  Although the numbers are not yet fully in the public domain, it seems around £30m a season will be earmarked to subsidise City's huge wage-bill in their quest to meet the FFP requirements. Given that City are currently running losing £100m+ every season, they face a seemingly impossible struggle to bring down the FFP deficit total  to und...
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Some clubs expected to fail FFP test

Posted by Ed Thompson on Sunday, April 15, 2012,
Article published 17 Aug 2011
Privately, a number of sports and financial journalists believe some clubs will fail the meet the FFP criteria. However people are reluctant to puttheir heads over the parapet and say as-much publically.  Things are starting to change. In an article published by Reuters, Neil Patey from Ernst &Young (a former Abramovic adviser according to the Edinburgh Evening News) has stated publically that he expects some clubs to fail the FFP test. 

"If I was a betting man I w...

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Record Etihad Deal

Posted by Ed Thompson on Sunday, April 15, 2012,
Article Published 12 Jul 2011Eyebrows were certainly raised by the size of the Etihad sponsorship deal with Manchester City. Etihad, who are yet to report a profit and have a similar sized fleet to UK-based Flybe, have reportedly paid City around £400m in a 10 year deal which will extend the existing shirt-sponsorship
deal and re-brand City's stadium complex as "The Etihad Campus".  Not all of the Etihad funds will be used to boost City's coffers for the purposes of FFP - a reported £100m ha...
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Barcelona sponsorship - from heroes to zeros

Posted by Ed Thompson on Sunday, April 15, 2012,
Article published 19 May 2011

Barcelona unveiled their new shirt bearing the Qatar Foundation logo.  Barcelona President Sandro Rosell and coach Pep Guardiola championed Qatar's successful World Cup bid and were rewarded with the E170m 5-year deal just 8 days after the World Cup hosts for 2022 were announced. Barcelona had been struggling to comply with the FFP criteria and desperately needed the income from this huge deal. The Spanish FIFA delegation were also keen to arrange a reciprocal vot...


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