FFP

[bexleyboy]

Last summer we got pulled up because we broke FFP rules … and had to pay the difference back , Birmingham have spent 35.36 mill and recouped 5 mill , if you take the extra wages they must be paying how comes they are within their FFP … they can’t be ??

EFL operating different rules for different clubs ? Fair Play I don’t see it ..

[weststandfruitloop]

Aug 31, 2024 9:27:16 GMT bexleyboy said:

Last summer we got pulled up because we broke FFP rules … and had to pay the difference back , Birmingham have spent 35.36 mill and recouped 5 mill , if you take the extra wages they must be paying how comes they are within their FFP … they can’t be ??

For the millionth time there is no FFP in League One. Owners can put in as much money as they feel like.

The only difference is that Birmingham's billionaire owners are happy to blow umpteen millions at this level, whereas Methven moaned like a baby when Charlton's billionaire owners had to put in a couple of hundred grand to cover a wage shortfall last year.

We could be doing exactly the same as Birmimgham if GFP were prepared to spend like they are. Don't moan about Birmingham, moan about the fact our owners are so much tighter than theirs.

[valleydobson1]

Aug 31, 2024 10:05:23 GMT weststandfruitloop said:

Aug 31, 2024 9:27:16 GMT bexleyboy said:

Last summer we got pulled up because we broke FFP rules … and had to pay the difference back , Birmingham have spent 35.36 mill and recouped 5 mill , if you take the extra wages they must be paying how comes they are within their FFP … they can’t be ??

For the millionth time there is no FFP in League One. Owners can put in as much money as they feel like.

The only difference is that Birmingham's billionaire owners are happy to blow umpteen millions at this level, whereas Methven moaned like a baby when Charlton's billionaire owners had to put in a couple of hundred grand to cover a wage shortfall last year.

We could be doing exactly the same as Birmimgham if GFP were prepared to spend like they are. Don't moan about Birmingham, moan about the fact our owners are so much tighter than theirs.

7 year deal for Jay.

[bexleyboy]

Aug 31, 2024 10:05:23 GMT weststandfruitloop said:

Aug 31, 2024 9:27:16 GMT bexleyboy said:

Last summer we got pulled up because we broke FFP rules … and had to pay the difference back , Birmingham have spent 35.36 mill and recouped 5 mill , if you take the extra wages they must be paying how comes they are within their FFP … they can’t be ??

For the millionth time there is no FFP in League One. Owners can put in as much money as they feel like.

The only difference is that Birmingham's billionaire owners are happy to blow umpteen millions at this level, whereas Methven moaned like a baby when Charlton's billionaire owners had to put in a couple of hundred grand to cover a wage shortfall last year.

We could be doing exactly the same as Birmimgham if GFP were prepared to spend like they are. Don't moan about Birmingham, moan about the fact our owners are so much tighter than theirs.

There is you can’t spend more then 60% of your income

[weststandfruitloop]

Aug 31, 2024 10:53:15 GMT bexleyboy said:

Aug 31, 2024 10:05:23 GMT weststandfruitloop said:

For the millionth time there is no FFP in League One. Owners can put in as much money as they feel like.

The only difference is that Birmingham's billionaire owners are happy to blow umpteen millions at this level, whereas Methven moaned like a baby when Charlton's billionaire owners had to put in a couple of hundred grand to cover a wage shortfall last year.

We could be doing exactly the same as Birmimgham if GFP were prepared to spend like they are. Don't moan about Birmingham, moan about the fact our owners are so much tighter than theirs.

There is you can’t spend more then 60% of your income

Completely incorrect. Unlike you (it seems) I've actually read and understood the rules. You can literally spend WHATEVER YOU LIKE on transfer fees in League One - that's the rules.

What has confused you is that you can only spend 60% of turnover (75% if you've come down from the Championship like Brum) on wages for overage first team players.

Any money the owners inject (ie give to the club) counts towards turnover, so you can spend whatever you like on wages too (you just have to put more money in).

Ironically, the more you spend on transfer fees the higher that 60%/75% SCMP limit is!

None of the above is FFP of course (since you can set your own SCMP budget based on how much you want to spend). The Championship has FFP where you're only allowed to lose a certain amount over a three year period. Lots of clubs (like Reading) have been docked points for breaching those rules.

Once again, we are in League One. THERE IS NO FFP IN LEAGUE ONE. We or Birmingham or anyone else in this division can spend as much as our owners feel like spending, especially on transfer fees (which unlike salaries have no percentage restriction at all). THAT'S THE RULES and these have been in place for years and years now. I can't believe (given how long we've been in this poxy division) how many people choose not to understand them and ask how Birmingham aren't falling foul of FFP. They aren't because THERE IS NO FFP. We're in League One.

[kings hill addick]

Aug 31, 2024 11:10:30 GMT weststandfruitloop said:

Aug 31, 2024 10:53:15 GMT bexleyboy said:

There is you can’t spend more then 60% of your income

Completely incorrect. Unlike you (it seems) I've actually read and understood the rules. You can literally spend WHATEVER YOU LIKE on transfer fees in League One - that's the rules.

What has confused you is that you can only spend 60% of turnover (75% if you've come down from the Championship like Brum) on wages for overage first team players.

Any money the owners inject (ie give to the club) counts towards turnover, so you can spend whatever you like on wages too (you just have to put more money in).

Ironically, the more you spend on transfer fees the higher that 60%/75% SCMP limit is!

None of the above is FFP of course (since you can set your own SCMP budget based on how much you want to spend). The Championship has FFP where you're only allowed to lose a certain amount over a three year period. Lots of clubs (like Reading) have been docked points for breaching those rules.

Once again, we are in League One. THERE IS NO FFP IN LEAGUE ONE. We or Birmingham or anyone else in this division can spend as much as our owners feel like spending, especially on transfer fees (which unlike salaries have no percentage restriction at all). THAT'S THE RULES and these have been in place for years and years now. I can't believe (given how long we've been in this poxy division) how many people choose not to understand them and ask how Birmingham aren't falling foul of FFP. They aren't because THERE IS NO FFP. We're in League One.

One could argue that this is, actually, very good business. Spend millions on transfer fees in League One that will not be counted further up the pyramid, and put players on long contracts so that should the Championship rules mirror the Premier League (or if they go straight through) they will be able to amortise those players over a longer period.

It certainly worked well for Ipswich.

It just prevents Methven from, credibly, justifying our lack of spend on the rules. Apparently, it doesn't stop his 'apologisers' from peddling the bullshit, for him, though.

For the record, I'm happy with the sustainability model, I'm just getting board shitless of constantly being told that we have restrictions on what we can spend and that the Academy players don't count towards the SCMP. All of the issues, and I mean all of them, can be fixed with capital injections from the billionaire owners.

[seriouslyred]

Aug 31, 2024 13:05:13 GMT kings hill addick said:

Aug 31, 2024 11:10:30 GMT weststandfruitloop said:

Completely incorrect. Unlike you (it seems) I've actually read and understood the rules. You can literally spend WHATEVER YOU LIKE on transfer fees in League One - that's the rules.

What has confused you is that you can only spend 60% of turnover (75% if you've come down from the Championship like Brum) on wages for overage first team players.

Any money the owners inject (ie give to the club) counts towards turnover, so you can spend whatever you like on wages too (you just have to put more money in).

Ironically, the more you spend on transfer fees the higher that 60%/75% SCMP limit is!

None of the above is FFP of course (since you can set your own SCMP budget based on how much you want to spend). The Championship has FFP where you're only allowed to lose a certain amount over a three year period. Lots of clubs (like Reading) have been docked points for breaching those rules.

Once again, we are in League One. THERE IS NO FFP IN LEAGUE ONE. We or Birmingham or anyone else in this division can spend as much as our owners feel like spending, especially on transfer fees (which unlike salaries have no percentage restriction at all). THAT'S THE RULES and these have been in place for years and years now. I can't believe (given how long we've been in this poxy division) how many people choose not to understand them and ask how Birmingham aren't falling foul of FFP. They aren't because THERE IS NO FFP. We're in League One.

One could argue that this is, actually, very good business. Spend millions on transfer fees in League One that will not be counted further up the pyramid, and put players on long contracts so that should the Championship rules mirror the Premier League (or if they go straight through) they will be able to amortise those players over a longer period.

It certainly worked well for Ipswich.

It just prevents Methven from, credibly, justifying our lack of spend on the rules. Apparently, it doesn't stop his 'apologisers' from peddling the bullshit, for him, though.

For the record, I'm happy with the sustainability model, I'm just getting board shitless of constantly being told that we have restrictions on what we can spend and that the Academy players don't count towards the SCMP. All of the issues, and I mean all of them, can be fixed with capital injections from the billionaire owners.

The challenge is actually cultural as much as it's about sustainability.

On the one hand Leagues One and Two have opted for SCMP cost controls, but owners at Wrexham, Birmingham, CAFC are free to pump in equity "to blow the League away".

But does the new CEO at Wrexham believe Parkinson should be given blank cheques. Or does Parky need to manage to deliver a competitive side, AND await the expiry of c. 15 player contracts next summer... players signed when they were in the national League.

The fundamental failure at CAFC has been twofold:
- a failure to deliver a top six finish with a top six playing budget
- complete failure to deliver decent commercial revenue streams

"Oh, that's OK, the owners can pay for all those playing and commercial failures - an extra £10M please!"

"But doing an Ipswich is an obvious cheat code and giving the football management twice the budget guarantees success!"

Does it really? Has anybody looked at the plethora of clubs that have spaffed £200M over the last decade in their attempts to reach the EPL?!

No, for me CAFC needs to improve delivery and performance in every area. Once revenues are going up, more fans show up and performances / results are consistently top six then, and only then, should the CEO & management approach investors for an injection.

One could cite today’s performance, or our record of 0.1 xG for set pieces or many other reasons for fixing the basics first. But a simpler way to describe relevant and reasonable ambition is to improve the process iteratively, thats to say every three months.

Positive outcomes will follow.

Meanwhile let's watch our side develop, and trust that we win more than not, and that an extra couple of thousand fans jump on board... just as they did six years ago.

Another £2M of fans ticket money AND commercial revenue adds £1M to the wage SCMP limit. We're all in this together, so what if the owners state that they'll match any increases in revenue?!

[kings hill addick]

Aug 31, 2024 22:29:47 GMT seriouslyred said:

Aug 31, 2024 13:05:13 GMT kings hill addick said:

One could argue that this is, actually, very good business. Spend millions on transfer fees in League One that will not be counted further up the pyramid, and put players on long contracts so that should the Championship rules mirror the Premier League (or if they go straight through) they will be able to amortise those players over a longer period.

It certainly worked well for Ipswich.

It just prevents Methven from, credibly, justifying our lack of spend on the rules. Apparently, it doesn't stop his 'apologisers' from peddling the bullshit, for him, though.

For the record, I'm happy with the sustainability model, I'm just getting board shitless of constantly being told that we have restrictions on what we can spend and that the Academy players don't count towards the SCMP. All of the issues, and I mean all of them, can be fixed with capital injections from the billionaire owners.

The challenge is actually cultural as much as it's about sustainability.

On the one hand Leagues One and Two have opted for SCMP cost controls, but owners at Wrexham, Birmingham, CAFC are free to pump in equity "to blow the League away".

But does the new CEO at Wrexham believe Parkinson should be given blank cheques. Or does Parky need to manage to deliver a competitive side, AND await the expiry of c. 15 player contracts next summer... players signed when they were in the national League.

The fundamental failure at CAFC has been twofold:
- a failure to deliver a top six finish with a top six playing budget
- complete failure to deliver decent commercial revenue streams

"Oh, that's OK, the owners can pay for all those playing and commercial failures - an extra £10M please!"

"But doing an Ipswich is an obvious cheat code and giving the football management twice the budget guarantees success!"

Does it really? Has anybody looked at the plethora of clubs that have spaffed £200M over the last decade in their attempts to reach the EPL?!

No, for me CAFC needs to improve delivery and performance in every area. Once revenues are going up, more fans show up and performances / results are consistently top six then, and only then, should the CEO & management approach investors for an injection.

One could cite today’s performance, or our record of 0.1 xG for set pieces or many other reasons for fixing the basics first. But a simpler way to describe relevant and reasonable ambition is to improve the process iteratively, thats to say every three months.

Positive outcomes will follow.

Meanwhile let's watch our side develop, and trust that we win more than not, and that an extra couple of thousand fans jump on board... just as they did six years ago.

Another £2M of fans ticket money AND commercial revenue adds £1M to the wage SCMP limit. We're all in this together, so what if the owners state that they'll match any increases in revenue?!

Sometimes SR your posts come across as though you are mates with Charlie Methven and you are peddling what he tells you to say.

In fact the first couple of paragraphs are, virtually, word for word, what Methven says in his podcasts. Maybe you are just regurgitating what he says but it is beginning to sound like he is feeding you lines.

The whole threat of getting into trouble if clubs dare to spend any money is, currently, the comment de jour for Mr Methven and has been for over a year..

As I said I’m not against a sustainable model but I am getting fed up with people trying to justify why we have been in this God forsaken division for five seasons and we are, still, trying to ‘win’ promotion by spending less than three, four or even more clubs, when just two go up and the rest have no better chance than a lottery - even though we haven’t, even, been in the lottery for the last four seasons.

[seriouslyred]

Aug 31, 2024 23:14:56 GMT kings hill addick said:

Aug 31, 2024 22:29:47 GMT seriouslyred said:

The challenge is actually cultural as much as it's about sustainability.

On the one hand Leagues One and Two have opted for SCMP cost controls, but owners at Wrexham, Birmingham, CAFC are free to pump in equity "to blow the League away".

But does the new CEO at Wrexham believe Parkinson should be given blank cheques. Or does Parky need to manage to deliver a competitive side, AND await the expiry of c. 15 player contracts next summer... players signed when they were in the national League.

The fundamental failure at CAFC has been twofold:
- a failure to deliver a top six finish with a top six playing budget
- complete failure to deliver decent commercial revenue streams

"Oh, that's OK, the owners can pay for all those playing and commercial failures - an extra £10M please!"

"But doing an Ipswich is an obvious cheat code and giving the football management twice the budget guarantees success!"

Does it really? Has anybody looked at the plethora of clubs that have spaffed £200M over the last decade in their attempts to reach the EPL?!

No, for me CAFC needs to improve delivery and performance in every area. Once revenues are going up, more fans show up and performances / results are consistently top six then, and only then, should the CEO & management approach investors for an injection.

One could cite today’s performance, or our record of 0.1 xG for set pieces or many other reasons for fixing the basics first. But a simpler way to describe relevant and reasonable ambition is to improve the process iteratively, thats to say every three months.

Positive outcomes will follow.

Meanwhile let's watch our side develop, and trust that we win more than not, and that an extra couple of thousand fans jump on board... just as they did six years ago.

Another £2M of fans ticket money AND commercial revenue adds £1M to the wage SCMP limit. We're all in this together, so what if the owners state that they'll match any increases in revenue?!

Sometimes SR your posts come across as though you are mates with Charlie Methven and you are peddling what he tells you to say.

In fact the first couple of paragraphs are, virtually, word for word, what Methven says in his podcasts. Maybe you are just regurgitating what he says but it is beginning to sound like he is feeding you lines.

The whole threat of getting into trouble if clubs dare to spend any money is, currently, the comment de jour for Mr Methven and has been for over a year..

As I said I’m not against a sustainable model but I am getting fed up with people trying to justify why we have been in this God forsaken division for five seasons and we are, still, trying to ‘win’ promotion by spending less than three, four or even more clubs, when just two go up and the rest have no better chance than a lottery - even though we haven’t, even, been in the lottery for the last four seasons.

Yes, I've taken what Methven has stated openly about growing the club. That's because to me it makes sense. But I've gone on to develop that theme, stating successful areas should be given more resources.

For example the women's team was made professional by Sandgaard, but if it can't win promotion / there's no decent commercial outcome then why keep paying out?!

Talking of Sandgaard, ask him why he funded a top six budget but we never finished in the play-offs?

Let's get in that lottery ASAP, then allocate resources to improve. And if we can't make the top six then heads need to roll! Same goes for the commercial revenues - we're nowhere near clubs of a similar size, with similar gates. And that's millions that could go towards player wages.

As for making more cash available to failing managers? This time last year Dean Holden was sacked after one of the most inept performances we've ever seen. Any coach would struggle after losing Leaburn to injury and Rak-Sakyi back to Palace. But conceding five vs Oxford was dire.

And Reading's second goal yesterday wasn't much better! When our opponents score in a two v five scenario, something needs to change. Seeing as the window is now closed, it's down to Jones to sort it ahhhtttt!

The chequebook can wait until January... 20 games over 18 weeks to improve our side. Then add two or three new signings.

[aucklandaddick]

Aug 31, 2024 13:05:13 GMT kings hill addick said:

Aug 31, 2024 11:10:30 GMT weststandfruitloop said:

Completely incorrect. Unlike you (it seems) I've actually read and understood the rules. You can literally spend WHATEVER YOU LIKE on transfer fees in League One - that's the rules.

What has confused you is that you can only spend 60% of turnover (75% if you've come down from the Championship like Brum) on wages for overage first team players.

Any money the owners inject (ie give to the club) counts towards turnover, so you can spend whatever you like on wages too (you just have to put more money in).

Ironically, the more you spend on transfer fees the higher that 60%/75% SCMP limit is!

None of the above is FFP of course (since you can set your own SCMP budget based on how much you want to spend). The Championship has FFP where you're only allowed to lose a certain amount over a three year period. Lots of clubs (like Reading) have been docked points for breaching those rules.

Once again, we are in League One. THERE IS NO FFP IN LEAGUE ONE. We or Birmingham or anyone else in this division can spend as much as our owners feel like spending, especially on transfer fees (which unlike salaries have no percentage restriction at all). THAT'S THE RULES and these have been in place for years and years now. I can't believe (given how long we've been in this poxy division) how many people choose not to understand them and ask how Birmingham aren't falling foul of FFP. They aren't because THERE IS NO FFP. We're in League One.

One could argue that this is, actually, very good business. Spend millions on transfer fees in League One that will not be counted further up the pyramid, and put players on long contracts so that should the Championship rules mirror the Premier League (or if they go straight through) they will be able to amortise those players over a longer period.

It certainly worked well for Ipswich.

It just prevents Methven from, credibly, justifying our lack of spend on the rules. Apparently, it doesn't stop his 'apologisers' from peddling the bullshit, for him, though.

For the record, I'm happy with the sustainability model, I'm just getting board shitless of constantly being told that we have restrictions on what we can spend and that the Academy players don't count towards the SCMP. All of the issues, and I mean all of them, can be fixed with capital injections from the billionaire owners.

This is the point I have made previously…..This summers budget looks no different to the last few years budgets…..I can’t see any further investment by the owners so all the NJ words about thanking them and how they have supported him by bringing in players seems no different to previous summers…..We have offloaded around 15 plus players in the summer and brought in 10 and probably spent the May/ CBT money to bring in who we have
it begs the question are our owners being told the investment is enough to get us to a top 6 place or is it a case of this is your budget….nothing more…..use it wisely……

[aucklandaddick]

Aug 31, 2024 9:27:16 GMT bexleyboy said:

Last summer we got pulled up because we broke FFP rules … and had to pay the difference back , Birmingham have spent 35.36 mill and recouped 5 mill , if you take the extra wages they must be paying how comes they are within their FFP … they can’t be ??

EFL operating different rules for different clubs ? Fair Play I don’t see it ..

I don’t recall this situation of us breaking FFP rules……many on here have explained the actual guidelines in league one

Please can you provide the evidence that we broke the rules and had to pay the difference back as that is quite a statement?

[kings hill addick]

Sept 1, 2024 8:32:23 GMT aucklandaddick said:

Aug 31, 2024 9:27:16 GMT bexleyboy said:

Last summer we got pulled up because we broke FFP rules … and had to pay the difference back , Birmingham have spent 35.36 mill and recouped 5 mill , if you take the extra wages they must be paying how comes they are within their FFP … they can’t be ??

EFL operating different rules for different clubs ? Fair Play I don’t see it ..

I don’t recall this situation of us breaking FFP rules……many on here have explained the actual guidelines in league one

Please can you provide the evidence that we broke the rules and had to pay the difference back as that is quite a statement?

To be fair I do remember something said. The SCMP rules insist that the club can’t spend more than 60% (I think) of ‘income’ on player wages. We were heading over that so the owners put some more money in ‘income’ to cover it.

This is what Birmingham have done, all be it that Brum’s owners have invested millions, ours put in a fraction of that.

The clever part of Birmingham’s spending is that they just wouldn’t be allowed to spend that money in the Championship so they are using a loophole to sign players that the Championship clubs can’t because the rules forbid it. This can, potentially, give them a massive advantage next season - assuming by they go up. We, on the other had, would have a vastly inferior squad and will struggle to stay up and won’t be allowed to sign much better players because in the Championship transfer fees are limited by income.

Clearly this approach requires massive investment, both initially, and ongoing - to cover the wages. It is not reasonable, in my opinion, to expect someone else to spend their money on our club. However, that doesn’t change the fact that Birmingham are using a loophole to, I believe, give themselves a decent chance of Premier League football within a few seasons. Doesn’t guarantee success, but nor does staying in League One losing c.£5m a season hoping for a playoff place and then winning the playoff lottery.

[aucklandaddick]

Sept 1, 2024 8:47:56 GMT kings hill addick said:

Sept 1, 2024 8:32:23 GMT aucklandaddick said:

I don’t recall this situation of us breaking FFP rules……many on here have explained the actual guidelines in league one

Please can you provide the evidence that we broke the rules and had to pay the difference back as that is quite a statement?

To be fair I do remember something said. The SCMP rules insist that the club can’t spend more than 60% (I think) of ‘income’ on player wages. We were heading over that so the owners put some more money in ‘income’ to cover it.

This is what Birmingham have done, all be it that Brum’s owners have invested millions, ours put in a fraction of that.

The clever part of Birmingham’s spending is that they just wouldn’t be allowed to spend that money in the Championship so they are using a loophole to sign players that the Championship clubs can’t because the rules forbid it. This can, potentially, give them a massive advantage next season - assuming by they go up. We, on the other had, would have a vastly inferior squad and will struggle to stay up and won’t be allowed to sign much better players because in the Championship transfer fees are limited by income.

Clearly this approach requires massive investment, both initially, and ongoing - to cover the wages. It is not reasonable, in my opinion, to expect someone else to spend their money on our club. However, that doesn’t change the fact that Birmingham are using a loophole to, I believe, give themselves a decent chance of Premier League football within a few seasons. Doesn’t guarantee success, but nor does staying in League One losing c.£5m a season hoping for a playoff place and then winning the playoff lottery.

Thanks for the explanation, that makes complete sense……You wonder if the authorities will change this ruling as it gives clubs such as Birmingham and Ipswich such a great advantage over other clubs
Maybe if we don’t achieve our objectives this season it might trigger a bigger investment by our owners to get us to where we want to be?

[Mundell]

I agree entirely with everything that’s been posted on this thread by kings hill addick but I think you may be wrong about Birmingham exploiting a loophole  kings hill addick  

If they’re playing in the Championship next season then they’ll obviously have to pay the wages of the players who they now have under contract but they’ll also have to account for the amortisation of transfer fees paid this summer. This means that the impact of that transfer spend on their costs will be the same next season as it will be this season. I don’t think there’s any benefit to them spending £10m on Jay Stansfield while in League One and operating under the SCMP versus if they did so in the Championship under the FFP rules at that level. If Stansfield has been signed on a seven year contract, his transfer will cost £1.43m this season and for the six seasons thereafter. 

Re aucklandaddick ‘s question on SCMP, I believe there has been some discussion about limiting the extent of the equity injections allowed, but for whatever reason that hasn’t yet been agreed. I’m fairly confident that Methven would be strongly in favour of such a limitation, but to kings hill addick ‘s point I think he’s guilty of obfuscation here. He keeps saying that League One already has its version of UEFA’s SCCR, but with a 60% limit. That’s simply not true though and it appears Methven is trying to avoid making it clear to fans that the owners are quite deliberately choosing, voluntarily to limit spending to that allowed under the SCMP without the need to boost turnover via equity contributions. 

[weststandfruitloop]

Mundell said:

I agree entirely with everything that’s been posted on this thread by kings hill addick but I think you may be wrong about Birmingham exploiting a loophole.

I think there is a loophole. Everybody's obsessed with Birmingham, but Ipswich are a better example as we can see how their actions worked out from a point two years further down the line.

Two summers ago Ipswich spent £8.5m on transfer fees alone, the same as the other 23 League One clubs combined!

As a result they had the majority of a competitive Championship team in place within the much less restrictive (non FFP) League One rules.

With a few additions that side won back to back promotions, slingshotting through the Championship in a single season.

Now here's the loophople: FFP loss limits aren't imposed by the season, they are calculated across a three year (ie THREE season) period. If you only spend one year in the Championship, you're not going to overreach three years worth of losses in that single year are you?

Ipswich are now in the Premier League where the three year loss limit under FFP is £105m. The three year loss limit in the Championship (£41.5m) is in their rear view mirror and they're in the land of hundreds of millions in TV money.

[Three year loss limits are actual tweaked for clubs that move between the PL and Championship in either direction during the three years, but the point still applies that by spending less than three years getting from League One to the Premier League they have bypassed the restrictions of the Championship FFP rules. Thus effectively a loophole.]

When GFP took over Charlton just over a year ago, people with links to the board on this and other forums posted that the plan was to "do an Ipswich".

That's simply not the case. Birmingham are currently "doing an Ipswich". Charlton are not.

In truth, we're no better off now than we were under the Danish loon. We just have a chicken van instead of a guitar solo.

[Mundell]

Sept 1, 2024 11:48:44 GMT weststandfruitloop said:

Mundell said:

I agree entirely with everything that’s been posted on this thread by kings hill addick but I think you may be wrong about Birmingham exploiting a loophole.

I think there is a loophole. Everybody's obsessed with Birmingham, but Ipswich are a better example as we can see how their actions worked out from a point two years further down the line.

Two summers ago Ipswich spent £8.5m on transfer fees alone, the same as the other 23 League One clubs combined!

As a result they had the majority of a competitive Championship team in place within the much less restrictive (non FFP) League One rules.

With a few additions that side won back to back promotions, slingshotting through the Championship in a single season.

Now here's the loophople: FFP loss limits aren't imposed by the season, they are calculated across a three year (ie THREE season) period. If you only spend one year in the Championship, you're not going to overreach three years worth of losses in that single year are you?

Ipswich are now in the Premier League where the three year loss limit under FFP is £105m. The three year loss limit in the Championship (£41.5m) is in their rear view mirror and they're in the land of hundreds of millions in TV money.

[Three year loss limits are actual tweaked for clubs that move between the PL and Championship in either direction during the three years, but the point still applies that by spending less than three years getting from League One to the Premier League they have bypassed the restrictions of the Championship FFP rules. Thus effectively a loophole.]

When GFP took over Charlton just over a year ago, people with links to the board on this and other forums posted that the plan was to "do an Ipswich".

That's simply not the case. Birmingham are currently "doing an Ipswich". Charlton are not.

In truth, we're no better off now than we were under the Danish loon. We just have a chicken van instead of a guitar solo.

You make an interesting point about rolling three year losses weststandfruitloop However, while I’m not certain, I think it’s likely that if Birmingham City are promoted their losses this season will count in the calculation of their three year rolling loss for the purposes of the Profitability and Sustainability calculation next season.

I assume the limit on those losses would be £39m over the three seasons. I’m not sure about that either, but it would be very odd if the allowable losses were higher than for other Championships clubs, or if there was no calculation until a club had been in the Championship for three seasons. That would be a kind of loophole I agree which would enable clubs to spend very heavily once in the Championship, though I don’t think there would be any need, per se, to pre-fund. The P&S rules clearly do help clubs promoted straight through to the Premier League, though as Nottingham Forest found they then constrain those same clubs once in the Premier League. 

I’ve taken a brief look at the EFL rulebook and I can’t see a specific reference to any this, though it does say that clubs promoted to the Championship are required to submit their financials for the season in which they were promoted. 

Happy to stand corrected if you feel the rules are very clear on this. Interesting discussion. 

[weststandfruitloop]

Mundell said:

I’ve taken a brief look at the EFL rulebook and I can’t see a specific reference to any this, though it does say that clubs promoted to the Championship are required to submit their financials for the season in which they were promoted.

I think the loophole (and I'm not really great with accounts type stuff, despite guest tutoring on a Masters in Business!) is that 'losses' mean expenditure above turnover.

Money given to the club by the owner(s) counts as expenditure in the PL and Championship, but as turnover in Leagues One & Two.

Assuming they can't somehow retrospectively apply Championship rules to a season in L1 (which would be an iffy thing to do on many levels) then 'losses' for a L1 spending spree like Birmingham's current one would be way lower than the exact same behaviour in the Championship.

So even if they get promoted, Birmingham only have two Championship rules years to set against their three year rolling losses both next season and the one after (since their current L1 season is one of the three).

Ipswich do even better on the above basis, having spent many consecutive seasons (not just the one in Brum's case if they go up next summer) under L1 rather than Championship rules re what counts as losses.

Incidentally, the Championship three year loss limit was 'temporarily' raised from £39m to £41.5m this summer. I have no idea why (maybe the new TV deal?).

[Mundell]

Sept 1, 2024 15:08:34 GMT weststandfruitloop said:

Mundell said:

I’ve taken a brief look at the EFL rulebook and I can’t see a specific reference to any this, though it does say that clubs promoted to the Championship are required to submit their financials for the season in which they were promoted.

I think the loophole (and I'm not really great with accounts type stuff, despite guest tutoring on a Masters in Business!) is that 'losses' mean expenditure above turnover.

Money given to the club by the owner(s) counts as expenditure in the PL and Championship, but as turnover in Leagues One & Two.

Assuming they can't somehow retrospectively apply Championship rules to a season in L1 (which would be an iffy thing to do on many levels) then 'losses' for a L1 spending spree like Birmingham's current one would be way lower than the exact same behaviour in the Championship.

So even if they get promoted, Birmingham only have two Championship rules years to set against their three year rolling losses both next season and the one after (since their current L1 season is one of the three).

Ipswich do even better on the above basis, having spent many consecutive seasons (not just the one in Brum's case if they go up next summer) under L1 rather than Championship rules re what counts as losses.

Incidentally, the Championship three year loss limit was 'temporarily' raised from £39m to £41.5m this summer. I have no idea why (maybe the new TV deal?).

Thanks for the explanation weststandfruitloop I’ve linked here Ipswich Town’s accounts for their League One promotion season. It shows their turnover at £22m, a total wage bill of £20m and transfer spend of 8m. The cash outflow from operating activities was £15.5m and they had operating losses of £20m. They obviously weren’t compliant with the SCMP on this basis, but the accounts also show proceeds from issues of shares of £29.5m and because for the purposes of the SCMP calculation this equity injection counts as turnover they were compliant. This is, of course, exactly as we’ve previously discussed and understood the way the SCMP works. 

However, there is a nuance here. While the EFL allows that equity injection to cover wage bill for the purposes of the SCMP it’s not really turnover in an accounting sense. It’s financing, and when Ipswich submitted their accounts to the EFL for the purposes of the P&S checks this is how the numbers would have been viewed. I don’t believe the Championship would have credited Ipswich with £29m of additional income. 

The question I think we therefore have is how a club promoted from League One is treated once in the Championship. Does it immediately come under the P&S regime so that is has allowable losses (after add backs) of now £41.m (I wasn’t aware of that change) over three years, or not? Before we began this discussion my guess would have been yes and with equity contributions not counting as turnover for P&S purposes. I think I’d still guess yes, but if the answer mattered to me I’d now definitely want to consult the EFL before taking any action!