| FFP? 14:35 - Jun 4 with 2908 views | bobbyramsey |
Could anyone explain in plain English what financial restraints we’ll be under next season/year?
Tia. |  | | |  |
| FFP? on 14:49 - Jun 4 with 2838 views | unstableblue |
I asked ChatGPT a few times, and got this:
“Certainly! Here's a more succinct explanation of how a club in the EFL Championship League can be restricted by Financial Fair Play (FFP) regulations:
Spending Limits: Clubs have restrictions on player wages and operating expenses based on a percentage of their total revenue.
Profit and Sustainability: Clubs must demonstrate financial stability and responsible management.
Break-Even Requirement: Clubs should not exceed a certain threshold for financial losses over a specified period, usually three years.
Owner Investment: There are limits on the amount owners can invest without penalties to prevent overreliance on owner injections.
Monitoring and Penalties: The EFL monitors compliance and can impose fines, transfer embargoes, points deductions, or even expulsion from the league for non-compliance.
As for the actual financial limits, the EFL Championship has its own set of regulations that may change over time. Specific thresholds and percentages can vary, so it's best to refer to the official guidelines provided by the EFL for the most accurate and up-to-date information on financial limits.” |  |
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| FFP? on 14:59 - Jun 4 with 2821 views | xrayspecs |
Between 21/22, 22/23 and 23/24 we can post a cumulative financial loss of no more than £39m.
We posted a loss in 21/22 of circa £12m, and would expect to post similar for 22/23. Some of these reported losses do not count toward the cumulative total, including money spent on community and ITFC women, but cannot tell you how much they contribute to the loss.
I also do not know whether the capital spend on Staples land, stadium upgrades and pitch are contained within our operating loss and if they do, whether they can also be deducted from the cumulative total.
So we have some scope to overspend but we certainly cannot go mad. Which is why MA keeps talking about player trading as transfer fee profits are another source of income. |  | | |
| FFP? on 15:03 - Jun 4 with 2798 views | bobbyramsey |
| FFP? on 14:49 - Jun 4 by unstableblue |
I asked ChatGPT a few times, and got this:
“Certainly! Here's a more succinct explanation of how a club in the EFL Championship League can be restricted by Financial Fair Play (FFP) regulations:
Spending Limits: Clubs have restrictions on player wages and operating expenses based on a percentage of their total revenue.
Profit and Sustainability: Clubs must demonstrate financial stability and responsible management.
Break-Even Requirement: Clubs should not exceed a certain threshold for financial losses over a specified period, usually three years.
Owner Investment: There are limits on the amount owners can invest without penalties to prevent overreliance on owner injections.
Monitoring and Penalties: The EFL monitors compliance and can impose fines, transfer embargoes, points deductions, or even expulsion from the league for non-compliance.
As for the actual financial limits, the EFL Championship has its own set of regulations that may change over time. Specific thresholds and percentages can vary, so it's best to refer to the official guidelines provided by the EFL for the most accurate and up-to-date information on financial limits.” |
Thanks for this, it’s quite understandable albeit quite minimal.
It’s when you start to put “the meat on the bones “ that it gets complicated.
Thanks again…. | | | |
| FFP? on 15:05 - Jun 4 with 2787 views | burnbudgiesburn |
| FFP? on 14:59 - Jun 4 by xrayspecs |
Between 21/22, 22/23 and 23/24 we can post a cumulative financial loss of no more than £39m.
We posted a loss in 21/22 of circa £12m, and would expect to post similar for 22/23. Some of these reported losses do not count toward the cumulative total, including money spent on community and ITFC women, but cannot tell you how much they contribute to the loss.
I also do not know whether the capital spend on Staples land, stadium upgrades and pitch are contained within our operating loss and if they do, whether they can also be deducted from the cumulative total.
So we have some scope to overspend but we certainly cannot go mad. Which is why MA keeps talking about player trading as transfer fee profits are another source of income. |
You would think capital spending on infastructure is not included, else how would any football club afford new facilities/stands etc | | | |
| FFP? on 15:07 - Jun 4 with 2785 views | bobbyramsey |
| FFP? on 14:59 - Jun 4 by xrayspecs |
Between 21/22, 22/23 and 23/24 we can post a cumulative financial loss of no more than £39m.
We posted a loss in 21/22 of circa £12m, and would expect to post similar for 22/23. Some of these reported losses do not count toward the cumulative total, including money spent on community and ITFC women, but cannot tell you how much they contribute to the loss.
I also do not know whether the capital spend on Staples land, stadium upgrades and pitch are contained within our operating loss and if they do, whether they can also be deducted from the cumulative total.
So we have some scope to overspend but we certainly cannot go mad. Which is why MA keeps talking about player trading as transfer fee profits are another source of income. |
Clubs must have whole departments dedicated to understanding this stuff….. | | | |
| FFP? on 15:09 - Jun 4 with 2776 views | xrayspecs |
| FFP? on 15:05 - Jun 4 by burnbudgiesburn |
You would think capital spending on infastructure is not included, else how would any football club afford new facilities/stands etc |
I agree, but I could not find anything in the rules that made this explicit.
What we do not know is if the capital spend is in our financial results. if it is not, then most of the reported loss in 21/22 would count towards the cumulative £39m. | | | |
| FFP? on 16:24 - Jun 4 with 2546 views | SuperKieranMcKenna |
| FFP? on 15:09 - Jun 4 by xrayspecs |
I agree, but I could not find anything in the rules that made this explicit.
What we do not know is if the capital spend is in our financial results. if it is not, then most of the reported loss in 21/22 would count towards the cumulative £39m. |
I’ve seen the max £39m loss over three years, what happens after that? If we post a £38.5m loss, does it reset for another 3 years? | | | |
| FFP? on 16:32 - Jun 4 with 2534 views | marvellous |
| FFP? on 14:59 - Jun 4 by xrayspecs |
Between 21/22, 22/23 and 23/24 we can post a cumulative financial loss of no more than £39m.
We posted a loss in 21/22 of circa £12m, and would expect to post similar for 22/23. Some of these reported losses do not count toward the cumulative total, including money spent on community and ITFC women, but cannot tell you how much they contribute to the loss.
I also do not know whether the capital spend on Staples land, stadium upgrades and pitch are contained within our operating loss and if they do, whether they can also be deducted from the cumulative total.
So we have some scope to overspend but we certainly cannot go mad. Which is why MA keeps talking about player trading as transfer fee profits are another source of income. |
Why do the clubs losses made in 21/22 and 22/23 count? Aren't the rules for League 1 and the Championship different? I know they are regarding injections of cash from owners.
Or does that mean that if GC have injected cash into the club amounting to the total losses made during 21/22 and 22/23 then essentially the club has a "clean slate"/zero balance going into next season? | | | |
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| FFP? on 16:36 - Jun 4 with 2518 views | NthQldITFC |
| FFP? on 16:32 - Jun 4 by marvellous |
Why do the clubs losses made in 21/22 and 22/23 count? Aren't the rules for League 1 and the Championship different? I know they are regarding injections of cash from owners.
Or does that mean that if GC have injected cash into the club amounting to the total losses made during 21/22 and 22/23 then essentially the club has a "clean slate"/zero balance going into next season? |
That question is the question to which I too would like to see a definitive answer. |  |
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| FFP? on 16:42 - Jun 4 with 2484 views | xrayspecs |
| FFP? on 16:24 - Jun 4 by SuperKieranMcKenna |
I’ve seen the max £39m loss over three years, what happens after that? If we post a £38.5m loss, does it reset for another 3 years? |
Three year rolling cumulative figure. So 24/5 figures replace 21/2. | | | |
| FFP? on 16:53 - Jun 4 with 2466 views | xrayspecs |
| FFP? on 16:32 - Jun 4 by marvellous |
Why do the clubs losses made in 21/22 and 22/23 count? Aren't the rules for League 1 and the Championship different? I know they are regarding injections of cash from owners.
Or does that mean that if GC have injected cash into the club amounting to the total losses made during 21/22 and 22/23 then essentially the club has a "clean slate"/zero balance going into next season? |
They still count. In any given year, you need to submit your forecast profit/loss to the league, along with your actual accounts for the previous two years.
It is in here: https://www.efl.com/-more/governance/efl-rules--regulations/efl-regulations/appe
It takes some deciphering but section 1.1.15 states that the profit and sustainability is "the aggregation of a Club’s Adjusted Earnings Before Tax for T, T-1 and T-2".
Section 1.1.20 states that "T means the Club’s Accounting Reference Period ending in the year in which assessment....takes place", "and:
(a) T-1 means the Club’s Accounting Reference Period immediately preceding T;
(b) T-2 means the Club’s Accounting Reference Period immediately preceding T-1.
So while we are in the Championship, including this coming season, the EFL will look at the budget for the season and the last two years financial results. | | | |
| FFP? on 16:54 - Jun 4 with 2457 views | xrayspecs |
| FFP? on 16:32 - Jun 4 by marvellous |
Why do the clubs losses made in 21/22 and 22/23 count? Aren't the rules for League 1 and the Championship different? I know they are regarding injections of cash from owners.
Or does that mean that if GC have injected cash into the club amounting to the total losses made during 21/22 and 22/23 then essentially the club has a "clean slate"/zero balance going into next season? |
No. Losses from previous seasons count towards our P&S calculation - more detail in post below.. | | | |
| FFP? on 19:47 - Jun 4 with 2253 views | FevsBCFC |
| FFP? on 15:05 - Jun 4 by burnbudgiesburn |
You would think capital spending on infastructure is not included, else how would any football club afford new facilities/stands etc |
Under FFP Infrastructure Build is excluded as this isn’t something that goes into the Profit & Loss account….it’s a Balance Sheet item in its simplest form.
The other things that are allowed to be taken off / excluded from the (P&L) accounting loss are:
- Depreciation / Impairment of Tangible Fixed Assets
- Amortisation / impairment of Intangible Fixed Assets (BUT NOT PLAYERS)
- Transactions with related parties (above or below fair value)
- Youth Development Expenditure
- Women’s Football Expenditure
- Community Development Expenditure
FFP wants to support clubs investing in their infrastructure. Infrastructure is not the same as “maintenance” though. |  | | |
| FFP? on 20:13 - Jun 4 with 2199 views | HighgateBlue |
| FFP? on 14:59 - Jun 4 by xrayspecs |
Between 21/22, 22/23 and 23/24 we can post a cumulative financial loss of no more than £39m.
We posted a loss in 21/22 of circa £12m, and would expect to post similar for 22/23. Some of these reported losses do not count toward the cumulative total, including money spent on community and ITFC women, but cannot tell you how much they contribute to the loss.
I also do not know whether the capital spend on Staples land, stadium upgrades and pitch are contained within our operating loss and if they do, whether they can also be deducted from the cumulative total.
So we have some scope to overspend but we certainly cannot go mad. Which is why MA keeps talking about player trading as transfer fee profits are another source of income. |
There are adjustments for the purposes of the EFL rules that go beyond disregarding expenses on certain matters.
They also restate transactions with Associated Parties such that they are at fair market value. So owners cannot simply inject cash with impunity to cover losses, and expect that not to have an impact.
I have not yet had a look to see whether this is the case for previous seasons when we were in other divisions, or whether it also applies to the seasons when we were only seeking to comply with SCMP and not FFP. So I don't know whether any previous cash injections from our owners will be "caught" now that we're in the Champ. Questions like this are very important questions, as they will affect very substantially what the owners are allowed to do within the rules (And therefore affect substantially what future criticism directed towards the owners, if there is any, is justified). |  | | |
| FFP? on 20:21 - Jun 4 with 2166 views | xrayspecs |
| FFP? on 20:13 - Jun 4 by HighgateBlue |
There are adjustments for the purposes of the EFL rules that go beyond disregarding expenses on certain matters.
They also restate transactions with Associated Parties such that they are at fair market value. So owners cannot simply inject cash with impunity to cover losses, and expect that not to have an impact.
I have not yet had a look to see whether this is the case for previous seasons when we were in other divisions, or whether it also applies to the seasons when we were only seeking to comply with SCMP and not FFP. So I don't know whether any previous cash injections from our owners will be "caught" now that we're in the Champ. Questions like this are very important questions, as they will affect very substantially what the owners are allowed to do within the rules (And therefore affect substantially what future criticism directed towards the owners, if there is any, is justified). |
FMV has been an issue with clubs selling grounds to related parties for far above real value (Derby, allegedly) or for accepting sponsorship deals from owners at way above market rates (Man C, allegedly).
I have not looked at the previous years accounts, but would expect GC to have carefully audited any ME transactions as part of their due diligence. Since GC took over, they have invested directly in Town by buying shares, so unlikely to be anything untoward in this approach. | | | |
| FFP? on 00:34 - Jun 5 with 1911 views | FevsBCFC |
| FFP? on 20:13 - Jun 4 by HighgateBlue |
There are adjustments for the purposes of the EFL rules that go beyond disregarding expenses on certain matters.
They also restate transactions with Associated Parties such that they are at fair market value. So owners cannot simply inject cash with impunity to cover losses, and expect that not to have an impact.
I have not yet had a look to see whether this is the case for previous seasons when we were in other divisions, or whether it also applies to the seasons when we were only seeking to comply with SCMP and not FFP. So I don't know whether any previous cash injections from our owners will be "caught" now that we're in the Champ. Questions like this are very important questions, as they will affect very substantially what the owners are allowed to do within the rules (And therefore affect substantially what future criticism directed towards the owners, if there is any, is justified). |
Basically the rules changed in 2016.
Until then, upon promotion you started off with 1x £13m cycle in season one. By end of season two, you have a £26m cycle and then into year three you’d be on a full £39m three year cycle. That meant at long as you were compliant under SCMP you couldn’t be penalised for past years.
That changed to stop owners putting loads in whilst in Lg1 creating an unfair advantage upon promotion.
So now, your P&L for 21/22, 22/23 and 23/24 will all be used in your first cycle of P&S (Champ FFP), irrespective of you passing SCMP in 21/22 and 22/23.
As it happens, even if you take your loss for 21/22 (published) of £12.6m, you ignore the £13.750m share capital introduced, it’s irrelevant (apart from showing Owner’s willing to support losses) but you can reduce by allowables of say £2m (depreciation, academy, etc), so let’s call it a round £10m for FFP.
My gut feel looking at your transfer activity, wages vs increased revenues is that you’ll probably make another £12m loss, probably more likely towards £15, so let’s split the difference, £13.5m. Take off £2m in allowables thats £11.5m for 22/23.
Now comes the rub…23/24.
You’re pretty much maxing out attendances, but there’ll still be an increase in revenues again (Commercial, match day, tv, etc), but 1) your wage bill will probably see a big chunk of that used, just in wage increases as player promotion clauses kick in (luckily promotion bonuses aren’t included in ffp), and that’s before you’ve recruited any new players.
You do have plenty of wiggle room for ffp, but any thoughts of the owners going mad, won’t be possible.
Trying to move on existing players who aren’t good enough will be difficult, because most Lg1 teams won’t be able to take up their contracts. Pigott is a good example. One year left, but on high wages relatively. I suspect you’ll loan him out, but you’ll also have to pay a big chunk of his wages still. You’ll have others in a similar situation.
At Champ level loaning players from the PL is a different game to Lg1….PL clubs will want loan fees as well as wages paid. They are doing you a favour. In Lg1, many players are just getting a taste of senior football, and PL clubs are happy to subsidise the cost because you’re doing them a favour.
Someone like Hirst probably falls in between.
Balogun went on loan from Arsenal to Boro season before. For half a season he cost £1m loan fee and £6k p.w. And he didn’t set the world alight. I dread to think how much Ramsey and Archer set Boro back this season just gone.
But in summary, you will be fine for FFP this season assuming sensible recruitment.
Whatever Mark Ashton says, you will not be net neutral on transfers at the end of 23/24, that’s 100% spin. | | | |
| FFP? on 01:02 - Jun 5 with 1898 views | Vaughan8 |
Didn't mean to down vote  | | | |
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