Financial Fair Play

[London424]

I'm sure i've seen this as a topic before but the search function isn't working so here goes another.

With the silly off-season about to get into full swing with massive transfer figures banded about, the talk of city and chelsea buying the league/trophies, when do you think clubs are going to start seriously looking at this?

From my very limited knowledge of the workings of all the premier league clubs (none whatsoever), aren't only a handful of the Top 8 actually looking like being compliant?

Surely the work around can't be that easy (see City & Etihad for details)?

Hasn't Platini basically staked his reputation on this?

I'm very confused by it all when you read of Anzhi supposedly lining up a 45m, 300k per week deal for Van Persie, how is this ever going to work?

[London424]

I think it's a valid concept (keep clubs solvent etc), and would really like it to be enforced properly to level the playing field somewhat, but as mentioned above when it comes to the crunch are they ever going to exclude City, Milan, Barcelona etc...I think not

[London424]

im said:

FFP will clearly be tested in the European courts the minute someone falls foul of it.

I'd have thought there are restraint-of-trade issues at the very least.

Interesting times ahead

I'm not an expert in the slightest but why would it be restraining trade? Isn't it just saying you cant spend what you cant afford.

So instead of the player getting 250k a week the club can only afford 150k. It then just becomes about supply and demand right?

[London424]

smj996c said:

Wombat3 said:

Said the Man City fan...

just adding a bit of balance and reality to the conversation- as the new bitters are clinging to the last hope that FFP will restore the status quo....

That's the only hope most fans have got. Only so many billionaires to go round!

And as to your earlier point about continued spending, I've got no doubt that they'd happily keep spending it like its going out of fashion. Chelsea got to the top in what 2004 or 2005...haven't seen any hint of balancing the books or tightening the purse strings

[London424]

Uhura fighter said:

Real Madrid and the bank, Bankia - Huge can of worms.

I hope it all goes hits up for them.

Is that who RM are financed through? As in, if they call in their debts it will be interesting?

[London424]

dirty boy said:

UEFA said:

Income transaction(s) with related party(ies) above fair value
For the purpose of the break-even result, the licensee must determine the
fair value of any related party transaction(s). If the estimated fair value is
different to the recorded value then the relevant income must be adjusted
accordingly, bearing in mind, however, that no upward adjustments can be
made to relevant income.
Examples of related party transactions that require a licensee to demonstrate
the estimated fair value of the transaction include:
• Sale of sponsorship rights by a club to a related party;
• Sale of corporate hospitality tickets, and/or use of an executive box, by a
club to a related party; and
• Any transaction with a related party whereby goods or services are
provided to a club.
Examples of related party transactions that must be adjusted because they
must always be excluded from relevant income are:

Who quantifies 'fair value' ?

Something that strikes me as being important, would be a club like Chelsea being able to argue that their 'fair value' has gone up immesurably since their CL win.

This stuff could be picked apart all day.

Yep, and that's the main problem. it's my understanding that UEFA will judge fair value e.g. the Etihad sponsorship thing has already been highlighted as way above "fair value".

I would like this to have some teeth to it, but believe it will just be more of a nuisance that clubs will work around.

[London424]

Cheib said:

dirty boy said:

Are transfers included in the 'sustainable' model?

Ie

If a club can service it's running costs via the income, then surely if the owner decides to put in £X to purchase a player, then that's up to them. Is it not about the club being viable should there not be an owner to pay the overheads?

Not looked at it though, maybe I should..hang on..

Very few transfers are paid for as a lump sum up front so those ongoing payments are part of the running costs.....

That's the second time I've heard that. Can you link to something about that as I can't understand why a club would want to do business that way.

[London424]

Cheib said:

London424 said:

Cheib said:

dirty boy said:

Are transfers included in the 'sustainable' model?

Ie

If a club can service it's running costs via the income, then surely if the owner decides to put in £X to purchase a player, then that's up to them. Is it not about the club being viable should there not be an owner to pay the overheads?

Not looked at it though, maybe I should..hang on..

Very few transfers are paid for as a lump sum up front so those ongoing payments are part of the running costs.....

That's the second time I've heard that. Can you link to something about that as I can't understand why a club would want to do business that way.

Only the second time ?!?! Not sure what you thought was market norm but staged payments are very,very common and almost the norm. When Portsmouth went into administration it was widely reported that they owed and were owed money by clubs because of outstanding transfer payments.

If ever you want to read about a club's finances this blog is excellent http://swissramble.blogspot.co.uk/2011/05/arsenals...
In that piece he mentions Arsenal owe £13mil in transfer fees to other clubs when looking at a particular year's accounts.

I'm amazed at that. I know some transfers are dealt with in instalments and some have additional conditions attached but didn't think it was the norm. I'll have to look into some other club accounts to see if more is forthcoming.

I've seen that site before, very good reading!

[London424]

So a nice thread resurrection for an Xmas eve, eve day.

I saw this article and it appears that the FFP enforcement could be quite tough/strict.

http://www.danielgeey.com/will-clubs-be-banned-for...

There are some recent cases of exclusion from competition for what looks like pretty small sums of money. Spring 2014 is the first big measurement time. Will be interesting to see what happens.

[London424]

Apologies for the link as the mainstream haven't started writing this up as far as I can see.

http://www.nzherald.co.nz/sport/news/article.cfm?c...

But 76 clubs playing in Europe this season are under investigation.

[London424]

Here we go boys and girls

http://www.telegraph.co.uk/sport/football/news/107...

Already posted by Hornetrider on the city thread.

[London424]

Killer2005 said:

London424 said:

Here we go boys and girls

http://www.telegraph.co.uk/sport/football/news/107...

Already posted by Hornetrider on the city thread.

I find it funny that they're threatening some of the new mega rich clubs with a fine

I thought the same thing as well. Can't quite understand the logic behind that one!

[London424]

Devilstreak said:

It will still be slightly harder for them as the 21 player squad has to include 8 home trained

It will be interesting to see who they buy this summer with that in mind.

Though I believe they are going to appeal. I've seen some articles by various lawyers that suggest that FFP is illegal, so this will really put the cat amongst the pigeons.

[London424]

Chelsea are hoping that Roman doesn't go any time soon as if you look at the club accounts they owe him almost £1 billion.

[London424]

Cheib said:

ascayman said:

London424 said:

Chelsea are hoping that Roman doesn't go any time soon as if you look at the club accounts they owe him almost £1 billion.

Ludicrous isn't it.

If there is one team that should be hit by FFP its Chelsea.

That £1bil was converted to equity quite a while ago....same with Man City's owners I think.

The problem with FFP is that it took four or five years to implement. The Premier League has it's own separate FFP rules, no idea what will happen with those.

What does that mean?

All I've seen is a note in their accounts that says that they have a net debt of £958 million in their holding company.

[London424]

jcremonini said:

London424 said:

Cheib said:

ascayman said:

London424 said:

Chelsea are hoping that Roman doesn't go any time soon as if you look at the club accounts they owe him almost £1 billion.

Ludicrous isn't it.

If there is one team that should be hit by FFP its Chelsea.

That £1bil was converted to equity quite a while ago....same with Man City's owners I think.

The problem with FFP is that it took four or five years to implement. The Premier League has it's own separate FFP rules, no idea what will happen with those.

What does that mean?

All I've seen is a note in their accounts that says that they have a net debt of £958 million in their holding company.

Go back to 2004. Abramovich wants to inject money into the club to buy players and the like. He does that by loaning the money to the club. So, on the balance sheet the club owe him that money. What has now happened (and I think this was 6 or 7 years ago), is that he has agreed to convert that loan into shares in the club.

The end result of all this is that he owns the club anyway. Nothing has changed. All he has done is written the debt off, in effect (in that he owns the business anyway).

So, you are incorrect in thinking if he sold he would be owed all that money. If he sold he would get whatever he sells the business for - be that £1 or £1bn.

Alot of clubs do this. At least Abramovich had the cash, not like some clubs whose owner loan into the club with a loan of their own (Glaziers for example).

I think I follow. So, assuming Roman wants to sell up, what happens to the almost £1 billion?

[London424]

sleep envy said:

London424 said:

I think I follow. So, assuming Roman wants to sell up, what happens to the almost £1 billion?

Depends what he sells the club and assets for.

> £1bn = profit, < £1bn = loss.

So the biggest club in England (Utd) were bought for 800 Million. So basically Roman is taking a rinsing when it comes time to sell or can he reclaim any of it from the club?

[London424]

jcremonini said:

sleep envy said:

jcremonini said:

The guy has so much money that I suspect if he did sell it, it would be for £1.

I'll have it.





Really?

I just have this feeling he would just 'give it away' because he could. The £1 is the legal minimum.

I don't think he got rich by giving away a billion quid here and there.

[London424]

Here's the Forbes valuation of football clubs...

http://www.lfconline.com/feat/ed11/reds_rise_in_fo...

So Chelsea are around £500 mil. So Roman is looking at a half a billion bath 'if' he wanted out.

[London424]

The thing is, the FFP punishments don't actually prevent a rich owner coming in and spending fortunes.

Really in the grand scheme of things they've been fined a few quid that the rich owner probably has down the back of the sofa.