Financial Fair Play in Division 3

[William Henry Foulkes]

Something else that cropped up in another thread that I thought might be of wider interest:

• In League 1 clubs can spend a maximum of 60% of their turnover on wages
• There are no restrictions (in themselves) on the amount a club can lose or spend on transfer fees.

Seems fairly straightforward, but then there's the small print about what constitutes "turnover":

However the Football League uses a broader definition of Turnover. Crucially, the FL Turnover figure includes donations from the owners to the club and injections of equity. [...] In League 1 and League 2, a wealthy owner can therefore fund the club spending in a way that is not permitted in other divisions.

So, as I read it, just because our attendances are much bigger this doesn't necessarily mean we can outspend our rivals on either transfer fees or wages.

http://www.financialfairplay.co.uk/scmp.php

 

[Deleted member 1486]

The NBA model is the best. Want to spend a kings ransom on a team? Go ahead, but you must also pay all of your competitors an amount equivellant to what you are spending over the salary cap.

 

[Chezzy Blades]

Correct, when the Prince first arrived McCabe said in the press conference before Rotherham away that the way we spend his investment would fall outside of the FFP.

I believe there is a ceiling to how much an owner can put in against the FFP deficit, but in the Championship in particular it's a pretty high ceiling.

 

[UnitedBlade]

There are no restrictions on equity injection under SCMP (leagues 1 and 2).

I give you Brentford's promotion figures from L1.

Turnover £3M, wages £10M (the vast majority of which is player wages).

The Prince has invested off the pitch, by paying off Weir find his cronies and on our playing budget since January.

However, I believe we are largely within the 60% formula unlike Bournemouth, Brentford and Bristol City.

 

[Cyprus Blade]

The point in the OP came up at the beginning of the season when we were talking about game changing investment. Div 3 is the right place to make major injections of capital as the Championship formula is far more prohibitive. Simply put there will not be the same possibilities of injecting major additional capital to bring in quality players under FFP should we go up.

 

[William Henry Foulkes]

The point in the OP came up at the beginning of the season when we were talking about game changing investment. Div 3 is the right place to make major injections of capital as the Championship formula is far more prohibitive. Simply put there will not be the same possibilities of injecting major additional capital to bring in quality players under FFP should we go up.

Have Bournemouth circumvented this?

 

[UnitedBlade]

Have Bournemouth circumvented this?

No, they passed the test in December - for me that probably means the owner subsidised up to the limit of £8m. Owners can chuck in £13M per year in the Championship from next year. This renders FFP as fairly meaningless although it has to be equity not loans on the never, never (I think) which has ruined other clubs.

It's academic now as they have attained the PL riches.

The platform was set with the huge investment they put in to get out of L1.

 

[bristolboy]

There are no restrictions on equity injection under SCMP (leagues 1 and 2).

I give you Brentford's promotion figures from L1.

Turnover £3M, wages £10M (the vast majority of which is player wages).

The Prince has invested off the pitch, by paying off Weir find his cronies and on our playing budget since January.

However, I believe we are largely within the 60% formula unlike Bournemouth, Brentford and Bristol City.

Not so. We have been comfortably under 60% of turnover on wages this season. That's what we have been told.

 

[UnitedBlade]

Not so. We have been comfortably under 60% of turnover on wages this season. That's what we have been told.

You do know that equity injection goes into the turnover line for the purposes of SCMP don't you ?

Last season you had an accounting turnover of £4.5M (ie crowds, TV, sponsorship, yet wages (all wages but the vast majority in all football clubs are player wages) were £9.6M.

Let's assume the turnover bit that comes from attendances and TV will be broadly the same ie £4.5M.

Are you telling me your player wage bill has been "comfortably" less than £2.7M ?

Sorry, but your squad is very unlikely to have been pared to £2.7M without equity injection.

I know you cut wages a lot from the Championship to L1 but to hit £2.7M you have had to cut the player wage bill in half I would imagine.

Of course, they've been telling you that they've hit 60% because Lansdown has been putting the money in. Hardly surprising when he's worth £1.3bn. He'd be an idiot not to make that investment this year.

I'm not complaining by the way, those are the rules, Lansdown is not only building your club but providing the right investment at the right time. Fair play to him.

 

[Davie Blade]

Have Bournemouth circumvented this?

Different rules in the Championship

Frankly having read so many websites that all seem to contradict one another , including the one you quoted it really isn't worth bothering about, trying to make any sense of it.
Some even said debt to equity swaps will be greatly limited to £4M blah blah.
Same website as you quoted in the OP said Championship sides had to submit their accounts by 1st Dec 2014. It predicted 10 clubs were highly likely or likely to havea transfer embargo , massive fines, with QPR to be fined £50 million hell fire and brimstone blah blah blah.

6 months on and I'm still waiting!

In the meantime I comfort myself with
http://sisportscentre.com/understanding-staff-roles-principal-advisor-jim-phipps/

10 – Some fans of Sheffield United have been saying the Prince should splash the cash and spend ridiculous amounts of money but how frustrating is hearing things like this when we have the Salary Cost Management Protocol to comply with?

Answer from Jim Phipps
Exactly. Some fans do not understand that the rules have changed. As owners, we cannot just come in and dump a truck load of cash on the team anymore. Under the protocol, we have to grow revenue to increase the amounts we can spend. It is more or less that simple.

As they say,

A little knowledge is a dangerous thing

Amen to this thread.

 

[bristolboy]

You do know that equity injection goes into the turnover line for the purposes of SCMP don't you ?

Last season you had an accounting turnover of £4.5M (ie crowds, TV, sponsorship, yet wages (all wages but the vast majority in all football clubs are player wages) were £9.6M.

Let's assume the turnover bit that comes from attendances and TV will be broadly the same ie £4.5M.

Are you telling me your player wage bill has been "comfortably" less than £2.7M ?

Sorry, but your squad is very unlikely to have been pared to £2.7M without equity injection.

I know you cut wages a lot from the Championship to L1 but to hit £2.7M you have had to cut the player wage bill in half I would imagine.

Of course, they've been telling you that they've hit 60% because Lansdown has been putting the money in. Hardly surprising when he's worth £1.3bn. He'd be an idiot not to make that investment this year.

I'm not complaining by the way, those are the rules, Lansdown is not only building your club but providing the right investment at the right time. Fair play to him.

To be honest, I haven't a clue and am no authority on all this! I haven't fully comprehended all the ffp/scmp stuff, and am never going to be an economist or accountant. And you seem to know far more about our financial situation than I do! Are those figures though, not for the last financial year, and that in the current one - with our championshi high earners now gone - we now are in line with the 60% stuff? I know he has ben doing the converting debt into equity thing but have no idea where this fits into all that. I had better go away and find out now!

Either way, we cannot compete in Championship the way we have been running without his continued backing. We are always trying to play catch up with the big clubs in the north, midlands, London. Lansdown might have made a hash of it last time but there's a few clubs around who would love to have his backing (Newcastle?)

 

[UnitedBlade]

To be honest, I haven't a clue and am no authority on all this! I haven't fully comprehended all the ffp/scmp stuff, and am never going to be an economist or accountant. And you seem to know far more about our financial situation than I do! Are those figures though, not for the last financial year, and that in the current one - with our championshi high earners now gone - we now are in line with the 60% stuff? I know he has ben doing the converting debt into equity thing but have no idea where this fits into all that. I had better go away and find out now!

Either way, we cannot compete in Championship the way we have been running without his continued backing. We are always trying to play catch up with the big clubs in the north, midlands, London. Lansdown might have made a hash of it last time but there's a few clubs around who would love to have his backing (Newcastle?)

Those figures are for L1 to May 2014.

Just to reiterate, Lansdown is doing everything right at your club now ! All I'm saying is after the disastrous results you had after coming down from the championship, you've made many changes to the playing squad but with a L1 turnover, he has to be continuing to put money into the playing side to get the squad you had this season.

We had the same problem, our Chairman McCabe lost buckets of money as we slid down the leagues and he vowed to put nothing more in. He sold half of the club to our Saudi Prince, who set aside £20M to invest. Eighteen months later, they've said that he's already done £10M of that. I'm guessing some was to plug holes, some was to invest off the pitch (we are getting a Desso pitch), some to support the Academy, some was to pay off the disastrous David Weir and I believe in January we probably put some extra into the playing squad.

The Championship is a whole different ballgame but I think I've read that it is worth £4M in revenue to promoted clubs. The problem is competing against clubs with parachute payments. There will be 10 clubs with parachute payments next season plus a handful of others prepared to push the boat out.

The problem at Newcastle is Ashley is holding £30M in cash. He just won't spend it. He's even richer than Lansdown by the way !

Good luck, I think you'll do well going forwards.

 

[Worksop II]

Soooooo, tell me

How do SUFC increase the amount of money they can spend on the Team, how do they raise it ?

 

[Kenilworth]

Soooooo, tell me

How do SUFC increase the amount of money they can spend on the Team, how do they raise it ?

By winning promotion to the Championship via the play-offs this year

 

[bristolboy]

Those figures are for L1 to May 2014.

Just to reiterate, Lansdown is doing everything right at your club now ! All I'm saying is after the disastrous results you had after coming down from the championship, you've made many changes to the playing squad but with a L1 turnover, he has to be continuing to put money into the playing side to get the squad you had this season.

We had the same problem, our Chairman McCabe lost buckets of money as we slid down the leagues and he vowed to put nothing more in. He sold half of the club to our Saudi Prince, who set aside £20M to invest. Eighteen months later, they've said that he's already done £10M of that. I'm guessing some was to plug holes, some was to invest off the pitch (we are getting a Desso pitch), some to support the Academy, some was to pay off the disastrous David Weir and I believe in January we probably put some extra into the playing squad.

The Championship is a whole different ballgame but I think I've read that it is worth £4M in revenue to promoted clubs. The problem is competing against clubs with parachute payments. There will be 10 clubs with parachute payments next season plus a handful of others prepared to push the boat out.

The problem at Newcastle is Ashley is holding £30M in cash. He just won't spend it. He's even richer than Lansdown by the way !

Good luck, I think you'll do well going forwards.

Cheers.

I was tired and watching the snooker when I replied, a little defensively, last night! Never a good idea.

We have thrown money around before, but never as wisely or as successfully as this season! This'll be Lansdown's second bite at the Champ and we're going to find out what he has learned from that experience. We already are.

 

[Cyprus Blade]

How do SUFC increase the amount of money they can spend on the Team, how do they raise it ?

Also by investing in the Deso pitch which allows for multiple usage without damaging it - hence turnover increased through other ventures eg Rugby League, concerts boxing etc. Its what JP was on about re marketing the brand.

 

[UnitedBlade]

Soooooo, tell me

How do SUFC increase the amount of money they can spend on the Team, how do they raise it ?

All the suggestions so far are good but it would be worth asking Mark Benham.

Brentford turnover 2013/14

 

[William Henry Foulkes]

Different rules in the Championship

Frankly having read so many websites that all seem to contradict one another , including the one you quoted it really isn't worth bothering about, trying to make any sense of it.
Some even said debt to equity swaps will be greatly limited to £4M blah blah.
Same website as you quoted in the OP said Championship sides had to submit their accounts by 1st Dec 2014. It predicted 10 clubs were highly likely or likely to havea transfer embargo , massive fines, with QPR to be fined £50 million hell fire and brimstone blah blah blah.

6 months on and I'm still waiting!

In the meantime I comfort myself with
http://sisportscentre.com/understanding-staff-roles-principal-advisor-jim-phipps/

10 – Some fans of Sheffield United have been saying the Prince should splash the cash and spend ridiculous amounts of money but how frustrating is hearing things like this when we have the Salary Cost Management Protocol to comply with?

Answer from Jim Phipps
Exactly. Some fans do not understand that the rules have changed. As owners, we cannot just come in and dump a truck load of cash on the team anymore. Under the protocol, we have to grow revenue to increase the amounts we can spend. It is more or less that simple.

As they say,

A little knowledge is a dangerous thing

Amen to this thread.

Thanks for the link. Just had time to read the whole interview. I think we're in very good hands. I hope to see real progress next season.

 

[UnitedBlade]

All the suggestions so far are good but it would be worth asking Mark Benham.

Brentford turnover 2013/14

That should be:

Brentford Turnover £3,285,965

Total Staff Costs £9,950,861

Of which playing, training and ground staff £9,102,244

Bingo ! Equity Investment

http://www.brentfordfc.co.uk/documents/bfc-group-final-accounts-2014277-2362022.pdf

 

[Flatulent_Bob]

The NBA model is the best. Want to spend a kings ransom on a team? Go ahead, but you must also pay all of your competitors an amount equivalent to what you are spending over the salary cap.

I do not understand the need for FFP at all, the only rule should be against putting debt against the club.
If a wealthy owner wants to pump money into a club then all well and good so long as the club has the money in it's accounts/holdings to cover any debts.
If they want to have a wage bill 200% over turnover, then they need to put that amount in the accounts of the club which they can't touch or put at debt owed to them by the club.

Should they go tits up, or want out then all fine and good, the club is protected and can cover their bills. They may need to slim down a tad once the existing contracts expire but no one should go to the wall.

FFP just protects the current order of things and keeps those at the top there.

 

[Davie Blade]

Thanks for the link. Just had time to read the whole interview. I think we're in very good hands. I hope to see real progress next season.

Agreed
Tis a good read
I loved question 6 .
Can't be many co owners rep who have been asked a question about Football Manager PC game .
PMSL