Rodgers opens up on Leicester City transfer struggles but 'won't go to war' with club

[Terraloon]

21 hours ago, Chrysalis said:

With the new FFP more focused on wages now, I wonder if the way forward is to reduce the balance sheet wages and offset by signing on fees.

A % of most players deals is paid via image rights. Some clubs  pushed it too far , Portsmouth for instance, so there are guidelines issued by HMRC and as contracts are all registered at the FA there are trick controls around these type of payments. A signing on fee is detailed in the contract and subject to PAYE /NIC . 
Then you have agents fees and things like company cars ( it’s provision of cars by sponsors that is Chelsea’s current problem with HMRC) These payments are treated as benefits in kind and are included in the overall wages and salaries.

The “new” FFP sets a limit of 70% of income to be spent on player costs but that isn’t just the wage cost it also includes amortisation, impairment, and agents fees and as things stand that is a problem.

 

If you look at the average of the 20/21 & 21/22 years, and yes I know they were to a degree impacted by COVID 

 

Averaged

 

Annual income £240 million                     Wages                                  £ 173 million

                                                                  Amortisation/Impairment    £. 76million

    Included is an average of £76.2 

profit on player sales                                    Agents Fees.                       £.  13 million

 

 

                                                                     Total.                                £ 262 million

 

Thats not even close to the 70% allowable

 

You then have to look at the 21/22 transfer activity and you will see that nowhere close to the £76.2 averaged will have been achieved. The amortisation numbers of the last few years have been cancelled out by player sales. That didn’t happen in 21/2 season

 

Harsh but the lack of income that counts for FFP is a major issue and one why I personally think that cutting even say £20 million off the wage bill won’t be enough there has to be a significant number made from player sales 

 

                                                        

 

 

 

 

[AmyLGK]

Watching the last few pre-season games I was starting to feel optimistic - but now I'm thoroughly depressed again  Kasper would be a big loss, but lil Wez going would be devastating!! And then how many others will follow...ugh, I'm going to cry...

[Aus Fox]

Just now, AmyLGK said:

Watching the last few pre-season games I was starting to feel optimistic - but now I'm thoroughly depressed again  Kasper would be a big loss, but lil Wez going would be devastating!! And then how many others will follow...ugh, I'm going to cry...

I know how you feel, but I’m confident little Wes is going nowhere. I can’t see, unless stupid money comes in any key players other than Tielemans leaving now it looks like Kasper is going.

[Stadt]

FFP isn’t an issue, losses stemming directly from covid aren’t included 

[Terraloon]

33 minutes ago, Stadt said:

FFP isn’t an issue, losses stemming directly from covid aren’t included 

The club quantified COVID Losses at circa £50 million over the two years . That averaged around £25 million pa .

 

I think you are missing the point that it’s not the old process that’s the issue it’s how things will look going forward and particularly when you focus just on two simple number total  income on one side of the equation and player costs on the other.

 

The 21/22 which ended in May won’t show any income of note from player trading nor will it show much change in the amortisation. In terms of wages well they have come down a bit due to reduced bonus payments but that negated to a degree in PL merit award reductions and I. 22/23 of course there won’t be any UEFA income 
 

Player costs have to be reduced and unless somehow the £60-70 million player trading profit that won’t be there in the 21/22 numbers is somehow achieved through growth in other income streams.
 

Edited 27 July 2022 by Terraloon

[Stadt]

33 minutes ago, Terraloon said:

The club quantified COVID Losses at circa £50 million over the two years . That averaged around £25 million pa .

 

I think you are missing the point that it’s not the old process that’s the issue it’s how things will look going forward and particularly when you focus just on two simple number total  income on one side of the equation and player costs on the other.

 

The 21/22 which ended in May won’t show any income of note from player trading nor will it show much change in the amortisation. In terms of wages well they have come down a bit due to reduced bonus payments but that negated to a degree in PL merit award reductions and I. 22/23 of course there won’t be any UEFA income 
 

Player costs have to be reduced and unless somehow the £60-70 million player trading profit that won’t be there in the 21/22 numbers is somehow achieved through growth in other income streams.
 

I'm not that well versed with football finances to be completely honest but it seems more of a cashflow issue than an FFP one to me. The volume of expiring contracts next season mean we'll be ok wages wise, with Soyuncu, Tielemans, Mendy & Perez all unlikely to be renewed.

 

Even accounting for the bonus payments inflating our wage bill, the wages/turnover ratio is probably still something like 75%. I'm not sure overdrafts work for clubs (presumably very high) but I don't think we have the wiggle room to get anybody in, of course wages play a part in that but excising Schmeichel's £6m p/a, a) only works if we don't sign any replacement and b) isn't actually that much.

 

Personally, Schmeichel's leaving because he wants a change; he's won everything he can here, he's living in much nicer, warmer place and he's playing in a European competition still. From the club's point of view they don't want to stand in his way and we slightly improve our financial situation.

[Terraloon]

1 hour ago, Stadt said:

I'm not that well versed with football finances to be completely honest but it seems more of a cashflow issue than an FFP one to me. The volume of expiring contracts next season mean we'll be ok wages wise, with Soyuncu, Tielemans, Mendy & Perez all unlikely to be renewed.

 

Even accounting for the bonus payments inflating our wage bill, the wages/turnover ratio is probably still something like 75%. I'm not sure overdrafts work for clubs (presumably very high) but I don't think we have the wiggle room to get anybody in, of course wages play a part in that but excising Schmeichel's £6m p/a, a) only works if we don't sign any replacement and b) isn't actually that much.

 

Personally, Schmeichel's leaving because he wants a change; he's won everything he can here, he's living in much nicer, warmer place and he's playing in a European competition still. From the club's point of view they don't want to stand in his way and we slightly improve our financial situation.

The level of income from current sources aren’t big enough to support the level of spend.

 

I mentioned bonus payments because they of course will have been paid for EL qualification maybe even not getting relegated but those bonuses are paid when you achieve something and more often than not those achievements come with extra income. Finishing 5th probably bought in an extra £6 million in PL merit payments and also EL qualification bought in several million by way of UEFA payments. Those extra European games generated probably £15-20 million that won’t be there in 22/23 on the back of probably £50 million less in transfer fees in 21/22 then there is an issue 

 

The 70% limit isn’t just on wages and that is the concern for me

[HighPeakFox]

They play us like a banjo. It only works if you react. 

[coolhandfox]

57 minutes ago, HighPeakFox said:

They play us like a banjo. It only works if you react. 

Who?

 

 

[Foxy-Lady]

On 16/07/2022 at 19:00, JimmyC74 said:

Emphasises the mess we have got into paying premium wages to peripheral players who we can’t persuade anyone else to take.

 

a lot of the blame re contracts and being able to move players we no longer want sits with the DofF.

Absolutely spot-on...!

Easy to apportion blame people with the benefit of hindsight but paying over-inflated wages to players that other clubs simply refuse to pay does appear to be one of the major stumbling blocks for us.

 

Did we show naivety/panic by offering them too much money as an enticement to sign for us, did we simply misjudge the market OR, have those players simply failed to deliver?

Difficult to say....but in a buyers market, other clubs are not going to pay top dollar and the same over-inflated wages for players who other clubs are looking to offload....and the players are definitely not going to want to take a drop in wages.

It does appear the DoF may have made a rod for his own back on this one...!

[HighPeakFox]

43 minutes ago, coolhandfox said:

Who?

Those that publish rumours, hearsay and conjecture.

[Chrysalis]

18 hours ago, sacreblueits442 said:

...I  can't see that auditors would be convinced by this attempt to reclassify an expense!!!

  The reason for FFP is to ensure that clubs keep within a ratio of wages to Revenue and to stop clubs from taking the risk, of going all in to secure promotion or to stave off relegation. It is clear that a signing on fee is remuneration for the players and would be bracketed as such.

  Saracens (Rugby Union) attempt to circumnavigate the system by creating individual companies for their players and then put money into the companies as an investment by their owner, was picked up,  having looked at their accounts. A subsequent relegation followed, but they bounced right back the next season.

  I for one do not wish to see us having to climb back up from the Championship because we were desperate and panicked.

Well I think the reason is to prevent the status quo been challenged given it conveniently ignores debt. So we disagree on what FFP is aimed at.

Slightly offsetting wages via signing on bonuses is very different to giving players their own companies.  Not really comparable :p

Edited 27 July 2022 by Chrysalis

[Chrysalis]

10 hours ago, Terraloon said:

A % of most players deals is paid via image rights. Some clubs  pushed it too far , Portsmouth for instance, so there are guidelines issued by HMRC and as contracts are all registered at the FA there are trick controls around these type of payments. A signing on fee is detailed in the contract and subject to PAYE /NIC . 
Then you have agents fees and things like company cars ( it’s provision of cars by sponsors that is Chelsea’s current problem with HMRC) These payments are treated as benefits in kind and are included in the overall wages and salaries.

The “new” FFP sets a limit of 70% of income to be spent on player costs but that isn’t just the wage cost it also includes amortisation, impairment, and agents fees and as things stand that is a problem.

 

If you look at the average of the 20/21 & 21/22 years, and yes I know they were to a degree impacted by COVID 

 

Averaged

 

Annual income £240 million                     Wages                                  £ 173 million

                                                                  Amortisation/Impairment    £. 76million

    Included is an average of £76.2 

profit on player sales                                    Agents Fees.                       £.  13 million

 

 

                                                                     Total.                                £ 262 million

 

Thats not even close to the 70% allowable

 

You then have to look at the 21/22 transfer activity and you will see that nowhere close to the £76.2 averaged will have been achieved. The amortisation numbers of the last few years have been cancelled out by player sales. That didn’t happen in 21/2 season

 

Harsh but the lack of income that counts for FFP is a major issue and one why I personally think that cutting even say £20 million off the wage bill won’t be enough there has to be a significant number made from player sales 

 

                                                        

 

 

 

 

Thanks thats a very good response, so its a no go then.

[sacreblueits442]

19 minutes ago, Chrysalis said:

Well I think the reason is to prevent the status quo been challenged given it conveniently ignores debt. So we disagree on what FFP is aimed at.

Slightly offsetting wages via signing on bonuses is very different to giving players their own companies.  Not really comparable :p

...not an attempt to compare, just an illustration of the lengths people will go to get around the rules!!!

[Terraloon]

19 hours ago, sacreblueits442 said:

...I  can't see that auditors would be convinced by this attempt to reclassify an expense!!!

  The reason for FFP is to ensure that clubs keep within a ratio of wages to Revenue and to stop clubs from taking the risk, of going all in to secure promotion or to stave off relegation. It is clear that a signing on fee is remuneration for the players and would be bracketed as such.

  Saracens (Rugby Union) attempt to circumnavigate the system by creating individual companies for their players and then put money into the companies as an investment by their owner, was picked up,  having looked at their accounts. A subsequent relegation followed, but they bounced right back the next season.

  I for one do not wish to see us having to climb back up from the Championship because we were desperate and panicked.

It wouldn’t just be the auditors the PL and FA  would be all over this and then  you have HMRC  who have  become very interested in PL payments

 

https://www.sportbible.com/football/premier-league-clubs-under-investigation-over-suspected-tax-avoidance-20220710

 

The new owners at Chelsea, as I pointed out earlier made a voluntary disclose about matters uncovered during their  due diligence . It was an ideal opportunity for them to uncover any shortcomings and take steps to clear the slate as it were it was very very easy to come clean and blame the previous regime 

 

 Chelsea and HMRC will now be agreeing some sort of settlement the penalty element of such agreement being significantly reduced down to self disclosure. The irony  is that the new owners being withheld £100 m from the sale fee to cover such matters. 
 

Other clubs won’t be so lucky because it’s almost certain than if HMRC uncover failings then there with be significant penalties and if those failings amount not just  to tax evasion but done in such a way to deliberately hide remuneration from HMRC and the footballing authorities a more damaging penalty by way of a points reduction as has happened in the past to the likes of Luton would be a real possibility 

 

 

 

 

 

Edited 27 July 2022 by Terraloon

[FoxesWalk]

[norwichfox]

25 minutes ago, FoxesWalk said:

Just remind me when the transfer window closes please...

[ALC Fox]

18 minutes ago, FoxesWalk said:

They clearly haven't watched a single pre-season game then.

 

I was thinking exactly the same before the games started but with loanees returning, last season's injured players looking sharp, and our best players still looking good, we look fresh and hungry.

 

I'm way less concerned than I was before.

 

However, if papers start pushing this narrative, they will make it happen. One bad result will pile on the pressure and they'll manufacture a sense of unease in fans that will spread to the squad. If other papers as well as radio, podcasts and other media start parroting the same stuff (which they probably will because they'll only see what's on the surface and draw conclusions from that), then that's a reason to worry. It'll be the media narrative that will derail our season.

 

We can't let a bad perception throw what has been an excellent pre-season off course. The club need our support in the first few games of the season. Big atmospheres, no booing, plenty of songs about Rodgers and the players. I'm talking 15/16 levels of atmosphere. 

[Claudio Fannieri]

Weirdly this kind of press may suit us as it will help create a siege mentality which tends to work well for us. 
 

Rodgers is sensible and whilst no doubt he is frustrated by the lack of transfer activity, he is also a realist and will see how difficult it is to operate in the current market, especially moving players out. Hopefully as we approach the start of the season and the end of the transfer window we will start to see some significant movement both outgoing and inbound. 

 

Whilst the current impasse is far from ideal and it does mean that any new signings will have limited pre season prep with us, it certainly isn’t the end of the world as long as we bring in the right players, this refresh should be about the medium and long term and not just short term gains.

[MarriedaLeicesterGirl]

23 hours ago, Stadt said:

Personally, Schmeichel's leaving because he wants a change; he's won everything he can here, he's living in much nicer, warmer place and he's playing in a European competition still. From the club's point of view they don't want to stand in his way and we slightly improve our financial situation.

I think it is possible that Kasper told the club he wanted a change and wouldn't sign a new contract, and they said it might be better for the club's finances if he left a year earlier. I mean, there is no way Nice is going to match his wages, and even if he gets a signing bonus, I think he would get a less this year than if he stayed. (That being said, I think Kasper knows the club will have his back once he actually retires, and it's possible that any income loss would be promised to him for "club services" in five years time.)

[lcfcsnow]

We are standing still though, if you don't continually improve you will drop off as we saw last season and without Lookman we are weaker due to a lack of wide options that we were already low on.

[Stadt]

15 minutes ago, lcfcsnow said:

We are standing still though, if you don't continually improve you will drop off as we saw last season and without Lookman we are weaker due to a lack of wide options that we were already low on.

Agreed. An Injury to Barnes and we no dynamism out wide - 4231 with the 3 comprised of Albrighton, Maddison and Perez would be easy to defend against. I can see us trying to get Lookman on loan again, with an obligation to buy it'd be shrewd if the fee's c. £10m.

[Stadt]

Just now, pmcla26 said:

I imagine we'd go 3 at the back and couple Vardy with one of Daka or Iheanacho, before we'd play Albrighton and Perez out wide. 

Most likely, doesn't solve the dynamism problem though  

 

We've never really sorted the winger problem, Albrighton is the only successful permanent wide player we've signed since we got promoted. Signing Ebiowei would have made sense, promising and cheap. Not saying he'd be the answer but he at least gives an option.

[Guest ttfn]

22 hours ago, Terraloon said:

The level of income from current sources aren’t big enough to support the level of spend.

 

I mentioned bonus payments because they of course will have been paid for EL qualification maybe even not getting relegated but those bonuses are paid when you achieve something and more often than not those achievements come with extra income. Finishing 5th probably bought in an extra £6 million in PL merit payments and also EL qualification bought in several million by way of UEFA payments. Those extra European games generated probably £15-20 million that won’t be there in 22/23 on the back of probably £50 million less in transfer fees in 21/22 then there is an issue 

 

The 70% limit isn’t just on wages and that is the concern for me

The 70% limit should not be a concern at the moment. It doesn’t come in for 3 years and it’s phased in until that point. In any event it’s a UEFA rather than PL mandate and so only impacts us if we qualify for Europe.

 

Not to mention that UEFA’s punishments for failure to comply with FFP have been empty. My strong suspicion is that they will water it down anyway because it’s too restrictive with the transfer fee amortisation in there too. Not that the club can afford to take that chance of course.

 

(Not to dispute any of your analysis, I agree with everything you’ve said but the 70% wages+amortisation:turnover cannot possibly be what’s caused us to completely pull up the drawbridge this summer).

Edited 28 July 2022 by ttfn

[Terraloon]

22 minutes ago, ttfn said:

The 70% limit should not be a concern at the moment. It doesn’t come in for 3 years and it’s phased in until that point. In any event it’s a UEFA rather than PL mandate and so only impacts us if we qualify for Europe.

 

Not to mention that UEFA’s punishments for failure to comply with FFP have been empty. My strong suspicion is that they will water it down anyway because it’s too restrictive with the transfer fee amortisation in there too. Not that the club can afford to take that chance of course.

 

(Not to dispute any of your analysis, I agree with everything you’ve said but the 70% wages+amortisation:turnover cannot possibly be what’s caused us to completely pull up the drawbridge this summer).

You are right that the 70% figure doesn’t come in 25/26 but the new rules are introduced in January 23 and run to December 23. That in itself is a change because hitherto they have been measured over the clubs trading year.

 

The % that is allowable in year one in 90%. But that’s not just 90% in wage terms it’s 90% of every cost associated with the players. If players are purchased in this window then that will inevitably lead to any bumping up amortisation and will add to the charge for the term if the players contract

 

Based on my very much back of a fag packet calculations hitting that 90% is going to be a challenge. I haven’t looked back too far but without player sales of note added to the maximum allowable contributions from the owners I just can’t see how player costs can be allowed to increase

 

In the first couple of years the suggestion will in effect be a luxury tax with the suggestion being that for every £ you exceed the 90% figure you will be deducted a multiple from the money you will be due from UEFA then shared amongst all participants in that competition 

 

It is expected that the PL will bow to the pressure from UEFA to introduce ( as will other) Football Associations one standard approach