Musings on FFP position

[coolhandfox]

I was wondering what our position against the new European FFP would look like if it was applied to our 20/21 accounts.

 

We need to be at 90% by 23/24, 80% by 24/25 and 70% by 25/26 of money spent on players and coaches, transfers fees and agents fees. (Other staff at the club outside of players and coaching don't count neither do stuff stadium improvements etc) 

 

So for us in 20/21 that would look like this: 

 

Overall Total Wages

192m

Keep in mind this includes around 300 staff, non players or coaches whose wages aren't included in FFP, for calculation purposes I'm going to knock off 6m (300 x £20000) which seems a reasonable average wage for non-playing our coaching staff

Also, the 20/21 accounts had deferred wages from 19/20 due to COVID

 

Overall Total wages minus players and coaching

186m

 

Player Fees (Keep in mind this is the amortised amount of transfer fees in the accounts for the season, not the amount we spent that season)

78m

 

Agents Fee

12.5m 

 

Total expenditure with regards to FFP rules 276M 

 

Which comes to 122.5% of income for that year. 

 

So for the 20/21 accounting period, we would have busted the 23/24 limit by 32%, give an idea way we are being a little careful.

 

This is my interpretation of the 20/21 accounts and FFP rules so it isn't perfect.

 

 

 

 

 

 

Edited 4 August 2022 by coolhandfox

[moore_94]

When our accounts are done, are they done for the duration of the season or January to December?

[jonthefox]

9 minutes ago, moore_94 said:

When our accounts are done, are they done for the duration of the season or January to December?

April to April I believe. The same as any other limited company.

[moore_94]

Just now, jonthefox said:

April to April I believe. The same as any other limited company.

Thanks

 

@coolhandfoxThis will make it interesting for you to work out 

 

"For instance, in 2023 clubs will be assessed from January to December. They will find out in May 2024 whether they have broken any rules. If they have, their punishment will be applied for the start of the season three months later."

 

https://www.skysports.com/football/news/11095/12584543/uefas-new-financial-sustainability-regulations-to-replace-ffp-all-you-need-to-know

[foxfanazer]

Brent mused.....

[coolhandfox]

4 minutes ago, moore_94 said:

Thanks

 

@coolhandfoxThis will make it interesting for you to work out 

 

"For instance, in 2023 clubs will be assessed from January to December. They will find out in May 2024 whether they have broken any rules. If they have, their punishment will be applied for the start of the season three months later."

 

https://www.skysports.com/football/news/11095/12584543/uefas-new-financial-sustainability-regulations-to-replace-ffp-all-you-need-to-know

No thanks 

 

[st albans fox]

14 minutes ago, jonthefox said:

April to April I believe. The same as any other limited company.

Companies can have their year end date any month they want to. 

 

Our year end is may 31 

 

but it seems that ffp will be judged Jan to dec 

[davieG]

Can't see the benefit or logic of including coaches in the FFP figures. Surely we want as many avenues as possible to allow the development and nationwide growth of qualified coaches. That's not even thinking of the impact they can make on the improvement of players especially the younger ones.

[st albans fox]

I think the first assessment of  90% will be Jan to dec 2023.  So wages we are taking on now will count towards that as will be relevant for first half of next year

 

this is why we are having problems 

[st albans fox]

2 minutes ago, davieG said:

Can't see the benefit or logic of including coaches in the FFP figures. Surely we want as many avenues as possible to allow the development and nationwide growth of qualified coaches. That's not even thinking of the impact they can make on the improvement of players especially the younger ones.

You’re confused- this isn’t about anything other than making sure the big clubs across Europe stay as the big clubs 

 

 

[onetruesaxon79]

Just a quick look at the P&L for 2021, shows why we are being so cautious. It’s frustrating but clearly looking to safeguard the club and mitigate any risk.

[Lineker's Left Foot]

I am not an expert on finance, but is the concept of FFP legal as it isn’t applicable in the world of industry? 🤔

[st albans fox]

1 minute ago, Lineker's Left Foot said:

I am not an expert on finance, but is the concept of FFP legal as it isn’t applicable in the world of industry? 🤔

If you want to enter uefa tournaments then you have to abide by their rules ….

[sishades]

1 minute ago, st albans fox said:

If you want to enter uefa tournaments then you have to abide by their rules ….

Except chelsea,man city , Barca et al

 

[st albans fox]

8 minutes ago, sishades said:

Except chelsea,man city , Barca et al

 

Well they’re changing the rules so that they won’t need to break them …..

[oxford blue]

8 minutes ago, sishades said:

Except chelsea,man city , Barca et al

 

I was just looking at Chelsea figures; they show a loss of > £145m for y/end 30.6.21. This summer have spent nearly £120m with no income from sales, before Cucurella, let alone Fofana which would more than double the deficit on transfers (and Fofana would earn £10m a year - reportedly).

 

I realise CL will be hugely beneficial this season for the club, but are they gambling on a  long run?

 

I do struggle to understand the FFP rules!

 

 

[st albans fox]

54 minutes ago, oxford blue said:

I was just looking at Chelsea figures; they show a loss of > £145m for y/end 30.6.21. This summer have spent nearly £120m with no income from sales, before Cucurella, let alone Fofana which would more than double the deficit on transfers (and Fofana would earn £10m a year - reportedly).

 

I realise CL will be hugely beneficial this season for the club, but are they gambling on a  long run?

 

I do struggle to understand the FFP rules!

 

Chelsea have been sold and all their debts were written off by the previous owner 

 

I assume prior losses will become irrelevant 

 

and losses will no longer be part of ffp

 

 

[coolhandfox]

57 minutes ago, oxford blue said:

I was just looking at Chelsea figures; they show a loss of > £145m for y/end 30.6.21. This summer have spent nearly £120m with no income from sales, before Cucurella, let alone Fofana which would more than double the deficit on transfers (and Fofana would earn £10m a year - reportedly).

 

I realise CL will be hugely beneficial this season for the club, but are they gambling on a  long run?

 

I do struggle to understand the FFP rules!

 

 

Remember the 120m is amortised over the length of the players contract, if they all signed 5 year contract that 120m x 5 and only affects there account by 24m a season. 

[st albans fox]

half way through next year we lose a lot of wages when players fall out of contract 

 

so the 2023 season numbers will drop off markedly end June. 
 

YT.  70

Evans.   80

perez.   80

Hamza.  60

Mendy.   50

bertrand.  75

Amartey.   40

cags.     40

Vards.    140

 

I reckon that’s approx 16m that will drop off 2023 wages if we replace no one ! (22m with kasper) 

 

i wonder what we can therefore spend on incoming  players wage bill and stay within 90% ??

 

very crude scenario because some of these players will go before 2023 

 

 

 

 

 

 

[gerrytaggart]

2 hours ago, coolhandfox said:

 

Keep in mind this includes around 300 staff, non players or coaches whose wages aren't included in FFP, for calculation purposes I'm going to knock off 6m (300 x £20000) which seems a reasonable average wage.

This seems extremely low.  Id double that estimate.

[davieG]

1 hour ago, st albans fox said:

You’re confused- this isn’t about anything other than making sure the big clubs across Europe stay as the big clubs 

 

 

Oh I understand that but it seems a very negative rule and is likely to have strangle hold on new coaches entering especially none whites and women

 

 

 

 

1 hour ago, st albans fox said:

If you want to enter uefa tournaments then you have to abide by their rules ….

So they could introduce a wages cap if they wanted? Thought not 

[st albans fox]

Can I aske what happens if we sell wes for £85m

 

obvs his 90k/week falls off the wage bill but how do we account for the fee in the t/over equation or is it irrelevant? 

[Guest ttfn]

17 minutes ago, st albans fox said:

half way through next year we lose a lot of wages when players fall out of contract 

 

so the 2023 season numbers will drop off markedly end June. 
 

YT.  70

Evans.   80

perez.   80

Hamza.  60

Mendy.   50

bertrand.  75

Amartey.   40

cags.     40

Vards.    140

 

I reckon that’s approx 16m that will drop off 2023 wages if we replace no one ! (22m with kasper) 

 

i wonder what we can therefore spend on incoming  players wage bill and stay within 90% ??

 

very crude scenario because some of these players will go before 2023 

 

 

 

 

 

 

Also can expect to lose a reasonable amount of amortisation - we were charged £71m a year for 19/20 and 20/21 on transfer fees. That will fall - lots of our more expensive transfers affecting those years will have been fully amortised (or the amortisation massively reduced if they extend their contracts) by 2023:

Slimani, Perez, Tielemans, Silva, Soyuncu, Iheanacho, Maddison. That’s 7 of the top 10 most expensive signings in the club’s history and of the other 3 only one (Daka) will be a new amortisation charge in the 21/22 accounts. 
 

So even if we sign 3 or 4 pretty high value players in the next year or so it seems hard to

imagine our amortisation “spend” won’t come down.

[Guest ttfn]

8 minutes ago, st albans fox said:

Can I aske what happens if we sell wes for £85m

 

obvs his 90k/week falls off the wage bill but how do we account for the fee in the t/over equation or is it irrelevant? 

It must count (otherwise there’s no incentive to sell in FFP) but I’d have thought that you could only take the profit into account.
 

Otherwise you could just buy a player for £50m then sell them the next day for £50m and you’d have £50m extra turnover and no accounting cost. 

[st albans fox]

21 minutes ago, ttfn said:

It must count (otherwise there’s no incentive to sell in FFP) but I’d have thought that you could only take the profit into account.
 

Otherwise you could just buy a player for £50m then sell them the next day for £50m and you’d have £50m extra turnover and no accounting cost. 

but does annual t/over get affected by sales/purchases. We know that purchases are amortised over the period of the contract.  What happens with sales ? How are they amortised and of so, over what period?