Musings on FFP position

[Beechey]

13 hours ago, st albans fox said:

The stadium has a name 

surely king power should be paying into the pot for that  - there are ways the money could be returned back which wouldn’t affect ffp??

I believe KP only pay about £4m per year for stadium naming rights.

[Chrysalis]

13 hours ago, Les-TA-Jon said:

People need to stop using "Financial Fair Play" - that gives the false impression it's about creating a level playing field. It isn't. It's about enforcing clubs to be fiscally responsible and sustainable. 

 

UEFA themselves have dropped the phrase too because of this. 

Why does it ignore debt then?

[st albans fox]

6 hours ago, Chrysalis said:

Why does it ignore debt then?

Because debt on its own without context isn’t an issue if it’s comfortably serviceable from income. Many companies run with sig debt. And make large profits. 
 

someone who has studied the rules better than me will advise if the cost of servicing the debt is in the numbers. I would assume it comes off the income. but if the debt is related to infrastructure investment then I believe it’s excluded. 

[Bordersfox]

I apologise in advance as I know this will have been covered (probably several times) before.  But can someone explain for the number illeterate how a Fofana sale for say £85m would impact us in terms of FFP? 

 

Not so much the nuts and bolts figures but I keep reading we need to cut the wage bill down to hit the FFP targets.  But if we make a huge sale is the profit on that essentially also helping our revenue figures thus also easing the pressure on the wages for that financial year?

 

@coolhandfox over to you? 

[Mehrez]

We have to find more ways to drive revenue into the club, things like naming rights are definitely a good way to do that but I can’t see KP wanting to give that up

[Wymsey]

Didn't know where to put, but apparently Aiyawatt had recently purchased a small island for £200m.

Edited 6 August 2022 by Wymsey

[Clever Fox]

19 hours ago, Chrysalis said:

Why does it ignore debt then?

I'm not accountant but here is my understanding of it which might help you understand and why FiFA are only interested in ability to pay really.

 

Most likely because Debt itself doesn't directly effect the day to day accounts or running of the Club, Only the current Debt interest payments do. 

For instance, We borrow 50 million at 5% interest per year thats 2.5 million a year interest. It's that 2.5 million that affects the accounts in the current year.

It's a bit like your Mortgage, It's only the cost of the Montly Mortgage coming out of your salary that affects your ability to pay ,  not the value of your Property.

 

The debt itself is treated as a long term committment and can be Amortised or treated as book Value.  The Club can choose to pay down the debt also in installments or it can choose to leave it out there knowing inflation will reduce the debt over time. A bit like Leasing , where you make regular payments but dont own the Asset.

The Club might see the Interest payments are much more managable for the Club on an ongoing basis.

 

For FiFA Debt can be difficult to get to the bottom of how it's structured, Plus today's Debt might be tomorrows Asset. like most homes if you've lived there for a period of time.

So I think it's for that reason Fifa are only interested in a Clubs ability to pay.

 

I could be wrong of course.

[st albans fox]

It’s worse than we think ……

a mate has just messaged me to say that there are two chicken dishes in hospitality and no sign of beef or lamb ….

[Sly]

18 hours ago, Wymsey said:

Didn't know where to put, but apparently Aiyawatt had recently purchased a small island for £200m.

Setting up his own football league on it. First season. Is Vs OHL 38 times. 

[Terraloon]

17 hours ago, Clever Fox said:

I'm not accountant but here is my understanding of it which might help you understand and why FiFA are only interested in ability to pay really.

 

Most likely because Debt itself doesn't directly effect the day to day accounts or running of the Club, Only the current Debt interest payments do. 

For instance, We borrow 50 million at 5% interest per year thats 2.5 million a year interest. It's that 2.5 million that affects the accounts in the current year.

It's a bit like your Mortgage, It's only the cost of the Montly Mortgage coming out of your salary that affects your ability to pay ,  not the value of your Property.

 

The debt itself is treated as a long term committment and can be Amortised or treated as book Value.  The Club can choose to pay down the debt also in installments or it can choose to leave it out there knowing inflation will reduce the debt over time. A bit like Leasing , where you make regular payments but dont own the Asset.

The Club might see the Interest payments are much more managable for the Club on an ongoing basis.

 

For FiFA Debt can be difficult to get to the bottom of how it's structured, Plus today's Debt might be tomorrows Asset. like most homes if you've lived there for a period of time.

So I think it's for that reason Fifa are only interested in a Clubs ability to pay.

 

I could be wrong of course.

Forget debt, yep it’s what FFP should be about but it isn’t.

 

Put very simply the current model os on one side you have income, and that includes profit from player sales.

 

On the other its what you’ve spent. Ok some types of expenditure  don’t count such as academy costs, and money spent on infrastructure. 
 

The simple fact is that the more you earn the more you can spend be it on wages or transfers. Many of the costs are broadly similar at all PL it  don’t matter if you earn £400 million a season or £200 million for me it’s the % of total income a club spends on wages closely followed by amortisation that tells the greatest tell so for me the 90–80%-70% will be far more relevant than the old process as that was open to so much abuse as to make you laugh

 

 

 

[Chrysalis]

On 06/08/2022 at 07:28, st albans fox said:

Because debt on its own without context isn’t an issue if it’s comfortably serviceable from income. Many companies run with sig debt. And make large profits. 
 

someone who has studied the rules better than me will advise if the cost of servicing the debt is in the numbers. I would assume it comes off the income. but if the debt is related to infrastructure investment then I believe it’s excluded. 

I didnt say should be debt on its own, I pointed out its ignored.

 

The answer to my question is the FFP isnt here to prevent clubs from going bust, its here to protect the status quo.