HankMarvin Posted 8 June 2011 Posted 8 June 2011 Championship clubs are set to introduce their own financial fair play system where teams can only spend what they earn. The Football League chairman Greg Clarke has revealed that the Championship clubs have voted in principle to mirror the UEFA system that will affect clubs in European competition from 2014. The system will be proposed at the Football League's AGM in Cyprus on Thursday, where it will also be put forward that League One clubs move towards the introduction of the salary cap currently in force in League Two, where teams can spend a maximum of 60% of their turnover on wages. Clarke said: "The Championship clubs voted to look at financial fair play and in principle decided that was the road they wanted to go down. "I think it's essential, and the energy to solve this is coming from the clubs themselves. "It's a perfect storm in that a lot of things have come together to make this happen, including of course the level of debt in the game - £700million in the Football League, most of that in the Championship - and big losses being racked up by the clubs." Clarke said if the proposal was passed the next six months would be spent on developing a system and ensuring it was fair and transparent. He admitted that there had been some opposition to the move but a strong majority had been in favour. It is understood that Leeds chairman Ken Bates is among those backing the system. "These things are never unanimous and a couple of the clubs would rather not have constraints on how mach money they can spend," added Clarke. "I would hope this could lead to a return to the days when local communities could own the clubs rather than rely on offshore benefactors. "There is also a proposal for League One clubs to shadow the League Two system in the coming season with a view to their adopting it the season afterwards." The proposed spending constraints also reflect concern over income - the League's new £195million domestic TV deal is a 26% drop on the previous one. Clarke added: "Football finances are difficult and the UK television deal is less than the last one, and there are no signs that the economy is going to recover quickly." One area where income has gone up is in parachute payments to clubs relegated from the Premier League - now they can earn up to a maximum of £48million over four years. There have been fears that could have a distorting effect and lead to yo-yo clubs but Clarke said there had been little evidence of that so far. He said: "Largely the parachute payments are absorbed by the club paying their debts and players. Last year three clubs came down and did not make the play-offs. "This year we have two financially-distressed clubs relegated in West Ham and Birmingham, while Blackpool have run quite a tight ship, and it will be interesting to see whether the financial distress overcomes the parachute payments in terms of giving them a competitive advantage." The Football League have often taken the lead in bring in new systems - their track record includes: the fit and proper person's test for directors; clubs disclosing agents' payments; an independent chairman and independent directors; the spending constraints operating in League Two
ajthefox Posted 8 June 2011 Posted 8 June 2011 It'd be sods law if it came in just when we'd got funding but in the long run I think it's a good idea.
gazfox9 Posted 8 June 2011 Posted 8 June 2011 I certainly can't see LCFC favouring this. Not in the short term anyway. Its probably good for the game in general though.
Dan Posted 8 June 2011 Posted 8 June 2011 A percentage of revenue going on wages? Expect another price hike then.
Jay Posted 8 June 2011 Posted 8 June 2011 it's never gonna be fair play when relegated clubs get a big financial wedge over all over clubs
leicesterseddon Posted 8 June 2011 Posted 8 June 2011 So essentially, football league clubs are admitting that they can't run themselves properly as viable businesses and need greater regulation from the governing body to ensure they don't all end up making themselves bankrupt. Great. Still doesn't solve the biggest two long-term financial problems in the game, namely the fact that players' wages are still at unsustainably high levels and the disparity in TV revenue between the premier league and the divisions below...
Foxybeaver Posted 8 June 2011 Posted 8 June 2011 Most smaller clubs don't make enough and have to borrow loads of money would they still be allowed to do this at the same level?
Vlad the Fox Posted 9 June 2011 Posted 9 June 2011 Players wages need to have a cap put on them. Not in just one league but across europe at least.
ozleicester Posted 9 June 2011 Posted 9 June 2011 Salary caps = Wrestling As soon as this kind of thing is introduced then competition is killed and we end up with entertainment.
Jon the Hat Posted 9 June 2011 Posted 9 June 2011 Load of hot air. 60% of Revenue? You just re-arrange your financial statements a little so your benefactor puts money in as sponsorship and takes it out again as cost - easy for those who already financed things via loans. This will not work at all to achieve the stated aims. As soon as a benfactor walks away, a club could find themselves in breach - and then the fans are the ones who suffer.
Rocket-Ron Posted 9 June 2011 Posted 9 June 2011 Just charge the owners £20m for there season ticket!!
accessory Posted 9 June 2011 Posted 9 June 2011 All lower league clubs will take a financial hit next year, when the current TV deal runs out and a significant stream of finance is reduced. Measures like this are probably needed in order to prevent further clubs going to the wall like Palace and Plymouth. But let's hope we're promoted by then, so that they won't have any impact on us!
Fez of Mahrez Posted 10 June 2011 Posted 10 June 2011 http://www.bloomberg.com/news/2011-06-10/english-soccer-s-lower-leagues-to-adopt-new-european-rules-on-cost-control.html Sorry I can't paste the whole article. Am on my phone. This probably applies to us more than any other club at the moment.
ACF Posted 10 June 2011 Posted 10 June 2011 English Soccer’s Lower Leagues to Adopt New European Rules on Cost Control By Tariq Panja - Jun 10, 2011 10:00 PM ET English soccer’s Championship league plans to adopt “in principle” financial rules similar to those designed by European soccer’s governing body UEFA. Like the top-tier Premier League, the second division league has been unable to keep costs under control, even with rising revenue. Operating losses in the Championship during the 2009-10 season increased for the sixth straight year to a record 133 million pounds ($216.7 million), according to a report published this week by accountant Deloitte LLP. UEFA’s rules, which could lead to clubs being barred from Europe’s elite Champions League from 2014 for failing to meet its criteria on limiting losses, came in response to rising debt across the continent and the effect of cash infusions from wealthy benefactors in its competitions. “We are not doing this so clubs can make huge profits,” Football League chairman Greg Clarke said in a telephone interview today. “We are trying to stop teams from haemorrhaging cash. Football League teams have debts of 700 million pounds” The Football League, which accounts for the three professional divisions below the Premier League, plans to introduce the measures in the Championship by the start of 2012-13 season. Clubs in third-tier League One have also agreed, starting next season, to adopt a salary control mechanism that limits spending on wages to a percentage of turnover. Possible Penalties Clubs have yet to agree what punishment rule breakers will face. Clarke said they’ll probably start with ”light touch“ penalties like transfer embargoes before possibly being extended to fines and points deductions. “Without teeth these things are just meaningless metrics without regulation,” he said. The rules are likely to be advantageous to teams relegated to the second tier from the Premier League. Those clubs get so- called parachute payments averaging 12 million pounds a season for four years. Clarke said it will take time to get conclusive evidence to prove if the funds skew performance or simply help teams cope with a sudden drop in revenue after relegation. None of the teams relegated from the Premier League in 2010 -- Portsmouth, Burnley and Hull -- made it back for next season. “It’s too early to tell the impact of those payments because we have relatively little data,” he said. “I don’t think it gives them a competitive advantage but stops them from going bankrupt.” Clarke said two teams, which he didn’t identify, voted against the new proposals. “Everybody needs to get real and understand we are in period of economic austerity and we can no longer bury our heads in the sand,” he said, adding the rules may mean greater relegation clauses in player contracts. UEFA’s break-even rules will allow clubs some leeway for the first few years before being made more stringent and will also allow teams to overspend on facilities and youth development. It’s unclear whether the Championship will follow the same route.
Smudge Posted 10 June 2011 Posted 10 June 2011 I don't understand the implications of that since I haven't a clue what UEFA's controls are. However, before you posted that I was thinking that someone needs to cap players basic wages for each league and higher salaries should be earned by performance.
Fez of Mahrez Posted 10 June 2011 Posted 10 June 2011 It would certainly impact upon our willingness to dish out a two or three year contract at 30-40k a week to a certain Nigerian striker, I would have thought.
sbfox Posted 10 June 2011 Posted 10 June 2011 It would certainly impact upon our willingness to dish out a two or three year contract at 30-40k a week to a certain Nigerian striker, I would have thought. Only kicks in from 2012-13 so doesn't impact on the Yak anyway. Either way, this seems to be measuring wages as a proportion of turnover, rather than a simple debt/equity ratio that would measure losses against profits (and that clubs would have to keep above a certain figure). I'd guess that are debts are still recovering from the past 10 years, but our turnover won't be awful, so theoretically we should be fine. I would've thought this move is aimed at the mental £150k a week salaries, rather than the (whilst high, not totally out of line with inflation) £20-30k. Sensible move mind.
Fez of Mahrez Posted 10 June 2011 Posted 10 June 2011 Only kicks in from 2012-13 so doesn't impact on the Yak anyway. Surely it would if we signed him for more than one season?
sbfox Posted 10 June 2011 Posted 10 June 2011 Surely it would if we signed him for more than one season? Most probably, but not really privy to UEFA info! Like I say though, my guess is that is more aimed at the ridiculous £150k a week salaries.
Babylon Posted 10 June 2011 Posted 10 June 2011 Surely it would if we signed him for more than one season? How can it be possible to start it so soon? People have players on contracts, you can't just rip them all up. .... Kingpower could sponsor the stadium for £5m a season... that way turnover goes up. Problem is, I imagine what they are currently spending is in the form of loans, which that couldn't be.
Smudge Posted 10 June 2011 Posted 10 June 2011 Having now listened to Infantini's account of the 'fair play regulations' it sounds too vague. It won't control wages, other than than salaries being a part of the sum. On the other hand if the football league determined that a basic salary for any player, say in the Championship, could only earn a basic maximum of $25,000 pounds per week if available and his fortune depended on whether he scored goals, kept a clean sheet, assisted, stayed fit etc. I think we'd have a healthier league financially and the players would be rewarded on performance not just negotiating a good deal at the get go. The problem with common sense, is it's politically naive, therefore probaly won't happen.
Jon the Hat Posted 10 June 2011 Posted 10 June 2011 This could be a good thing - it may mean that owners such as ours have to put cash into the club in the form of income (sponsorship say) rather than debt. I await news on how exactly they plan to make it work. To be honest, this whole plan sounds to be like a scheme cooked up by the richest clubs to try and stay that way. If you have champions league money and a big stadium already, then you have a built in advantage which is very hard to overcome. Man City for example would not have been able to do what they have done. Then again maybe the rich always find a way around these things.
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