Is there a way around the ffp

[Foxes_Trust]

I know there might not be a way around financial fair play and I don't know the in's and out's of the ffp rules. But do you think there is a way around the ffp for example if our owners sponsored a stand for x amount of money would that work or would that be breaking the rules?

 

The League have an independent auditor who will inspect any "related party" transactions and ensure their valuations are at the "market rate", so if any club inflates the value, the League can revalue them to the market rate

[5waller5]

I'm not sure the amount of money either owner has is relevant. The business profile is similar, debt is created in the clubs name and the owner appears to be the saviour whilst charging the club for the privilege. However, the debt has been manufactured by the owner intentionally so he can benefit from the interest.

 

I look at this way. if you have a nest egg in the building society which you never spend, it's worth is actually in what interest you get, which you withdraw and enjoy. The money the Thais and ND plough into a club is like their nest egg, it stays with the club but allows them to milk the club of interest. It dosen't take many years for the interest payments to outweigh the original loan and then you're in profit and yet the big loan amount still exists. Given footballs predictable income of TV and gate receipts, an owners money might be considered safer in a football club than a bank and certainly more lucrative.

 

 

Using your analogy that's where doughty and the Thais are different and why the amounts are relevant......

 

Doughty put all his savings in there and raided his piggy bank too ..... it was way too much of his net worth and he had tied up too much money and couldn't get it out.

 

To the Thais buying LCFC is like looking after this year's ISA allowance. No big deal if they need to invest more if needs be. No need to cash in in the short term as they are comfortable with it being long term.

[Foxes_Trust]

For me the whole purpose of introducing FFP is just ridiculous, as it will have no affect whatsoever.

 

 

It was an attempt to ensure clubs only pay out what they recieve, but the problem is, it is the richer clubs which will benefit the most. Take Manchester United for example, they are the most recognized footballing brand in the world, and as a result they gain more money through sponsorship than any other club. Secondly, the more financially superior clubs are far more likely to have players which are on financially rewarding contracts, and have some value. Using the same example, lets say Manchester United sell Rooney for £35 million, and he is on £200,000 a week. Manchester United will then have £35 million upon which then can spend, as well as a spare £200,000 a week for player salaries.

 

Furthermore, FFP is meant to ensure clubs to not overspend and plummet into debt. However, for most businesses what is their main source of income? Investments. If a club cannot make an investment, in cannot obtain levels of revenue which they will require to continue running. Clubs in our division cannot afford to operate on income from just tv revenue, sponsorship and payments from the FA.

 

 

There was definetely a requirement for some form of fair play system to ensure financial stability within the game, but FFP will not result in this happening. Bayern Munich and Borussia Dortmund have shown within the German game how clubs can be profitable, and so have tottenham and arsenal within england. This is mainly through investment of players, if clubs can no longer invest...it appears than even the most financially aware clubs may no longer obtain any operating profit.

 

FFP has different criteria for the Premiership, the Championship & Leagues 1 & 2. The Championship FFP still permits £5m of investment this season. alongside allowed losses of £8m. The reason it affects LCFC is easily seen in the last set of published accounts where wages exceeded turnover by several million pounds, that is not sustainable & exactly what FFP seeks to address.

 

The German Leagues are structured very differently, wages are nothing like the scales in the UK, and ticket prices are significantly lower, while there isn't a raft of foreign owners.

[Foxes_Trust]

I thinking more like managers totally disregarding the FFP rules and in agreement with their owners invest more money than they should to achieve promotion. After all what's a fine compared to the £120 million or whatever it is prize money for promotion. 

 

Winning promotion is not a certainty no matter what money is thrown at it, gamble & fail this season and the transfer embargo kicks in Jan 1st 2015

[Foxes_Trust]

I've said it before. Just look at the Manchester City situation.

Signed a deal with Eithad for the Ground naming rights & shirt sponsor, I believe the deal was in the region of £400M for 10 years/seasons. So roughly that's £40M per yer/season they will recieve. I wonder if our club have thought about doing something similar with King Power Holdings?

 

That deal was the main reason that the related party transactions audit was introduced, it is specifically referred to in the published document on FFP prior to it being officially launched, so the value would be evaluated & "down graded" to the market rate

[Foxes_Trust]

Didn't they just buy the stadium a few weeks back? Seems to me they're putting money in wherever they can.

 

That transaction "may" save £1.1 million on the expenditure side of LCFC accounts (the interest paid to Teachers per season). That would assume the property now sits under King Power International (where all their property portfolio is accounted for) and KPI don't charge any admin fee to LCFC

[Foxes_Trust]

Doesn't it usually "Slam" shut? Once everyone has 'Swooped' and 'Snapped' up their final deals.

 

On FFP I understand the rules to allow you to post a €45 million euro loss, but the owners have to cover anything over 5 million. which they can not do with loans (it need to be capital injected), so they are not going to do that, were are not their toy we are clearly a business to them. Sponsorship is another loophole, but then if they sponsor the training ground for say £100 million (aka Man city) then they post a profit in the year and lose a chunk through corporation tax. Not something a sheikh is too concerned about.

 

I think the owners will invest but want to bring things back in line a bit. I see them here for long term but have realised its not easy to buy your way into the premier league. It needs a slow building process, hence all the effort in developing a first class academy (which is exempt from FFP).

 

The Championship rules next season are a £3 loss + £5m investment allowed

[5waller5]

That transaction "may" save £1.1 million on the expenditure side of LCFC accounts (the interest paid to Teachers per season). That would assume the property now sits under King Power International (where all their property portfolio is accounted for) and KPI don't charge any admin fee to LCFC

 

 

Wouldn't they have to charge rent / admin or some sort of fee to be playing fair under FFP?

[Vale Blue]

Using your analogy that's where doughty and the Thais are different and why the amounts are relevant......

 

Doughty put all his savings in there and raided his piggy bank too ..... it was way too much of his net worth and he had tied up too much money and couldn't get it out.

 

To the Thais buying LCFC is like looking after this year's ISA allowance. No big deal if they need to invest more if needs be. No need to cash in in the short term as they are comfortable with it being long term.

 

But Thais cant invest any more money as you call it, due to FFP. Our FFP budget will be totally used up due to our wage bill and other expenses.

[5waller5]

But Thais cant invest any more money as you call it, due to FFP. Our FFP budget will be totally used up due to our wage bill and other expenses.

 

 

Which would have ironically saved Doughty from losing his money!!!

 

So they are even further from being like him .... they are protected against making too big a loss by having FFP rules .... and have more money sitting there waiting anyway!

[Vale Blue]

Which would have ironically saved Doughty from losing his money!!!

 

So they are even further from being like him .... they are protected against making too big a loss by having FFP rules .... and have more money sitting there waiting anyway!

We agree on something at last, yes there has never been a better time to own a football club because fans cant blame you for not spending because FFP dosen't allow it.

 

It's a pity you cant see that both owners deliberately manufactured a debt to create a cash cow. Well that's why you're an accountant I guess.

[Guest ttfn]

Exactly .... and by charging 8% we increase those losses so that there's more years of future profit that don't attract a tax bill.

The interest will be tax deductible, assuming its at a market rate.

The League have an independent auditor who will inspect any "related party" transactions and ensure their valuations are at the "market rate", so if any club inflates the value, the League can revalue them to the market rate

Does this include player transfers?

[Jace]

  As far as I am aware the football club is under a different company name to what King Power and all their other assets are.

 

Have a read through this mate, ownership was changed last year from AFI to King Power holdings. Being a holding account secures our losses against the profits made by King Power 

 

http://www.bbc.co.uk/sport/0/football/19637032

[Rob1742]

Previously the owners have lent us money and made interest. So it is a good investment for them provided we go up as they get every penny back, plus interest and they would be sitting on a sizeable asset.

The big issue now is that for us to have a better squad than anyone else, we would need to increase our income, which only really could be achieved through increased sponsorship.

Their big issue is that if they increase sponsorship, this is not a loan and so they would in effect just be giving it away.

So they either give money to the club through sponsorship or we reduce the wage bill and take a more balanced approach.

After their massive mistake of overspending they are now doing it right. The problem though now is that we do not have an edge over our competition as it is now a level playing field, unless they want to increase sponsorship of course.

What annoys me is that people have had a go at Pearson, yet clearly since he has been here he has tried to put right what went wrong under Sven. He has had to try and offload players like Beckford, Danns, Gallagher and Wellens when it's clear these players don't want to leave their highly paid positions.

The manager has a difficult task, and he is now working on a tighter ship with more outgoings possible.

[Happy Fox]

Previously the owners have lent us money and made interest. So it is a good investment for them provided we go up as they get every penny back, plus interest and they would be sitting on a sizeable asset.

The big issue now is that for us to have a better squad than anyone else, we would need to increase our income, which only really could be achieved through increased sponsorship.

Their big issue is that if they increase sponsorship, this is not a loan and so they would in effect just be giving it away.

So they either give money to the club through sponsorship or we reduce the wage bill and take a more balanced approach.

After their massive mistake of overspending they are now doing it right. The problem though now is that we do not have an edge over our competition as it is now a level playing field, unless they want to increase sponsorship of course.

What annoys me is that people have had a go at Pearson, yet clearly since he has been here he has tried to put right what went wrong under Sven. He has had to try and offload players like Beckford, Danns, Gallagher and Wellens when it's clear these players don't want to leave their highly paid positions.

The manager has a difficult task, and he is now working on a tighter ship with more outgoings possible.

 

It is the DOF job not NP's.

[Babylon]

It is the DOF job not NP's.

He's been here 5 minutes

[Ashley]

It dosen't work like that. The arabs at MCFC don't care what money they lose and therefore paying 40 million/year for advertising which is a waste of money dosen't matter to them.

We dont have owners like that. Our owners pile all the debt on the club, create a huge debt and then charge the club 8%interest which they pocket which puts LCFC in even more debt and so it continues. They will not be paying for advertising rights on the name King Power Stadium because that would be a cost which would come out of their own pockets.

The Thais haven't spent anything whatsoever on LCFC, all debt is in the name of LCFC. This business approach has been very common in football for a few years and the main reason FFP was brought in, it results in Clubs being ripped off, massive debt and owners charging them for the privalege.

The same thing happened to Forest under Nigel Doughty. They ended up 80 million in debt but during his rule he only spent about 20 million on players, the other 60 million was compound interest paid to himself, !!!

Aledgedley (fff knows how you spell it your honour, !!)

Think you kind of missed my point.

[5waller5]

He's been here 5 minutes

 

 

And already got rid of the biggest earner ..... Just shows what can be achieved hey!!!

[MC Prussian]

I think you will find we are well and truly stuffed. There really is no viable way out.

There is... It's down to promotion within a reasonable timeframe and a sensible spending policy.

 

Both not officially excluding each other.

[MC Prussian]

FFP has different criteria for the Premiership, the Championship & Leagues 1 & 2. The Championship FFP still permits £5m of investment this season. alongside allowed losses of £8m. The reason it affects LCFC is easily seen in the last set of published accounts where wages exceeded turnover by several million pounds, that is not sustainable & exactly what FFP seeks to address.

 

The German Leagues are structured very differently, wages are nothing like the scales in the UK, and ticket prices are significantly lower, while there isn't a raft of foreign owners.

This is an essential bit here - other leagues have demonstrated over the years that you don't need to dish out lots of money on exuberant salaries, the talent will still be attracted.

 

The level of wages and signing fees, as well as agents' fees and transaction fees have clearly done massive damage to the market and the English market in particular, a fatal consequence of the Bosman ruling.

Now, players follow the advice of their "consultants", completing moves that don't really benefit the parties on a footballing side, but rather the leeches, ahem, assistants on the sides, filling their pockets with money they don't really deserve or have hardly worked hard for.

[Leicester_Numan]

And already got rid of the biggest earner ..... Just shows what can be achieved hey!!!

To be fair, the Beckford offer was already on the table long before the DOF arrived, it was just details that needed sorting. Wellens' contract was probably paid up by the DOF but only after Pearson told him he couldn't guarantee him first team football. So credit to all 3 parties there

[MC Prussian]

And already got rid of the biggest earner ..... Just shows what can be achieved hey!!!

I can but assume the club were trying to get rid of Beckford for a longer period of time already, the new Director of Football might have just sped up the process.

 

Still, well done.

[Babylon]

And already got rid of the biggest earner ..... Just shows what can be achieved hey!!!

Riiiiiiiight.

[NewburyFox]

The League have an independent auditor who will inspect any "related party" transactions and ensure their valuations are at the "market rate", so if any club inflates the value, the League can revalue them to the market rate

What about Watford? Their signings can hardly be judged to be at the market rate?

[5waller5]

Riiiiiiiight.

 

Soooo negative!!!!