Clubs make legal threat to Football League over financial fair play

[Monsell1976]

I personally can't see how it benefits football, charities yes, but not football clubs.

A club goes into debt due to high running cost, which doesn't just mean players wages but everything from the chairman to groundsman, gas electric etc, everything barring the youth set up, so they fine them and put them even further in debt.

States in the mercury that on that 34 million loss the fine would be 22.5 million, which is given to charity, I'm can't see how that would save a football club.

I can see what they are trying to do, but most teams outside the top flight struggle to break even, and something needs to be in place to prevent them going bust, but how can they justify adding that amount to teams debts.

[sylofox]

Can they win in court as it was the member clubs that voted it in.

 

I believe it was not a UEFA or FA/League directive but a joint agreement from the member clubs.

[sylofox]

Also thought there was a little rule that say's

 

Member clubs can not take associations to court.

The FA/League do not have to accept any application to the League membership.

 

All clubs have to re apply every season.

[Ric Flair]

I fail to see how we will comply with FFP, thank god we're in the position we're currently in league position wise.

[sylofox]

I fail to see how we will comply with FFP, thank god we're in the position we're currently in league position wise.

Not sure how this works but our owners did not write off the debt for no reason.

 

So it must have a huge bearing on the out come of the figures released.

They have not given away 103mill for nothing.

 

Do we know what the penalties are?

I know a fine or embargo. Whats the fine? How long is the embargo? 

[Iwan is a Welshman]

I think the idea that "fining clubs isn't good for them" misses the point - the idea is that it deters clubs from getting into such a mess in the first place.

Squad costs are the main problem. Essentially if you can't afford Jermaine Defoe, rather than borrowing, don't buy him. I wonder how many Pompey fans wish it had come in ten years ago.

[Guest Col city fan]

I see this simplistically. Maybe too simplistically because finance and accounting is not my background.

For me, the concept of FFP is right and proper. God knows how we have seen the country (not only football) get into a crazy mess over recent years by spending what it can't afford. This has a knock-on effect and many people end up suffering.

There is definately a mentality of wanting everything NOW, rather than saving until it can be afforded.

So, to my mind, wanting clubs to be financially prudent and sensible to maximise their longevity seems to make sense.

What I don't get is the amount of 'parachute payments' awarded to clubs relegated from the Prem. If the plan is to try to encourage a level playing field, initially in the lower leagues, then parachute payments (or the size of them) don't make sense, do they?

The clubs relegated will immediately have a year on year, huge advantage over the rest of the Championship clubs forced to try to comply with FFP, such that any concept of 'fairness' is already lost.

That's how I see it, from a lay person's eyes.

[Iwan is a Welshman]

I see this simplistically. Maybe too simplistically because finance and accounting is not my background.

For me, the concept of FFP is right and proper. God knows how we have seen the country (not only football) get into a crazy mess over recent years by spending what it can't afford. This has a knock-on effect and many people end up suffering.

There is definately a mentality of wanting everything NOW, rather than saving until it can be afforded.

So, to my mind, wanting clubs to be financially prudent and sensible to maximise their longevity seems to make sense.

What I don't get is the amount of 'parachute payments' awarded to clubs relegated from the Prem. If the plan is to try to encourage a level playing field, initially in the lower leagues, then parachute payments (or the size of them) don't make sense, do they?

The clubs relegated will immediately have a year on year, huge advantage over the rest of the Championship clubs forced to try to comply with FFP, such that any concept of 'fairness' is already lost.

That's how I see it, from a lay person's eyes.

 

I agree, although to be fair it's understandable to see how the position has come about.

 

Premiership formed with shedloads of cash from TV deals and sponsors ensuing. Then people realise, after the mess we ended up in, that the gulf between the top flight and the rest financially was crippling clubs when they dropped out of it. Parachute payments are then introduced with the best of intentions.

 

Move a few years down the line and a number of clubs in the Championship are operating on a short-term high-spend policy where, if promotion isn't achieved within a season or two - financial collapse is inevitable. FFP needs to be brought in.

 

I imagine the problem is that parachute payments are regulated by the Premier League (who, as far as I'm aware, have not bothered with a financial fair play model - despite the situation of a number of there members) and FFP is regulated by the Football League. I'm cynical that the process of those two getting together and coming up with a fairer way of distributing the cash is going to happen any time soon.

[Guest Col city fan]

I agree, although to be fair it's understandable to see how the position has come about.

Premiership formed with shedloads of cash from TV deals and sponsors ensuing. Then people realise, after the mess we ended up in, that the gulf between the top flight and the rest financially was crippling clubs when they dropped out of it. Parachute payments are then introduced with the best of intentions.

Move a few years down the line and a number of clubs in the Championship are operating on a short-term high-spend policy where, if promotion isn't achieved within a season or two - financial collapse is inevitable. FFP needs to be brought in.

I imagine the problem is that parachute payments are regulated by the Premier League (who, as far as I'm aware, have not bothered with a financial fair play model - despite the situation of a number of there members) and FFP is regulated by the Football League. I'm cynical that the process of those two getting together and coming up with a fairer way of distributing the cash is going to happen any time soon.

About sums it up for me.

What I'm saying is that I fundamentally agree with the concept of FFP, as much as I understand it. As usual, its the execution of it and all the other variables that muddy the waters.

I find myself saying that more and more in contemporary Britain. What seems clear as a principle becomes too complex in execution such that the original meaning and intent becomes lost.

[foxes1988]

One of the main flaws in the English game at the minute is the fact that the premier league and the football league seem to work too separately from one another.

With so much money going to the top league it and the amount of medium to big clubs around of course there are going to be teams running up a debt. There are more the 20 of these clubs so competition will always be cut throat and self destructing.

Clubs tend to make aims and objectives over the course of a few years and players are signed with such aims in mind.

if the plan doesn't work immediately and the club is say relegated from the prem they suddenly then have to deal with a 50 odd percentage decrease in revenues.

This massive revenue drop or even the threat of it can have a massive impact on too many clubs. The FFP system doesn't seem to really affect enough clubs. Any FFP system I think has to be multi national. There aren't many industries as global as football so the only way to combat club debt is to do it internationally, which would be too complex to devise anyway.

[MattFox]

http://www.theguardian.com/football/2014/mar/05/wage-bills-leicester-city-nottingham-forest-losses?CMP=twt_gu

 

I'd be worried if were a forest fan. If they don't get promoted they are in a mess. We look like we are heading in the right direction on the other hand

[davieG]

Promoted clubs get significant funding as we know and most of this goes on player wages thus potentially crippling the club if they get relegated, the reason for the parachute payments

 

If it was a rule to have all PL player contracts include a relegation clause with a reduced salary and a transfer/fee option so that a relegated player could leave if someone matched the agreed fee or they live with the reduced salary in the Championship.

 

Then the money currently given to PL relegated teams through the parachute payments could be split evenly amongst all that season's Championship Teams.

 

I guess there is a danger of increasing the gap between the Championship/L1 but at least that season's teams promoted from L1 would get a share of the PL  money and teams relegated from the Championship wouldn't thus giving them no significant advantage over their new L1 rivals.

[Mark_from_USA]

Over here we have salary caps in most sports (NFL, NBA).  They work a bit like FFP by limiting player contracts.  There are all sorts of rules in place like having 'franchise' players, max contact players, max rookie contracts, etc.  They work to try to level the quality between teams in rich markets like New York and LA and smaller market teams.  To an extent it works.

 

The big difference is we don't have relegation and promotion, and therefore different tiers with vastly differing income opportunities for the teams.  A teams earning potential is based more on its performance and market, but a team cannot 'go down'.  On the other hand, we have the draft where teams pick players coming out of college, and because of this there is an incentive for teams to do poorly to get an earlier draft slot, which is bad.

 

I think some form of a tiered salary cap system (by league) would be preferable to FFP.  It would allow teams with means like Leicester to spend up to the limit of their tier, and owners of teams in the same tier could try to compete by spending to raise their team up.  It would also help rein in agents.   Basing it on profit/loss is not the greatest idea in my opinion, because so many other factors go into profit and loss other than performance and player salaries, like stadium construction, advertising deals, etc.

[Monsell1976]

Over here we have salary caps in most sports (NFL, NBA). They work a bit like FFP by limiting player contracts. There are all sorts of rules in place like having 'franchise' players, max contact players, max rookie contracts, etc. They work to try to level the quality between teams in rich markets like New York and LA and smaller market teams. To an extent it works.

The big difference is we don't have relegation and promotion, and therefore different tiers with vastly differing income opportunities for the teams. A teams earning potential is based more on its performance and market, but a team cannot 'go down'. On the other hand, we have the draft where teams pick players coming out of college, and because of this there is an incentive for teams to do poorly to get an earlier draft slot, which is bad.

I think some form of a tiered salary cap system (by league) would be preferable to FFP. It would allow teams with means like Leicester to spend up to the limit of their tier, and owners of teams in the same tier could try to compete by spending to raise their team up. It would also help rein in agents. Basing it on profit/loss is not the greatest idea in my opinion, because so many other factors go into profit and loss other than performance and player salaries, like stadium construction, advertising deals, etc.

I think ffp creates unfair competition, basically as it is, the bigger the club the more likely you are to win something, as you can afford the better players, so year on year a select few clubs will compete for the prize.

If man city's owner had come in now under ffp, the wouldn't get to become the team they are now, leaving Man U and Chelsea fighting for the title every year.

I think there could be a fairer way to control spending, and there shouldn't be a limit on what the owners can put in

[5waller5]

I think ffp creates unfair competition, basically as it is, the bigger the club the more likely you are to win something, as you can afford the better players, so year on year a select few clubs will compete for the prize.

If man city's owner had come in now under ffp, the wouldn't get to become the team they are now, leaving Man U and Chelsea fighting for the title every year.

I think there could be a fairer way to control spending, and there shouldn't be a limit on what the owners can put in

 

For me any manipulation or intervention in a free market creates unfair competition.

[Happy Fox]

http://www.theguardian.com/football/2014/mar/14/financial-fair-play-rules-unsustainable-richard-scudamore-premier-league

 

 

Richard Scudamore: financial fair play rules unsustainable in present form

• Around half the Championship clubs face big fines
• Talks ongoing about gulf between it and Premier League

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• Owen Gibson
• The Guardian,  Friday 14 March 2014 17.27 GMT

Richard Scudamore, chief executive of the Premier League, said regulators do not want half the Championship's clubs to be in breach of the rules. Photograph: Andrew Couldridge/Action Images

The Premier League has called into question the future of the Football League's new financial fair play rules, warning that as they stand they are not viable.

Judging by their annual results, around half of the teams in the Championship could face a substantial fine or a transfer embargo, having fallen foul of the FFP rules agreed by the Football League in 2012. Some clubs that have spent heavily – including Leicester City, Queens Park Rangers and Blackburn Rovers – are believed to be considering legal action, along with Wolverhampton Wanderers from League One.

By going public with his concerns and revealing that the Premier League is in talks with the Football League to agree a way of better managing the gulf between their rulebooks, Richard Scudamore, the Premier League's chief executive, could sound the death knell for the rules in their current form.

"I think the Championship clubs and the Football League themselves are taking a long hard look at what they have done with their own rules," said Scudamore. "Obviously we have some concerns but these are concerns we expressed at the time when they introduced them."

The rules were the idea of the former Football League executive chairman Greg Clarke, who remains in a nonexecutive role, and were designed to try and stop clubs gambling unsustainably on getting into the Premier League. But some of those clubs argue that given the munificence of the Premier League's parachute payments, now up to £59m over four years, it will become impossible to compete with relegated clubs and remain within guidelines. Others argue that the step down from the Premier League is too great in terms of TV income and leaves clubs unable to avoid a sizeable loss in their first year back in the Football League.

Under the Championship's rules, agreed by a majority of 21 to three following two years of detailed debate, clubs losing more than £8m can be fined or have a transfer embargo imposed. QPR could face a fine of up to £48m if they repeat their recently announced annual losses of £65m.

"We thought the transition between leagues was going to be very difficult and I think there is a mood certainly around our clubs and I think with Shaun Harvey [the Football League chief executive] and the board of the Football League to sit around in a room and see if we can actually come up with something that makes that transition a little bit more manageable," said Scudamore.

The Premier League's chief executive believes there is too much of a gap between the Football League's rules and its own recently introduced financial controls. "There needs to be some proportionate linkage because we have our rules which allow X and their rules that only allow Y and if you can't bridge that delta then it's difficult. But certainly we are in discussions with them about how we might be able to reconcile that."

He added: "Their numbers wouldn't work for us and our numbers wouldn't work for them." Asked whether it was desirable for around half of the Championship's clubs to be in breach of the Football League's rules, Scudamore said: "If that is right, as a regulator you don't want to get yourself into a position where half your clubs will breach the rules, that's really not where you want to be."

Scudamore insisted that the Premier League's own less stark financial controls, including a cap on salary increases, were having an effect. "It's too early to state formally because we don't get the first reporting period until the end of this season but taking a look at the contract profiles and what people are doing then, yes, people are respecting that," he said. "We are in the first year of three in terms of the aggregate acceptable loss but in the reports that are coming through, the clubs are trying to bring their losses down so I think we are in good shape."

[lancyclaret]

It will be an absolute disgrace if the FFP rules are watered down just because the Football League cannot stand up to the Premier League big bullies who want dodgy foreign investors to continue ploughing money into the English game so the greedy top players can get even more obscenely-high salaries.

 

Clubs like QPR, Forest and Blackburn (maybe even Leicester last year) must be laughing their heads off and sticking two fingers up the majority of clubs who voted in the rules democratically.

 

Burnley may go up to the "Greedy League" this season, but in some ways I wish they would stay in the Championship complying with the spirit of FFP.

[yorkie1999]

Simple answer is to get rid  of the parachute payments. Clubs that are struggling in the premier league will then be forced to think twice about signing players on 50 grand a week in their last transfer window, plus they won't have an unfair financial advantage when they go down. The parachute payments are supposed to help with the drop in revenue, not to spunk away on buying a new team.

[davieG]

Simple answer is to get rid  of the parachute payments. Clubs that are struggling in the premier league will then be forced to think twice about signing players on 50 grand a week in their last transfer window, plus they won't have an unfair financial advantage when they go down. The parachute payments are supposed to help with the drop in revenue, not to spunk away on buying a new team.

The parachute payment money could then be split evenly between all of next season's Championship teams.

[yorkie1999]

The parachute payment money could then be split evenly between all of next season's Championship teams.

The only reason why sky don't put big money into the championship is because the FA wont allow it because they will lose more power.

[Rincewind]

I was thinking earlier that the only way that other teams will catch City is if they had points deducted. I assume we are safe from that.

[davieG]

The Football League's 24 Championship clubs have held a meeting to discuss differences of opinion in terms of how their Financial Fair Play (FFP) rules should be implemented. Although the League have not referred to it, the meeting held in London yesterday appears to follow a legal petition called by four clubs, who The Guardian named as Leicester City, Queens Park Rangers, Blackburn Rovers and Wolverhampton Wanderers, who are all understood to object to the penalties that begin to kick in during December 2014 - at present FFP rules at Championship level are purely 'advisory', with no penalties imposed. 

The objections are reported as being due to increased parachute payments which have rocketed over the past few years, although that clearly can't be the whole picture given that QPR are one of the major beneficiaries of the revised payment system that is in place, yet are also listed as one of the objectors - unless they are trying to have their cake and eat it. The initial 'noises' coming on this matter suggested that the quartet of clubs listed were concerned at the size of the penalty that would hit them if they broke the FFP rules - a transfer embargo in the Football League, or a large fine if they had made it as far as the Premier League. 

The Football League have given their own views on yesterday's meeting, albeit without providing any detail of what changes may be tabled for its members to vote on. The statement says: 

"Considerable progress was achieved on potential improvements to the current regulations following a constructive debate between clubs. In particular, there was a focus on maintaining fair competition between clubs, in light of the substantial increase in Premier League parachute payments brought in since the introduction of FFP. Clubs also considered the introduction of a 'real time' approach to financial reporting instead of the current retrospective analysis of club accounts. The League and Championship clubs will continue developing this work in order to achieve consensus, as any changes to the current regulations will require support from 75 per cent of clubs in order to be approved." 

Current rules were voted through in February 2012, with Championship clubs agreeing in a 21 vs 3 majority to implement the rules, which closely mirror that required by both the Premier League and UEFA in their own competition rules. Clubs are allowed to report up to £8 million in operational losses, provided £5 million of that is covered by shareholder investment (rather than loans). 

The issue the Football League will face is that a number of Championship clubs feel the rules should be tightened up in the other direction, given that they have been making strong efforts to rein in their own spending. One of those isBlackpool, whose Chairman Karl Oysten said late last year that he believed some clubs were making zero effort to bring themselves within the forthcoming rules: 

"Out of the 24 clubs in the Championship, six won’t hit the FFP target. They face a transfer embargo if they aren’t promoted to the Premier League. The teams that are promoted will be fined and the money will be distributed to charity. I think those six either have no intention of complying, or can’t because of previous activity. The general strength of feeling among Championship clubs is that we need to give the rules more teeth, with higher punishments to the teams that break them." 

The next point at which Financial Fair Play is likely to hit the agenda is June's Football League AGM, when all 72 member clubs will be able to vote on a range of tabled issues. 

[Dan]

Embarrassing to be stuck alongside those three clubs when it comes to finance.

[WhispyWizard]

If the current playing squad does not comply with FFP, then theres defiantly something wrong with FFP.

[johnny the fox]

 I Know this does not apply to us any more... but it seems its not cast in stone...http://www.bbc.co.uk/sport/0/football/26971640