Topic: FFP rules

[CraigDS]

Thanks for posting that, Craig.

It still sounds very much like falling between stools to me. On the one hand they want sustainable growth and to prevent reckless overspending, but on another you can approach them with 'a plan' (whatever that actually equates to) to reimburse that money in order to circumnavigate their own restrictions. Sponsor your own club, perhaps? I wonder what they'd've made of it had Peter Ridsdale gone to them back in 2001 with 'a plan' based on sustaining CL qualification to reclaim their overspending.

If it was me running it and I was introducing something along those lines, then I'd be saying to those owners coming to me wanting to invest their own cash chasing future income that it's all fine that they do that, but the money coming in will be subject to be turned into equity should that future income not come to fruition. So basically the risk is on the owners investing the money, and they won't be bailed out by securing that debt on the club.

[jambutty]

Doesn't everyone see what a shit 'investment' a footy team is?

I'd bet if FSG knew as much as they know now they would never have bought.

Sugar Daddy my arse.

Morons with money are few and far between.

Is Ashley looking for a new team yet?

[Deo]

Doesn't everyone see what a shit 'investment' a footy team is?

I'd bet if FSG knew as much as they know now they would never have bought.

Sugar Daddy my arse.

Morons with money are few and far between.

Is Ashley looking for a new team yet?

The club is worth almost twice what they paid for. Not exactly that bad of an investment.

[idontknow]

This whole thread makes football as a business seem a tad dodgy.
George Graham would be turning in the carpark.

[stevensr123]

The club is worth almost twice what they paid for. Not exactly that bad of an investment.

The club is only worth what someone is willing to pay for it. Despite what the likes of forbes say, No one is gonna pay almost 700 million dollars for us. Or even 2 billion for real Madrid.

Simply because you would never get a return on your investment. Unless of course a sugar daddy comes in akin to man city. But then not a lot of billionaires are like them. They got man city on the cheap and are using them as exposure for their country and their other businesses.

[TSC]

FFP or whatever other regulation UEFA decide to implement will always be on stony ground where it can be challenged under EU law.  How can it be legal to prevent an owner putting his or her own money into their business?

Totally different of course but the same principle applies re the Bosman ruling over freedom of movement for workers etc.  If it doesn't meet requirements under law then it'll fall down, and UEFA probably know this now that challenges are arising.

[QC]

FFP or whatever other regulation UEFA decide to implement will always be on stony ground where it can be challenged under EU law.  How can it be legal to prevent an owner putting his or her own money into their business?

Totally different of course but the same principle applies re the Bosman ruling over freedom of movement for workers etc.  If it doesn't meet requirements under law then it'll fall down, and UEFA probably know this now that challenges are arising.

Legitimate public interest; justified if it creates a more competitive outcome; sector specific public policy.

There are a few defences.

[CraigDS]

The club is worth almost twice what they paid for. Not exactly that bad of an investment.

And Forbes once valued us at £1b when the two shyster yanks owned us. How much did they end up getting? And even at that value on 2 bids materialised.

As someone else said, the club is worth what someone ends up paying, and it certainly wouldn't be double what they paid IMO. It'll be a profit though, that's for sure.

FFP or whatever other regulation UEFA decide to implement will always be on stony ground where it can be challenged under EU law.  How can it be legal to prevent an owner putting his or her own money into their business?

Totally different of course but the same principle applies re the Bosman ruling over freedom of movement for workers etc.  If it doesn't meet requirements under law then it'll fall down, and UEFA probably know this now that challenges are arising.

Because UEFA competitions aren't a free and open market. Football clubs have to apply to be part of them, and one of the conditions for being part of these competitions are compliance with their rules.

[TSC]

Legitimate public interest; justified if it creates a more competitive outcome; sector specific public policy.

There are a few defences.

Because UEFA competitions aren't a free and open market. Football clubs have to apply to be part of them, and one of the conditions for being part of these competitions are compliance with their rules.

Yep but if UEFA 'rules' are at odds with EU legislation I'd imagine EU legislation will prevail.  As ever the courts will decide of course and there are challenges ongoing which may have been the prompt for UEFA to look at ways of 'relaxing' the rules.  Whether this relaxation will be enough to stop current challenges remains to be seen.

[CraigDS]

Yep but if UEFA 'rules' are at odds with EU legislation I'd imagine EU legislation will prevail.  As ever the courts will decide of course and there are challenges ongoing which may have been the prompt for UEFA to look at ways of 'relaxing' the rules.  Whether this relaxation will be enough to stop current challenges remains to be seen.

I'm not sure they are at odds, especially given Man City (or whoever) have the choice if to be part of UEFA competitions or not.

There are a number of examples of direct wage caps across Europe which seem to be legal (Rugby Super League has had one since 1996), so given FFP doesn't limit wages at all or puts limits on movement of trade between countries (I'd argue the transfer windows are more of a preventative to this than FFP) I'm not sure there will be much of an issue.

[QC]

Yep but if UEFA 'rules' are at odds with EU legislation I'd imagine EU legislation will prevail. As ever the courts will decide of course and there are challenges ongoing which may have been the prompt for UEFA to look at ways of 'relaxing' the rules.  Whether this relaxation will be enough to stop current challenges remains to be seen.

There are aspects of EU legislation that may justify FFP. The relaxation seems voluntary rather than a response to the legal challenges.

[CraigDS]

There are aspects of EU legislation that may justify FFP. The relaxation seems voluntary rather than a response to the legal challenges.

Agreed. There were always going to be changes as it evolved to be the best fit.

It's pretty clear it created an 'us and them' situation that prevents those without money from getting investment and spending to challenge, so I think its natural for UEFA to want to fix that issue as it's really not in their (or footballs) best interests for that sort of investment not to happen. This way they get to allow it, but totally on their terms and with their input.

[L666KOP]

FSG aren't going to bail on us until the ground expansion is done.

Their 'peak maximisation' will come when we have our 60k stadium, and are in the CL.

Hoping for new owners before it happens is just wasting brain space.

[QC]

Agreed. There were always going to be changes as it evolved to be the best fit.

It's pretty clear it created an 'us and them' situation that prevents those without money from getting investment and spending to challenge, so I think its natural for UEFA to want to fix that issue as it's really not in their (or footballs) best interests for that sort of investment not to happen. This way they get to allow it, but totally on their terms and with their input.

Sadly, judging from the article on the other page i don't see the changes benefitting us. Unless we can point to the future larger stadium revenues to justify some large spending this summer.

[CraigDS]

Sadly, judging from the article on the other page i don't see the changes benefitting us. Unless we can point to the future larger stadium revenues to justify some large spending this summer.

I don't think it will change anything for us either though.

It really depends what UEFA allow. Would they class Man City as a 'fixer-upper' and allow an overspend from their owners? Or are they specifically looking at teams like Villa or Everton who aren't one of the 'elite'?

[QC]

I don't think it will change anything for us either though.

It really depends what UEFA allow. Would they class Man City as a 'fixer-upper' and allow an overspend from their owners? Or are they specifically looking at teams like Villa or Everton who aren't one of the 'elite'?

I can't really see what will change for City. Their trick now is to build infrastructure like their training ground, and get sponsors slapped on the side of every building. That will still be restricted by 'fair value' though. But given the wealth of their owner, if he invests 100 mil in a building, and gets 10 mil for naming rights, he'll probably just build 10 buildings.

Could be this relaxation just ends up immediately unlocking all the revenues on their unsponsored buildings; as opposed to them having to wait for that money to trickle in.

I don't really know what an viable growth-focused business plan looks like for a football club. Already infrastructure and youth is exempt, so presumably they'd be allowed to break FFP thresholds to buy players to reach viable goals: i.e. buy players to get promotion to the PL is plausible, but spending 1bn on players to win the CL money for 5 years in a row isn't.

Seems pretty subjective overall.

[L666KOP]

It won't be a free for all.

UEFA could say that for 2 years you can spend up to 250m pounds, however 10% has to be on your academy, 10% has to be on improvements to the facilities etc etc.
After the 2 years grace period the normal rules apply.

There are ways and means of policing it, but it needs careful scrutiny so we don't end up running clubs to the wall like Leeds and Pompey.

[L666KOP]

Sadly, judging from the article on the other page i don't see the changes benefitting us. Unless we can point to the future larger stadium revenues to justify some large spending this summer.

That's a variable though. There's no absolute guarantee we'll fill it.

Much like Leeds spending like a drunken sailor because the borrowed against future ST and Champions League income.

[QC]

That's a variable though. There's no absolute guarantee we'll fill it.

Much like Leeds spending like a drunken sailor because the borrowed against future ST and Champions League income.

Filling our stadium is a lot less riskier than betting on CL income. A lot.

[L666KOP]

Filling our stadium is a lot less riskier than betting on CL income. A lot.

Agree.

But it's still a variable. They might allow a percentage ? But with the caveat that should we not meet our projections we'll suffer as a result ?

Would you let Arsenal point to future CL revenue ? They've qualified every year for as long as I can remember, but it's not 'guaranteed' is it ?

You're allowing ambiguity into the sums, and I doubt UEFA would go for it.

[QC]

Agree.

But it's still a variable. They might allow a percentage ? But with the caveat that should we not meet our projections we'll suffer as a result ?

Would you let Arsenal point to future CL revenue ? They've qualified every year for as long as I can remember, but it's not 'guaranteed' is it ?

You're allowing ambiguity into the sums, and I doubt UEFA would go for it.

But that is what they are allowing Craig posted the article in this page before. If UEFA sign off on a commercial strategy they deem as 'plausible' and 'business led', you'll be allowed to breach FFP thresholds.

I agree with you that it introduces ambiguity, so i'm just speculating at the creative ways we could strengthen our spending ability.

As I see it, the stadium expansion is on an interest free loan. There's pretty high demand for tickets as seen by the outrageous prices, and overall it just seems like a safe bet. As a club we've fallen behind in many things, but I don't think fan attendance is one of those. Plus a small decrease in the very high ticket prices will also influence any dip in demand.

Our stadium has long been an untapped source of potential revenue, hopefully these rules let us extract that value now. We sure as hell need it.

[CraigDS]

You're allowing ambiguity into the sums, and I doubt UEFA would go for it.

All income streams have some level of ambiguity, especially because a business plan which allows for spending above your current income (i.e. needing owners cash) relies purely on future revenue from areas you've not yet got it from.

Given stadium and other infrastructure spending isn't included in FFP calculations it remains to be seen how they'd look at that.

So you're looking at an improved side finishing higher in the league so more TV income, qualification for UEFA competitions, increased commercial activity. All of which will have some level of guess work.

[Dave D]

Is there any more information on the legal cases being brought against FFP? It's probably more important than the UEFA backtracking currently going on.

The only information i can find is that at least two of the cases are hoping for a interim decision by July.

[L666KOP]

But that is what they are allowing Craig posted the article in this page before. If UEFA sign off on a commercial strategy they deem as 'plausible' and 'business led', you'll be allowed to breach FFP thresholds.

I agree with you that it introduces ambiguity, so i'm just speculating at the creative ways we could strengthen our spending ability.

As I see it, the stadium expansion is on an interest free loan. There's pretty high demand for tickets as seen by the outrageous prices, and overall it just seems like a safe bet. As a club we've fallen behind in many things, but I don't think fan attendance is one of those. Plus a small decrease in the very high ticket prices will also influence any dip in demand.

Our stadium has long been an untapped source of potential revenue, hopefully these rules let us extract that value now. We sure as hell need it.

All income streams have some level of ambiguity, especially because a business plan which allows for spending above your current income (i.e. needing owners cash) relies purely on future revenue from areas you've not yet got it from.

Given stadium and other infrastructure spending isn't included in FFP calculations it remains to be seen how they'd look at that.

So you're looking at an improved side finishing higher in the league so more TV income, qualification for UEFA competitions, increased commercial activity. All of which will have some level of guess work.

I broadly agree, I just can't see them allowing too much ambiguity. If our income rises 20m a season due to the expansion I can see them allowing say 75% of our projections for instance.

Rather than 'relaxing' the rules, I think they should tighten them. Allow the new 'owner' to buy the fixer upper, and invest money within a set framework, but really nail those clubs using spurious sponsorship to shovel money in through the back door.

I mean, City being sponsored 40m a year by an airline company that's not turned a profit in the last ten years ? These are the types of deals UEFA need to be outlawing.

[CraigDS]

I broadly agree, I just can't see them allowing too much ambiguity. If our income rises 20m a season due to the expansion I can see them allowing say 75% of our projections for instance.

Rather than 'relaxing' the rules, I think they should tighten them. Allow the new 'owner' to buy the fixer upper, and invest money within a set framework, but really nail those clubs using spurious sponsorship to shovel money in through the back door.

The rules (certainly on allowed losses) are tightening, and if the article I posted on the other page is correct then this won't change.

As for the sponsorships, this is no doubt where UEFA would face their biggest legal challenges if they went in too hard. They massively limited PSG's because it was stupidly above the normal, but I doubt they want to be going in too hard on some of City's (they have on others) if they are there or there abouts.

I mean, City being sponsored 40m a year by an airline company that's not turned a profit in the last ten years ? These are the types of deals UEFA need to be outlawing.

How could UEFA possibly have any opinion on if a business should or shouldn't be sponsoring a team in those circumstances? For all they know the owners of said airline are happy for the losses as they go through a long term expansion plan, part of which involves their brand becoming a household name via sponsorships. I don't think that is UEFA's decision to make.

[L666KOP]

The rules (certainly on allowed losses) are tightening, and if the article I posted on the other page is correct then this won't change.

As for the sponsorships, this is no doubt where UEFA would face their biggest legal challenges if they went in too hard. They massively limited PSG's because it was stupidly above the normal, but I doubt they want to be going in too hard on some of City's (they have on others) if they are there or there abouts.

How could UEFA possibly have any opinion on if a business should or shouldn't be sponsoring a team in those circumstances? For all they know the owners of said airline are happy for the losses as they go through a long term expansion plan, part of which involves their brand becoming a household name via sponsorships. I don't think that is UEFA's decision to make.

Everyone knows it's bollocks. It's a club bending rules to exploit loopholes. There must be a way to tighten the rules.

And it's a plan that's worked so well I can't remember who the bloody hell they are.

[TSC]

Is there any more information on the legal cases being brought against FFP? It's probably more important than the UEFA backtracking currently going on.

The only information i can find is that at least two of the cases are hoping for a interim decision by July.

One of the lawyers bringing one of the cases is the same guy who won the Bosman ruling (I bet UEFA just love this guy!), and he appears fairly confident of a successful challenge.  Ultimately while we can all speculate it'll be decided by the courts.

[Fair Play Falsehood]

I broadly agree, I just can't see them allowing too much ambiguity. If our income rises 20m a season due to the expansion I can see them allowing say 75% of our projections for instance.

Rather than 'relaxing' the rules, I think they should tighten them. Allow the new 'owner' to buy the fixer upper, and invest money within a set framework, but really nail those clubs using spurious sponsorship to shovel money in through the back door.

I mean, City being sponsored 40m a year by an airline company that's not turned a profit in the last ten years ? These are the types of deals UEFA need to be outlawing.

Etihad has been profitable since 2011.

Note (mods changed my name and tag line - without me knowing [Thanks for that, I a treat it as a RAWK badge of honour]) before anyone starts jumping on it

[Twelfth Man]

What are the chances clubs in our position will sue Uefa if they relax FFP?

[CraigDS]

What are the chances clubs in our position will sue Uefa if they relax FFP?

I guess it depends on just how much they intend to relax it. The threat may well be used when the clubs meet to discuss the changes.

[RedHopper]

as far as I can make out there are two big driving forces behind this relaxation of the rules. The first is that the two milan clubs have gone straight down the toilet as a result of FFP. Silvio and Moratti were massively in favour of FFP, because they wanted to stop pumping €100 million a year into their clubs. Unfortunately their clubs are so badly run that their efforts to cut back to a level of spending that was close to their income has seen them crash into midtable, losing CL revenue, and running up huge losses anyway. Both want to sell their clubs, but no-one wants to buy a midtable club that is running up huge losses. These clubs have no idea how to operate within their budget, and instead of adjusting, and coming back stronger, they are desperate to have the rules changed so they can go back to buying a champions league place, and screw over napoli, roma, lazio and fiorentina. If you were to say to an italian that FFP is about entrenching a wealthy elite, they would laugh at you. Italy above all is the league that was most distorted, and damaged by Sugar Daddy spending. Then you have PSG. More on that later.

The second big driver is something wenger mentioned at his press conference. It is the Premier league TV deals. The next PL deal is going to move every premier league club from being in the top 40 richest clubs in europe, into the top 30. That is a massive change, that will gradually start to have increasingly large effects. The bottom club in the premier league is going to be making nearly as much from domestic television as Real Madrid and Barcelona. This means that rich buyers are going to be drawn more to the PL than to big clubs in other leagues.

This second issue is very important, because while other people within UEFA are thinking about the long term viability and financial stability of european football, platini seems to have been trying to rein in the english clubs. (These proposals came into existence when english clubs were getting 3 CL semi final spots)  Every time he has been talking about FFP he seems to mention english clubs there for some reason. He mentions how the French media are unhappy that PSG can't buy whoever they want, but Roman Abramovich can. However Roman Abramovich isn't putting any more money into chelsea, and hasn't done so in a while. Why is he talking about Roman Abramovich? The only reason that Chelsea were able to afford to buy fabregas, Costa and fillipe Luis last season was because PSG paid the guts of £50 million for David Luiz.

If Platini was behind FFP for the right reasons, then he would have been saying different things, and focusing more on the Milan Clubs. However, given how France has become increasingly cosy with Qatar, (Something that extends far beyond PSG) and given that his son works for PSG, I must say that I don't trust him at all.

Also I don't understand the argument that FFP is cementing in place a hierarchy of rich clubs. That is an entirely separate problem. Inequality of income is a major problem for leagues all across europe. In the past this could be ignored by someone coming in and artificially creating a super club, and creating an illusion of competition, while crushing every other club, and destroying the opportunities for clubs that didn't have a sugar daddy. But with the implementation of FFP in Spain, you are seeing real pressure to divide the TV deal in a better, if still unfair way. The same pressures are rising in Italy.

[QC]

But with the implementation of FFP in Spain, you are seeing real pressure to divide the TV deal in a better, if still unfair way. The same pressures are rising in Italy.

I agree with this. I think FFP has worked to the extent that it has been enforced.

I believe they should push on with it. Narrow the looholes that allow city to perpetuate their sham sponsorships, leave the door open to new big spenders with sustainable business plans that are independently evaluated, and follow through with harsher punishments on poor debt management (unpaid tax by the big two in Spain) and contravention of the rules (PSG and City).

The framework is there, it just needs to be refined.

[CraigDS]

Good post RH.

Personally I see it as cementing the hierarchy because it has simply cut off any opportunity for new investors to come in invest heavily in a club to push it to the levels we've seen happen (Chelsea, City, PSG). So other than some poorly run clubs who didn't prepare at all for FFP even though they knew it was coming, there is going to be little change to those clubs at the top in each country, and as the income from the CL increases this gap will keep on increasing.

As you said, there are obviously going to be some who didn't plan for it (the Milan clubs are a good example of this) and therefore drop back, which will allow some to grab the chance to move on up. I think if you fast forward 5 or 10 years though, once these initial movements have settled, then you'd potentially just have a group of sides which is next to impossible to break into.

[CraigDS]

I believe they should push on with it. Narrow the looholes that allow city to perpetuate their sham sponsorships, leave the door open to new big spenders with sustainable business plans that are independently evaluated, and follow through with harsher punishments on poor debt management (unpaid tax by the big two in Spain) and contravention of the rules (PSG and City).

The framework is there, it just needs to be refined.

Agree with this.

[L666KOP]

Isn't it all a bit moot until we establish just what is enforceable in law ?

[lionel_messias]

It's a somewhat artificial constraint on natural marketplace economics. Sky Television, in conjunction with BT Sport dictate that Man City can pay Pogba £200k a week, with a fee of 60 million Euros. But I guess infact, they are so rich anyway that they only have to manage their business well to placate FFP.

With John Henry and FSG, we find ourselves in a weirdly ambiguous world where sporting ethics (kind of) meet hard-nosed business. They want to grow Liverpool as a business, generate more revenue and then use that revenue to fund more players. But mostly football is Europe hasn't worked like that. Teams go through a period of unnatural spending, and if they are lucky that leads to success.

John Henry's model will be sorely tested now because Liverpool will need to spend heavily to even get a shot of breaking into the more lucrative top four situation.

He bought Liverpool with hopes of strict FFP in Europe. Now, we'll have to see if he has got the stomach for looser FFP rules, and the spending that will require if LFC are not to swim around the 7th, 6th, 5th place mark in the league.

[CraigDS]

We already spend well above the 6th and 7th place level, so it's not a question of spending more but spending it more wisely.

Also, the FFP rules shouldn't really hamper our push for 4th. The team we've always been looking at bridging the gap to first is Arsenal, as they are the next above us revenue wise. They aren't owned by someone who is going to be throwing money in over and above what they bring in themselves, so there shouldn't be a need for us to do so either. We just need to increase our revenues (the stadium will help massively) and once again - spend it more wisely.

So yeah - spend it more wisely is the answer!!

[killer-heels]

Spend it more wisely. Should really be the only thing said in our supposed end of season review meeting.

[ricen]

In terms of average wages paid we went from 20th in the world to 14th (according to recent report which accounts for all sports teams in world. The only non-footy teams to make it into top ten were LA Dodgers and NY Yankees  http://www.espnfc.us/paris-saint-germain/story/2456012/psg-pay-sports-highest-wages-as-football-dominates-top-10).

Our average spend isn't anywhere near the top 4 in terms of wages; lowest in the top ten is Arsenal at nearly 85K pounds/wk

And now with FFP being relaxed, Man City can begin squad overhaul in earnest. Let's not forget at one point we thought we were fighting them for 4th place.

Furthermore, our transfer spend has always been below average. In fact our transfer spend is well below what all the other top four teams lay out. I forget the exact figure, but it came from RAWK post and was pretty clear: We're not paying what we have to in order to break into top 4.

The outcome? FSG no longer has the excuse of FFP while trying to gamble on a successful top four challenge without serious investment. Maybe this was the case before, i was always skeptical, but now they HAVE to spend. If they don't then just sell the club.

This is coming from a lifelong Red Sox fan who lives in Boston and has loved LFC since 2005. (coincidence? i think not lol) I'd love to keep seeing LFC come play in Fenway Park, but not at the expense of an EPL title.

YNWA

[CraigDS]

In terms of average wages paid we went from 20th in the world to 14th (according to recent report which accounts for all sports teams in world. The only non-footy teams to make it into top ten were LA Dodgers and NY Yankees  http://www.espnfc.us/paris-saint-germain/story/2456012/psg-pay-sports-highest-wages-as-football-dominates-top-10).

Our average spend isn't anywhere near the top 4 in terms of wages; lowest in the top ten is Arsenal at nearly 85K pounds/wk

Those wages are pretty much bullshit.

Even so, we do have by far the lowest wages out of the top 5 teams, this isn't anything new though. We don't really have much ability to up the amount of wages we spend, but we probably do have the ability to adjust how it is spent (i.e. spend it more wisely).

And now with FFP being relaxed, Man City can begin squad overhaul in earnest. Let's not forget at one point we thought we were fighting them for 4th place.

There is nothing to suggest this would allow City to go and spend massive amounts again.

Furthermore, our transfer spend has always been below average. In fact our transfer spend is well below what all the other top four teams lay out. I forget the exact figure, but it came from RAWK post and was pretty clear: We're not paying what we have to in order to break into top 4.

Not totally sure on where these figures are from, so there is probably some wiggle room either way on them all. However I'd say we're far from below average for the top 4.

The outcome? FSG no longer has the excuse of FFP while trying to gamble on a successful top four challenge without serious investment. Maybe this was the case before, i was always skeptical, but now they HAVE to spend. If they don't then just sell the club.

This is coming from a lifelong Red Sox fan who lives in Boston and has loved LFC since 2005. (coincidence? i think not lol) I'd love to keep seeing LFC come play in Fenway Park, but not at the expense of an EPL title.

They aren't going to spend more than we bring in, no matter what the FFP rules, I also doubt they've any intention of selling us, no matter what the FFP rules.

We can compete, but we have to be a lot wiser with how we spend.