Football Clubs & Debt

[Toonpack 9303]

The case we settled was related to payment of image rights rather than use of an EBT.

 

Similar thing though ain't it ?? was reported in the Torygraph the other day, no amount but evidently less than the contingent liability held in last years accounts (which I can't find).

[JawD 99]

I think every club has has the same discussions with HMRC on image rights. Just in case anyone thinks our case was unusual.

[Toonpack 9303]

I think every club has has the same discussions with HMRC on image rights. Just in case anyone thinks our case was unusual.

 

Oh aye, they all are, think only us and Chelsea have settled so far. There's also reportedly 8 or 9 likely to get a kicking over the EBT's business if HMRC win their case against Rangers.

 

Outside of the UEFA fair play malarkey, hopefully HMRC kick the shit out of football, so that everyone has to operate correctly.

[JawD 99]

So the Rangers players have agreed to a 75% wage reduction until the end of the season. Thats enough to drop their overheads significantly and give them time to sell the club I'd think.

 

http://www.guardian.co.uk/football/2012/mar/09/rangers-redundancies-pay-cut?newsfeed=true

[Baggio 0]

But Abramovich and his new manager will be constrained if Chelsea cannot finish in the top four or win the Champions League, an alternative way to qualify for next season's competition. Abramovich has spent around £800m since his takeover in 2003.

 

But, under UEFA's new Financial Fair Play rules, which are unlikely to face legal challenges by the clubs after being backed by the European Commission last week, the Russian's lavish subsidies of Chelsea will have to end, making Champions League qualification a must.

 

Last year Chelsea made £37m from Champions League TV money alone, plus an estimated £25m from the matches. And next season looks like being a financial nightmare if they fail to qualify.

 

Without that money there seems little hope of Chelsea meeting the criteria for UEFA's new rules unless the naming rights of Stamford Bridge can be sold for a huge sum. Chelsea chief executive Ron Gourlay has said he is confident of a deal this summer, but £10m a year would be a generous valuation and UE FA have already said they will outlaw any massively overvalued deal that looks like a disguised subsidy.

 

The FFP rules do not come into force until 2013 but it is this season's finances and next season's that will determine whether a club comply. Any club who do not will risk being excluded from UEFA competitions, including the Champions League.

 

Clubs will be allowed to lose a total of £35m in the first two years of UEFA's scheme - that is, this season and next. Exemptions mean Chelsea had been confident of meeting the new requirements even though they posted a £67.7m loss last year.

 

The club might even cut that loss to a few million pounds this season under UEFA's accounting rules. But take £37m out of the pot and it is difficult to see how they can make the grade.

 

One of the mitigating factors UEFA will take into account in deciding whether the rules have been broken is whether losses are heading in the right direction. But if Chelsea do not qualify for the Champions League, their losses are likely to grow rather than fall.

 

 

Read more:

http://www.dailymail...l#ixzz1qBFvFcfw

[Baggio 0]

Uefa and the European Commission (EC) closed any possible loophole that could be exploited by overspending clubs when they signed a joint agreement yesterday endorsing Financial Fair Play (FFP).

 

They said the FFP rules, drawn up by European football's governing body, were fully compliant with European law. The central principle of FFP is that clubs should "live within their means" or break even based on football-related income at least matching their football-related expenditure.

 

Uefa and the EC have acted to stop any club mounting a challenge in court to the FFP rules, which come fully into force in 2013-14 with any sanctions imposed in the 2014-15 season.

 

The Uefa president Michel Platini believes the joint statement is a significant step in strengthening the policy, saying: "Our statement confirms that Uefa's Financial Fair Play regulations are fully consistent with EU State aid policy."

 

Joaquin Almunia, vice-president of the EC and the Commissioner for Competition added: "I fully support the objectives of Uefa's FFP rules as I believe it is essential for football clubs to have a solid financial foundation. The Uefa rules will protect the interests of individual clubs and players as well as football in Europe as a whole."

 

Almunia, who has agreed the 14-point statement with Platini, would rule on any complaints and his comments make it clear that there would be little sense in clubs challenging the ruling.

 

Some observers have questioned whether the FFP rules can work, but the Uefa/EC joint agreement means there will be no room for clubs to manouevre their way out of the framework. At present, many clubs have huge debts which need to be off their books when FFP comes fully into force or else they will risk Uefa sanctions that could include disqualification from the Champions and Europa League.

 

Uefa' general secretary Gianni Infantino said: "Let us be clear this is not a new law. But it reaffirms what we have always said that the FFP rules are legal and in accordance with European legislation.

 

"If anyone was thinking of filing some sort of complaint saying FFP somehow restricts European competition law they would have to file it to the Commission. This is a big milestone in the enforcement of the break-even principle."

 

What FFP and yesterday's joint statement cannot prevent at present, however, are the types of financial problems affecting clubs such as Rangers in Scotland, Portsmouth in the English Championship and Servette and Neuchatel Xamax in Switzerland, where poor management has led to difficulties.

 

Asked if it was time for Uefa to oversee who could and could not take control of Europe's senior clubs, Infantino replied: "It is not our ambition to dictate everything everywhere. We hope we can convince every league, every association and every club in Europe to implement the same rules and to make sure there is a stricter control as it is really a pity and sad to see what is happening today in Switzerland, and in Scotland where some traditional clubs are going bust for whatever reason.

 

"This shows more control is needed, more enforcement is needed, but this cannot be done by Uefa but by everybody in a responsible way and our job is to convince everyone to follow the same principles and the same rules which we have started to do."

 

http://www.independe...ns-7580682.html

Edited March 26, 2012 by Baggio

[Kitman 2204]

Is Baggio posting in invisible ink or is it just me?

[Kevin Carr's Gloves 3860]

Does this mean the end of Manchester city esque club buyouts. No one can come in and buy a league anymore. Good if it's true like.

[Happy Face 29]

If you think that no-one else ever breaking into the top 4 is a good thing

 

Man City getting bankrolled has been brilliant for the league IYAM.....at least in the short term. Not sure if I'll be saying that in 5 years if they get a stranglehold on things.

[ChezGiven 0]

Explain that point of view, please? "FFP is going to reduce the probability of teams breaking into the top 4", is that what you are saying?

 

You can guess what i think of that, if you want.

[Happy Face 29]

Explain that point of view, please? "FFP is going to reduce the probability of teams breaking into the top 4", is that what you are saying?

 

You can guess what i think of that, if you want.

 

You have teams with a huge turnover who the new rules allow to spend a corresponding larger amount than clubs with a lower turnover, this cements the ability of rich clubs to spend on success and outlaws any other clubs from getting ideas above their station and doing so.

 

The way I saw it, it preculdes Richard Branson from deciding NUFC should be up there, buying the club from Ashley and spending all he sees fit in getting us to challenge for the title.

[Kevin Carr's Gloves 3860]

But isn't CHelsea and Man city's turn over crap? And doesn't Man u's debt cripple them as well?

[Happy Face 29]

But isn't CHelsea and Man city's turn over crap? And doesn't Man u's debt cripple them as well?

 

1. Man U

2. Arsenal

3. Chelsea

4. Liverpool

5. Spurs

6. Man City

 

Man City's is low, but that's the point. Does anyone imagine they'd be challenging for the title without the investment they've had.

 

The suggestion seems to be it's more likely that a club could build their turnover to the same levels as Man U and Arsenal (without buying top players) and then challenge for the title and Champions league using the extra income. That seems to me more far fetched than someone investing the money needed to challenge for the title & champions league places....and increasing revenue as a result.

Edited March 26, 2012 by Happy Face

[ewerk 30385]

City's will be much higher for this season given their CL money.

 

Also, Man U's finance costs won't count towards the cap.

[ChezGiven 0]

Explain that point of view, please? "FFP is going to reduce the probability of teams breaking into the top 4", is that what you are saying?

 

You can guess what i think of that, if you want.

 

You have teams with a huge turnover who the new rules allow to spend a corresponding larger amount than clubs with a lower turnover, this cements the ability of rich clubs to spend on success and outlaws any other clubs from getting ideas above their station and doing so.

 

The way I saw it, it preculdes Richard Branson from deciding NUFC should be up there, buying the club from Ashley and spending all he sees fit in getting us to challenge for the title.

That wasnt an explanation, it was more a re-statement of the point of view. First of all, on a basic level FFP is a more competitive model than the current one. That should be ovbvious. The only way it fits with your view is that the current model allows small turnover clubs to be subsidised and loss making to compete with the big clubs. The solution to the inequality of the distribution of wealth in football is, under the current model, to allow private debt to or 'subsidy' to reduce that inequality, which is only good for clubs with access to private subsidies. However, the well-run competitive club without subsidy and lower turnover than the very biggest clubs, now faces a double disadvantage; less income than the big clubs, and no access to private subsidy.

 

The whole point of FFP is based on insight into better competitiion in markets. The European enery market is a good analogue. Pre EU competition rules, state owned energy companies in France, Italy, Spain etc could operate inefficiently in their home markets but purchase energy companies abroad through massive state subsidies. Domestic energy companies complained to the EU competition commissioners because the state subsidies meant the public monoliths could out-bid them for rival companies, increasing their monopolistic power of energy supply in the region. This was judged to be bad for everyone.

 

Another way to look at FFP is to think about any highly competitive market (e.g. phone networks) and ask yourself, has competiton regulation ensured that the biggest companies with the highest turnover have cemented their place with the highest market share? Of course not, in any highly competitive market, with many companies with an unequal distribution of income (and market share), the dynamics of competition and market forces over time mean that the dominant players have to work very hard to stay at the front of the pack, many dont and new leaders emerge who have better business models.

 

Just look at Chelsea, ageing squad, lack of coherent direction internally, riven with politics. The private subsidy model will allow them another crack at the top next season if they spend massively. However, they cant spend that massively and under FFP, that spending is limited. They also now have to balance the wage bill as a % of turnover and total outlay on players against a fixed benchmark. If FFP drives this summer's financial planning, then they have less scope to improve their lot. A poor performance next term, some bad management decisions, new purchases dont work out and they are 5th again. The scope to improve reduces again.

 

As for Man City, they can stock up on top quality players now but wont be able to carry on the way they have. The current players will pass their peak soon and will need replacing except next time, they cant go out and blow 100s of millions on new players to re-stock the club. They will need to be more organic and with that, will be less certain of success. Its the reduced certainty, the increased exposure of the club to the vagaries of success and failure which means that those well run clubs, with high performing teams will be more able to compete with the top side.

 

Just think where Chelsea and Liverpool would be now if the same decision makers who spent all their money in the last 18 months were still in place but had 60% less money to spend?

[Happy Face 29]

None of what you've said there suggests to me why those with the highest turnover won't cement their positions at the top of the league, Chelsea could have a blip, but what club with a low turnover can build a team that will be in a position to take advantage?

 

There's a reason Man U and Arsenal love these new rules and want real sanctions against those that flaunt them, and in my view it's not the levelling of the playing field so much as the restrictions placed on pretenders to their crown. Their position is built on decades of success and they don't want any new money taking that position from them.....rather than removing one of two barriers to success as you put it (low income and no subsidy) this removes the ONLY possible path to real success open to an outsider club....the subsidy.....the only way ANY club has taken the title from Man U or Arsenal in 20 years.

Edited March 26, 2012 by Happy Face

[ChezGiven 0]

Then you didnt understand the two paragraphs on subsidised competition and competitive markets. As both of those analyses suggest you are less likely to be able to cement your position, the more competitive a market is and an unequal starting distribution of wealth does not mean dominant players remain dominant in other markets.

 

Man U win titles because they are the best not because they are the richest, you confused man. They've not spent their way there recently either, or certainly not in relation to the other very rich clubs which tells you all you need to know. As for arsenal, am sure everyone would agree they are in striking distance of us, if we keep progressing and they lose Wenger, nothing to fear.

[Gemmill 44539]

You two totally fancy each other.

[ChezGiven 0]

It's purely platonic.

[Happy Face 29]

Then you didnt understand the two paragraphs on subsidised competition and competitive markets. As both of those analyses suggest you are less likely to be able to cement your position, the more competitive a market is and an unequal starting distribution of wealth does not mean dominant players remain dominant in other markets.

 

Man U win titles because they are the best not because they are the richest, you confused man. They've not spent their way there recently either, or certainly not in relation to the other very rich clubs which tells you all you need to know. As for arsenal, am sure everyone would agree they are in striking distance of us, if we keep progressing and they lose Wenger, nothing to fear.

 

In striking distance of us.....who've been subsidised to the tune of £150m.

[ChezGiven 0]

You know what I mean.

[LeazesMag 0]

You know what I mean.

 

"if we keep progressing"

[ChezGiven 0]

Aye, it's a big if.

[LeazesMag 0]

Aye, it's a big if.

 

[ChezGiven 0]

?

 

I was being serious, progress from here is overtaking 5th and challenging for the CL places. Despite an amazing season and even with significant investment, that's still a big ask.