Financial Fair Play

[mullers]

Clubs like ours are being targeted to protect the big clubs. Berlusconi and others were the people behind the Champions League rather than the European Cup to safeguard their Euro qualification every year [Remember Ken Bates fighting this because they didn't include Chelsea in their 'club'?
Now FFP is needed as a second step. Those already established don't want clubs like ours and Middlesborough threatening to become Euro regulars and reaching finals and taking up valuable qualifying places from the likes of Spurs and Liverpool, and Arsenal don't want the last two threatening their fourth spot. I've no time for QPR as a club, but the truth is their situation is not a million miles away from ours. Man. Utd can afford their debts because of their turnover; the odds are stacked against most clubs ever being in a position to compete - FFP just adds to that likelihood. Whatever happens to QPR, clubs like them will always be penalised while others like Real just laugh at the rules.

[Apprentice to the Maestro]

But the "checks and balances" stiffle risk-taking. For every Portsmouth and Leeds who have had setbacks due in part to debt (and neither has gone out of business), there are success stories like us under MAF and Wigan for several years. The problem with FFP and/or football authorities' checks and balances on debt levels is that it will reduce the chance of success stories as well as setbacks. That is in part why both Watford and Bournemouth are already at very short prices to be relegated next season, and whoever joins them from the play-offs will be, too.

Apart from instances such as the Bradford fire and Hillsborough, which clearly belong to a quite different category, the only truly devastating impact on fans I can recall is Wimbledon, where a local club was literally uprooted and moved miles out of the area. By contrast, while they have had some dark years of late both Portsmouth and Leeds have had success, and remain local clubs.

Why is it good to allow someone with an excessive amount of money and no football knowledge to buy a club and try to buy success?

Why is trying to curb that regarded as stiffling risk-taking? What is good about risk-taking?

Why wouldn't it be a better idea that clubs were run on a more modest scale by people who knew about football and took risks, if you insist, on progressive managers and home developed players?

[Andy S]

That would be far more exciting but It would have to be applied across every club to make it fair. The way I could see it working would be to take a lower figure that all clubs could afford. All clubs would be made to work to the lower limits. They would have a budget to work to and would not be able to exceed it. This would only work for playing staff outside academy level and would include wages. The big problem would be for teams promoted or relegated. So as you can see there are no easy answers.

The only other way I can see it is if every club had to pay an insurance to the league each season. The league would cover any debts that a club was unable to pay within reason.  In return they would impose a 10 point deduction for having a claim Then impose the fair play rules that are clearly not fair on the club for two years

[Oakeshott]

"Why is it good to allow someone with an excessive amount of money and no football knowledge to buy a club and try to buy success?"

Because it injects more capital and more enterprise into the football world. Our neighbours are a shining example, in that Roman A's money has created a club whose achievements stand comparison with almost any in Europe. Without him (or some other very wealthy person) they'd be run-of-the-mill, like West Ham, Everton and Villa.


Why is trying to curb that regarded as stiffling risk-taking? What is good about risk-taking?

If the football authorities institute controls which reduce the level of investment that might otherwise be made, they inevitably limit (or stiffle) risk-taking. And it is risk-taking that drives progress in football as in everything else. 

[Oakeshott]

Mullers

It is worth reflecting on Chelsea. Prior to Roman A's take over in 2003, although they normally did better than us they were nothing special. I think they had won the old First Division title once, but were as susceptible to possible relegation as most top division sides.

Now, 12 years later, they are among the elite of European clubs and have won numerous domestic trophies as well as the top European trophy. It is an outstanding record of success which is due to the investment of one very rich man.

Personally I prefer a free enterprise system where in principle any club can achieve that kind of success to controlled mediocrity. Our own, more limited, success has been achieved in much the same way, and for me the problem is that the chance of it happening again is much less under FFP.

[Apprentice to the Maestro]

"Why is it good to allow someone with an excessive amount of money and no football knowledge to buy a club and try to buy success?"

Because it injects more capital and more enterprise into the football world. Our neighbours are a shining example, in that Roman A's money has created a club whose achievements stand comparison with almost any in Europe. Without him (or some other very wealthy person) they'd be run-of-the-mill, like West Ham, Everton and Villa.


Why is trying to curb that regarded as stiffling risk-taking? What is good about risk-taking?

If the football authorities institute controls which reduce the level of investment that might otherwise be made, they inevitably limit (or stiffle) risk-taking. And it is risk-taking that drives progress in football as in everything else. 

What has Abramovic's money done for Fulham?

Give us some examples of the innovative enterprise.

Risk-taking drives progress? That's a pretty meaningless phrase. I can see that aspects like innovation, spotting opportunities and investment can drive progress but risk-taking?

Would you be bringing this up if Brentford rather than Fulham had the billionaire owner?

[Oakeshott]

Innovation always involves risk-taking. The man or woman who has the creativity and enterprise to say "I think this way will prove to be an improvement" is always taking a risk, ie that it won't, and he or she will lose out as a result. Plus of course he or she will usually have to face the presssure of entrenched interests who will invariably try to find ways of thwarting the new to safeguard their established approaches.

Obvious well known examples - Jack Cohen and the creation of supermarkets, Rupert Murdoch revolutionising the newspaper industry through new printing techniques, Freddie Laker (and successors) in creating cheap air travel, Andrew Black and the creation of Betfair, and a very current one - Travis Kalanick's Uber, transforming taxi services throughout the world.

Each of these faced enormous opposition from vested interests, pressure for governments to introduce "controls", and not infrequently local public resistance, but here we are today with most of the population near one or more supermarkets selling decent food relatively cheaply; newspapers so cheap to print that quite a few are literally given away, such as the Evening Standard; flights so cheap that almost anyone can afford to fly abroad; a betting source which means these days I never get a bet knocked back as one does with the bookies if one is a successful punter and almost always a point or two better odds than available from the traditional bookies; and cheaper and more convenient taxi services.

What has Roman A done for Fulham? Nothing directly, because he doesn't own us. But there is surely little doubt that the rise of Chelsea as a major force in both domestic and European football has been a significant part of the success story that has been the Premiership, from which for years we benefitted by large sums of television money, the size of which would undoubtedly have been lower had it not been possible for Chelsea and a few other teams to become clubs football fans all over the world want to watch. (Difficult to imagine Premiership football being so internationally watched if the typical fare was, for example, us v Wigan a couple of years back, or Sunderland v Hull today.)

[Logicalman]

If there is a fine to be paid, no doubt they will appeal & appeal & appeal. They won't be demoted to the conference as some seem to think.

It wouldn't be a demotion as such, they are being demoted from the Premiership only, it's just their application to the League would not be accepted.

[Logicalman]

Mullers

It is worth reflecting on Chelsea. Prior to Roman A's take over in 2003, although they normally did better than us they were nothing special. I think they had won the old First Division title once, but were as susceptible to possible relegation as most top division sides.

Now, 12 years later, they are among the elite of European clubs and have won numerous domestic trophies as well as the top European trophy. It is an outstanding record of success which is due to the investment of one very rich man.

Personally I prefer a free enterprise system where in principle any club can achieve that kind of success to controlled mediocrity. Our own, more limited, success has been achieved in much the same way, and for me the problem is that the chance of it happening again is much less under FFP.

Isn't the principle of FFP to attempt to level the financial playing field though, to allow for 'smaller' teams to compete more and also curb the spending of the 'bigger' teams? I know it hasn't worked out so well, as when the rules were introduced the playing field wasn't already level and they simply froze it in place, but is something better than nothing?

I agree with your comment that we obtained some success prior to the rules being implemented due to MaF spending, and it might well have been some consideration of such rules that we have not invested as much over the past 3 seasons.

[rogerpbackinMidEastUS]

The world is built on risks, the Romans, the Vikings etc took huge risks financially and in man power and life.
If it wasn't for risk taking building cars, planes and particularly in America, the railway, people would have to walk (or wagon) from Virginia to California (see Hell on Wheels !)
(I only use America as an example because of it's size)
Others like Britain (not the world wars) Germany, Spain, Portugal even the Catholic and Baptists (etc) churches took risks but these were more of an egotistical arrogant form.
This I suspect includes Roman, MAF, Oystons, him from Hull and several more.

There's a fine line between calculated risk and risk taking which is often done with other peoples money who hope to profit from it.
The stock market, robbing banks, bookies and casinos are all 'risk takes'  (casinos are the worst because the odds, except in poker are staked against the punters.
Even stealing a bicycle is a risk,
Unless of course you are in the futures market in which case you bet millions on whether the price of parsnips will increase in 10 years time.

[mullers]

I agree with the points you've raised Oakeshott, but I think there's another element here which flies in the face of free enterprise and risk-taking. The 'big' clubs are using their power within UEFA and FIFA to safeguard their positions in knock-out tournaments so even if they fail to qualify they are given games that they are favourites to win to see them through.
To me it's an underhand or unofficial form of seeding where on and off the pitch certain clubs are obviously given an advantage, it's a matter of opinion whether it is fair or not.
The initial point I was trying to make is that no matter what individual feelings are towards QPR and what might happen to them we really shouldn't be gloating. What happens to them will affect clubs like ours more so than the the top ones. No club can come out of the Premier League and not have their future threatened, particularly if they have stayed there for a number of seasons.

[Oakeshott]

Logicalman

"but is something better than nothing?"

Not in my view.


Mullers

I very much agree your point, and whenever vested interests are threatened there is the possibility (likelihood) of conspiracy. We've seen it all over the place, from rate fixing in the banks to cartel-like behaviour among the supermarkets. The corollary to a free market based arrangement is supervision of the market to make sure it is not fixed. The trouble with the football authorities - both European and World - is that they tend to act as though they are not subject to any authority. How else can we explain how the level of corruption apparent in FIFA, especially, goes on essentially unchallenged.

It it similar with the UN, where corruption is rife, and the EU, whose accounts have not been passed by the auditors for years. Some bodies seem to act as if they are entirely sovereign and possible sources of control simply allow them to get away with it. (Not least in the case of the EU because failed but aspiring senior politicians see it as a gravy train they could join as Commissioners.)

It is a common myth that those who favour free markets are opposed to any controls. What they tend to want is not a load of risk-adverse (almost by definition) civil servants second guessing them and trying the manage things, but proper laws and enforcement to try to ensure that markets really are free and are not covert conspiracies against newcomers or the public.

I also do not understand the hostility to QPR, or indeed any other club. Their supporters are essentially no different to ours, and locally speaking it is largely a matter of chance that X became a Chelsea supporter and Y a Fulham one. Indeed years ago when prices were much cheaper and I had no family responsibilities I and others I know would go to Fulham one week and Chelsea the next. We supported Fulham, but enjoyed football, and if Fulham were playing in the north, we were perfectly happy to go and cheer on Chelsea turning over West Brom. or whoever.

[Logicalman]

Logicalman

"but is something better than nothing?"

Not in my view.

Fair enough.

I believe the FFP was brought in following the disquiet from a number of quarters, including fan bases, that the top teams were getting richer and 'buying' the championships, both nationally and internationally, whereas teams such as Fulham, QPR, Brentford (to name just the local ones) have little to no chance of progressing to such heights.

That said, and I am aware this might be a solitary view amongst us, I do feel that we are where we, as the size of the club we are, belong. My reasons for that are quite simple. In the same way that QPR have, and I feel Bournemouth will, discover, unless we are able to up the match-day revenue, we will never in a position to compete with the likes of Chelsea, the Manchesters or Liverpools/Evertons of this world. With the rise in players wages and transfer fees it does not behove owners to splash out hundreds of millions on such players when they are unable to realize the financial roi, and football is now just a business in the top tier, nothing less or more, just business.

The lower leagues are where English football teams were decades ago, before the big monies rolled in with rich owners. Of course United et al had the lions share, that was never going to change that much, but it was still good. Perhaps we have experienced natural evolution as far as football is concerned, and with the expansion of TV rights and the want to expand the game further worldwide, as in to North America, money was always going to start playing a larger part.

[rogerpbackinMidEastUS]

"unless we are able to up the match-day revenue, we will never in a position to compete with the likes of Chelsea, the Manchesters or Liverpools/Evertons of this world"

This was never more apparent then when we played in Jacksonville.
There was a dedicated merry little band of us (300-400) whilst in Wisconsin (I think it was)
Manchester Utd played Real Madrid and there was over 100,000 there (in a college NFL stadium !!)

Lot's of money in replica kits and car stickers.

[Oakeshott]

"In the same way that QPR have, and I feel Bournemouth will, discover, unless we are able to up the match-day revenue, we will never in a position to compete with the likes of Chelsea, the Manchesters or Liverpools/Evertons of this world"

But how do we increase match day revenue? Obviously by offering a popular product, but also by having the capacity to take the increased number of spectators that the popular product could reasonably be expected to generate.

And that immediately points up the issue of the ground. We didn't always sell out when we were in the Premiership, and to raise another theme I think the Premiership is in some danger of over-egging the television pudding by having too many games outside of the conventional 3.00 Saturday start. But when we were playing well, and matches were at a sane time against decent opposition we were often full. Hence the significance of the proposed Riverside development. But that is risk-taking. Khan could spend millions on it, increase the capacity of the ground significantly but see no increase in match day revenue if the product on the pitch is not viewed as attractive.

Assuming he is in ownership here for the longer term, it will be interesting to see how Khan tackles the problem. We have to be in the Premiership to have any chance of regular gates in excess of 25,000, so he needs to contrive his investment strategy to deliver both promotion and the greater capacity at roughly the same time. We sometimes see on the forum scepticism about the Riverside development. Obviously it won't go forward if Khan is actively seeking to see the Club. But if he is here for the longer term, the earliest the enhanced capacity can realistically be available is at the start of the 2017/18 season. IF he was working to that kind of timescale, he would simultaneously need to be anticipating promotion next season or the following one, which in turn has implications for the managership and squad investment.

To deliver both on the enhanced capacity and promotion would in any case only be a start - significantly increasing match day revenue would require another long spell in the Premiership, playing attractive football. That in turn requires a level of investment while in the Premiership that was too much for MAF's pocket, though by all accounts Khan is much the more wealthy man. Theoretically we could emulate Chelsea, but doing it in practice would demand top class leadership, would involve calculated risk-taking, and the outcome could never be guaranteed. If he was able to pull it off, then unfortunately the Cottage imposes limitations on expansion, so one could see a time when a Fulham owner would need to do an Arsenal and leave a well-loved historic ground for a new, larger stadium, which in turn would raise its own problems as for sure there would be a body of supporters who would prefer Fulham as a smaller club playing at the Cottage than being a bigger one playing elsewhere. But those are the kind of issues that any owner who believed he could achieve MAF's oft quoted comment of making us the Manchester United of the south would have to address.

[Logicalman]

Oakeshott,

Perfectly put sir. I was alluding to the fact that our 'small' ground capacity did have an impact. I know we might not have sold out every home match, but in all honesty those same big clubs in the Prem could have taken more of our tickets if we had had the increased capacity and that might well have made up some of that match-day revenue we would be missing.

[MJG]

With matchday revenue even with a 4k increase to 30k it would mean about another £2-3m per year. Not a huge amount. 
It's important to make a difference between matchday revenue and commercial activities,  two very different figures.

[MJG]

Also we had one of the highest percentage to total capacity within the PL. We were at times bursting at the seams,  so more seats if in the PL are required for the 'tourists'

[Neil D]

Does anyone seriously believe that Abramovic has been 'risk taking' with Chelsea?  His net worth is $9b.  What he is spending  on Chelsea is chickenfeed.  It means no more to him than the tenner I blew on McCormack being the Championship's top scorer.   I blew a whole tenner?  090.gif

[Scrumpy]

I guess some of you may have seen this already.......

Last season saw Fulham's losses rocket from £2.7 million to £33.3 million, a staggering increase considering they enjoyed a near-£20 million jump in turnover on the back of the new Premier League television deal.

More than half that loss (£16.9 million) was the result of what is known as 'impairment', a method of consolidating future losses on player purchases.
When most players are bought, their transfer fee is spread evenly over the course of their contract in a club's accounts. So, the £50 million Chelsea paid for Fernando Torres in a five-year deal added £10 million per-season to their outgoings.

Fulham reversed this process, in an attempt to reduce their losses for this season and beyond. They would not comment on the reason for that, but it is understood that complying with FFP rules in the Championship was one motivation.

That is because, unlike in the Premier League, where clubs are permitted to make losses of £105 million over three years, Championship teams are only allowed to lose £8 million a season.

Fulham are unlikely to have been the only team to exploit this chasm. Cardiff City, relegated alongside them last season, reported £3.99 million and £6.58  million impairments in their two most recent sets of accounts.

http://www.telegraph.co.uk/sport/football/teams/queens-park-rangers/11587937/QPR-may-regret-failing-to-exploit-FFP-loophole.html


Basically, it looks like we have written down all of our players' value last season (we're allowed to make massive losses in the Prem), rather then spread it over the term of the player's contract (which could extend over the next few seasons). For example we have put the full fee for Mitroglu in last season (rather than spread over a few seasons, as is the real case) meaning any income we have received from him this season will all be profit. It looks like the Club know what they're doing (off the pitch) and it should give us a little more leeway over the next few years.