Financial Fair Play

[McBride78]

I am still learning how the FFP works.  In American sports there are really two ways that leagues are run with success.  Major League Baseball is less regulated and looks more like the Premier League, where money can buy talent to equate to wins.  Most of the other leagues (NBA and NFL) are regulated through a salary cap system where teams have a maximum they can spend on players, all teams have the same maximum, meaning if an owner chooses to be competitive they will not be out spent by bigger clubs.   

So to ask a stupid question, what is the long term goal of FFP?  to create parody and equality?  If so it does little to change the fact that the top of the table is impossible to reach without a sh!t load of $$$. 

[MJG]

http://www.financialfairplay.co.uk/financial-fair-play-explained.php   This is good explanation of how it works if not the reason of it.

I see it as a way to control costs so clubs don't go bust. It may not work that well at top levels but it's clearly helping keep clubs at lower levels on a secure footing.

[Logicalman]

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.

Very interesting, so basically you are saying our owner DOES have some idea of the financial world we now live in. Must be why he's a billionaire and we ain't then.

If this explanation is on par with the actions and FFP rules, then I might suggest that Khan has one eye on the future as well as the present, which for, as some claim, a want-away owner, seems strange, as it seems like he wants to keep us afloat and within profit for a longer time.

MJG, any comment on the reasons for this write-off for the last Prem league year?

[MJG]

The write down is in line with clubs that get relegated devaluing their assets. Norwich did it and we have just on a larger scale,  but if you think about it then it makes perfect sense,given the amount of players who left and also what remained of the squad.. Mainly youngsters.
The example I give is Roberts. In the second half of last season you could have argued he was worth £15m on paper to us.
With relegation,  one year less on his contract you could say he's only worth half that. Hence you would show a 7.5m loss.

Now of course when we go up, the value will go up and we show a profit.

I'm not concerned by these reports as they have an angle of argument and it's down to people to either believe that or actually look a bit deeper at what's happening.

[Oakeshott]

Logicalman

I agree it could indicate that Khan is with us for the longer term. On the other hand it could be argued that he has put the Club in as favourable position, FFP-wise, as it can be (by accounting means rather than changes to staff, salaries and income) and that is an appropriate step if one is hoping to attract a new buyer.

[Logicalman]

Logicalman

I agree it could indicate that Khan is with us for the longer term. On the other hand it could be argued that he has put the Club in as favourable position, FFP-wise, as it can be (by accounting means rather than changes to staff, salaries and income) and that is an appropriate step if one is hoping to attract a new buyer.

.. and that argument bears some wisdom. My target were those that still claim Khan is here to run us in the ground and then sell off the land for development, for which improving the clubs standing under FFP makes no difference.

I would be very surprised, given the cost of purchase and the drop in the value that might be expected, together with our survival this season, that Khan is likely to sell in the near future. He is a successful business man after all (though his purchase of the club at the time he did, tends to let one believe he might not be as up on English footie clubs value as he should have been).