FFP rules and how it will affect Villa and also more insight into FFP

[MJG]

I found this article below really intereting in relation to Villa and FFP
Also covers the old argument about 'Khan should just get Flexigate to sponsor us for £100M' and why he cant

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http://www.birminghammail.co.uk/sport/football/football-news/how-financial-fair-play-rules-11361849




How Financial Fair Play rules will affect how much cash Tony Xia can splash

Losing Premier League status is a catastrophe for any club, but losing it this year will make every self-respecting businessman wince.

The megabucks TV deal being brought in will only increase the gap between the Premier League and Championship, a chasm that Aston Villa must now bridge.

Such is the financial power that the top flight now has, membership of this exclusive club guarantees a top place on the list of the world's richest football clubs.

New owner Tony Xia might be prepared to flash the cash in a bid to return Villa to the promised land at the first attempt - and he has talked about a potential transfer warchest of up to £50 million - but can he realistically outspend his divisional rivals?



What does Financial Fair Play tell us?

As of June 2015, clubs can spend up to €5 million (approximately £3.83 million) more than they earn per assessment period (three years). However, it can exceed this level to a certain limit, if it is entirely covered by a direct contribution/payment from the club owner(s) or a related party. This prevents the build-up of unsustainable debt.

The limits are:

• €45m (approximately £34.5 million) for assessment periods 2013/14 and 2014/15.

• €30m (approximately £23 million) for assessment periods 2015/16, 2016/17 and 2017/18

In order to promote investment in stadiums, training facilities, youth development and women's football (from 2015), all such costs are excluded from the break-even calculation.

The turnover in the most recent set of accounts, covering 2014-15, was £115.6 million.

However, that figure obviously included Premier League TV money.

In the coming season, TV revenue will be significantly lower and will only be partially offset by the parachute payment which relegated clubs receive.

In a nutshell Villa's transfer spending, wagebill and all other costs must come to roughly around their turnover. Therefore Xia faces a challenge of increasing the turnover, without the Premier League riches of years gone by.

Rules in relation to sponsorship?

Football's wealthiest owners have tried to find a way around Financial Fair Play previously by using their own enterprises as kit and stadium sponsors. This is in line with the Lotus Villa Park naming rights suggestion Xia is proposing.

Manchester City announced a £400 million sponsorship deal with Etihad Airways in 2011, a company owned by the Abu Dhabi government who have direct links to City owner Sheikh Mansour.

If Xia hopes to do something similar, here are UEFA's guidelines on money through sponsorship:

If a club's owner injects money into the club through a sponsorship deal with a company to which he is related, then UEFA's competent bodies will investigate and, if necessary, adapt the calculations of the break-even result for the sponsorship revenues to the level which is appropriate ('fair value') according to market prices.

Under the updated regulations, any entity that, alone or in aggregate together with other entities which are linked to the same owner or government, represent more than 30% of the club's total revenues is automatically considered a related party.



Villa's latest loss?

£27.3 million for the year ending 31 May 2015.
TV money?

Early indications show that Premier League clubs will receive around £100 million per season due to BT and Sky Sports' massive new deal to broadcast top flight football matches.

It is estimated that Villa will only receive around £40 million in year one in the Championship. Should they bounce straight back up, they will only miss out on £70 million, but if it takes them three years to get back to the Premier League they will lose a whopping £210 million.
Parachute Payments?

Under new rules, Aston Villa will be entitled to three years of Parachute Payments. This is believed to be worth £87 million over the course of three years.

In season one, 2016-17, Villa would get £40 million.

In season two, 2017-18, Villa would get £33 million.

In season three, 2018-19, Villa would get £14 million.
Mat Kendrick and Steve Wollaston on the takeover
New owners

There were concerns among potential new owners that FFP rules frustrated attempts to buy clubs and grow them gradually, so the regulations were tweaked slightly to enable them to invest cash, providing they prove to UEFA they have a valid business plan to break even within a certain timeframe.

Writing in the Guardian last year , Owen Gibson observed: "As many critics pointed out from the start, it appeared to be belated acceptance that anomalies across Europe (for example the bumper new Premier League TV deal in England) made it impossible to impose a one-size-fits-all FFP rule across the continent."
Can Villa outspend their Championship rivals?

Given the Financial Fair Play ruling that clubs can spend up to €5 million (£3.83 million) more than they earn per assessment period (three years), you would assume that Villa and Newcastle will have the largest budgets in the Championship.

Those two clubs will also be entitled to bigger Parachute Payments than their rivals having been Premier League clubs throughout the last assessment period.

Newcastle and Villa face similar issues in potentially being lumbered with a raft of high earners.

It was recently revealed that they had players signed in January earning upwards of £60,000 per week who didn't have reduction clauses in their contracts in the eventuality of relegation.

At least Villa's blank January didn't add to the wagebill, even if it did wave a white flag on their Premier League survival hopes.

The importance of an immediate return to the Premier League cannot be underestimated.

[MJG]

I looked at Aston Villa's accounts the other day and they're unusual because The entity that accounted for players' wages last year reported turnover of £90m but another company in the group (which this article must be referring to) recorded turnover of £112m for the same period.

I didn't have time to investigate the reason for that and determine which is the truer figure.

Whether I trust this journalist to have looked into it more thoroughly depends whether there's an explanation for him referring to 5m EUR limit. I thought it was 5m GBP (plus 8m GBP direct investment). Surely the football league wouldn't be setting domestic limits in Euros anyway??

I think you can haggle a bit over his figures, but the thrust of the article at least tries to explain Villa's situation and also for me the sponsorship issue

[MJG]

To read more on Villa goto

http://swissramble.blogspot.co.uk/2016/03/aston-villa-this-house-is-circus.html

[copthornemike]

Quite a few parallels between Villa and Fulham it would appear.

Rich, well intentioned foreign owners who, for whatever reason, failed to appoint the right advisors  resulting in a series of underperforming teams. Unfortunately the owners despite their wealth cannot simply spend their way out of the problem in the short term due to FFP!

[WayneKerrins]

Simple truth is that relegation from Prem was and is financially ruinous.

Ally Mac is still raking in thick end of £500k. Despite his responsibilities being reduced and his boss belatedly stepping in on the one thing he was unequivocally still the 'owner' of.

Of all of Khan's specious sound bites ....custodian...do what takes...not always about balancing the books... The "I empower people and hold them accountable" line is, to me, the most risible.

[Andy S]

I think Khan may have already put money into our club via our shirt sponsor 'Visit Florida'. I have always thought that this was a way around FFP. Relegation is disastrous for any club, not just the big ones and if promotion and relegation are going to continue then parachute payments will need to increase

[grandad]

Seems to me that there is some merit in being a yo-yo club.

[b+w geezer]

Ally Mac is still raking in thick end of £500k. Despite his responsibilities being reduced and his boss belatedly stepping in on the one thing he was unequivocally still the 'owner' of.

Of all of Khan's specious sound bites ... The "I empower people and hold them accountable" line is, to me, the most risible.

It has been suggested that the new Danish bloke will be taking over from Ali Mac, after a transition period that includes the transfer window. His decision to leave ManU for us then becomes less bizarre. If so, firmer word will surely emerge, but if not, then the cat has yet more lives, an exceedingly lucky puss indeed.

[H4usuallysitting]

This is all well and good - but didn't QPR just do what they wanted and then let the Lawyers sort it out......and Leicester had a very unrealistic valuation when sponsoring there ground.......it will be interesting to see what Newcastle & Villa do......I think Newcastle will just do whatever they like and probably get promoted at Christmas (hope I'm wrong)......I think that Mr Mackintosh is probably a little bit naive in these matters

[Andy S]

The problem I can see with FFP is it could have got us relegated which could have cost us as a business a lot of money. Owners could argue that it is their club and they should have the freedom to spend as they like. the fact that QPR's case has gone on as long as it has means that it is complicated. So you could even see the whole thing abolished