Has anyone wondered if this seasons plan

[Dougie]

I reckon we could spend another £100m on new players this season without hitting the maximum permitted losses under FFP. So we're hardly constrained.

Yes it would bite us in future years if we went down, lost the ZPL revenue streams and still had to account for those players. But there are exit strategies for that - selling them, loaning them out, clauses providing for a reduction in their wages if we go down, or best of all, loaning them now and only making the deal permanent if we stay up.

I don't think we can. I've calculated this - I think we had £42m of amortised transfer spend + loan fees in 18/19. In 20/21 is is already up to £47m. So before any serious investment in new signings, we already have £5m more committed spend this year than two years ago, against lower income because of matchday revenues disappearing. And we are clearly running so close to our FFP limits that it affected being able to sign Hector last August.

In a sense, the reason we can't spend another £100m this year is the same reason we could only spend £100m and not £200m in 2018. If I had to guess, I think we essentially have what we were willing to spend on Marlon (maybe not even that if the stories about how that collapsed are true), and the ability to bring in another loan, and that's it unless we sell. I think being unable to shift either Anguissa or Seri so far has really hurt us.

Exit strategies only work if people are willing to pay for a player something close to what we bought them for, or are willing to pay a fee to take them on loan close to what a year's amortisation of his transfer fee represents. And I don't think we can rely on that. We didn't even get a fee for Mawson from what I can see - only his wages paid in full. That makes him a £5m hit to our P/L even though he's not even at the club.

[The Rational Fan]

I reckon we could spend another £100m on new players this season without hitting the maximum permitted losses under FFP. So we're hardly constrained.

Yes it would bite us in future years if we went down, lost the ZPL revenue streams and still had to account for those players. But there are exit strategies for that - selling them, loaning them out, clauses providing for a reduction in their wages if we go down, or best of all, loaning them now and only making the deal permanent if we stay up.

I don't think we can. I've calculated this - I think we had £42m of amortised transfer spend + loan fees in 18/19. In 20/21 is is already up to £47m. So before any serious investment in new signings, we already have £5m more committed spend this year than two years ago, against lower income because of matchday revenues disappearing. And we are clearly running so close to our FFP limits that it affected being able to sign Hector last August.

In a sense, the reason we can't spend another £100m this year is the same reason we could only spend £100m and not £200m in 2018. If I had to guess, I think we essentially have what we were willing to spend on Marlon (maybe not even that if the stories about how that collapsed are true), and the ability to bring in another loan, and that's it unless we sell. I think being unable to shift either Anguissa or Seri so far has really hurt us.

Exit strategies only work if people are willing to pay for a player something close to what we bought them for, or are willing to pay a fee to take them on loan close to what a year's amortisation of his transfer fee represents. And I don't think we can rely on that. We didn't even get a fee for Mawson from what I can see - only his wages paid in full. That makes him a £5m hit to our P/L even though he's not even at the club.

My calculations are we have at least another £50m of allowed FFP spending, provided SK invest fresh money into the club this season and We need to buy new centre backs even if we go down.

[Bassey the warrior]

I think next season we'd be less likely to get promoted as we'll lose Mitrovic and possibly Rodak. Plus any other player that stands out this season.

[FulhamStu]

I don't think it's the main plan which would always be to stay up, however after our last experience and looking at all the statistics of how promoted teams via the playoffs perform, we would be wise to accept relegation as a real possibility, if not probability.  This is also why I suspect we are not throwing the sort of money at it as we did last time.  It's why we are going for the loan to buy options which make perfect sense.

We need to bring in players that in the case of relegation will stay with us, and loan the rest.  Anguissa, Seri, Mitro and Mawson were the big money buys and still on our books so we can retain players via the loan system and survive but I want players to remain with the club that will play for the team not go on loan.

Many did not think Mitro would play in the championship but he did, many hoped Anguissa would do the same but he did not.  I see no reason why we could not keep all the permanent buys so far, Reed/Knockaert/Tete/Robinson if we went down so yes I think this is a strategy that we have adopted.

[Dougie]

My calculations are we have at least another £50m of allowed FFP spending, provided SK invest fresh money into the club this season

How? Our spending is up on 18/19 and our revenues are down because we've lost essentially all of our matchday income. We generated some cashflow by selling Sessegnon, but prior to that we were stretched right to FFP limits and most of that money has already been reinvested.

[Statto]

My calculations are we have at least another £50m of allowed FFP spending, provided SK invest fresh money into the club this season

How? Our spending is up on 18/19 and our revenues are down because we've lost essentially all of our matchday income. We generated some cashflow by selling Sessegnon, but prior to that we were stretched right to FFP limits and most of that money has already been reinvested.

You estimated yourself that our losses in 18/19 (excluding FFP-exempt items) were £17m.

Permitted losses are £35m.

So that leaves £18m which, if we're assuming the fee for anyone we sign will amortize over 4/5 years, would allow us to spend c £80m now.

And IIRC correctly those figures assumed we'd sign Marlon for £13m and didn't account for Seri (£20-30m currently amortising over 4 yrs) potentially being taken out the equation. Add them and you get an even higher bugget.

[FFC In Oz]

I think next season we'd be less likely to get promoted as we'll lose Mitrovic and possibly Rodak. Plus any other player that stands out this season.

Throw in Anguissa, and maybe Tete if he continues to impress.

Lemina and Areola won't stick around, Lookman won't either.

I'm more concerned about getting sucked in to a relegation battle next season

[FFC1987]

I think the sad take form this is, it would make more sense IF this was the plan than what the current plan is. I don't think this IS the plan.

[Dougie]

My calculations are we have at least another £50m of allowed FFP spending, provided SK invest fresh money into the club this season

How? Our spending is up on 18/19 and our revenues are down because we've lost essentially all of our matchday income. We generated some cashflow by selling Sessegnon, but prior to that we were stretched right to FFP limits and most of that money has already been reinvested.

You estimated yourself that our losses in 18/19 (excluding FFP-exempt items) were £17m.

Permitted losses are £35m.

So that leaves £18m which, if we're assuming the fee for anyone we sign will amortize over 4/5 years, would allow us to spend c £80m now.

And IIRC correctly those figures assumed we'd sign Marlon for £13m and didn't account for Seri (£20-30m currently amortising over 4 yrs) potentially being taken out the equation. Add them and you get an even higher bugget.

So a couple things about those figures that may be bad news - I even had a chat with the Cottage Analytica chat to compare notes where we reached similar conclusions:

That ~£17m loss doesn't include the bonuses paid out for promotion in 2018. They're the reason we, Cardiff and Wolves recorded such huge losses in 17/18, but didn't fail FFP. I believe that because these promotion bonuses are guaranteed against future revenues they roll into the next season when it comes to calculating FFP (though there is no documentation to confirm this).
So that £17m loss may be more like a £17-£37m loss as fair as FFP is concerned (It's why Wolves posted a profit in 18/19 and Cardiff only a small loss), depending on what we paid out in promotion bonuses.

Obviously we have the same situation regarding bonuses from last year being paid out from this year's PL money, and being part of the 20/21 FFP calculations.

The numbers I'm looking at today remove Marlon from the equation. I make us up £4.6m in transfer and loan fees.

Therefore, as far as FFP in concerned I'm confident it's much tighter than that.

[Statto]

That ~£17m loss doesn't include the bonuses paid out for promotion in 2018. They're the reason we, Cardiff and Wolves recorded such huge losses in 17/18, but didn't fail FFP. I believe that because these promotion bonuses are guaranteed against future revenues they roll into the next season when it comes to calculating FFP (though there is no documentation to confirm this).
So that £17m loss may be more like a £17-£37m loss as fair as FFP is concerned (It's why Wolves posted a profit in 18/19 and Cardiff only a small loss), depending on what we paid out in promotion bonuses.

That's an interesting point but IIRC the short-term cost controls in force for the 18/19 season limited the wages we could pay to £81m.

The statutory accounts for that year show staff costs of £93m. I assume the extra £12m was staff and wages that were exempted from the wage cap.

Now if I've understood you correctly, you're saying that promotion bonuses of around £20m, which in the statutory accounts are treated as money spent in 17/18, were actually included in the 18/19 season for FFP purposes. Which would imply that our total wage bill for that season was £113m, not £93m, for FFP purposes.

Now, I find it hard to see how, even allowing for some exemptions, a total of £113m spent on wages wouldn't breach a wage cap of £81m.

To be honest, I think all this shows is the futility of using the statutory accounts as an indicator of how much we can spend under FFP. 

[Dougie]

I can only guess but I think because they were bonuses from the previous year they don't count towards whatever calculations you're looking at.

What I'm using for a marker is that we were clearly right up against our FFP limit last August, which would have included any slack we might have carried over from our Prem season (apparently, not much slack), that we are spending more now in areas we can measure vs. back then (transfers and loan fees), and that our financial policy under the Khans has always seen us spend whatever the pro-rata limit is for the season (they are as generous as they can possibly be).

Edit: and that our revenues will be down several million £ this season because of no matchday income.

We made a £35m loss in 18/19 but we ought to have only been able to make maybe a £16m loss at most (it's hard to tell how much we spend on our academy each year but that + stadium improvements are exempt from caculations), so we really might handed out bonuses as large as £20m. It sounds like a lot but considering Wolves recorded a £55m loss that year and Cardiff a £39m loss, that figure sounds about right.

My prediction is we spend less than £20m between now and the end of the window - probably one CB whilst another arrives on loan.

[Statto]

I can only guess but I think because they were bonuses from the previous year they don't count towards whatever calculations you're looking at.

What I'm using for a marker is that we were clearly right up against our FFP limit last August, which would have included any slack we might have carried over from our Prem season (apparently, not much slack), that we are spending more now in areas we can measure vs. back then (transfers and loan fees), and that our financial policy under the Khans has always seen us spend whatever the pro-rata limit is for the season (they are as generous as they can possibly be).

Edit: and that our revenues will be down several million £ this season because of no matchday income.

We made a £35m loss in 18/19 but we ought to have only been able to make maybe a £16m loss at most (it's hard to tell how much we spend on our academy each year but that + stadium improvements are exempt from caculations), so we really might handed out bonuses as large as £20m. It sounds like a lot but considering Wolves recorded a £55m loss that year and Cardiff a £39m loss, that figure sounds about right.

My prediction is we spend less than £20m between now and the end of the window - probably one CB whilst another arrives on loan.

Well in the statutory accounts, our wages in the promotion season were £17m higher than the preceding season, which suggests we did indeed pay promotion bonuses around that level.

If you're correct that we made a loss of around £35m in 18/19 (the £17m you can see in the statutory accounts, plus an additional £17m in promotion bonuses which for FFP purposes were treated as paid during that season) then I agree, that would imply we don't have much to spend this year.

But that involves a lot of assumptions (in particular, I've always said it's dangerous to refer to conflate the statutory accounts with our FFP position) and also raises questions, such as the point I just made about the short-term costs controls (ie how weren't we in breach of the £81m wage cap?) and how did Villa manage to spend even more than we did in 19/20?

As I said, I think it's exposed how crude and speculative these sorts of discussions are. Let's just see how much we spend in the next week or so. I actually think, in any case, that most of our business will be loans with an option, because irrespective of our budget this season, one thing we can both agree is that our revenue will fall dramatically next season if we go down.

[Dougie]

As I said, I think it's exposed how crude and speculative these sorts of discussions are.

I only really started trying to wrap my head around all of it in 17/18 when we were coming to the end of our parachutes but I've found it incredibly useful in understanding why we spend what we spend when we do, and the approximate ballpark of our constraints at any one point.

I was able to, for instance, conclude at the beginning of last summer, based on what the club leaked about our wage bill falling to £29m, that we wouldn't have to sell anybody in order to meet FFP requirements in our first season in the Championship unlike most clubs that are relegated, which was true.

Similarly, I think it's useful now to understand why we aren't spending £50m on a new defence, because it can be frustrating if you think owners are sitting on money they could be spending when our squad is so blatantly not up to the task.

It's only crude if it's wildly inaccurate and I think in this instance, like last summer, the conclusions that could be drawn have successfully predicted our transfer activity, as will be the case when we spend less than £20m between now and Monday.

If you're correct that we made a loss of around £35m in 18/19 (the £17m you can see in the statutory accounts, plus an additional £17m in promotion bonuses which for FFP purposes were treated as paid during that season)

Just to clarify - we made a £21.6m loss in the statutory accounts. I read up on category 1 football academies taking between £2m and £5m to run a year and deducted the upper end of that from the sums, because academy costs are excluded from FFP (along with facilities improvements but not much else).

[Statto]

Similarly, I think it's useful now to understand why we aren't spending £50m on a new defence, because it can be frustrating if you think owners are sitting on money they could be spending when our squad is so blatantly not up to the task.

I'm not going to argue about your calculations (I've been doing the same thing every year for several years now, and think it's an interesting exercise, provided you treat these back-of-a-fag-packet numbers with a bit of caution) but TBH I don't think the sums make much difference at this point, either way.

As far as I can tell, the only thing we neither of us has any certainty on is whether the promotion bonuses will be accounted for this season for FFP purposes. Now, that makes a big difference this year (since that ~£20m equates to one year's amortisation of a potential £80-100m of transfer spending) but it doesn't make any difference to our position next year and going forward, which will either be (a) rich, if we stay up, or (b) poor, if we go down.

So we can still bring in lots of really expensive, big money signings this season, if it's done on a loan-with-an-option basis. Which is probably what we would be doing in any case (whether or not we've promotion bonuses to pay) given the risk of (b) above.