Premier League Financial Regulations

[evoh_1]

from BBC sport:

The Premier League says its clubs will be punished with a points deduction if they breach new spending controls.

The 20 teams will not be allowed to make a loss above £105m over the next three seasons, while from 2013-14 they must limit their player wage bills.

"If people break the £105m we will look for the top-end ultimate sanction range - a points deduction," said Premier League boss Richard Scudamore.

The rules are designed to improve the financial sustainability of clubs.

Investment in areas such as stadia and academies will be exempt.

The aim is a 'break even' model similar to the Financial Fair Play regulations introduced by Uefa for sides in European competitions. The FFP allows only a £38m (45m euros) loss - significantly less than the Premier League's new limit of £105m between 2013 and 2016.

Agreeing to cost controls marks a major change for Premier League clubs - they made cumulative losses of £361m in the 2010-11 season - and Scudamore is adamant the system will be enforced.

"As with all things in our rulebook, you will be subject to a disciplinary commission," the Premier League chief executive warned clubs.

"Normally we stay silent on sanctions as the commission has a free range but clearly if there is a material breach of that rule we will be asking the commission to consider top-end sanctions."

Scudamore confirmed there would be an "absolute prohibition" on teams reporting losses of more than £105m over the next three years, with the first sanctions possible in 2016.

Of the 20 top-flight sides, only Manchester City, Chelsea and Liverpool have reported losses of more than £105m over the last three years, according to the most up-to-date published accounts.

"A new owner can still invest a decent amount of money to improve their club but they are not going to be throwing hundreds and hundreds of millions [of pounds] in a very short period of time," said Scudamore.

"While it has worked for a couple of clubs in the last 10 years, if that's going to be done in the future it's going to have to be over a slightly longer term without the huge losses being made.

"I think at £105m you can still build a very decent club with substantial owner funding but you have to do it over time, not in a season."

Chelsea won the Premier League two years after Roman Abramovich acquired the Stamford Bridge outfit, and Manchester City's title success came three years after Sheikh Mansour's takeover.

Any club making a loss of above £5m a year will have to guarantee those losses against the owner's assets, which should help prevent the situations that afflicted Leeds and Portsmouth.

"In some ways that's the most significant part, this is a three-year rolling system of secure funding - it's one year at the moment," Scudamore added.

Clubs whose total wage bill is more than £52m will only be allowed to increase their salaries by £4m per season for the next three years (2013-14: £4m, 2014-15: £8m, 2015-16: £12m).

However, that only applies to revenue centrally distributed by the Premier League - essentially TV income - and does not cover extra money coming in from increases in commercial or matchday income.

The 'short-term cost control' measure applies solely to clubs with a player wage bill in excess of £52m in 2012-13, £56m in 2014-15 and £60m in 2015-16.

West Ham's co-owner David Gold said that the proposals for controls had received backing of the majority of chairmen.

"We have all voted and it was overwhelmingly supported, not by all the clubs - some are a little concerned - but the vast majority of the clubs voted in favour," he explained.

"It's not a salary cap, it's a restraint on over-spending. If clubs increase their revenues then they can increase their spending.

"We have got restraint, that's the important thing. What's driving the whole thing is we've got to avoid another Portsmouth."

Minister for Sport Hugh Robertson commented: "I am pleased that Premier League clubs have agreed further financial regulations that will help ensure they are run on a more sustainable basis.

"The Government has been clear that we want clubs to be on a secure financial footing for the long-term health of the game. This is a welcome and positive move."

love that you cna run up a loss of £105 mil over 3 years (something only city have done), yet can only increase wages by a paltry £4 mil a year. We are truly ****ed by this which is designed to keep citeh and chelsea at teh top for the next decade while they pocket the TV revenue to meet FFP.

We could have used that increase to make ourselved a competitive team but now absolutely no chance and that cash reserve just went up by £50 mil in the summer. Totally disgrace from us to allow this to happen as it keeps us right in our place and mean that the TV money means nothing to us even though we could use it for tranfers.

Ivan and Stan will love this more money and more rules to stop us spending it on the first team, I am almost done with bothering with this league as it seems totally and utterly corrupt.

 

[mavelous]

i don't believe the 105m is actually FFP, must be internal. FFP is like 45m over three seasons

 

[evoh_1]

No its £105 mil total over 3 years as in thats the most you can lose over 3 years, eg £34 mil lost each year for 3 years is totally fine.

 

[mavelous]

no, really. "The permitted loss falls to €30m for the three year period that covers 2013/14, 2014/15, 2015/16 (that works out to an average loss of €10m or £8m a season)." <a class="postlink" href="http://www.financialfairplay.co.uk/financial-fair-play-explained.php" onclick="window.open(this.href);return false;">http://www.financialfairplay.co.uk/fina ... lained.php</a>

 

[evoh_1]

FFP has nothing to do with this its EPL not UEFA.

 

[spartandre217]

"Wages"- What is the definition used there??

Anyone?? Is it guaranteed fees paid to players over the course of a calendar year and does it include bonuses paid to players upon completion of certain performance and/or trophy stipulated bonuses? (This may or may not include image rights which are commonly not considered part of standard wages)

Or is it total remuneration at the end of any given reporting time period?


If the former then clubs have little to worry about. If it is the latter then all clubs will be f***ed, including City et al not just us.



Re: the loss related figure, it's not such a big deal for clubs like Chelsea and City as their owners can mostly certainly cover those losses whereas clubs like Villa and Everton might be slightly more hard-pressed.


Do I think that this proposal was put forward quite possibly primarily by our CEO and majority owner? Yes! Is there significant premise and statements in the media to back this up? Yes.

But to garner the support of 13 out of 20 clubs is quite frankly a f***ton and with only 1 club Reading abstaining, it's hard to argue that the majority of clubs WANT these measures for whatever reasons. Whether this are for their own benefit (increased likelihood of success) or just recognition of the spiraling costs of football we'll likely never know.

In either case this set of rules will certainly work towards preventing another Leeds, Portsmouth et al from happening again. Will it completely prevent such an event??


Not likely or possible but at least they're trying.

 

[Bigbludfire]

If I was the owner of Manchester City I'd happily blow even more money to make sure I win the league whilst everyone's cutting down to make sure they get into Europe. A even more secure premier league title with a slap on the wrist wouldn't bother me, it's not like there's a better chance of winning the Champions league, so if you've got the revenue to miss out on Europe why not?

Or do I have a completely wrong perception of this?

 

[MDGoonah41]

will be interesting to see the accounting specifics on this.

if a player signs a deal that pays him £70k per year for 5 years, and its £70k per year every year, that is easy to account for and calculate. however if the deal has escalator clauses, wherein the player makes £50k, 60k, 70k, 80k, and 90k over the life of the 5 years, will you have to count the average of the 5 year deal (£70k) or do you only count the current year?

for major league baseball's accounting for luxury tax purposes (its not a salary cap, but you get taxed for any money you spend over $178m per year), its the average annual value.

hopefully the wage restrictions make us think long and hard about our structure. having players on the wage bill you cant sell because they make too much could really hurt us. hopefully we see a bigger range now.

 

[spartandre217]

will be interesting to see the accounting specifics on this.

if a player signs a deal that pays him £70k per year for 5 years, and its £70k per year every year, that is easy to account for and calculate. however if the deal has escalator clauses, wherein the player makes £50k, 60k, 70k, 80k, and 90k over the life of the 5 years, will you have to count the average of the 5 year deal (£70k) or do you only count the current year?

for major league baseball's accounting for luxury tax purposes (its not a salary cap, but you get taxed for any money you spend over $178m per year), its the average annual value.

hopefully the wage restrictions make us think long and hard about our structure. having players on the wage bill you cant sell because they make too much could really hurt us. hopefully we see a bigger range now.

What you mentioned there definitely brings up some very interesting accounting implications and there will need to be standardizing on a fair number of things before this goes into practice at all.

Should be fun to see how the club and Wenger manage to spin things if and when we have another Arshavin, Squillaci etc scenario.

I mean, this almost forces them to democratize less and only spend wages on the average members of the squad. Or at the very least offer them VERY performance-influenced contracts.

 

[mavelous]

FFP has nothing to do with this its EPL not UEFA.

i said as much in the original post. what's the point of making it 3 times the allowed in a wider scale regulation? unless of course the EPL is worried only about teams that don't qualify for europe. what are the odds of teams below 7th place making 105m loss in 3 years?

 

[evoh_1]

FFP has nothing to do with this its EPL not UEFA.

i said as much in the original post. what's the point of making it 3 times the allowed in a wider scale regulation? unless of course the EPL is worried only about teams that don't qualify for europe. what are the odds of teams below 7th place making 105m loss in 3 years?

Why bring it up in the first palce as it has nothing to do with the matter at hand.

Teams rolling that sort of loss below 7th? Think city or any other person wanting to blow a wad aka QPR and such nutters.

The whole wages thing is nuts, it will be manipulated by image rights and bonus payments and I doubt anyone will fall foul if this and wages will still go up at radical rates.

 

[Anzac]

On one hand it says that only 7 PL clubs currently fall below the projected wages ceiling,
but then it goes on to say that if your revenues increase then so can your wages/expenditure.

As such as the 5th highest revenues in the game it means little to us and in theory like the FFP criteria it should mean that we have a massive window of opportunity within those regulations,
but that we likely won't take advantage of because of our internal policy re Self Funding & debt etc,
and in the mean time we'll still look to keep that 150m Cash Reserves dry for a rainy day.

 

[Mudi]

Does this mean we start with a wage bill of £143m? Cause if that's the case, it would mean that Wenger is a genius

I mean, we have a £143m wage bill because of our dead woods. This means that we can arise till £155m going to wages to 2016. Once we get rid of the dead woods (Arshavin, Squillaci, Bendtner, Denilson, Chamakh, Park, Fabianski, DJourou, Santos and even Gervinho, Rosicky and/or Diaby), we will have almost £50m to spend on wage for the coming 3 years (not that it will happen, but still). Meanwhile, Tottenham and Liverpool are restricted with much less.

Otherwise, Wenger should invest this summer a lot so we are not restricted when we need to strengthen our team!

 

[MDGoonah41]

yea and that is the way for citeh and chelsea to circumvent the wage restriction. give guys over inflated wages right before the restriction kicks in, bloat the wage bill way up, then as guys move on, the wage bill will actually come down significantly and they can do whatever they want

 

[kofigunner]

That's exactly it and no wonder the clubs agreed.
The big spenders will just structure payments and transfers so it's all fine. Methinks this is just a way for everybody to avoid salary caps and more 'restrictive' forms of financial management.

 

[eye4goal]

I never realised Liverpool were making such big losses. Anyways I think this will have more effect on the smaller clubs like QPR and will make it harder for another Man City to emerge

I wonder if signing on fees count as wages in club accounts? That can be a way of getting around things when offering contract extensions

 

[Floating]

I never realised Liverpool were making such big losses. Anyways I think this will have more effect on the smaller clubs like QPR and will make it harder for another Man City to emerge

I wonder if signing on fees count as wages in club accounts? That can be a way of getting around things when offering contract extensions

They essentially have the wage bill and transfer budget of a CL club, but without the revenue that the CL brings.

 

[mavelous]

FFP has nothing to do with this its EPL not UEFA.

i said as much in the original post. what's the point of making it 3 times the allowed in a wider scale regulation? unless of course the EPL is worried only about teams that don't qualify for europe. what are the odds of teams below 7th place making 105m loss in 3 years?

Why bring it up in the first palce as it has nothing to do with the matter at hand.

Teams rolling that sort of loss below 7th? Think city or any other person wanting to blow a wad aka QPR and such nutters.

The whole wages thing is nuts, it will be manipulated by image rights and bonus payments and I doubt anyone will fall foul if this and wages will still go up at radical rates.

you're such a hardhead aren't you? for teams that make europe, they have worse things to worry about than these more lax EPL rules. so i was just musing why make up rules that go up 105m for teams that don't make europe. i guess you answered, could've done without the long way of back and forth. qpr's and reading's of the world, sure.

still though, if qpr manage a top four finish at the cost of 100m losses, it would be pointless if UEFA don't allow them participation. would be hilarious

 

[Anzac]

yea and that is the way for citeh and chelsea to circumvent the wage restriction. give guys over inflated wages right before the restriction kicks in, bloat the wage bill way up, then as guys move on, the wage bill will actually come down significantly and they can do whatever they want

Lol - isn't that where they are at NOW = over inflated wages in order to have bought their WC teams?
This will work quite nicely for them as it is as they look to restructure & rebuild by shifting out their dross.

 

[bingobob]

I really like the changes. Essentially you can buy one big player a season or spend with in your means or buy 2/3 big players in one season and use the remaining two to balance books. Personally I think we will see more loans going through than previously or player trades and the remaining funds used for big name signings.