The AVFC FFP thread

[Czarnikjak]

@blandy, you are really overcomplicating it

Rules are clear on this and don't allow wriggle room in terms of when you bank the profit from a player sale. You bank the whole profit at the point of sale.

PSR calculations look only at Adjusted Earnings before Tax, these are not related to Cash Losses at all.

Cash Losses are only relevant to the Secure Funding part of regulations which determines if you are allowed to go the the higher "tier" of losses (£105m vs £15m). Cash Losses indeed look at the actual money coming in from the transfer as per agreed payment plan, but in no way they affect PSR calculation, providing you satisfy the Secure Funding clause.

Basically, as per point (ii) below, we just need a guarantee from our owners that they gonna cover the extra losses, which obviously already was given in the pervious years and will be extended if we want to continue loosing more than £15m in 3 year periods.

 

[CVByrne]

1 hour ago, mrjc said:

We've effectively already 'spent' the Grealish money though.  In transfer fees: Buendia + Bailey + Ings is reportedly £95m / £100m.  In wages, you would think those three + Young, in total, are earning more than Jack was. 

So unless we have any underlying headroom (previous analysis from Czarnikjak suggests there is some, but not loads) or get some sales in, I don't think we can be overloading the P&L with lots of big signings this summer / January.

You are still thinking in the concept of net spend. We are a club for whom cashflows aren't important as we have large financial backers. Our limitations are the FFP rules. So if Jack appears as a one off +100m in this years accounts as is debated above then we need to put as much of the amortised cost of new players in the next 3 years as possible. Ings for example is 30m of the 100m from Jack as his contract is for 3 years, the period Jacks +100m is part of our FFP calculations. 

Buendia, Leon Bailey and Ashley Young were singings made within FFP if Jack had stayed and signed his new contract. So the additional headroom Jacks transfer gives us has only had 30m of that "spent" as you could say. If we get Ward Prowse in for 40m on a 4 year deal with an option for 1 more, we are then "spending" 30m of the 100m Jack money. Wages would be marginal difference between Jacks 200k per week new contract and JWP and Ings combined. So our available remaining room in next 3 years account would be 40m of the Jack money. 

It's why we will need to overpay for singings this summer or next to really utilise this Jack money. At a minimum we need one new signing this summer along with Ings.

We've plenty more to do with squad to create headroom. Emi Martinez new 5 year deal this season would spread his remaining 2 year 10m amortisation over 5 years. Moving Wesley on for a fee of 8m next summer after a Loan spell would offset his remaining amortisation. We've Trezeguet and El Ghazi to move on next summer who selling will give us a net positive to our accounts vs their small remaining amortisation. 

It's this type of thinking around the squad development we need to have. "self sustaining" clubs need to worry about cashflows as much or more than FFP. We just get a new equity injection from our owners when we have those type of issues.

[OutByEaster?]

I think it's also worth keeping in mind the increase in our incomes in this accounting year - regardless of the sale of Jack, our income in the next accounts is likely to be £70-£80m in excess of the income reported in the last accounts - we'll be reporting a full year, we'll have the holdover from last year, we'll have ticket monies and we've made a couple of commercial deals that will bring benefit us. It's possible that the £112m we reported last time out will be £200m this time around. Those top line increases will help a great deal.

 

[Vive_La_Villa]

10 minutes ago, OutByEaster? said:

I think it's also worth keeping in mind the increase in our incomes in this accounting year - regardless of the sale of Jack, our income in the next accounts is likely to be £70-£80m in excess of the income reported in the last accounts - we'll be reporting a full year, we'll have the holdover from last year, we'll have ticket monies and we've made a couple of commercial deals that will bring benefit us. It's possible that the £112m we reported last time out will be £200m this time around. Those top line increases will help a great deal.

 

Even with the season long Covid hit?

[CVByrne]

5 hours ago, OutByEaster? said:

I think it's also worth keeping in mind the increase in our incomes in this accounting year - regardless of the sale of Jack, our income in the next accounts is likely to be £70-£80m in excess of the income reported in the last accounts - we'll be reporting a full year, we'll have the holdover from last year, we'll have ticket monies and we've made a couple of commercial deals that will bring benefit us. It's possible that the £112m we reported last time out will be £200m this time around. Those top line increases will help a great deal.

 

Yeah this is key along with next summers new sponsorship deals. Which can give us a big boost if we qualify for Europe and our upward trajectory is clear. I'd hope we can get to budgeting on Europa League then, by which I mean the club sets a target of x amount of income in the 3 year period from European prize money and revenue. Say 20m over the 3 years etc.. 

We will begin to see the play sales income tick up as we move on players from our academy who don't make it in first team, either Loan fees or direct sales. Along with profits on players who we have developed, like say El Ghazi and Nakamba who are proven Prem players. Liverpool and City make a good chunk of revenue on player sales like this. 

Finally, the longer we keep teams like Spurs and Arsenal out of European football the more they need to readjust their budgets away from those revenue sources as they drop off their FFP calcs. Also wage discipline on the part of our club is also crucial, I think we're aiming for a small squad of 22 players with many who can play multiple positions / roles in the team. This is supplemented by promising u23 academy gradates, this is a good way to keep the wage bill down, especially if we continue to focus on signing players under 25 who will not command massive wages to start and when we renegotiate their contracts after 2 successful years on higher wages we are actually opening up headroom.

Lets go with an example of a 23yo player signed on a 5 year deal for 50m on 6.5m wages. That's -16.5m (10m + 6.5) per year to us in wages and amortisation. Now assume he plays and develops well and we offer a new 5 year contract on 8m wages after 2 years when the player is 25. This changes our costs to -14m (6m + 8m) in our accounts as remaining 30m in amortisation is spread over 5 years. We secure an asset who's sell on value has increased from the 50m we signed him for and we've also reduced the FFP burden on our accounts. Now say after 2 years he's 27 and United come calling wanting him badly, he wants to go, he has a remaining amortisation if 18m on our accounts and we sell him for 80m. That's a net positive of 62m to our accounts that season and removal of his 8m wages over the following seasons. So immediately a + 70m on that years accounts. 

This is exactly why we need to view sales of a key player like this as a fundamental part of how this club needs to operate. As fans will see a player who has been here for 4 years and improved. Will say we spent 50m on him and "he's worth more than 80m" etc.. But we're getting 70m in our accounts for his sale. This is exactly why Leicester are open to selling Maddison and see a sale to Arsenal for say 60m as great business. He cost them 20m and renewed his contract until 24 last year in when 12m amortisation was left meaning 3m per year and lets say 6.5m in wages, he's on their books now as 9m left in amortisation cost. A sale to Arsenal for 60m is a net positive to their accounts of 60 - 9 + 6.5 = 57.5m. 

This is how our football club is to operate. Players who sign with us need to know they will be sold if the right bid is received and they have developed here over 3/4 years. Those sales need to be rare though, but the headroom they create is significant. This is also why signing Mings, Konsa and hopefully Martinez on new higher wages after 2 years of their contracts is actually a net positive to our accounts as the extension of the the remaining amortisation over 5 years more than offsets the increased wages. This is a clear showing of why owners who will absolve the club of cashflow issues are a huge asset even in the world of FFP. 

[mrjc]

14 hours ago, CVByrne said:

You are still thinking in the concept of net spend. We are a club for whom cashflows aren't important as we have large financial backers. Our limitations are the FFP rules. So if Jack appears as a one off +100m in this years accounts as is debated above then we need to put as much of the amortised cost of new players in the next 3 years as possible. Ings for example is 30m of the 100m from Jack as his contract is for 3 years, the period Jacks +100m is part of our FFP calculations. 

Buendia, Leon Bailey and Ashley Young were singings made within FFP if Jack had stayed and signed his new contract. So the additional headroom Jacks transfer gives us has only had 30m of that "spent" as you could say. If we get Ward Prowse in for 40m on a 4 year deal with an option for 1 more, we are then "spending" 30m of the 100m Jack money. Wages would be marginal difference between Jacks 200k per week new contract and JWP and Ings combined. So our available remaining room in next 3 years account would be 40m of the Jack money. 

It's why we will need to overpay for singings this summer or next to really utilise this Jack money. At a minimum we need one new signing this summer along with Ings.

We've plenty more to do with squad to create headroom. Emi Martinez new 5 year deal this season would spread his remaining 2 year 10m amortisation over 5 years. Moving Wesley on for a fee of 8m next summer after a Loan spell would offset his remaining amortisation. We've Trezeguet and El Ghazi to move on next summer who selling will give us a net positive to our accounts vs their small remaining amortisation. 

It's this type of thinking around the squad development we need to have. "self sustaining" clubs need to worry about cashflows as much or more than FFP. We just get a new equity injection from our owners when we have those type of issues.

Fair enough, agree with some parts, definitely disagree with others...but it's one approach!

[AV82]

Eye-watering graph.

[MrBlack]

2 minutes ago, AV82 said:

Eye-watering graph.

I thought spurs were basically bankrupted by their new stadium. How have they got such a profit?

Thank god FFP lets us offset some of our losses. Assume our owners may be looking to make a profit soon... wonder whether the 10mn profit on player sales/purchases this season is the start of that.

[Czarnikjak]

3 minutes ago, AV82 said:

Eye-watering graph.

Somebody left brilliant comment on Twitter about Spurs:

”Balance sheet champions, you’ll never sing that.”

[MWARLEY2]

So we have been 3 quarters of a billion worse off than Spurs in the last 10 years .

[Phil Silvers]

31 minutes ago, MWARLEY2 said:

So we have been 3 quarters of a billion worse off than Spurs in the last 10 years .

Chicken feed boyyyy, chicken feed 

[Tony]

https://twitter.com/kieranmaguire/status/1426047620368281600?s=21

Edited August 13, 2021 by Tony

[Eak94]

1 hour ago, Tony said:

https://twitter.com/kieranmaguire/status/1426047620368281600?s=21

Would be good if the luxury tax pot is redistributed to lower leagues and grass roots, but how likely is that?

[Czarnikjak]

10 minutes ago, Eak94 said:

Would be good if the luxury tax pot is redistributed to lower leagues and grass roots, but how likely is that?

This is interesting. Although this is UEFA FFP, it would only applie to clubs involved in European competitions. It remains to be seen if Premier League follows suit or it sticks with its current regulations.

Need to see more details of this proposal before we can make full judgement.

[sne]

Anyone got a The Times subscription?

This sounds a bit like the system they are using in the NBA maybe.

Quote

Uefa plans salary cap and ‘luxury tax’ for teams who breach it

efa will set out proposals next month to replace its Financial Fair Play rules with a salary cap and luxury tax by next year.

Under the planned system, clubs in European competition would be limited to spending a fixed percentage of their revenue — possibly 70 per cent — on salaries. Any clubs breaching the cap would have to pay a luxury tax, under which the equivalent or more of any overspend would go into a pot to be redistributed.

This would replace the FFP rules brought in 11 years ago, which state that clubs must break even over a three-year period.

The proposals will be unveiled at a convention on the future of European football that Uefa is hosting in Switzerland next month,

 

https://www.thetimes.co.uk/article/uefa-plans-salary-cap-and-luxury-tax-for-teams-who-breach-it-5vrwf8cm7

[Czarnikjak]

8 minutes ago, sne said:

Anyone got a The Times subscription?

This sounds a bit like the system they are using in the NBA maybe.

 

https://www.thetimes.co.uk/article/uefa-plans-salary-cap-and-luxury-tax-for-teams-who-breach-it-5vrwf8cm7

I don’t have the sub for times (if someone has please paste the article here if allowed), but it doesn’t look like the NBA model. 

In NBA every team has the same salary cap, this one is related to the revenue. It means that teams like city and united would have the cap 3 or 4 times bigger than a team like villa

[sne]

1 minute ago, Czarnikjak said:

I don’t have the sub for times (if someone has please paste the article here if allowed), but it doesn’t look like the NBA model. 

In NBA every team has the same salary cap, this one is related to the revenue. It means that teams like city and united would have the cap 3 or 4 times bigger than a team like villa

Think they have a luxury tax as well, along with a whole lot of extra rules like Bird clause, transfer exceptions and so on.

[MaVilla]

If they bring in a salary cap where the top 4 or so have 3 or 4 times the wage budget, we may as well turn the lights off.

Edited August 13, 2021 by MaVilla

[Sulberto21]

9 minutes ago, MaVilla said:

If they bring in a salary cap where the top 4 or so have 3 or 4 times the wage budget, we may as well turn the lights off.

"ESL". 

[ender4]

1 hour ago, sne said:

Anyone got a The Times subscription?

This sounds a bit like the system they are using in the NBA maybe.

 

https://www.thetimes.co.uk/article/uefa-plans-salary-cap-and-luxury-tax-for-teams-who-breach-it-5vrwf8cm7

Bloody hell, they really don’t want Villa or Leicester and other smaller teams upsetting the ‘Big 6’