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Anyone know what the deal with FFP is for this season and where it leaves us with money to spend?

My understanding was losses from 2019/20 season were rolled into last season due to covid, allowing firms the chance to spread out their loss over a couple of years and in doing so avoid breaching ffp regs by default in 19/20. The £30m loss per year over 3 year ruling effectively became a 30m loss per year over 4 years for last season ending 2021.

Given the 20/21 season was also then impacted by covid, do they get to roll them into another year? Even so, how does that really help given the losses will be higher than normal due to covid.

Internet seems to have no information about what is happening.

I use the term season loosely, as I think the losses align with the tax year. So in theory, as of 1st April, we're in a new year where we'll actually have yo make a profit, given our losses last season were 99mill and about 66 mill the season before?

How does this impact our ability to buy anyone else? We already spent a hefty chunk on Buendia, and we look like we're going to have to offer Martinez and Grealish hefty increases to their weekly wage.

Has it officially been scrapped? I have no reason to think we are, but hope we are we not doing a man City to disguise our losses this season, and somehow have managed to sustain the massive spending and 0 income from sales legitimately. Otherwise, I see a situation where we need to sell around £100m worth of assets to comply?

Welcome any resident experts view on the matter...

 

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On 17/07/2021 at 20:57, cheltenham_villa said:

I've been to the new spurs ground and the biggest difference really is that they are perfectly set up to socialise before and after games. Huge gangways and places to meet, bars with seating and a massive amount of food offerings. I went for a cup game with some friends from work, we were there for 6 hours.

Unfortunately the design of villa park makes it impossible to follow suit, they need to consider how they make money around the group if they want to compete.

Agree the spurs ground is pretty breathtaking.

I do believe we could move towards that. The catering side at villa has loads of room for improvement - short term might be difficult with covid. But really the days of the half time scramble for a pie and a drink should be a thing of the past.

Decent WiFi and an ordering app would massively improve things.

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13 minutes ago, MrBlack said:

Anyone know what the deal with FFP is for this season and where it leaves us with money to spend?

 

PL_Handbook_2021_22_DIGITAL_22.07.pdf (premierleague.com)

Page 127 & 128 (or sheet 67 if looking on the internet)

Quote

If the aggregation of a Club’s Earnings Before Tax for T-1, T-2 and T-3 results in a loss, any consideration from Related Party Transactions having been adjusted (if appropriate) pursuant to Rule E.46, then the Club must submit to the Board the calculation of its Adjusted Earnings Before Tax for each of T, T-1, T-2 and T-3.

:snip:

If the PSR Calculation results in losses of in excess of £105m: E.51.1. the Board may exercise its powers set out in Rule E.15; and E.51.2. the Club shall be treated as being in breach of these Rules and accordingly the Board shall refer the breach to a Commission constituted pursuant to Section W of these Rules

 

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34 minutes ago, MrBlack said:

Anyone know what the deal with FFP is for this season and where it leaves us with money to spend?

My understanding was losses from 2019/20 season were rolled into last season due to covid, allowing firms the chance to spread out their loss over a couple of years and in doing so avoid breaching ffp regs by default in 19/20. The £30m loss per year over 3 year ruling effectively became a 30m loss per year over 4 years for last season ending 2021.

Given the 20/21 season was also then impacted by covid, do they get to roll them into another year? Even so, how does that really help given the losses will be higher than normal due to covid.

Internet seems to have no information about what is happening.

I use the term season loosely, as I think the losses align with the tax year. So in theory, as of 1st April, we're in a new year where we'll actually have yo make a profit, given our losses last season were 99mill and about 66 mill the season before?

How does this impact our ability to buy anyone else? We already spent a hefty chunk on Buendia, and we look like we're going to have to offer Martinez and Grealish hefty increases to their weekly wage.

Has it officially been scrapped? I have no reason to think we are, but hope we are we not doing a man City to disguise our losses this season, and somehow have managed to sustain the massive spending and 0 income from sales legitimately. Otherwise, I see a situation where we need to sell around £100m worth of assets to comply?

Welcome any resident experts view on the matter...

 

Mr Black,

You are asking a lot of questions there, let me address some of them.

Two COVID affected seasons as you saying were rolled into one and any COVID related losses are exempt from FFP calculations ( on top of existing exempt items: academy costs, women’s football, community costs and tangible assets depreciation/amortisation).

Club is allowed to loose £105 (£35m per season in Premier League or £13m in championship) over last 3 year rolling period ( with the exemption of 2 COVID seasons that are averaged out and treated as one season). However, the headline £99m loss you quoting is not the loss that goes into FFP calculations, see all the exempt items I listed above.

We are pretty much on the limit of FFP as things stand, and some  sales will be expected (hourihane, maybe ghazi and guilbert too) if we want to bring in more players and stay compliant. We don’t need to raise anywhere near £100m, so don’t worry, don’t have to sell grealish -)

If you are interested I can provide you with the figures and calculations to back it up ( with some assumptions as 20/21 season accounts won’t be published until March next year)

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26 minutes ago, Czarnikjak said:

Mr Black,

You are asking a lot of questions there, let me address some of them.

Two COVID affected seasons as you saying were rolled into one and any COVID related losses are exempt from FFP calculations ( on top of existing exempt items: academy costs, women’s football, community costs and tangible assets depreciation/amortisation).

Club is allowed to loose £105 (£35m per season in Premier League or £13m in championship) over last 3 year rolling period ( with the exemption of 2 COVID seasons that are averaged out and treated as one season). However, the headline £99m loss you quoting is not the loss that goes into FFP calculations, see all the exempt items I listed above.

We are pretty much on the limit of FFP as things stand, and some  sales will be expected (hourihane, maybe ghazi and guilbert too) if we want to bring in more players and stay compliant. We don’t need to raise anywhere near £100m, so don’t worry, don’t have to sell grealish -)

If you are interested I can provide you with the figures and calculations to back it up ( with some assumptions as 20/21 season accounts won’t be published until March next year)

Thanks! Yes, was awarw we attributed about 36m of our losses to covid in our last accounts, so makes it only about 63m last season,  even before the other losses we can exclude, rather than the 99m. Definitely a rosier place. Wasn't aware they could be excluded though

Given our signings last summer were less value than the one before (I think), I assume our losses for 20/21 will be lower...would love to see your estimated calcs if you care to pm me. Plus, may well be covid losses are signifciantly higher given the whole season was being closed doors rather than only part of it, and give us evern more leeway.

And yes, I was trying not to allude to a need to sell Jack, hence I used assets rather than asset, but still suggests we need to sell someone, or a few, before we can bring in our second key signing (as alluded to in Purslows post season interview where he stated we are "a couple of key signings short").

 

Edited by MrBlack
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2 minutes ago, Czarnikjak said:

@MrBlack

I am making 2 assumptions here:

1. We didn't break FFP in 20/21

2. We have no intention on breaking it in 21/22

I think these are pretty safe assumptions as Purslow many times publicly  reiterated his commitment to the rules. We also went as far as "selling" our stadium to stay within the rules, which I think indicates we are serious about sticking to them.

So, with that in mind, this was our FFP situation as of May this year (looking back at last 3 FPP monitoring periods):

 1151627292_Screenshot2021-07-27at20_16_58.thumb.png.d91721b6bc791c3fdbf5576138a9f870.png

Right near the limit, since then we have released about £24m from FFP balance as per the transactions below:

1958395366_Screenshot2021-07-27at20_26_51.thumb.png.fb2651b234cbaf154b07a0abe6a19bb6.png

And added about £14m, as below:

1272474049_Screenshot2021-07-27at20_28_19.thumb.png.2dc45a59f368f8a417fbd84c9fa46cc6.png

That still leaves us about £10m spare (without any more outgoings and no major revenue increase), which basically allows you £30m player on £80k wage (£30m amortised over 5 years = £6m plus £4m wages),  Bailey for example.

However if you look closely, our 17/18 season will drop off from the calculations next year, and as it was a particulary bad year, it gives us another £10m or so to play with this summer.

Selling Hourihane for example for £5m, frees up another £7m (£5m profit on the sale as he has hardly any value left on our books and £2m wages). That allows you a £20m player on £60k wage.

So overall, it's not looking too bad, assuming we didn't go over last year.

Thanks that makes sense.

Just one small point - Sanson was meant to be in this summers spend, so we might have already used a little bit of the leeway you show in your post.

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32 minutes ago, Nigel said:

If we get loan fees for our kids does this count towards ffp (considering all youth is exempt from the calculations)?

Normally  receivable loan fees appear under “commercial revenue” on accounts which makes them count towards FFP income, I am not 100% sure if the same applies to under age players. Regardless, loan fee values for our kids will be relatively insignificant in grand scheme of things and won’t affect the calculations much.

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57 minutes ago, ender4 said:

Thanks that makes sense.

Just one small point - Sanson was meant to be in this summers spend, so we might have already used a little bit of the leeway you show in your post.

Good point about Sanson, he will use some of that leeway. Although not as much as one would expect as he was on our books already in previous accounting period ( for about 5 months , our accounting period ends on 31st May)

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2 hours ago, Czarnikjak said:

@MrBlack

I am making 2 assumptions here:

1. We didn't break FFP in 20/21

2. We have no intention on breaking it in 21/22

I think these are pretty safe assumptions as Purslow many times publicly  reiterated his commitment to the rules. We also went as far as "selling" our stadium to stay within the rules, which I think indicates we are serious about sticking to them.

So, with that in mind, this was our FFP situation as of May this year (looking back at last 3 FPP monitoring periods):

 1151627292_Screenshot2021-07-27at20_16_58.thumb.png.d91721b6bc791c3fdbf5576138a9f870.png

Right near the limit, since then we have released about £23m from FFP balance as per the transactions below:

1809502975_Screenshot2021-07-27at20_45_05.thumb.png.9bdfec03c82ccec65a4cd7dabb1b8630.png

And added about £13m, as below:

1272474049_Screenshot2021-07-27at20_28_19.thumb.png.2dc45a59f368f8a417fbd84c9fa46cc6.png

That still leaves us about £10m spare (without any more outgoings and no major revenue increase), which basically allows you £30m player on £80k wage (£30m amortised over 5 years = £6m plus £4m wages),  Bailey for example.

However if you look closely, our 17/18 season will drop off from the calculations next year, and as it was a particulary bad year, it gives us another £10m or so to play with this summer.

Selling Hourihane for example for £5m, frees up another £7m (£5m profit on the sale as he has hardly any value left on our books and £2m wages). That allows you a £20m player on £60k wage.

So overall, it's not looking too bad, assuming we didn't go over last year.

 

 

Thanks, that makes plenty of sense, except where you round up 22.4 and round down 13.5 ;).

I think i'd assumed the losses we could write off as allowable costs would be much lower than they are. Also, reassures me that we'll be able to set aside a significant chunk of our losses due to covid in the accounts we'll release early next year. I know our wage bill will be a lot healthier for the 5 senior players we've lost, and the quality of the players we lost is easily replicated by our youth team at a much cheaper price.

Overall,  you've eased my mind a lot, thanks!

 

Edited by MrBlack
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Posted (edited)
18 hours ago, Czarnikjak said:

@MrBlack

I am making 2 assumptions here:

1. We didn't break FFP in 20/21

2. We have no intention on breaking it in 21/22

I think these are pretty safe assumptions as Purslow many times publicly  reiterated his commitment to the rules. We also went as far as "selling" our stadium to stay within the rules, which I think indicates we are serious about sticking to them.

So, with that in mind, this was our FFP situation as of May this year (looking back at last 3 FPP monitoring periods):

 1151627292_Screenshot2021-07-27at20_16_58.thumb.png.d91721b6bc791c3fdbf5576138a9f870.png

Right near the limit, since then we have released about £23m from FFP balance as per the transactions below:

That still leaves us about £10m spare (without any more outgoings and no major revenue increase), which basically allows you £30m player on £80k wage (£30m amortised over 5 years = £6m plus £4m wages),  Bailey for example.

However if you look closely, our 17/18 season will drop off from the calculations next year, and as it was a particulary bad year, it gives us another £10m or so to play with this summer.

Selling Hourihane for example for £5m, frees up another £7m (£5m profit on the sale as he has hardly any value left on our books and £2m wages). That allows you a £20m player on £60k wage.

So overall, it's not looking too bad, assuming we didn't go over last year.

Are you sure that's right? 

For the situation in May 2021 the three years (FFP monitoring periods) in question are the 20/21 season (Prem), the 19/20 season (Prem) and the 18/19 season (EFL). The allowable losses are therefore correspondingly 35, 35 and 13 =83, (not the 61 you show).

So, while there's the additional complexity/leeway of the 20/21 actual figure being allowed to be an average of that season and the one before to address/mitigate the impact of Covid costs, the 3 seasons in question do not include 17/18 as I understand it @Czarnikjak?

I also wonder whether the club's not including of 36 million income in the figures which could have been put in this years accounts has been done because we could still meet the allowable losses figures for the past 3 years with them excluded, and then the next lot will have a rolling allowance of 105 mill (3 prem seasons) and the losses from last year get out of the system a year sooner than otherwise would have been the case.

Edited by blandy
changed loss to income for the 36 mill
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13 minutes ago, Wainy316 said:

Isn't FFP meant to be being relaxed/temporarily done away with due to Covid?

UEFA suggested they were going to completely revamp it, then did nothing of the sort.  Was just a leak, that may well not have been true. Or they may still be determining what it is they're going to change.

In terms of the premier league rules, they just let you spread losses over a longer period but at the same ratio. So effectively you could lose 70m over 2 years, instead of 35m over 1 year. In theory, they expected clubs to drop below the usual 35m loss in 2019 due to covid, and expected them to make up the shortfall in 2020. That obviously hasn't happened with last season being nearly fully behind closed doors, so they may well make a further allowance for the 21/22 season. Tbc

See the posts from @Czarnikjakon page 16 for a better indication of what was done and how it impacts our potential position.

 

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21 minutes ago, blandy said:

Are you sure that's right? 

For the situation in May 2021 the three years (FFP monitoring periods) in question are the 20/21 season (Prem), the 19/20 season (Prem) and the 18/19 season (EFL). The allowable losses are therefore correspondingly 35, 35 and 13 =83, (not the 61 you show).

The 19/20 and 20/21 are treated as one monitoring period, T-1, and averaged loss of £35m is allowed for it (£70m loss total for T-1 as it comprises of two seasons). Our two last championship years still stay in this calculation as T-2 and T-3

The reason for that was delayed end of 19/20 season and a lot of revenue deferred until 20/21. The deferred 19/20 revenue will appear in 20/21 accounts and average itself out over that period.

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10 minutes ago, Czarnikjak said:

The 19/20 and 20/21 are treated as one monitoring period, T-1, and averaged loss of £35m is allowed for it (£70m loss total for T-1 as it comprises of two seasons). Our two last championship years still stay in this calculation as T-2 and T-3

The reason for that was delayed end of 19/20 season and a lot of revenue deferred until 20/21. The deferred 19/20 revenue will appear in 20/21 accounts and average itself out over that period.

Thanks. So the total allowed is the 70 + 13 = 83 (not 61 as per your earlier post) - that's the bit I don't get, really. or 70+13+13=96 even?

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1 minute ago, Czarnikjak said:

It's (70/2) + 13 + 13 = 61

How certain are you of that, that the monitoring window is 4 years, not 3?

I get the bit about 19/20 and 20/21 being adjusted for Covid, but not the inclusion of the 4th year. I had (perhaps mistakenly) interpreted the rules as saying the last 2 seasons are treated as a whole, but the overall period is still the last 3 years

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