The AVFC FFP thread

[the_eristic]

7 minutes ago, Czarnikjak said:

If you look at that Premier League PSR rule closely it's average of last two years, so:

(70/2) + 13 + 13 = 61

4 by 3 formula is what EFL decided to use in the championship 

 

[Czarnikjak]

1 hour ago, punkiller1981 said:

I wouldn’t worry about it I think Man City have shown the rules are irrelevant 

Why would you say that?

There's no suggestion that their current spending puts them anywhere near breaking the limits.

The ongoing premier league investigation into ManCity looks at events from 2014, the outcome of it and possible penalty remain to be seen.

Look at Everton, they pushed FFP to the limits over last few seasons and now ended up only being permitted to sign freebies like Townsend and Grey for £1m. They are desperate for someone to buy some of their players so they can sign Dumfries.

[WallisFrizz]

So it really proves that all of this fanciful talk of blowing JGs mind with some amazing signings in the space of a week is complete bs. And, as much as we don’t want it, the £100m might actually be good for the stability and progress of the club to avoid getting into an Everton situation.

[MaVilla]

14 minutes ago, WallisFrizz said:

So it really proves that all of this fanciful talk of blowing JGs mind with some amazing signings in the space of a week is complete bs. And, as much as we don’t want it, the £100m might actually be good for the stability and progress of the club to avoid getting into an Everton situation.

dude, we signed Buendia and Bailey.....both are top shelf signings, did u forget they happened?

Although, i do wonder if Grealish going for 100m+ might actually be on balance better for the club....although ofc i dont actually want to lose him.

[Follyfoot]

17 minutes ago, WallisFrizz said:

So it really proves that all of this fanciful talk of blowing JGs mind with some amazing signings in the space of a week is complete bs. And, as much as we don’t want it, the £100m might actually be good for the stability and progress of the club to avoid getting into an Everton situation.

They could be kind of some reverse plan in action, Break financial fair play to get replies you want and then have a very strong youth structure for when you are embargoed. Not saying that is the plan but looking from the outside in you could argue that it might be

[WallisFrizz]

2 minutes ago, MaVilla said:

dude, we signed Buendia and Bailey.....both are top shelf signings, did u forget they happened?

Although, i do wonder if Grealish going for 100m+ might actually be on balance better for the club....although ofc i dont actually want to lose him.

Of course I hadn’t forgotten but there was this load of tat out there on Twitter last night about how we had one week to prove ourselves to Jack by making further big signings this week, multiple. I don’t see how we could do that and be ffp compliant.

My main point was in line with your second paragraph. 
 

 

[WallisFrizz]

1 minute ago, Follyfoot said:

They could be kind of some reverse plan in action, Break financial fair play to get replies you want and then have a very strong youth structure for when you are embargoed. Not saying that is the plan but looking from the outside in you could argue that it might be

If there was a way we could do it, I’d be all for it but wouldn’t want to put club in jeopardy for any player. I actually trust the owners to do what’s best.

[blandy]

8 hours ago, Villaphil said:

Must have something wrong but if you divide by 4 then * 3…. that’s (35 + 35 + 13 + 13)/4*3 = 96 * 0.75 = £72m ?

The EFL way of doing it isn’t being used by the PL. The EFL has said, because of COVID, instead of taking the last 3 years losses together, we’ll allow you to use 4 years losses and then count the 3 year pass/fail value as ¾ of that 4 year total.

The PL has said, also, that instead of taking the last 3 years losses together, we’ll use a 4 year window, but unlike the EFL we count the two most recent of the 4 as just one (averaging).

Both methods basically give clubs a maths tweak to spread COVID losses over 4 years, instead of the normal 3 year window, for FFP purposes, but they do it in different ways.

(As I understand it)

[Villaphil]

59 minutes ago, blandy said:

The EFL way of doing it isn’t being used by the PL. The EFL has said, because of COVID, instead of taking the last 3 years losses together, we’ll allow you to use 4 years losses and then count the 3 year pass/fail value as ¾ of that 4 year total.

The PL has said, also, that instead of taking the last 3 years losses together, we’ll use a 4 year window, but unlike the EFL we count the two most recent of the 4 as just one (averaging).

Both methods basically give clubs a maths tweak to spread COVID losses over 4 years, instead of the normal 3 year window, for FFP purposes, but they do it in different ways.

(As I understand it)

Thereby screwing over the newly promoted, that little bit more, nice.

[blandy]

25 minutes ago, Villaphil said:

Thereby screwing over the newly promoted, that little bit more, nice.

Not sure. I thought that to start with, but now don’t. Because of the effect of promotion on finances (massive plus) and particularly income, I think it’s neutral at worst. Even a newly promoted club spending a ton on transfers gets that outlay amortised over the player contract lengths, so in some ways the promoted clubs are better placed, starting from a EFL level of running costs, but PL income.

[Villaphil]

2 hours ago, blandy said:

Not sure. I thought that to start with, but now don’t. Because of the effect of promotion on finances (massive plus) and particularly income, I think it’s neutral at worst. Even a newly promoted club spending a ton on transfers gets that outlay amortised over the player contract lengths, so in some ways the promoted clubs are better placed, starting from a EFL level of running costs, but PL income.

They’re cheaper because they aren’t as good, if they were, you’d have them on premier league contracts ??

EFL calculation would apparently allow us £11m more in losses.  That’s a sizeable disadvantage.

[blandy]

2 minutes ago, Villaphil said:

They’re cheaper because they aren’t as good, if they were, you’d have them on premier league contracts ??

EFL calculation would apparently allow us £11m more in losses.  That’s a sizeable disadvantage.

To the first point, an EFL club has lower income and therefore has to have lower outgoings and has to adhere to a tighter margin, therefore is allowed only a smaller loss each year. When they get promoted they bring that small loss figure with them.

second point is the PL method applies to all the clubs in the PL - the last 2 season’s losses are averaged and the 2 EFL seasons that count for Villa we met the rules, so they are neutral in terms of the calls for the time in the PL. We’re not disadvantaged by it. Leeds who came up last year have a bit of a case because they have to (for the PL FFP) use 3 EFL seasons and one PL Season, but that is offset by the huge income increase they had in income from the one PL season and a lower cost base.

Its the likes of Everton who are the most hit by it

[Czarnikjak]

35 minutes ago, Villaphil said:

They’re cheaper because they aren’t as good, if they were, you’d have them on premier league contracts ??

EFL calculation would apparently allow us £11m more in losses.  That’s a sizeable disadvantage.

The point you are making is a minor implementation detail that could be argued the way you see it.

Overall though, covid and the FFP regulations around it, gave teams with owners willing to plough the money in (villa, city and Chelsea mainly) massive advantage.

Namely the provision to not include any losses caused by covid in FFP calculations. While other teams had to tighter their belts and reign in spending, we continued like covid doesn't exists thanks to injections from our owners.

Overall i estimate that gave us about £60m advantage over the likes of West ham or Wolves.

[AndFos]

8 hours ago, AndFos said:

What we are forgetting is the increase in income. We can assume that our club have increased the income massively, therefore we can afford a couple more signings without selling Jack or anybody else?

@Czarnikjak What are your thoughts on this?

[Czarnikjak]

59 minutes ago, AndFos said:

 

9 hours ago, AndFos said:

What we are forgetting is the increase in income. We can assume that our club have increased the income massively, therefore we can afford a couple more signings without selling Jack or anybody else?

Expand  

@Czarnikjak What are your thoughts on this?

 

Our income improved massively the season we got promoted. But not since then.

It improved by about £12m last season due to higher league position, but commercial revenue would see only very modest increase if at all.

This season again, the commercial revenue will see little increase, we didn't sign any new major sponsor deals. If we finish the league in let's say 6th position, our broadcast revenue will go up by another £10m or so.

I wouldn't call these increases "massive"

PS. I am ignoring any revenue lost to covid as that's excluded from FFP calculations anyway.

[DaveAV1]

Surely we do what the other big spending clubs do, which appears to be spend the money regardless of FFP. Creative accounting, perhaps the odd fine. 
 

Ok they’re getting CL money but that surely doesn’t account for the amount the likes of Citeh and PSG are spending? Even Arsenal are still spending and that’s without CL money these days. To compete we have to play by the same rules and use the same accountants and lawyers as the big boys. 

[AndFos]

2 hours ago, Czarnikjak said:

Our income improved massively the season we got promoted. But not since then.

It improved by about £12m last season due to higher league position, but commercial revenue would see only very modest increase if at all.

This season again, the commercial revenue will see little increase, we didn't sign any new major sponsor deals. If we finish the league in let's say 6th position, our broadcast revenue will go up by another £10m or so.

I wouldn't call these increases "massive"

PS. I am ignoring any revenue lost to covid as that's excluded from FFP calculations anyway.

Thanks for the answer, I guess Covid might be the reason we are not seeing a increase on the commercial side, as I would imagine it would increase year on year with is staying in the Prem and climbing the table. But maybe we need to qualify for Europe first.

[mrjc]

On 27/07/2021 at 20:43, 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):

 

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

And added about £13m, as 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.

 

 

Haven't visited this thread for a while, and thanks for this, looks good.  Only thoughts which might make this a bit less positive (admittedly without having fully thought this through....):

• I think using the average of 19/20 and 20/21 as the 'start point' for 21/22 maybe ends up too optimistic for a couple of things
• For example, even if we are saving £11m year-on-year for Barkley....because that's going into a two-year average, I think we'll only save half of that compared to the average, if that makes sense?
• On the 'ins', wouldn't we also need to include the fairly significant contract increases that we handed out last season to Jack, Mings, McGinn etc, which will also be diluted as being part of a 2-year average, but we will have a full year of next year?
• A full year of Sanson wages vs effectively a 1/4 year in a 2-yr average calc.

As I say, not fully thought through, but wouldn't this eat into the ~£10m surplus?

That said, this also ignores any increase in income (hopefully a bit through league position + gates + commercial), and also is pretty difficult given the uncertainty over the 20/21 numbers.

Also, clearly all before any change in Jack status!

 

[blandy]

1 hour ago, mrjc said:

wouldn't we also need to include the fairly significant contract increases that we handed out last season to Jack, Mings, McGinn etc, which will also be diluted as being part of a 2-year average, but we will have a full year of next year?

If you extend a players contract that also extends the amortisation, which is a positive impact. For example (hypothetical), we buy a defender for 20 million quid, on a 4 year contract and 100 k wages.

he costs us 5 mill a year in wages and 5 mill a year amortisation of his fee (20 mill /4).

now, after 2 years we give a new contract for 4 years with wages of 120 k. His value at the time = 20 - (2 x 5) = 10 mill. That now gets amortised at 2.5 mill a year ( a saving of 2.5 mill a year). His wage increase of 20 grand a week costs around 1 mill a year extra. In FFP terms that’s a win.

[Czarnikjak]

2 hours ago, mrjc said:

Haven't visited this thread for a while, and thanks for this, looks good.  Only thoughts which might make this a bit less positive (admittedly without having fully thought this through....):

• I think using the average of 19/20 and 20/21 as the 'start point' for 21/22 maybe ends up too optimistic for a couple of things
• For example, even if we are saving £11m year-on-year for Barkley....because that's going into a two-year average, I think we'll only save half of that compared to the average, if that makes sense?
• On the 'ins', wouldn't we also need to include the fairly significant contract increases that we handed out last season to Jack, Mings, McGinn etc, which will also be diluted as being part of a 2-year average, but we will have a full year of next year?
• A full year of Sanson wages vs effectively a 1/4 year in a 2-yr average calc.

As I say, not fully thought through, but wouldn't this eat into the ~£10m surplus?

That said, this also ignores any increase in income (hopefully a bit through league position + gates + commercial), and also is pretty difficult given the uncertainty over the 20/21 numbers.

Also, clearly all before any change in Jack status!

 

Thanks, all good points.

@blandy explained contract extensions perfectly, no need to add anything to it.

Your Ross Barkley example would be correct if our combined £64m FFP loss for last 2 seasons ( £32m average) was very heavily skewed towards 20/21. Let's say 44-20. But in reality it will be much more evenly spread, limiting the "average" effect you mentioned.

Untill full 20/21 accounts are published (march/April 2022), we can only estimate obviously. Thus my calculations have margin of error in them. But I am fairly confident my numbers are not widely off the mark (within £5-10m)