The AVFC FFP thread

[Czarnikjak]

2 minutes ago, Peter Griffin said:

If it is not the case then what does the ruling "inclusion of net cash flow in respect of transfers of Players’ registrations" mean?

That rule describes something Premier League calls "Cash Losses" which is used to determine if Secure funding from your owner is required for a club. Not strictly related to P&S calculation.

You are right about addons, any conditional addons wouldn't be immediately booked as profit, only upon meeting those conditions.

For Jack though, the remaining £25m is not conditional, it will therefore be fully recognised in 21/22 accounts.

[CVByrne]

16 hours ago, KMitch said:

It's easier said than done... Generating revenue for football clubs comes only a in a few main ways:

• Broadcasting rights
• Match day revenue
• Sponsorships
• Merchandise
• Transfers
• Prize Money

Broadcasting rights are split equally among Premier League clubs now.  Prize money comes directly from performance on the pitch.  You need to be successful on the pitch in order to grow your fanbase and win more prize money.  The bigger your fanbase is locally, the more money you can generate from matchday revenue.  The bigger your fanbase is globally, the more revenue you can generate from sponsorships/merchandise sales. It's a Catch-22 situation where you need to perform well on the pitch in order to make more money, but because you don't make a lot of money, you aren't allow to spend consistently more than you take in because of FFP rules.  This leads us down the discussion of transfer strategy and recruitment.  The number 1 biggest way for clubs outside of the top 6 to make money while following FFP rules is to play the transfer market well and continue to generate steady profits off of player sales.  Excluding Jack's transfer to Man City, Villa have done a terrible job selling players over the past 15 years.  We've lost so much money because of paying too much for the wrong players (both in transfer fees and wages over long contracts), paying peanuts for players who aren't good enough, extending poor performers on big contracts, and not developing/flipping our youth team players well enough.  Everyone is playing "Moneyball" these days, so it's becoming harder and harder to have a statistical advantage in recruiting players than ~10 years ago when Southampton/Swansea burst into the Premier League flipping unknown talents to the big clubs and reinvesting into more quality, season after season.  

That said, there is one significant untapped area of revenue which really hasn't been saturated by all of the big clubs at the moment, besides Man City and Chelsea, and that's academy recruitment/development.  Man City and Chelsea have dominated the youth team market for a while now and consistently recruit the best talent from across England and Europe, develop them, then loan them out and get them exposure.  They then sell them at a profit, with a buy-back clause and a sell on fee, allowing them to go back in for someone if they actually turn into the superstar they hoped they would be.  Look at how many players Chelsea has sent out on loan and flipped over the years.  They currently have 22 players out on loan, and had over 40 on loan last year.  Adopting their business model will allow us to generate the funds necessary to improve our squad and break into Europe, but it will take several years for our new strategy to start paying dividends and we need to be patient and stick with the plan until then.  

 

 

This is being clamped down on, limiting the number of players a club can send out on loan to cut off these big revenue stream from Chelsea. The one big leveler is the academy. If you cut off the 30+ people out on loan like they are doing then teams need to bring through their own players and there are finite numbers of games for clubs to do that and the big clubs have packed squads already. 

It will be very difficult or nearly impossible for Villa to break into the elite like Chelsea and City did with pure money. We can aim for a few things to happen though. A salary cap that is set at say 70% of the average of the top 10 teams in the CL means salaries are kept in check at the top which will filter down to all salaries. Or if it's set at 70% of a clubs revenue then that's still beneficial to us because it will only be for the Champions League clubs and if we ever qualified we'd have a revenue bump from the CL itself.

Our revenue sources do need to increase and that only comes via performances on the pitch. We need a run of Europa League football to help with that. But we need to continue to focus on the academy and build a culture like Dortmund of bringing young talent through. This will mean we can compete with the big teams on talent recruitment. We need to improve the system at schools level and dominate the midlands in terms of development of talent from a young age.

There will become more of a need for homegrown players post Brexit so the fees these players will command will increase over time meaning the clubs who best develop young British talent gain in this period too. 

I do worry the bigger clubs are sorting themselves out in terms of across the board better recruitment. The main hope for the teams behind were mismanagement usually in form of transfers and players on big wages who don't play etc..

Edited September 6, 2021 by CVByrne

[OutByEaster?]

5 hours ago, Czarnikjak said:

For Jack though, the remaining £25m is not conditional, it will therefore be fully recognised in 21/22 accounts.

The income line in those accounts will be a massive leap for us - even without the transfer profit, we have increased commercial revenues, increased TV revenues and will include the income that was moved from the previous accounting period - can we expect to be north of £200m? £250m?

 

[Czarnikjak]

4 minutes ago, OutByEaster? said:

The income line in those accounts will be a massive leap for us - even without the transfer profit, we have increased commercial revenues, increased TV revenues and will include the income that was moved from the previous accounting period - can we expect to be north of £200m? £250m?

 

Not quite.

The deferred income was moved from 19/20 to 20/21 accounts. Not affecting 21/22.

TV revenues depend on final league position. Each position is worth about £2m. Unlikely we gonna be much that much higher than 11th for it to be significant.

Commercial revenues will be higher, but not massively. Our main commercial deals are the same or similar in value to previous years.

Overall revenue (not including player sales) will be around £175-180m, depending on league position, unless we suddenly pull some big sponsorship deal out of a bag ( like stadium or training ground naming rights)

[OutByEaster?]

18 minutes ago, Czarnikjak said:

Overall revenue (not including player sales) will be around £175-180m, depending on league position, unless we suddenly pull some big sponsorship deal out of a bag ( like stadium or training ground naming rights)

Ah yes, the Grealish money will be in the following years accounts, even so, the jump from the £112m reported in the last accounts to £180m in the next set to be published is huge, and will possibly increase further in the following year with the Grealish income, that should give us plenty of room to manoeuvre under whichever form of FFP we find ourselves subject to.

The two main commercial contracts to be negotiated in the summer give us further opportunity to increase that top line, and for the shirt manufacturer and principle sponsor agreements I would think we can look for an increase on the current deals that should run to eight digits. We seem to be headed in the right direction in terms of revenues.

 

[Czarnikjak]

33 minutes ago, OutByEaster? said:

Ah yes, the Grealish money will be in the following years accounts, even so, the jump from the £112m reported in the last accounts to £180m in the next set to be published is huge, and will possibly increase further in the following year with the Grealish income, that should give us plenty of room to manoeuvre under whichever form of FFP we find ourselves subject to.

 

To avoid confusion let me list it year by year:

19/20 - reported revenue £112m ( but £48m revenue loss attributed to covid, so the underlying revenue was £160m

20/21 - estimated underlying revenue ( excluding covid adjustments) £172m

21/22 - estimated underlying revenue £175m - if we finish 11th  (plus profit from sale of Grealish on top of that )

Edited September 6, 2021 by Czarnikjak

[OutByEaster?]

46 minutes ago, Czarnikjak said:

To avoid confusion let me list it year by year:

19/20 - reported revenue £112m ( but £48m revenue loss attributed to covid, so the underlying revenue was £160m

20/21 - estimated underlying revenue ( excluding covid adjustments) £172m

21/22 - estimated underlying revenue £175m - if we finish 11th  (plus profit from sale of Grealish on top of that )

It's interesting though in terms of how that will be reported.

We'll have the 19/20 as £112m, based on your underlying estimate we'll have 20/21 reported as around £207m (with the moved TV income from 19/20) and then if we report a £70m profit on Grealish, the following year, even without other improvements we will be at £245m - on paper it'll look like:

• 18/19 - £54.3m
• 19/20 - £112m
• 20/21 - £207m
• 21/22 - £245m

Which will be remarkable progress.

 

[Czarnikjak]

7 minutes ago, OutByEaster? said:

It's interesting though in terms of how that will be reported.

We'll have the 19/20 as £112m, based on your underlying estimate we'll have 20/21 reported as around £207m (with the moved TV income from 19/20) and then if we report a £70m profit on Grealish, the following year, even without other improvements we will be at £245m - on paper it'll look like:

• 18/19 - £54.3m
• 19/20 - £112m
• 20/21 - £207m
• 21/22 - £245m

Which will be remarkable progress.

 

One small correction on your "paper" figures as you call them. out of £48m revenue lost in 19/20, only £36m was deferred to 20/21. £12m was permanently lost due to COVID. Also in 20/21 there will be some permanent loss in terms of gate receits (~£16m) and commercial ( ~£3m) and TV rebate (~£3m). SwissRamble has excellent post detailing COVID loses - https://threader.app/thread/1429685285755949056

Overall, Covid cost us around £34m in real money that we lost (£12m in 19/20 and £22m in 20/21). Not too bad if you consider that the likes of Spurs lost £176m revenues. 

So the reported, paper figures will be more like this:

• 18/19 - £54.3m
• 19/20 - £112m
• 20/21 - £186m
• 21/22 - £245m (or £275m if you account whole £100m profit from JG this year, as I believe will be the case)

Excellent Revenue "growth" to show in 1 pager PDF to uninformed audience

 

 

[OutByEaster?]

36 minutes ago, Czarnikjak said:

Excellent Revenue "growth" to show in 1 pager PDF to uninformed audience

And the FFP bogeyman.

[Follyfoot]

A big thank you to all of you on this thread. I think I even might half understand it now, only half mind

Edited September 6, 2021 by Follyfoot

[MWARLEY2]

10 minutes ago, Follyfoot said:

A big thank you to both of you on this thread. I think I even might half understand it now, only half mind

I echo this . I thought i understood ffp but now i realise i didnt . I also wish i had gone to accountancy school .

[Czarnikjak]

5 minutes ago, MWARLEY2 said:

I echo this . I thought i understood ffp but now i realise i didnt . I also wish i had gone to accountancy school .

Good job we have Christian Purslow in charge who once, whilst in charge of Liverpool, described himself as "Fernando Torres of finance"

[Risso]

Yes I think you're right. Due to FFP rules, I think NSWE HAD to inject capital via share issues. Now that the sale of Greasy has eased the FFP burden, they can use some debt finance again, so why not. Every other club does.

[Czarnikjak]

Interesting proposal for a reform of English football pyramid by Fair Game organisation : https://www.fairgameuk.org/about

Part of their Manifesto :

THE FAIR GAME SOLUTION

• Abolition of parachute and solidarity payments.

• 25% of The Premier League TV rights both domestic and international - and

new income streams such as streaming - goes to the rest of the pyramid and independent football organisations such as the FSA, PFA, LMA (up from 14% currently - note to properly tackle the cliff edge between Premier League and the Championship this proportion would have to be significantly higher).

• The Introduction of the Sustainability Index as a measure to distribute funds fairly.

This total pot is then split two ways:

• 20% is given as baseline funding to clubs to spend in whatever way they see fit.

• 80% split dependent on a club’s sustainability category rating (30% unrestricted; 70% on capex and community projects that can be either rolled over or backdated five years and should explicitly include investment in women’s football).

To ensure cliff edges rise consistently, each division’s split of this money needs to be:

• 46% Championship

• 24% League One

• 13% League Two

• 7% National League

• 3.5% National League North and South

• 2% Women’s Super League

• 1% Women’s Super League 2

(note: WSL divisions only have 12 clubs)

  

 

Assuming every club reaches the highest standards on the Sustainability Index, this would give:

• A category 1 Championship club not in receipt of parachute payments £13.91m an uplift of £8.81m

• A category 1 League One club £7.26m an uplift of £6.65m

• A category 1 League Two club £3.93m an uplift of £3.33m

• A category 1 National League £2.12m – when they previous received nothing

• A category 1 National League N & S club £1.06m

• A category 1 WSL club £724,000; and

• A category 1 WSL2 club £362,000

Edited September 10, 2021 by Czarnikjak

[Tomaszk]

They won't let streaming go. That's a bomb waiting to go off. Within 10 years PL will be heading onto something like Amazon Prime, or more likely their own platform.

That's when things will go wild, player wages will properly blow up. Might hold off the superleague again for a few years.

Like the look of something like that though. Something needs to he done to get the EFL closer to the PL but the PL won't want to share any of their money. 

I'm coming more round to the idea it's either an international salary cap or super league is unstoppable.

League One is brilliant this season. About 12 teams are targeting the playoffs. It's the new Championship because the Championship has become...at least two teams who come down go back up + one lucky contestant gets a play-off spot and one year of PL money. Everyone else is getting cut off.

[MaVilla]

am i correct in thinking, that next summer (just prior to the 22/23 season), that our huge outlay for our first year back in the PL (140m), will effectively drop off the FFP budget?

So if correct, the 2020/21, 2021/22 & 2022/23 reporting period would be at the end of the 22/23 season, meaning player net expenditure as follows:

20/21 - 90m net spend.

21/22 - 15m net profit.

22/23 - i assume we could spend big if we wish?, with a previous 2 year total net spend of only 75m?

 

By this i mean, if our average max spend each year could be roughly 100m (for the purpose of the discussion), then the 300m allowable over the 3 years, minus the 75m net spent in the first two years, leaves effectively 200m+ flex in the budget if we want it next summer?

I know its not quite that simple, but im trying to talk in Broad strokes?

 

[Czarnikjak]

29 minutes ago, MaVilla said:

am i correct in thinking, that next summer (just prior to the 22/23 season), that our huge outlay for our first year back in the PL (140m), will effectively drop off the FFP budget?

No and no -)

That outlay will only drop off our ffp budget when these players are sold or leave.

For now, we keep paying their wages and account their amortisation fees.

FFP doesn’t know or care what Net Spend is.

Big spending next summer is unlikely in my opinion due to our wage budget creeping up. I estimated it to be already at or over 70% this season. You don’t really want to go much higher than that, especially with the rumoured Salary Cap potentially replacing FFP in the future.

Edited September 26, 2021 by Czarnikjak

[QldVilla]

On 11/09/2021 at 09:13, Tomaszk said:

They won't let streaming go. That's a bomb waiting to go off. Within 10 years PL will be heading onto something like Amazon Prime, or more likely their own platform.

That's when things will go wild, player wages will properly blow up. Might hold off the superleague again for a few years.

Like the look of something like that though. Something needs to he done to get the EFL closer to the PL but the PL won't want to share any of their money. 

I'm coming more round to the idea it's either an international salary cap or super league is unstoppable.

League One is brilliant this season. About 12 teams are targeting the playoffs. It's the new Championship because the Championship has become...at least two teams who come down go back up + one lucky contestant gets a play-off spot and one year of PL money. Everyone else is getting cut off.

Don’t think it will be 10 years, already happening with CL you have to pay a streaming service called Stan in Australia to watch the games now.

5 years ago it was Fox Sports, then PL and CL moved to Optus Sport, now Optus has lost the CL.

Its going to become quite expensive to watch different football leagues in the next few years, albeit its already started and will only get worse.

Your right, PL must already be investing in their own streaming service, why get payed for others to do something you can do yourself and make maximum profit for the clubs.

[WHY]

44 minutes ago, Czarnikjak said:

No and no -)

That outlay will only drop off our ffp budget when these players are sold or leave.

For now, we keep paying their wages and account their amortisation fees.

FFP doesn’t know or care what Net Spend is.

Big spending next summer is unlikely in my opinion due to our wage budget creeping up. I estimated it to be already at or over 70% this season. You don’t really want to go much higher than that, especially with the rumoured Salary Cap potentially replacing FFP in the future.

Genuinely don’t think our wage budget has gone up much.

We have lost:

Grealish, highest paid player

Barkley, second highest paid player

Elmo, Taylor and Heaton,  add to that the players we have out on loan and I can’t see how it has increased that much. Bailey and Buendia probably replaces the Grealish wage. Ings will be on less than Barkley and Axel will be on par with Heaton. Elmo and Taylor’s probably covers Young’s. If it had increased it will be negligible imo.

[paul514]

1 hour ago, WHY said:

Genuinely don’t think our wage budget has gone up much.

We have lost:

Grealish, highest paid player

Barkley, second highest paid player

Elmo, Taylor and Heaton,  add to that the players we have out on loan and I can’t see how it has increased that much. Bailey and Buendia probably replaces the Grealish wage. Ings will be on less than Barkley and Axel will be on par with Heaton. Elmo and Taylor’s probably covers Young’s. If it had increased it will be negligible imo.

I don't think our wage total has gone up since the end of last season.....

But I think it went up a hell of a lot on the same season before with new players and a bunch of new contracts.

Going forward I think our biggest problem buying players will be the wages.