Are they no concessions for newly relegated teams who have players on Championship contracts?
- Clubs relegated to League 1 will not be entitled to any payout derived from the Fair Play Tax and will be required to comply with the FFP rules in operation in that division.
no i think those direct costs will be things like the purchase of goods to sell in the shop, pitch maintenance, playing insurance, kit and small equipment purchases, ticketing costs etc. He did mention £1m in direct costs but as rent is £1.3m it couldnt be part of it. In the 2011 accounts direct costs were 995k.
Rent is generally a fixed cost not dependent on the level of sales - and therefore not a direct cost linked to sales. Nearly always goes as an overhead in any accounts I prepare
just a thought................ but if TF gets the rent down and agreed levels for higher divisions, gets access at no or low cost to match day income streams, has a team competing for promotion, drives other costs down, gets players on less costly contracts, no more money from SISU.............. does that make the club more saleable?
I dont mean get the SISU money all back but would it maximise what they can get? Could they work a deal on some of the remaining debt ?
just a thought................ but if TF gets the rent down and agreed levels for higher divisions, gets access at no or low cost to match day income streams, has a team competing for promotion, drives other costs down, gets players on less costly contracts, no more money from SISU.............. does that make the club more saleable?
I dont mean get the SISU money all back but would it maximise what they can get? Could they work a deal on some of the remaining debt ?
"Regarding the effect of FFP rules on CCFC ... The Football League's own website (http://www.football-league.co.uk/pag...748246,00.html) says "The SCMP (Salary Management Cost Protocol) broadly limits spending on total player wages to a proportion of each club's turnover", i.e. the total amount of money the club receives. However after listening again to the interview that TF gave on 15/02 (at 8 minutes in), he stated that the amount a club can spend on players is linked to "allowable revenue", that is to say total revenue (turnover) less cost of sales (which as far as I understand it would be for example match day costs, but not such things as rent). So even if the rent is reduced to zero it doesn't give CCFC even £1 more to spend on players. I also believe that a cash injection to CCFC by SISU would not be treated as revenue, because it would not be generated by the business sales / activity of the football club, and so this wouldn't give CCFC anything to spend on players either. I am happy to be corrected on any of this if my assumptions are wrong"
Thats pretty much correct in my opinion....... I dont think TF is right about deducting cost of sales though, well not based on what the League told me anyway.
I think you are missing a bit!....
the FFP limits is just that, a limit..... it is not actual money.
the money has to be freed up and made available from somewhere in all the incomings and outgoings of the business...
but in principle that seems to be the crux - the FFP limit on playing budget cannot be increased by funding from SISU although that would seem to be necessary to find any money at all to spend on players.
imp:
The FFP limits what can be paid on players wages as a % of revenue, so if revenue is increased the actual amount (£) spent on the squad can increase accordingly.
I take your point that if CCFC pays out more in rent then it has to find the money from somewhere to do that if it is to at the same time pay more in wages, but I expect funds from SISU could cover the rent, as FFP does not dictate where funds for fixed overheads such as rates come from.
seems to me you can spend whatever you like on player wages by buying and selling players or am I missing something?
Well you can buy and sell individual players within the existing budget that is fixed by the current revenue, but to increase the overall budget for the squad you need more revenue.
In my experience what is revenue and what is capital can be a moveable feast. I bet Mr Abramovich has it sorted.
In general finance that maybe true but not when its an artificial constraint written into Football league rules especially to get over the unfair bias brought to the game by Russian oligarchs!
Fair comment but which of those two would you back in a financial joust?
Thanks OSB, appreciate the feedback, and of course whether or not TF is right doesn't alter the fact that neither rent reduction or cash injection gives CCFC even £1 more to spend on players.
Now to take the debate a stage further for everyone ... If ACL were to offer a completely different deal, and i quote figures just as an illustration ... say they propose to charge CCFC £1.5M in rent annually instead of the £400k or whatever presently on the table, and at the same time allow CCFC access to £1M in additional revenues, the net effect of the deal is that ACL now get £500k instead of just £400k from CCFC, but CCFC has an additional £1M in revenue, of which 65% can be added to the funds available to spend on players. WIN-WIN! Or am i just missing something?
Your example exposes the reality of the situation. Arguably your example would benefit ccfc, It might be worth them paying more rent than they are currently contracted to pay in order to benefit under ffp by getting back the other matchday revenues. But in reality they have generated those mach day revenues, they would not exist without the draw of the football match. And the rent should be what is worth for the function required ie to house 10-15000, ie an average league 1 rent, its not worth any more even if its super shiney and can seat 20,000 more fans than attend. Its not however a win win. You just had SISU paying over 1m every year in rent just to buy back the revenues that they generated in the first place, in order to get back the permission of the FL to spend another 650k on players. And they will have to find that money for that after paying 1m extra in rent!
Win win?
imp:
Well you can buy and sell individual players within the existing budget that is fixed by the current revenue, but to increase the overall budget for the squad you need more revenue.
Are you saying we need more revenue to buy players because of FFP rules, or are you saying we need more revenue so we have more money to buy players?
I was saying you can completely get around the ffp rules by buying at selling players because that increases your revenue even if you make a loss.
Sorry misled you ... we need more revenue to pay more wages.
If you make a profit on buying and selling players that profit is then additional revenue, 65% of which can then be used to pay more in wages. But of course you have to have the money to buy players first, and that isn't a course SISU is taking.
it's revenue even if you don't make a profit, of course we don't have the money to throw around doing that. I was just kinda saying I think ffp is pointless because you can get around it buy buying and selling players. If every year you spend 2 million on players and sell 2 million worth of players, you can now spend another 1.3million on wages. Unless I misunderstand how ffp works.
Yes I see what your saying, and you are right FFP would then be pointless if you happened to have £1.3M lying around to spend on wages. The Football League's own website makes it sound as if that could happen because it simply says that FFP is linked to turnover. But in his interview on 15/02 TF said FFP was based on allowable revenue, i.e. income less cost of sales (which for example would be the cost of buying the player in the first place), and this is the only way FFP would make any sense.
I think OSB58's wisdom may be needed here. Players, I'm sure, are classified as assets, and their sale as disposal of assets. So I'm not sure this would be accounted for as a cost of sale line item.
Might be an anomaly of FFP rules. You can seemingly increase revenues as above, make no cash and it qaulifies in the 65/60% rating; whereas in other instances could can create cash but not qualify as it counts as asset disposal? In which case, a mixed bag to satisfy both masters would be necessary?!?!?
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