FFP

[Smithy]

I'm sure it's more complex than this, but IF ground development projects are meant to be outside FFP, it seems madness that the interest on a loan for their ground development is what has tipped Everton over the threshold.  How can the capital costs be excluded but not the funding costs?  It seems like a ridiculous loophole for the PL to prosecute when the stakes are so high.

I'm guessing, but I'd assume the argument is that it's interest paid on loans taken out only because all of the available club funds were spent on players.  i.e. you can't spend all of your money on players up to the FFP limit, then borrow what you need for capital investment without there being "some" FFP cost to it.  You can spend what you like on capital investment, but if you're having to borrow large sums to do it, that is probably a negative on the "sustainability" front, and they want it accounted for in FFP some how?

I agree it's not consistent, but I can sort of see why it's included in the calculation.

[chrisw1]

But they wouldn't have needed the loan if they weren't doing the development.

[Smithy]

But they wouldn't have needed the loan if they weren't doing the development.

And they wouldn't have needed the loan if they hadn't maxed out buying players to the FFP limit.

Again, I do sort of agree with you that it's inconsistent.  I can just see how they're maybe thinking they don't want people maxing out on players to the FFP limit, and then having to borrow money elsewhere to "invest in the club in other areas".  They probably want it all done "sustainably".

I think of it this way;  What if they'd paid for the building costs out of their normal club funds, but borrowed that same amount of money to buy players up tot the FFP limit.  The net impact to the club is the same, they've still borrowed the same amount, it's just the interest would be applied to the player costs, not the capital costs. 

They're basically saying, "if you've borrowed money, having maxed out your FFP losses, we're going to assume you've borrowed that money for FFP related expenditure, whether you have or not"

[Somniloquism]

June 30th is used because it is the normal end date for the season and the new season starts on July 1st. Any player signed, even the pre-contract ones "signed" in January start their contracts on 1st July. Clubs have been forced to sell because of finances lots of times in the past even before FFP so I honestly do not see an argument that they wouldn't get full value.

Moving the cut-off date essentially gives clubs like Forest extra windows in which to fuck about with their finances and also allows the same player move to affect accounts over different periods. Will Forest try to claim Johnsons FFP sale from 2022-2023 or from 2023-2024 when looking at the three year period his "pure profit" shows on the books for example?

[chrisw1]

But they wouldn't have needed the loan if they weren't doing the development.

And they wouldn't have needed the loan if they hadn't maxed out buying players to the FFP limit.

Again, I do sort of agree with you that it's inconsistent.  I can just see how they're maybe thinking they don't want people maxing out on players to the FFP limit, and then having to borrow money elsewhere to "invest in the club in other areas".  They probably want it all done "sustainably".

I think of it this way;  What if they'd paid for the building costs out of their normal club funds, but borrowed that same amount of money to buy players up tot the FFP limit.  The net impact to the club is the same, they've still borrowed the same amount, it's just the interest would be applied to the player costs, not the capital costs. 

They're basically saying, "if you've borrowed money, having maxed out your FFP losses, we're going to assume you've borrowed that money for FFP related expenditure, whether you have or not"

What's wrong with maxing out on players to the FFP limit?  That's what it's there for.

Either building costs are excluded or they're not.  This seems like a weird case to me.  Can you imagine them charging Man U or Arsenal on this basis?

[Hookeysmith]

Whatever happens to anyone else all eyes are now fixed on Man Shitty.

115 charges are absurd and if they are allowed to get away with this then we all may as well give up.

They can postulate and argue as much as they like but the eyes are on them...and they know it

The claim by FA  etc is that the claims are different - i agree - Everton, Forest and even Chelsea are just down to either shit or dodgy accounting

Shitty is pure cheating - simple as that

[Stu]

I’m not sure if Man City will get pinged. Politics involved with this. Their owner is the deputy PM of a significant British ally in the Middle East, I’m not sure our lot would let him and his club be shamed by being found guilty of cheating for years and having trophies stripped. Think they’ll just end up with a fine. A big fine, but a drop in the ocean for their wealth.

[TelfordVilla]

They will announce that what City did was wrong, but cannot happen again as they have shut the stable door. Therefore a fine is appropriate and having learned from that situation we can all put it behind us and move on.

[PaulWinch again]

Whatever happens to anyone else all eyes are now fixed on Man Shitty.

115 charges are absurd and if they are allowed to get away with this then we all may as well give up.

They can postulate and argue as much as they like but the eyes are on them...and they know it

The claim by FA  etc is that the claims are different - i agree - Everton, Forest and even Chelsea are just down to either shit or dodgy accounting

Shitty is pure cheating - simple as that

It’s not the FA is it? It’s the Premier League.

[Simon Page]

They will announce that what City did was wrong, but cannot happen again as they have shut the stable door. Therefore a fine is appropriate and having learned from that situation we can all put it behind us and move on.

Lessons have been learned. This was all a long time ago, different age. We have robust procedures in place. The probity of the Premier League is of paramount importance to us. Trust is at the heart of what we do.

[Somniloquism]

What's wrong with maxing out on players to the FFP limit?  That's what it's there for.

Either building costs are excluded or they're not.  This seems like a weird case to me.  Can you imagine them charging Man U or Arsenal on this basis?

Isn't the claim that they made two loans going on and claimed they were both for the stadium build but one of them was actually for general running costs, and so should be included in the PSR threshold? 

Misleading the Premier League about stadium interest
The Premier League complains that Everton deliberately misled about the source of funds for the stadium development. Everton had two sources of funds – Moshiri’s interest free shareholder loans (albeit not charge free) and commercial loans from Rights and Media Funding and Metro Bank. By applying the costs of the commercial loans to the stadium development company, the Premier League complained this was deliberately misleading. The commercial loans were for working capital purposes within the club.
Importantly the Premier League makes no allegation of dishonesty. However by providing materially inaccurate information there was a breach of utmost good faith as imposed by Premier League Rule B15.

[ChicagoLion]

I know there's at least one particularly talented accountant on here (Percy told me !) so I have a question for them.
Wouldn't the sale of Johnson be reported in the 2023 accounts as a significant post balance event ? I know that obviously doesn't change the actual loss reported in the financial year, but formally highlights the corrective action taken by the club and condoned by the auditors. If I was analysing a set of accounts I'd factor this into my analysis of overall fiscal strength. So I would say that this just highlights the weakness in the drafting  of the P&S rules. Or am I being naive ?

You have to have a date when the financial transactions are accounted for, if not there would be chaos.
It’s like a seller of umbrellas  saying if it had rained in September instead of October as our financial year end is September we would have made profit.
Forest have more control over their affairs than someone does over the weather.
They sold him for more they claim after the accounting period, so what?
They were sailing too close to the wind and got caught out.

[brontebilly]

I know there's at least one particularly talented accountant on here (Percy told me !) so I have a question for them.
Wouldn't the sale of Johnson be reported in the 2023 accounts as a significant post balance event ? I know that obviously doesn't change the actual loss reported in the financial year, but formally highlights the corrective action taken by the club and condoned by the auditors. If I was analysing a set of accounts I'd factor this into my analysis of overall fiscal strength. So I would say that this just highlights the weakness in the drafting  of the P&S rules. Or am I being naive ?

You have to have a date when the financial transactions are accounted for, if not there would be chaos.
It’s like a seller of umbrellas  saying if it had rained in September instead of October as our financial year end is September we would have made profit.
Forest have more control over their affairs than someone does over the weather.
They sold him for more they claim after the accounting period, so what?
They were sailing too close to the wind and got caught out.

Let's just start with there's chaos anyway. FFP is encouraging clubs to stockpile academy players just to sell them for FFP benefit. So there have been unintended consequences already that aren't in the interests of players, clubs or the wider game. These will require changes.

Here's another blatantly obvious one, you simply can't have the 'line' during the transfer window. Forest have proven beyond doubt the issue here and will win this case all day if it goes the court. It simply has to be in the interests of P&S for clubs to sell their assets at their fair value during a trading period, given the transfer window it will nearly always be at the end for getting the best price for a top player. Instead of putting their hands up and changing the 'line', they have opened themselves to ridicule by charging Forest and emboldened the likes of Man City no doubt too.

[LeonW]

I know there's at least one particularly talented accountant on here (Percy told me !) so I have a question for them.
Wouldn't the sale of Johnson be reported in the 2023 accounts as a significant post balance event ? I know that obviously doesn't change the actual loss reported in the financial year, but formally highlights the corrective action taken by the club and condoned by the auditors. If I was analysing a set of accounts I'd factor this into my analysis of overall fiscal strength. So I would say that this just highlights the weakness in the drafting  of the P&S rules. Or am I being naive ?

You have to have a date when the financial transactions are accounted for, if not there would be chaos.
It’s like a seller of umbrellas  saying if it had rained in September instead of October as our financial year end is September we would have made profit.
Forest have more control over their affairs than someone does over the weather.
They sold him for more they claim after the accounting period, so what?
They were sailing too close to the wind and got caught out.

Let's just start with there's chaos anyway. FFP is encouraging clubs to stockpile academy players just to sell them for FFP benefit. So there have been unintended consequences already that aren't in the interests of players, clubs or the wider game. These will require changes.

Here's another blatantly obvious one, you simply can't have the 'line' during the transfer window. Forest have proven beyond doubt the issue here and will win this case all day if it goes the court. It simply has to be in the interests of P&S for clubs to sell their assets at their fair value during a trading period, given the transfer window it will nearly always be at the end for getting the best price for a top player. Instead of putting their hands up and changing the 'line', they have opened themselves to ridicule by charging Forest and emboldened the likes of Man City no doubt too.

The argument will probably be that those were the rules at the time and weren’t followed with regards Forest. I have every sympathy with them morally, because I don’t think it can be right that they could get almost double for a player just by waiting a month as a likely result of FFP accounting periods, especially trying to break the established elite under FFP but those were the rules at the time which all the clubs agreed to.

I think the two points you make are salient ones with regards changing things for the future. Just as I wonder whether it should be ok to charge a club for two different accountancy issues relating to different periods in the same season as is what is happening with Everton. Having said that, Everton themselves did delay the initial process to later last year which fell into a new season. Obviously because they knew there was a strong chance of a points penalty and they almost went down last season. So there’s got to be some semblance of responsibility from the clubs involved, particularly those who have adhered to the rules.

[LeonW]

Just on Everton, there was something I wanted to add into this discussion  which relates to our previously proposed stadium development; I heard on a BBC podcast that stadium development DOES impact on FFP and this is part of the reason why Everton are in the dock. I’m not sure what percentage, but if true, does that explain why Heck might have called a halt to developments? Hoping someone else might know the answer.