Championship adopt Financial Fair Play regulations (From Watford Observer)
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Championship to implement Football League's Financial Fair Play regulations
1:47pm Wednesday 25th April 2012 in Watford FC Academy
Championship clubs have voted in favour of implementing a "breakeven approach" from next season by accepting the Football League's Financial Fair Play regulations.
The Football League's FFP propsals are based on UEFA's Financial Fair Play regulations and Championship sides will now join League One and League Two teams in trying to address over spending at clubs.
The governing body want to apply rules which will increase their control over expenditure at clubs.
The decision came following a review by the Football League Board - who stated "club finances are the organisation's greatest challenge".
League chairman, Greg Clarke, said: "On the pitch we have three exciting, competitive divisions with crowds at their highest levels for 50 years. But that success isn't necessarily being reflected on our clubs' balance sheets and we have to remedy that situation or face an uncertain future.
"I'd like to commend the Championship clubs for the courageous decision they have taken today. It means that for the first time, all 72 Football League clubs have agreed to take concerted action towards controlling their financial destiny.
"Whilst we cannot promise that these rules will deliver results overnight, they will begin to lay the foundations for a league of financially self-sustaining football clubs."
The Football League website explained in detail the changes that will be implemented. It said:
Financial Fair Play in the Championship:
- Financial Fair Play (FFP) in the Championship will require clubs to stay within defined limits on losses and shareholder equity investment that will reduce significantly across a five-season period.
- Permitted losses will reduce from an acceptable deviation of £4m for 2011/12 to £2m by 2015/16, with additional investment in certain areas of club infrastructure being excluded (e.g. youth development and community programmes).
- The permitted level of shareholder equity investment will reduce from £8m for the 2011/12 season to £3m by 2015/16.
- Clubs will be required to provide annual accounts to The Football League by December 1, covering the previous playing season.
- Failure to stay within the defined limits will lead to the imposition of sanctions. The sanctions will vary depending on whether the club was ultimately promoted to the Premier League, remained in the Championship or was relegated to League 1.
- Clubs promoted to the Premier League will have to pay a 'Fair Play Tax' on the excess by which they failed to fulfil the Fair Play requirement ranging from 1% on the first £100,000 to 100% on anything over £10m. Any proceeds will be distributed equally amongst those clubs that complied with the FFP regulations for the season in question.
- Clubs remaining in the Championship will be subject to a transfer embargo until they are able to lodge financial information to demonstrate they comply with the FFP regulations (either for the previous reporting period or a future reporting period).
- 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.
- Clubs relegated from the Premier League will not be subject to sanctions in their first season in the Championship, as long as they have met their financial obligations under Premier League regulations. They would, however, be subject to the potential of a Fair Play Tax if they achieved promotion in the first season in the Championship whilst not complying with the FFP regulations.
- The first reporting period will be for the current playing season (2011/12), however sanctions will not be applied until the 2013/14 reporting period in order to give clubs a sensible period of transition.
Financial Fair Play in League 1 and League 2:
- League 1 and League 2, clubs have chosen to implement the Salary Cost Management Protocol (SCMP) first used in League 2 in 2004/05, although it will operate at different thresholds in each division.
- The SCMP broadly limits spending on total player wages to a proportion of each club's turnover, with clubs providing budgetary information to The League at the beginning of the season that is updated as the campaign progresses.
- Any club that is deemed to have breached the permitted spending threshold will be subject to a transfer embargo. Wherever possible, The League will seek to tackle the issue 'at source' by refusing player registrations that take clubs beyond the threshold.
- At the beginning of the current season, League 2 clubs reduced the permitted spending threshold to 55% from 60% and this figure will continue to be operated next season.
- League 1 clubs are currently operating a 'pilot' of the SCMP with clubs complying with a 75% threshold but with no sanctions being applicable this season. This threshold will reduce to 65% in 2012/13 and 60% in 2013/14 with sanctions (transfer embargoes) being applicable in both seasons.
Do you agree with the Football League's Financial Fair Play regulations? Let us know below.
Comments(21)
not a regular
says...
2:06pm Wed 25 Apr 12
LE PARK
says...
2:16pm Wed 25 Apr 12
Alex Hillcroft
says...
2:56pm Wed 25 Apr 12
strummerjoe
says...
3:15pm Wed 25 Apr 12
Alex Hillcroft wrote:No, they'll have to cut costs. Leicester for example, have a £15m annual deficit - to make that up on crowds of 20,000, they'd have to take an extra £750 per seat, or £32.60 a ticket over 23 home games. And what do you think would happen to crowds if they did that? On the other hand, every squad player on £20k a week costs £1m a year.
By cutting shareholder investment clubs and not limiting player wages, Championship clubs will be forced to raise funds by other means - namely ticket price increases.
dal8oy
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3:23pm Wed 25 Apr 12
McHornet
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4:20pm Wed 25 Apr 12
Agree with the previous post that, it's good to see that Watford already have a model that adheres to these rules.
Alex Hillcroft
says...
4:41pm Wed 25 Apr 12
strummerjoe wrote:So you think the days of the 20k a week second tier footballer will be over by 2015 do you?
Alex Hillcroft wrote:No, they'll have to cut costs. Leicester for example, have a £15m annual deficit - to make that up on crowds of 20,000, they'd have to take an extra £750 per seat, or £32.60 a ticket over 23 home games. And what do you think would happen to crowds if they did that? On the other hand, every squad player on £20k a week costs £1m a year.
By cutting shareholder investment clubs and not limiting player wages, Championship clubs will be forced to raise funds by other means - namely ticket price increases.
mrbankrupt
says...
4:44pm Wed 25 Apr 12
dal8oy wrote:I dont think we were ahead of the game,it was more like we had no choice but to cut back or go under.
I tell you what it means.....It means we are one of the only Championship clubs that are ahead of the game. We all want success, but in my opinion it shouldnt be at any price. WFC have a model in place that already adheres to these rules.
At least teams will have to use there youth system instead of paying carlos kickaball silly money
mooneysmagic
says...
5:45pm Wed 25 Apr 12
not a regular wrote:Club's wage budgets will to a large extent be governed by their attendances. As the likes of Leeds, the two Sheffield clubs, West Ham etc have or are (capable) of attendances at least double that Watford have how can this be an advantage to us. I don't see why Leeds would implode, their resources are massive compared to Watfords.
Fantastic news! Cardiff and West Ham had better hope they go up this year! Looking forward to the subsequent implosions of Ipswich, Leeds and Leicester too!
WFC4ever
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9:45pm Wed 25 Apr 12
strummerjoe
says...
10:24pm Wed 25 Apr 12
Alex Hillcroft wrote:Yes. For the most part. Clubs might be able to have one, or maybe 2 'stars' but you won't have Leicesters and Hulls and Middlesbroughs with 7 or 8 £20k players.
strummerjoe wrote:So you think the days of the 20k a week second tier footballer will be over by 2015 do you?
Alex Hillcroft wrote:No, they'll have to cut costs. Leicester for example, have a £15m annual deficit - to make that up on crowds of 20,000, they'd have to take an extra £750 per seat, or £32.60 a ticket over 23 home games. And what do you think would happen to crowds if they did that? On the other hand, every squad player on £20k a week costs £1m a year.
By cutting shareholder investment clubs and not limiting player wages, Championship clubs will be forced to raise funds by other means - namely ticket price increases.
strummerjoe
says...
10:25pm Wed 25 Apr 12
McHornet wrote:The prem will sort of follow when the Uefa fair play rules come in.
Isn't this just making the gap between the Premiership and the Championship even bigger! This is futile without the Premiership following suit.
Agree with the previous post that, it's good to see that Watford already have a model that adheres to these rules.
dal8oy
says...
8:14am Thu 26 Apr 12
WFC4ever wrote:I take your point but these rules should mean that the wages that players try and command in all but the top division will drastically fall, hence theoretically more players will be around as teams trim their squads.That will mean that teams with the better youth development will be the most successful and I think WFC have proved they are good in that department.
Good idea to get clubs working within their means which we try to do get this might not help us as such because we don't gain much in terms of revenune.
corbindallas
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8:14am Thu 26 Apr 12
Chris the Vic
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9:02am Thu 26 Apr 12
In the case of WFC we are owned wholly (near enough) by LB. He over the next few years wants to complete a building programme and for the club to pay off existing loans to former shareholders.
Not sure of the figure but say to achieve all this we need £15m.
As i understand it LB will be limited by the amount he can invest in equity per annum but can he invest in the club with interet free loans or convertible loans which will not cause trading losses. tax wise this may not be a great deal but would allow him to get the ground sorted and in the end make us a better business model. i am sure the authorities would support such a venture. But would LB be prepared to allow other investors to put money in by way of equity I doubt it.
For this to work it most probably needs the full backing of the Premier League, EUFA and FIFA.
In the long term it may mean players wages dropping the top teams only lending players out if the club they go to pay their wages in full, but if a club gambles and loses £10m in a year and they reach the premier it would be a small price to pay, but if they gamble and lose and enter administration will anything really have been achieved.
Giles Clark may in fact have introduced a system whereby if you employ the best accountants and lawyers you will do better on the pitch.
garston tony
says...
9:55am Thu 26 Apr 12
It also means clubs don’t gain an unfair advantage by borrowing big sums. Its one thing having more to spend because you have bigger crowds, quite another because your bank manager is willing to back your speculation which seeing how many clubs were doing this has far more chance of failing that suceeding.
I don’t think it'll mean increases in ticket prices either, if clubs put up prices fans wont turn up so it just wont work that way. As others have said this creates an honest financial playing field and ensures clubs don’t go to the wall.
And lets not forget we've been promoted twice on a shoe string to the Prem so no this does not mean the end of our chance of ever getting promoted again. It actually means that we have a better chance of success if anything
Alex Hillcroft
says...
12:11pm Thu 26 Apr 12
strummerjoe wrote:It would be lovely to think you'd be right, but somehow I'm sure they'll find a way round it
Alex Hillcroft wrote:Yes. For the most part. Clubs might be able to have one, or maybe 2 'stars' but you won't have Leicesters and Hulls and Middlesbroughs with 7 or 8 £20k players.
strummerjoe wrote:So you think the days of the 20k a week second tier footballer will be over by 2015 do you?
Alex Hillcroft wrote:No, they'll have to cut costs. Leicester for example, have a £15m annual deficit - to make that up on crowds of 20,000, they'd have to take an extra £750 per seat, or £32.60 a ticket over 23 home games. And what do you think would happen to crowds if they did that? On the other hand, every squad player on £20k a week costs £1m a year.
By cutting shareholder investment clubs and not limiting player wages, Championship clubs will be forced to raise funds by other means - namely ticket price increases.
Johnny Ryden
says...
1:03pm Thu 26 Apr 12
corbindallas
says...
8:00am Fri 27 Apr 12
Johnny Ryden wrote:I hope you are right Johnny, it will be nice to be back in the 18,000 a match bracket, I think WFC should aim at achieving 15,000 as their first target and adopt the Reading way in doing so also. Let's face it there are many schemes to put bums on seats and not lose out financially. It is better to get £5 for a empty seat than £0 and with the East stand sorted, cheaper seats should be a option, as well as getting the future fan base sorted by including schools. Some ideas, Emergency service personnel & Armed services personnel 1/2 price, let's face it they are on shifts or away on tours so cannot always make it but if they had a incentive to buy in let's do it. Involve the scout's, girl guides, sew the seeds, arrange for nursing homes, Oap etc to attend community involvement, I know WFC do some of this now but it really needs to be pushed, also look at the biggest employers in the area and tie in a link up to attract group booking's, it's a win win, the company can make it a social event and it also gives them a common interest, thus team building the list goes on.
I believe the club has greater potential for larger crowds than we give it credit for. With much needed improvements in infrastructure, there is a lot of scope for higher attendances and therefore bigger revenues. I work near Reading and they have been building their fan base for some time on the back of a new stadium and sensible management (come back Nigel!). Now they're maximising their Premier League opportunity with sensible and innovative pricing such as being able to share season tickets. In their old stadium Reading got smaller crowds than us so it's not impossible we can do the same. With a new east Stand, better car parking, the proposed new rail link etc. we should be able to get more people in over time and raise receipts to compete more effectively.
abbotshornet
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2:18pm Fri 27 Apr 12
I have been puzzled by clubs like Portsmouth nicking quality players despite heading towards bankruptcy.
There are other non premier league clubs who are buying and paying wages to players hugely inflated amounts of money on gates that are double ours but not 5 or 10 times bigger. Lets hope common sense prevails in football and there will be a more level playing field in which prudent clubs like Watford will flourish. COYH
Andrew1963 says...
2:04pm Wed 25 Apr 12