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Man C, QPR, Leicester, Man U, Leeds… yes it is FFP season again.

By Tony Attwood

This is the month when we are supposed to see the first impact of the new Premier League Financial Fair Play rules but there seems to be a significant silence surrounding these – and I have wondered if the Premier League is taking steps backwards, or has simply decided to ditch the matter.

But there are matters afoot, and it is starting to look as if the interconnectedness of all things (so beloved of Douglas Adams) is causing a certain heartache in some clubs that are looking for ways out of their FFP problems.

Certainly FFP still lurks with us, for the Championship, League One and League Two are implementing their rules, and of course the European rules are certainly in place and coming up for another round of “investigations”.  It is hard to see the Premier League staying out of the morass.

In particular Hull City are among the clubs now being considered in Europe, because of their short term involvement in the Europa League, and they have been invited to supply extra information to the regulatory control board.  They join Liverpool who back in October came under investigation for their behaviour.

Beyond the UK, Monaco, Roma, Besiktas, Inter Milan, Krasnodar and Sporting Lisbon were all reported as being under investigation relating to “potential break-even breaches”.

In the Championship Leeds United with losses of £22.9m last season look to be heading for trouble, as are Queens Park Rangers and Leicester.   Leicester are an interesting case because each time I have mentioned them before, there has been a smattering of comments from their supporters telling me that I know nothing about their finances and that they are perfectly safe.  Which is rather similar to what Man City fans said, as a number wrote in and confidently predicted that the whole FFP approach would be thrown out by the European Court.

Certainly I would be delighted to receive detailed news on why Leicester’s losses are not going to cause them a problem.

Of course just because Untold got the Man City case right even in the face of silence from all the media, (until Radio 5 broke ranks one famous Tuesday night and re-ran much of our script), doesn’t mean that we’ll be right again.  But it does mean I’m less likely to shut up when faced with a barrage of statements that I am wrong but without detailed facts and figures.

The dominant thinking is the QPR will get a fine of £30m and Leicester of something between £10m and £20m respectively, for their losses in the 2013-14 campaign.

Also, Blackburn, Nottingham Forest, Bolton, Bournemouth, Birmingham and Middlesbrough and Leeds will probably see transfer bans if not now, then in the near future, unless they sort matters out.  Bournemouth is a particularly interesting case as there seems to be no stopping the spending but nothing much to be done to increase their income and its rise up the leagues (after spending most of its existence in Division 3 South and Division 3.)

Leeds are also said by those in the know to have a fairly chaotic financial situation, and the owner is now debarred from being an owner for a year – plus they have a declining revenue.  Losses are in the realm of over £20m a year and rising plus debts of over £30m to the shareholders.

With Leeds of course the deal normally is to blame the previous owners, and then reveal an eternal outflow of money on consultancies and legal fees, plus some management charges.  Who knows where it all goes.

So a transfer ban at Leeds looks likely to go through because it is not certain who might fight it.

QPR however will probably fight in the courts.  But if that deal is not settled and they go down, the Football League has said that they will not be admitted back, and so will have to apply for a place in the Conference, and take on the mantle of Rangers in Scotland.

QPR’s problem is exacerbated by having lost £65m in their last sojourn into the Premier League.   If they carried on at that rate of spending in the Championship last season the fine would be £54m.  As yet we don’t know what they have declared.

Manchester City claim to have reduced their annual loss to £23m for 2013-14 largely by increasing their income with Sheikh Mansour of Abu Dhabi investing £160m during 2013-14 – much of it spent on facilities that make it excluded from FFP.

But this has also in part been achieved by the formation of a parent company leaving a group of other related companies looking after different issues, including the identikit clubs in New York, Melbourne and Yokohama. This approach of separate companies all owned by the same shareholders charging each other for services is not unknown in business but it raises eyebrows, especially where the sums are large.  Man City for example recently charged £10m to other parts of the group – which bolstered its income and ease FFP concerns.

Now this is ok if the activities are charged at market rates.  But if not then these are a neat way around FFP.   Man C charges the New York company money for services and NY pays up because it is not worried about FFP.  Man C income is up, the loss is down, FFP is bypassed.

Of course I don’t have access to the accounts of all these companies so I make no allegation, I just report a concern that has been expressed to me by interested parties.

And this is not the only bit of oddity in company accounts at the moment.  Falcao is on loan from Monaco to Man U.  In Monaco wages are not subject to income tax.  So are Man U paying him and deducting 40% tax on the bulk of his earning?   Or are they paying him £18m a year more a compensate?

Or at Monaco paying the difference – and making their own FFP situation worse instead of better?  Or is he being paid through a third country?   

This is where we come back to Premier League FFP in which clubs are not able to raise their total wage bill by more than £4m a season unless it is matched by an increased in commercial income.   Man U have reduced their income because of the loss of Champions League revenue. so the Falcao issue is now of special interest.   And certainly if there are special mechanics in the Falcao deal not in the public domain it is possible that other clubs might claim this is not a reasonable interpretation of the FFP rules.

It is indeed all getting a bit tasty, and just as last season when suddenly, despite all the protests, Man C were found guilty and were given restrictions and fines, so I rather think we are going to see a repeat.

FFP regs all contain clauses excluding the viability of clauses which are there simply to get around FFP.   The fireworks might be left off fairly soon.

 

9 comments to Man C, QPR, Leicester, Man U, Leeds… yes it is FFP season again.

  • Quincy

    It’s quite sad to see football in this state. The following article from Football Is Fixed makes interesting reading side-by-side:
    http://footballisfixed.blogspot.co.uk/2014/08/the-ongoing-takeover-of-british.html

    Sheikh Mansour has plenty of money to spend on the top lawyers to fight FFP and find ways around it. It will be shocking if all there commercial deals are declared to be at fair value. Man City is still a small team (in terms of supporters) on a global standard.

    One big problem with FFP is that it came far too late. Chelsea has already doped the markets beyond the point of no return. And now they get off scot free.

    And of course there’s the small matter of the David Luiz transfer…

  • Quincy

    My own interpretation of some of the events yesterday.

    We know from the documents Walter posted on Untold that the PGMO sees the Premier League as a ‘product’, as entertainment (obviously to keep up his viewership numbers, thereby generating more television money), and that it’s their job to keep the league entertaining, exciting, free-flowing, etc. for the viewers, rather than allowing a fair game of football.

    They tried to help Chelsea a bit, so they could keep up the hype around their unbroken record. More entertainment and all that. Also, no small reward for them if they could help Chelsea knock Wenger down a peg or two by repeating the Invincibles.

    When Chelsea lost, it was then in their interest to make the league more competitive, a ‘battle’ for the title. So they did their best to help Man City win, to keep things interesting at the top of the table.

    I know it’s a bit out there, but that’s my take on things.

    And of course, we don’t need to talk about Mr Taylor.

  • franck

    Football is being ruined every year and i am begining to get tired of it all….it is lookin like WWF wen i was younger,then i realised games were fixed and lost intrest totally.it would just take someone being caught fixing a game and its bye bye football for me.i am a chess lover and player…a game where u cant cheat,i hate cheats in any sports.be it cheating by breaking the ffp rules or circumventing them.

  • insideright

    Chelsea are indeed getting round things by selling players that they bought with now disallowed money and using the proceeds to buy new ones for somewhat less outlay. The process, carried out in other areas of commercial life, would be called money laundering.
    However that tactic can only go on for a certain period and relies heavily on getting transfers in to be much more successful than has often been the case in the past for Chelsea.
    The fact that they can see an end to it would explain why they are now entertaining a ground expansion that they themselves declared as ‘uneconomic’ only a few years ago.
    The impact of FFP is certainly slower than some people thought – and probably patchier. But lots of clubs are demonstrably changing their business plans and, where there is change, there is always risk of getting it wrong. Interesting times indeed, Tony.

  • @ Insideright, interesting observation about clubs changing their models and some probably getting it wrong. I hope Arsenal stay safe for the foreseeable future because we have paid very dearly for where we are today.
    But do you have any suggestions on clubs that are likely to get it wrong given their antecedents?

  • Will

    If Man City are allowed to cheat their way around the rules, there might as well be no rules.

  • Super Leeds

    In the case of Leeds Utd you state the owner is barred for 12 months. In fact it is until March 18th 2015-a matter, after the appeal period, that if lost would amount to little over 3 months. You fail to keep up to date with the financial input as well. 20 million is to be injected this week into the club by the clubs 2 major shareholders.

  • Will Rickson

    Stop making allegations you cannot back up

  • Tasos

    We’re well into the month of December and not one single managerial sacking in the formally trigger happy Premier League.

    Could this be attributed to FFP?