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The return of FFP with a vengeance. Two PL clubs now face serious financial battles if relegated

 

By Tony Attwood

If you have been reading Untold for a long old time you’ll know that the issues of football finances is one that we like to dig into off and on – and not just regarding Arsenal.  And there’s a good reason for that, because when we started, nearly 10 years ago, we were saying (occasionally) that if clubs spending is not controlled we would have a situation in England like Germany, Spain and Italy, where one or two clubs dominate the league so much that there is often no competition.

Occasionally there is a revelation, arrest or bankruptcy that knocks the big clubs back, but they quickly recover and lead the way once more and the situation grows.  Of late we have added add France to the list wherein one club is owned by a country, and another by a principality.  Like Spain the competition is by and large dead.

Of course as an Arsenal fan I want Arsenal to return to the glory days of the 1930s and win the league regularly, but I don’t want the Prem League to mirror Spain, where no one will ever give you odds on who will come in the top three because it is always the same.

So I’ve watched in dismay as various attempts to control football spending have collapsed, and as a result Manchester City were able to spend £220m this summer alone on transfers with absolute impunity.

But there has been a tiny bit of comfort for souls like me who think that limiting the money spent to being the money earned by the club, not the money given by a country or a billionaire (as was the case in the 1930s for example when Arsenal dominated the league by having a big stadium, by and large filling it, and a series of astute managers who not only spent money but also brought through youngsters from their own youth teams) is a good thing.

Sadly this spot of comfort noted above doesn’t come from Uefa deciding to get tough on Financial Fair Play in Europe, nor indeed the Premier League controlling transfer fees, but from the Football League.

Now if you really have been paying attention you’ll remember that in 2012 a form of FFP was introduced from the Championship down which among other things allowed Championship clubs to make annual losses of £8m.  Any club that went beyond this was given a transfer embargo or – if promoted to the Premier League – issued with a fine.

The Premier League then refused to co-operate with the system, meaning that the fine or any other punishment would not be effected until the club came back down to the Championship, whereupon they would have the money to pay up (because of the parachute payments).

Following this we ran a series of articles about the finances of Queens Park Rangers, AFC Bournemouth (previously Bournemouth and Boscombe Athletic) and Leicester City, the latter resulting in quite a considerable level of abusive comments from readers, mostly telling me that I had no idea what I was talking about and that I should focus on the fact that Arsenal were going to be relegated shortly.

Anyway, the big deal was QPR who effectively bought their way into the Premier League in 2011 and again in 2014 by having a £60m loan from the owner of the club who then wrote it off in the account as an “exceptional item”.  [Something I’ve always wanted to do with my companies and have only been held back by never having had £60m in the first place.]

The club has now been told to pay a fine of £40m for breaking the League’s Financial Fair Play rules.

In my view the League is absolutely right to have serious FFP rules because the temptation for foreign owners with their own private oil wells or countries, to buy a middle of the road Championship or League One club and simply pour billions into it is overwhelming.

Although in the context of the Premier League a £40m fine is a trifle, the sort of money Manchester City or Liverpool might contemplate paying to keep an errant member of staff happy, £40m to QPR is quite a bit.   (Not, I hasten to add, that I suggest that Man City or Liverpool they have ever done this, I don’t allege that at all, certainly not, indeed no, I merely suggest that someone might think of it, just as they might think of forging a bank letter, before being slapped down by serious and right minded people running the club).

Now when I was running this story in days of yore the main argument that came from any QPR or Leicester fans that happened upon my meanderings was that the FFP regulations were “unlawful” and were about to be thrown out by the courts.  It was the same argument that Man City fans used about FFP in Europe, and as you might recall I’ve had to run the details of the rather tedious legal case on that about five times on this site to try and show them that just saying “it is unlawful” doesn’t actually mean it IS unlawful.

QPR are of course going to appeal while Leicester and Bournemouth are watching with interest.

These rules on FFP in the lower leagues came into force in 2012 and they permitted Championship teams to make annual losses of £8m, with any side exceeding this placed under a transfer embargo or – if promoted to the Premier League – issued with a fine to be paid upon return to the Championship.

Each of the three clubs followed different paths.  Leicester set up a very strange and virtually invisible marketing company on an industrial estate a long way away from Leicester (and with no sign on the door) which appeared to do very little, but nevertheless increased the amount of money earned by the club dramatically.  Bournemouth’s route was simpler.  They just brought in a Russian oil billionaire.

QPR made no attempt to hide what was going on and just went out and bought players by the bucket load – in fact I think they were hiring trucks to ship the new comers in from here there and everywhere.

In vaguely alphabetical order, Jose Bosingwa, Julio Cesar, Samba Diakite, Esteban Granero, Robert Green, Tal Ben Haim, Junior Hoilett, Jermaine Jenas, Park Ji-Sung, Andrew Johnson, Stephane Mbia,  Ryan Nelsen, Loic Remy, Christopher Samba, , Yun Suk-Young,  and … to name but a few.  Remember any of them?

This of course not only cost money but took the wage bill up quite a bit, and that is how £60m was written off as an exceptional item.

Since then the FFP rules of the League have been changed so now clubs are allowed to lose £39m over three years, or in fact more if they have spent time in the Premier League.  This change, and the uncertainty over the outcome of the pending cases against QPR, Bournemouth and Leicester have kept most other clubs under control.

Worse, for QPR at least, it seems that the fine will have to be put into their accounts as an expense, which will make them fail FFP again.   Or they could simply go into liquidation, and enter the Conference next season – which is what we talked about when all this started.

Leicester’s situation is complicated by uncertainty as to the financial well being of their owner who was cited in a legal case involving dubious retail activities in Thailand’s airports.  Bournemouth were fined fined £7.6m after having £38.3 losses in their promotion season.  All have vigorously proclaimed that the rules were unlawful and anyway didn’t apply to them because, well, their foreign and thus above the law.

The Premier League has continued its stance that says it will not collect fines on behalf of other Leagues, and since Leicester and Bournemouth are not members of the Championship there is no way of collecting the money, if and until the clubs are relegated.  Which is why the bottom of the league makes rather interesting reading.

Pos Club P W D L F A GD Pts
14 Leicester City 9 2 3 4 12 14 -2 9
15 Swansea City 9 2 2 5 6 10 -4 8
16 West Ham United 9 2 2 5 8 17 -9 8
17 Stoke City 9 2 2 5 10 20 -10 8
18 Everton 9 2 2 5 7 18 -11 8
19 AFC Bournemouth 9 2 1 6 6 13 -7 7
20 Crystal Palace 9 1 0 8 2 19 -17 3

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6 comments to The return of FFP with a vengeance. Two PL clubs now face serious financial battles if relegated

  • Cyrano

    OT. Sorry, I couldn’t control myself.

    http://www.bbc.com/sport/football/41758874

    The spendthrift lost his job because he couldn’t spend some more. You can’t make this up. “You tell me where you can get a better striker.” LOLOLOL

  • Alexanderhenry

    Today was arsenal’s AGM meeting
    Unsurprisingly, it did not go well.

    I think untold should cover this.

  • We normally do – although not every year. But yes I am planning to do it this year.

  • alexanderhenry

    Good, I think you should. My favourite quote from the press statement was this:

    “Just go look at our history,”- meaning the history of Kroenke Sports Enterprises.

    Well, maybe Untold should have a look at the history of KSE seeing as Arsenal are a part of it.

  • Lindo

    Great article Tony, i’ve followed the series closely and your insight has been great. I think it’s safe to say it could be all coming to a head with AFC Bournemouth and Leicester City pending relegation ;). Any ways I not sure what you writing this article of FFP has to do withe the Arsenal AGM.

    Keep up the good job of telling the truth.

  • Nitram

    Is there 2? If so which is the real one?

    This one: Alexanderhenry ?

    or

    This one: alexanderhenry ?

    Do we have an impostor?

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