Financial (Un)Fair Play.

[Mashtray]

Can someone who is knowledgeable about this ease shed some light.

I get the basics and I understand the revolving losses over 3 years. I also understand it's based on commercial revenues and young player sales that acts as a multiplier for spending limits.

But what does transfer fees and wages have to do with it? Is it both that needs to be considered

I thought we have just let go a few players on some pretty high wages, delph and Voldemort. So before there is any sales whatsoever. Are not immediately in a better place in terms of wage bills? Therefore room to spend/sign? I know not by alot but surely the conclusion of those contracts means something

 

[kev]

Can someone who is knowledgeable about this ease shed some light.

I get the basics and I understand the revolving losses over 3 years. I also understand it's based on commercial revenues and young player sales that acts as a multiplier for spending limits.

But what does transfer fees and wages have to do with it? Is it both that needs to be considered

I thought we have just let go a few players on some pretty high wages, delph and Voldemort. So before there is any sales whatsoever. Are not immediately in a better place in terms of wage bills? Therefore room to spend/sign? I know not by alot but surely the conclusion of those contracts means something

Can't help other than to say I think it's Profit and sustainability (Premier League rules) that is hampering us, rather than FFP which I think is to do with European games.
Don't pretend to understand it myself though, so looking forward to somebody else explaining.

 

[Robbo05]

Well, however it’s worked, out I’m really happy that it’s doing it’s job for us.

 

[Jimishorts]

Can someone who is knowledgeable

Maybe the wrong site looking for anybody knowledgeable.

 

[Lob]

Its simple really. The so called top 6 will continue to be the so called top 6 while the rest are restricted as much as possible from ever encroaching on their parade. That is how pyramids have always worked. A small few have the majority and the majority fight over the scraps.

 

[ToffeeTim]

I dont like the rules at all and don't think they are fair.

But there is no one to blame for our situation other than ourselves.

 

[MKEvertonian]

Financial fair play simplified:
Can spend what you earn from your clubs revenue so the big clubs stay at the top and the up and coming clubs can’t afford to compete.

 

[MikeH72]

They rules are exactly the same for everyone else btw.

 

[ToffeeTim]

They rules are exactly the same for everyone else btw.

The argument is should an owner be allowed to spend as much of their own money as they like on their business. I would argue yes they should, especially in an industry where you can only compete by investing shed loads of cash.

In the football industry debt is arguably far more important than losses and I'm not sure the Profit and Loss sustainability rules are actually making clubs more sustainable.

 

[Nymzee]

We have 50p available after paying the tea lady.

 

[greener]

 

[Eggs]

….spend shed loads of money producing a very poor football team seems to be contrary to the rules.

 

[dublinbluenose]

 

[kev]

To clear this up once and for all, here's Stanley Unwin explaining the FFP model to Michael Parkinson.
Muchly cleario now.

 

[Villa_Fan]

Can someone who is knowledgeable about this ease shed some light.

I get the basics and I understand the revolving losses over 3 years. I also understand it's based on commercial revenues and young player sales that acts as a multiplier for spending limits.

But what does transfer fees and wages have to do with it? Is it both that needs to be considered

I thought we have just let go a few players on some pretty high wages, delph and Voldemort. So before there is any sales whatsoever. Are not immediately in a better place in terms of wage bills? Therefore room to spend/sign? I know not by alot but surely the conclusion of those contracts means something

If u ignore the conspiracy stories FFP is designed to stop a club from spending beyond its limits so that the club won't go out of business.

FFP is judged over a 3 year period and allows a club to lose an average of 35m a year for each of the 3 years, so total losses over 3 years cannot exceed 105m. In yr 1 a club can make a loss of 200m but if they make a profit of 75m in years 2 and 3 they will not be in breach of FFP.

Different things count towards FFP. Investment in youth, infrastructure, training facilities etc are not counted towards FFP. Operating costs: wages, player purchases, travel, bonuses, payoffs for sacking managers etc are counted towards FFP.

It is important to understand Amortisation when thinking FFP. Amortisation just means that a player's purchase price is accounted for over the term of a player's contract. If Everton buys a player for 20m in this window and gives him a 4-year contract, that will account for a 5m loss each year for the next 4 years. So for FFP, buying a 20m player only costs a 5m loss this year. That is just for the transfer fee, if u pay the player 3m a year the total cost to Everton is 8m a year for the next 4 years.

If you sell a player, you must account for all years of amortisation remaining on their contract. Everton bought Gomes for 22m in 2019 and gave him a 5 year contract. So that is 22/5 = 4.4m in amortisation cost each of the 5 years of his contract. If Everton sells Gomes this window for say, 5m, they have to account for the 2 years left on his contract which would be 4.4m x 2 = 8.8m. So if Everton sold Gomes for 5m, you would have a 3.3M loss on your accounts that impact FFP. However, you would also save 4m on his wages so Everton would be better off by about 700k this year. But if you want to replace Gomes with a new player then that will have a new amortisation cost and a new set of wages to pay. In short, getting rid of underperforming players can be very expensive.