Financial Fair Play in Championship

[Hoop Blah]

It was converted to shares long ago now

The last accounts I saw still had around £30m of loans on it from him.

Agreed, although I thought it was more around the £23/24m mark which put us right on the average debt for the Championship that someone posted recently.

I think Madejski converted some of his loan to shares in the last year or so but I don't think it was a massive amount.

[Snowball]

When we talk about clubs in debt, what percentage is Director loans?

I am really only interested in amounts owing to suppliers, tax-man, VAT-man, police, council etc

[Svlad Cjelli]

When we talk about clubs in debt, what percentage is Director loans?

I am really only interested in amounts owing to suppliers, tax-man, VAT-man, police, council etc

I'd need to lookup the percentage - I think it's about 45% but that's a few years ago.

But I'll also ask a question on this subject - why would any chairman putting massive sums into a football club do it as loans ratehr than as donations if they didn't want it back?

As such it's just as much a hindrence to a club's future as a debt to HMRC.

[Hoop Blah]

I've asked the same in the past Dirk and I'm none the wiser.

I guess it may have some tax implication or something like that. Could it be to maintain their net worth as that debt is still an asset to them whereas if they donate it it's just gone?

[Svlad Cjelli]

Probably so that if it all goes tits up or someone richer comes along they get to claim something back.

Also makes it harder for hostile takoevers.

[Ian Royal]

The thought that occurs to me, sorry if it's been posted before, is that this just strengtherns relegated clubs with parachute payments as its so much harder to compete with their comparatively massive income.

[Svlad Cjelli]

The thought that occurs to me, sorry if it's been posted before, is that this just strengtherns relegated clubs with parachute payments as its so much harder to compete with their comparatively massive income.

Maybe, but it'll also force them to reduce their salaries even more from PL levels, because even with parachute payments their total income is so much less then PL income. Clubs with parachute payments are so much stronger now - especially with the new payments - so I don't think it'd make things any worse.

[Ian Royal]

The thought that occurs to me, sorry if it's been posted before, is that this just strengtherns relegated clubs with parachute payments as its so much harder to compete with their comparatively massive income.

Maybe, but it'll also force them to reduce their salaries even more from PL levels, because even with parachute payments their total income is so much less then PL income. Clubs with parachute payments are so much stronger now - especially with the new payments - so I don't think it'd make things any worse.

Dirkers, how's this conundrum for you?

This gets brought into affect for 2012-13. Sunderland get unexpectedly relegated (like Newcastle did) having failed to put in relegation wage reduction clauses in players contracts. This means Sunderland's wages = 140% of their income in the Championship. Sunderland try to sell players to bring this down, but either no one wants to buy them, or the players refuse to sign with new clubs as it would be on lower, more realistic wages.

What happens? Do Sunderland get kicked out of the Championship for not conforming to rules?

[Svlad Cjelli]

I'd not be surprised if there's a waiting period of 1-2 seasons where clubs arriving in the Championship are allowed to get their financial house in order.

[Bucks Dave]

You'd think that parachute payments would guarantee promotion wouldn't you, but this year none of the promoted clubs had parachute payments and we got closest to promotion again in the first year we had to operate without them. I don't think these payments hinder a promotion push, but they certainly don't guarantee it.

[SCIAG]

So it's relegation for spending too much? I think that's overkill, and would just make it harder for clubs to sort themselves out. I'd just stop them from being promoted.

[Svlad Cjelli]

So it's relegation for spending too much? I think that's overkill, and would just make it harder for clubs to sort themselves out. I'd just stop them from being promoted.

But what if they overspend to stop themelves being relegated? The end result of building up debt is the same.

[weybridgewanderer]

One way to (partially) circumvent the rules is for a business-owning
Sugar-Daddy to have sponsorship on the shirts and pay way over the odds
for the privilege.


But surely TRYING to have rules is better than not trying?


As for "only the big/famous clubs will get the good players"
doesn't that currently mean that for clubs like RFC to get
these players they would have to pay even higher wages?

Won't the transition years favour the financially-well-run clubs?

No problem with sugar daddys givinga club hand outs

its the giving of loans, running up rediculous debt, that is to be stopped.

So yes, let a sugar daddy pay way over the odds for sponsorship, as long as the money goes into the club. Then sugar daddy cannot say after 3 or 4 years that he wants all his money back

[The Doctor]

what is stopping a chairman sponsoring his own stadium for say £10m a season and the club then having more money in their income to beat the system?
I think its a great idea in princible but there will be many loop holes.

[weybridgewanderer]

but that not a loophole

he has given them the money, not lent them it, racking up a huge debt

[Ian Royal]

what is stopping a chairman sponsoring his own stadium for say £10m a season and the club then having more money in their income to beat the system?
I think its a great idea in princible but there will be many loop holes.

You're missing the point. It's about stopping building up debt, not about stopping ridiculous spending.

The problem comes when they spend more than they get in, getting into more and more debt and then start not paying some of their creditors (HMRC, St Johns Ambulance etc) so they can cover their footballing debts to not get kicked out the league.

[Svlad Cjelli]

what is stopping a chairman sponsoring his own stadium for say £10m a season and the club then having more money in their income to beat the system?
I think its a great idea in princible but there will be many loop holes.

They're not beating the system - that is income that they're allowed to spend, just as if the chairman gave them the money. What they won't be able to do is spend money that's borrowed - whether from the banks, HMRC or the chairman.

[Snowball]

Isn't it, wages/income relationship per season?

So any gift would need to be yearly

[weybridgewanderer]

Isn't it, wages/income relationship per season?

So any gift would need to be yearly

either that or they would have to cut their spend

[Svlad Cjelli]

Isn't it, wages/income relationship per season?

So any gift would need to be yearly

either that or they would have to cut their spend

Yeah - if it's anything like the German model it's assessed annually. Before the season starts they submit a draft business plan and throughout the seasons they're assessed on how closely they're meeting that.