Financial Fair Play Regulations

FFP has helped us. If it were not for Suarez sale, FFP may have seen us sign watered down targets this window. It has made the Suarez blow turn beneficial. Now we are in CL we cant allow for much debt at the end of this financial year. The only thing that concerns me is how sponsorship deals have gone into crazy money since FFP. I just hope UEFA are going to scrutanize all these huge sponsorship deals to make sure clubs aren't indirectly paying themselves and posting it as profit.

FFP is working, look at City and PSG. They've both spent within the limits given to them by UEFA. Over the years that limit will come down too.

No, it's not working.
Look at Chelsea.

Spending millions stockpiling U21 players, which isn't included in the FFP, and then selling them on to generate money to offset net spend.

FFP has helped us. If it were not for Suarez sale, FFP may have seen us sign watered down targets this window.

That makes no sense whatsoever.

FFP has helped us. If it were not for Suarez sale, FFP may have seen us sign watered down targets this window.

Suarez sale has helped us because the owners have stated they will only invest what the club generates.
That's nothing to do with FFP.

No, it's not working.
Look at Chelsea.

Spending millions stockpiling U21 players, which isn't included in the FFP, and then selling them on to generate money to offset net spend.

It's not a sustainable way of doing business however. Just a short term way to cheat the system.

It is working, look at City and PSG. They're spending a lot less this summer then they have in the last 3/4 years. PSG admitting they can't afford Di Maria would never happen without FFP.

Like I said: that's fair enough Tom and I know your motives are pure. I'm just not sure everyone else has the same reasons for wanting FFP.

Let's take Liverpool out of the equation and look instead at Arsenal; a huge advocate of the 'virtues' of FFP and the 'shining example' of how to run a business...

Arsenal were, for as long as I can remember (and before), always a wealthy club; always able to 'compete'; always able to sign and pay for the best and always winners. Yet, in all that time, I don't recall them ever saying "whoa, hold on here, this isn't fair... we can sign and pay the best, whilst Burnley can't."

Then, two things happen... a noisy, wealthy, Russian neighbour moves in across the street and Kronke starts his rise to prominence.

All of a sudden Wenger starts to mewl: "It's not fair... We can't compete... How's it fair when we can't compete and pay what the Russian can?" Well the truth is; they could compete but that would have meant Kronke (a very wealthy man) and others spending his/their own money - just like the pesky Russian.

The fact is; he (and the other shareholders ) didn't want to compete. They were getting their coin [dividends] and watching their stock grow without 'competing', thanks to a good but compliant coach/manager.
[Striking similarities between Arsenal and Man U with their own noisy Arab neighbours but that's for again maybe].

Arsenal never gave a F**k about level playing fields or inequality until they were the poor relations. Now they're buying into FFP lock, stock and both barrels. A system which is every bit unfair. Why?

Well, without spending a penny of their own money, Arsenal's shareholders will be at the top of the pile... and my guess is that, just like all them years ago, Arsenal will not be pointing out how unfair the inequality is.

So whilst I know your motives are pure Tom, I also know that the clubs who are shouting the loudest are less altruistic. For them it's more about money than concern about their 'fellow man'. (IMO, of course). 

True, and it is a good point, but this is supposed to get owners to invest in the club's infrastructure, rather then them to invest in players and salaries. Arsenal invested in infrastructure (they spent hundreds of millions on a new stadium) while Chelsea spent it on players.

There is leeway in the rules to allow rich owners spending their money on building the infrastructure to allow the club to build a long term sustainable model. The £260 million FSG are spending on Anfield will not be counted towards FFP.


Like I said earlier, it's not the perfect system but I'd rather clubs are sustainable in the long term then to spend money that the clubs do not have and build substantial debt.

Chelsea owe Roman Abramovich over £750 million in interest free loans. If he called that in, Chelsea would go bankrupt.

That makes no sense whatsoever.

It does make a little sense.

Suarez was bought for £22.5million on a 4.5 year deal, so after 3 years amortization would give him a value of only £7.5million in the accounts. So we sell Suarez for £75million and almost all of it goes into the accounts  (£75million- £7.5million)

We buy say Lallana for £25million on a 5 year contract and only £5million goes into the accounts as the £25million is amortizised over the 5 years of his contract. 

So the accounts show a plus £67.5million for the sale of Suarez, yet only a minus £5million for Lallana.

Figures are just made up but hopefully you get the gist.

It does make a little sense.

Suarez was bought for £22.5million on a 4.5 year deal, so after 3 years amortization would give him a value of only £7.5million in the accounts. So we sell Suarez for £75million and almost all of it goes into the accounts  (£75million- £7.5million)

We buy say Lallana for £25million on a 5 year contract and only £5million goes into the accounts as the £25million is amortizised over the 5 years of his contract. 

So the accounts show a plus £67.5million for the sale of Suarez, yet only a minus £5million for Lallana.

Figures are just made up but hopefully you get the gist.

I get that Saint but I don't see how FFP has 'helped' us this summer and using the Suarez sale as an example.

If there was no FFP we would be free to spend as much as we want and, in theory, spend more money without have to sell Suarez to 'help' us.

I get that Saint but I don't see how FFP has 'helped' us this summer and using the Suarez sale as an example.

If there was no FFP we would be free to spend as much as we want and, in theory, spend more money without have to sell Suarez to 'help' us.

Yeah I think I missed the main point mate. Nothing to do with FFP, just standard accounting .

It is working, look at City and PSG. They're spending a lot less this summer then they have in the last 3/4 years. PSG admitting they can't afford Di Maria would never happen without FFP.

I think the biggest problem for both clubs is spending 40-50 million on centre backs.

I think the biggest problem for both clubs is spending 40-50 million on centre backs.

Wasn't the greatest deal PSG will ever make, that's for sure. Chelsea would have sold for half that. Inflated the entire market which is a little unfortunate.

Wasn't the greatest deal PSG will ever make, that's for sure. Chelsea would have sold for half that. Inflated the entire market which is a little unfortunate.

City have done exactly the same.
That's crazy stuff regardless of FFP.

City have done exactly the same.
That's crazy stuff regardless of FFP.

Forgot about him, £32 million is a lot of money for a player who's backup to Sakho in the French squad.

United getting Rojo for well over £20 million is extortionate, he was pretty average in Portugal. Luke Shaw going for £30 million too.

Still this was all started by PSG paying £42 million for Luiz, who's the worse defender out of the lot.

Forgot about him, £32 million is a lot of money for a player who's backup to Sakho in the French squad.

United getting Rojo for well over £20 million is extortionate, he was pretty average in Portugal. Luke Shaw going for £30 million too.

Still this was all started by PSG paying £42 million for Luiz, who's the worse defender out of the lot.

And we got Lovren for 20M...after looking at those numbers we got Lovren on the cheap.

The £260 million FSG are spending on Anfield will not be counted towards FFP.

Yeah, I know....

[as everyone knows, or at least should know, "stadium debt" is not included in any calculation]

Like I said earlier, it's not the perfect system but I'd rather clubs are sustainable in the long term

Yeah, I know... I actually read your posts mate and (if you read back) accepted that perspective right from the off.

I was, most likely, concentrating too much on the "Fair" part. 

An interesting perspective I suppose:

David Owen: Liverpool and Balotelli: Why Reds set for a summer transfer profit despite £100m+ spree

     Published on Monday, 25 August 2014 10:46

Liverpool posted the biggest pre-tax loss in the Premier League in 2012-13. The previous year only Manchester City posted a bigger one. In such circumstances, you might have expected the Anfield club to be squirrelling away at least some of its Luis Suárez windfall; to be showing a modicum of restraint in this summer's transfer market in the interests of its bottom-line. All the more so with UEFA's Financial Fair Play (FFP) provisions hovering in the background.

And yet here they are seemingly about to bring pure box office Mario Balotelli to Merseyside, in a move that would take their summer transfer spending to an estimated ooh £117 million or so. That's £40 million or £50 million more than they are pocketing for the Uruguayan superstar. How can such apparent extravagance be justified?

Well, increased turnover is one answer. By getting back into the Champions League, Liverpool will probably have assured themselves of €30 million to €40 million of new revenue that simply wasn't available to them last year – and that's just in participation and performance-related money from UEFA, without taking into account a further hike in match-day income from the return of big European nights to Anfield.

Another answer is that thanks to the magic of amortisation, the Reds are still on course to book a substantial net gain on their summer transfer dealings – and they may yet offload one or two more players in the remaining days of the summer window.

How can this be when their outlay is so much more than what they have recouped? The secret lies in the lop-sided way player valuations are dealt with in English corporate accounts.

On the one hand, when a club sells a player, the gain - or loss - that it realises against the value of that player carried in its books is normally included in full in that year's accounts.

When, by contrast, a player is bought, the transfer fee is normally amortised over the length of that player's contract. If a player signs for five years, therefore, at most a fifth of the fee would be included in the amortisation charge in that year's accounts.

Let's now try to apply this to Liverpool's summer business.

Heading out of the exit door, so far, have been Suárez to Barcelona, Pepe Reina to Bayern Munich, Martin Kelly to Crystal Palace and Conor Coady to Huddersfield Town.

Suárez was bought from Ajax in January 2011 for a reported £22.8 million on what was said to be a five-and-a-half year deal. That means he had about two years of his contract to run, suggesting that his remaining book value at the time of his sale may have been around £8.3 million.

Even if you assume that his latest transfer fee was 'only' £65 million, that would still leave the Merseysiders booking a hefty £56.7 million gain on the deal.

Add in £1.5 million and £375,000 respectively for Kelly and Coady, who were both "home-grown" talent which is normally valued in the books at zero, and £2 million for Reina, who joined Liverpool so long ago that his original fee is likely to have been fully amortised, or all but, and the gains column swells to well over £60 million.

That is still, repeat, substantially less than the club has spent.

What is relevant for our purposes, however, is not Liverpool's gross summer outlay on players, but how much of this will be included in the 2014-15 amortisation charge.

While I do not have all the information for a precise calculation, my best stab is that, even with Balotelli, the amount in question is likely to be around £30 million – probably less than half the gain.

In my back-of-envelope calculation, this is made up of: Adam Lallana £6.25 million; Rickie Lambert £2 million; Emre Can £2 million; Lazar Marković £4 million; Dejan Lovren £5 million; Alberto Moreno £3 million; Divock Origi £2 million; and Super Mario himself £4 million.

What this doesn't do, of course, is tell you anything about the company's cash flow. And we will almost certainly find that the club's wage costs in 2014-15 are substantially higher than the £132.4 million incurred in the year to May 2013.

When it comes to profitability, however, I'd be very surprised to find Liverpool still at the foot of the Premier League table in 2014-15, in spite of its current spending spree. You might see this as Suárez's parting gift.

David Owen worked for 20 years for the Financial Times in the United States, Canada, France and the UK. He ended his FT career as sports editor after the 2006 World Cup and is now freelancing, including covering the 2008 Beijing Olympics, the 2010 World Cup and London 2012. Owen's Twitter feed can be accessed at www.twitter.com/dodo938.

http://www.insideworldfootball.com/david-owen/15309-david-owen-liverpool-and-balotelli-why-reds-set-for-a-summer-transfer-profit-despite-100m-spree

It does make a little sense.

Suarez was bought for £22.5million on a 4.5 year deal, so after 3 years amortization would give him a value of only £7.5million in the accounts. So we sell Suarez for £75million and almost all of it goes into the accounts  (£75million- £7.5million)

We buy say Lallana for £25million on a 5 year contract and only £5million goes into the accounts as the £25million is amortizised over the 5 years of his contract. 

So the accounts show a plus £67.5million for the sale of Suarez, yet only a minus £5million for Lallana.

Figures are just made up but hopefully you get the gist.

Close ?

Want to 'see' how "fair" FFP is? Need to figure out who it really benefits? Look no further than the scum and their "ridiculous" spending...

The wealthiest club in Britain back on top of the heap: able to out-spend any rivals. The wealthiest club able to attract and pay top names without the 'lure' of champions league football... just like City and Chelsea did before.

The old order has been restored and restored without very wealthy owners having to spend a F***ing dime [very appropriately] of their own.

The Glazers dine again, at the top table, along with their partners in whine, Arsenal... thank you FFP. 

Don't kid yourselves : there's F**k all "fair" about financial fair play. 

Whatever you want to call it, its NOT "financial FAIR play".

Should be called Financial PROFIT play.

It is a disincentive to investment in the game. It suggests the game should be all about profit.
Its not about "fair" play. And its certainly not about financial fair play for the fans.

There should also be something done about the idiocy of Bosman and the fact that it causes money to haemorrage out of the game, into the hands of overrated players. (Infact a Bosman situation could never have occurred in England or numerous other countries. In England, there would have been a transfer fee set by tribunal, rather than forcing the player to honour his contract).

One thing I'd like to see is some informal type of player wage restraint INCLUDING the mega clubs. The mega players should have the bulk of their earnings from commercial deals NOT from the hard paying fans.

And I'd like to see players forced to honour their contracsts. After all, we've been forced to honour contracts with players who snapped cruciates etc and became a shadow of their former selves!

The above, together with sensible ticket prices, supporter ownership stakes etc might result in something more of a system of financial "fair" play.

Finally, atleast the article observes that despite the massive money coming INTO the club, we did NOT have a big window in terms of net spend.

FFP has helped us. If it were not for Suarez sale, FFP may have seen us sign watered down targets this window. It has made the Suarez blow turn beneficial. Now we are in CL we cant allow for much debt at the end of this financial year. The only thing that concerns me is how sponsorship deals have gone into crazy money since FFP. I just hope UEFA are going to scrutanize all these huge sponsorship deals to make sure clubs aren't indirectly paying themselves and posting it as profit.

UEFA may scrutinize the sponsorship deals, but can do absolutely nothing about them if they're legit. There is no mechanism in FFP to stop owners of several entities influencing sponsorship deals between these entities. It may change later but would be very difficult to enforce. City have it Etihad and PSG have it with Qatar National Bank , and whilst it may be unethical or unfair, it's absolutely legal whichever way you look at it.

Having said that, FFP is designed more to protect club (without billionnaire sugar daddies) from living beyond their means and ending up in administration, which is a good thing. Without FFP, the likes of H&G could, and did, load the club with huge amounts of debt and risked our future. In that sense, I welcome it.

However, I am very cynical about whether it will do much to break up the dominance of the richest clubs or stop billionnaires buying prizes.

I find it hard to believe we would have breached FFP. The owners seem to have a good structure in terms of money at the club and I don't think they'd have put us in a situation where we broke any FFP. For a start we wouldn't have spent so much in the summer regardless of getting £75mill for Suarez if we were in danger of breaching FFP.

They want to be saving their time for when they have to look into the Mancs at the end of the season. Big losses heading their way soon.

This something to be worried about? Last thing we need is a points deduction or worse.

It's just looking at our accounts is all.

Papers blowing it out of proportion saying it's "an investigation".

This something to be worried about? Last thing we need is a points deduction or worse.

Don't think there is any points deduction aspect, only financial penalty.