Spurs Banter Archive May 07 2014

07 May 2014 23:09:01
Ok all
We have been battered home and away from Liverpool!
And the go to palace and go 3-0

07 May 2014 17:10:50
Maybe I sould be asking this on the Liverpool page, but didn't want to be seen to be stirring up trouble.

Eds - How might these potential FFP sanctions affect Liverpool in the upcoming transfer window and year. As I understand it they need to have below £74m in the two years combined. I thought I saw they made a loss of about £50m this year, so they must need to only make about a £25m loss this coming year in order to aviod the sanctions.

Will increasing TV and european revenues save them with regard to the MD stating that £60m would be spent in the summer? I can't see them spending £60m and only making a loss of £25m

{Ed002's Note - You have got the wrong end of the stick completely here. Try not to worry about it.}

Really?
Liverpool will come under scrutiny next autumn right?
They will be scrutinised for losses made over that season and the one before, so surely this upcoming summer they will need to watch what the spend and keep the losses below the threshold?

£37m per year which they have exceeded this season so surely they need to reduce that in the coming year, assuming they make the champions league come the end of next season

{Ed002's Note - Sorry, you really don't understand and the figures you are quoting are all incorrect.}

Have you explained it at any point which you could copy and paste here?

{Ed002's Note - The Demystification of the Financial Fair Play Rules (FFPR)
Introduction
I will try and simplify and summarise the FFPR and give examples where I can.
Putting aside all of the “mother country” fluff, the fundamental purpose of the FFPR is to:
(1) Ensure that clubs are operating within their means with transparent financial reporting. Example: Arsenal has debt which they can manage from the money they make as a club (good). PSG has a very low turnover given the amount of money they spend on players through donations from wealthy owners (bad) and sponsorship deals well beyond the norm..
(2) Protect creditors. Example: When Portsmouth went bust they owed money for players (the extreme case being Glen Johnson who had moved to Liverpool but Portsmouth still owed Chelsea for), money to local businesses (tradesmen who had worked at the ground, newsagents etc.), utility companies, the police et al (bad).
(3) Encourage responsible spending. Example: Liverpool under Hicks and Gillett borrowed money against the value of the club in order to buy players (bad).
(4) Protect the long-term viability of European club football. Example: They want to avoid the scenario of clubs entering administration or going out of business.
The FFPR apply to all UEFA club competitions and will actively come in to force from the end of June 2014 taking account of the financial monitoring period (the season just finished) and the two prior reporting periods. So when they first start, the FFPR will look at the 2013/2014 returns, and they will give consideration to the 2011/12 and 2012/13 figures.
I should make clear that it is not the full accounts of a club that are being considered, but just the “relevant” income and the “relevant” expenses. “Excluded” expenses are critical to the FFPR calculations. To this end, all clubs will need to effectively produce two sets of accounts. An audited set which are provided to Companies House and the relevant revenue organisations, and a second audited return laying out the “relevant” income and the “relevant” expenses for the purpose of the FFPR.
Relevant Income
(1) Match day gate receipts. Example: The money made by the club from paying fans attending games. This includes income from cup games when played away from home where a proportion of the gate money goes to the away side.
(2) Broadcasting rights. Example: Television income for games, money provided for radio broadcasting.
(3) Income from commercial activities. Example: Sales of bobble hats and rattles, club shop income, licensed income (e.g. DVD sales). In the future you can expect to see income from other media (e.g. streaming of games on a pay-per-view basis to the web and phones) increase.

(4) Prize money. Example: income from the Premier League, Champions League etc..
(5) Sponsorship. Example: Shirt sponsors (Standard Chartered, Samsung etc.), shirt manufactures (Adidas, Warrior etc.).
(6) Advertising. Example: Companies who buy time on video screens during games or hoardings at the stadium.
(7) Other operating income. Example: Payments made to a club for playing friendly matches in the Far East.
(8) Income from transfers: Example: All income from the sale of a player regardless of payment being due to previous clubs, the player himself etc. as they are allowable expenses which will later be deducted.
(9) Excess proceeds on the sale of tangible fixed assets. Example: The money Arsenal from converting part of Highbury in to apartments and selling them.
(10) Other income: Example: Interest on investments.
Relevant Expenses
(1) The costs of running the business (confusingly referred to as “the cost of sales” by accountants etc.). Example: Wages, ground maintenance, lighting, telephones, IT equipment, travel costs, policing costs etc..
(2) Employee related benefits and associated costs. Example: Costs of providing insurance, dental care, medical, employer NI contribution, housing, loyalty bonuses etc..
(3) Other operating expenses. Example: Payments for advertising, legal fees, agent fees, accounting fees, payments to players in relation to transfers, payments to player’s previous clubs, etc..
(4) Amortisation or transfer costs. Example: The total amount of money paid to another club to transfer a player or, if a club decides to do so, the amortised cost for that year (where a club is spreading the cost of the transfer out over the length of his contract for accounting purposes).
(5) Finance costs. Example: Bank charges, interest on loans etc..
(6) Dividends. Example: The owners may take a dividend from the profits a club makes as income.
Excluded Expenses
(1) Depreciation of tangible fixed assets. Example: The loss, if any, in value of the stadium, cars, IT equipment etc..
(2) Costs associated with the intangible fixed assets (other than player registrations). Example: goodwill, franchises, trademarks, copyrights etc..
(3) Expenditure on youth development activities. Example: All youth development expenses (housing, schooling, travel, medical etc.) are excluded from the calculations.
(4) Community development activities. Example: Outreach programmes, donations to the local community and charities, provision of equipment etc..
(5) Tax expenses. Example: Monies paid to the Inland Revenue, VAT etc..
(6) Finance costs related to construction of tangible fixed assets. Example: The interest on the £300M loan to build a new stadium.
(7) Interest payments on old loans (pre June 1, 2011). Example: Any interest due on a loan taken out for whatever purpose before June 1, 2011 is excluded from the calculations.
(8) Certain expenses from non-football operations. Example: This does not really apply to British clubs, but in other European countries clubs are often “sporting clubs” and have basketball, football, hockey team etc. all under one business.
The Calculation
FFPR calculates from a club’s “relevant” income and the “relevant” expenses whether the club is running at a surplus (profit) or deficit (loss) within a Monitoring Period (e.g. 2013/14). From this the FFPR decides if a club has met the “break even” requirement or not. This is not met if the “relevant” expenses exceed the “relevant” income by more than 5M euros (an acceptable deviation).
If the club exceeds this acceptable deviation, the owners of a club may contribute toward correcting it to a maximum of 45M euro over a rolling three year period (30M euro from 2015/16 on). Example: If Club X made a loss of 50M euro in 2013/14 due to the purchase of players, the calculation will ignore the first 5M euro and assume an owner contribution of 45M euro and there would not be an issue. However, for the two years following, there would be no allowable owner contribution as the full allocation had been used. If Club Y made a loss of 30M euro in 2013/14 due to the purchase of players, the calculation will ignore the first 5M euro and assume an owner contribution of 25M euro and there would not be an issue. But in this case, for the two years following, there would still be 20M euro allowable as owner contribution to cover further losses.
The Punishment
The Threat: If a club has been determined to have violated the “break even” requirement for a season it may be excluded from the next season’s UEFA competitions.
Likely Situation: If a club can show it has been moving in the right direction and doing what it can to overcome financial issues, perhaps brought on by a recession (e.g. in Spain) then I would expect a strongly worded letter as a warning. If a club has strayed a significant distance for the rules, then a fine and cap on number of salaries of players in UEFA competitions may be imposed. Perhaps by then end of the 2016/2017 season, If a club has been determined to have violated the “break even” requirement for several seasons then it may be excluded from the next season’s UEFA competitions.
UEFA are willing to make some exceptions to the rule and have already said they will consider:
(1) The quantum and trend of the break even result. Example: Chelsea spent a lot three years ago summer rebuilding an aging squad, so even with considerable additional income from winning the Champions League it could violate the “break even” requirement. However, spending less the next season will show the club moving in the right direction. Expect a strongly worded letter in a couple of years time.
(2) Debt situation. Example: A possible “get out” for Barcelona, Real Madrid and Manchester United should they have a bad season and need to violate the “break even” requirement. Consideration will be given to the existing debt and the ability of the clubs to service that debt. The trend of the debt reducing and an excuse of “one bad season” and “need to rebuild the team” would likely result in a slapped wrist.
(3) Fluctuating exchange rates. Example: All non eurozone countries need to report the FFPR figures in euros which could fluctuate due to the exchange rate, whereas a number of the UEFA figures are fixed amounts (e.g. the 5M euro acceptable deviation).
(4) Projected figures. Example: UEFA will allow clubs to show that they are moving in the right direction if they provide projected figures showing that the “break even” requirement will be met in the following season.
(5) Force majeure. Example: Any extraordinary events or situation arising that is beyond the club’s control will be taken in to account.
(6) Until then end of 2014/15 only - Ongoing reductions in wage costs. UEFA will be flexible over the “break even” requirement if a club can show that their wage bill has been reducing and with the exclusion of wages of players signed before June 1, 2010 they would have met the “break even” requirement. Example: An escape route for the likes of Chelsea with Cech, Terry, Cole, Lampard etc. wages excluded from the calculations. A possible future escape route for the likes of Barcelona.
The Issues
There are a number of matters that UEFA still need to figure out and a number of concerns that certain clubs and certain national associations have. Off the top of my head:
(1) Loopholes: Whilst UEFA has done what it can to block any potential “loopholes” it is well aware that exclusion of wages for players signed before June 2010 is one it has introduced itself, and one that will be popular with the higher paying clubs as a short term escape route through to the summer of 2015. The matters of excessive sponsorship will be addressed via a cap to thwart the concerns over the likes of Manchester City abusing the rules. The cap has yet to be finalised but will require ratification. It was discussed without UEFA present at the end of March at a meeting of a number of clubs in Monaco. No agreement was reached.
(2) Soft Sponsorship: UEFA are concerned at the aggressive approach to obtaining sponsorship some clubs are taking. Questions are being asked about the ethics in clubs having airline travel partners, photocopier partners etc.. The Spanish clubs have raised this as a concern.
(3) National Sponsorship Variations: As we have seen tobacco sponsorship leave Formula 1 UEFA would like to see alcohol sponsorship out of football. We already have a situation where sponsorship by alcohol related businesses are forbidden in certain countries. Wealthy breweries are now focussing their sponsorship in other countries thereby creating a perceived imbalance in what income clubs are able to obtain in sponsorship. The French and Russian clubs have raised this as a concern.
(4) National Financial Distribution Variations: Concerns exist in countries where different models are used for distributing prize money, contributing to the grassroots game and distributing income from television and other media broadcasting. This led to an original request (rejected) from a number of clubs to restrict the FFPR to only the wealthiest of clubs, those with a turnover in excess of xM euros.
(5) National Taxation Variations: There is a considerable difference across UEFA nations in taxation, and this is seen to be reflected in the wages paid to players. The Spanish clubs have raised this as a concern.
(6) Third Party Ownership: Countries that allow third party ownership of players are seen to have a distinct advantage in being able to keep the costs of transfer fees low as they are only paying for a proportion of a player. The English clubs have raised this as a concern.
The Great Fear
Without going in to too much detail: (a) A number of clubs take the opportunity a once or twice a year to discuss various issues including changes in rules, television rights, the power of UEFA, exploitation issues for new technology streams, etc.. These discussions, the last of which were in late August, also always turn to the possibility and structure of a breakaway pan European league. Several are ex-G14 clubs, several are not, and some clubs decline involvement in such discussions. (b) The plan is that at some point a number of clubs would break away from their national leagues and UEFA. They accept that they would be banned from all existing club competition and the players would initially be banned from all FIFA competitions as well, but know that FIFA would be looking to negotiate in any case. It would be the end of UEFA in all probability and UEFA are very aware of this. It would also result in a restructuring of many of the national leagues. (c) The clubs would renegotiate their television rights, rights of distribution via other streams etc.. (d) It remains the greatest fear of UEFA and all major national authorities that one day this will happen.

Is £37m per year wrong? Around 45m euros

{Ed002's Note - Yes.}

Care to explain?

{Ed002's Note - I have done.}

Enlighten me, I am so stupid

{Ed002's Note - I knew would post a correct statement at some point.}

Fair enough, can you answer this, do you expect they might struggle to adhere to them and strengthen their team/squad like they plan to.

Or do you think they will be fine and uneffected by them?

{Ed002's Note - Could you have someone feel your head just to see if it has gone soft.}

I really wish you had posted this on the Liverpool page, imagine how many more people would've been questioning your intellect.

I obviously didn't post all of those replys like that, I just thought my previous ones weren't going to be posted.

I already understood those FFP rules as you stated them, it's not exactly rocket science.

I was just asking a contextual question with figures I quoted from the BBC, wouldn't have been that hard for the ed to give me an answer initially, rather than patronising me.

{Ed002's Note - You obviously didn't understand it otherwise you would not have mis-interpreted the values.

I understand the principles and basis of FFP, wouln't really have taken long to explain one point to me, the values I gave relating to Liverpool were my own memories and estimates at the time.

You're probably one of the few who understands both the FFP rules and the inner finances of clubs, was just looking for your opinion of how it might effect them really, regardless of how incorrect my figures were.

{Ed002's Note - Clearly you don't understand.}

Guess i'll throw my BA in Finance and Accountancy in the bin

Guess i'll throw my BA in Finance and Accountancy in the bin

{Ed002's Note - Right, clearly you weren't listening.}

07 May 2014 09:30:20
We have been linked with Louis Van Gaal, Frank de Boer, Pochettino, Klinsmann, Benitez, Moyes, Mancini, Allegri, Martinez, Poyet, Hoddle, Hiddink, MacKay and Pulis amongst others. The sad truth is LVG got his offer from Spurs and used it to broker a bigger deal at Manchester United.

The future looks less certain as Levy has been advised by two of his board to take Moyes, but realises this would not be the fans choice. As such he is worried that a negative run of form would potentially end his own tenure at White Hart Lane.

The issue with Frank de Boer is his team including Bergkamp, Jaap Stam and Overmars. All highly unlikely to want to move, and yet key figures in the success of Ajax. Without them Frank de Boer carries huge risk, and Levy is seeking reassurances of who will join him if he were appointed.

Ajax however provide a clear picture of how to build a successful club, and this has been done with a fraction of the revenue. Create a management hierarchy that knows what it is doing, even Van de Saar is part of the same structure. Just imagine a management structure including Klinsmann, Hoddle and King.

I assume this appointment will be very tricky indeed seeing as LVG seems to have played us. As bad as Sherwood is, he is as good as any panic appointment, so I for one hope Levy takes the time to get the right man.

End of Levys tenure how? who does he hold accountability to apart from Joe Lewis, there is no shareholder vote, or non-executive decisive decisions on appointing the chairman, its Levy and Lewis, owning and governing, they are in charge!

Oracle, you say keep TS, the same TS who said whatever happens to him, we should keep Danny Rose as left back next year as he has been excellent this year!

Actually De Boer is our number one target, Pochettino is second choice. This isn't me claiming to be itk its coming from someone (a banned poster on here!) who is itk and gets a lot right.