New “UEFA Financial Sustainability” rules

[halfcenturyup]

It's not clear what the bit in bold actually means. There's an explanatory note from UEFA, that Swiss Ramble used, which accompanies the regulations.

This suggests that money has to be put in to cover these "relevant investments" but it can't be on top of any contribution to cover a deficit.

I read it as the opposite: that relevant investments can be covered by equity investment, but not the same equity investment (so an additional equity investment on top of that) used to cover the acceptable deviation.

Not sure I have any problem with any of these new rules really but what the hell do I know?

One thing I do know, if they are really checking every transaction for fair value, they will need a team of about 2000 people to do it :)

 

[Centurions]

I read it as the opposite: that relevant investments can be covered by equity investment, but not the same equity investment (so an additional equity investment on top of that) used to cover the acceptable deviation.

Not sure I have any problem with any of these new rules really but what the hell do I know?

One thing I do know, if they are really checking every transaction for fair value, they will need a team of about 2000 people to do it :)

That made me laugh because you and others have confused me even more :(

So is infrastructure investment allowed or not and does it affect transfer budgets for instance?

 

[SWP's back]

Spot on. These new rules will make it almost impossible to attract new external investment. It will damage youth football, community projects, stadium development and destroy women's football. It will encourage owners to take on huge long-term loans for most projects to avoid breaching FFP.
It deters owner investment and encourages debt. It is the opposite of sustainable and designed to protect the elite clubs (and we are now part of that group). It will devastate anyone trying to climb the ladder like Everton and Newcastle and ironically will damage United hugely because of their crumbling infrastructure.
Why should we be surprised that a corrupt body like UEFA should come up with this proposal. It will hasten the onset of the Super League. Why should ambitious clubs who want to improve their infrastructure, creating hundreds of local jobs, be hampered by a bunch of greedy crooks.

Not sure why this has so many likes as it’s filled with inaccuracies.

How do the new rules encourage owners to take on long term debt to avoid breaching FFP? That.. that isn’t how any of this works.

 

[Onholiday(somemightsay)]

That made me laugh because you and others have confused me even more :(

So is infrastructure investment allowed or not and does it affect transfer budgets for instance?

I'll leave the difficult explanation to others, however in simple terms it generally depends on whether you are steeped in 'iiiiiiiiiiiiiistory, whether you play in sky blue, whether you have non-caucasian christian owners and whether you ruined 'Grand Slam Sunday' by wrecking the old Sky 4............ or not ;-)

 

[dadnlad]

If I want to sponsor a football club to the tune of a few million to show of my company. Who has the right to say I am paying to much ?

If I think it's a fair price and the club think it's fair what's the problem. Is it to protect the sponsors from paying to much ?

I just dont see how someone employed by UEFA can tell me how much I should sponsor a club for.

it'll be like dickinsons real deals as soon as dealer puts too much money on table he dives in saying great offer that
that'll be gill n parry sticking nose in things thats got f""k all to do with them

 

[KS55]

Several points occur to me.
1. Clubs will have to obey two sets of regulation at the same time. Either wiggle room or a clash seems inevitable.
2. The press will not take the trouble to understand all this. Either they will ignore it or make ludicrous accusations in their ignorance. Room then for more frivolous complaints from the red shirts.
3. Both the PL and UEFA say that fair value will be determined by independent experts, but note that UEFA ignored these experts in the last case of PSG. The experts valued PSG’s “world branding” paid for by Qatar at £9m. Leterme adjusted that in the investigatory chamber to just short of £100m, thus ensuring PSG passed ffp. No corruption there, oh no.

 

[halfcenturyup]

That made me laugh because you and others have confused me even more :(

So is infrastructure investment allowed or not and does it affect transfer budgets for instance?

:)

Infrastructure investment is allowed, as is youth development and the women's game, but there is no special dispensation against FFP. So all infrastructure costs, youth development costs and womens game costs are included in the profit/loss on which FFP is measured. Before, these costs were excluded.

Do these investment/costs affect transfer budgets? Not directly, but because they are now costs included in the FFP profit or loss, they will have to managed against the 90%, 80%, 70% player "wage" cost to make sure they don't lead to losses overall over the allowed limits.

The allowed limits increase if they are funded to a limited extent by equity investment, and increased again if you are determined to be in good financial health, whatever that the hell means.

I think.

Hope that clears it up. Not sure it worked for me, honestly ....

 

[mexico1970]

Meanwhile in the real world Barcelona, Real Madrid and the rags all run with massive debts and are allowed to do so, it's the biggest Elephant in the room since Dumbo got stuck in the Debenhams lift in the early 70's.

If a business wants to speculate to accumulate then it should be left up to them, if they go bust then they go bust because that's the chance that they take, the football associations are kidding us by claiming they are protecting football clubs and tradition yada yada yada, they most certainly are not.

We are now full on global this idea of football in the community bollox is just that, it's bollox.

 

[KS55]

:)

Infrastructure investment is allowed, as is youth development and the women's game, but there is no special dispensation against FFP. So all infrastructure costs, youth development costs and womens game costs are included in the profit/loss on which FFP is measured. Before, these costs were excluded.

Do these investment/costs affect transfer budgets? Not directly, but because they are now costs included in the FFP profit or loss, they will have to managed against the 90%, 80%, 70% player "wage" cost to make sure they don't lead to losses overall over the allowed limits.

The allowed limits increase if they are funded to a limited extent by equity investment, and increased again if you are determined to be in good financial health, whatever that the hell means.

I think.

Hope that clears it up. Not sure it worked for me, honestly ....

UEFA report that all G14 clubs will be considered in good financial health, irrespective of debt to income ratio. Conversely, any clubs owned by Arabs or Muslims (with the exception of PSG) will be deemed basket cases if Teabag says so.

 

[Cobwebcat]

So if we built a new stadium would the cost of building it be offset by the asset itself?

If we were to build a new stand presumably that would be a cost that couldn’t be offset as the asset was owned by the Council?

Very confusing!

 

[Holcombe bloo]

You’ll only be able to spend 70% of your turnover (plus profit on player trading) on player salaries, coaches salaries and amortised transfer fees.

Basically most of the Big Six will piss the new rules but Italy, PSG and Barca may struggle. Germany and Madrid should be fine.

The previous ffp 30m euros allowance to go over the limit in a 3 year period also rises now to 90m euros so long as it’s equity investment from owner (not loan) AND the club is deemed in good financial health.

It seems less draconian than previous rules and still does fuck all about debt so long as the repayments are made.

So of the 30 percent not spent of wages and amortisation can you spend any of that on infrastructure? If not we’d better sign a cheque for the new north stand pretty damn quick!

 

[SWP's back]

So of the 30 percent not spent of wages and amortisation can you spend any of that on infrastructure? If not we’d better sign a cheque for the new north stand pretty damn quick!

Yes you can spend that on whatever AND still go over by up to 90m euros in any year (so long as it’s equity investment).

Not sure why quite so many are getting their knickers in a twist.

 

[Jacko1956]

So of the 30 percent not spent of wages and amortisation can you spend any of that on infrastructure? If not we’d better sign a cheque for the new north stand pretty damn quick!

Re devolpements are not included in FFP, our owner could even fund this out of his own pocket if he wanted!

 

[SWP's back]

Re devolpements are not included in FFP, our owner could even fund this out of his own pocket if he wanted!

FFP won’t exist any more. That’s sort of the purpose of this thread.

 

[halfcenturyup]

So if we built a new stadium would the cost of building it be offset by the asset itself?

If we were to build a new stand presumably that would be a cost that couldn’t be offset as the asset was owned by the Council?

Very confusing!

All the cash costs of constructing a building are shown in the balance sheet as an asset, and this is amortised over its useful life to the profit and loss account with an annual cost of amortisation. So you make a building for 40 million with a useful life of 40 years, say, 1 million will be a cost in the profit and loss account each year.

The financing of the building only appears in the balance sheet, either as increased equity or a loan, the only thing that will impact profit and loss from the financing is an annual interest charge on any loans (zero financing cost for funding by equity).

Now, the Etihad Stadium is owned by the Council but it is leased on a long-term basis, pretty much over its useful life by the club, so accounting rules say it has to be treated as an owned asset: ie; the asset is shown at a calculated value in the balance sheet and amortised with an annual amortisation cost to the profit and loss account, and a calculated loan amount is included on the other side of the balance sheet as well, as a loan, with an annual interest charge included in costs in the profit and loss account.

Now, any improvements to the stadium financed by City will be added to the cost of the asset in the balance sheet and there will therefore be an increased amortisation charge (increase = cost of improvement over the number of remaining years of useful life) each year. Depending how the improvements are financed, there will either be an additional loan in the balance sheet with an annual interest charge to the profit and loss account, or increased equity with no profit and loss effect.

What was it you asked, again? I forgot where I was going with that ....

 

[waspish]

FFP won’t exist any more. That’s sort of the purpose of this thread.

Don’t the premier have a different ffp

 

[Cobwebcat]

All the cash costs of constructing a building are shown in the balance sheet as an asset, and this is amortised over its useful life to the profit and loss account with an annual cost of amortisation. So you make a building for 40 million with a useful life of 40 years, say, 1 million will be a cost in the profit and loss account each year.

The financing of the building only appears in the balance sheet, either as increased equity or a loan, the only thing that will impact profit and loss from the financing is an annual interest charge on any loans (zero financing cost for funding by equity).

Now, the Etihad Stadium is owned by the Council but it is leased on a long-term basis, pretty much over its useful life by the club, so accounting rules say it has to be treated as an owned asset: ie; the asset is shown at a calculated value in the balance sheet and amortised with an annual amortisation cost to the profit and loss account, and a calculated loan amount is included on the other side of the balance sheet as well, as a loan, with an annual interest charge included in costs in the profit and loss account.

Now, any improvements to the stadium financed by City will be added to the cost of the asset in the balance sheet and there will therefore be an increased amortisation charge (increase = cost of improvement over the number of remaining years of useful life) each year. Depending how the improvements are financed, there will either be an additional loan in the balance sheet with an annual interest charge to the profit and loss account, or increased equity with no profit and loss effect.

What was it you asked, again? I forgot where I was going with that ....

Good answer so if we develop it shouldn’t really impact us too much.

 

[SWP's back]

Don’t the premier have a different ffp

Yes but this is about the new uefa one.

Also when the PL one is changed, there won’t be quite so many team voting against owner investment now.

 

[bobbyowenquiff]

Not sure why this has so many likes as it’s filled with inaccuracies.

How do the new rules encourage owners to take on long term debt to avoid breaching FFP? That.. that isn’t how any of this works.

This has been covered later on in the thread. My view was based on the initial Swiss Ramble tweet which suggested any investment in youth football and infrastructure would count for FFP purposes. It is more complex than that. That said the new rules will do nothing to reduce debt.

 

[halfcenturyup]

FFP won’t exist any more. That’s sort of the purpose of this thread.

So what are we going to call it?

Football Financial Sustainability?

FFS.