Queens Park Rangers are facing a record-breaking fine - even if they are promoted this season - after recording a huge £65.4million loss, taking their overall net debt to £177m.
The Championship club have posted their financial report for the year ending May 2013, and the document underlines the heavy spending of co-owner Tony Fernandes' reign.
But as a result of their failures on the pitch, QPR are now facing major ramifications under Financial Fair Play regulations, even if they are promoted back in to the Barclays Premier League this season.
Under Football League Financial Fair Play rules, the Loftus Road club are almost certain to be hit with a transfer embargo should they fail to secure promotion this season.
And Rangers could face a fine in-excess of £40million even if they are promoted this summer.
The club have recorded a net debt of £177million - a massive increase from £91.4m the previous year.
Turnover dropped from £64m to £60.6m, but wage costs sky-rocketed from £58.5m to £78m.
The news casts a huge cloud over the club's future and, in the report, Fernandes wrote: 'Clearly in 2012-13 the club did not meet its performance targets and was relegated from the Premier League.
'A critical driver of any club’s value is its presence in the Premier League, and the club is focused on regaining its Premier League status as quickly as possible.
'The financial results reflect the club’s focus on trying to achieve on-pitch success.
'When, alongside my business partners, I purchased a majority shareholding in the club in August 2011, my goal was to turn QPR into an established Premier League club.
'Being relegated was obviously not part of our plans, but our focus and determination to achieve our long-term goals has not diminished.
'During the summer 2013 transfer window we have worked to put together a squad of players we believe will give us a good chance of achieving promotion back to the Premier League.
'At the time of writing, we have made a good start to the 2013-14 season and we remain confident that under the guidance of our manager, Harry Redknapp, we have a squad capable of challenging for promotion.
'We are confident that the 2013-14 season will also see the club continue to make progress towards achieving its short, medium and long-term off-pitch targets.
'The group’s key short-term objective is to regain its Premier League status. The board believes that some restructuring of the playing squad is required in order to achieve this. However, they are conscious of the need for expenditure to be closely monitored and controlled.
'The directors, based on cash flow projections prepared by management and through confirmation of continuing support from the groups’ main shareholders and creditors, have a reasonable expectation that the company and the group have adequate resources to continue in existence for the foreseeable future.'
Their wage bill alone is £18m more than their turnover!!
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Unbelievable wage bill
The thing is, a club rarely sees any of that 'windfall'. It all goes out the door to players and agents.
Let's say they get 120m, their wage bill is 78m leaving 42m. They'd have to pay a 40m fine leaving 2m and that's before they've even bought any players. Plus that wage bill would probably rise.
Mike, I see what you're saying. I think they've got the wording wrong.
If promoted: fine
If not promoted: transfer embargo
Maybe I've misunderstood the FFP rules.
QPR accounts state that the club's continued "operational existence" depends on the financial support of Tony Fernandes and the other owners.
Really? : - )
I assume by raising it you mean borrowing it, therefore it adds to the debt. Even if a director put his hand in his pocket and slapped £40million on the table he would want it back therefore it is a loan thus added to the debt.
Bye bye
i. Sanctions for clubs remaining in the Championship
Clubs that fail to comply with the Financial Fair Play regulations (from December 1st 2014) will be subject to a transfer embargo. This embargo will come in to force ahead of the subsequent transfer window beginning on January 1, 2015.
The embargo will remain in place until the club is able to lodge financial information that demonstrates that it meets the Financial Fair Play regulations (either for the previous reporting period or a future reporting period).
ii. Sanctions for clubs promoted to the Premier League
Clubs promoted to the Premier League will be required to provide Financial Fair Play information for their promotion season by December 1. Any club found to have breached Financial Fair Play regulations will be required to pay a 'Fair Play Tax' on the excess by which the club failed to fulfil the Fair Play requirement, ranging from 1% on the first £100,000 to 100% on anything over £10m.
ALSO:-
Transition arrangements for clubs relegated from the Premier League
Clubs relegated from the Premier League will not be subject to sanctions in their first season in the Championship as long as they have met their financial obligations under Premier League regulations. They would, however, be subject to the potential of a Fair Play Tax if they achieved promotion in their first season in the Championship whilst not complying with the FFP regulations.
Andy Street @ADGStreet 7h
It's likely, based on the last two years and the reduced revenue in the Championship that QPR could be £250m in debt by end of 13/14.
So you have the power to ban me, even though you are not a moderator? .