Basically the main rule is that "players" wages have to be below 60% of turnover. Currently I believe are ratio to be 100%. As turnover will also fall by probably more than a half, this means our wage bill will have to be cut by about 2/3rds. This means we will have a massive turnover of players in the next couple of years.Dippenhall said:
I think it says that loans cannot be counted as part of turnover for setting the 60% limit on wages. Loans can still be made.vff said:Note Its very important for Charlton to be in the Championship as in League One, additional monies by the owner cannot be loaded as loans - currently being charged at 3%- only as investment direct into the club and that means Duchatelet having to put in real equity not a sodding loan to fund losses'
http://www.financialfairplay.co.uk/scmp.php
In League 1 and League 2, a wealthy owner can therefore fund the club spending in a way that is not permitted in other divisions. Manchester City and Leicester for example seem set for punishment for their excessive losses (from UEFA and the Championship respectively) despite the fact that the owners have injected hard cash into the club to finance the spending.
Comments
Relegation from Championship means tighter belt around paying players? Meaning you're forced to sell players?
How is that FFP?
My first question is when was this published/updated, because the approach to, and enforcement of, these types of rules chance year-on-year. Manchester City made a profit last year, and their owners, for whatever you think of them, have put money into the club not as loans but simply as injected capital (in some cases through what many would argue are inflated endorsement deals). UEFA has backed off their crusade quite considerably on this.
I'm a big believer in FFP as a concept, but it seems that every time there are attempts to enforce it the execution or proposed execution is awful. One of the big problems with the way UEFA did it was they chose an arbitrary year, and essentially said "whoever is successful now, or has high turnover now, will be successful henceforth because you have to operate within the parameters of this arbitrary year zero." It didn't take into account existing debts, which made clubs like Chelsea and City, again, regardless of what you think of them their owners have simply injected capital (Abramovich basically wrote off his loans), so even though they run at a loss, they don't necessarily have debts. Contrast that with Man United, who have massive debts put on them by the owner. And contrast that again to Arsenal, who went into debt to invest in infrastructure (which under UEFA wouldn't have counted against them but I believe would have counted against them here).
Let's say the concept was applied to restaurants. You wouldn't be allowed to make a huge loss while buying up a derelict restaurant, spending a fortune refurbing it, hiring the best staff and stocking the kitchen and wine cellar with the best products. Just because you were not making a profit for a few years while working towards getting those oh so important Michelin stars? Under FA rules a restaurant owner would even be in trouble spending money on advertising his own business with a billboard outside his gaff. FFP is really a rather silly thing.
"You've got to speculate to accumulate" may not be an entirely accurate saying, but if you don't do infrastructure, research and development, product improvement, and, most importantly, hire the best staff in all the keys positions, you are heading for a fall.
What's worse, a business turning over £100mn making a £1mn loss with a plan in place to do better in upcoming years or a business turning over £5mn making a £1mn loss with no idea how to and no hope of stemming the losses?