Leicester City losses 2012-13 - £34m

[father_and_son]

I don't think there should be competing ideas but if it had been thought through better from the start and the basic philosophy was to prevent clubs going into administration and living within their means then an approach that limited borrowing to sustainable levels would have been fairly easy to construct.

That's exactly what FFP is designed to do. If you can only run at a relatively small loss then your borrowing requirement should not be growing out of control.

There needs to a be complete change and you cannot go from now to financial nirvana in one step. Control the losses and make the clubs sustainable, then you can look to tackle the long term debt issues that some clubs have (and others don't).

 

[nwgull]

The big loser in FFP is going to be fans who regularly attend football matches and have to pay increased ticket prices because many clubs won't suddenly lower their ambitions or halve their wage offers. They will just pass the cost on.

In an ideal world the clubs would take FFP on board and collectively drop the ridiculous wages being offered to players. This is unlikely to happen though - particularly all the time certain clubs can fund these wages with parachute payments. Those looking to compete with them will have to up their prices in order to do so.

Ditch parachute payments. Encourage clubs in the Premier League to have sensible and sustainable wage reductions written into player contracts guarding against relegation - as Sunderland do already, I believe.

Go back to the idea of distributing FFP penalties to those clubs who DO follow the rules.

In isolation I can't see how FFP will work in the way I think we all hope it will.

I actually think that FFP IS going to affect wages. David Burke, when interviewed on The Roar, seemed to think that it had already started to affect the negotiations of out of contract players last summer. As mentioned above, it's going to be a gradual process taking a few years.

 

[El Presidente]

This is a very good point. You don't just get handed a cheque for 120m and expect all your players to carry on playing for the same wage for the next 3 years - regardless of whether or not they get relegated in the first season.

Football is currently unsustainable, and all it will take is for one of these foreign investors to get bored of the game and withdraw their millions for a club to go under.

You mean Portsmouth?

 

[El Presidente]

Can you put some meat to the bone of your idea as to how the FL, and Premier League come to that, can achieve that. After all, most of the 'investment' as you put it, are actually loans!!!

If my memory serves me right Leicester are debt free.

 

[Triggaaar]

The FL should focus their effort on seeing that clubs remain solvent and not stifle it of "investment"

I'd think this is a good way for the FA to keep clubs solvent. If they're allowed to make huge losses, and then go into administration when it doesn't work out, how can the FA stop it?

 

[Lady Whistledown]

If Bolton are a good example then so are the Albion. Bolton are being bankrolled by Eddie Davies in the same way we are by Tony Bloom. Nearly all the money Bolton owe is to Davies (or a company he controls) in the same way we own Bloom.

The typo in that is inadvertently brilliant

 

[Kalimantan Gull]

The one problem I have with FFP - well, the MAIN problem, there are a few - is that once it at settles down and is being adhered to, it will basically sort clubs out by their potential fan base size.

Follow a small club? You won't ever progress higher than the lower end of Championship unless the club charges £50 a ticket because the attendances will be smaller, advertising smaller, merchandise sales smaller etc etc.

Why SHOULDN'T someone be able to fund the progress of a traditionally smaller club if that is what they want to do with their money?

I'm with you on that. When I was younger I imagined that if I won big on the lottery I'd give a massive donation to the Albion - but I wouldn't be allowed to now because it would breach FFP.

If someone wants to give 100 million to a club they should be able to. Its when they lend 100 million that the problems start.

 

[Guy Fawkes]

It's a matter of opinion but I think it's a totally shit start!! It was voted in and will now be ignored by some and likely challenged. Even if it weren't it's a totally blunt instrument and half baked. It's not just picking holes I see it as a huge backwards step for the game outside the Prem making the chasm between the Leagues and premiership even wider

I don't think there should be competing ideas but if it had been thought through better from the start and the basic philosophy was to prevent clubs going into administration and living within their means then an approach that limited borrowing to sustainable levels would have been fairly easy to construct.

The effects of FFP are already being felt in that player wage demands are falling which is one of the main aims of FFP

If this effect is to have a comparable squad in terms of strength and depth to the squad you had before FFP but are paying less in wages and therefore more likely to limit losses / break even then how is it a bad thing?

If the players at the top of the game find that clubs can't afford to pay them as much they have to drop their wage demands in order to get a decent club or those clubs will have to have smaller squads in order to cap their wage bill. The Albion have already said that wage demands are falling because of FFP and what this does is give some power back to the clubs and away from the players and their inflated wage demands.

 

[Gwylan]

I'm with you on that. When I was younger I imagined that if I won big on the lottery I'd give a massive donation to the Albion - but I wouldn't be allowed to now because it would breach FFP.

If someone wants to give 100 million to a club they should be able to. Its when they lend 100 million that the problems start.

I don't think FFP does stop you doing that. I think it only stops you doing it if you're an owner (or connected with an owner). I await to be corrected on this by El Pres or another bean counter, but I'm sure donations from ordinary members of the public are OK

 

[El Presidente]

I don't think FFP does stop you doing that. I think it only stops you doing it if you're an owner (or connected with an owner). I await to be corrected on this by El Pres or another bean counter, but I'm sure donations from ordinary members of the public are OK

You could easily contribute £100m to the club if you're not a significant shareholder. Sponsorship deal, naming rights for the training ground.

FFP is full of holes anyway, just take a look at ********** **** or ***

 

[Ernest]

FFP is a waste of time just let natural forces sort things out, the prime example is Portsmouth that is a much better sanction than FFP

 

[gordonchas]

I really think you are missing the point. Take a look at Vincent Tan's wikipedia page http://en.wikipedia.org/wiki/Vincent_Tan, just to get a flavour of his business interests. He is a big fish in Malaysia, with close links to prominent politicians. how does he protect his money (especially if the politicians fall out of favour), grow his influence and satisfy his ego ? Not by turning Cardiff City into a model of financial propriety. You need to look at this more like a local businessman who has a Corporate Box at the Amex, or membership at an exclusive golf club. A waste of money when looked at in isolation, but when you consider all the deals that can be done on the back of this, it starts to make more sense.

I'm confused from your posts as to whether you're in favour of this or against it?

FFP is supposed to prevent owners using clubs for ulterior motives - a response to Abramovic. Whether it does so is a different talking point, but over the last 10 years there has been only one football club on the planet consistently making a surplus, and that is ostensibly fan-owned and (almost) in a unique position compared with anyone else.

Whatever these owners are getting out of their involvement, and I agree they are all after something - though in most cases in won't be money as that's a fools paradise - they are certain to leave their clubs in a parlous financial state because not one of them can make a profit.

I laugh smugly every time a new Premier League TV deal is announced as all this does is raise the stakes further, leaving the overwhelming majority of clubs with unpayable liabilties just a short distance into the future.

WBA are the only English club I can think of who have managed the ups and downs well, but since the last time they were relegated their wage bill has increased dramatically so it will be a big test for them as well should they find themselves in the Championship next season.

Leicester, and any number of clubs like them, are playing casino-football and the outcome will be just the same as it is for any mug punter.

 

[Rugrat]

I'd think this is a good way for the FA to keep clubs solvent. If they're allowed to make huge losses, and then go into administration when it doesn't work out, how can the FA stop it?

THe FL are the (so called) governing body. They can, within reason, do whatever they want. Establishing what is reasonable in terms of borrowing and levels of acceptable debt shouldn't be beyond them. There are several regulated areas of business that have to work within much more stringent conditions

The effects of FFP are already being felt in that player wage demands are falling which is one of the main aims of FFP

If this effect is to have a comparable squad in terms of strength and depth to the squad you had before FFP but are paying less in wages and therefore more likely to limit losses / break even then how is it a bad thing?

If the players at the top of the game find that clubs can't afford to pay them as much they have to drop their wage demands in order to get a decent club or those clubs will have to have smaller squads in order to cap their wage bill. The Albion have already said that wage demands are falling because of FFP and what this does is give some power back to the clubs and away from the players and their inflated wage demands.

If FFP brings wages across the board down to manageable levels then I'll admit that I was wrong. I don't think it will and all the time more and more TV money is flowing in at the top of the pyramid (and staying there) then the commercial pressures across the board will mean that many will be chasing the prize.

 

[Rugrat]

If someone wants to give 100 million to a club they should be able to. Its when they lend 100 million that the problems start.

Right on both counts

 

[seagullsovergrimsby]

Surely it has got to the point where several clubs in The Championship group together and threaten legal action against the FL because they're following the rules and are being shafted by adhering to FFP.

 

[Triggaaar]

THe FL are the (so called) governing body. They can, within reason, do whatever they want.

They can set the rules that clubs have to live by in order to stay in the leagues, but if a club wants to go into administration, and right off it's huge debts, the FA/FL can't stop them. Sure, they can be thrown out of the league, but people like Archer wouldn't give a shit when they're writing off £millions of debt.

Establishing what is reasonable in terms of borrowing and levels of acceptable debt shouldn't be beyond them.

Yes, that's the sort of thing that makes sense. I'd think it's good for the game that a benefactor (like TB) can spend money on infrastructure though, so I can't see that stopping all debt would work. Having limits on the losses a club can make each year seems to me like a good way of doing it, no?

If FFP brings wages across the board down to manageable levels then I'll admit that I was wrong. I don't think it will and all the time more and more TV money is flowing in at the top of the pyramid (and staying there) then the commercial pressures across the board will mean that many will be chasing the prize.

Firstly, I don't think it needs to bring down wages for it to have worked. Many clubs already adhere to FFP, it's just the Leicester's and Forests we want to stop gambling so much. Secondly - yes, the prize will still be there, and boards/owners will still be reckless in chasing it, and it's up to the FL to stop it. They could make clubs fill in accounts a few times a year, and there could be rules on the amount of losses acceptable per quarter, so any club found to be breaking the rules could be deducted points. They could make it impossible for a club to get promoted by overspending.

 

[drew]

If a benefactor wants to gift the club or wrap it up as soon spurious sponsorship deal or naming rights or whatever then fine. Equally if other "investors" want to buy shares or equity that overvalues the club then why not?

It's only when clubs and owners use their assets to borrow or simply convince creditors that by lending they will get their money back when they get to the promised land, that things go wrong.

There's nothing unusual about borrowing against future revenues just as long as those revenues are fairly well set or guaranteed. I'd have thought the FL could act in a supervisory capacity to oversee clubs borrowings. It may well not be able to actually stop them but it has the ability to impose sanctions if a club exceeds it's reasonable borrowing capability.

I don't know, perhaps it's unworkable but I'm convinced FFP is not the way to go, far too simplistic

I don't think FFP is the panacea for football ills but I do believe it is the first step in the right direction.

If my memory serves me right Leicester are debt free.

So where did the money for their loss come from. Did their owner happily pump the money in and right it off immediately or did they have that money sitting in the bank to cover the loss! If neither of the above then surely they owe the money to someone?

 

[El Presidente]

So where did the money for their loss come from. Did their owner happily pump the money in and right it off immediately

The debt was converted into shares.

http://www.leicestermercury.co.uk/Future-City-secure-owner-wipes-huge-debts/story-20352762-detail/story.html

 

[seagullsovergrimsby]

The debt was converted into shares.

http://www.leicestermercury.co.uk/Future-City-secure-owner-wipes-huge-debts/story-20352762-detail/story.html

What a BLOOMing cheek

 

[Rugrat]

I'd think this is a good way for the FA to keep clubs solvent. If they're allowed to make huge losses, and then go into administration when it doesn't work out, how can the FA stop it?

They can set the rules that clubs have to live by in order to stay in the leagues, but if a club wants to go into administration, and right off it's huge debts, the FA/FL can't stop them. Sure, they can be thrown out of the league, but people like Archer wouldn't give a shit when they're writing off £millions of debt.

Yes, that's the sort of thing that makes sense. I'd think it's good for the game that a benefactor (like TB) can spend money on infrastructure though, so I can't see that stopping all debt would work. Having limits on the losses a club can make each year seems to me like a good way of doing it, no?

Firstly, I don't think it needs to bring down wages for it to have worked. Many clubs already adhere to FFP, it's just the Leicester's and Forests we want to stop gambling so much. Secondly - yes, the prize will still be there, and boards/owners will still be reckless in chasing it, and it's up to the FL to stop it. They could make clubs fill in accounts a few times a year, and there could be rules on the amount of losses acceptable per quarter, so any club found to be breaking the rules could be deducted points. They could make it impossible for a club to get promoted by overspending.

By setting the rules it would be establishing what levels of debt a club might reasonably incur. Like in any business that would be linked to the levels of income historically and projected (meaning sensible). Simply applying a one size fits all across all clubs in the same tier is one of the absurdities (imo)

Of course incurring debt to build infrastructure is "fine" as long as that build produces an asset that is sensibly valued (another thing the FL could/should police)

Limiting losses is fine but not as a single instrument .. as another poster said, if I won the lottery and wanted to give the club £10M as a gift I can't ... if I wanted to give the club £10M and take a % of the "equity" I can't ... if I want to give the club £10M and have my name on the shirt for a season I can't. All because the FL say it isn't sustainable? It may well not be repeatable but I fail to see how it isn't or wouldn't improve the overall financial well being of the club

My point wasn't about wages, it was a response to someone else. In terms of Forest I don't see them as reckless, unless that is their owners are saddling them with debt which I don't believe they are ... I don't like it but that's another thing.

Filing accounts quarterly would be too onerous and very volatile given the way finances work. As I said the FL should be more than capable of overseeing the lending/borrowing activity of 72 league clubs. I've been in Consumer and Commercial lending all my life and it really isn't difficult

Also debt can't be simply tied to losses. I can lend the club £100M and make it repayable in 10 years with no instalments .. job done. As far as I can see I stay within FFP rules (wait to be corrected) but in 10 years the club goes bust. How did FFP help?