Richard Tiltmans Shin Pad
Rustingtons' Mr Guiness
Taken from : http://www.financialfairplay.co.uk/scmp.php re FFP in League 1 - probably need [MENTION=31]El Presidente[/MENTION]'s comfirmation though.....
Clubs in the League 1 and League 2 operate within a Spending Constraint framework termed Salary Cost Management Protocol (SMCP). SCMP limits spending on player wages to a percentage of club Turnover. In League 1 clubs can spend a maximum of 60% of their turnover on wages - in League 2, the limit is 55%. There are no restrictions (in themselves) on the amount a club can lose or spend on transfer fees.
The process is interactive with clubs providing the Football League with projections for the spending for the coming season. During the season the clubs provide regular updates on their Turnover and wage bill. Any club that is forecasting a wage spend within 5% of the figure will be scrutinised more closely. Where a club is on course to exceed the limits, the Football League will apply a Transfer Embargo. Crucially, a club doesn't have to overspend to incur the embargo, it only needs to shown to be heading for an overspend. This interactive approach enables clubs to increase their wage bill if their circumstances improve - a successful cup run will generate increased income and the Football League may be able to sanction additional wage spend. Because SCMP doesn't rely on the retrospective scrutiny of club accounts, it is also extremely effective at stopping overspend before the spending actually occurs (something that has been a problem for the Championship's version of FFP).
The Football League's website's doesn't go into a great deal of detail about how they operate. However they have responded to enquiries and confirmed a number of areas that help us to better understand the rules.
Relegated clubs
The rules apply to all clubs and there is no moratorium for clubs relegated from the Championship. However, Transitional Arrangements are in place whereby clubs are allowed to exclude the wage costs of all players that the club signed pre September of the relegation season, if they were signed on contracts in excess of 3 seasons.
Turnover definition
Under the SCMP rules, the definition of 'Turnover' is particularly important as Turnover is used to determine the maximum wage-spend. Within a traditional accounting perspective, there are usually only three elements of turnover:
• Match-day Income
• Commercial Income (such as sponsorship)
• TV revenue (and any 'merit payments' based on league position)
However the Football League use a is broader definition of Turnover. Crucially, the FL Turnover figure includes donations from the owners to the club and injections of equity. Loans from club owners are understandably not included in the Turnover figure as these would result in growing club debts. up club debts. 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.
Clubs in the League 1 and League 2 operate within a Spending Constraint framework termed Salary Cost Management Protocol (SMCP). SCMP limits spending on player wages to a percentage of club Turnover. In League 1 clubs can spend a maximum of 60% of their turnover on wages - in League 2, the limit is 55%. There are no restrictions (in themselves) on the amount a club can lose or spend on transfer fees.
The process is interactive with clubs providing the Football League with projections for the spending for the coming season. During the season the clubs provide regular updates on their Turnover and wage bill. Any club that is forecasting a wage spend within 5% of the figure will be scrutinised more closely. Where a club is on course to exceed the limits, the Football League will apply a Transfer Embargo. Crucially, a club doesn't have to overspend to incur the embargo, it only needs to shown to be heading for an overspend. This interactive approach enables clubs to increase their wage bill if their circumstances improve - a successful cup run will generate increased income and the Football League may be able to sanction additional wage spend. Because SCMP doesn't rely on the retrospective scrutiny of club accounts, it is also extremely effective at stopping overspend before the spending actually occurs (something that has been a problem for the Championship's version of FFP).
The Football League's website's doesn't go into a great deal of detail about how they operate. However they have responded to enquiries and confirmed a number of areas that help us to better understand the rules.
Relegated clubs
The rules apply to all clubs and there is no moratorium for clubs relegated from the Championship. However, Transitional Arrangements are in place whereby clubs are allowed to exclude the wage costs of all players that the club signed pre September of the relegation season, if they were signed on contracts in excess of 3 seasons.
Turnover definition
Under the SCMP rules, the definition of 'Turnover' is particularly important as Turnover is used to determine the maximum wage-spend. Within a traditional accounting perspective, there are usually only three elements of turnover:
• Match-day Income
• Commercial Income (such as sponsorship)
• TV revenue (and any 'merit payments' based on league position)
However the Football League use a is broader definition of Turnover. Crucially, the FL Turnover figure includes donations from the owners to the club and injections of equity. Loans from club owners are understandably not included in the Turnover figure as these would result in growing club debts. up club debts. 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.
