The Football League have voted to introduce Financial Fair Play regulations in all three of their divisions starting next season. The Championship has voted in favour of bringing in a break-even approach based on the UEFA Financial Fair Play Regulations. In League 1 and League 2, clubs will implement the Salary Cost Management Protocol (SCMP) that has been in use in the latter division since 2004/05. The SCMP broadly limits spending on total player wages to a proportion of each club's turnover. The regulations will be introduced next season on a gradual basis, but sanctions for non-compliance will not be put in place until the 2014-15 season. Under the regulations, from the 2014-15 season, clubs in the Championship who record total losses of over £6million will be hit with either a transfer embargo or a fine that could run in to the millions. The club in question will be fined if they are promoted to the Premier League and will be hit with a transfer embargo if they remain in the Championship. Owners of Championship clubs will be allowed to invest £6million next season, £5million the following and £3million the following season The decision to adopt Financial Fair Play regulations follows a strategic review by The Football League Board which identified the state of club finances as the organisation's greatest challenge. League Chairman, Greg Clarke, said: "On the pitch we have three exciting, competitive divisions with crowds at their highest levels for 50 years. But that success isn't necessarily being reflected on our clubs' balance sheets and we have to remedy that situation or face an uncertain future. "I'd like to commend the Championship clubs for the courageous decision they have taken today. It means that for the first time, all 72 Football League clubs have agreed to take concerted action towards controlling their financial destiny. "Whilst we cannot promise that these rules will deliver results overnight, they will begin to lay the foundations for a league of financially self-sustaining football clubs." Financial Fair Play in the Championship - Financial Fair Play (FFP) in the Championship will require clubs to stay within defined limits on losses and shareholder equity investment that will reduce significantly across a five season period. - Permitted losses will reduce from an acceptable deviation of £4m for 2011/12 to £2m by 2015/16, with additional investment in certain areas of club infrastructure being excluded (e.g. youth development and community programmes). - The permitted level of shareholder equity investment will reduce from £8m for the 2011/12 season to £3m by 2015/16. - Clubs will be required to provide annual accounts to The Football League by December 1, covering the previous playing season. - Failure to stay within the defined limits will lead to the imposition of sanctions. The sanctions will vary depending on whether the club was ultimately promoted to the Premier League, remained in the Championship or was relegated to League 1. - Clubs promoted to the Premier League will have to pay a 'Fair Play Tax' on the excess by which they failed to fulfil the Fair Play requirement ranging from 1% on the first £100,000 to 100% on anything over £10m. Any proceeds will be distributed equally amongst those clubs that complied with the FFP regulations for the season in question. - Clubs remaining in the Championship will be subject to a transfer embargo until they are able to lodge financial information to demonstrate they comply with the FFP regulations (either for the previous reporting period or a future reporting period). - Clubs relegated to League 1 will not be entitled to any payout derived from the Fair Play Tax and will be required to comply with the FFP rules in operation in that division. - 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 the first season in the Championship whilst not complying with the FFP regulations. - The first reporting period will be for the current playing season (2011/12), however sanctions will not be applied until the 2013/14 reporting period in order to give clubs a sensible period of transition. Financial Fair Play in League 1 and League 2 - League 1 and League 2, clubs have chosen to implement the Salary Cost Management Protocol (SCMP) first used in League 2 in 2004/05, although it will operate at different thresholds in each division. - The SCMP broadly limits spending on total player wages to a proportion of each club's turnover, with clubs providing budgetary information to The League at the beginning of the season that is updated as the campaign progresses. - Any club that is deemed to have breached the permitted spending threshold will be subject to a transfer embargo. Wherever possible, The League will seek to tackle the issue 'at source' by refusing player registrations that take clubs beyond the threshold. - At the beginning of the current season, League 2 clubs reduced the permitted spending threshold to 55% from 60% and this figure will continue to be operated next season. - League 1 clubs are currently operating a 'pilot' of the SCMP with clubs complying with a 75% threshold but with no sanctions being applicable this season. This threshold will reduce to 65% in 2012/13 and 60% in 2013/14 with sanctions (transfer embargoes) being applicable in both seasons.
OK so how close are we to compliance? Wonder if this will have an impact on number of foreign imports now that clubs are restricted in terms of wages.
"Championship clubs vote in favour of Financial Fair Play Championship clubs who record losses of over £6m will receive either a transfer embargo or a fine that could run into the millions from the 2014-15 season. Three of the 24 clubs voted against new regulations to limit investment from owners and curb total spending." BBC football website hope this will benefit us..........wonder who were the clubs who voted against??
So - when the Cash Converters sponsorship ends, could we be sponsored to a ridiculous level by Allam Marine? Isn't that what Lesta/ Man. City/ etc will do, to get around the restriction on investment?
That loophole will be closed shortly and I don't expect Allam Marine to be sponsoring us at a ridiculous level anyway.
I am hoping that, given the input we've had from the Allams and assuming we can get the high earners off our wage bill, that this is to our advantage - thoughts anyone?
There isnt a legal way of stopping it though. In goes down as income through advertising. You cant stop a club advertising. The finacial fair play doesnt really change much but it will help clubs keep their best players but it will allow Prem clubs to just take the best players without much competition
I didn't think, for one moment, that Allam Marine would be sponsoring us. I was more using it as an example, being concerned with that angle as a loophole. Can it effectively be closed?
Maybe it will be beneficial to us in the short/medium term, but it means we can never really dream of anything more than lower-mid-table Premier League football.
Is it percentage revenue based for the Championship? If so, are we at a disadvantage because we don't own our own ground, and any money generated by non footballing events I assume go to the SMC?
The Champions League is a UEFA competition, they can set whatever rules they want for entry into it. If they want to set a rule that says any club with a sponsorship deal three times the league average won't be allowed in, then that's exactly what they'll do(that was just an example, I've no idea what restrictions they do plan to put in place, but they've made it clear that they are going to take action to close the loophole).
What bit didn't you get? Apparently, the three clubs who voted against were Leicester, Cardiff and Doncaster.
The general basis will be that you can sell the advertising for what ever you want, but if the buyer of the advertising is a related company they will be allowed to exclude it from the FFP calculations. That way the trade laws are satisfied and there's no loophole. It's just the same as saying that expenditure on youth football and community projects won't count towards your expenditure because of the nature of the spending. I'd imagine Doncaster were against it because they're going to L1 and seem to prefer signing free agents on big money than paying a fee for someone on lesser wages. £5k/wk for 2 years plus a £500k transfer fee costs the same as £10k/wk for 2 years, only under the new rules the 2nd one costs twice as much.
