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The #LUFC Breakfast Debate (Tue 16th July)

Discussion in 'Leeds United' started by ellandback, Jul 16, 2019.

  1. Morbid_White

    Morbid_White Well-Known Member

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    Transfer watch - I see that Andy Lonergan has joined Liverpool , albeit only for their 3 match pre season tour :)
     
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  2. Whitejock

    Whitejock Well-Known Member

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    Read this & everything I can get my hands on (inc Morbid's ramblings) & still don't see my fundamental question addressed, which is:

    "If you fail any of the tests which qualify you for a penalty, is that penalty applied year after year that you fail, or does the penalty somehow allow you to start from year 1 again"?

    Or put another way, more specifically, what do Birmingham have to do to avoid a 9 point deduction next season, if anything?

    I suspect the former, but it's just not clear. In fact, it's not specifically addressed in any of the documentation I've read. Could be I'm not reading the right stuff, or just too thick to understand what I've read, hence throwing it out here for wider input.
     
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  3. Morbid_White

    Morbid_White Well-Known Member

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    Aha sorry WJ, my response was in reply to LoL and thus related to our specific issue, and I never considered your question, so I'll try and address that now :)

    Short answer would be that whatever has been agreed with the EFL will supersede FFP, and Birmingham will be subject to a specific set of terms and FFP won't be applied until the club have satisfied the conditions imposed upon them.

    The way I've read it, and I agree it can be open to interpretation, then if having failed either test 2 and some sort of sanction has been set in place or having failed test 3, then the EFL are going to monitor that financial situation and put strict controls in place (how good those are, well we all know what the EFL are like). Thus the FFP tests are surpassed by whatever the EFL put in place for each individual club

    But if as in say the case of Birmingham, where we presume that the points deduction was due to failing the £39m losses over a 3 year period, I would suggest that those tests are now out the window, and that Birmingham will have been given a strict financial budget that they have to stick to, or suffer further sanction. I would imagine that budgetary controls and transfer embargoes will remain active for an indefinite period. Depending on those targets set by the EFL, this may be enforced for 2 years, 5 years etc.

    Even if Birmingham achieve profitability of say 1m per season over the next 3 years, then I anticipate that FFP will still not resume, until the issue regarding the total losses of 39m+ are rectified, as the idea between having the different totals between tests 2 and 3, is that owners are allowed to put in a cash injection as equity of 8m per season, this being a total of 24m, thus the difference between the figures for test 2 and test 3. Therefore in the case of Birmingham, I would expect that there has been no equity injection and would imagine that this would also be one of the conditions that the club find they have to comply with before any of the present sanctions are reduced. Obviously the sale of Adam will have some positive effect, but I still consider that the EFL will be keeping a close watch on Birmingham's financial situation over and above the normal FFP rulings.

    As to what further action is taken if Birmingham fail to adhere to whatever has been agreed, then who knows.

    I know the Mike Thornton article suggests that he considers they have been in breach of test 2, in which case the Adams sale will help alleviate that, although again I wouldn't expect them to return to just standard FFP monitoring, but still be under some further regulations, although there may well be a relaxation in some of the conditions.

    The cash injection for equity part is what has caused the uproar recently with both Derby and Sheff Wed, as the owners have basically injected cash (over and above what the rules allow for) by selling a club asset for what is believed to be over and above its market value. This is similar to the sponsorship loophole that was cracked down on a couple of years ago, which in effect would stop Radz putting 30m into the club ( if he wanted to and had it available) and claiming this is a sponsorship deal by ElevenSports.

    All of the above is of course my interpretation of the situation and could quite easily be 100% incorrect
     
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    Last edited: Jul 17, 2019
  4. Whitejock

    Whitejock Well-Known Member

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    I see what you're saying, but I still don't feel that I have the answer.

    So if you're correct & Birmingham, for instance, have to follow a harsh plan following their 9 point deduction, what are the sanction rules? Having been hit with the maximum penalty, surely further failure doesn't mean that they can drop down to the piddling sanction level?

    It may not be the best comparison, but if someone serving a life sentence for murder gets out on licence, they're chucked back into the jug to complete their sentence if they so much as fart out loud in public.

    That is the essence of my concern - once you get a points deduction & produce a plan that proves to be unsustainable, do you get thrown back in the jug (deduction again), or do you get a 30 bob fine every time you fart? In other words, is it worth taking a deduction to get you off the hook for a few years?
     
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  5. Morbid_White

    Morbid_White Well-Known Member

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    WJ I can only give you my interpretation of what those sanction rules may be, because they are not fixed, but a 9 point reduction is no where near the maximum penalty, that is more like receiving 3 points on your driving licence for speeding.

    Subsequent breaches of whatever is set in place between the EFL and the individual club concerned, can result in further point reductions, refusal to allow promotion, automatic relegation, expulsion from the league, levying of fines, whilst still remaining under a transfer embargo (this doesnt mean a club can't sign anyone, just that payment of transfer fees is restricted and also the clubs outgoings in players wages is capped, thus you get rid of someone on 10k per week, and you may be able to replace them with 2 free signings earning 8k per week between them, hence an overall reduction in outgoings of 2k per week as an example).

    Those sanctions above are ones that are applicable for failing Test 3, so a single figure points reduction is not that harsh and I can see no reason that those additional sanctions would not remain applicable, if a club subsequently fails to abide with any agreement resulting from a Test 3 failure.

    So if we take Birmingham as an example, the EFL say they need to make a 5m profit by the end of the season. They have made a good start with the sale of players for 20m. If come the end of the season they make a 4m profit, I see very little happening, other than they are set another target to reach the following season. However say they make a 5m loss, then that may incur another points deduction, a 10 million loss may incur a higher points deduction, anything higher than that, they may receive a sufficient points reduction to relegate them. What happened in the previous seasons no longer matters, its the individual agreement that they need to comply with. Alternatively they make a 15m profit this season, next season they are given a target of break even and if they achieve that they are given no specific target, but the EFl monitor their financials for the 3rd season running and if considered in order they return to normal FFP reporting.

    Once the EFL are satisfied that they no longer need to set the club individual conditions they return to falling within the boundaries of FFP again. This is not like the the days of administration where you receive your punishment and then carry on as if nothing had happened.

    This is my understanding of the FFP process, I am unable to prove it to you, and I may as easily be wrong, but given that under Uefa's FFP AC Milan have been banned from European competition, 2 Turkish clubs have had the number of players restricted to 22, and must break even at the end of the forthcoming season, these are the type of additional conditions (within their competition remit) that I could imagine the EFL setting for clubs failing test 3 of FFP, with appropriate sanctions for failing to adhere to those conditions.
     
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    Last edited: Jul 17, 2019
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  6. Doc

    Doc Well-Known Member

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    WJ as Morbid says the penalties are a variable (No Logic) sliding scale. Birmingham were expected to get a 12 point deduction because they were at the higher end of abuse and 12 points is the maximum for that offence, but they got leniency so only 9 points. Not rectifying the problem means an extra 3 point deduction. *I believe Villa could be sanctioned this season whilst in the Prem and will be interesting to see what they use for defence as promotion shouldn't be allowed to negate an offence because that would mean cheating paid off?

    We have to look at the transfers out too because we made £1.2m for Wilks, £900k for Halme, Dalby wouldn't be cheap to Watford so circa £500k, Ideguchi will be £500k, Ekuban will be £1m, and all these players come off the wage bill. Then there are players released who come off the wage bill like Sacko, Anita, LDB, Bouy etc and there are still players to go like Sarkic, Machuca, O'Kane, Pearce for cash so a big chunk of cash generated and reduced wages bill will be significant
     
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  7. MIGHTY

    MIGHTY Del-Boy

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    its a 3 year period WJ so I assume yes it will if this year and last 2 years take you over again <ok>
    if that's what your question relates to,

    if they lost 100m for eg: last year that's with them for 3 years,
    even if they make profit this year if its not enough to get you under the 39m for last 3 years you get hit again,
    but I assume the penalty will depend on by how much you are still over,
     
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  8. Doc

    Doc Well-Known Member

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    We also have at least another £2.5m cash coming in this month from the sale of Danny Rose who will go for a minimum of £25m and we get 10%
     
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  9. Eric Le Merde

    Eric Le Merde Well-Known Member

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    I read the UEFA rules and those of the EFL and it is my opinion that a club who were sanctioned, points deduction, in the previous season have to put forward a plan to show how they are going to get back to complying with FFP. If, by the 31st March in the following season, they aren't getting there then there are various options available to the EFL. If the sanctioned club are taking the piss and never intended to get back on track, then a further points deduction, they aren't getting any better nor getting any worse. points deduction or transfer ban. If they are sticking to their plan then probably coming out of the transfer ban but still under scrutiny. I could be wrong but that's how I read it but now for the caveat, it is all at the EFLs discretion.
     
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  10. Oldsparkey

    Oldsparkey Well-Known Member
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    This is entirely correct. The excess losses for which a penalty has been imposed are not automatically carried over.

    A sanctioned club has to demonstrate it has an approved immediate future plan in place and is complying with that submission to the EFL.

    Losses may still be incurred the following (and subsequent) season(s) that when added to the previous losses would again breach the limits, but a penalty would not be applied if the EFL considerd the club was acting correctly and complying with their submission to them.

    Any deviation from that agreed plan that the EFL considered to be a deliberate act to secure an advantage would be met with further sanctions.
     
    #30
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  11. Whitejock

    Whitejock Well-Known Member

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    I enjoyed reading that. It reassured me that the authorities do indeed stay on the case. Actually, I'll modify that - I'm reassured that they have the tools to stay on the case. Using them might be a whole new ball game, if you'll pardon the pun. :)
     
    #31
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  12. Whitejock

    Whitejock Well-Known Member

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    We've actually had a good pre-season in terms of sorting out the player pool, haven't we? Not got rid of all the dead wood yet, but have made massive inroads, particularly if you compare it to any other season. Very encouraging.
     
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  13. Whitejock

    Whitejock Well-Known Member

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    It's more complex than that. Just learned that overnight from Morbid's postings. I didn't realise there was so much to it now. I was just thinking it was the £39m test, but there's a lot more to it now. Not suggesting for a moment that I fully understand it though! :)
     
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  14. MIGHTY

    MIGHTY Del-Boy

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    You can make a loss 4th year yet show a gain if your loss is smaller than the 1st year, and visa versa you can show a loss if your 4th year profit is less than your 1st years, <doh> yes you are right it is very complex and confusing <laugh>

    <cheers> hope you are good m8ty
     
    #34
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