Interesting - lifted from BBC site: http://www.bbc.co.uk/sport/0/football/29562047 Meanwhile, Uefa said it will consider changing its Financial Fair Play (FFP) rules to take into account the amount of debt held by clubs. Currently, debt is not factored into FFP calculations, although interest payments on debt are considered. "Certainly, the question of debt is something that can be put on the table," said Infantino. Uefa introduced FFP in 2011 to prevent clubs competing in European competitions from spending beyond their means and stamp out what president Michael Platini called "financial doping". In May, Manchester City were fined £49m - £32m of which was suspended - and had their Champions League squad capped to 21 players for breaching FFP rules. As one of the few clubs that have little or no debt - this could work significantly in our favour if brought in - although I suspect there will be a serious watering down of it, and prolonged timescales for clubs to clear outstanding debt.
If they can categorize the debt by class and have different treatments and rules then that would work well. For example, debt from the financing of player transfers introduces an element of systemic risk into the industry. In this case, one club's debt (the buying club) is another club's risk and deferred revenue (the selling club). If the buying club over extends, has compromised cash flow and defaults on payment, this then harms the selling club compromising their cash flow and possibly their ability to service their debt, and so the cascade begins. All financial obligations on a transfer between clubs should be closed and settled within 30 days of the transfer at a maximum. Debt relating to fixed assets and infrastructure - stadiums and facilities for training and academies, etc - should be treated differently. This is debt secured by a tangible asset and therefore is less "riskier" than other forms etc. and the club retains the tangible value of the asset on the balance sheet which has a useful life, unlike a player's contract which depreciates rapidly to zero.
I agree, Yankee. 'Fluid' debts like the ones you describe should definitely be included, and that would put a lot of clubs in trouble imo.
With all the money in football then no club should be in debt. you get into debt by spending money you have not got and clubs who go beyond the level of reasonable debt should be relegated or thrown out of the league. Clubs who knowingly put themselves into debt who can never balance the books in a season should also be relegated. This will stop clubs buying players they can't afford and put them on obscene contracts. Clubs who show at the end of every season that they have assets they cannot control and cannot balance in their books shall be relegated. It's no good imposing a fine as they can't pay the debt they have. you will find that over a period of time football clubs will get their clubs in order and football will become cheaper in real terms for the most important asset every club has...it's fans...
I'd agree with what's been said. Player transfer debts are a huge risk and seem to have a massive ripple effect through clubs. If you can't afford to buy a player at that moment, there should be no option to defer payments with the selling club. Either pay upfront or take a bank loan. This 'buy now, pay later' scheme that seems to operate between clubs during player transfers has to stop as there is no guarantee that the buying club will even have the money in 12 months. While I think monks hero's post is a little heavier handed than needed, I agree with the principle. A club should be able to end the season without having made a loss on player purchases. If you want to spend more than you sell, then it should have to come from profit generated by the club (sponsorship, retail, TV money etc.). If you're in debt, you should have to sell a player to buy one/two/however many. Also agree that debts to build a new stadium should be treated differently. They are solid investments that should always pay for themselves over time.
Debt is mainly there because of inflated transfer fees and wages, and clubs paying it to gain an unfair advantage, so I hope these new inclusions to the FFP rules goes ahead, it will take away the unfair advantage of your Chelski and Citeh type clubs hopefully!...
Certain debts like bricks and mortar, fixtures and fittings are an asset and can always be sold at a profit should any club go into liquidation and should not be counted in the actual seasonable running of the club. It's the spending on players and the wages that should be brought into line because if these dealings are generating debt in an excessive manner then this is the time to first warn clubs that they must balance the books during the season or face the consequences....If you or i or any other business were to generate debts like some clubs do then we would not be in business for very long. the same thing should apply to sport and football in general who has had it easy for far too long....
I should add by the way that in the first instance then you cant implement a rule like this straight away as clubs must be given a certain amount of time to get their house in order but after for instance 3 years then the rule should come into force...
