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Spending cap

Discussion in 'Newcastle United' started by Albert's Chip Shop, Apr 29, 2024.

  1. Tash | All hail Almiron

    Tash | All hail Almiron Well-Known Member

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    I think the new plan was if you go over the limit, there's no points deduction, it's just a luxury tax, where you have to pay a fee for going over the limit but in reality it will be worth it because of what it is gained.
     
    #41
  2. Wontspendcantspend

    Wontspendcantspend Well-Known Member

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    bob-mortimer-wilty.gif
     
    #42
    FadgewackeR and Magdad like this.
  3. Tash | All hail Almiron

    Tash | All hail Almiron Well-Known Member

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    Why?

    It would basically give us unlimited spending like city has.

    FFP as it is now benefits those who could spend insane amounts when there were no rules and built their empire already.
     
    #43
  4. Wontspendcantspend

    Wontspendcantspend Well-Known Member

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    Because it's not the luxury tax suggestion it's something else but yeah let's hope it goes ahead..I'll believe it when it's official and all the rules and regulations can be assessed properly.
     
    #44
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  5. Magdad

    Magdad cult leader

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    Go read up on it, slap yourself in the face for making yourself look thick as **** and 6 weeks behind, then come back <doh>
     
    #45
    Wontspendcantspend likes this.
  6. Obi Wan

    Obi Wan keeper of the peace
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    It's Tash. I would suggest he washes his hands first before slapping himself in the face.
     
    #46
  7. Judge Death

    Judge Death Well-Known Member

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    It could result in a sticky situation ....
     
    #47
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  8. Maximin Effort

    Maximin Effort Well-Known Member

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    Shame this is not how it's going to work in it's entirety if voted in at the June AGM.

    In 25/26 season there are going to be 2 financial limitations applied in order
    1. Squad cost control:
      • Clubs in European competitions can spend 70% of their revenue on squad costs (wages of players and head coach/manager, agent fees, compensation for fired managers, amortised transfer fees)
      • Clubs not in European competitions can spend 85% of their revenue on squad costs (wages of players and head coach/manager, agent fees, compensation for fired managers, amortised transfer fees)
    2. Anchoring
      • No club may spend more than a multiple of the 20th's Clubs television revenue. (Currently thought to be 4.5 to 5 times but not confirmed)
    What this means for us:
    We are required to comply with the 1st rule. So if in Europa or Conference we can spend 70% of our total revenue on squad costs.
    This figure will not be anywhere near 4.5x the bottom clubs tv revenue (£463.5m based on Southamptons TV revenue last year), so are not affected by the second rule (Unless we increase commercials by multiple hundreds of millions).

    The reason Man C & Man U voted against this is because 70% or their total revenue is higher or very close to 4.5x the lowest clubs tv revenue. Therefore they would have the amount of money they can spend reduced to that figure.

    This means the league is slightly more egalitarian in that it hamstrings the major revenue earners a bit, it doesnt really increase lower teams spending power by much.
    No idea why Villa voted against it...
     
    #48
    Last edited: May 1, 2024
  9. Wontspendcantspend

    Wontspendcantspend Well-Known Member

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    Villa voted against
     
    #49
  10. Maximin Effort

    Maximin Effort Well-Known Member

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    Oops, that's what I meant. - to the edit function!
     
    #50

  11. Beardsley's Shimmy

    Beardsley's Shimmy Well-Known Member

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    So we still need to ramp up revenue but if we fail to get Europe then we can spend more to hopefully get in the next year?
     
    #51
  12. cronemeister

    cronemeister Well-Known Member

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    Simple answer to this is cos they are ****s!
     
    #52
  13. Obi Wan

    Obi Wan keeper of the peace
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    Like their fans.





    :bandit:
    <waits for Chaos to react>
    :emoticon-0158-time:
     
    #53
  14. cronemeister

    cronemeister Well-Known Member

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    Revenue for year ending in June 2023 was £250m, so assume that’s maybe £300m this season due to champions league and increased tv money perhaps (roughly) that means we can spend £210m. Obviously if the revenue figure is higher next season it will be a bit more but as has been said, it would need to increase by hundreds of millions (double basically) before we were close to the anchoring figure in rule 2.

    One thing I’m still not clear on, is say we have £200m for the first season of these new rules and say we sell Bruno and Isak that summer for £200m (total)…does that mean we have £400m to spend or would we not be allowed to count that as it was not part of the calculation from previous year etc?
     
    #54
  15. boxheed

    boxheed Well-Known Member

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    I’ve read through everything I can find out about this and have reached this conclusion.
    It’s just in fact one of Mick’s new hats
     
    #55
  16. Maximin Effort

    Maximin Effort Well-Known Member

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    If we follow UEFA's model then profits from player sales from the the 36 months to the 31 December during the licence season, prorated to 12 months count as revenue in.

    https://documents.uefa.com/r/UEFA-C...cle-92-Calculation-of-squad-cost-ratio-Online
     
    #56
  17. FadgewackeR

    FadgewackeR Well-Known Member

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    Squad Cost Control Ratio 2022/23
    Although the Premier League has not officially stated how much it will apply as its limit for the squad cost control ratio, it has been widely reported that this will be 85% of a club’s adjusted revenue, though this will be reduced to 70% for clubs playing in UEFA competitions, as they benefit from higher revenue.

    It does seem slightly unfair that clubs in the Europa League and Europa Conference will have the same ratio as those in the Champions League, as the earnings from Europe’s leading tournament are much more lucrative. However, this is to ensure alignment with UEFA’s own 70% target.

    As an example, Manchester City’s adjusted revenue is £834m and they are playing in a UEFA competition, so their spending limit for the relevant squad costs would be £584m, i.e. £834m x 70%.

    upload_2024-5-10_9-11-27.png

    This highlights one of the issues with the spending limit, as the elite clubs end up with a much higher budget than aspirational clubs. For example, Aston Villa and Newcastle United could only spend £236m and £216m respectively, which is around £350m less than City.
     
    #57
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  18. FadgewackeR

    FadgewackeR Well-Known Member

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    upload_2024-5-10_9-14-7.png

    It also shows that for the vast majority, the spending cap linked to TV income is effectively irrelevant, as their budget under squad cost control is already much lower than the mooted spending cap.

    So, if we take Arsenal, their squad cost control budget is £337m (i.e. £481m adjusted revenue x 70%), which is nearly £200m less than the theoretical £518m spending cap (the lowest club's TV money x 5).

    Personally, I don't think this whole thing will help much, other than to potentially stop City getting further away on the wages / fees vs revenue.
     
    #58
    Last edited: May 10, 2024
  19. Geordie Ginola

    Geordie Ginola Well-Known Member

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    What does squad cost budget cover though? Does it cover just transfer fees or does it cover wages and agents fees etc?
     
    #59
  20. FadgewackeR

    FadgewackeR Well-Known Member

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    Squad Cost Control Ratio
    The spending cap only acts as a backstop to the squad cost control ratio.

    This ratio is calculated as the sum of:

    • Wages of players

    • Player amortisation

    • Agent fees and cost of other intermediaries
    Divided by the sum of:

    • Operating revenue (adjusted for fair value, if required)

    • Profit from player sales
     
    #60

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