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Fans Sites meeting with the Club: FFP / P&S questions answered

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  • Fans Sites meeting with the Club: FFP / P&S questions answered

    WATRB and other fans sites met with Lee Hoos last week to discuss FFP and to hopefully clear up some of the ongoing confusion and questions surrounding the topic. The following is what we gleaned from the meeting. Hope it's helpful. Any further questions, just ask below or they can be raised at the forthcoming Fans Forum on the 22nd of this month.

    FFP regulations limit the amount of money clubs can lose over any rolling three year period. Therefore they limit the amount of cash investment shareholders can inject into the business.

    In the Championship the regulations allow for losses of £39million over a rolling three year period (i.e. an average of £13million each season over three consecutive seasons).

    For example:

    £13m Year 1 + £13m Year 2 + £13m Year 3 = £39m

    Alternatively:

    £17m Year 1 + £13m Year 2 + £9m Year 3 = £39m

    These losses are called 'permissible losses'.

    In the Premier League the regulations allow for losses of £105million over a rolling three year period (i.e. an average of £35million each season over three consecutive seasons).

    For example:

    £35m Year 1 + £35m Year 2 + £35m Year 3 = £105m

    Alternatively:

    £50m Year 1 + £35m Year 2 + £20m Year 3 = £105m

    A club can only apply to have certain items deducted from the permissible losses such as Community Trust donations, investment in Academy and Youth Development.

    These items are called 'exceptional items'.

    So, if a club spends three years in the Championship, its permissible losses are £39million over the three year reporting period. (£13m Year 1 + £13m Year 2 + £13m Year 3. Total: £39m)

    If a club spent Year 1 in the Championship, Year 2 in the Premier League and Year 3 in the Championship, then its permissible losses would be £61million. (£13m Year 1 + £35m Year 2 + £13m Year 3. Total: £61m)


    Example of how FFP Profitability and Sustainability works

    A club spends three years in the Championship, its permissible losses are £39million.

    Say for example, it had revenue in Year 1 of £25m, Year 2 of £25m and Year 3 of £25m, it would report £75m in total revenue for the three year period.

    Suppose costs and expenses to the club in Year 1 were £50m, Year 2 was £40m and Year 3 was £30m, it would report total costs of £120m

    So the costs of £120m would exceed the revenue of £75m by £45million.

    And if the club spent £2m per year in each of these seasons on 'exceptional items' (such as Academy or Community Trust), they would deduct £6m from the permissible losses (£2m x 3 years = £6m), bringing the FFP reporting figure to £39m. (£45m total loss over 3 years less the £6m in exceptional items = £39m).

    The club would therefore be compliant with the Profitability and Sustainability Regulations under this scenario.


    How can the Club stretch its resources and maintain compliance with Profitability and Sustainability?

    Simply put, the two ways to stretch a Club's financial ability to compete within the confines of Profitability and Sustainability Regulations are to:

    Cut costs and expenses AND Increase revenues.

    The days of buying the players everyone wants and then shareholders writing a cheque for the difference above the Revenue streams of the Club are over under the Profitability and Sustainability Regulations.


    Examples of stretching the resources

    SALE OF A PLAYER

    This has a dual effect. The savings from the player's wages would help increase the available headroom as would the lump sum received from the player sale.

    For instance, if Player X was earning £1million per year and was sold at the beginning of the season for £10million, the Club would record an additional £10m in revenue and would have a reduction of £1m in expenses.

    So if the sale accrued in Year 3 of the previous example, instead of recording £25m in revenue and £30m in costs, the Club would record £35m in revenue and £29m in costs in Year 3, thereby giving a Profitability and Sustainability result of £28million for that period.

    This would provide the club with additional resources to invest into the Club and the playing squad.

    Obviously increases in revenue streams (i.e. tickets, retail, commercial revenue) increases the resources available to invest into the Club and the squad.

    Correspondingly, every pound we can save goes to increasing the FFP headroom and the resources available to invest into the squad and the Club.


    What happens if we breach FFP?

    There are no specifically prescribed penalties for breach.

    Breaches are referred to an independent disciplinary commission who have a wide range of sanctions they could issue based upon the facts of the case.

    Sanctions could be anything from a slap on the wrist to a fine, points deduction or expulsion from the League.

    We all have a part to play and we can all help.

  • #2
    With regard to an explanation of the January transfer embargo (not covered above) and its impact on the club, Lee Hoos explains it here at 3:10 mins into the interview: https://www.qpr.co.uk/videos/intervi...s-ffp-outcome/

    Comment


    • #3
      For those who can't access the above video, a basic transcript:

      "No blanket ban on signing players in January but you are limited on what you can do:

      Example 1: Paul Smyth - an u23player signed in January a couple of years ago, but he didnt play for us for the remainder of that season. He gets his feet on ground then makes his debut the following season - which would fit right into the business model.

      Example 2: Signing players if we've sold someone or they've left - We can then bring in another player, but it can only be at 75% of the exiting player's salary, or £600,000, whichever is the lesser amount. So say you had someone on £10k a week who was sold or left, you could then bring in a player on £7500k a week. It would also have to be a free transfer.

      Then when the transfer window opens again in the summer its a clear deck and you're free to do your normal course of business." (As per the OP)
      Last edited by Stanley; 16-11-2018, 11:02 AM.

      Comment


      • #4
        Originally posted by Stanley View Post
        WATRB and other fans sites met with Lee Hoos last week to discuss FFP and to hopefully clear up some of the ongoing confusion and questions surrounding the topic. The following is what we gleaned from the meeting. Hope it's helpful. Any further questions, just ask below or they can be raised at the forthcoming Fans Forum on the 22nd of this month.

        FFP regulations limit the amount of money clubs can lose over any rolling three year period. Therefore they limit the amount of cash investment shareholders can inject into the business.

        In the Championship the regulations allow for losses of £39million over a rolling three year period (i.e. an average of £13million each season over three consecutive seasons).

        For example:

        £13m Year 1 + £13m Year 2 + £13m Year 3 = £39m

        Alternatively:

        £17m Year 1 + £13m Year 2 + £9m Year 3 = £39m

        These losses are called 'permissible losses'.

        In the Premier League the regulations allow for losses of £105million over a rolling three year period (i.e. an average of £35million each season over three consecutive seasons).

        For example:

        £35m Year 1 + £35m Year 2 + £35m Year 3 = £105m

        Alternatively:

        £50m Year 1 + £35m Year 2 + £20m Year 3 = £105m

        A club can only apply to have certain items deducted from the permissible losses such as Community Trust donations, investment in Academy and Youth Development.

        These items are called 'exceptional items'.

        So, if a club spends three years in the Championship, its permissible losses are £39million over the three year reporting period. (£13m Year 1 + £13m Year 2 + £13m Year 3. Total: £39m)

        If a club spent Year 1 in the Championship, Year 2 in the Premier League and Year 3 in the Championship, then its permissible losses would be £61million. (£13m Year 1 + £35m Year 2 + £13m Year 3. Total: £61m)


        Example of how FFP Profitability and Sustainability works

        A club spends three years in the Championship, its permissible losses are £39million.

        Say for example, it had revenue in Year 1 of £25m, Year 2 of £25m and Year 3 of £25m, it would report £75m in total revenue for the three year period.

        Suppose costs and expenses to the club in Year 1 were £50m, Year 2 was £40m and Year 3 was £30m, it would report total costs of £120m

        So the costs of £120m would exceed the revenue of £75m by £45million.

        And if the club spent £2m per year in each of these seasons on 'exceptional items' (such as Academy or Community Trust), they would deduct £6m from the permissible losses (£2m x 3 years = £6m), bringing the FFP reporting figure to £39m. (£45m total loss over 3 years less the £6m in exceptional items = £39m).

        The club would therefore be compliant with the Profitability and Sustainability Regulations under this scenario.


        How can the Club stretch its resources and maintain compliance with Profitability and Sustainability?

        Simply put, the two ways to stretch a Club's financial ability to compete within the confines of Profitability and Sustainability Regulations are to:

        Cut costs and expenses AND Increase revenues.

        The days of buying the players everyone wants and then shareholders writing a cheque for the difference above the Revenue streams of the Club are over under the Profitability and Sustainability Regulations.


        Examples of stretching the resources

        SALE OF A PLAYER

        This has a dual effect. The savings from the player's wages would help increase the available headroom as would the lump sum received from the player sale.

        For instance, if Player X was earning £1million per year and was sold at the beginning of the season for £10million, the Club would record an additional £10m in revenue and would have a reduction of £1m in expenses.

        So if the sale accrued in Year 3 of the previous example, instead of recording £25m in revenue and £30m in costs, the Club would record £35m in revenue and £29m in costs in Year 3, thereby giving a Profitability and Sustainability result of £28million for that period.

        This would provide the club with additional resources to invest into the Club and the playing squad.

        Obviously increases in revenue streams (i.e. tickets, retail, commercial revenue) increases the resources available to invest into the Club and the squad.

        Correspondingly, every pound we can save goes to increasing the FFP headroom and the resources available to invest into the squad and the Club.


        What happens if we breach FFP?

        There are no specifically prescribed penalties for breach.

        Breaches are referred to an independent disciplinary commission who have a wide range of sanctions they could issue based upon the facts of the case.

        Sanctions could be anything from a slap on the wrist to a fine, points deduction or expulsion from the League.

        We all have a part to play and we can all help.

        Comment


        • #5
          FFP.........Forget Fooking Promotion

          Comment


          • #6
            With Boro interested in signing Freeman again in Jan it I think we shoukd increase his contract now for the remaining 18 months to £20k a week. When he leaves for a better shot at promotion at least we can then bring in a replacement at a cap of £14k a week.

            Comment


            • #7
              Originally posted by SheepRanger View Post
              With Boro interested in signing Freeman again in Jan it I think we shoukd increase his contract now for the remaining 18 months to £20k a week. When he leaves for a better shot at promotion at least we can then bring in a replacement at a cap of £14k a week.
              He then sees the full contract out and we are skint......

              Comment


              • #8
                Originally posted by loftbalcony View Post

                He then sees the full contract out and we are skint......
                He was pissed off by all accounts that the Boro deal wasn't accepted in the summer. He'll go just for increased chance of prem football next summer. Increase it to £17k then, which Boro will better, so we can bring someone in on £12k. If he does stay the increase will be offset by those going out on loan.

                Comment


                • #9
                  He must be worth 10+
                  QPR
                  Best team in the world
                  Sort of

                  Comment


                  • #10
                    Originally posted by Shania View Post
                    He must be worth 10+
                    Nah. We wanted £7m in the summer and they offered £3m. Another 25% 9f his contract has gone since so £5m will see him gone.

                    Comment


                    • #11
                      Originally posted by SheepRanger View Post

                      Nah. We wanted £7m in the summer and they offered £3m. Another 25% 9f his contract has gone since so £5m will see him gone.
                      It that is true I despair.
                      QPR
                      Best team in the world
                      Sort of

                      Comment


                      • #12
                        Originally posted by SheepRanger View Post

                        He was pissed off by all accounts that the Boro deal wasn't accepted in the summer. He'll go just for increased chance of prem football next summer. Increase it to £17k then, which Boro will better, so we can bring someone in on £12k. If he does stay the increase will be offset by those going out on loan.
                        Pulis plays Centre backs in every position so Freeman has no chance....

                        Comment


                        • #13
                          Originally posted by Stanley View Post
                          [COLOR=#0000CD]

                          SALE OF A PLAYER

                          This has a dual effect. The savings from the player's wages would help increase the available headroom as would the lump sum received from the player sale.

                          For instance, if Player X was earning £1million per year and was sold at the beginning of the season for £10million, the Club would record an additional £10m in revenue and would have a reduction of £1m in expenses.

                          So if the sale accrued in Year 3 of the previous example, instead of recording £25m in revenue and £30m in costs, the Club would record £35m in revenue and £29m in costs in Year 3, thereby giving a Profitability and Sustainability result of £28million for that period.


                          on player sales... i'm not sure hoos is completely correct here... we can use the profit on a sale of a player (fee received less recorded book value) rather than the gross fee received (if recorded book value is zero, then the two figures are the same, obviously). hopefully, he was just trying to keep thing simple...

                          https://www.efl.com/-more/governance...y-regulations/

                          Comment


                          • #14
                            "IN the first of a new series designed to address some of the frequently asked questions about the club, QPR CEO Lee Hoos breaks down Financial Fair Play.

                            Hoos explains what the implications of Financial Fair Play are for the club and talks about how the club plans to tackle these issues going forward.

                            Click HERE to download the full FFP Profitability and Sustainability Regulations.

                            Warning: The following content may cause drowsiness. Do not attempt to drive or operate heavy machinery immediately after viewing. (On a serious note, if you want to learn about FFP itís worth a watch.)"

                            Video: https://www.qpr.co.uk/videos/feature...ial-fair-play/

                            Comment

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