City didn't vote for it
Football Finance
- Thread starter King Binny
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Even if it started late Summer before the season got under way it would probably be months before a decision is made...
Currently the rules are you can make losses of c100m cumulatively over 3 years.
Effectively they are ripping that up and replacing it with an expenditure cap of c.500m spending per annum. (Tbc).
It means clubs like Everton and Forest probably wouldn't have got points deductions in that scenario (however will have likely gone bust instead if they even got near that limit). But teams like City will need to get even more creative in their accounting.
Believe Utd voted against it due to them wanting to build a shiny new toilet.
The vote was merely FOR a spending cap. There was no cap mechanism in the proposal. Apparently a proposal for the Cap mechanism will be made in June and voted on at a later date.
It seems the principal here is to limit the higher earning clubs whilst giving the lower earning clubs a chance to spend to catch up for a limited period. The tricky thing I imagine will be aligning the rules for higher earning clubs in UEFA competitions vs those in domestic competition only
It seems the principal here is to limit the higher earning clubs whilst giving the lower earning clubs a chance to spend to catch up for a limited period. The tricky thing I imagine will be aligning the rules for higher earning clubs in UEFA competitions vs those in domestic competition only
Quite a lot of my take on this has already been posted above.
Firstly, as @dee says, the vote was only to discuss developing a spending cap - there will have been a proposed mechanism for this, but it will likely change / be clarified before it goes to any formal approval vote. There's a good chance that some clubs will have voted yes at this stage but may not be keen on the final mechanism, and likewise they may iron out some of the concerns of the clubs voting against.
The precise mechanism is unclear, but the suggestion is that spending (likely to mean player wages, agent fees and transfer spend (probably amortisation-based rather than cash)) would be capped at between 4 and 5 times the lowest team's TV revenue. Last year, Leeds got the lowest revenue at £112m, which puts the cap at between £448m and £560m. That's the opening proposition, it could well change, and I suspect it will go up, if anything. At the top end, a club complying with UEFA's 70% squad cost ratio, would have turnover of £800m. City's was £713m last year, so they would not have been constrained by these rules, assuming they complied with UEFA's.
As @The Nomad says, this gives a lot of flexibility to clubs lower down the league, so the likes of Everton and Forest could spend with abandon and not be penalised. This is a great position for them to be in, because as we know, Everton are not remotely at risk of going bust, so the rules give them flexibility and achieve the aims of PSR. Oh wait, Everton ARE in danger of going bust. These rules are a load of shit. Never mind, I'm sure the football regulator will be OK with them and won't try to interfere.
There's also the issue of "other costs". Clubs could run up huge losses when you add in non-playing staff costs and overheads. These rules do not address control of those costs. The existing PSR, focusing on losses in total, does address those costs by including them in the target measure, whilst the UEFA cost ratio effectively includes leeway to accommodate them (since the UEFA target measure will ultimately be 70% of turnover for squad costs, it effectively allows for 30% of revenue to cover other costs).
The bigger clubs will need to comply with the UEFA measures anyway, so there's an argument that they shouldn't have an issue with the new rules. I think City's objection is the 115 charges, just being spiteful. United have historically had a financial edge based on their huge commercial revenue base (although they have lost ground on that in recent years, and not just to City's artificially inflated number). They are probably banking on getting into the same league as City via boosting on-field and media revenues by being good at footy again - bless! Chelsea know they're in a mess regardless of what rules are implemented and I have no idea what Villa's beef is - these rules would probably suit them.
But this appeals to smaller, ambitious clubs who are prepared to take risks, or who feel they may be more attractive M&A targets if their prospective owners know they won't be constrained in the way Newcastle currently are. So we should expect more nation-state takeovers, and proxy wars on the field every weekend.
But I also feel like the PL is defying the regulator to interfere so they can say they had a scheme that had broad approval and the government shot it down. Playing politics, basically.
The scheme is bullshit, and it will encourage a lot of the smaller clubs to take chances and risk their future, whilst barely impacting the bigger clubs who will have to follow the UEFA model anyway. And at the end of it all, the big risk is that the TV deal won't continue to out-perform inflation over the longer term. The smaller clubs probably figure that if that happens then they'll be able to argue for a more even distribution of TV money - so the bottom team's revenue goes up, and everyone else can spend a bit more (even though their revenues will have gone down, proportionately). I get how that would appeal to the clubs lower down the league, but it's purely hypothetical. And if everyone is free to spend willy nilly, economics means prices will go up for everyone, and in that situation, the ones who will suffer are the ones who choose to spend responsibly (e.g. the likes of Brighton, Brentford, Bournemouth). They shouldn't be voting for this.
Firstly, as @dee says, the vote was only to discuss developing a spending cap - there will have been a proposed mechanism for this, but it will likely change / be clarified before it goes to any formal approval vote. There's a good chance that some clubs will have voted yes at this stage but may not be keen on the final mechanism, and likewise they may iron out some of the concerns of the clubs voting against.
The precise mechanism is unclear, but the suggestion is that spending (likely to mean player wages, agent fees and transfer spend (probably amortisation-based rather than cash)) would be capped at between 4 and 5 times the lowest team's TV revenue. Last year, Leeds got the lowest revenue at £112m, which puts the cap at between £448m and £560m. That's the opening proposition, it could well change, and I suspect it will go up, if anything. At the top end, a club complying with UEFA's 70% squad cost ratio, would have turnover of £800m. City's was £713m last year, so they would not have been constrained by these rules, assuming they complied with UEFA's.
As @The Nomad says, this gives a lot of flexibility to clubs lower down the league, so the likes of Everton and Forest could spend with abandon and not be penalised. This is a great position for them to be in, because as we know, Everton are not remotely at risk of going bust, so the rules give them flexibility and achieve the aims of PSR. Oh wait, Everton ARE in danger of going bust. These rules are a load of shit. Never mind, I'm sure the football regulator will be OK with them and won't try to interfere.
There's also the issue of "other costs". Clubs could run up huge losses when you add in non-playing staff costs and overheads. These rules do not address control of those costs. The existing PSR, focusing on losses in total, does address those costs by including them in the target measure, whilst the UEFA cost ratio effectively includes leeway to accommodate them (since the UEFA target measure will ultimately be 70% of turnover for squad costs, it effectively allows for 30% of revenue to cover other costs).
The bigger clubs will need to comply with the UEFA measures anyway, so there's an argument that they shouldn't have an issue with the new rules. I think City's objection is the 115 charges, just being spiteful. United have historically had a financial edge based on their huge commercial revenue base (although they have lost ground on that in recent years, and not just to City's artificially inflated number). They are probably banking on getting into the same league as City via boosting on-field and media revenues by being good at footy again - bless! Chelsea know they're in a mess regardless of what rules are implemented and I have no idea what Villa's beef is - these rules would probably suit them.
But this appeals to smaller, ambitious clubs who are prepared to take risks, or who feel they may be more attractive M&A targets if their prospective owners know they won't be constrained in the way Newcastle currently are. So we should expect more nation-state takeovers, and proxy wars on the field every weekend.
But I also feel like the PL is defying the regulator to interfere so they can say they had a scheme that had broad approval and the government shot it down. Playing politics, basically.
The scheme is bullshit, and it will encourage a lot of the smaller clubs to take chances and risk their future, whilst barely impacting the bigger clubs who will have to follow the UEFA model anyway. And at the end of it all, the big risk is that the TV deal won't continue to out-perform inflation over the longer term. The smaller clubs probably figure that if that happens then they'll be able to argue for a more even distribution of TV money - so the bottom team's revenue goes up, and everyone else can spend a bit more (even though their revenues will have gone down, proportionately). I get how that would appeal to the clubs lower down the league, but it's purely hypothetical. And if everyone is free to spend willy nilly, economics means prices will go up for everyone, and in that situation, the ones who will suffer are the ones who choose to spend responsibly (e.g. the likes of Brighton, Brentford, Bournemouth). They shouldn't be voting for this.
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Like Happy Gilmore with his cheques.Thanks - I did read all of it, though I suspect this is the sort of postcard you are used to :
Barely an hour after my post above highlighting that Everton are at risk of going bust, the Guardian is reporting they have called in insolvency advisers.
Popcorn at the ready.
www.theguardian.com
Everton are calling in a leading firm of restructuring and insolvency advisers, the Guardian understands, raising further questions about the proposed takeover of the Premier League club by 777 Partners.
The move comes as the club is believed to still be waiting for a further £15m of loans that 777 had pledged to provide to Everton during April, according to one 777 source.
The latest loan would have taken the amount the club had borrowed from the American firm to more than £200m during the seven months since it was announced it would acquire Everton.
However, 777 appears to be experiencing further financial difficulties, with its low-cost airline Bonza entering voluntary administration in Australia on Tuesday.
Meanwhile, 777 Partners is understood to have parted company with its UK PR advisers after falling behind on paying its fees.
The developments raise further questions regarding whether 777 will be able to complete its takeover of Everton – and how the club will be funded until the end of the season.
When companies fall into financial difficulties, directors are required to take professional advice and closely monitor a business’s finances to ensure that they are not trading while insolvent.
The Guardian understands that Teneo – a global financial advisory firm with a large insolvency division – has been approached to advise Everton and its directors.
When asked on Monday about the firm advising Everton, Daniel Butters, Teneo’s chief executive of financial advisory, said: “We don’t comment on any client situations.” The phone line then went dead.
Everton declined to comment.
The developments also raise questions about how long Everton owner Farhad Moshiri can retain control of the club, just a month after assuring fans that 777’s takeover was entering the “home straight”.
Another set of Everton creditors – MSP and its partners, the Evertonian businessmen Andy Bell and George Downing – has loaned the club about £160m, which is secured over the new stadium development at Bramley-Moore Dock, as well as a charge over more than half of Moshiri’s 94% stake in the club, according to corporate documents filed in the Isle of Man.
That consortium could use its security to take control of the club.
777 did not respond to efforts to contact the company.
Popcorn at the ready.
Everton call in insolvency advisers amid fresh doubt over 777 takeover
Everton are calling in a firm of restructuring and insolvency advisers, the Guardian understands, raising further questions about the proposed takeover by 777 Partners
Everton are calling in a leading firm of restructuring and insolvency advisers, the Guardian understands, raising further questions about the proposed takeover of the Premier League club by 777 Partners.
The move comes as the club is believed to still be waiting for a further £15m of loans that 777 had pledged to provide to Everton during April, according to one 777 source.
The latest loan would have taken the amount the club had borrowed from the American firm to more than £200m during the seven months since it was announced it would acquire Everton.
However, 777 appears to be experiencing further financial difficulties, with its low-cost airline Bonza entering voluntary administration in Australia on Tuesday.
Meanwhile, 777 Partners is understood to have parted company with its UK PR advisers after falling behind on paying its fees.
The developments raise further questions regarding whether 777 will be able to complete its takeover of Everton – and how the club will be funded until the end of the season.
When companies fall into financial difficulties, directors are required to take professional advice and closely monitor a business’s finances to ensure that they are not trading while insolvent.
The Guardian understands that Teneo – a global financial advisory firm with a large insolvency division – has been approached to advise Everton and its directors.
When asked on Monday about the firm advising Everton, Daniel Butters, Teneo’s chief executive of financial advisory, said: “We don’t comment on any client situations.” The phone line then went dead.
Everton declined to comment.
The developments also raise questions about how long Everton owner Farhad Moshiri can retain control of the club, just a month after assuring fans that 777’s takeover was entering the “home straight”.
Another set of Everton creditors – MSP and its partners, the Evertonian businessmen Andy Bell and George Downing – has loaned the club about £160m, which is secured over the new stadium development at Bramley-Moore Dock, as well as a charge over more than half of Moshiri’s 94% stake in the club, according to corporate documents filed in the Isle of Man.
That consortium could use its security to take control of the club.
777 did not respond to efforts to contact the company.
dont know about you but i think i could get popcorn up there without the lube
or are you talking about something else
I have a feeling they'll try to avoid pulling the trigger unless they know a 10 point deduction won't relegate them. They've got Luton and Sheff Utd up next, they ought to win both of those games on current form. If they do, they won't be relegated, and there's a good chance they won't need to win both as the other teams below them are unlikely to win their games. They can then go into administration and not fear the (footballing) consequences.
It'll still be a good laugh though.
It'll still be a good laugh though.
So what happens to all this money that 777 have pumped into everton while they've waited to see if there deal goes through...
Im assuming it would have to be paid back with interest??
goes puff into the sky
If Everton go into administration, the main purpose of that will be to reduce their debt burden. Any and all lenders (and other creditors generally) could have to take a haircut, and the end result would be a company with reduced debt levels, coming out of administration and probably acquired by new owners.
Football administrations are complicated by what is know as the “football creditors” rule, which in simple terms means other football clubs take priority over everything else. This is very controversial as in normal procedures, banks and HMRC usually come out of it best. But it means any debts to other clubs need to be honoured in full, which means greater exposure for debt holders and other creditors.
There is the added complication here of Laing O’Rourke, building the stadium. I suspect they will be being paid 1-2 months in advance so they won’t be a creditor, and therefore won’t lose out. But if they were to lose out they would probably down tools and walk away. And if the administration is a long, drawn-out process then stadium work will halt.
777 had been told they would need to convert their debt to equity as part of the terms of the takeover, otherwise the PL wouldn’t agree to it. So they’re not getting repaid, the question is whether they will come out of it all with any equity in the club.
If this were not a football club, it would be ideal for what is known as a “pre-pack” administration, which is where the main creditors get together, alongside potential new owners, and agree what things will look like afterwards - I.e. the level of reduction they will take on their debt and who will own the club afterwards. The company then goes into admin, the administrator agrees the reductions in debt in line with the pre-pack plan, the new owners buy the shares from the administrator and effectively the club hits a partial reset button and goes off, pledging to honour the terms of all remaining (reduced) liabilities. Some of the debt holders may also take a share of the equity in the club as a condition of agreeing to their debt reduction.
The complication is the new owners test with the Premier League. However, that only applies to a person taking over 30% of the shares, so we could see a consortium of new shareholders, made up of the debt holders and potentially Moshiri, all holding less than 30% individually. That is sub-optimal from a management perspective, so you could then see a smaller group buy out some of the others a few months later once they had passed the fit and proper person test. We know 777 are struggling to meet that test, so this may be the point they bow out.
If Bell / Downing / MSP have sights on acquiring the club, they have the further option of exercising their security over Moshiri’s shares, before an administration, but after the next debt-repayment deadline, but they would still have to deal with reducing the other debt so would need serious funds on hand to keep the club going without an administration. I think they are hoping they will get paid out, so either their debt is repaid, or else they hope to exit the administration on favourable terms.
Football administrations are complicated by what is know as the “football creditors” rule, which in simple terms means other football clubs take priority over everything else. This is very controversial as in normal procedures, banks and HMRC usually come out of it best. But it means any debts to other clubs need to be honoured in full, which means greater exposure for debt holders and other creditors.
There is the added complication here of Laing O’Rourke, building the stadium. I suspect they will be being paid 1-2 months in advance so they won’t be a creditor, and therefore won’t lose out. But if they were to lose out they would probably down tools and walk away. And if the administration is a long, drawn-out process then stadium work will halt.
777 had been told they would need to convert their debt to equity as part of the terms of the takeover, otherwise the PL wouldn’t agree to it. So they’re not getting repaid, the question is whether they will come out of it all with any equity in the club.
If this were not a football club, it would be ideal for what is known as a “pre-pack” administration, which is where the main creditors get together, alongside potential new owners, and agree what things will look like afterwards - I.e. the level of reduction they will take on their debt and who will own the club afterwards. The company then goes into admin, the administrator agrees the reductions in debt in line with the pre-pack plan, the new owners buy the shares from the administrator and effectively the club hits a partial reset button and goes off, pledging to honour the terms of all remaining (reduced) liabilities. Some of the debt holders may also take a share of the equity in the club as a condition of agreeing to their debt reduction.
The complication is the new owners test with the Premier League. However, that only applies to a person taking over 30% of the shares, so we could see a consortium of new shareholders, made up of the debt holders and potentially Moshiri, all holding less than 30% individually. That is sub-optimal from a management perspective, so you could then see a smaller group buy out some of the others a few months later once they had passed the fit and proper person test. We know 777 are struggling to meet that test, so this may be the point they bow out.
If Bell / Downing / MSP have sights on acquiring the club, they have the further option of exercising their security over Moshiri’s shares, before an administration, but after the next debt-repayment deadline, but they would still have to deal with reducing the other debt so would need serious funds on hand to keep the club going without an administration. I think they are hoping they will get paid out, so either their debt is repaid, or else they hope to exit the administration on favourable terms.
I would not be surprised if the PL want to drop the charges, but I think they’d have to deal with a shareholder revolt from the other clubs if they tried it. I think the pressure from the other clubs is the number one reason they made the charges in the first place.
The other clubs could, without having to state cause, vote City out of the league if they wanted to. Per the PL rules:
B.6. Notwithstanding the provisions of Article 14.10, the League may expel a Club from membership upon a special Resolution to that effect being passed by a majority of not less than three-quarters of such members as (being entitled to do so) vote by their representatives or by proxy at a General Meeting of which notice specifying the intention to propose the Resolution has been duly given.
‘The League’ means the company in which the clubs hold shares, and article 14.10 just states the normal rule is 2/3 majority. There is nothing in there preventing a coup by the clubs. Although obviously City would threaten to sue etc.
There’s no way that’ll happen. The point of no return was a long time ago. They’ll lose everything if they drop it. It would inevitably bring in an independent regulator.
City isn't a club, its an extension of an Oil Rich State, that owns large chunks of the UK. I do expect some punishment but it won't be retrospective and no way near harsh enough. It gonna be something like 10 pts penalty and £20-60m fine. It would be sugar coated to rival fans as the harshest penalty in top flight football.
If they are even given the slightest penalty any time anyone mentions their achievements it will be associated with that guilty verdict.
It’s better for the league to severly punish them. It’s the only way they can save face.
If they allow politics to get involved it is the end of the premier league.
It’s better for the league to severly punish them. It’s the only way they can save face.
If they allow politics to get involved it is the end of the premier league.
