Financial Fair Play investigation

[mahermi1]

I just can’t get my head around it , it really is turkeys voting for Christmas

A 100% this, it's practically agreeing to never winning a trophy again, by ensuring the top 6 are untouchable.

 

[Jeff Jones]

What evidence did you have of that?

None at all. How could I?

 

[Villa_Fan]

Can someone tell me, not sure if the correct thread but figured may be worth asking.

If someone was to invest, ie. MSP or 777 and buy a stake in the club. How does that money investment get accounted for? I assume, although no idea if correct, that it doesn't go down as revenue for the club? I gather the investment by those parties would most likely secure Stadium funding and therefore be irrelevant to any FFP anyway.

Just curious and want a better understanding.

If someone invests money in the club it will be put down on the balance sheet as the investor will get some sort of equity in the club. If EFC raises 250m then they just have an extra 250m in the bank and a shareholder on the balance sheet. If EFC spends that money then it impacts the Income Statement and as such may be subject to P&S/FFP calculation i.e. spend it on players and it impacts P&S/FFP, spend it on the stadium and it doesn't impact P&S/FPP or if any of the Board were sacked and had a payoff then this payoff would also impact P&S/FFP. If however, the investment is structured as a loan rather than an equity investment then the loan repayments are included in P&S/FFP calculations.

 

[Villa_Fan]

I'm anticipating other clubs being found to have breached the rules.

The bigger clubs have a safety net if they are looking like breaking P&S as they tend to have higher value players than the rest of us. They can very quickly sell these players to generate revenue and remove amortisation and wages from their income statement. Most clubs don't have enough high value players to be able to benefit from this. And Chelsea is throwing away their safety net by giving long contracts. But, as expected by many, there will be a clear out of homegrown players from Chelsea this summer. Mason Mount and Conor Gallegher will be gone in the summer imo

 

[Marius57]

Can someone tell me, not sure if the correct thread but figured may be worth asking.

If someone was to invest, ie. MSP or 777 and buy a stake in the club. How does that money investment get accounted for? I assume, although no idea if correct, that it doesn't go down as revenue for the club? I gather the investment by those parties would most likely secure Stadium funding and therefore be irrelevant to any FFP anyway.

Just curious and want a better understanding.

Yeah it doesn’t go towards FFP. As with all our money, it will go straight down the urinal.

 

[WestStandLower]

So we were “allowed” to make a bid of £45m for Gallagher in Jan which was accepted but the player refused??

Now, we are really really bad at the finance thing, but not a chance in hell we do that unless we were positive we weren’t about to get referred for the previous season. Which given the PL sat there last year and told all clubs we had no case to answer seems fair enough.

The whole thing is a joke. We are going to end up accepting some vague punishment with no precedent, just so the PL can save face. They have mismanaged us almost as badly as we have mismanaged ourselves.

I keep reading that the PL are in some way complicit in all this and not quite sure how they have any accountability for how a club actually runs it’s business.

I know that some state that the PL agreed the sum claimed in respect of COVID losses and yep it’s obvious that Everton believe that there are losses in excess of the sums reflected in the accounts that said can anyone point me to any official statement where both the PL and or Everton actually confirm that there is any sort of agreement to factor in any sum north of those stated in the accounts

As for Gallagher being the subject of a bid I am far from sure Chelsea would have formally and publically accepted any offer without the player’s consent.

 

[andy4efc]

If someone invests money in the club it will be put down on the balance sheet as the investor will get some sort of equity in the club. If EFC raises 250m then they just have an extra 250m in the bank and a shareholder on the balance sheet. If EFC spends that money then it impacts the Income Statement and as such may be subject to P&S/FFP calculation i.e. spend it on players and it impacts P&S/FFP, spend it on the stadium and it doesn't impact P&S/FPP or if any of the Board were sacked and had a payoff then this payoff would also impact P&S/FFP. If however, the investment is structured as a loan rather than an equity investment then the loan repayments are included in P&S/FFP calculations.

So to simplify that, as there is alot of P&S and FFP in there (i hope you copy and pasted to save yourself time!)

My question is really, let's say we have Club X who for the 22-23 season are financially cutting it close to the Profit and Loss rules of the PL. Would that investment from an outside party go down as 'income' which helps balance their books? I know spending that money would naturally go within FFP as an outlay, but I'm just curious.

Im curious as that investment, while in Everton's case would finance the stadium, wouldn't neccesserily do anything would it? Assuming Club X were in normal circumstances of not building a stadium, if they were tightroped by FFP and had that investment, how could they utilise it? I know Stadium/infastructure is exempt from FFP.

Just trying to gain a better of understanding of how this investment will impact Everton in the summer, winter, upcoming years.

 

[Villa_Fan]

So to simplify that, as there is alot of P&S and FFP in there (i hope you copy and pasted to save yourself time!)

My question is really, let's say we have Club X who for the 22-23 season are financially cutting it close to the Profit and Loss rules of the PL. Would that investment from an outside party go down as 'income' which helps balance their books? I know spending that money would naturally go within FFP as an outlay, but I'm just curious.

Im curious as that investment, while in Everton's case would finance the stadium, wouldn't neccesserily do anything would it? Assuming Club X were in normal circumstances of not building a stadium, if they were tightroped by FFP and had that investment, how could they utilise it? I know Stadium/infastructure is exempt from FFP.

Just trying to gain a better of understanding of how this investment will impact Everton in the summer, winter, upcoming years.

For ease of writing let's say club X is Everton. If EFC got a capital injection of 200m now, there is no direct impact on FFP. The only benefit is if EFC has interest on debt then the debt could be paid off and the interest e.g. 50k a month could be saved but it is a relatively tiny amount of money for a company with a 200m turnover and it wouldn't happen as Mosh has said there is a 250m shortfall for the stadium so EFC can't clear any existing debt. There is no FFP benefit from getting money from the owner of the club or any other investor. The danger is if the investment is in the form of a loan. If Mosh borrowed the 250m then the annual interest payments would be north of 12.5m a year, although this 12.5m would not be counted for FFP, it would be a hell of a lot of money that would ultimately be taken from the transfer budget or wages. That is what the Glaziers are doing at United. They got Man Utd to borrow money from the Glaziers and they charge Man Utd interest every year. In 21/22 season, Man Utd paid the Glaziers 61m in interest payments for a loan.

 

[trueblue84]

Why would anyone vote for the new ffp rules?

Most Premier League clubs would be in trouble immediately.

 

[Damo_1878]

For ease of writing let's say club X is Everton. If EFC got a capital injection of 200m now, there is no direct impact on FFP. The only benefit is if EFC has interest on debt then the debt could be paid off and the interest e.g. 50k a month could be saved but it is a relatively tiny amount of money for a company with a 200m turnover and it wouldn't happen as Mosh has said there is a 250m shortfall for the stadium so EFC can't clear any existing debt. There is no FFP benefit from getting money from the owner of the club or any other investor. The danger is if the investment is in the form of a loan. If Mosh borrowed the 250m then the annual interest payments would be north of 12.5m a year, although this 12.5m would not be counted for FFP, it would be a hell of a lot of money that would ultimately be taken from the transfer budget or wages. That is what the Glaziers are doing at United. They got Man Utd to borrow money from the Glaziers and they charge Man Utd interest every year. In 21/22 season, Man Utd paid the Glaziers 61m in interest payments for a loan.

Everton owe £150million currently to one lender and have interest charged at 12% per annum

That isn't a small amount a year

Don't misrepresent things. Saying it's 50k a month. Its far more

Everton presently are paying £21million per year in interest charges.

Recaptialising will help things

 

[Damo_1878]

If someone invests money in the club it will be put down on the balance sheet as the investor will get some sort of equity in the club. If EFC raises 250m then they just have an extra 250m in the bank and a shareholder on the balance sheet. If EFC spends that money then it impacts the Income Statement and as such may be subject to P&S/FFP calculation i.e. spend it on players and it impacts P&S/FFP, spend it on the stadium and it doesn't impact P&S/FPP or if any of the Board were sacked and had a payoff then this payoff would also impact P&S/FFP. If however, the investment is structured as a loan rather than an equity investment then the loan repayments are included in P&S/FFP calculations.

Recapitalisation can help in several ways.

Reduce exorbitant interest that the club is currently paying on existing debt to existing lenders. It can allow the under performing board to be removed

It can also allow the club to take on cheaper debt to then allow completion of a revenue generating asset (the new stadium)

 

[Del-boy]

The rules just create a new Super League within the league. Nobody else can compete. Newcastle will give it a go, but it will be interesting to see what sponsors they bring in and if the fees are inflated. Only way they will close the gap financially.

 

[andy4efc]

For ease of writing let's say club X is Everton. If EFC got a capital injection of 200m now, there is no direct impact on FFP. The only benefit is if EFC has interest on debt then the debt could be paid off and the interest e.g. 50k a month could be saved but it is a relatively tiny amount of money for a company with a 200m turnover and it wouldn't happen as Mosh has said there is a 250m shortfall for the stadium so EFC can't clear any existing debt. There is no FFP benefit from getting money from the owner of the club or any other investor. The danger is if the investment is in the form of a loan. If Mosh borrowed the 250m then the annual interest payments would be north of 12.5m a year, although this 12.5m would not be counted for FFP, it would be a hell of a lot of money that would ultimately be taken from the transfer budget or wages. That is what the Glaziers are doing at United. They got Man Utd to borrow money from the Glaziers and they charge Man Utd interest every year. In 21/22 season, Man Utd paid the Glaziers 61m in interest payments for a loan.

Yes in our case it will 100% be going for Stadium funding.

I was just curious as to how a regular club (and not a circus) would be able to use that money. Certain clubs, who are run by competant people, will have enough room if their FFP to go and spend the investment on trasnfers should they wish to, but that income into the football club doesn't allow them to balance it against the FFP/PL regulations.

 

[Villa_Fan]

Everton owe £150million currently to one lender and have interest charged at 12% per annum

That isn't a small amount a year

Don't misrepresent things. Saying it's 50k a month. Its far more

Everton presently are paying £21million per year in interest charges.

Recaptialising will help things

I am not trying to misrepresent anything. If u read my post it is clear that the numbers are for illustrative purposes, I never claimed to know EFC's current interest costs. Also, as per my post, how would EFC recapitalise to remove the 21m and raise the 150m capital required for the stadium without selling the club? That would be raising equity of 400m which would be a large majority of EFC

EDIT: on the subject of misrepresentation, in the latest published accounts Interest and taxation were a total of 9.1m (see page 10, link below). Where are you getting 21m and 12% interest?

https://resources.evertonfc.com/evertonfc/document/2023/03/31/895fc94b-f5a7-4c72-8d3b-57abf7929dff/Annual-Report-2-And-Accounts-2022.pdf

 

[ForeverBlue92]

The rules just create a new Super League within the league. Nobody else can compete. Newcastle will give it a go, but it will be interesting to see what sponsors they bring in and if the fees are inflated. Only way they will close the gap financially.

They'll just break the rules like City have done. Saudi's only want Newcastle to sportswash and they know the time it takes the courts etc to make a ruling They'll have won numerous trophies and become a household CL name like Man City.