Liverpool Message Board
Not sure if this one went under the radar, but thought I'd post for those who still think FFP is a figment of the accountants’ imagination.
One thing I think is important to point out who think clubs are getting away with breaking the rules, this makes it clear who would have been punished in the past if the rules had been in effect, which is a warning to clubs now, as the rules start going into effect.
It’s also interesting to see (although we don't have the full financial reports yet) which clubs have spent heavily in the past, but seem to have gone very quiet over the past 2 transfer windows. We need to think about that when complaining that we don't spend enough relative to other so called big spenders.
Is this all just sabre-rattling though? What if another 14 clubs fail the test? Would they boot out nearly half of the champions league qualifiers? I think a lot of those clubs would be happy to pay the fines and if other clubs its saw fines being dished out, it won't mean a damned thing. We've seen how effective fines are at discouraging racism and I think it would be the same here.
When a team is actually kicked out of the competition then I will say FFP has teeth.
- 1 Reply to LFC_Armchair_Supporter
Yes, but rules don't apply before they apply. It seems like half the rest of the CL clubs would have been "kicked out" too. Maybe there should be a "Champions League" for the clubs that aren't champions but don't upset Platinipus by investing in their squad, and another competition for the champions of each country. Maybe call the new one the "European Cup". That has a nice ring to it.
I think transfer fees and wages should be viewed in different ways. The proclaimed motivation for FFP is to get football clubs as a whole, as well as individually, to be run in a sustainable way. The big problem that clubs have is they collectively pay excessively large salaries to players so that, despite the huge influx of money coming in from TV at the top, most of them make no profit, or lose money. This runs from the top of the game down to the semi-professional leagues. The problem is that too high wages suck the income out of clubs. But it's only wages.
Transfers are a different story. Aside from the amounts going to agents and the players in signing-on fees, transfer fees between clubs are a zero-sum game in terms of clubs over all. Transfer fees do not impoverish clubs as a whole - they are neutral. Indeed, the big clubs buying players from small clubs helps those small clubs survive. A thriving transfer market is good for the financial health of the game.
It is also healthy for the finances of the game for external investors to be bringing money in, whether it is FSG, local boy made good at non-league Littletown FC, or Roman Abramovich or Etihad. More money in helps, as long as it is not all blown on making players unbelievably rich.
So what I would do is:
- have one FFP rule which says that clubs may spend only X% of allowable income on players' wages (plus agents fees and amortised signing on fees)
- disregard from that transfer fees paid between clubs
- not worry about clubs being profitable in short timescales. If someone wants to invest in the club, that should be seen as a good thing. You can buy some expensive players, you just can't pay them lots unless you earn it.
As a Chelsea fan I'm very surprised by some of your comments there Robert. While Transfers may indeed be a £0 sum game there are a number of clubs who are or have tried to move forward by throwing ecessive amounts of money at players. Chelsea being one such guilty party. City, Leeds, Blackburn are some others that spring to mind.
I'd also say that Liverpool have been inpart guilty of it but not at the same extent.
True, agents fees are bonkers while I also feel that players wages are being skewed by a number of sources. City for example have been paying large sums to attract players. t's had a subtle effect on the market. Similarly we've also seem QPR push the boat out. It's been going on for ages and ultimatly been perpetuated by TV money.
However, I like some of your ideas. Keep the day to day running within the club such that wages, bonuses, all running costs etc. of the squad and ground within the club's self generated revenue. Yes allow investment but the rules must be air tight to prevent that investment from leaking into the other pot. i.e investment can only be used for:
1. Buying players only. Signing on fees agents fess and wages bourne by self generated revenue
2. ground / infrastructure investment
That leaves a grey area with sponsorship I guess.
My bumbling thoughts for the day
I surprise myself sometimes.
"there are a number of clubs who are or have tried to move forward by throwing e[x]cessive amounts of money at players. Chelsea being one such guilty party. City, Leeds, Blackburn are some others that spring to mind."
What are they guilty of? Do you mean other than wages?
My bad, you're right. They're guilty of nothing but what they have done is thrown e(x)cessive (my fingers and keyboard worked in harmony there) money at players to lift their general position in the league. Nowt wrong with that until you look at the fallout on players wages across the leagues from it.
Although it could be argued that TV money plays a bigger part in that.
I bet Leeds and Blackburn fans would also argue that it's completely destroyed their clubs. Got too close to the sun.
I supose we're in agreement that there's some mileage in FFP but the details are a muddle and perhaps there's too many loop holes.
I also don't like the fact that it's always the supporter that seems out of pocket.
It's not clear to me that Chelsea spending a large amount on players ten years ago and City more recently is what has raised players wages across the leagues. It's certainly a common assertion but how can it be established? Why do the managements of the other 90 clubs feel that just because Chelsea and City were paying high wages that they had to? It's not as if had they refrained from doing it all their players would go to Chelsea and City.
Yes, I think TV money plays a much bigger part in the inflation of wages. At the end of it it just seems that clubs pay as much as they think they can afford, and so constantly live on the edge. TV money should have made Premiership clubs rich. But they just used it to be in constant spiralling-up auction on player wages.
Robert, I'd agree with you that its wages that are really the issue that can weaken a clubs finances, while the transfer fee's while headline grabbing are really not a major issue. But not sure they are really a zero sum game, as they still are payments that have to be paid, and therefore impact the bottom line. For some clubs (buying clubs) they are a drag on profitability, while I do agree for others (selling clubs) they are an important source of income.
So for example, and I may not have the figures exactly correct as I'm doing this from memory, but for the Torres transfer, Chelsea paid out 50M as a transfer fee, and pay him around 200K a week (I'm guessing on that number), over a 5 year contract. So for the club books that's a 10M charge per year of his contract for the transfer fee, and just over 10M cost for his salary. Of course that's using simple sums which be different when transfer fee's involved scheduled payments, bonuses, or a makeweight is in place, but one way or another they need to be accounted for on the books.
But on what you'd recommend actually I don't think they are far from what FFP will actually do. FFP does allow clubs to operate with a loss, but they need to balance the books over a 3 year accounting period. So if a club wants to deficit spend in order to try to move to the next level (from mid table to EL qualifying, or to push for a top 4 finish) they are allowed to do that, however will need to make up for that deficit spending at some point during that accounting period.
The only real difference is that they do need to include transfer fees (amortized over the length of the contract). For me that is appropriate.
But at the end of the day, one key thing to remember is that FFP is not about leveling the playing field between the rich and not so rich clubs. Successful clubs who generate large revenues will always have more to spend on salaries and transfer fees than less successful clubs. It’s also not something to prevent a club investing to try to move to the next level, whether (if similar rules are applied domestically) to gain promotion or to gain access to the lucrative income European football provides. But what it’s supposed to do is ensure that investment is done in a measured way and we try to prevent owners taking down clubs which punishes fans much more than owners if they use risky strategies.
What its suppose to prevent, or limit is what almost happened to us with owners willing to buy the club using debt, and borrowed to buy players like Torres, taking the club a gnats hair away from liquidation when the bet went sour. Or the borrowing Portsmouth did to gain a bit of silverware only to see things implode when the owner loss interest and decided to walk away. I'm pretty sure Alexandre Gaydamak still has a few pennies to rub together while football fans on the south coast still feel the pain he caused.
FFP may or may not help us compete with the richer clubs in Europe, but the fact we are very lucky not to be in Portsmouth shoes after the Toxic Texan is a very good reason I think FFP or something with the same goal is a very good idea. If Roman ever decides to play with another of his toys and ignore CFC the way Gaydamak did, I think Robert you might start thinking the same way.
Robert wouldn’t it be denying basic established economic thinking to deny that large spending by one club has no impact on other clubs? It’s basic wage inflation.
If one bank pays high salaries and bonuses to attract the best financial minds, then other banks have to follow suit unless they don't want to also attract the best minds, therefore causing all compensation in the financial sector to rise.
The same applies to football. The suggestion that other clubs don't have to match what Chelsea and City pays would imply either you don't think inflation exists, or that all the other clubs would just decide not to complete in a business which is supposed to be all about competition.
- View More Messages