Financial Fair Play (FFP)

[Louth Red]

Would that count in the EFL? I'm not sure that £72m would- seemed to be put through as Exceptional Income for a start.

Don't think they appreciated it when Mel did it in 2015-16..there was a downward adjustment on something by Spring 2018.

Think basically a debt Cancellation post Takeover was negated, it came up in the Written Reasons of their January 2020 case.

To clarify the Bournemouth PSR position resulted from a write off of £71m of shareholder loans. In the same season broadcasting income was up £80m because of promotion.

This is all detailed on Swiss Ramble.

I share many of your views on AFCB. When we travelled there in our League One days they were happy to let us have 2,600 tickets (all sold) - now we receive less than half of that for PL games.

Their ground is largely unchanged despite their PL broadcasting revenues - it is not fit for purpose for the Premier League.

When we visited them four seasons ago we encountered a serious pitch invasion which they struggled to contain, and we had coaches attacked after the game. This from a club which claims the toughest approach to banning orders for pitch invasions.

They are one of a small number of Clubs which fail to sell their 3,000 allocation of tickets to the City Ground for PL games.

Despite this I’m looking forward to visiting their ground later this month.

 

[Cloughie1975]

To clarify the Bournemouth PSR position resulted from a write off of £71m of shareholder loans. In the same season broadcasting income was up £80m because of promotion.

This is all detailed on Swiss Ramble.

I share many of your views on AFCB. When we travelled there in our League One days they were happy to let us have 2,600 tickets (all sold) - now we receive less than half of that for PL games.

Their ground is largely unchanged despite their PL broadcasting revenues - it is not fit for purpose for the Premier League.

When we visited them four seasons ago we encountered a serious pitch invasion which they struggled to contain, and we had coaches attacked after the game. This from a club which claims the toughest approach to banning orders for pitch invasions.

They are one of a small number of Clubs which fail to sell their 3,000 allocation of tickets to the City Ground for PL games.

Despite this I’m looking forward to visiting their ground later this month.

I went to all 3 trips to Bournemouth when we were in League One.
I’d be very surprised if we sold 2,600 tickets for the games-the second one was a night game in 2006 and I bought
2 tickets on the day of the match for the away section.The girl who served me nearly passed out with shock and there were plenty of space in that area.

 

[Louth Red]

I went to all 3 trips to Bournemouth when we were in League One.
I’d be very surprised if we sold 2,600 tickets for the games-the second one was a night game in 2006 and I bought
2 tickets on the day of the match for the away section.The girl who served me nearly passed out with shock and there were plenty of space in that area.

When we visited on 2nd February, 2008 for a 2-0 defeat we sold out our allocation of 2,600 - we were allocated almost the entire length of the stand opposite the main Stand. This was the promotion season - we travelled by train and stayed for a long weekend. During that time we encountered several Forest fans without tickets who offered over the odds prices for our tickets (without success).

The crowd that day was 7,251 and the referee Keith Stroud.

 

[Cloughie1975]

When we visited on 2nd February, 2008 for a 2-0 defeat we sold out our allocation of 2,600 - we were allocated almost the entire length of the stand opposite the main Stand. This was the promotion season - we travelled by train and stayed for a long weekend. During that time we encountered several Forest fans without tickets who offered over the odds prices for our tickets (without success).

The crowd that day was 7,251 and the referee Keith Stroud.

Fair enough-but there were nowhere near that many in 2006/7-I’d estimate 1,000 at the most.
I happened to go to Salisbury in the FA Cup 2nd Round the Sunday before when a few hundred Forest fans made the trip.
It’s amazing who wants tickets now.

 

[BristolfaninPeace]

To clarify the Bournemouth PSR position resulted from a write off of £71m of shareholder loans. In the same season broadcasting income was up £80m because of promotion.

This is all detailed on Swiss Ramble.

I share many of your views on AFCB. When we travelled there in our League One days they were happy to let us have 2,600 tickets (all sold) - now we receive less than half of that for PL games.

Their ground is largely unchanged despite their PL broadcasting revenues - it is not fit for purpose for the Premier League.

When we visited them four seasons ago we encountered a serious pitch invasion which they struggled to contain, and we had coaches attacked after the game. This from a club which claims the toughest approach to banning orders for pitch invasions.

They are one of a small number of Clubs which fail to sell their 3,000 allocation of tickets to the City Ground for PL games.

Despite this I’m looking forward to visiting their ground later this month.

Don't get me wrong, I do get how it was done. I'm just shocked the FFP Rules may allow for it, in the EFL I'm quite sure that wouldnt fly. Derby got pulled up over something similar and an adjustment was made down the line.

The £71m Write-off was pivotal, turned if from a -£27m Pre Tax Loss to a £44m Pre Tax Profit or thereabouts. Swiss Ramble seems to believe it would be excluded anyway last time I looked.

A serious pitch invasion? That's surprising, Bournemouth have struck me as a fairly placid fanbase and Coaches attacked. Shocking.

Should be an interesting game, both sides doing well without enormous budget but I do wonder if Swiss Ramble have seen the Cannae Holdings stuff.

 

[YouReds43]

Don't get me wrong, I do get how it was done. I'm just shocked the FFP Rules may allow for it, in the EFL I'm quite sure that wouldnt fly. Derby got pulled up over something similar and an adjustment was made down the line.

The £71m Write-off was pivotal, turned if from a -£27m Pre Tax Loss to a £44m Pre Tax Profit or thereabouts. Swiss Ramble seems to believe it would be excluded anyway last time I looked.

A serious pitch invasion? That's surprising, Bournemouth have struck me as a fairly placid fanbase and Coaches attacked. Shocking.

Should be an interesting game, both sides doing well without enormous budget but I do wonder if Swiss Ramble have seen the Cannae Holdings stuff.

If you have seen the articles about all the PL clubs, Swiss Ramble has Bournemouth scraping through PSR by 1m. I know it is a prediction but no one in the media have mentioned them. probably because of the size of the club.

 

[BristolfaninPeace]

If you have seen the articles about all the PL clubs, Swiss Ramble has Bournemouth scraping through PSR by 1m. I know it is a prediction but no one in the media have mentioned them. probably because of the size of the club.

I've seen them, but I'm confused when reconciling it with the Cannae Holdings stuff. Swiss Ramble is very good but the losses are awful...albeit Hibs and Lorient numbers may well be included in the $103-104m Lost by Black Knight Football and Entertainment. Will make for some very interesting reading but that Debt Cancellation feels pivotal.

 

[andyd]

To clarify the Bournemouth PSR position resulted from a write off of £71m of shareholder loans.

Louth Red, forgive my ignorance, but as I have followed this and read about the debt write off I am confused as to what is different about this and what Marinakis has just done in turning debt into equity. From what I understand Marinakis' actions will have no beneficial impact on our FFP position beyond the fact we won't have to factor in the 'interest payments' on the de facto loan. Isn't what Bournemouth did basically the same thing? How do they get a +£71m benefit in their FFP accounts while we don't get a +£81m for Marinakis move of debt into equity?

 

[Bing Crosby's Head]

Louth Red, forgive my ignorance, but as I have followed this and read about the debt write off I am confused as to what is different about this and what Marinakis has just done in turning debt into equity. From what I understand Marinakis' actions will have no beneficial impact on our FFP position beyond the fact we won't have to factor in the 'interest payments' on the de facto loan. Isn't what Bournemouth did basically the same thing? How do they get a +£71m benefit in their FFP accounts while we don't get a +£81m for Marinakis move of debt into equity?

The difference is what happens to the debt. With debt write off the debt no longer exists so you've either injected cash into the business to get pay off the debt or just no longer require payment. When you convert it to equity the debt still exists to whoever holds that equity as a share of the company.

 

[Professor Wolfgang Schnell BSc. PhD.]

Thanks for explaining that in a way that I could understand!

 

[andyd]

The difference is what happens to the debt. With debt write off the debt no longer exists so you've either injected cash into the business to get pay off the debt or just no longer require payment. When you convert it to equity the debt still exists to whoever holds that equity as a share of the company.

Thanks, that does make sense. However, it creates another question; how is that £71m not controlled by the limit of what an owner can put into a club each year for FFP purposes? Isn't that supposed to be limited to £35m a year? Why were they allowed to put in more than double the allowable?

 

[Louth Red]

Louth Red, forgive my ignorance, but as I have followed this and read about the debt write off I am confused as to what is different about this and what Marinakis has just done in turning debt into equity. From what I understand Marinakis' actions will have no beneficial impact on our FFP position beyond the fact we won't have to factor in the 'interest payments' on the de facto loan. Isn't what Bournemouth did basically the same thing? How do they get a +£71m benefit in their FFP accounts while we don't get a +£81m for Marinakis move of debt into equity?

I realise others have responded to your query.

My understanding is that the previous owner of Bournemouth received a large enough offer directly to him (and his colleague owners) that allowed him to write off the loans he (and his colleague owners had made to the Club). This created a surplus which was allowed to be written back to the revenue account (on a one-off basis).

The loans made by our owner (or any current owner of a PL club) cannot be written off in the same way - they will be seen as owner contributions and excluded from PSR calculations.

Therefore good owners (like ours) convert them to share capital increasing their ownership. It improves the Balance Sheet and now importantly avoids charging interest to the Club on the loan - which would now count to the detriment of the PSR calculation.

This latest change to PSR rules will impact on any PL Club which has borrowings from the owner at zero or favourable interest rates - Brentford and Brighton are often cited as two examples and it will be interesting to see whether the owners of other clubs follow the Forest approach or not. If not they will find PSR tougher to achieve as owner loans tend to be at no or very low interest rates compared to commercial money market rates. If the owner loans continue the club will have to make an adjustment for higher interest charges for PSR purposes.

 

[T Francis]

I went to all 3 trips to Bournemouth when we were in League One.
I’d be very surprised if we sold 2,600 tickets for the games-the second one was a night game in 2006 and I bought
2 tickets on the day of the match for the away section.The girl who served me nearly passed out with shock and there were plenty of space in that area.

Im sure that the ground only had 3 sides when I went there? Or is my memory going!
We even parked in the park next to the ground.

 

[T Francis]

Fair enough-but there were nowhere near that many in 2006/7-I’d estimate 1,000 at the most.
I happened to go to Salisbury in the FA Cup 2nd Round the Sunday before when a few hundred Forest fans made the trip.
It’s amazing who wants tickets now.

How times have changed!
I remember the Salisbury game well. They gave us 400 tickets and as an away member I went down to the ticket office expecting a big queue and a scramble to get one.
I got there to find that when they went on sale there was only about a dozen of us waiting outside! I even managed to get an extra ticket when they went on sale to ST holders a few days later.

 

[Cloughie1975]

Im sure that the ground only had 3 sides when I went there? Or is my memory going!
We even parked in the park next to the ground.

I seem to remember an empty or removed terrace behind one of the goals in 07/08.

 

[Cloughie1975]

How times have changed!
I remember the Salisbury game well. They gave us 400 tickets and as an away member I went down to the ticket office expecting a big queue and a scramble to get one.
I got there to find that when they went on sale there was only about a dozen of us waiting outside! I even managed to get an extra ticket when they went on sale to ST holders a few days later.

Yes-I had the same experience!
Glory seekers,eh!

 

[valspoodle]

The difference is what happens to the debt. With debt write off the debt no longer exists so you've either injected cash into the business to get pay off the debt or just no longer require payment. When you convert it to equity the debt still exists to whoever holds that equity as a share of the company.

But apparently rich owners are not allowed to inject money into a club to get rid of debt? If so, the Saudi run club would be buying vast numbers of top players and simply writing off the resulting debt.

 

[BristolfaninPeace]

They can do if they like, I just don't understand how it could be included in the PSR numbers.

Two separate elements no? It is like a Stadium Sale post June 2021 and pre 2016..you can still do it in the Championship, just it's adjusted out of FFP.

I know the PL Rules are looser but it seems very odd if included in the PSR Numbers if adding £71mish in Headroom given the deductions or sacrifice affecting numerous clubs.

 

[Shearstone]

They can do if they like, I just don't understand how it could be included in the PSR numbers.

Two separate elements no? It is like a Stadium Sale post June 2021 and pre 2016..you can still do it in the Championship, just it's adjusted out of FFP.

I know the PL Rules are looser but it seems very odd if included in the PSR Numbers if adding £71mish in Headroom given the deductions or sacrifice affecting numerous clubs.

If it is included in the PSR numbers then couldn't club owners just sell the club between themselves? Marianikis sells to his son next year. Then year after he buy it back?

I genuinely don't get the rules.

 

[PlayedOnGrass]

The difference is what happens to the debt. With debt write off the debt no longer exists so you've either injected cash into the business to get pay off the debt or just no longer require payment. When you convert it to equity the debt still exists to whoever holds that equity as a share of the company.

Are you sure about this?
My understanding is that the reason it was allowed is that it was an outside investor that had bought shares in the club - I.e. a cash injection

 

[BristolfaninPeace]

If it is included in the PSR numbers then couldn't club owners just sell the club between themselves? Marianikis sells to his son next year. Then year after he buy it back?

I genuinely don't get the rules

Yes agreed. Logic and common sense dictates it should appear in the Accounts but be adjusted from the PSR numbers. (Derby fwiw 'sold' or did something in Summer 2019 whereby Sevco 5112 ceased to be the top entity and Gellaw Newco 203 took over. No entity released Accounts under Mel or Quantuma post April 2019 however so we'll never know)!

Are you sure about this?
My understanding is that the reason it was allowed is that it was an outside investor that had bought shares in the club - I.e. a cash injection

There is a cap on the Upper equity injection however.

By which I mean, £15m in PSR/FFP Losses in 3 Years with none then anything up to £105m if 3 years PL..in Bournemouth case it is £5m v £13m for one Championship year and £5m v £35m for one PL year.

For the relevant Period it should be no equity £15m plus Allowables, equity first £68m counts towers the Upper Limit or something in beyween if less.

It really shouldn't extend or offer a gain over and above. You can put as much as you like but only a certain amount lifts from Lower to Upper in a given Period.

 

[Bing Crosby's Head]

Are you sure about this?
My understanding is that the reason it was allowed is that it was an outside investor that had bought shares in the club - I.e. a cash injection

I was only explaining the difference between debt write off and converting it to equity! You are right that there are rules in place about how it is done.

 

[BristolfaninPeace]

Fresh equity regardless of source doesn't move the FFP dial.

Could Newcastle have just written off their debt? Does interest play a role.. Chelsea had £2bn to Abramovich iirc, Aston Villa in 2018-19, was there debt to Xia?

Maybe that Bournemouth were narrowly compliant anyway, Swiss Ramble seemed to think so but this Debt Write Off should be an irrelevance for PSR.

 

[jamferg]

Fresh equity regardless of source doesn't move the FFP dial.

Could Newcastle have just written off their debt? Does interest play a role.. Chelsea had £2bn to Abramovich iirc, Aston Villa in 2018-19, was there debt to Xia?

Maybe that Bournemouth were narrowly compliant anyway, Swiss Ramble seemed to think so but this Debt Write Off should be an irrelevance for PSR.

I’m pretty sure interest has to be added to equation and owner loans treated as if commercial loan

 

[Rzar]

Fresh equity regardless of source doesn't move the FFP dial.

Could Newcastle have just written off their debt? Does interest play a role.. Chelsea had £2bn to Abramovich iirc, Aston Villa in 2018-19, was there debt to Xia?

Maybe that Bournemouth were narrowly compliant anyway, Swiss Ramble seemed to think so but this Debt Write Off should be an irrelevance for PSR.

The rules are changing next week, owner debt has to be charged interest at a set amount in PSR calculations

One of the reasons EM cleared all the debt owed to him by the club last week.