13 Jan 2018 11:24:29
Hi eds and reds, I was wondering if ed02 could explain how ffp works and how it's determined how much clubs can spend, I understand it's probably very complex but its there's a " dumbed down version" for us not so in the Know, I'd appreciate it, cheers, PS tried the search,

{Ed002's Note - In the simplest of terms clubs are constrained to only spend what they earn and they cannot simply borrow to build up debt.

From 2011/2012 all clubs need to provide a second set of accounts specifically for the purpose of Financial Fair Play. These are based on the ordinary accounts but adapted for the provisions for FFP - so certain things can be deducted as allowable costs (infrastructure changes, spending on youth sides, wages of players signed prior to 2010 etc.). These accounts also include the income streams (TV and prize money, match day revenue, commercial revenue).

The FFP accounts are then assessed for compliance with the provisions of the FFP rules to ensure that wages have not increased beyond that allowed and spending on transfers is constrained based on what the club earns (ply €5M spread over a rolling three year period). The owners can add to the transfer funds from their own money up to €30M over a rolling three year period. Clubs can opt out of meeting FFP but will then be excluded for European competition.

So the bottom line is a club can only spend what it earns and cannot increase wages beyond a small amount each year.}

1.) 13 Jan 2018
13 Jan 2018 12:19:06
Has ffp been considered a success or effective ed002? When you see the sums that the likes of psg and man city can still throw at transfers.

{Ed002's Note - Yes, it has worked pretty well. I don't really understand your comment about Manchester City or PSG. Both paid a substantial fine and were subject to sanctions. Numerous clubs have been banned, fined etc..

If you look at Manchester City, (a) theu have a larger income than most, and (b) whilst working within the rules are making use of some pretty extreme sponsorship that comes via their owner's business interests. So the figures are skewed.

This is seen as an issue by UEFA and the reason there have been efforts over the past four years or so to agree a sponsorship cap. UEFA are happy for those "elite" European clubs that meet (now twice or three times a year) to come up with a proposal, but so far they have failed to agree a figure. UEFA are aware that taking the matter to the European Club Association will not help them. Eventually they will come up with a cap themselves and that will be it. A similar issue is being discussed about capping TV and media income for FFP because of the finances for English sides also being skewed. With a UEFA senior official moved on it might be easier to push something through as the resistance was related to the clubs that would be most impacted by a change.

Effectively the cap would say something like, "regardless of the amount of sponsorship a club obtains, only the first €115M will be allowable for the purposes of the FFP calculation". The same could be done with the media income - obviously that would hit the English sides very hard and a few others only. It is contraversial but there is a swell of effort from other sides to make it happen. One side who were leading the push pulled out of the group of "elite" sides earlier this year so it will take others to pick up the ball on that one. But it is fair to say that mainland European sides do not see it as fair that the English sides can benefit from vast media income and would like a more level playing field.}

2.) 13 Jan 2018
13 Jan 2018 12:26:37
In light of the above surely the neymar deal was not done according to these rules.

Were they aware of this and just went ahead with it anyway with the intention of being excluded from Europe or do they think that over 3 years they will be able to balance it out?

Or do they actually earn the amount that was needed to make the deal happen. I just don't understand that one.

{Ed002's Note - There is nothing to say that PSG cannot cover the costs of Neymar through additional income from a new shirt deal, new sponsorship deals and endorsements in addition to the income they already have and player sales.}

3.) 13 Jan 2018
13 Jan 2018 13:00:27
Does the sale of players count towards what the club earns or are the rules just toward commercial incomings?

{Ed002's Note - Player sales count and that is the way MST clubs raise money toward the purchases.}

4.) 13 Jan 2018
13 Jan 2018 13:08:35
What is Your personally opinion on capping of the media related income Ed002? I would argue that the PL has made itself a desirable product worthy of the money that is being thrown at it currently, so why should it and clubs within it be essentially limited just because clubs abroad think it’s unfair? Unless I’m missing something it seems like sour grapes from the bigger clubs in Spain, Germany, Italy etc who are afraid of losing their status as the richest clubs.

{Ed002's Note - It is not sour grapes from the bigger clubs but those who don't have the benefit and are priced out of transfers. The likes of Crystal Palace can buy a £75M player if they wish - most mainland clubs can't. I suspect you are not aware of who the "richest" clubs are but the English sides feature prominently. Personally, there is a need to manage finances responsibly - because when the "elite" sides breakaway they will take with them the there is every likelihood that the big money from television, sponsorship etc. would go with a breakaway league.}

5.) 13 Jan 2018
13 Jan 2018 14:03:19
Thanks for the reply ed02, brilliant as usual.

{Ed002's Note - You are welcome.}

6.) 13 Jan 2018
13 Jan 2018 16:46:54
Thanks for your insight Ed002!