The mathematician said: “Well it depends upon the beans; Are they all the same size and type?” So wandering off he passed Baldrick who said “A very small stew”. An Engineer suggested that four was the answer, but to check he called an accountant who said “What would you like the answer to be?”
Financial Fair Play is a bit like that, confusing with sub-plots and hidden agendas. First off lets be clear I’m no expert. It was Blaster Bates who described an expert as “Ex as in has-been and spurt as in a drip under pressure”. No on second thoughts maybe I am. Anyway FFP. There are two sets of FFP – UEFA and Premier League.
The European FFP regulations are there to ensure that clubs don’t overspend and hence go bust. OR to make sure that rich owners don’t threaten the status quo. Your choice. This basically says that clubs must break-even. However to give an idea of the complexity it is covered by Chapter 2 in the regulations which is articles 57-68 and several appendixes of which the five pages of Appendix X covers what to take into the Income and Expenditure equation and the five pages of Appendix XI defines the terms used in Appendix X. Even then for the first two years you are allowed to overspend (“notion of acceptable deviation,” article 61) by €45m. These regs have been known about for a few years and what they mean for a club like Newcastle is that we have to be a bit prudent.
The latest figures 2011-12 show that we had an income £93.3m of which £55.6m was media related. And an expenditure of £85.7m of which £64.1m was wages and £21.6m other. So a wages to turnover of 68.7% which is fine. Under normal circumstances that would be near as dammit perfect. We are in profit by £7.6m with an 8.86% return on expenditure. Better than sticking it in the bank. So as far as the UEFA regs are concerned full marks.
Of course if we wanted to be risky/ambitious we could have increased expenditure to £36.6m (€45m) over income – in other words £129.9m. If all this extra had been spent on wages we would have had a wage bill of £108.3m, which would have paid for a few more players (£850kpw extra. New team at £75kpw each) and still been within the regs. We would have a wages to income ratio of 116% but as a one off spend it was an option. It would have restricted us in the following years and so it would have been a gamble. Under the UEFA regs it is still an option. The cost of buying such a team is another matter and finding a way of doing that without it going through the books would be a challenge.
The English FFP regs ate there to ensure that the new TV money stays in the game and does not end up in the pockets of players and worse agents, by inflating wages. There is some interesting stuff on it all here.
Now then, what does it say and what does it mean? It says that clubs can overspend the UEFA break-even rule if the Owner guarantees it with equity. So only if it can’t make the club go bust. This means that smaller clubs not trying for Europe immediately can play catch up.
The second aspect is that the TV money can’t be spent on wages.
To put that money into perspective last season We earned £45.1m from TV, finishing where we did. This year we will receive somewhere between £60m and £100m depending on performance, If we do well we could easily receive say an extra £30m, but we can only spend £4m of it on wages.
So the regs have different impacts for big clubs like us and smaller clubs. In round figures here are the wages spent by each club last year. City £196m; Chelsea £173m; Man Utd £171m; Arsenal £143m; Liverpool £123m; Spurs £91m; Villa £68m; NUFC £68m; Sunderland £63m; Everton £63m; Fulham £63m; Stoke £55m. All of these clubs are affected by the rule. All of these clubs can only spend £4m (£77kpw) of the extra TV money on Wages. Any other increase has to come from elsewhere. So if Sports Direct were to sponsor something for £50m each year (an example before you all fall off your chairs!) that could all go on wages. If not then we are restricted to how much we can grow our wage bill.
All other clubs are exempt from the regulations regarding the wages in theory. Theoretically they could spend as much as they like, but then would be caught in the following years trap. So they are being encouraged to go big this season. Even if they decide to increase spending to “only” £56m then the spending could be :-
West Brom and West Ham both spent £50m last year on wages so that can go up with the TV money by £115kpw. Swansea, Norwich and Southampton all spent £40m last year, so they can increase their wage bill by £16m (£307kpw) this year and that’s another five or more decent players. And guess what they have done this summer. They are being allowed to play catch up. If they truly are exempt from that aspect of the regs then they can spend even more provided they stay within the UEFA regs.
What this means is that historically there are a big three with wages over £170m which will basically be subject to a freeze. Then a gap to the next three which again are effectively frozen. Although Spurs will use the Bale money to increase their wage bill by probably £20-30m as it’s nowt to do with TV money. This means that they have the tools to consolidate their position with Arsenal and Liverpool. There will then be a massive gap from those three above £125m to the rest below £75m. There will be 11 clubs between £75 and £52m with the three promoted clubs given the choice of spending to catch up or protecting their position in case they are relegated.
Last season the gap between West Brom on 49 points in 8th and Sunderland in 17th on 39 points was only 10 points. This season expect it to be closer.
So what options have Newcastle to show the ambition fans call for? Well the obvious option and the most likely one is already being used. Bring players in in January to inflate the wage bill so that the extra £4m has the greatest impact (we brought in five players remember). So that was not necessarily a knee **** reaction to the fear of relegation but shrewd planning depending on how you look at it. Next we have to get rid of anybody who does not have the capacity for growth. Goodbye Perch, Simpson and Harper. Sell high if anybody wants a player or two and reinvest the capital in wages (Cabaye and Debuchy to PSG please). Otherwise only buy when the accounts permit, for example Remy and another striker.
The big problem is that we are now back in the pack financially. Top of it yes, but still in 7-17th place. We could try and increase our spending and still get relegated as QPR who last season spent £86m on wages showed. Good management is better than deep pockets.
The only way that we can increase our football income is by getting into the Champions League The Europa League does not pay. That means spending between £125m and £150m each year on wages to have a one in four chance of getting 4th place. Nobody in their right mind is going to take that gamble. So expect a well managed club aiming to be best of the rest. And expect a new commercial director to boost income off the field to consolidate our position.
Last question before I go. Would you be prepared to pay and extra £1000 per year for your season ticket if it was spent on player wages so that we could compete 4th to 7th on a level playing field?
Now then, clear as mud? This has been a great oversimplification, by someone who is both past it and under pressure. Any questions or comments please feel free to leave them below.
Ha! You have been admiring my underkegs Aussie. Tell the truth. 😆
Grandad Les’ specials. 😆
Troy Stavers(Quote)
excellent read Prem, superbly put together.
Hey troy u have a canny shape for a fat kid.
A little concerning seeing a lost blonde peeking thru a door and you coming out of the cupboard with knickers on yer head 🙂
mark(Quote)
Troy…quite impressive…to get to that size after only 12 days of over indulging I mean 😆
richietoon(Quote)
gelding, came to mind when I saw the togs mate 😆
Aussie Magpie Fan(Quote)
@Mark
Prem did a cracking job explaining things. It’s just unfortunate that Begas got the wrong end of the stick. 😆
Troy Stavers(Quote)
M – I’d sell Cabaye to whoever offered the money we want for him – get rid of this new circus.
DJG – I like that line up mate but I’d like to see him play Vukic behind Cisse and move Marv over to the left in place of Sammy. I think Vukic would be more of a goal threat tbh
Sharpy17(Quote)
DJG – I wouldn’t be disappointed if they replaced Jonas to be honest. But I think he still offers more than those other players put together to be honest. I we got rid of Willo, Obertan, Gosling and Amalfitano and pooled 40k in wages I’d replace them all with a midfielder who could play centre and right.
Curtis Good could take Willos place at least til Jan, the new signing would cover the usage of Obertan and Gosling and then we have Vukic would would be ahead of Gosling for me as well.
The thing is mate we have other squad players who don’t get their chance coz Pardew keeps picking the likes of Obertan who does little to nowt when selected. Pardew likes Willo coz he’s a hoofball CB but we need to change things IMO.
I’m not in favour of having 4 rubbish players incase of injury or suspension when the young uns could be given a crack at it.
Sell the 4 for 1 decent player and give the young players a chance if needed – Villa proved last season that its worth putting faith in your younger players rather than depending on the likes of Dunne, Bent and Zog.
Sharpy17(Quote)
Aha, ok, accountancy never was a strong point of mine 😆 It still means we could add about 20m to the wage bill without using the tv money and still have a healthy profit.
And given that the cost of buying a player is (what’s the term?) amortised (?) over the period of the contract, there’s room for a few players in without breaking the rules or jeopardising our financial integrity – unless we get relegated of course. But if that happened there’d be mass suicide and there’d be nobody left to care 😆
So, I’m still struggling with my original question … why is it such a problem? or should it be: where is the problem?
Try and make the answer simple for me though, I don’t have as big a brain as Troy apparently. 🙄
brisvegas(Quote)
@Begas
😆 I thought you were the brighter of the two of you but it looks like Aussie’s got the wit and the brains. 😆
Troy Stavers(Quote)
Wow, Troy, you might be right for once! 😉
brisvegas(Quote)
Cabaye to Spurs for £10m + Gylfi Sigurdsson, then use the £10m to buy either Ayew, Gomis or my preferred choice Finnbogason. That would give us this:
——————- Krul —————
Debuchy – Colo – MYM – Santon
——— Sissoko — Anita ———-
—- HBA — Marveaux — Sigurdsson
—– forward or your choice —–
Forward of Cisse, Remy or whoever we buy that £10m.
I’d be well happy with that like.
Sharpy17(Quote)
Sharpy what makes you think we would spend the Cabaye money ❓ We are running out of time and it takes a long time to sign players sure 😉
Big Dave(Quote)
Dave – I can live in hope can’t I?!.
Even if we didn’t spend that £10m but added Sigurdsson to the team behind Cisse or Remy, I still think that would be an improvement and would create us chances and goals.
Sharpy17(Quote)
Great article, really good. but one question left is that if we can only spend say 4m of TV money on wages, and haven’t used it to fund players, where will the rest of the increased TV money go? Surely into Ashley’s pocket? Or am I missing something…..
BIGPAPA(Quote)
Dave and Sharpy – I think the fact that we are waiting till he leaves, we are not spending anything – shambles – everyone knows he wants to go so why not do things properly for a change?
Like any decent club would do.
We are going nowhere with these new regulations then.
BIGPAPA(Quote)
doesnt matter who we sell as we wont invest and if we do invest it still doesnt matter as Pardew is our manager 🙁
get kinnear in 😛
mark(Quote)
Sharpy I guess we all have to live in hope
Big Dave(Quote)
New article up peeps – I’m on me tod on there at the minute man 🙁 😆
Sharpy17(Quote)
Good read Prem thanks for this. I see some of the good in what is being done but first and foremost we need to survive and that is by no means certain this season. I also don’t really believe the January thing was to inflate the wages-it’s definitely good that we managed it, but I don’t think Mikey had it planned or we would have kept it up when we could. Plus, I doubt it went up by much- Ba out =50-55k pw probably paid for Deb and Goof wages, Mbiwa and Sissoko wouldn’t be on more than 40k each imo. Haidara probably on about 15.
We could fiddle but we won’t, we’ll sell Cabs and use Anita as his replacement (which I’m not that worried about tbh) but I do worry that the funds won’t be reinvested. I’m also not sure Arsenal will raise their bid ,so we need PSG to come in with 20mil and take the surrender monkey off our hands.
Newkie(Quote)
Very fine article Premand. I would agree that we are financially well run but for football we are terribly run and getting worse. If we could finish top of the best of the rest that would be quite a good achievement. But what are our chances of doing that? And how long will the supporters continue to pay out good money to watch dross? The club is being run completely unrealistically because the money flow will not continue unless our quality of play rises dramatically. I can’t see it happening no matter how reasonable the finances look right now.
GeordieTwo(Quote)
I would add that the quality of our squad is impossible to assess properly with Pardew running things. That doesn’t mean bring in another nitwit friend to replace him Mike by the way. That means bring in a highly qualified manager and listen to what he says. Give him a reasonable contract for 2-3 M pounds a year for 3 years and challenge him to get the best out of the club. Expect a finish around 8th-12th for the first season but with rising expectations given reasonable expenditures using the new manager’s and Carr’s advice. You can also sack Joe by the way to save a bit of dosh. 😆
GeordieTwo(Quote)
Cabaye has put himself into a very difficult position in my view. He hasn’t put himself in the shop window by playing well for us. Instead he’s chosen to hide and refuse to play. What does that tell other clubs about him? That he quits when the going gets tough. Will Arsenal actually fork out 20M for him under these circumstances? I doubt it. So what happens if someone doesn’t sweeten their bid? Are we stuck with this useless lump and will he actually be able to come back into the squad and play decent football? Big questions with no clear answers right now.
GeordieTwo(Quote)
Great article Prem and Up. For the first time I’ve understand the FFP rules!
Geordie Deb(Quote)
Some decent results for Prem teams in cup ties today. Norwich scored 6 and Southampton 5. Will we get a few tomorrow? Let’s hope so. The team needs confidence in attack as much as anything right now.
GeordieTwo(Quote)
Where is everyone today? You must all be as busy as me. 😆 I’m still waiting for some positive news in the transfer front. We’re running out of time Joe.
GeordieTwo(Quote)
Joe getting a transfer over the line would be a miracle imo. He seems pretty retarded as Director of Football if you ask me ? I can’t really tale who is doing the worst job at Newcastle these days. I don’t think the club is prepared for this season ? We need a descent winger and a striker but I bet we get sweet F-A thanks to Joe and Mike. Why haven’t we done anything this window, seriously ? This will be the ultimate test staying in a league improving all the time.
stem(Quote)
Is Joe seriously delusional saying 16 players have been signed.
Perch, Harper, Simpson, Ba, Lovenkrand, Guthrie, Barton, Nolan, Best have I missed anyone ?
stem(Quote)
there the ones all gone.
stem(Quote)
Xisko left also if i remember rightly so we done nothing
stem(Quote)
i’m on my own
stem(Quote)
Ba, Cabaye, Sissoko, Gouffran, Ben Arfa (permanent deal concluded), Haidara, Kemen, Cisse, Marveaux, Stephen Ireland, Rob Elliot, Santon, Abeid, Mbiwa, Good, Mbabu, Remy, Obertan, Kuqi
That makes 19 but to be fair Mbabu, Kemen and Good are youth players.
SJP14(Quote)
sjp how manys left ? just curious after 2 the last 2 years ? it must be even ?
stem(Quote)
Yes Joe didn’t mention the players who’ve gone out STEM mate, just players who came in. Overall it’s hard to say whether we’re any stronger than we were 2 years ago now because of Pardew. On paper we look a stronger side but that’s about it. If Cabaye does go it means Ba, Cabaye, Enrique, Barton, Nolan, and Carroll who are first teamers in most squads (not sure about Barton but give him some credit for his last season here) have left us. And they provided plenty of dosh so Mike hasn’t spent anywhere near 60M pounds net, which is all that matters. In fact he will have made money, especially if they get somewhere around 20M for Cabaye. If they get 20M for Cabaye then that’s 55M from just him and Carroll! It’s all bollocks as usual from Joe STEM. Nobody is being fooled anymore (if they ever were).
GeordieTwo(Quote)
I forgot Alan Smith aswell G2. It’s just the same amount gone out the door as in. Ashley made 35 million on Carole, 7.5 on Ba 4 Nolan 20 Cabaye if he leaves. He hasn’t spent 60 in two years. 17 in janaury 10 on cisse which is 3 million over the Carole sale. There’s no truth in what Joe says
stem(Quote)
Oh it’s definitely outweighed and the SQUAD is weaker even if we potentially have a stronger team.
Ba, Barton, Nolan, Carroll, Enrique, Harper, Simpson, LuaLua, Xisco, Routledge, Ranger, Guthrie, Lovenkrands, Smith, Perch. That’s just players in contention for first team places not those youngsters such as Kadar and Moyo who were given a big billing and never lived up.
So that makes 15 out.
SJP14(Quote)
Spot on STEM and SJP14. It’s all bollocks from Joe. We have spent very little over Mike’s 6 years in terms of players. We are probably in the bottom 5 on net spending for players in fact. It’s more of the same from the 3 stooges. There is no intention to build a strong squad and try for Europe again. The only intention is to make money for Ashley. Scum always floats to the top so you can see it. It’s showing now and has been for quite a while. The only real way out of this is a new owner with some proper values. Pride in the team, pride in the city, a desire to have the team win something.
GeordieTwo(Quote)
G2 Why on gods earth doesn’t Alan say something ? If he gets sacked it’s a bonus for him. Joe and Ashley have been trying to force him out behind the scenes. Telling us they spent 60 million on players is false information for a start. Lying to the fans that everything’s rosie between Joe and Alan. He has almost a completely different squad. To much to fast and the team has lost it’s identity in two years. Barton, Nolan, Enrique, Carole, Ba, Xisko, Best, Harper, Perch, Simpson, Smith, Guthrie, Lovenkrand that’s way to many changes mate. Ok Smith, Xisko are past it but it’s not the point i’m trying to make. This amateur owner Ashley sales our most experienced player for a quick buck. Get’s younger inexperienced players in that take two years to adapt. It sounds good on paper but relegation from to many changes is destroying this club
stem(Quote)
G2 and SJP14 I really fear relegation but I can see it happening. I will still support the club but it’s the only way to get rid of Ashley. I really hope he sales before and relegation doesn’t happen
stem(Quote)
Have to agree with you STEM mate. There is still time to do something in this window but if Cabaye goes will he be replaced properly. We really need a very good ACM to supply Remy and Cisse. I like Anita but he may not be enough. Marveaux is very good in patches as well but it’s still not enough. Bring in a very good winger as well. We’re weak attacking on the right. Ben Arfa is not a true right winger, he should be in behind the strikers. We’ve all said these things over and over but Ashley is determined not to improve further after spending in January.
GeordieTwo(Quote)
Talk to you all again tomorrow lads and lasses. Let’s hope the news is good for us.
GeordieTwo(Quote)