Some time ago I was asked by one of our readers to take a look into the new Financial Fair Play (FFP) regulations and just how Newcastle United fit into them.
Most people are now familiar with what the aim of FFP is, but just in case you aren’t the aim is essentially to get football clubs running in a self-sufficient manner which will, hopefully, lead to other aspects, like the transfer market and player wages, being brought under control naturally.
The penalty for failure to adhere to these rules is as yet unspecified. There have been rumours that clubs who break the rules will be banned from UEFA run European competitions such as the Champions League although I personally feel that will be a last resort kind of punishment. We’ll have to wait and see of course as the list of punishments is set to be unveiled by the end of this month ahead of being ratified in March.
Anyway, back to Newcastle United. How do we fit into it?
Well the first thing to understand are the rules themselves. Some of them are pretty clear cut while others are very hazy. Let’s just say that when it comes to FFP, not everything is as black and white as it seems.
As Platini’s puppy leaps into action we are now at the stage where accounts are being looked at. From now until the end of the 2013-2014 season clubs can amass losses of £39.5m (just over £13m each season) but only if these losses are subsidised by an owner who is taking shares in return or is underwriting an infrastructure project, such as a new stadium or training ground upgrades. If this isn’t the case then losses are limited to just £4.4m.
From 2014-2017 losses are limited once again and will be capped at £8.4m a season but only in the same instance as above – if the owner is taking shares or underwriting infrastructure projects.
At the moment we are well within these limits although it feels like a hollow success when you see other clubs posting such significant losses. With the first penalties set to be imposed at the end of the first reporting period surely we could start to see some vindication of our owners approach?
Perhaps not.
There are many loopholes that are yet to be fully exposed, but one of them which has been exposed is advertising revenue. I’m talking about Manchester City here in this instance. It’s well documented that they’ve signed a deal worth in the region of £340m with Etihad for the naming rights to what is now the Etihad Stadium.
Now under the FFP ruling each sponsorship deal is to be looked at by a dedicated panel to see if it is comparable to what can be achieved in the open market – particularly pertinent considering the Mansour family owns Etihad raising accusations of foul play to try and get round fair play.
However when questioned Manchester City got all ambiguous and said that the sponsorship was for the entire 210 acre site surrounding the stadium which will eventually house an academy, a second stadium for reserve fixtures, sports science centre along with retail and office space. That makes it an infrastructure project which means that none of the costs involved will be counted towards the FFP calculations.
What does that mean for us? Not a lot really, but it does show that there are loopholes in the rules. Another one is transfer fees. An accounting term called ‘player amortisation’ comes into play here. Basically, say we sign a player for £5m on a five year contract and pay him £1m a year – a total cost over the five years of £10m. Not all of that comes off the accounts at once. Instead it will show as £2m per season (fee ÷ length of contract + annual wage). Using a more extreme example, £50m Fernando Torres would only show as a £17m hit on Chelsea’s accounts (£50m ÷ 5.5 years + £8m a year in wages).
It’s hard to quantify just what our income is. The last official accounts available are relevant for our Championship season which means that the next set will feature last season and so on. They are generally released late so I expect we’ll get them around March time again which makes them outdated before they are even released. This is the problem which trying to guess the finances of NUFC – people guesstimate based on out of date information. However if you wish to look at the last set of accounts you can do so by clicking here.
Using rough estimates we are well within the guidelines of the FFP regulations and should, in theory, be well placed to capitalise should the rules be followed through. I mean we have resources that outweigh all but a few clubs so if the rules are followed then we should naturally float back towards the top, even with the Ashley approach which is basically following the FFP guidelines.
Debt is not an issue under FFP. A club can be saddled with it in truth but as long as it can afford the repayments from it’s own revenue then it is not seen as being a problem. Of course the knock on effect is that if a club is spending all it’s money on debt then how can it afford to pay for transfers and stuff like that. We are in debt ourselves but we don;t owe any of it to the back so there are no structured repayments which effectively means that this doesn’t really affect us.
The problem is that there are a lot of “if’s” in there. If this, if that. It’s a huge problem. For these rules to work UEFA need to stick to their word and be strict with clubs who are found to be breaking the rules. Failure to do that will render Platini’s puppy useless because if one club finds a way around things or escapes punishment then the rest have a precedent set that they can follow, and with all this talk of court cases and claims for restriction of trade you have to wonder if UEFA have the bottle to go through with it all.
The concept is great but I fear the execution may be lousy which is a shame, because if it wasn’t and they did work out it would be very good for Newcastle United as we already have a head start on the majority of clubs when it comes to FFP. Time will tell all I guess, but some huge names have a reputation hinging on the proper introduction of FFP.
Don’t you Michel Platini and Karl-Heinz Rummenigge!
mark he’s no fan of any team with those views imo
night lads im off
ice pup(Quote)
@Troyore 😆
aye, havent come down yet..
boing boing boing!
mark(Quote)
Mark I would watch you don’t get carried away just yet because if there is a whip in Jabba’s tail you will end up looking like a right mug 😆
Big Dave(Quote)
@ice pup nite dude, aye, agree there
@icedog I’d rather just sign up Colo and buy the Aussie from Boro as back-up..
mark(Quote)
@Big Dave
thats ok m8, I love the excitement and don’t mind a hard fall, its part of the fun 😆
mark(Quote)
Mark @ 79 imo Colo is a very important player and must be signed up
Big Dave(Quote)
MARK i would love colo to sign m8,but if jabba gets a good bid he will go at 29 jabba will cash in imo,but lets see
icedog(Quote)
@Big Dave
very true m8, but like you say, a lot is hinged on the next 12 days and then Colos contract to sort out. I’m not that stupid to think there mightnt be a slap in the teeth from Ashley but I have a good feeling we’ll replace quality with quality and show some ambition
boing boing boing
mark(Quote)
i think next season if we keep the big guns eg colo , krul , tiote , ba etc and buy a few players in like hoillet and samba then i think we will be heading towards champions league footy!! it is quite unreal how we have been promoted then 2 seasons later we are starting to think about champions league …. am i getting ahead of myself here?? i think in the summer aswell we shud defo try and get another striker #greedy me
Army69(Quote)
@Icedog, not sure which Prem teams would opt for him, most have a decent pairing of centerhalves and at 29 + the decent wage he’s on there could be a chance he’s settled here and wants to stay..
but aye, lets see. tbh I’ll be worried if we spend a lot of money on a good centerhalf, prob means hes off
mark(Quote)
Dub – Just seen your post about cash injections from owners. They can only pump cash in on infrastructure projects,like new heating, new ground, training academy etc etc. They can underwrite losses, but they must take some for of equity for it. Basically they can’t justkeep on pumping money on or underwriting losses
toonsy(Quote)
Nolan Roux is going to Lille for 8million Euros
icedog(Quote)
anyway, (bee) 🙄 good fellers, off 2 bed with poo and a pot of honey 😉
boing boing…
mark(Quote)
army69
why don’t we really f*** ourselves up next january and get Sow, then we can boast senegals entire front line. since lovo and prob ranger will leave in the summer (as well hopefully xisco) then we’d have some gaps in the striking department, its at this point we should buy rhodes whilst throughout the season slowly bringing the youth players through.
andymag (scot toon)(Quote)
MARK laters m8
icedog(Quote)
Mark @ 83 I just don’t want us to be a side that continually has to replace our better players. IMO we need to hold on to them and add to them.
I just think if thats the road we are going down it’s a big mistake because it’s not going to work everytime.
Funny my wee lad was talking to me about when the new virgin tops were out, and I said that I will get him one for next season but I was going to get his own name on the back, his answer was yeah dad theres no point cause they keep selling my fav players, he is only 9 and I think all younguns need to have fav players to keep them interested, not chop and change every couple of yrs, I think we need stability in the team
Big Dave(Quote)
Army @ 84 tbh if Ba stays I don’t think there would be any point in bringing a striker in, we will have best as a back up and there will be the younger ones coming up ❓
Big Dave(Quote)
wrexham v brighton on penalties
andymag (scot toon)(Quote)
Wrexham 0-1 Brighton on penalties. 😥
andymag (scot toon)(Quote)
Wrexham 2-3 Brighton on penalties.
andymag (scot toon)(Quote)
brighton win 👿
Beardsleys Boots(Quote)
Brighton it is then.Really not feeling that one like 😕
toonsy(Quote)
Match ends Wrexham 4-5 Brighton on penalties. 😡 😥 oh well tis a shame, wrexham sounded like they were the better team.
andymag (scot toon)(Quote)
Over 1200 comments in the last two days 😯
toonsy(Quote)
Well if we can’t beat Brighton we don’t deserve to go through…
JJ(Quote)
Toonsy – Just a testament to your terrific work! excellent site. btw hows the cucumber thing coming along?= 😀
Anyway, So over the moon with Cisse like, and if they get in Yohan Benalouane or Thomas Vermaalen I would creaming!
HWTL
bring on brighton.
AlanPardewProject(Quote)
Toonsy @ 99 good job lad 😉
Big Dave(Quote)
Dub- Just read your post and will bow to your obvious superior knowledge when it comes to this debate.My views our clouded by having seen my father suffer at the hands of some very creative accounting many years back. Glad to hear things are cleaner and better regulated nowadays by peeps like you. 🙂
kimtoon(Quote)
would be*
pretty long way for travelling fans to brighton! Might aswell play in china.
AlanPardewProject(Quote)
“Over 1200 comments in the last two days “….it’s that Mark, the fecker never shuts up! 😆
richietoon(Quote)
Cheers sy, just wondering if you came across anything.
I wanted to avoid brighton originally too but wrexham looked a canny team and could’ve been an intimidating trip for some of the frenchies 😉 brighton have been on the slide since 10/15 games in so i’m not too disappointed really
Dubtoon(Quote)
Thomas Vermaalen? Em, the Arsenal defender? Doubt it
JJ(Quote)
Someday hopefully Kimtoon 😉 sorry to hear about ur dad 🙁 you’ll find people like that in all walks of life i find unfortunately.
How many posts was it last deadline day do you remember toonsy? I remember we were edging 1000 on the thread but cant remember if we got there
Dubtoon(Quote)
JJ – Youre right am wrong. meant Vertonghen 🙂
AlanPardewProject(Quote)
Big Dave @ 92 – You could always stick Shola’s name on his back? 😉 Hehe
Shamrock(Quote)
Was thinking you were being a bit optimistic APP 😆 makes more sense now
Dubtoon(Quote)
over the moon that brighton won, first time i’ll have a 10 min walk to a ground to watch the toon, normally get up for a few games a season at SJP and do the London away games – Brighton are extremely beatable and have a decent ground and more importantly a decent pitch, the racecourse looked bumpy as fook
just hope i can get a ticket like
stevep(Quote)
Dub – 900+ off the top of my head. I think 😕
toonsy(Quote)
Toonsey @ 99 fantastic 1200 comments , thats what happens when you start topics about vegetables in dark places 😉
Axel(Quote)
Dubtoon – aye, must be recent days excitement, that has me being delusional or sommat 😆 we will win champions league in 2 years!!! 😛
AlanPardewProject(Quote)
Stevep
Exactly, mate! I could see a potential banana skin against Wrexham. Poor pitch and players playing like it’s a cup final…No thanks.
Brighton have a new ground and pitch. Just right for us. I am confident we will win now.
Also, people are still talking about Cissokho on Twitter etc. It’s not going to happen and the club have confirmed it.
~ El Toro ~(Quote)
Dunno if its the same in the rest of the world, apart from Newcastle obviously, but all the faded Toon fans seem to be coming back out of the wilderness over here.
Seeing a lot moreToon shirts than I was a year ago…
JJ(Quote)
As much as I don’t like unloyal fans, it does show the massive worldwide brand Newcastle could be with a little success.
They have millions of supporters around the world considering they havnt won nowt in 40 odd years.
JJ(Quote)
APP
I wouldn’t mind Vermaalen, great player but a bit of a crock.
😉
I think the ideal player we need now is another Aaron Hughes.
He never let anyone down and could play anywhere apart from striker or keeper…
JJ(Quote)
i still say +65% that we sign cissokho or another equally as good defender ..
TOONPIPES(Quote)
JJ – aye. Shame Hughes was sold. Really reliable player. Agree with about vermaalen, but think vrrtoghen is similar only bigger/higher which is good. Both have great technique for a centre back.
AlanPardewProject(Quote)
I still can’t believe the last few days. I didn’t think we would even get Miaga or Erdinc but Cisse is a better striker than both, and knows BA, and is the no. 9 CF finisher to Ba’s Second Striker drops off, plays the channels. They could be the best strike partnership in the league. 😯
DJG(Quote)
Toonpipes
We can sign a better defender easily. In my opinion, we missed a big trick in the summer with Neil Taylor. He looks good on the ball, intelligent and committed defender. Not too mention he doesn’t stop running. He would have been a steal for a few million.
~ El Toro ~(Quote)
Poor grammar/spelling in my last post. Apologies 🙂
~ El Toro ~(Quote)
stevep
January 18, 2012 at 22:29
over the moon that brighton won, first time i’ll have a 10 min walk to a ground to watch the toon, normally get up for a few games a season at SJP and do the London away games – Brighton are extremely beatable and have a decent ground and more importantly a decent pitch, the racecourse looked bumpy as fook’
Some good points there like. I bet Poyet is chuffed to bits, they seem to target our players, (LuaLua, Harper, and now Tavernier rumour) Nice new little stadium they have got and like you say, not having to play it on a battered to hell conference pitch should help us. How many FA cup games would we have to win without our lethal new strike force is what i’m wondering, i’m guessing two?
DJG(Quote)
Fourth Round Proper Saturday 28 January 2012
Fifth Round Proper Saturday 18 February 2012
Sixth Round Proper Saturday 17 March 2012
Semi-Final Saturday 14 April & Sunday 15 April 2012
Final Saturday 5 May 2012
‘Tell ME MA ME MA!!’ 🙂
DJG(Quote)
http://soccernet.espn.go.com/news/story/_/id/1010047/marseille%27s-cesar-azpilicueta-open-to-chelsea-move?cc=4716
I would love to have him as the RB player,but sadly after the fiasco with OM,unlikely to get him.. He is great in long throws too. haha.
Also i was thinking,why not the NUFC scouts find a centre back that can also scores goals? For example: Thomas Vermaelen type.
AngelOfDeath(Quote)
ET – Don;t mean to bust your logic, but didn’t Pardew say we wouldn;t be getting a striker in during January? 😕
toonsy(Quote)
AOD – enter jan vertonghen. The guy can play ball! As well as defend and he scores goals. Even able to smash in freekicks. God i would love it if we were to sign him. Perfect centre half for me.
AlanPardewProject(Quote)
Vertonghen stated on numerous occasions late in 2010-11 that he is considering leaving Ajax at the end of the season.
In May 2011 Frank De Boer confirmed Manchester City boss Roberto Mancini was present at the 2011 KNVB Cup Final held on 7 May 2011, with Vertonghen’s side lost 3-2 to FC Twente.
Mancini was reportedly scouting Vertonghen to strengthen his side for their upcoming UEFA Champions League qualifying for the 2011-12 campaign.
AngelOfDeath(Quote)
Neil Taylor does look decent. Great on the ball. Too late now though.
I’m sure our scouts have some other names up their sleeves.
JJ(Quote)
This is way over my head. 😕
nobby(Quote)