Financial Fair Play / Profit & Sustainability

[Whitley mag]

19 minutes ago, pubteam said:

But then how much do they actually want to invest into the club? They may have decided it’s too much trouble. City have challenged the rules and Chelsea found a route around them.

They paid a billion quid to help push the takeover through to BEIN Sports, they’ll be frustrated as much as us, but they’re an investment fund and play by the rules.

 

They’re about to invest approaching 2 billion on infrastructure, we really just need to understand it’s a long term investment and they’re doing it strategically and patiently.

[Stifler]

38 minutes ago, Whitley mag said:

They paid a billion quid to help push the takeover through to BEIN Sports, they’ll be frustrated as much as us, but they’re an investment fund and play by the rules.

 

They’re about to invest approaching 2 billion on infrastructure, we really just need to understand it’s a long term investment and they’re doing it strategically and patiently.

We’re an investment, but a soft power investment, not a financial one.

As you say, they are about to take the spend on NUFC alone to about £2bn, possibly more if the stadium is going to cost more than the £1.2bn the latest rumours suggest it is. I also think the training ground for what they want will end up costing more than the reported £200m budget.

 

Since they took us over they have already invested £300m in Teesside. They are rumoured to have a lot of other projects in the pipeline in the area, be that Sports teams, or buying a controlling majority of the airport.

 

If the stadium goes ahead, then that development will dwarf any sole project the North East has ever seen (at £1.2bn, it would cost 50% more than what the 1984 Metro project cost if we adjusted for inflation), and to be honest I can’t see it being beaten unless they come back and do something else.

 

I still think the stadium will be a venue for them to host European editions of things like WWE, Boxing, Taylor Swift style concerts.

 

Newcastle and the North East as a consequence will be the project that enables Saudi Arabia to keep their seat at the table with world leaders once the oil race is over.

 

 

Edited Saturday at 19:41 by Stifler

[Displayname]

Hoped Saudi-Arabia would have put up more of a fight. Impossible to move forward under these conditions.

[TRon]

10 minutes ago, Displayname said:

Hoped Saudi-Arabia would have put up more of a fight. Impossible to move forward under these conditions.

 

They've been hamstrung by the conditions they agreed to with the PL when the takeover was allowed.

 

We'll only know the real extent of their ambition if they are given an avenue where they can flex their muscle. The APT rules being ruled illegal might be that avenue.

[SUPERTOON]

 

[r0cafella]

It's as I said they need to get back to consensus building. The cartel simply has to compete at some levelvv

[Nobody]

22 hours ago, HayDen Traces said:

PSG manage to navigate UEFA's spending rules alright

Aye but isn't their CEO also like the president of UEFA or something daft like that? 

[SUPERTOON]

Apologies to anyone who doesn’t have twitter/X, not sure if you can read the thread.

 

 

[Abacus]

In most businesses, APTs are perfectly legal, they just need to be disclosed so that shareholders know where the money is really coming from.

 

What the PL have tried to do instead is so obviously wrong since they have attempted to come up with a new definition as to what can actually be spent which makes no commercial or sustainability logic, which doesn't follow the law per the latest ruling, and nor have they given any reason as to why they are required unless it is to stop certain clubs and protect others.

 

Not saying anything new here I realise, just amazed that they have gotten away with it for so long. No idea why Masters thinks any part of his revised rules will apply, but not surprised he's tried to revert to UEFA rules since the problem then shifts from his desk.

[Jackie Broon]

4 minutes ago, Abacus said:

In most businesses, APTs are perfectly legal, they just need to be disclosed so that shareholders know where the money is really coming from.

 

What the PL have tried to do instead is so obviously wrong since they have attempted to come up with a new definition as to what can actually be spent which makes no commercial or sustainability logic, which doesn't follow the law per the latest ruling, and nor have they given any reason as to why they are required unless it is to stop certain clubs and protect others.

 

Not saying anything new here I realise, just amazed that they have gotten away with it for so long. No idea why Masters thinks any part of his revised rules will apply, but not surprised he's tried to revert to UEFA rules since the problem then shifts from his desk.

 

The fundamental principle of the PL controlling APTs and limiting them to fair market value was found to be lawful by the tribunal, it was only the exclusion of shareholder loans and some procedural stuff that was found to be unlawful.

[FloydianMag]

5 minutes ago, Abacus said:

In most businesses, APTs are perfectly legal, they just need to be disclosed so that shareholders know where the money is really coming from.

 

What the PL have tried to do instead is so obviously wrong since they have attempted to come up with a new definition as to what can actually be spent which makes no commercial or sustainability logic, which doesn't follow the law per the latest ruling, and nor have they given any reason as to why they are required unless it is to stop certain clubs and protect others.

 

Not saying anything new here I realise, just amazed that they have gotten away with it for so long. No idea why Masters thinks any part of his revised rules will apply, but not surprised he's tried to revert to UEFA rules since the problem then shifts from his desk.

In business isn’t it RPT’s that are used and have to be shown in accounts under accepted accounting procedures?

[Maggies]

I can’t see a way that the Premier League can get out of this.

 

Even if the new APT are found legal, how can you punish clubs for PSR when 2 of the 3 years being judged had illegal APT rules.

 

Moving to squad cost rules would work, but that has just been voted out as well…

 

They’ve got themselves in such a mess and it’s brilliant!

[Abacus]

20 minutes ago, FloydianMag said:

In business isn’t it RPT’s that are used and have to be shown in accounts under accepted accounting procedures?

It is, yes. Not sure of the terms of the tribunal, but the two concepts are very similar.

[Jackie Broon]

27 minutes ago, FloydianMag said:

In business isn’t it RPT’s that are used and have to be shown in accounts under accepted accounting procedures?

 

Before our takeover the definition of a RPT in the PL's rules was this:

 

“Related Party Transaction” means a transaction disclosed in a Club’s Annual Accounts as a related party transaction or which would have been disclosed as such except for an exemption under the accounting standards under which the Annual Accounts were prepared;

 

Following our takeover they changed the term to Associated Party Transaction and this is the current definition:

 

An “Associated Party” is a Person that is associated with the Club. In considering each possible Associated Party relationship, the League will direct its attention to the substance of the relationship and not merely the legal form.

 

1. A Person is associated with a Club if that Person or, where that Person is an individual, a close member of that individual’s family (i.e. those family members who may be expected to influence, or be influenced by, that individual in his dealings with the entity, including that individual’s parents, children, siblings and spouse or domestic partner, children of that individual’s spouse or domestic partner, and dependents of that individual or that individual’s spouse or domestic partner):

(a) has Control or joint control over the Club;

(b) holds a Holding in excess of 5% of Shares;

(c) holds a loan interest or other debt or security interest of any kind in the Club or an entity in the same group of companies as the Club, with the exception of any such interest held:

(i) as part of regulated banking services provided by a Financial Institution;

(ii) in the form of bonds, notes or other securities held by professional investors; or

(iii) pursuant to a debenture providing the holder with access to tickets to events at the Club’s Stadium;

(d) has Material Influence over the Club or an entity in the same group of companies as the Club; or

(e) is a Director or member of the key management personnel of the Club or of a Parent Undertaking of the Club.

 

2. A Person is also associated with a Club if any of the following conditions apply:

(a) the Person and the Club are members of the same group of companies;

(b) the Person and the Club are directly or indirectly controlled, jointly controlled, or Materially Influenced by the same government, public or state-funded body or by the same party;

(c) the Person (or a Director or member of the key management personnel of the Person) has Material Influence over the Club (or vice versa);

(d) the Person is an associate or joint venture of the Club (or an associate or joint venture of a member of a group of companies of which the Club is a member) (or vice versa); (e) both the Person and Club are joint ventures in which the same third party is a shareholder;

(f) the Person is a joint venture in which a third party is a shareholder and the Club is an associate of the third party (or vice versa);

(g) the Person is controlled or jointly controlled by a Person identified in paragraph 1;

(h) an individual identified in paragraph 1(a) has Material Influence over the Person or is a member of the key management personnel of the Person (or of a parent of the Person); or

(i) the Person, or any member of a group of which it is a part, provides key management personnel services to the Club;

 

“Associated Party Transaction” means, in respect of any Club, a Transaction that is, whether directly or indirectly, between:

(a) a Club and an Associated Party;

(b) a Player registered to the Club and an Associated Party of that Club; or

(c) a Manager or Senior Official of the Club and an Associated Party of that Club, 

 

with the exception of any Transaction pursuant to which the Club, Player, Manager or any Senior Official of the Club is exclusively a purchaser of goods or services (and does not receive any payment, fee or monetary equivalent) and the total value of any consideration either paid or to be paid by the Club or individual (as applicable), when added to any consideration paid or to be paid by the Club or individual (as applicable) in respect of other Transactions with the same party agreed in the preceding three years, is less than £500,000 (and subject to Rules E.70 to E.71). In considering whether a Transaction is an Associated Party Transaction, the League will direct its attention to the substance of the Transaction and not merely the legal form;

 

[Jackie Broon]

35 minutes ago, Maggies said:

I can’t see a way that the Premier League can get out of this.

 

Even if the new APT are found legal, how can you punish clubs for PSR when 2 of the 3 years being judged had illegal APT rules.

 

Moving to squad cost rules would work, but that has just been voted out as well…

 

They’ve got themselves in such a mess and it’s brilliant!

 

I think the only way will be to start over with a new PSR cycle from scratch. But even then they will run into fairness arguments, like what about clubs who made big profits on players in the previous seasons that would no longer count positively towards their PSR calculation? 

 

I might be wrong because the full details of what was proposed are not public but I doubt the would have squad cost as the only control. That's because without some control over losses clubs like us could just probably increase our turnover with loss making activities to benefit the squad cost ratio. I think, like UEFA, the proposal would be to have both squad cost and PSR together.

 

 

Edited Sunday at 14:52 by Jackie Broon

[Unbelievable]

6 hours ago, SUPERTOON said:

Apologies to anyone who doesn’t have twitter/X, not sure if you can read the thread.

 

 

 

It's only after reading this tweet that I've understood something quite hilariously uncompetitive and flawed about these new APR rules agreed in November. I always thought the "no historic owner loans" provision meant that owner loans excluded until the new rules came into effect would not be applied retrospectively, but would be included going forward. Seems I was wrong, and what was actually agreed is that owner loans that were in effect before the new rules were agreed will forever going forward be excluded from PSR calculations, giving clubs like Everton and Arsenal a lasting advantage over their competitors? Aye, if true, good luck defending these financial "fair play" in court lads

[Unbelievable]

11 minutes ago, Unbelievable said:

 

It's only after reading this tweet that I've understood something quite hilariously uncompetitive and flawed about these new APR rules agreed in November. I always thought the "no historic owner loans" provision meant that owner loans excluded until the new rules came into effect would not be applied retrospectively, but would be included going forward. Seems I was wrong, and what was actually agreed is that owner loans that were in effect before the new rules were agreed will forever going forward be excluded from PSR calculations, giving clubs like Everton and Arsenal a lasting advantage over their competitors? Aye, if true, good luck defending these financial "fair play" in court lads

Did some more digging and the above is not true, strictly speaking (source PL press statement):

 

Quote

Shareholder Loans 

- The new rules seek to ensure that there is appropriate parity between the treatment of shareholder loans and other APTs going forward, with transitional rules clarifying the treatment of existing shareholder loans within that framework. 
- Shareholder loans entered into after 22 November 2024 will be required to be submitted as an APT and subject to an FMV assessment. If the Premier League Board determines the loan to evidently not be at FMV, the club in question shall be required to terminate or vary the loan to reflect FMV and pay any identified shortfall in interest.
- Any Shareholder loan that was entered into before 22 November 2024 and which is replaced with other forms of financing (e.g. by way of conversion to equity or repayment) within 50 days (i.e. by 11 January 2025) will not be required to be submitted as an APT or assessed for FMV. 
- Any Shareholder loan that was entered into after 14 December 2021 but before 22 November 2024 and remaining in effect on 11 January 2025 must be submitted as an APT. If the Premier League Board determines the loan is evidently not at FMV,  the club is permitted to retain the Shareholder loan on its existing terms, though adjustments must be made to its Annual Accounts for 2024/25 onwards as if, from 22 November 2024, the loan was at FMV.
- Any Shareholder loan that was entered into prior to 14 December 2021 and remaining in effect on 11 January 2025 must be submitted as an APT and be subject to an FMV Assessment upon any drawdown taking place after the 22 November 2024. If the Premier League Board determines the loan is evidently not at FMV,  the club is permitted to retain the Shareholder loan on its existing terms, though adjustments must be made to its Annual Accounts for 2024/25 onwards as if any drawdowns made after 22 November 2024 were at FMV.

 

Not entirely sure what that bit on bold means though. Presumably they may be kept as interest free loans, but for the purpose of the accounts they need to be adjusted to have a market value interest. Not sure how that would work with such hugely risky and B2B loans, as well as not actually having to pay the interest and the financial benefits that brings. Looks like something any legally qualified person could drive a school bus through again.

[TheBrownBottle]

8 hours ago, r0cafella said:

It's as I said they need to get back to consensus building. The cartel simply has to compete at some levelvv

They had - and a have - a consensus.  The vast majority of clubs backed the previous and current rules.  The ‘minnows’ of the PL gain just as much as the ‘cartel’. 

[FloydianMag]

 

[TRon]

50 minutes ago, TheBrownBottle said:

They had - and a have - a consensus.  The vast majority of clubs backed the previous and current rules.  The ‘minnows’ of the PL gain just as much as the ‘cartel’. 

 

This is what the PL - and by extension, the cartel - were banking on. Majority rule forever. Problem is that doesn't stand up in court under scrutiny. If every parent sent a petition to a school that they all wanted their kids to be spanked by the teachers with no legal repercussions, if just one parent recanted and took it to court, those rules would be thrown out even if the school made them part of their policy.

[Whitley mag]

Quite laughable how cartel journalists like Sam Wallace from the Telegraph are so anti City, claiming there needs to be financial controls for the competitiveness of the league.

 

The anti competitive measure currently in place is PSR and stopping the very nature of the competitiveness he apparently wants to protect.

 

I have no problem with an equal playing field US sports ensure this and if they wanted to introduce a spend limit for all clubs then so be it, that would be competitive and ensure an equal playing field for those that truly want to compete.

 

But they don’t want an equal playing field and the charade of sustainability is a convenient cover. 
 

Furthermore UEFA are also at it with payments to so called legacy clubs, how come we get less for reaching the same stage of the competition as Man United, the elite clubs are guilty of protectionism and anti competitive collusion, hopefully City blow it all apart for what it really is.

 

 

 

 

[Ben]

I still can't believe how owners still go along with these rules, it's basically a slap in the face to them to say you can't run your clubs properly so corrupt organisations like the EPL and UEFA need to put restrictions in place.

[Shak]

Aye, just the sentence explaining this article is wild.

 

 

The crux of the argument is that you need financial rules that hand a massive advantage to some clubs because without them it could potentially hand a massive advantage to some clubs.

[r0cafella]

Just now, Shak said:

Aye, just the sentence explaining this article is wild.

 

 

The crux of the argument is that you need financial rules that hand a massive advantage to some clubs because without them it could potentially hand a massive advantage to some clubs.

We had no financial rules for over a 100 years

 

We walking back all of those trophies or nah? As you've pointed out Shak we should designing rules around competitive balance and not to entrench an elite. 

[Abacus]

"Legal onslaught" = challenging rules where the previous rules have already been shown to be void and the new ones might well be.