Financial Fair Play / Profit & Sustainability

[McCormick]

Probably doesn’t need to be said, like. But Christ, what a mess.

[Zero]

1 minute ago, PRL said:

Not sure how they get 14 teams signing off on it when 7 teams are already outted as against and other teams being dragged in by new rules. Even if they do, can they really expose themselves to another load of litigation and potential of being sued. How much cash as an organisation do they have to spend on this?

I think the FA guys will continue to go that route

 

 

and secretly sending CV everywhere targeting to quit within 6 months, leave the shit to those staying behind

[Zero]

2 minutes ago, BennyBlanco said:

How many times do Masters et al want to get slapped before they learn their lesson. The premier league has to be an open, transparent playing field for all clubs. The fucking yank owners are desperate to circle the wagons and pull up the ladder but they are fighting against an altogether biggest beast in the Abu Dhabi lot. I’m surprised we have kept our powder dry considering what’s at stake for us.

 

 

 

I find it funny when one of the Saudi Arabia’s intention of buying us is to compete with Abu Dhabi’s Man City, after seeing how successful they have been raising their profile and reputation 

 

and now the EPL is so shit that they two decided to become allies at the moment

 

 

Edited 7 hours ago by Zero

[Boey_Jarton]

28 minutes ago, WilliamPS said:

For loans they would just get quotes from banks at market rates. It really wouldn’t be a big deal.
 

Banks already do this for big corporate clients that need to show arms length terms for internal loans to meet transfer pricing requirements. 

If you think the market value of a loan is as simple as referencing bank market rates then you are mistaken. 

 

Of course such an approach can be taken for internal purposes (generally for the purposes of the corporation tax adjustment to avoid companies artificially shifting profits overseas) but that is fundamentally different to assessing fair value for the purposes of assessing ongoing profit and sustainability, where the substance of the transaction is the only thing that matters. 

 

Your suggestion is exactly the kind of  simplistic approach that the premier league might take, and it would lead to a legal minefield.

 

 

 

 

 

 

 

 

[Ash]

Plenty to go at in that letter sent by Man City but this snippet in particular is very telling on where they stand... 

 

"The tribunal has declared the APT rules to be unlawful. MCFC’s [Manchester City’s] position is that this means all of the APT rules are void, and have been since 2021."

 

 

[madras]

45 minutes ago, lovejoy said:

 

What's your take on this @madras? (Genuine question).

 

Cliff said: “When the PL consulted on and proposed the original APT Rules in late 2021, we pointed out that the process (which took several weeks) was rushed, ill-thought-out and would result in rules that were anti-competitive. The recent award (conclusion of the panel) has validated those concerns entirely.

“The tribunal has declared the APT rules to be unlawful. MCFC’s [Manchester City’s] position is that this means all of the APT rules are void, and have been since 2021.

“In recent correspondence, the PL agreed with MCFC that this is an issue which will need to be resolved by the tribunal. It is therefore remarkable that the PL is now seeking to involve the member clubs in a process to amend the APT rules at a time when it does not even know the status of those rules.”

A warning from Cliff then follows, suggesting there has been a loss of trust in the league.

“We will be writing separately about this to the PL but in the meantime, given the findings in the award, this is the time for careful reflection and consideration by all clubs, and not for a knee-jerk reaction,” he writes. “Such an unwise course would be likely to lead to further legal proceedings with further legal costs. It is critical for member clubs to feel that they can have trust in their regulator.”

 

Cliff then makes a further series of points. He states that the tribunal’s 175-page ruling “does not contain an ‘endorsement’ of the APT rules, nor does it state that the APT rules, as enacted, were ‘necessary’ in order to ensure the efficacy of the League’s financial controls”.

He says “it is not correct that the tribunal’s decision identifies ‘certain discrete elements” of the APT rules that need to be amended in order to comply with competition and public law requirements”.

“On the contrary,” Cliff adds. “The APT rules . . . have been found to be unlawful, as a matter of competition law and public law. This means that they are void and not capable of enforcement. This has very significant consequences for APTs that have been entered into to date and APTs that are currently being negotiated by clubs.”

 

 

 

 

Who's Cliff ?

 

My take is that he's giving his reading of it, in that hes just one of many. We'll soon see if APT is repealed and we have a training ground sponsor for 100mill.

[Dokko]

5 minutes ago, Zero said:

I find it funny when one of the Saudi Arabia’s intention of buying us is to compete with Abu Dhabi’s Man City, after seeing how successful they have been raising their profile and reputation 

 

and now the EPL is so shit that they two decided to become allies at the moment

 

 

 

 

Bringing the middle east together, one unlawful PL rule at a time. 

[madras]

2 minutes ago, madras said:

Who's Cliff ?

 

My take is that he's giving his reading of it, in that hes just one of many. We'll soon see if APT is repealed and we have a training ground sponsor for 100mill.

So it's Simon Cliff, given his position do you think there may be a little bias in his view ?

[Colos Short and Curlies]

5 minutes ago, Zero said:

So do we have 7 clubs hold together to stop the proposed new changes?

 

Man City, us, Aston Villa, Leicester City, Nottingham Forest, Everton? Did I miss someone?

 

The magnificent 7 are those fighting against the current APT rules are they not?

 

You bring in the likes of Brighton and Arsenal who would be against hanging the rules to bring in shareholder loans but there has to be a point where the mag 7 are happy to retain APT if shareholder loans are brought into PSR calculations but allowable losses are increased to allow for this.

 

In that scenario Liverpool, Chelsea, ManU would likely get on board as they see a positive outcome from that without it opening the floodgates on the likes of us and City. If Spurs are looking at investment it would likely suit them. 

 

So I can see support for change, the sticking point would be how do you remedy the past - if you say the rules were the rules (even if illegal) then hello compensation claims, if you try and remedy that by retrospectively putting in shl you get all the problems that brings.

 

The cleanest approach is to get rid of PSR and APT altogether with an agreement that no claims can be brought and something like a spending cap and ability to service debt brought in to replace it.

[Colos Short and Curlies]

8 minutes ago, Zero said:

I find it funny when one of the Saudi Arabia’s intention of buying us is to compete with Abu Dhabi’s Man City, after seeing how successful they have been raising their profile and reputation 

 

and now the EPL is so shit that they two decided to become allies at the moment

 

 

 

 

So we send the PL to 'mediate' between Russia and Ukraine

[r0cafella]

1 minute ago, Colos Short and Curlies said:

 

The magnificent 7 are those fighting against the current APT rules are they not?

 

You bring in the likes of Brighton and Arsenal who would be against hanging the rules to bring in shareholder loans but there has to be a point where the mag 7 are happy to retain APT if shareholder loans are brought into PSR calculations but allowable losses are increased to allow for this.

 

In that scenario Liverpool, Chelsea, ManU would likely get on board as they see a positive outcome from that without it opening the floodgates on the likes of us and City. If Spurs are looking at investment it would likely suit them. 

 

So I can see support for change, the sticking point would be how do you remedy the past - if you say the rules were the rules (even if illegal) then hello compensation claims, if you try and remedy that by retrospectively putting in shl you get all the problems that brings.

 

The cleanest approach is to get rid of PSR and APT altogether with an agreement that no claims can be brought and something like a spending cap and ability to service debt brought in to replace it.

Not a chance you get Arsenal to join the dark side   they become irrelevant if this gets split open. 

[lovejoy]

6 minutes ago, madras said:

Who's Cliff ?

 

My take is that he's giving his reading of it, in that hes just one of many. We'll soon see if APT is repealed and we have a training ground sponsor for 100mill.

Man City's lawyer, he has sent that to all 19 clubs today.

[lovejoy]

3 minutes ago, madras said:

So it's Simon Cliff, given his position do you think there may be a little bias in his view ?

 

Naturally, but howay man, he's going to all out war with the PL, i'm guessing he's pretty well informed (and qualified) to do so.

 

 

[Armchair Pundit]

I imagine the PL are finding themselves in a very difficult place, I suspect that the Americans are holding them to ransom to some degree over the potential of them leaving for a 'World Super League' or other nonsense as well. What an utter, utter mess.

 

 

Edited 12 minutes ago by Armchair Pundit

[TRon]

33 minutes ago, BennyBlanco said:

How many times do Masters et al want to get slapped before they learn their lesson. The premier league has to be an open, transparent playing field for all clubs. The fucking yank owners are desperate to circle the wagons and pull up the ladder but they are fighting against an altogether biggest beast in the Abu Dhabi lot. I’m surprised we have kept our powder dry considering what’s at stake for us.

 

 

 

 

 

I watched some of that Kieran McGuire guest piece on Loaded Mag and he said we had to sign off agreements that we wouldn't take matters to independent courts and would agree to internal arbitration only if we wanted the takeover to go ahead. So at this point that is why we have not waded in I would have thought.

[FloydianMag]

https://archive.ph/Qp8lE

 

Simon Cliffs letter to PL clubs re PL statement being misleading.

[TheBrownBottle]

36 minutes ago, madras said:

Who's Cliff ?

 

My take is that he's giving his reading of it, in that hes just one of many. We'll soon see if APT is repealed and we have a training ground sponsor for 100mill.

 

[Stifler]

7 minutes ago, TRon said:

I watched some of that Kieran McGuire guest piece on Loaded Mag and he said we had to sign off agreements that we wouldn't take matters to independent courts and would agree to internal arbitration only if we wanted the takeover to go ahead. So at this point that is why we have not waded in I would have thought.

It’s part of the Premier League rules though, It’s not exclusive to us.

What you need is someone who wants to sponsor Newcastle for a certain fee, being told he’s not allowed, but requesting to sponsor Liverpool for the same fee and being told he is allowed to that, and taking the Premier League to court.

[Abacus]

Forget lawyers, there's only one man who can sort this out. Former Leeds United hardman Arthur Graham.

[Ben]

Keep the PSR with the limit at £105 million loses but let clubs invest, the ambitious clubs will be allowed to grow and the poorly run clubs (the likes of Leeds Derby ect) wont be allowed to fail.

 

 

[WilliamPS]

52 minutes ago, Boey_Jarton said:

If you think the market value of a loan is as simple as referencing bank market rates then you are mistaken. 

 

Of course such an approach can be taken for internal purposes (generally for the purposes of the corporation tax adjustment to avoid companies artificially shifting profits overseas) but that is fundamentally different to assessing fair value for the purposes of assessing ongoing profit and sustainability, where the substance of the transaction is the only thing that matters. 

 

Your suggestion is exactly the kind of  simplistic approach that the premier league might take, and it would lead to a legal minefield.

 

 

 

 

 

 

 

 

Sorry this is nonsense.  Doing it with any other method would be a legal minefield as there is an established way of assessing market value. Assessing fair value of sponsorship deals is going to be very hard, as how do you assess accurately what it’s worth. But loans are incredibly easy, if a commercial bank would give you the rate it’s a market rate- as it’s literally available on the market.

 

By the way, corporates do it that way as HMRC accept that the bank quotes will give the market value, and there is a body of case law behind that. It isn’t for “internal purposes” it’s for legal compliance with tax law.

[nufcjmc]

2 minutes ago, WilliamPS said:

Sorry this is nonsense.  Doing it with any other method would be a legal minefield as there is an established way of assessing market value. Assessing fair value of sponsorship deals is going to be very hard, as how do you assess accurately what it’s worth. But loans are incredibly easy, if a commercial bank would give you the rate it’s a market rate- as it’s literally available on the market.

 

By the way, corporates do it that way as HMRC accept that the bank quotes will give the market value, and there is a body of case law behind that. It isn’t for “internal purposes” it’s for legal compliance with tax law.

Probably going to look silly replying here as know nowt about this but surely it will depend how well the club is doing how much it's worth it's debt proposition  etc to establish a rate? Or would it be fair to say it's 3% above a certain figure such as bank of England rate. Surely a title challenging side like arsenal and their loans are a better proposition in terms of a % of their value against say Everton who are still very much in the toilet finance and league wise?

[WilliamPS]

2 minutes ago, nufcjmc said:

Probably going to look silly replying here as know nowt about this but surely it will depend how well the club is doing how much it's worth it's debt proposition  etc to establish a rate? Or would it be fair to say it's 3% above a certain figure such as bank of England rate. Surely a title challenging side like arsenal and their loans are a better proposition in terms of a % of their value against say Everton who are still very much in the toilet finance and league wise?

Yep, you are totally right. A fair value loan for Everton is going to have a much higher rate than one for Arsenal. 

[The College Dropout]

1 hour ago, PRL said:

I don’t disagree re the wages on the Leicester side of things, but I disagree that PSR won’t impact Brighton if they don’t book some further big sales in the coming years. They’ve bought some really exciting players and Mitoma still looks great, but with the shifting sands of PSR and the potential for their interest payments to be factored in (you don’t get many corporate loans of hundreds of millions at close to BoE), we could be entering a phase where very few teams feel able to spend those big amounts and Brighton have just splurged one of the highest amounts in Europe. Significant spend + significant interest payments + clubs not being willing to spunk +£100m on players with a season or two of potentially being world class, could cause them some big issues by 26/27. Bloom will be looking at that when making a call about converting debt to equity. 
 

All guesswork for now, but the game definitely has changed. 

The rules will be relaxed though.  

[Terraloon]

14 hours ago, lovejoy said:

 

So what happens to clubs with huge loans that will no longer be interest-free?

 

Are they just in breach and will be dealt with by both UEFA and the Premier League?

 

Genuine question, because this could be a major issue for clubs like Brighton and Everton.

 

You’d imagine it would also impact Arsenal's growth.

 

 

 

14 hours ago, RodneyCisse said:

Ideal if Arsenal, Brighton and Everton are massively impacted. The former for our European ambitions and the latter so they fall into the championship forever.

 

14 hours ago, Colos Short and Curlies said:

So do the Premier League backdate the interest charges in the PSR calcs or compensate clubs who can demonstrate a loss from having to comply with the FMV/APT rules?

 

I don't see how you can just say 'fair cop gov' and only look to change the rules going forward.

 

13 hours ago, et tu brute said:

So if parts are unlawful then it is unlawful. Let's see the changes though as we both agree

 

12 hours ago, SAK said:

If the PL meeting is to vote in owner loans to be included in PSR calculations as speculated what happens if it fails? For FMV to be lawful owner loans have to be included in the calculations as I understand (correct me if I’m wrong), does that mean APT rules will have to be dropped to stay lawful?

 

8 hours ago, r0cafella said:

Under the current rules owners can top up the FFP allowance by capital injection. The 110m figure you often hear is the amount of allowable losses inclusive of owners capital injection. I can’t remember how much the allowable losses are minus the owner injection though. 

In most but not all instances where there are “ soft loans” the entity/ person that has lent the money has done so in the knowledge that they will never see the loan repaid nor are these loans secured against assets in effect shifting from a loan to creating more shares isn’t a major challenge 
 

I very much doubt that anything could or would be done to factor in notional interest retrospectively but even if they did most of the clubs like Everton, like Brighton and yes Arsenal would probably argue that the loan was either in full or part to fund areas that are PSR exempt such as infrastructures and even then if PSR charges were laid my guess is that there would almost certainly significant mitigation in any sanction

 

Going forward however  all that will happen is that these type of loans will almost certainly be converted to equity.

 

Bear in mind that PSR rules were being amended to another form of control  and whilst City are clearly trying to put the PL under even greater pressure they , City threw everything including the kitchen sink at this arbitration and yes they have won the argument around process the principle argument about the legality of measures applied to  associated transactions they didn’t win and that is the main point here.

 

City I genuinely believe had hoped for a far more definitive ruling and that isn’t the case. The likelihood of this impacting the 115 /130 allegations is close to zero s now focus will turn to the three sponsorship deals that are in limbo and in all probability will now have to be agreed as will some sort of compensation.

 

As for clubs like yours like mine that supported City I would be surprised if the support was for every aspect more to do with what was in the clubs best interest and that could be around the data bank access or more likely the onus or burden of proof shifting back to the PL when it comes to assessing fair value.

 

I would suspect that the PL are indeed in a stronger position in that the leaks some while ago was that City were going to win in some narrow areas so the tribunal ruling will shape changes