Financial Fair Play / Profit & Sustainability

[Heron]

From what I can see there is only one way this can feasibly pan out (which I'll come to across the post) and it won't be significant enough to cause large waves across the league (by footballing means I.e. helping us kick on).

 

First though - there is only one way that, us really kicking on (financially) could happen: through APTs/RPTs being opened up until the new rulings are agreed on and implemented. How FMV is calculated would then have to be with consideration of other sports and subsequently the amount being spent by the Saudi's on other sports. Which is kind of a beauty is in the eye of the beholder situation and also which I severely doubt would factor in their decision making given they already appear to be in cahoots with certain league members and so any respective commercial deals would be with consideration to the size and history of a club versus existing deals for the existing "elite".

 

Which brings me to (as I understand) the most likely solution: If clubs cannot be punished retrospectively for actions they've taken with regards to shareholder loans. Then the only way to fairly balance the playing field (for those operating without this financial input) is to constrain them now, based on the application of any historical, financial shortfallings. To do so, they may need to (even temporarily) extend the PSR rulings to take them beyond 3 years in order to calculate the respective interest that should have been applied from 2021 onwards and have them applied to the next footballing seasons' PSR calculations. For (theoretical) example, if Brighton loaned £100m in 2021 and the rate was 0.1% then £100k would be added, if they had another loan of £100m in 2022 at 1% and had only paid back £50m from the previous year then they'd factor in £1.5m, etc. etc.

 

But as you can see, unless the borrowing took a significant incline when the rates did to nearer 5-10% this is very unlikely to have any impact - with the salary of just one periphery player being cut would probably resolve that issue.

 

The league, its members and football fans, generally, probably do not wish to entirely lose the whole APT/RPT restrictions on the whole, and presumably would rather refine them so to keep the competitivity of the game, and commercially, this would also mean that the "product" retains its entertainment value. Taking bias, Man City and Newcastle in particular would argue why other clubs have been allowed to spend their respective fortunes to establish dominance but they are restricted from doing so - Newcastle United in particular.

 

So ultimately, financially and from a subsequent footballing point of view - the only way the likes of Newcastle can now "catch up" is within investment in club infrastructure and somehow convincing mid-top end players to come here over the next decade with ambitions capped at potentially playing with no European football at the bottom end and Champions League football and a potential cup run at the top end, whilst infrastructure catches up. Good luck selling that to ambitious youngsters.

 

And thus the status quo is maintained unless APT/RPT is blown open, even, albeit for a brief period and even if it was, the issue just moves to the next club after Newcastle or indeed to us, after Man City.

 

That brings me to the Premier League: One thing they cannot now escape is a legal battle versus any of the leagues incumbents from the last 3 seasons (26 teams if I have calculated correctly).

 

In the first instance, clubs such as Man City and Newcastle may seek compensation of APTs/RPTs to bring them back in line with where they would have been financially, given that elements of the APT/FMV rulings have been deemed unlawful. This would enable Newcastle to catch up in particular with extended transfer capabilities in upcoming transfer windows. It would also allow Man City to further assert dominance over those they're directly competing with.

 

They're the easiest and obvious clubs.

 

You then have a real quagmire (giggidy) of clubs who would have either had increased, or decreased revenue based on league standing which could extend from just 1 or 2 million for mediocre/mid-table sides to tens of millions where relegation is considered.

 

Said clubs cannot be reprimanded historically, so the only way to balance the playing field is to award compensation to those who should rightfully receive it.

 

Now how this is paid, I simply have no clue. In simplest of terms - the Premier League would have to. However, their investment is presumably through commercial deals and a degree of paying into the league to be one of the (said) members. Other clubs won't want to pay additional to cover said costs, therefore it would have to be through their own (PL) commercial deals and revenue. Will businesses be willing to pay extra to field that cost to clubs? Presumably not.

 

So the Premier League's growth as a product is completely stunted, unless quality is continued to be added through clubs being able to afford the best players etc. And so there's a chicken and egg element.

 

All the while - the league has lost all credibility and trust from what I suspect is the majority of its members. Which for me, means that a combination of the two basically destroys and burns the Premier League to the ground, with the immediate removal of Masters the first desperate attempt to appease its members.

 

The demise of the Premier League then leads to the "big 6" having more fluidity to join a Super League (presumably) without any existing league structure in place for England's "elite" 20 sides. Unless the FA immediately step in to create the equivalent as a governing body, which then leaves it down to fans and law to prevent such a "super league" (with Europe's elite) from being devised.

 

So in summary, (if you're still awake and my understanding of it all is all correct) we need to ask ourselves (as Newcastle fans) if we want the league to be more competitive or we want to blow it out the water? Maybe the latter for a short while before new rules are implemented? But one thing is for absolute certain English football needs rebuilding.

 

 

Edited Monday at 08:42 by Heron

[Colos Short and Curlies]

7 minutes ago, Heron said:

 

But as you can see, unless the borrowing took a significant incline when the rates did to nearer 5-10% this is very unlikely to have any impact - with the salary of just one periphery player being cut would probably resolve that issue.

 

 

Depending on the value commercial loans will often be at a variable rate with a hedging instrument put in place, its also not uncommon for these to be priced in 3-5 year periods. If you were looking retrospectively properly you would take that into account and it is very likely that all shareholder loans will have a period of the higher rates applied to them

[Heron]

6 minutes ago, Colos Short and Curlies said:

 

Depending on the value commercial loans will often be at a variable rate with a hedging instrument put in place, its also not uncommon for these to be priced in 3-5 year periods. If you were looking retrospectively properly you would take that into account and it is very likely that all shareholder loans will have a period of the higher rates applied to them

 

In which case, that would more heavily impact a handful of clubs - namely Everton, Arsenal and Brighton. Perhaps making the takeover of Everton fall through or certainly stunting their capability to improve (as per my suggested solution). Thus putting them at risk of relegation etc. And a massive stadium they cannot fill. Etc. Etc. Which they would certainly be chasing down the PL for compensation.

[Keegans Export]

There's one question I've had around the "compensation for deals ruled not FMV".

 

Presumably if Riyadh Air want to give the club £40m per season to sponsor our shirts, nobody is actually stopping them doing that are they? It's just that we (the club) will only be able to use the "FMV" amount towards our PSR calculation?

 

So if Riyadh Air think it's worth £40m, they can do it. The club still gets the £40m/season on their proper accounts and in it's bank account. The only difference is that we can only use around half of that when it comes to the PSR side of things. 

 

In that case, who is being compensated and for what?

[Cf]

14 minutes ago, Colos Short and Curlies said:

 

Depending on the value commercial loans will often be at a variable rate with a hedging instrument put in place, its also not uncommon for these to be priced in 3-5 year periods. If you were looking retrospectively properly you would take that into account and it is very likely that all shareholder loans will have a period of the higher rates applied to them

 

Even if you could guarantee the base rate would remain 0.1% over 5 years no-one is loaning a football club 200m at anywhere near that rate. It'd be financially stupid wouldn't it?

[Heron]

2 minutes ago, Cf said:

 

Even if you could guarantee the base rate would remain 0.1% over 5 years no-one is loaning a football club 200m at anywhere near that rate. It'd be financially stupid wouldn't it?

Aye - you'd think so like.

[Heron]

5 minutes ago, Keegans Export said:

There's one question I've had around the "compensation for deals ruled not FMV".

 

Presumably if Riyadh Air want to give the club £40m per season to sponsor our shirts, nobody is actually stopping them doing that are they? It's just that we (the club) will only be able to use the "FMV" amount towards our PSR calculation?

 

So if Riyadh Air think it's worth £40m, they can do it. The club still gets the £40m/season on their proper accounts and in it's bank account. The only difference is that we can only use around half of that when it comes to the PSR side of things. 

 

In that case, who is being compensated and for what?

It's a fair point but my understanding is that commercial deals were either reduced to achieve FMV or simply stopped/pushed back thus not allowing said deal to take place.

 

If I recall correctly, Man City accused the PL of kicking the can down the road for months/years and not coming to a decision on its FMV or subsequent acceptance.

[AyeDubbleYoo]

17 minutes ago, Cf said:

 

Even if you could guarantee the base rate would remain 0.1% over 5 years no-one is loaning a football club 200m at anywhere near that rate. It'd be financially stupid wouldn't it?

 

Guess the idea of loans from owners is that you never have to pay them back, isn't it? Or practically never...not until the club is sold again. 

[Zero]

I think Man City would just keep on raising  Legal cases until EPL surrenders and give up all the charges 

 

And if UEFA started the war, Man City would do the same 

 

These rules would only triggers lawsuits. We have predicted this long before and now probably the time has come. 

[Cf]

1 minute ago, AyeDubbleYoo said:

 

Guess the idea of loans from owners is that you never have to pay them back, isn't it? Or practically never...not until the club is sold again. 

 

I mean in the sense that if you apply "what would the market charge" if you asked it for a loan. 

 

Loaning Everton £100m isn't what I imagine would be considered low risk that you'd be happy with a 0.1% rate for £100,000k per year. 

[Ben]

Surely this in-fighting is a massive turnoff for new club owners and sponsors, if we are not the richest league in Europe with the best players why would TV companies or league sponsors pay a premium ? 

 

Another example of the EPL self destruction, I don't even blame Masters as its plain to everyone now that he's just a no-nowt patsy that is in place to do the bidding of Spurs Arsenal Man U and Liverpool 

[AyeDubbleYoo]

1 minute ago, Ben said:

Surely this in-fighting is a massive turnoff for new club owners and sponsors, if we are not the richest league in Europe with the best players why would TV companies or league sponsors pay a premium ? 

 

Another example of the EPL self destruction, I don't even blame Masters as its plain to everyone now that he's just a no-nowt patsy that is in place to do the bidding of Spurs Arsenal Man U and Liverpool 

 

Yeah, like I've said before, a company with a directing mind and a strategy would probably just welcome whatever money came in so it could become the best sports league of all time. 

 

Sadly the PL is a members club and all the members have their own reasons for wanting to stop some of that investment. 

[FloydianMag]

 

[Nucasol]

21 minutes ago, FloydianMag said:

 

Beginning to think this bloke knows fuck all. 

[et tu brute]

Just now, Nucasol said:

Beginning to think this bloke knows fuck all. 

He was adamant when the case first came out that City were wasting their time and the case wouldn't come to anything 

[Ben]

36 minutes ago, FloydianMag said:

 

 

That cant be true 

[whiteline]

4 hours ago, Heron said:

From what I can see there is only one way this can feasibly pan out (which I'll come to across the post) and it won't be significant enough to cause large waves across the league (by footballing means I.e. helping us kick on).

 

First though - there is only one way that, us really kicking on (financially) could happen: through APTs/RPTs being opened up until the new rulings are agreed on and implemented. How FMV is calculated would then have to be with consideration of other sports and subsequently the amount being spent by the Saudi's on other sports. Which is kind of a beauty is in the eye of the beholder situation and also which I severely doubt would factor in their decision making given they already appear to be in cahoots with certain league members and so any respective commercial deals would be with consideration to the size and history of a club versus existing deals for the existing "elite".

 

Which brings me to (as I understand) the most likely solution: If clubs cannot be punished retrospectively for actions they've taken with regards to shareholder loans. Then the only way to fairly balance the playing field (for those operating without this financial input) is to constrain them now, based on the application of any historical, financial shortfallings. To do so, they may need to (even temporarily) extend the PSR rulings to take them beyond 3 years in order to calculate the respective interest that should have been applied from 2021 onwards and have them applied to the next footballing seasons' PSR calculations. For (theoretical) example, if Brighton loaned £100m in 2021 and the rate was 0.1% then £100k would be added, if they had another loan of £100m in 2022 at 1% and had only paid back £50m from the previous year then they'd factor in £1.5m, etc. etc.

 

But as you can see, unless the borrowing took a significant incline when the rates did to nearer 5-10% this is very unlikely to have any impact - with the salary of just one periphery player being cut would probably resolve that issue.

 

The league, its members and football fans, generally, probably do not wish to entirely lose the whole APT/RPT restrictions on the whole, and presumably would rather refine them so to keep the competitivity of the game, and commercially, this would also mean that the "product" retains its entertainment value. Taking bias, Man City and Newcastle in particular would argue why other clubs have been allowed to spend their respective fortunes to establish dominance but they are restricted from doing so - Newcastle United in particular.

 

So ultimately, financially and from a subsequent footballing point of view - the only way the likes of Newcastle can now "catch up" is within investment in club infrastructure and somehow convincing mid-top end players to come here over the next decade with ambitions capped at potentially playing with no European football at the bottom end and Champions League football and a potential cup run at the top end, whilst infrastructure catches up. Good luck selling that to ambitious youngsters.

 

And thus the status quo is maintained unless APT/RPT is blown open, even, albeit for a brief period and even if it was, the issue just moves to the next club after Newcastle or indeed to us, after Man City.

 

That brings me to the Premier League: One thing they cannot now escape is a legal battle versus any of the leagues incumbents from the last 3 seasons (26 teams if I have calculated correctly).

 

In the first instance, clubs such as Man City and Newcastle may seek compensation of APTs/RPTs to bring them back in line with where they would have been financially, given that elements of the APT/FMV rulings have been deemed unlawful. This would enable Newcastle to catch up in particular with extended transfer capabilities in upcoming transfer windows. It would also allow Man City to further assert dominance over those they're directly competing with.

 

They're the easiest and obvious clubs.

 

You then have a real quagmire (giggidy) of clubs who would have either had increased, or decreased revenue based on league standing which could extend from just 1 or 2 million for mediocre/mid-table sides to tens of millions where relegation is considered.

 

Said clubs cannot be reprimanded historically, so the only way to balance the playing field is to award compensation to those who should rightfully receive it.

 

Now how this is paid, I simply have no clue. In simplest of terms - the Premier League would have to. However, their investment is presumably through commercial deals and a degree of paying into the league to be one of the (said) members. Other clubs won't want to pay additional to cover said costs, therefore it would have to be through their own (PL) commercial deals and revenue. Will businesses be willing to pay extra to field that cost to clubs? Presumably not.

 

So the Premier League's growth as a product is completely stunted, unless quality is continued to be added through clubs being able to afford the best players etc. And so there's a chicken and egg element.

 

All the while - the league has lost all credibility and trust from what I suspect is the majority of its members. Which for me, means that a combination of the two basically destroys and burns the Premier League to the ground, with the immediate removal of Masters the first desperate attempt to appease its members.

 

The demise of the Premier League then leads to the "big 6" having more fluidity to join a Super League (presumably) without any existing league structure in place for England's "elite" 20 sides. Unless the FA immediately step in to create the equivalent as a governing body, which then leaves it down to fans and law to prevent such a "super league" (with Europe's elite) from being devised.

 

So in summary, (if you're still awake and my understanding of it all is all correct) we need to ask ourselves (as Newcastle fans) if we want the league to be more competitive or we want to blow it out the water? Maybe the latter for a short while before new rules are implemented? But one thing is for absolute certain English football needs rebuilding.

 

 

 

Can we get this on a flag?

[Heron]

9 minutes ago, whiteline said:

Can we get this on a flag?

Maybe a whole Leazes surfer like We Are Newcastle

 

 

Edited Monday at 12:58 by Heron

[Stifler]

1 hour ago, Ben said:

 

That cant be true 

Can’t see what it says.

[FloydianMag]

1 hour ago, Ben said:

 

That cant be true 

What can’t be true…..Blue Pencil Test?

 

https://uk.practicallaw.thomsonreuters.com/4-502-1062?transitionType=Default&contextData=(sc.Default)&firstPage=true

[Keegans Export]

2 hours ago, Nucasol said:

Beginning to think this bloke knows fuck all. 

 

2 hours ago, et tu brute said:

He was adamant when the case first came out that City were wasting their time and the case wouldn't come to anything 

 

He knows more than the vast majority of Twitter, which is all you need to get a substantial following...

 

The "Blue pencil" thing seems quite straightforward - they can remove unlawful parts of a contract but not add or re-write things. For an employment contract, there may be a non-compete clause in there that is unlawful - they can get rid of the unlawful bit and the rest of the contract can still be binding. The suggestion is that the PL is going to have to add something to their rules (the shareholder loans) which they can't just "blue pencil". 

[Ben]

11 minutes ago, FloydianMag said:

What can’t be true…..Blue Pencil Test?

 

https://uk.practicallaw.thomsonreuters.com/4-502-1062?transitionType=Default&contextData=(sc.Default)&firstPage=true

 

Yes, Man City's lawyers would have a field day if that happened. 

[Colos Short and Curlies]

6 minutes ago, Keegans Export said:

 

 

He knows more than the vast majority of Twitter, which is all you need to get a substantial following...

 

The "Blue pencil" thing seems quite straightforward - they can remove unlawful parts of a contract but not add or re-write things. For an employment contract, there may be a non-compete clause in there that is unlawful - they can get rid of the unlawful bit and the rest of the contract can still be binding. The suggestion is that the PL is going to have to add something to their rules (the shareholder loans) which they can't just "blue pencil". 

Just add to that… the BPT requires a contract to stand up and essentially make sense when the term is removed.

 

i don’t see how fixing this can be done under this principle, the whole idea behind APT falls down if you remove fair market value

[FloydianMag]

8 minutes ago, Ben said:

 

Yes, Man City's lawyers would have a field day if that happened. 

Agreed, but clearly the PL thought that’s what they could do believing all would be good to go within 10 days of the judgement🤷‍♂️

[Paully]

I hope City take the corrupt wankers to the cleaners and expose the cartel wankers for exactly what they are - SHIT-HOUSES!