Financial Fair Play / Profit & Sustainability

[lovejoy]

44 minutes ago, madras said:

But but but "unlawful" ?

 

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.”

 

 

 

Edited October 8 by lovejoy

[PRL]

2 minutes ago, UpTheToon said:

Man City must be pushing the deals that were originally rejected to now be accepted.  That latest article stating their belief that the ATP rules are not relevant (and have never been) because of the ruling.  If they announce those deals then it's floodgates open time...

And we will be looking to sue the PL if any of our deals have been sidelined or put on ice for years. I cannot reiterate enough that this is all cataclysmically bad for the PL. It has to be the end of Masters. 

[TRon]

3 minutes ago, gjohnson said:

It certainly is. Shows you can do whatever you want in football and just tie it up in legal for years. By the time any wrong doing is proved, it's 15 years later and no-one cares anymore.

 

In a world of criminals, the only crime is being caught...and if you've got good lawyers it can be delayed indefinitely 

 

But someone has to pay the bills for those lawyers. £45m plus and counting in legal fees so far. At some point it must surely register at the rest of the lower PL clubs that they are subsidising the position of cartel clubs voluntarily.

[TRon]

10 hours ago, GideonShandy said:

Usually don't have much time for Martin Samuel -- the bloke who scoffed at us for "missing a trick" when we appointed Eddie Howe and not Stevie Gerrard -- but this is worth reading.

 

Unlawful, unlawful, unlawful, unfair, unfair, unreasonable, unreasonable. The seven conclusions of the arbitration panel governing Manchester City’s case against the Premier League make for sobering reading. Yet, even sober, the hangover is going to last a very long time.  It is not just Associated Party Transaction (APT) rulings that must now be revisited — this decision made them obsolete and unusable overnight. The whole concept of Profitability and Sustainability Rules (PSR) is also in the bin, now that shareholder loans, too, are to be judged related-party deals.

That is City’s big win, in many ways their payback. Their accusation was that the league and its members acted like a cartel by introducing rules specifically intended to curb the potential of a minority of clubs. They pointed out that many clubs benefited from interest-free shareholder loans. If that wasn’t a related-party transaction, they argued, what was? And because the arbitration was carried out by serious people, who listen to reason and logic, they agreed.

Imagine if every loan given to a club by one of its owners was charged, as is standard, at between 8 and 10 per cent, if it could be obtained at all? We would be looking at PSR failings across the board. And now we are. Wrapped up in legalese is a seismic verdict for football. It doesn’t mean that clubs can do what they want — there will still be financial regulations, although there are precious few right now, however the Premier League may wish to spin it. What it does mean is that these cannot be tailored to negate the growth of Newcastle United, City or any specific club.

On page seven, the panel deal with what is termed “the consultation with clubs which led to the adoption of the APT rules in December 2021” and hears from Jamie Herbert, the Premier League’s director of governance. “Mr Herbert gave evidence that the PL had been considering the need for amendments to the PSR over a period of years. This evidence was challenged by MCFC [Manchester City]. However, it is agreed that there was no evidence of any formal initiative before the Autumn of 2021 to amend the PSRs in the manner in which they were amended in December 2021. In other words, they cooked it up based on what most clubs wanted. There were no commissioned studies, no in-depth research of a type that would suggest change was always on the cards. Herbert talked of discussions about rule changes dating back to 2018. Maybe there were. But clubs talk all the time.

The fact is, these talks suddenly escalated and only became formalised when Newcastle were bought by the Public Investment Fund (PIF) of Saudi Arabia and it was feared they could receive huge investment, becoming more competitive. City argued from their own perspective but the desire to limit competition, the anxiety caused by Newcastle’s takeover, was very much at the heart of this.

“The tyranny of the majority,” City argued, and everybody sneered. It’s called democracy, they chorused. Well, yes and no. First past the post is democracy too, yet the tyranny of the majority is why your vote will never count if you are a Labour voter in a safe Conservative seat, or vice versa. That’s what John Stuart Mill wrote about in On Liberty. The pursuit of majority interest at the expense of a minority faction. So when the PIF bought Newcastle in October 2021 and almost instantly the Premier League began adjusting its rulebook — an email on the subject to the league from a club official specifically mentioned “the Gulf region” and was dated October 12, five days after the takeover — that’s the tyranny of the majority in action. AKA: a carve-up.

And we later read that the panel believed this official when, as a witness, he or she insisted Gulf-owned clubs were not the target. They believed the assertion that this intervention could just as easily have been discussing an “American consortium who had links to lots of American companies”. Except there are already quite a few American consortiums with links to lots of American companies in the Premier League, and the email didn’t mention them. It referenced the Gulf. “The takeover of Newcastle United heightened . . . concerns again and encouraged the clubs to seek action,” the witness admitted. Even so, the same email would have been sent had the worry related to Americans. It’s just that it wasn’t. It was sent five days after a Saudi takeover.

It’s the ruination of football, the destruction of the English game, that will be the argument. No, it’s not. City’s dominance is still scheduled to end pretty much the year Pep Guardiola walks out the door. Once the rules are redrafted, as they surely will be, City won’t be able to just claim what they like in sponsorship revenue. No club will. There will still be fair market value standards that have to be met, unless the system is entirely abandoned, which seems unlikely.

Yet the big change comes because the arbitration panel found that while APT regulations would be legal if applied in a non-discriminatory manner, Premier League rules excluded from the fair market value process some forms of financing by parties connected to a club. It means that in the future, the Premier League would have to regulate all forms of financing provided by shareholders and related parties, including sponsorship deals and loans, but also softer arrangements such as guarantees or equity investments. The calculation would be on the same terms available from a third party unconnected to the club and could even assess whether a club with a poor credit rating — one imagines Everton’s isn’t so hot right now — would be able to find a lender at all.

Equally, who doesn’t love Brighton & Hove Albion? Everyone’s second favourite club. Personal opinion: the best-run in the country. Yet, as of 2023, Brighton held shareholder loans of £302.8million. Charging interest at between eight and ten per cent would put £66-84million on their PSR calculation and will now have to be factored in going forward.

Brighton are a well-run club yet, as of 2023, had more than £300m in shareholder loans

The clue is in the delay. This was a verdict delivered 14 days ago, one that City have been happy to publish since it arrived. The hold up has been at the Premier League’s end. Now they are trying to spin it out further. Clarifications, consultations, all the things a governing body does if it wants to fashion a tight rule book which, as Leicester City found much to their delight, isn’t the Premier League’s style at all. Why? There is another case ongoing involving Manchester City and 115 charges. So the APT decision likely impacts proceedings elsewhere. If the League can bog this down in legal process, they hope it won’t weaken their case against City yet further. The Premier League, its rulebook and executives are facing a firing squad but are now asking to inspect the guns to ensure they fit professional standards. What a shower they are.

It is not so much a can of worms as one of those tins of exploding snakes. If shareholder loans should have been part of the PSR equation all along, Everton and Nottingham Forest may wonder how they, alone, suffered points deductions. The Premier League can’t even simply revert to a time before the APT update, because now calculations around shareholder loans are unavoidable. So there is no simple reset button, no back-to-factory-mode setting. The parameters around PSR will have to be rewritten, if the system is not to be scrapped.

The drawing board does not have a mark on it. Everton, for instance, have £451million in shareholder loans, equating to as much as £104million on their PSR calculation. Arsenal have £258million, working out to a potential addition of £62.5million. At best it collapses the market around English football, at worst it puts some of the league in breach, or with vanishingly small sums to invest in player acquisition. There would be more asterisks attached to the league table than there are presently flying around boardrooms, as owners begin to study the 175-page adjudication and consider its implications. Although not all of them. The idea City are out on a limb is inaccurate too. The club believe they have the support of at least six others in their actions — Everton, Nottingham Forest, Aston Villa, Chelsea, Leicester City and Newcastle. Others may be recruited if the Premier League attempts to keep the rules as they are with the odd tweak and adjustment.

Who will vote for a flawed system that might now impinge, and quite brutally, on finances? Adjust any PSR calculation by tens of millions and see how much is left for investment. And if the rules are unlawful, as stated, how far do we now rewind on PSR calculations involving shareholder loans? How many years must be recalculated? Will there be an amnesty? And what about going forward? At what rate is interest now calculated to alight on fair market value? Would Forest receive the same rate on their £23.4million as Everton would on £451million — if Everton could get such a deal at all?

It’s a mess. Complex, perhaps incalculable. It always was. If Saudi Arabia are trying to get on the map with the Neom City project — estimated cost $1.5trillion — what is it worth to them to bring it to the world on the front of a football shirt or in a stadium naming-rights deal? And how can that investment be measured against Newcastle’s previous sponsors such as Fun88, Wonga or McEwan’s Lager? “This means more” used to be an advertising slogan around Anfield — but sponsorship does, to some companies. And fair market value was always a dubious, debatable concept, for that reason.

Just as profitability and sustainability has always been a counterintuitive aim. Ever since it started, football — indeed all business — has worked on the basis of how much money can be attracted to enhance the chance of glory. It is why there is a National Lottery to fund British Olympic objectives; why Hampshire County Cricket Club have been sold to the owner of the IPL franchise Delhi Capitals.

City’s owners are not the first to throw money at a project and, it is to be hoped, they won’t be the last. Yet PSR behaves as if investment is bad, as if that drive to squeeze every last drop to achieve is actually the problem. Every financial constraint further cements an established elite — and even that wasn’t enough. So new rules were drafted to ward off, and warn off, interlopers.

Yet it was an overplayed hand. It was unlawful, it was unfair, it was unreasonable. And it was three judges, not City, who studied it and saw through it too.

 

 

 

Read it this morning. He's put out some good articles about us being hamstrung deliberately by the PL on behalf of cartel clubs tbf.

[bobbydazzla]

9 minutes ago, lovejoy said:

This is going to go off.

 

In a letter seen by The Times, Cliff has described the summary of the panel’s award as “not correct” and warns of further legal disputes if clubs bow to pressure to make some swift amendments to the rules on Associated Party Transactions (APT).

An emergency meeting of the clubs is due to be held next week but it will take place against the backdrop of this war of words as well as the continuing hearing into City’s 115 alleged breaches of financial rules.

Cliff tells clubs that the Premier League’s “summary is misleading and contains several inaccuracies”.

“Of even greater concern,” Cliff adds, “is the PL’s suggestion that new APT rules should be passed within the next ten days.”

The league said that, after the two-week private arbitration hearing in June, the tribunal had actually backed its APT rules, identifying only a “small number of discrete elements . .. which do not, in current form, comply with competition and public law requirements”.

 

 

 

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.”

 

 

 

 

 

 

[Pixelphish]

Scorched earth?

[PRL]

36 minutes ago, The College Dropout said:

Nah. Leicester had massive wages.  Brighton don’t.  Brighton wages are like bottom 10.  And until this summer, they didn’t reinvest the profits in the summer. 
 

Kasper Schmeichel, Vardy etc. all on good wedge at the time. Brighton don’t have players on 6 figures a week.  Even this summers splurge the highest wages will be £80k odd. 
 

We are handing out megabuck salaries. Brighton would have sold Bruno, Joelinton and Gordon rather than give them megabuck contracts. 

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. 

[Cf]

25 minutes ago, Yorkie said:

Have found it very challenging to get my head around all of this, but can we assume that the interest-free loan reveal will provoke a 'back to the drawing board' re-hash of PSR rules? Surely, with so many teams suddenly liable to massive PSR implications, there's going to be some hastily-organised amendments?

 

It's hastily organised amendments that's landed them in this hot water. They shouldn't be rushing to repeat the exercise.

[WilliamPS]

21 minutes ago, Boey_Jarton said:

The majority of football journalists are financially illiterate.

 

Jacob Whitehead completely misses the point. 

 

Man City have proven that financing activities (i.e. owner loans) need to be in scope of APT, otherwise they are unlawful.

 

I.e. they have proven that the premier league cannot just arbitrarily pick and choose which transactions are under the scope of APT and which are not, based on nothing more, than what suits certain clubs at a particular point in time. 

 

This casts a major shadow over PSR and undermines the whole concept.

 

Many clubs could be plunged into PSR deficits (e.g. Brighton). 

 

How on earth can they determine the fair value of a loan to each club?

 

The fair value of a loan is based on the risk free rate plus a margin to compensate the investor for risk. Risk is based on a multitude of factors (market based risk, the risk of default) that are bespoke to each transaction. 

 

The premier league would need to create a cottage industry just to assess owner loans and related party commercial deals, and even then , every single decision they make could be challenged as there is no right or wrong answer. 

 

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. 

[WilliamPS]

Well this explains the different journos takes - depends on who he briefed them.

 

In summary, PL position is the rules were confirmed but with a bit of a tidy up on loans and speed at which things are done

 

City position is the rules were unlawful due to the loans and speed stuff and are therefore entirely null and void.

 

Pretty big difference!

 

If City are right then get the Saudis on the phone and get the deals done before new rules come in, they can’t be retroactive (as Chelsea showed with the 8 year contracts trick)

 

 

Edited October 8 by WilliamPS

[bobbydazzla]

All of this rigmarole and PL dirty laundry being aired in public because a small number of clubs at the top conspire with the PL to keep themselves at the top, whilst the rest are happy to just nod along and be on the gravy train

 

As others have said, it does make you start to question what other shady deals have gone on behind the scenes to ensure equilibrium is maintained. I'm looking at you VAR....

 

 

Edited October 8 by bobbydazzla

[PRL]

7 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. 

While I completely agree with the thought process, what happens with someone like Everton? Odds are that loan simply wouldn’t take place in a space outside of football, and if it did it would be at Wonga level rates of interest. Bringing in that rule alone would effectively relegate Everton unless their new owners are happy to turn the majority of debt to equity. Not been tracking takeover, maybe they have said they will 

 

 

Edited October 8 by PRL

[gbandit]

Really struggling to see a way forward here right now. The PL is fucked, Man City may or may not be fucked with their 115 case but they’re clearly extremely buoyant. The Cartel clubs and the ones hanging out the back of them are caught in no man’s land here and some of them are in major trouble. Feels like we’re just watching on the sidelines with popcorn 

 

[WilliamPS]

Just now, PRL said:

While I completely agree with the thought process, what happens with someone like Everton? Odds are that loan simply wouldn’t take place in a space outside of football, and if it did it would be at Wonga level rates of interest. Bringing in that rule alone would effectively bankrupt Everton unless their new owners are happy to turn the majority of debt to equity. Not been tracking takeover, maybe they have said they will 

Everton wouldn’t be bankrupt as PSR accounts aren’t the real accounts. The owners would still be giving the money interest free in the real world, so it wouldn’t bankrupt the club.

 

Just it would reduce Everton’s spending power under PSR, and probably reduce it by >£20m a season. Everton would have to sell players or incur another points deduction.

[Keegans Export]

It seems like a classic legal grey area, I'd suggest what the entire legal profession is build upon 

 

Either the APT rules just need adjusting so as to include shareholder loans and can otherwise continue as normal, or they were never legal to begin with because of that omission and therefore the whole thing needs to be scrapped and re-written to adhere to UK Competition Law.

 

I wouldn't say the ruling is clear either way;

 

Quote

(i) that the APT Rules are unlawful on account of being in breach of sections 2 and 18 of the Competition Act 1998 because they exclude from their scope shareholder loans and for no other reason

 

So they are unlawful because they exclude shareholder loans. Fine. But that quote from Cliff ("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") suggests that the Tribunal has "resolved" the issue, when I'm not 100% sure they have. They haven't said "add something about shareholder loans and everything is fine" but they also haven't said "...therefore the APT rules should be ignored completely until something else is put in their place".

 

 

Edited October 8 by Keegans Export

[PRL]

3 minutes ago, WilliamPS said:

Everton wouldn’t be bankrupt as PSR accounts aren’t the real accounts. The owners would still be giving the money interest free in the real world, so it wouldn’t bankrupt the club.

 

Just it would reduce Everton’s spending power under PSR, and probably reduce it by >£20m a season. Everton would have to sell players or incur another points deduction.

Edited it to ‘relegated’ within seconds, got carried away. 

[Big Geordie]

English football isn't too far away from being altogether fucked.

[Armchair Pundit]

Well, if rumours are to be believed and the PL are calling another emergency meeting this morning, they'll probably come up with yet another half-baked, anti-competitive rule to stop us and Man City, which would then start the whole nonsense process all over again, until the next legal challenge a year or so down the line.

 

The PL and it's American cohort of conspirators are blatantly corrupt at this point and will do pretty much anything to stop competition and hide their dodgy dealings. 

[Ikon]

I wonder what the mood will be like at this PL meeting. Great spirits all around I assume. 

[PRL]

9 minutes ago, Armchair Pundit said:

Well, if rumours are to be believed and the PL are calling another emergency meeting this morning, they'll probably come up with yet another half-baked, anti-competitive rule to stop us and Man City, which would then start the whole nonsense process all over again, until the next legal challenge a year or so down the line.

 

The PL and it's American cohort of conspirators are blatantly corrupt at this point and will do pretty much anything to stop competition and hide their dodgy dealings. 

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?

[Slim]

Never watch these but Kieran Maguire is on and will prob be more NUFC related questions.

 

[Geogaddi]

I don't pretend to understand the majority of this but what I do know is the rules will be changed to suit the cartel clubs and we will see no benefit to any of it at all.

[Zero]

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?

[BennyBlanco]

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.

 

 

Edited October 8 by BennyBlanco

[Pixelphish]

1 minute 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?

CFC were a witness for MCFC as well I believe.