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FFP/SCMP

Postby dog rout 21 » Tue Aug 20, 2013 11:22 pm

Right then, seems like the FFP debate is getting a bit caught up in that other thread so, seeing as boss asked an interesting question :shock: thought I'd do a bit of research on it and start a new one.

Main points as I can decipher them...

- FFP (Financial Fair Play) doesn't actually exist for League 1 and 2 clubs, it's a UEFA thing and the Football League (FL) only adopted it, in a different form, for the Championship - I'm guessing to make it easier for clubs going up or down from the Prem and in case clubs in the Championship are in European competitions (al la Wigan)
- For League 1 and 2 we are under a Salary Cost Management Protocol (SCMP) so from this point on ignore FFP (until next season after our triumphant promotion)
- SCMP has existed, with sanctions, in League 2 since 2004/05
- For League 1, SCMP came into effect at the start of last season but without sanctions for breaches
- SCMP in its most basic definition for League 1 for this season limits player wages to 60% of your forecast turnover (last season it was 65%)
- This income will include things like ticket sales, catering sales, car park sales, shop sales, sponsorship, central payments from FL, all commercial sales, TV/radio money, any net transfer income and follow on fees etc. etc.
- Also include-able are donations, be it from sponsors, fans, businesses AND including any equity cash injections from the owners, as long as none of these donations come with any conditions for pay back, i.e. it's not a loan, it's a charitable donation you don't want back
- Forecast turnover is calculated at the start of the season and again at the halfway point, forecasts are evidence based using audited accounts from the previous year and other data such as attendances etc.
- If at mid-way it shows you've under forecast at the start e.g. if you had a good cup run which generated income or you ended up on SKY a lot for playing attractive football (which we will undoubtedly do) you can re-forecast turnover using the surplus as a cash injection and increase your wage budget, which could come in handy for the January transfer window
- Not all players are included in the 60% calculation, from what I can see exclusions include homegrown young players, which is any player registered with an English/Welsh club for three full years before their 21st birthday and if you get relegated from the Championship any player with a 3 or more year contract and including if this is extended. I'm not clear if because we came down for the start of this last season we'd be in that bracket but I think we can probably assume we are.
- The sanction is a transfer embargo until you're back under the 60% (and there's some stuff about a 5% below confidence limit which could lead to a temporary break on signing players, so that means 55% but I didn't really understand)
- The sanction can be changed to a one in one out scenario if you've not got a squad of 24 players and then the one in would need to be on 75% of the one out's wages (which sounds very much like the current situation)
- The sanction appears to be at the discretion of the FL and they can allow for situations when the threshold is broken with supporting evidence and a recovery plan, as I can understand it (although theres not much precedence) this can be a long term recovery plan and include such things as building a new stadium which is also exempt from the outgoings
- The whole purpose of the SCMP appears to be to stop clubs spending above their means but does encourage more emphasis on youth development

Caveat - this is from various sources I've read over the last couple of hours, the information could be wrong in some cases, the FL hasn't produced an open publicly available set of guidelines like UEFA have.

So in answer to boss's question...

this chappie from theFL said the new owner could fund the club for the 5 years away from the City even if no fans turned up. So how does this fit in with the 'spending only your income plan' they have for clubs :?: If there is no income, how would they pay for things like wages and the rest without breaking the rules :?:


I'd assume he was meaning through donations OR was meaning that we've forecast much lower "fan" income and with the various player exclusions we're under it OR the FL are using their discretion to account for our situation and the premise of a return to normality if/when we return to the Ricoh or a new stadium in the Coventry area OR all three. Or we could already be under the sanctions given this 75% wage one in one out jobby...

A quick look at the squad would suggest that a large number are excluded either by homegrown or Championship players. The only players over 21 I can see are Murphy, Baker, Webster, Clarke, Moussa, Manset and Barton then any who are still hanging about down the Memorial Park like Sheff and Jennings? So you can probably exclude Murphy, Baker and Sheff with Championship thing and that leaves just the other 5 or 6 as being eligible anyway, say at an average wage of 3k a week would put our required turnover at 1.5mill for the season. But, Timbo and AD are probably better at the playing side info. I've massively assumed in all that bit but based on that with zero turnover (which given sponsorship, TV money and central payments is impossible) it would only need a "donation" of £7mill from SISU over 5 years, something which obviously isn't a problem for the master-fund, at which point if you believe Fisher and his new stadium talk would leave them with a club, stadium and surrounding land/commercial interests.
ISUZU OUT!
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Re: FFP/SCMP

Postby The Yid » Wed Aug 21, 2013 6:25 am

So basically NOPM is futile?
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Re: FFP/SCMP

Postby dog rout 21 » Wed Aug 21, 2013 8:26 am

QED
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Re: FFP/SCMP

Postby the boss » Wed Aug 21, 2013 9:11 am

why did I ask :?: :lol:
2014 will be our year !!
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Re: FFP/SCMP

Postby AD » Wed Aug 21, 2013 4:04 pm

The Yid wrote:So basically NOPM is futile?


From that I'd say definitely not.

The thing a lot of fans supporting NOPM are uneasy about is that although it will long term affect the viability of SISU/Otium remaining in charge, in the much shorter term it affects the team as it reduces the amount of wages we can pay. This totally and utterly destroys that belief. Basically if the owners so chose they could increase the wage bill to whatever they liked if they were willing to fund it.

Either SISU have to spend a lot more money a lot more quickly or carry the can for not being willing/able to support the club for their own reckless decisions.

And it also allows for the next time TF mentions FFP it can be pointed out to him it's nothing more than a lot of meaningless bullshit.

Nice work btw Dog
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Re: FFP/SCMP

Postby The Yid » Wed Aug 21, 2013 4:17 pm

But the difference is if SISU 'donate' money to support the wage structure they won't be able to tie it to the club as owed monies.

The primary objective of NOPM is to starve the club out of money. That is simply not going to happen is it.
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Re: FFP/SCMP

Postby AD » Wed Aug 21, 2013 7:05 pm

The Yid wrote:But the difference is if SISU 'donate' money to support the wage structure they won't be able to tie it to the club as owed monies.

The primary objective of NOPM is to starve the club out of money. That is simply not going to happen is it.


That's the beauty of it. They either have to give the money as equity and lose it completely, or not put the money in and face questions as to their commitment to the club/team. No hiding behind this 'debt-free' bollocks and £45m put into the club they peddled for years. Sounds like you'd prefer it if the owners could profit ahead of the club?

And the primary objective of NOPM is to get SISU out. Protests etc haven't made any difference so the last option is to starve them of money, which unfortunately means starving the club of those same resources. As Sisutium have said themselves they can only invest their clients cash where they let them, if this investment just makes losses continuously clients will specifically ask for their money not to be invested in the football and they will run out of funding. Carry on too long and they may start losing investors altogether.
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Re: FFP/SCMP

Postby The Yid » Wed Aug 21, 2013 7:47 pm

Starving them financially is a ridiculous approach. You're talking about probably a 100m+ hedge fund. If Dogga's calculations are correct then the money they'd put in over the next 3 yrs would be amount to the interest on their cash balance... There or thereabouts. And they've come so far down the line - bloody-mindedness is going to make them even more resolute. The only way they will ever go is when they get a stadium - Ricoh or their own and then they maybe will sell.

You've got more chance of tying a fucking sky-blue ribbon round the moon than starving them out.
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Re: FFP/SCMP

Postby AD » Wed Aug 21, 2013 9:36 pm

The Yid wrote:Starving them financially is a ridiculous approach. You're talking about probably a 100m+ hedge fund. If Dogga's calculations are correct then the money they'd put in over the next 3 yrs would be amount to the interest on their cash balance... There or thereabouts. And they've come so far down the line - bloody-mindedness is going to make them even more resolute. The only way they will ever go is when they get a stadium - Ricoh or their own and then they maybe will sell.

You've got more chance of tying a fucking sky-blue ribbon round the moon than starving them out.


I think as hedge funds go their not massive players - they've made losses the last two years. OK, profit figures aren't necessarily the best indicators at times but it's far from great. As I said before their resources mainly belong to their investors and thus have restrictions on what they can do with it based on those clients wishes. If they say it can't be used on the club/stadium, they can't use it.

And venture capitalists aren't big fans of using their own funds to fund investments, they much prefer using other people's. Given the entrenched position they may well be willing to use some of their own cash, but with an almost certain likelihood of a huge loss maybe not.
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Re: FFP/SCMP

Postby king chillout » Wed Aug 21, 2013 10:01 pm

The Yid wrote:Starving them financially is a ridiculous approach. You're talking about probably a 100m+ hedge fund. If Dogga's calculations are correct then the money they'd put in over the next 3 yrs would be amount to the interest on their cash balance... There or thereabouts. And they've come so far down the line - bloody-mindedness is going to make them even more resolute. The only way they will ever go is when they get a stadium - Ricoh or their own and then they maybe will sell.

You've got more chance of tying a fucking sky-blue ribbon round the moon than starving them out.


Yes, they are a 100m+ hedge fund......but if they carry on operating the way they are that 100m+ will soon dwindle away to sweet fuck all.

As an investor looking to give my money to a hedge fund, I think SISU would be the last fuckers I would trust with it. They have to be the laughing stock of the hedge fund world !

They thought buying into an English football club could make them money ! And they picked Coventry City !!!
And just to add a bit of special fuck-up sauce......Sisu managed to make us fucking worse !!!!!!!!!!!!!!!!!!!!!!!!!!!!!

They currently own a football club without a ground in the city they come from and whose own fans refuse to go and watch them. Seriously, I think SISU need to take a good look at the situation they are in and admit it's been a total balls-up.

SISU have got themselves into a hostage situation which is in danger of dragging on for so long that the hostage loses what litle value they once had because everyone just gets fucked off with it all.
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Re: FFP/SCMP

Postby dog rout 21 » Wed Aug 21, 2013 10:21 pm

In your own ways I think both of you are correct but I was angling towards Yid with my cobbled figures. I don't know enough about SISU as a company or how they are structured or how the master fund is structured to say definitely. But as wild guesses surely they'd either be comprised of investors who understand the nature of the of the fund and it being high risk, high reward OR they get bundled into the main master fund and just be a small percentage of the investment/return? So I don't imagine they'd be risking losing investors unless the other sections of the master fund are failing and there's a dip in the overall return. Did I not read that the council's pension fund might be investing in ARVO?

I also think a lot of people are looking at this with a short term view in that SISU couldn't possibly last 5 years without income but I think my guesstimate shows that in the grand scheme of things, it might not be that much money they'd need to use to prop us up with the high profit reward of having club, stadium and associated commercial land (whether Ricoh or HR2) lock, stock. Even as non-returnable donations, to use a shit analogy, it would be a bit like selling your house if you're a millionaire, you might fit a new kitchen for 10k but then inflate the sale price by 10-20k which while it wouldn't necessarily be paying for the kitchen directly does get you your money back.

Again it's all conjecture and guesses and assumptions, I still don't really understand what SISU are trying to achieve and what their end-game is. But I think it's all too easy to under-estimate them as astute investors just because of the mud-slinging they've got caught up in with a bunch of football fans and a shitty council. If there wasn't a plan for them to get a return with set limits of risk (i.e. more money put in in the short term) I can't see that they'd still be here.
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Re: FFP/SCMP

Postby The Englander » Wed Aug 21, 2013 11:11 pm

My guess is they still think ACL are on the verge of going bust, and are still pinning their hopes on getting the Ricoh on the cheap.
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Re: FFP/SCMP

Postby billythefish » Thu Aug 22, 2013 7:37 am

I agree with Sid and think that SISU are playing hardball with ACL. To put it simply then who goes bust first SISU or ACL? My money would be on ACL.

Whilst AD and a couple of others have painted pictures where ACL could still make a profit without the football club, I havent seen much increase in non football use at the Ricoh. If anything the use seems to have decreased rather than increase (I dont live locally so could be wrong).

So assuming that ACL do go bust first who is likely to buy a stadium without a club, in an area that desperately needs investment? The only way I can see someone making money on the stadium is if there is regular use. SISU/Otium hold all the aces as they are the ones that have the only regular user of that stadium.

To a certain extent it could be seen as win/win for SISU/Otium. They end up with a club and the Ricoh and are able to develop the site or they end up with a club and build a new stadium in a local (ish) site with the capability to develop that site. Yes they will lose fans but this (for them) isnt about how many fans attend its about having a stadium site that can be developed. It will be easier to attract investors and partners if you have that stadium with regular weekly use through the season and then add in the potential of possible additional use (concerts, additional sports games etc).

Thats my view on the end game for them but it is just my opinion.
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Re: FFP/SCMP

Postby AD » Thu Aug 22, 2013 10:20 am

I think SISU are still intent on picking up the stadium for a pittance - the new stadium things gone pretty quiet given they said they were on the verge of a purchase and picking a preferred developer two months ago. In fact the last thing I remember hearing was that the number of potential sites had gone back up to three - handily making any decision more difficult and take more time. Everything about it is based around delay.

Of course now that the club have officially left the Ricoh, their claim as main tenants is no longer valid and any claims they make as to having a right or need to be there are massively reduced. I have wondered if maybe an entertainment company like AEG could end up interested as they have no venues in the Coventry/Warwickshire area, which is a significant catchment area, and with two performance spaces gives them various options. They don't tend to have large stadium venues but if they took over the arena their market dominance could see them use the venue for all their midland dates on massive tours rather than having to fit them in around the football season at other venues, with the exhibition hall being used in conjunction with places like the NIA,LG Arena and O2?

I think it would still be best utilised as a sporting arena, but if it did get to the situation of serious problems they'd sell it to someone else first. SISU would probably start their usual litigation, but it'd be nigh on impossible to prove any deal wasn't done in good faith and belief their business plan had a higher chance of success.
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Re: FFP/SCMP

Postby The Yid » Thu Aug 22, 2013 11:18 am

AEG were already put in place to run the Ricoh by SISU of they had acquired the stadium from ACL.
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Re: FFP/SCMP

Postby Sky Blue Steve-o » Tue Sep 03, 2013 9:59 pm

So we turned down two bids of around £500k for Cyrus Christie and rejected enquiries for Leon Clarke and Callum Wilson. Backs up the theory that NOPM doesn't leave SISU desperate for income.

Nor can SISU be accused of asset stripping if they're turning down offers for players whilst continuing to absorb losses. Fisher seems to be telling the truth when he says they're in it for the long haul, which begs the question what is their end goal?
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Re: FFP/SCMP

Postby billythefish » Wed Sep 04, 2013 7:42 am

Sky Blue Steve-o wrote:So we turned down two bids of around £500k for Cyrus Christie and rejected enquiries for Leon Clarke and Callum Wilson. Backs up the theory that NOPM doesn't leave SISU desperate for income.

Nor can SISU be accused of asset stripping if they're turning down offers for players whilst continuing to absorb losses. Fisher seems to be telling the truth when he says they're in it for the long haul, which begs the question what is their end goal?


Fair play to the current regime for that and it does appear to support the fact they in this for the long haul. Dont think anyone knows exactly what the end goal is but I still think it has something to do with ending up with a ground that has potential for development. Possibly the Ricoh (if they get it when ACL go bust) or an alternative self built ground somewhere on the outskirts of Cov.
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Re: FFP/SCMP

Postby AD » Wed Sep 04, 2013 3:32 pm

Sky Blue Steve-o wrote:So we turned down two bids of around £500k for Cyrus Christie and rejected enquiries for Leon Clarke and Callum Wilson. Backs up the theory that NOPM doesn't leave SISU desperate for income.

Nor can SISU be accused of asset stripping if they're turning down offers for players whilst continuing to absorb losses. Fisher seems to be telling the truth when he says they're in it for the long haul, which begs the question what is their end goal?


Possibly. It could also be a bluff to try and appear robust (think North Korean military parades). Apparently the three released players got significant payouts so that will have hit them in the pocket. Also maybe lessons have been learnt from the sales of players for a quick buck (admittedly to cover losses) which long term has resulted in a far larger loss of revenue in relegation and lower supporter numbers(although in the current climate this isn't so important - I think our support has dwindled to as low as it is likely to).
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Re: FFP/SCMP

Postby The Englander » Wed Sep 04, 2013 7:38 pm

Sky Blue Steve-o wrote:So we turned down two bids of around £500k for Cyrus Christie and rejected enquiries for Leon Clarke and Callum Wilson. Backs up the theory that NOPM doesn't leave SISU desperate for income.

Nor can SISU be accused of asset stripping if they're turning down offers for players whilst continuing to absorb losses. Fisher seems to be telling the truth when he says they're in it for the long haul, which begs the question what is their end goal?


If nothing else, it proved a lot of Coventry City fans are utter cnuts, who can't be pleased whatever goes on. Whinging like bitches all over the weekend saying SISU would sell their granny for fifty pence, then moaning when the window shut that nobody offered the market value for certain of our players which is why they weren't sold. It must have really pissed them off that their shitty pre-written ramblings have had to be put in a draw till at least January. Failure to sell wasn't any bravado-ish show of strength, it was about knowing we have a wafer thin squad, but (Aside from one or two central defenders) a bloody good first team. And somebody, who is as anti-SISU as it gets, wrote a Father Jack level sarcastic piece apologising to SISU a few days ago, and apparently got slated by some utterly thick fcukers that didn't see it as a joke. Some people shouldn't be allowed to use a keyboard.
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Re: FFP/SCMP

Postby billythefish » Thu Sep 05, 2013 7:21 am

Also agains proves the worth of having one of the most successful academies in this League. [smilie=icon_mrhappy.gif]
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