It seems these days that every self respecting football body feels the need to bring in financial fair play rules - how long before the Premier League does?
I have read the Football League's news on their own website which describes what the FL clubs themselves have agreed to work to. This is a sign of the times and represents a real shift in football economics. Just over ten years ago I presented the idea of financial controls to the FL clubs and was told that such measures would "kill the dream". Now much more draconian measures are being introduced to ensure that the dream doesn't kill the clubs.
Well done to the Football League who, once again, are being very progressive in an attempt to improve their lot, or at least, make sure that their lot doesn't get any worse. You can't blame them because a competition is hugely damaged when member clubs such as Portsmouth implode. It would be disasterous if such clubs were ever unable to complete a season.
The measures as described on the FL website are interesting and, no doubt, over the next few weeks and months everyone will spend many hours working out the potential consequences. It does seem that if you are going to "go for it" and make a heavy investment in your club, you had better be successful and get promoted to the Premier League. If you do, you can pay the "overspending tax" to the clubs that are staying in the FL from your newly acquired Premier League revenues. If you don't you get promoted, you will have an immediate transfer embargo and you will be unable to sign new players. High stakes indeed.
It will be interesting to speculate on the impact of FL FFPR on Premier League clubs. Until the Premier League bring in similar regulations there will be a potentially dramatic consequences for Premier League clubs that are relegated. Although the FFPR do not take effect for a few years it is interesting to speculate on what would happen if they were imminent.
One of the clubs which is currently involved in the battle for Premiership survival recently reported losses of over £50m in their last financial year. Even with parachute payments to lessen the blow of relegation to the Championship, the challenge to reduce the cost base sufficiently to meet the FFPR, even with 12 month's grace, would be eye-wateringly difficult.
Would the new owners of QPR have bought the club and made a big investment in playing staff if they might be subjected to the FL's FFPR a few months later? It leads me to wonder whether, once the FL FFPR are fully operational, Premier League clubs will manage themselves more prudently in case the unthinkable actually happens?
Some of the details of the FL FFPR are potentially interesting. As anticipated, the FL have followed UEFA's lead in excluding and therefore encouraging expenditure on certain "good items" such as youth player development and community work.
However they have included a strange statement about excluding "The profit affecting element of the purchase, sale and depreciation of fixed assets excluding players (e.g. a club's stadium)". I have had to read this a few times as, on first read, it is not that clear (to me anyway). I conclude that "the profit affecting element of the" actually means "financial transactions relating to". If this is correct then the FL are rightly encouraging expenditure on stadia which will improve spectator safety and enhance the spectatator experience, but they could have said it more simply. It will be interesting to read the actual rule relating to this. Safe and pleasant stadia have to be a priority and the cost in providing these conditions should be encouraged.
Other excluded costs include those relating to career ending injuries for players, bad debts owed by other clubs and losses sustained by a major sponsor defaulting - the shadow of ITV Digital still looms large over this last one. This looks like a strange mixture of afterthoughts and "just in case" measures. The cost of career ending injuries for players can be substantial but perhaps the FL should have excluded the cost of insuring against such eventualities? Wouldn't that encourage better financial planning?
Overall the FL should get credit for attempting to bring in these FFPR however, how much credit they should receive will become clearer when everyone has poured over the new rules and worked out what the consequences might be. The FFPR are designed to create greater financial stability but could there be circumstances where they actually destabilise a club?