On my way home

[ConorQPR2000]

I have written about this in another thread but I am happy to elaborate again:

As you might know, FFP rules set a threshold on losses of £39m for any three season period. 2020/21 was our financial super season, when we sold Eze. In that season our FFP loss was around zero (break even). Hence, we could lose £39m from a FFP point of view in the following two seasons and still be inside the three year limit of £39m.

However, 2021/22 was a disaster. We lost ca £20m based on my best estimate of the "FFP loss". We gambled on promotion by signing expensive players without resell value, such as Austin, Johansen and Gray. This meant that we can only lose £19m over the next two years, or £9.5m on average per season for this season and next. For the three year period that ends 2023/24 the Eze-year will be left out of the calculation and that completely changes the picture.

We have cut costs this season. First of all we did not renew the contracts of expensive players such as Austin, Gray, Hendrick, Wallace and Barbet. But we signed a few very expensive players. I think Roberts is equally expensive as Austin and Gray. Premier League loans such as Laird, Iroegbunam and Richards aren't cheap. Neither are Balogun, Clarke-Salters and Paal. Even though transfer fees were absent, we have paid agents a lot in order to sign seven players and three managers. Add to that the fact we had to pay up a 3.5 years contract for Critchley.

I think we have cut costs this season and thereby cut looses. As far as I understand, TV revenue has gone up a little and we were paid a decent fee by Glasgow Rangers when Beale left. But I cannot see that we have reduced the FFP losses more than 30%, from £20m to 14m. Hence, the head room for next season is just £5m if my assumptions are correct.

To cut costs by another £9m (£14m minus £5m) is almost impossible. As I see it, we can only reduce the loss a lot by selling players. However, the way this season has panned out leaves us with very few players of any sigificant sell-on value. Willock, Dieng and Dykes have just one year left on their contracts and I think they are worth 1-2m each at most. Chair and Field are our best hopes, but I am afraid they are not PL material. We might risk no bids will be forthcoming. I am therefore afraid we cannot raise enough money from asset sales and will struggle big time to comply with the FFP threshold.

If we get relegated, we will lose almost all TV money. That is a £7-8m weakening compared to this season. If that comes on top, I cannot see we have any chance of avoiding breach of the FFP rules. I know that players contracts might include release clauses, but as it looks to me this will be a mountain to climb.

If we break the rules, this will not be visible before the 23/24 accounts are publish in spring of 2025. Hence, any point deduction will only happen two years from now. But since we have broken rules before, I fear the penalty will be significant, and possibly as much as 10 points. Whether we are in Championship or L1 at that point, it might have severe consequences.

Hence, relegation has knock on effects that are potentially severe. Of that reason we have to do whatever it takes now to avoid it.

Some important points you make.

What would help with costs is that players would all have relegation clauses so the wages would reduce as per their contract, im not sure what the specific numbers are, but that would help with partially cutting losses on top of player sales.

You also got to remember that there is no FFP as such in League 1 and 2, Its called the Salary Cap Management Protocol, which means we would be restricted to spending 60 percent of our turnover on player wages, for the first season down in L1, we can spend an extra 15 percent, so 75 percent in total.

The turnover includes matchday and commercial income, TV revenue, merit payments based on league position, donations from the owners and injections of equity.

[QPROslo]

Yes, I also learned in the meantime that FFP is replaced with a salary cap in L1. It is well worth reading this:

SCMP (League 1 & 2) (financialfairplay.co.uk)

Because owners can inject as much as they like if it is gifts or equity (not loans), we will not be in breach of rules in L1. At least that is a relief. After learning this, I am less concerned.

I am happy to stand corrected.

[ConorQPR2000]

Yes, I also learned in the meantime that FFP is replaced with a salary cap in L1. It is well worth reading this:

SCMP (League 1 & 2) (financialfairplay.co.uk)

Because owners can inject as much as they like if it is gifts or equity (not loans), we will not be in breach of rules in L1. At least that is a relief. After learning this, I am less concerned.

I am happy to stand corrected.

Its why teams like Derby, Sheff Wed and Ipswich tend to spend a fair bit whilst they are there.

I think we are capable of going back up if we do end up being relegated, but it requires serious changes on the pitch as well as off it.

[eam1882]

I have written about this in another thread but I am happy to elaborate again:

As you might know, FFP rules set a threshold on losses of £39m for any three season period. 2020/21 was our financial super season, when we sold Eze. In that season our FFP loss was around zero (break even). Hence, we could lose £39m from a FFP point of view in the following two seasons and still be inside the three year limit of £39m.

However, 2021/22 was a disaster. We lost ca £20m based on my best estimate of the "FFP loss". We gambled on promotion by signing expensive players without resell value, such as Austin, Johansen and Gray. This meant that we can only lose £19m over the next two years, or £9.5m on average per season for this season and next. For the three year period that ends 2023/24 the Eze-year will be left out of the calculation and that completely changes the picture.

We have cut costs this season. First of all we did not renew the contracts of expensive players such as Austin, Gray, Hendrick, Wallace and Barbet. But we signed a few very expensive players. I think Roberts is equally expensive as Austin and Gray. Premier League loans such as Laird, Iroegbunam and Richards aren't cheap. Neither are Balogun, Clarke-Salters and Paal. Even though transfer fees were absent, we have paid agents a lot in order to sign seven players and three managers. Add to that the fact we had to pay up a 3.5 years contract for Critchley.

I think we have cut costs this season and thereby cut looses. As far as I understand, TV revenue has gone up a little and we were paid a decent fee by Glasgow Rangers when Beale left. But I cannot see that we have reduced the FFP losses more than 30%, from £20m to 14m. Hence, the head room for next season is just £5m if my assumptions are correct.

To cut costs by another £9m (£14m minus £5m) is almost impossible. As I see it, we can only reduce the loss a lot by selling players. However, the way this season has panned out leaves us with very few players of any sigificant sell-on value. Willock, Dieng and Dykes have just one year left on their contracts and I think they are worth 1-2m each at most. Chair and Field are our best hopes, but I am afraid they are not PL material. We might risk no bids will be forthcoming. I am therefore afraid we cannot raise enough money from asset sales and will struggle big time to comply with the FFP threshold.

If we get relegated, we will lose almost all TV money. That is a £7-8m weakening compared to this season. If that comes on top, I cannot see we have any chance of avoiding breach of the FFP rules. I know that players contracts might include release clauses, but as it looks to me this will be a mountain to climb.

If we break the rules, this will not be visible before the 23/24 accounts are publish in spring of 2025. Hence, any point deduction will only happen two years from now. But since we have broken rules before, I fear the penalty will be significant, and possibly as much as 10 points. Whether we are in Championship or L1 at that point, it might have severe consequences.

Hence, relegation has knock on effects that are potentially severe. Of that reason we have to do whatever it takes now to avoid it.

Thanks Oslo,appreciate your reply.