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An In Depth Look At The New Villa Budget / FFP Rules

An In Depth Look At The New Villa Budget / FFP Rules


maninapinksuit follows on from posts in the forum about the reported new budget for Aston Villa with this on the whole situation. See also: Plans Change For Bruce With Summer Budget?

*************

There is some truth in this but also some lazy journalism...

Dr T stated on Twitter early this morning that 'we need well prepared for the FFP as we inherited heavy burdens. If we get more ins but can't succeed in outs, we'll have headache with FFP.'

Which shouldn't be a surprise to anyone.

With regards to the press stories:

1. The c.£81m loss reported for the 12 months to 31 May 2016 appears to relate to that reported in Reform Acquisitions Limited - the UK Holding Company - for the Aston Villa Group, not the company that is the Football Club and presumably the member of the EFL; it therefore includes a number of non-football club losses which I cannot believe are included in the return to the EFL for FFP purposes (apparently 'Regulation 16.4 applies but I cannot find it);

2. More importantly the £81m loss is the amount reported, whereas the FFP rules (which are available on the EFL website) state in section 4.2 that the loss reported is adjusted for many items, including 4.2.2 'depreciation / impairment of tangible fixed assets'. The £81m loss included the small matter of £3.7m of depreciation of TFA and £44.8m of impairment of TFA'.

Both of these are non-cash items, and in the case of impairment, largely affected by the opinion of the board of directors and I can't imagine a case would have been put forward for such a write-off if it impacted on FFP!

3. FFP makes some provision for shareholder equity input so Dr T could (or may already have done so) inject some funds to offset losses for FFP reporting purposes.

Posts on Xia`s tweet in the summer transfer thread: Click Here

FFP appears to be for a rolling three year period as follows:

'Financial Fair Play 2016/17

This season sees the implementation of a new set of 'Profitability and Sustainability` regulations that will deliver a consistent approach to Financial Fair Play for those clubs that move between the Premier League and Championship through promotion and relegation.

Championship clubs voted to change their FFP rules in November 2014 as part of wide-ranging negotiations with the top-flight about future solidarity arrangements that has contractually linked the finances of the EFL and Premier League for the first time since the formation of the latter in 1992.

The £13m limit for the 2015/16 season is in line with the losses permitted under the new regulations which will permit a maximum loss of £39m (compared to an equivalent figure of £105m in the Premier League) over a rolling three season timeframe measured from March 2017. A club that moves between the Premier League and Championship will be assessed in accordance with the permitted loss in the relevant divisions played in during the three-year period in question. For example, a club that had played two seasons in the Championship and one in the Premier League would have a maximum permitted loss of £61m, consisting of one season at £35m and two at £13m.

Read more at www.efl.com

Thus a 3 year rolling amount of losses allowed, with a higher proportion for the years in the Premier League.

Not only does our income fall the longer we stay in the Championship (reducing parachute payment over 3 years) but so does the maximum amount of losses permitted under FFP - a double whammy - it will be harder to compete the longer we stay in the Championship - stating the bloody obvious....

Read more in the forum thread: Click Here



Click here to join in the debate on the club forum.

Writer:maninapinksuit
Date:Monday May 15 2017
Time: 10:42AM

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