I wonder whether one of the big big clubs that feel FFP will hinder their aspirations will decide to challenge the ruling in the courts on the basis of restraint of trade ?
As I say above - this is currently in action. An objection has been lodged with the EU Commission - google Striani if you want more details.
I recognise, given the nature of our debt, the reasons why we haven't entered administration over the last few years but I can't help feeling that had we gone through that pain we'd have come out the other side smiling.
The 'slate' would have been clean and we would have then been an attractive proposition to investors - would have done naff all for the creditors of course, particularly the 'friendly' creditors.
I'd be careful what you wish for...
Not sure he's saying he thinks it would be a good idea, and I know I'm not, but (sadly) I also think there's an element of truth in the point he's making.
I recognise, given the nature of our debt, the reasons why we haven't entered administration over the last few years but I can't help feeling that had we gone through that pain we'd have come out the other side smiling.
The 'slate' would have been clean and we would have then been an attractive proposition to investors - would have done naff all for the creditors of course, particularly the 'friendly' creditors.
I'd be careful what you wish for...
Not sure he's saying he thinks it would be a good idea, and I know I'm not, but (sadly) I also think there's an element of truth in the point he's making.
I agree, I just think it's something that can never be ruled out whatever line is coming out of The Valley. It's not just that the business isn't viable, it's that the funding sources are unpredictable and indeed unknown. The club could just run out of cash.
The biggest protection is that the owners (or their funders) are fourth in the queue behind RBS, HSBC and the former directors. But accidents can happen, as the song goes.
I recognise, given the nature of our debt, the reasons why we haven't entered administration over the last few years but I can't help feeling that had we gone through that pain we'd have come out the other side smiling.
The 'slate' would have been clean and we would have then been an attractive proposition to investors - would have done naff all for the creditors of course, particularly the 'friendly' creditors.
I'd be careful what you wish for...
Not sure he's saying he thinks it would be a good idea, and I know I'm not, but (sadly) I also think there's an element of truth in the point he's making.
I was thinking more retrospectively than something I would necessarily advocate now. We've probably got more to lose now (playing squad wise) than we did in the time immediately pre TJ/MS - but we are one step closer to the Prem, have a good manager etc etc.
In any event, from what little I understand of our unsecured debt to ex directors and more recent investors I think Admin is not a likely route by choice (but if losses cease to be funded....)
The most long term solution will surely be, to try and close the gap between all leagues.
Keep it competitive, but the money floating around is ludicrous, especially given the state of our national team, and national youth setup!
I suspect we all agree, but it 'ain't happening, unfortunately. Right now the game is becoming increasingly uncompetitive with financial advantage ever more important.
The only real answer would be a series of radical measures, including salary caps, maximum wage bills, controls on the length of player contracts or, as a minimum, enforced performance conditions (step downs on relegation, for example), an end to the blatant abuse of the loan system by the big Clubs and so on. The problem though is that the weak and ineffective football authorities have lost control. The big Clubs have the game by the nuts.
All very well to blame the authorities and big clubs but most punters are no less guilty. When we were at the top table there wouldn't have been many on here starting threads hand wringing about the plight of lower league teams when On-Digital went up in a puff of smoke. When the zabeel thing was rumoured to be happening a load of people didn't go down to mill around the ground like Geordies, because they expected owners with a keen interest in the community and running a sound financial business; it was because they hoped for pots of cash to spunk on foreign mercenaries. That's the way of it, I'm afraid. People are selfish. If we were in the prem with a moneybags owner we'd not give half a shit about the inequality of the league. It's only really in a socialist state like America where sport is run on a truly equitable basis. Everywhere else the structure is haves and have nots, or more accurately don't care and care a lots.
The most long term solution will surely be, to try and close the gap between all leagues.
Keep it competitive, but the money floating around is ludicrous, especially given the state of our national team, and national youth setup!
I suspect we all agree, but it 'ain't happening, unfortunately. Right now the game is becoming increasingly uncompetitive with financial advantage ever more important.
The only real answer would be a series of radical measures, including salary caps, maximum wage bills, controls on the length of player contracts or, as a minimum, enforced performance conditions (step downs on relegation, for example), an end to the blatant abuse of the loan system by the big Clubs and so on. The problem though is that the weak and ineffective football authorities have lost control. The big Clubs have the game by the nuts.
All very well to blame the authorities and big clubs but most punters are no less guilty. When we were at the top table there wouldn't have been many on here starting threads hand wringing about the plight of lower league teams when On-Digital went up in a puff of smoke. When the zabeel thing was rumoured to be happening a load of people didn't go down to mill around the ground like Geordies, because they expected owners with a keen interest in the community and running a sound financial business; it was because they hoped for pots of cash to spunk on foreign mercenaries. That's the way of it, I'm afraid. People are selfish. If we were in the prem with a moneybags owner we'd not give half a shit about the inequality of the league. It's only really in a socialist state like America where sport is run on a truly equitable basis. Everywhere else the structure is haves and have nots, or more accurately don't care and care a lots.
Your point about the US is well made and an intriguing irony. But you should except Germany and also Scandinavia from your final point too. The Swedish and Norwegian fans co-ordinated across club lines protests against TV companies buggering around with match schedules, and achieved some success in doing so. Of course if you look at Spain or Italy your point is entirely valid.
Debt isn't and never has been Charlton's problem. Debt is an issue if your creditors are chasing you for interest or principal payments and you simply don't have the money. Administration is then a mechanism for protecting your business from those creditors whilst you sort it out.
Charlton's ongoing problem has been its operating losses and the need to fund them. Administration simply doesn't help in this situation.
For those who feel that other Clubs have unfairly benefitted from administration it is worth considering our own history. When Richard Murray consolidated ownership of the Club under Baton he wiped out all its equity and wrote off or deferred all debts. This was possible because the creditors were "friendly", but in many ways it achieved the benefits of administration without the disruption.
It makes no sense for the current owners (funders) to allow the Club to go into administration. They will lose if it does, not least because, as Airman points out, they are behind RBS, HSBC and the former Directors in the queue.
If the Club goes into administration, therefore, it will be because the owners have screwed up and shot themselves in the feet. If they are unable to continue to fund they should, quite literally, give the Club away in exchange for a option to share in the benefits of promotion or even, in extreme circumstances, pay somebody to take the Club off their hands in exchange for such an option. The risk is that a combination of ill judged brinkmanship and, perhaps, a lack of humility prevents them from behaving rationally.
Football culture has been until now ultimately selfish because it is a zero sum game (quite literally). I think that's changing, albeit slowly. Probably due to the number of bigger clubs who have dropped like a stone after falling out of the Prem.
This is the new economic reality and instablity in our game, and some not all, are starting to realise it has a massive downside and are taking an interest in the financial side of things. Ironically up until now at least parachute payments do not seem to have been the panacea, many have thought, although the enormous hike in their value may change that. Alternatively it may not, watch QPR and see I guess, it may encourage them to take even higher risks.
The most long term solution will surely be, to try and close the gap between all leagues.
Keep it competitive, but the money floating around is ludicrous, especially given the state of our national team, and national youth setup!
I suspect we all agree, but it 'ain't happening, unfortunately. Right now the game is becoming increasingly uncompetitive with financial advantage ever more important.
The only real answer would be a series of radical measures, including salary caps, maximum wage bills, controls on the length of player contracts or, as a minimum, enforced performance conditions (step downs on relegation, for example), an end to the blatant abuse of the loan system by the big Clubs and so on. The problem though is that the weak and ineffective football authorities have lost control. The big Clubs have the game by the nuts.
All very well to blame the authorities and big clubs but most punters are no less guilty. When we were at the top table there wouldn't have been many on here starting threads hand wringing about the plight of lower league teams when On-Digital went up in a puff of smoke. When the zabeel thing was rumoured to be happening a load of people didn't go down to mill around the ground like Geordies, because they expected owners with a keen interest in the community and running a sound financial business; it was because they hoped for pots of cash to spunk on foreign mercenaries. That's the way of it, I'm afraid. People are selfish. If we were in the prem with a moneybags owner we'd not give half a shit about the inequality of the league. It's only really in a socialist state like America where sport is run on a truly equitable basis. Everywhere else the structure is haves and have nots, or more accurately don't care and care a lots.
Don't really disagree. I was simply trying to explain the situation not seeking to apportion blame. Your line about US sports is funny, of course, but somewhat misleading!! US sport is very commercial, much more so than sport in this country, but their model wouldn't work here, at least not for football, because the tribalism demands promotion and relegation and, as we've seen, the so-called franchise system has been absolutely rejected.
Debt isn't and never has been Charlton's problem. Debt is an issue if your creditors are chasing you for interest or principal payments and you simply don't have the money. Administration is then a mechanism for protecting your business from those creditors whilst you sort it out.
Charlton's ongoing problem has been its operating losses and the need to fund them. Administration simply doesn't help in this situation.
For those who feel that other Clubs have unfairly benefitted from administration it is worth considering our own history. When Richard Murray consolidated ownership of the Club under Baton he wiped out all its equity and wrote off or deferred all debts. This was possible because the creditors were "friendly", but in many ways it achieved the benefits of administration without the disruption.
It makes no sense for the current owners (funders) to allow the Club to go into administration. They will lose if it does, not least because, as Airman points out, they are behind RBS, HSBC and the former Directors in the queue.
If the Club goes into administration, therefore, it will be because the owners have screwed up and shot themselves in the feet. If they are unable to continue to fund they should, quite literally, give the Club away in exchange for a option to share in the benefits of promotion or even, in extreme circumstances, pay somebody to take the Club off their hands in exchange for such an option. The risk is that a combination of ill judged brinkmanship and, perhaps, a lack of humility prevents them from behaving rationally.
Perhaps you've just hit the nail on the head with regards to potential buyers backing out?
I'm extremely grateful to a number of posters today, particularly Mundell and BlackForest, for shedding a lot of light on the mysterious world of football finance. I'm a complete novice at this, and don't have much of a head for figures. May I ask one more question - and forgive me if it sounds naïve or has been answered elsewhere on the forum - How do most football clubs manage to lose so much money? As I see it, the basic income is from ticket receipts, sales from the club shops, sponsorship, TV money, and prize money from the League. The outgoings are all those things that keep the stadium running - rent (if applicable), rates, services, maintenance - and staff and players' salaries. Excluding the buying and selling of players, what is it that has got so out of hand for many of the nation's clubs? Is it, as the media headlines suggest, the high level of players' wages? And if so, why on earth did the clubs allow this situation to develop, when they themselves are in control of what their players get paid? Is there any other industry still alive in which the management has effectively allowed the workforce to render the business insolvent?
The salary to turnover ratio at clubs is a key factor - I think it was Bristol City year before last who were up at about 150% (pre-Baldock) and they were garbage and got relegated the season after
Things to campaign for: 4 up 4 down from the Premier League - Very exiting for the end of season in both divisions especially given the one horse / two horse nature of the League title Things not to campaign for today but maybe in the future: Parachute payments get eaten up by failing / failed clubs - take a look at Wolves and Blackburn and they are just like CAFC five years ago... Only when more than one promotion slot out of three is taken by clubs with parachute payments is there a real case to change the system.
I'm extremely grateful to a number of posters today, particularly Mundell and BlackForest, for shedding a lot of light on the mysterious world of football finance. I'm a complete novice at this, and don't have much of a head for figures. May I ask one more question - and forgive me if it sounds naïve or has been answered elsewhere on the forum - How do most football clubs manage to lose so much money? As I see it, the basic income is from ticket receipts, sales from the club shops, sponsorship, TV money, and prize money from the League. The outgoings are all those things that keep the stadium running - rent (if applicable), rates, services, maintenance - and staff and players' salaries. Excluding the buying and selling of players, what is it that has got so out of hand for many of the nation's clubs? Is it, as the media headlines suggest, the high level of players' wages? And if so, why on earth did the clubs allow this situation to develop, when they themselves are in control of what their players get paid? Is there any other industry still alive in which the management has effectively allowed the workforce to render the business insolvent?
The Trust have started a section on the website to highlight both rules and opinions about this area and we hope that once it takes off people will contribute AND the club will promote it to the fans...
The irony is that the TV deal is bigger than ever but too many clubs are banking on promotion to sort their finances. Clubs are paying outrageous salaries to players who only perform occasionally and agents are racking up the bills by telling directors that if they don't pay x then someone else will... The theory is that limiting losses will hand negotiation power back to the clubs and kill off the root cause of the auction for scarce talent.
The only way a club can perform better is to manage its resources as best it can and to increase its income. I can see the current CAFC board doing the former - we can debate the merits of certain players but it is clear that c. £1.5M has fallen off the payroll this summer.
And the Trust is building a case as to how it can help with the latter - at board level!
Things to campaign for: 4 up 4 down from the Premier League - Very exiting for the end of season in both divisions especially given the one horse / two horse nature of the League title Things not to campaign for today but maybe in the future: Parachute payments get eaten up by failing / failed clubs - take a look at Wolves and Blackburn and they are just like CAFC five years ago... Only when more than one promotion slot out of three is taken by clubs with parachute payments is there a real case to change the system.
Sorry to bang on about parachute payments, but.... Take QPR, for example. They sign a load of players for high transfer fees and enormous wages on 3-year contracts, and within months the players turn out to be useless and the club gets relegated. Having been reckless, or misguided - and having run up huge debts - the club then gets handsomely rewarded, through parachute payments, for failure. Meanwhile, average Championship clubs who run a tight ship (like us, for example), see the prospect of promotion receding because the FFP rules prevent a sugardaddy from funding new players and their salaries. Is it me, or is there something fundamentally unjust about this?
Things to campaign for: 4 up 4 down from the Premier League - Very exiting for the end of season in both divisions especially given the one horse / two horse nature of the League title Things not to campaign for today but maybe in the future: Parachute payments get eaten up by failing / failed clubs - take a look at Wolves and Blackburn and they are just like CAFC five years ago... Only when more than one promotion slot out of three is taken by clubs with parachute payments is there a real case to change the system.
Sorry to bang on about parachute payments, but.... Take QPR, for example. They sign a load of players for high transfer fees and enormous wages on 3-year contracts, and within months the players turn out to be useless and the club gets relegated. Having been reckless, or misguided - and having run up huge debts - the club then gets handsomely rewarded, through parachute payments, for failure. Meanwhile, average Championship clubs who run a tight ship (like us, for example), see the prospect of promotion receding because the FFP rules prevent a sugardaddy from funding new players and their salaries. Is it me, or is there something fundamentally unjust about this?
You are right to bang on about it! Simple maths states we have a 1 in 8 chance of promotion next season (3 in 24). But then rule out one slot as taken by a relegated club and that five clubs will be nowhere near the top six (Millwall) and those chances go down to 2 in 18 or 1 in 9... I can live with that and from there we have to make our own luck by backing the team etc. etc.
Your point about QPR is valid but they are very strange - not only did they buy promotion with £23M losses they also lost £23M in the Premier League and last season will be a lot more as they spent silly money on players as well as getting no performance money for finishing last... Even if you are a billionaire you are not going to be happy at losing £100M (?) in 3 years...
Only time will tell whether they are stable enough to bounce back up - I would be more worried about Reading who have been run on a sensible Charltonesque basis for a long time now.
How can FFP be against Eu rules? Surely a sports governing body can set their own rules? They cannot cite restraint of trade or a billionaire might demand the right to play in the premiership when their club is from another European country
How can FFP be against Eu rules? Surely a sports governing body can set their own rules? They cannot cite restraint of trade or a billionaire might demand the right to play in the premiership when their club is from another European country
I'm certainly no expert but if I owned a football club, a business despite what we might think and I wanted to invest over and above existing profits because I believed that the risk would ultimately be of benefit and take my business forward and I was told you can't run your business how you want then I might think it was restraint of trade.
All PL players must be on one year contracts, that way they will have to give 100% to get a new contract the following season and have just the one "window" for changing staff between the 1st June till 31st July That'll take care of the wages for teams that are relegated
How can FFP be against Eu rules? Surely a sports governing body can set their own rules? They cannot cite restraint of trade or a billionaire might demand the right to play in the premiership when their club is from another European country
You would think so. However when the European Commission first started casting its beady eye over the business of football 10-12 years ago, there was nobody in football with the intellectual capacity to argue that a sport is not a normal "business". Its not that the EC had it in for football. Just nobody made the case. I've only got to mention the words Sepp Blatter, to explain how that came about.
"Simple maths states we have a 1 in 8 chance of promotion next season (3 in 24)"
Agree with your point, and no good at maths but I don't think you can use these numbers unless every team is exactly equal. If it did work like that wouldn't all horses in a horserace have the same odds?
Clubs are spending money to increase their odds and a parachute payment gives them potentially an advantage. In theory the parachute payment is going to be used to allow them to cover their Premiership level overheads and keep the same squad. In practice they reduce overheads, sell players and distort the market in the lower division using the cash available.
A fairer system might be to simply make sure a club doesn't collapse financially, but it should only be available to cover overheads and not to top up transfer fees.
If you keep your previous squad then none of the parachute payment can be used in the transfer market. The parachute payment then just allows you to maintain infrastructure temporarily, not to buy advantage. If you sell a player for a cheaper one you don't release cash, you are reducing your overheads so the parachute payment would be reduced by the difference in wages.
"Simple maths states we have a 1 in 8 chance of promotion next season (3 in 24)"
Agree with your point, and no good at maths but I don't think you can use these numbers unless every team is exactly equal. If it did work like that wouldn't all horses in a horserace have the same odds?
Clubs are spending money to increase their odds and a parachute payment gives them potentially an advantage. In theory the parachute payment is going to be used to allow them to cover their Premiership level overheads and keep the same squad. In practice they reduce overheads, sell players and distort the market in the lower division using the cash available.
A fairer system might be to simply make sure a club doesn't collapse financially, but it should only be available to cover overheads and not to top up transfer fees.
If you keep your previous squad then none of the parachute payment can be used in the transfer market. The parachute payment then just allows you to maintain infrastructure temporarily, not to buy advantage. If you sell a player for a cheaper one you don't release cash, you are reducing your overheads so the parachute payment would be reduced by the difference in wages.
Very good points there: what you suggest is much fairer than the present unconditional doling out of parachute payments, which becomes more iniquitous the more I think about it.
"Simple maths states we have a 1 in 8 chance of promotion next season (3 in 24)"
Agree with your point, and no good at maths but I don't think you can use these numbers unless every team is exactly equal. If it did work like that wouldn't all horses in a horserace have the same odds?
Clubs are spending money to increase their odds and a parachute payment gives them potentially an advantage. In theory the parachute payment is going to be used to allow them to cover their Premiership level overheads and keep the same squad. In practice they reduce overheads, sell players and distort the market in the lower division using the cash available.
A fairer system might be to simply make sure a club doesn't collapse financially, but it should only be available to cover overheads and not to top up transfer fees.
If you keep your previous squad then none of the parachute payment can be used in the transfer market. The parachute payment then just allows you to maintain infrastructure temporarily, not to buy advantage. If you sell a player for a cheaper one you don't release cash, you are reducing your overheads so the parachute payment would be reduced by the difference in wages.
Excellent post this. Hope you have joined the Trust, we need people like you :-)
not sure if your maths is right - yes there are 3 places up for grabs but there are 23 other teams going for these places, so I don't think its as simple as a 1 in 8 chance of going up.
The most long term solution will surely be, to try and close the gap between all leagues.
Keep it competitive, but the money floating around is ludicrous, especially given the state of our national team, and national youth setup!
I suspect we all agree, but it 'ain't happening, unfortunately. Right now the game is becoming increasingly uncompetitive with financial advantage ever more important.
The only real answer would be a series of radical measures, including salary caps, maximum wage bills, controls on the length of player contracts or, as a minimum, enforced performance conditions (step downs on relegation, for example), an end to the blatant abuse of the loan system by the big Clubs and so on. The problem though is that the weak and ineffective football authorities have lost control. The big Clubs have the game by the nuts.
All very well to blame the authorities and big clubs but most punters are no less guilty. When we were at the top table there wouldn't have been many on here starting threads hand wringing about the plight of lower league teams when On-Digital went up in a puff of smoke. When the zabeel thing was rumoured to be happening a load of people didn't go down to mill around the ground like Geordies, because they expected owners with a keen interest in the community and running a sound financial business; it was because they hoped for pots of cash to spunk on foreign mercenaries. That's the way of it, I'm afraid. People are selfish. If we were in the prem with a moneybags owner we'd not give half a shit about the inequality of the league. It's only really in a socialist state like America where sport is run on a truly equitable basis. Everywhere else the structure is haves and have nots, or more accurately don't care and care a lots.
Your point about the US is well made and an intriguing irony. But you should except Germany and also Scandinavia from your final point too. The Swedish and Norwegian fans co-ordinated across club lines protests against TV companies buggering around with match schedules, and achieved some success in doing so. Of course if you look at Spain or Italy your point is entirely valid.
Would be interested to know how the Scandics maintain such an even league. In Germany the support seems to be a lot more community based, but they've actually got one of the most uneven leagues in Europe - BM picked up 60% of the titles in the last 15 years. Hoffenheim when from village side to contenders, not through hard work and endeavour but through a large pot of lolly. Still take the point about it being more equitably run than anywhere else
Comments
The biggest protection is that the owners (or their funders) are fourth in the queue behind RBS, HSBC and the former directors. But accidents can happen, as the song goes.
In any event, from what little I understand of our unsecured debt to ex directors and more recent investors I think Admin is not a likely route by choice (but if losses cease to be funded....)
Charlton's ongoing problem has been its operating losses and the need to fund them. Administration simply doesn't help in this situation.
For those who feel that other Clubs have unfairly benefitted from administration it is worth considering our own history. When Richard Murray consolidated ownership of the Club under Baton he wiped out all its equity and wrote off or deferred all debts. This was possible because the creditors were "friendly", but in many ways it achieved the benefits of administration without the disruption.
It makes no sense for the current owners (funders) to allow the Club to go into administration. They will lose if it does, not least because, as Airman points out, they are behind RBS, HSBC and the former Directors in the queue.
If the Club goes into administration, therefore, it will be because the owners have screwed up and shot themselves in the feet. If they are unable to continue to fund they should, quite literally, give the Club away in exchange for a option to share in the benefits of promotion or even, in extreme circumstances, pay somebody to take the Club off their hands in exchange for such an option. The risk is that a combination of ill judged brinkmanship and, perhaps, a lack of humility prevents them from behaving rationally.
This is the new economic reality and instablity in our game, and some not all, are starting to realise it has a massive downside and are taking an interest in the financial side of things. Ironically up until now at least parachute payments do not seem to have been the panacea, many have thought, although the enormous hike in their value may change that. Alternatively it may not, watch QPR and see I guess, it may encourage them to take even higher risks.
Things not to campaign for today but maybe in the future: Parachute payments get eaten up by failing / failed clubs - take a look at Wolves and Blackburn and they are just like CAFC five years ago... Only when more than one promotion slot out of three is taken by clubs with parachute payments is there a real case to change the system.
The irony is that the TV deal is bigger than ever but too many clubs are banking on promotion to sort their finances. Clubs are paying outrageous salaries to players who only perform occasionally and agents are racking up the bills by telling directors that if they don't pay x then someone else will... The theory is that limiting losses will hand negotiation power back to the clubs and kill off the root cause of the auction for scarce talent.
The only way a club can perform better is to manage its resources as best it can and to increase its income. I can see the current CAFC board doing the former - we can debate the merits of certain players but it is clear that c. £1.5M has fallen off the payroll this summer.
And the Trust is building a case as to how it can help with the latter - at board level!
Your point about QPR is valid but they are very strange - not only did they buy promotion with £23M losses they also lost £23M in the Premier League and last season will be a lot more as they spent silly money on players as well as getting no performance money for finishing last... Even if you are a billionaire you are not going to be happy at losing £100M (?) in 3 years...
Only time will tell whether they are stable enough to bounce back up - I would be more worried about Reading who have been run on a sensible Charltonesque basis for a long time now.
That'll take care of the wages for teams that are relegated
Agree with your point, and no good at maths but I don't think you can use these numbers unless every team is exactly equal. If it did work like that wouldn't all horses in a horserace have the same odds?
Clubs are spending money to increase their odds and a parachute payment gives them potentially an advantage. In theory the parachute payment is going to be used to allow them to cover their Premiership level overheads and keep the same squad. In practice they reduce overheads, sell players and distort the market in the lower division using the cash available.
A fairer system might be to simply make sure a club doesn't collapse financially, but it should only be available to cover overheads and not to top up transfer fees.
If you keep your previous squad then none of the parachute payment can be used in the transfer market. The parachute payment then just allows you to maintain infrastructure temporarily, not to buy advantage. If you sell a player for a cheaper one you don't release cash, you are reducing your overheads so the parachute payment would be reduced by the difference in wages.
odds are different to probability.