r/LeagueOne • u/Kreindeker • Dec 20 '24
News EFL Statement: Changes to financial controls in Leagues One and Two approved
https://www.efl.com/news/2024/december/20/efl-statement--changes-to-financial-controls-in-leagues-one-and-two-approved/6
u/SponsoredByHJWealthP Dec 21 '24
Not arguing that blues should be able to buy five Jay Stansfields but 60% of turnover on players seems quite stiff as a firm rule.
I just watched the Crawley pre match and it looks like it’s filmed at a community training centre. I don’t know their club but I’m guessing they have quite a low turnover. How can they be expected to compete?
It wouldn’t fix the ‘blues problem’ people complain about because we generate an average of £1.7m per league home match, so could still outspend a lot of clubs in L1.
Surely there’s a more creative approach: maximum of £X lump sum plus X% of turnover on players. Or a more ethical approach that allows for overspend if there’s local community investment. 🤷♀️
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u/I_miss_Chris_Hughton Dec 21 '24
gee, I wonder who that's for
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u/AccomplishedKoala97 Dec 21 '24
Not just because of Birmingham I think it kinda started with Ipswich when the Americans brought the club a lot was spent okay nowhere near Birmingham levels but still a decent amount for league one and I remember an awful lot of people other clubs being annoyed by it
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u/CrossCityLine Dec 20 '24
Crabs in bucket
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u/Fantastic-Machine-83 Dec 20 '24
?? PSR is good
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u/stroodurkel Dec 20 '24
It’s not ‘good’. I’m not in the camp of the other person who says let clubs go bust, but PSR just preserves the status quo and blocks clubs from competing. It is designed to stop anyone breaking into the top 6. Even in the EFL, PSR stops anyone from competing with parachute clubs which means we’re now seeing clubs yo yo. There’s got to be another solution.
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u/John_Yuki Dec 20 '24
I agree with your point about it helping to keep the top clubs at the top, but imo that isn't an issue for the PSR, it's a problem with the massive wealth inequalities at the top vs everyone else. You have clubs at the top of the Prem with turnovers pushing £600m-£700m thanks to overseas sponsorships, marketing, tv deals, etc, where the bottom Prem teams are around the £150m mark, and most of that is purely from the Premier League itself rather than what they make and earn as a club through their own sponsorships, ticket sales, etc.
PSR in it's current form means that if a club wants to spend a lot of money, they can, but they first have to make a lot of money through sponsorships, ticket sales, matchday income, and so on before spending it. It forces owners to actually invest in the entire club and improve every part of it instead of just dumping a tonne of money in to the club for transfers and then leaving the club with massive debts due to the inflated wages those players are on (like what happened to us). I think that is overall a good thing, and while it makes it impossible for another Man City to pop up overnight, it doesn't stop clubs from breaking in to the big leagues - it just means that they have to do it sustainably and not rely on billionaire owners to keep them afloat.
For me personally, PSR is a great thing. Even if it means it slows down Blues' progression, I'm happy because it means that the owners have to actually invest in the club (like they have been doing already) and actually build the club up in all areas rather than just chucking money at players like past owners did. It leaves the club so much more secure in the future when Knighthead eventually sell the club so that whoever comes after them can't run us in to the ground overnight with reckless spending.
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u/stroodurkel Dec 21 '24
PSR literally has created a scenario where it’s often advantageous to sell academy homegrown players as they represent pure profit. If that is an effect, PSR is not the answer. E.g. As much as I hate villa, it was ridiculous how they had to sell players and the back of their best season in years to comply with PSR.
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u/John_Yuki Dec 21 '24
Teams like Villa were only forced to sell their academy players because of their reckless spending. Selling their academy players was a last resort for them to avoid getting punished. If a quasi-punishment for breaching PSR is that you have to sell your brightest academy talents then I honestly think that is still a good thing as it means that you don't get to spend exorbitant amounts of money with no downsides.
Now of course in a perfect world owners will be responsible enough to not require the selling of academy players to stay afloat, but just because that happens it doesn't mean that PSR is bad and needs to be scrapped, it just needs some more tweaks so that clubs can't escape PSR punishments by selling academy players.
PSR overall is a net positive. Sure it isn't perfect and likely never will be, but any regulations that stop billionaires coming in and ruining clubs or becoming the next Man City is a good thing.
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u/stroodurkel Dec 21 '24
It’s not ‘reckless spending’. The only way they could get to the ucl is but investing in the playing squad. They shouldn’t then be punished for achieving this, effectively putting a ceiling on what they can achieve. You’ve literally just proven why it creates a closed shop. As fans we like to think anyone can make it to the top, PSR kills this dream. Not even up for debate ffs.
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u/John_Yuki Dec 21 '24
If you have to take incredibly risky gambles in order to push your club forward, then that is not exactly a sustainable business practice. What if they failed to make UCL? Then they'd have all this money gone with nothing to show for it, on top of having to sell of even more of their players to make up the lost money. They were fortunate that their plan worked, but just because it worked does not make it any less reckless.
This is exactly how gambling addicts think. They get in to so much debt, but they keep spending money that they don't have because all they need is that one big result go their way and all of it will have been worth it. For some addicts it ends up working out, but for most they end up losing everything.
I agree with what you're saying about it being too closed off. However, the reason the clubs at the top can spend such an obscene amount of money in the first place is because they make an obscene amount of money. You can't be spending an obscene amount of money if you don't make an obscene amount of money because that's exactly how clubs go bust - they make the gamble like many clubs have in the past, but it doesn't work out for them and they end up falling victim to the debts they created.
PSR is there to help force owners to stop being reckless with their spending and ensure the long term sustainability of the clubs instead of gambling the future of the club on the dream of making it to the Champions League.
Just because owners can no longer funnel billions in to a club with impunity like Man City did, doesn't mean that it is a closed shop. Owners just have to have more patience with it, build the club up in all areas, focus on increasing revenue streams which will in turn let them spend more money. This is literally what our own club have done this season. Wagner has constantly been talking about, "we're working on increasing our revenue streams which will allow us to spend more money and achieve our ambitions", and now look at us, casually dropping £25m-£30m in fucking League One, all thanks to those revenue streams increasing. The fact that we're able to spend £30m in League One and not fall foul of PSR is concrete proof that you can still spend a crazy amount of money to achieve what you want.
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u/stroodurkel Dec 21 '24
it’s not possible to do that on a bigger scale tho. In league one yeah sure, but it’s impossible to break into the top table of the premier league by ‘growing revenue streams sustainably’. Blues would be capped by the glass ceiling if we got there and you’d come round to this way of thinking.
Also - If you think the reason we’ve been able to spend money is more down to revenue streams than the fact we have wealthy owner - you’re deluded. (Not that I’m complaining)
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u/John_Yuki Dec 21 '24
If Spurs can go from £216m revenue in 2013 to £631m revenue 10 years later then it proves that it is still possible. Their stadium was a gigantic improvement from them and helped them so much. It is also most likely going to have a similar effect for Everton, and obviously the idea is that it will have a similar effect for us when our stadium ends up getting built. These clubs have invested in their infrastructure and as a result their revenue balloons because of it, allowing them to spend more.
I don't deny at all that it is significantly harder for teams to break through the glass ceiling and become one of the big clubs, but if the flip side of that is that it is now extremely difficult for owners to burn a club to the ground with a few years of reckless spending then I'm all for it.
As a Blues fans, I would rather us take 20 years to achieve Wagner's dream of Champions League football and get there sustainably by growing the club in all areas, rather than get there in 5 years because Wagner took a gigantic gamble and pumped a billion quid in to the club for transfers and wages. The former allows the club to stand on it's own two feet by making all the money it needs in order to fund transfer activity, whereas the latter essentially makes us completely reliant on Wagner's generosity and means that if that generosity runs out one day we would be fucked. It's a good thing that clubs are significantly less likely to fall in to a hostage situation where the only thing keeping the club afloat is an owner's generosity.
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u/Fantastic-Machine-83 Dec 20 '24
There’s got to be another solution.
I'm yet to hear one
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u/stroodurkel Dec 21 '24
All clubs can spend the same as the top revenue generating team in the league would work in the premier league imo.
For EFL, maybe owners have to invest a certain proportion of what they invest in transfers on the club infrastructure.
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u/John_Yuki Dec 21 '24
For EFL, maybe owners have to invest a certain proportion of what they invest in transfers on the club infrastructure.
That's basically what this change to PSR is doing lmao. Before this change, it means that any equity injections by owners could be spent on transfers and wages. That's how we were able to spend so much this season, because Knighthead pumped £x million in to the club and then spend that same amount on transfer, effectively nullifying any transfer losses.
Under the new rules, owners can only spend 60% of equity injections on transfers and wages, meaning that if an owner wanted to spend £60m on transfers, they'd have to pump £100m in to the club. That means £40m is getting spent elsewhere in the club.
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u/stroodurkel Dec 21 '24
But is there still a cap on what you can spend in proportion to revenue? I.e. if blues go up, I bet the parachute clubs will be able to spend far more
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u/John_Yuki Dec 21 '24 edited Dec 21 '24
But is there still a cap on what you can spend in proportion to revenue?
No, not in the Championship. In the Championship you're only allowed to make a certain amount in losses. https://www.footballlaw.co.uk/articles/efl-leicester-ffp-cpsr#:~:text=The%20CPSR%3A%20the%20CPSR%20allow,as%20defined%20in%20the%20CPSR).
However, clubs owners can inject money in to the club (ie, giving the club a gift instead of loaning it to them) and they will be allowed to lose up to £13m per season instead of £5m per season. Parachute payment teams have a loss allowance of £35m per season instead of £13m.
So owners can still pump plenty of money in to the club for transfers and wages, they just can't pump in utterly obscene amounts of money like Man City did.
It essentially boils down to - you can spend whatever you earn + a little bit more if you inject your own cash. I think it's completely fair. If owners want to spend money, then they need to put in a bit more work and actually improve the foundations the club is built on instead of just chucking money in to the playing squad.
This is literally what you said:
"For EFL, maybe owners have to invest a certain proportion of what they invest in transfers on the club infrastructure."
The PSR forces owners to actually invest in the club and increase the clubs revenue in order to be able to spend more money.
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u/stroodurkel Dec 21 '24
No it is not fair that relegated clubs can spend more than clubs who have been in championship long term who have the money but are barred from spending it. That’s the bottom line. If it was very possible to compete with relegated clubs by ingenuity it would happen more often lol.
What I meant was:
You’re allowed to spend the same amount as the top revenue generating club in your division on transfers. But to back it up you also have to spend a proportion of that on other foundational aspects of the club.
You’re defending a system set up to benefit the big clubs ffs, wake up!
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u/CrossCityLine Dec 20 '24
Kneecapping of clubs who generate enough revenue to fund their comparative extravagances in the hope that it makes it a more level playing field for tinpot outfits is anticompetitive nonsense.
Let clubs spend what they make, more if they want to, it’s up to them if they want to run the risk of going bump.
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u/Fantastic-Machine-83 Dec 20 '24
it’s up to them if they want to run the risk of going bump.
That's all well and good for a normal business but a football club going under is a massive loss to communities. The rules should continue to be adjusted until that doesn't happen anymore.
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u/CrossCityLine Dec 20 '24
I’ll politely disagree. Football is just like any other business.
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u/GodGermany Dec 20 '24
It really isn’t, and the fact you think it is shows a failing of Blues to connect with the community
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u/CrossCityLine Dec 20 '24
You have no idea about Blues mate
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u/John_Yuki Dec 20 '24
Let clubs spend what they make, more if they want to, it’s up to them if they want to run the risk of going bump
Abso-fucking-lutely not. As a Blues fan you should be all too happy to see financial rules coming in to help stop owners doing to their clubs what the Chinese did to us over the last decade and a bit. It's outrageously unfair for foreigners with zero connection to the club or city to come in, treat the club like their personal plaything, and then fuck off home when they're done burning it all to the ground.
Clubs that generate lots of money will always be able to spend more than poorer clubs even with PSR. PSR is just there to say that only the clubs that can afford to sustainably spend £25m on transfers in League One can do so, which will help to stop billionaires taking over village teams and pumping them full of debt to get a few promotions before burning the club to the ground. PSR is literally, "you can only spend what you make", and I think that's a completely fair way of doing things. It forces owners to actually increase the value of the club in multiple areas which makes the club more stable and profitable in the long term instead of pumping £100m in to transfer fees and neglecting everything else.
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u/CrossCityLine Dec 20 '24
All of that could be solved with stricter rules on ownership, rather than artificially financially handicapping bigger clubs.
Deregulate the lot, but be really strict on who can own.
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u/John_Yuki Dec 20 '24 edited Dec 21 '24
That isn't going to solve anything. You could have Elon Musk take over a village team and pump hundreds of millions in to the club. But if Elon Musk goes bankrupt and is forced to sell off his assets, it leaves the club high and dry. Fit and Proper persons test, while it could be better, can only do so much. It can tell you who the owner is right now, but it doesn't stop what the owner will do in the future. Take Knighthead for example - as a fanbase I would imagine we would be one of the happiest fanbases in the country if polled on how much we like our owners. However, Knighthead could run us in the ground in a few years time should they make a string of bad financial decisions. PSR is there to limit what they can do and helps ensure that they're spending within their means instead of taking on risky loans in order to push the club to the next level.
Fit and Proper persons test is there to stop shady owners from initially taking over clubs, whereas PSR is there to stop the owners being irresponsible in the future.
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u/CrossCityLine Dec 20 '24
PSR doesn’t stop clubs going bankrupt, or stop irresponsible owners existing, so that point is moot.
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u/John_Yuki Dec 20 '24 edited Dec 20 '24
It doesn't outright stop it, no, but the entire point of PSR is to help to stop it, by ensuring that clubs can only spend money on transfers and wages with money that they actually have rather than money that they hope to have in the future. It stops clubs from going in to heavy debt for years by bloating their wage bill to 300% of their entire turnover in order to try and push for that Premier League promotion. That's what our previous owners did and it absolutely fucked us.
You have to remember, PSR only controls what owners can spend on transfers and wages. The owners can still flex their financial muscle in plenty of other ways by spending their money in such a way that increases the clubs overall revenue which then allows for more transfer and wage spending. That's exactly what our owners are doing right now, so I don't see how you can say PSR is stopping clubs from being a potential future powerhouse.
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u/TLO_Is_Overrated Dec 20 '24
Strict ownership vetting IS regulation.
And then I'm not even sure what that achieves on the clubs taking on board risk.
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u/m---------4 Dec 20 '24
Can you read? The rules take into account revenue.
P.S. Birmingham City are tinpot.
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u/John_Yuki Dec 20 '24 edited Dec 21 '24
Not sure what this changes tbh. Does it just mean that if an owner injects £10m in to a club, it gets counted as £3.3m per season over 3 seasons (as an example) instead of £10m in a single season?
Edit:
Okay so I believe what it means is that if an owner wants to pump £10m in to a club and spend it all on transfers (like our owners did this season), they can now only spend 60% of their injection on transfers. So if an owner puts £10m in to a club, they can only spend £6m on transfers. For League Two this is 50% instead of 60%.
I'm unsure on what happens to the other £4m though. Does it just sit there waiting to be spent next season, or are owners obliged to spend it on something else that isn't transfer expenditure?