Clubs Agree on Debt Rules

[Rimbeux]

here

 

 

Beginning of the end of the benefactor model?

[Maldini]

That could be a huge step in getting football back to a sport and away from only being a business. Hopefully it'll scare off the vultures keen to make a quick buck as well. What sort of impact will this have on those wishing to do LBO's? It's also a bit dodgy for Arsenal's model isn't it? It's worked for them, they'd meet the criteria, but others who follow it might not be able to recoup the amount in property sales as they have.

[The Hitman]

We sure as sh*t wouldn't.

[Rimbeux]

That could be a huge step in getting football back to a sport and away from only being a business. Hopefully it'll scare off the vultures keen to make a quick buck as well. What sort of impact will this have on those wishing to do LBO's? It's also a bit dodgy for Arsenal's model isn't it? It's worked for them, they'd meet the criteria, but others who follow it might not be able to recoup the amount in property sales as they have.

 

 

There would have to be stipulation about what a debt can relate to, ie not for players, not to fund an LBO, not to cover annual budget shortfalls.

 

I think borrowing for a stadium is absolutely no issue, personal opinion. There is nothing morally off with it and it is the reality for most UK clubs who unlike many in Europe do not have local government or national government support in the costs of building a stadium or even have those authorities build and own them and take the risk.

 

The fact the clubs themselves have agreed that they should have break even budgets by 2015 and will not allow benefactors to fill in holes in the budget is huge. The alternative is a sugar daddy led culture, because you cannot outlaw LBOs or come down on clubs like Madrid who have favourable institutions allow them 100s of millions of credit to acquire players whilst at the same time having a few clubs operating above it all by pumping tens of millions in a year and converting it to equity to avoid the debt regulations.

[Maldini]

How will these new rules regulate the debt for equity thing Abramovich did with Chelsea recently? He basically gave himself "more" equity in a club he owned 100% of right? What's to stop him and Mansour doing that every year?

[Rimbeux]

How will these new rules regulate the debt for equity thing Abramovich did with Chelsea recently? He basically gave himself "more" equity in a club he owned 100% of right? What's to stop him and Mansour doing that every year?

 

 

You'd be able to see the funding going in every year in the accounts and it would count as illegal payment I'd imagine, and transparent accounts would have to be a condition of joining the competitions. If you dont then there's no point stopping clubs getting a partial bank onside to back them if individual owners are allowed to operate outside 'normal' financial conditions.

[New York Red]

Great news this. Everything should be on the table. salary caps, transfer budgets, luxury tax, free agency, cash injections.

 

The sport needs this in the worst way.

[Big Red Machine]

Whats to stop some rich owner buying a Premium-amazing-mega-corporate-box-that-he-always-sits-in-anyways for £50m a season?

[Sion]

All footballers should be put into a big pot at the end of the season and the 17th place gets to pick first and first last etc...

 

like the draft system but with all players

 

that'd reduce the need for 'sugar daddies' (hate that phrase)

 

Rooney playing for Hull, Fabregas for Bolton

 

It'd be well funny

[Rimbeux]

Whats to stop some rich owner buying a Premium-amazing-mega-corporate-box-that-he-always-sits-in-anyways for £50m a season?

 

 

Might raise suspicions of money laundering that sort of malarky! In short, I've got no idea beyond some internal football committee ruling it an illegal payment

[Tosh]

"The rules will apply in 2015 instead of 2012 and will govern the amount of debt clubs can accrue, with European bans a possible punishment if they are broken......

 

Uefa will assess clubs' finances over a rolling three-year period to ensure they comply with their new financial fair play rules before they are allowed to take part in the Champions League or Europa League.

 

It means rich owners will have to have an equitable stake in a club rather than loaning it vast sums of money.

 

Clubs also agreed that they will not be able to owe each other money, nor will they be allowed to compete in Europe if salaries have not been paid to players or non-playing staff. "

 

 

Nothing in there about "LBOs" - just that they can meet debts/break even - which (albeit with help from Ronaldo) ManU do. We struggle although as a football club, we are fine. We are paying dividends to an owner (who uses that to finance debt).

 

And the policeman in this porcess? Ah yes, UEFA who couldn't organise a game of football in a park, let alone police the financial shenanigans of a bunch of bankers, lawyers and LBO specialists

[mally]

All footballers should be put into a big pot at the end of the season and the 17th place gets to pick first and first last etc...

 

like the draft system but with all players

 

that'd reduce the need for 'sugar daddies' (hate that phrase)

 

Rooney playing for Hull, Fabregas for Bolton

 

It'd be well funny

 

Wes Brown or Neville playing for us. Hmm, suddenly not so much.

[Rimbeux]

Bit more detail

[boohog]

Might raise suspicions of money laundering that sort of malarky! In short, I've got no idea beyond some internal football committee ruling it an illegal payment

 

Its typical ill thought through legislation like this that the government puts in place. There is no chance that they will be able to prevent financial assistance from an owner, be it through off market payments from related companies, offset payments to sponsors to provide off market sponsorship deals etc. The football league would have to audit the clubs themselves to have any chance of identifying that kind of activity and since they can't do that they will rely on accountancy firms who merely audit based on UK audit legislation which has no problem with or requirement to report financial assistance from owners of private companies.

 

What they should be looking to do is disincentivise the use of debt in football clubs by lobbying governments to remove the tax shield on interest payments by football clubs. That would completely prevent the possibility of LBOs and make it highly unnattractive to most sugar daddies. Of course that would never happen either so in reality its all pretty futile.

[Sion]

how long before Kenyon and Cook start talking about a breakaway league?

[Rimbeux]

how long before Kenyon and Cook start talking about a breakaway league?

 

 

Well the interesting thing is that the clubs are in favour of this, it's the timescale they are debating. It fits in with what Chelsea claim to be aiming for and the stuff that comes out of Cooke, they view themselves as in transition to being self sufficient.

 

Good and informative stuff from boohog btw

[aka Dus]

Its typical ill thought through legislation like this that the government puts in place. There is no chance that they will be able to prevent financial assistance from an owner, be it through off market payments from related companies, offset payments to sponsors to provide off market sponsorship deals etc. The football league would have to audit the clubs themselves to have any chance of identifying that kind of activity and since they can't do that they will rely on accountancy firms who merely audit based on UK audit legislation which has no problem with or requirement to report financial assistance from owners of private companies.

 

What they should be looking to do is disincentivise the use of debt in football clubs by lobbying governments to remove the tax shield on interest payments by football clubs. That would completely prevent the possibility of LBOs and make it highly unnattractive to most sugar daddies. Of course that would never happen either so in reality its all pretty futile.

 

Surely any such regulations introduced by Uefa would have to be conforming to some EU 'standard' rather than rely on local law? In which case the audit routines would also be standardised, no?

[boohog]

Surely any such regulations introduced by Uefa would have to be conforming to some EU 'standard' rather than rely on local law? In which case the audit routines would also be standardised, no?

 

Well UEFA certainly have no sway over company law in the UK or Europe so I see no way how those standards would change. The only way I could see it work would be if there was an enforced special annual 'audit' or due diligence requirement for all football clubs, completely separate from international accounting standards. The level of work required would be pretty large though and would encumber football clubs with substantial additional costs and management attention which would have a serious detrimental effect on lower league clubs. It just seems like a tonne of additional red tape.