Changes to P&S rules

[Pepe the Horseman]

Surprised this isn't being discussed anywhere.

EFL Championship Clubs have today approved a number of changes to the division’s Profitability and Sustainability Rules (P&S) that will take effect immediately. The amendments come following a period of consultation and take into consideration a range of representations from Clubs.

In total 8 proposals were put forward and were passed, requiring a two-thirds majority of Championship Clubs. The main changes are summarised below.

COVID

As a result of a number of Clubs highlighting that the pandemic continues to have an adverse financial effect despite a return to full capacity stadiums, Clubs have opted to reintroduce COVID add backs into the P&S calculation for season 2021/22. The impact is that Clubs will be able to claim lost revenues or exceptional costs directly relating to the pandemic up to a value of £2.5m for the reporting period 2021/22. Clubs can claim up to £5m for seasons 2019/20 and 2020/21.

Accounting for Player Registrations

Clubs are now required to provide a Player Registration schedule that will ensure greater transparency in respect of information that includes but is not limited to players wages, sell-on rights, registration costs and amortisation. These new requirements follow the principles of the UEFA Club Financial Fair Play Regulations.

In addition, EFL Clubs have agreed that a mandatory requirement for the amortisation of Player Registrations on a straight-line basis should be included.

Introduction of Monitoring for Forecasted Breaches

With a priority to ensure future compliance with the P&S rules, Clubs have agreed that where a breach is forecasted in future years then the League should have the ability to impose a business plan or appropriate monitoring requirements.

Trevor Birch, EFL Chief Executive said:

“Over the past two years of unprecedented challenges and upheaval, the priority of the EFL has been to support Clubs practically wherever possible while maintaining the ongoing integrity of our competitions and the League as a collective. I’m pleased to say that the changes agreed by Clubs will help them manage ongoing financial issues in the short term, while providing the League with additional powers to assist Clubs in complying with their P&S obligations going forward.”

[Hound]

can anyone translate that - what is straight line?

did see a bit of noise on twitter etc that Derby and Reading have been unlucky to get the deductions and this seemed to be Gibson and co looking after the 7 or so clubs who would be hit by a points deduction next year. But obvs thats twitter.

[Pepe the Horseman]

Need DD to summarise really.

[Snowflake Royal]

Covid bit seems sensible and probably won't be enough to save anyone from our fate if they've been overspending for ages.

Forecast bit looks like its designed to stop clubs getting to our position and being deducted points.

Which seems good to me. More about preventing cheating / failure to meet requirements than punishing it.

But could easily be missing something.

[Stranded]

can anyone translate that - what is straight line?

did see a bit of noise on twitter etc that Derby and Reading have been unlucky to get the deductions and this seemed to be Gibson and co looking after the 7 or so clubs who would be hit by a points deduction next year. But obvs thats twitter.

I'm pretty sure even with these changes, we would still have been hit. The deductions aren't going away but the changes have meant that a club will have a budget fixed by the EFL if it looks like they will breach from the forecast i.e. if they forecast to miss by 5m then they will have a budget forced on them that will be 5m less than the forecast to try and get them under. If they still fail, then the deduction kicks in.

It will probably see deductions happen more automatically once accounts are in.

Given we missed by a country mile, we would likely have missed the target even with an improved budget.

The interesting point I've seen mentioned elsewhere is the automatic deduction of points for late payment of salary. If a club is 2 days late, they must inform the EFL. If they do, they get an automatic 3 point suspended penalty. If the PFA informs the EFL before the club then the 3 points is applied immediately. A club could be docked up to 13 points if they keep missing payments.

EDIT: Straight line means that the book cost of a player must go down in a straight line i.e. a player with an asset value of 5m on a 5 year deal, would see the book cost drop by 1m each season over the course of that for account purposes.

[tidus_mi2]

I saw Derby fans getting really pissed off with these rule changes so I was hoping to see someone explain them without the Derby tinted goggles.

[zaskar]

can anyone translate that - what is straight line?

did see a bit of noise on twitter etc that Derby and Reading have been unlucky to get the deductions and this seemed to be Gibson and co looking after the 7 or so clubs who would be hit by a points deduction next year. But obvs thats twitter.

I'm not an accountant but from what I understand traditionally football accounts use the straight line basis although it is not specifically written into the rules. So if the club buys a player for 6 million over a three year contract they can allocate the expense at 2 million for each of the three years. Derby, to try to comply with p+s rules, decided to use residual value basis buying the same player over the same term but arguing that they would sell him after two years for 5 million, so he only cost them one million rather than six. Their claims that this was a reasonable way to do their accounting spilled over into the next season and hence the retrospective claims against them from Gibson at Boro and Wycombe.

It is just making sure that everyone does their accounts in the same way.

[Hound]

cool, thanks for the explanations - makes sense

[Pepe the Horseman]

Despite being relegation rivals, Derby fans now seem to see us as BFFs. Which is nice.

[windermereROYAL]

Despite being relegation rivals, Derby fans now seem to see us as BFFs. Which is nice.

BIFFs?

[Sanguine]

Interesting re Derby. And they were obviously advised badly by accountants/auditors as to the validity of that approach. If you sell an asset for more than its book value, you realise a profit on disposal - but you establish the depreciation basis up front. Does raise an interesting question as to how players' values change, but the league is right to clarify a straight-line approach because such a large chunk of that value is subjective. A reducing-value depreciation curve is common - think cars or machinery, but one where most depreciation occurs near the end of an assets life, I've not seen before.

[YorkshireRoyal99]

Hopefully it will prevent clubs from having points deductions in the future then in some cases, whether it will practically or not is another question.

Probably a change to the FL's Fit & Proper Test might need revising as well.

[Snowflake Royal]

Hopefully it will prevent clubs from having points deductions in the future then in some cases, whether it will practically or not is another question.

Probably a change to the FL's Fit & Proper Test might need revising as well.

Owners and Directors test. Fit and proper was abandoned years ago.

[YorkshireRoyal99]

Hopefully it will prevent clubs from having points deductions in the future then in some cases, whether it will practically or not is another question.

Probably a change to the FL's Fit & Proper Test might need revising as well.

Owners and Directors test. Fit and proper was abandoned years ago.

That's what I meant, I've just not got out of the habit of using the old term.