Are we still heading for a 9pt deduction?

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Are we still heading for a 9pt deduction?

by paddy20 » 28 Jul 2019 09:11

I would imagine the soft embargo was imposed as the EFL consider that last seasons trading may result in RFC exceeding the £39m losses allowed over the last 3 year period. Although this has been lifted it seems the club are only signing loan players or free transfers.
Remember Birmingham only had their 9 pt deduction half way through last season which coincides I guess when their full accounts were issued for the previous season. So will we be heading for the same 9pt deduction half way through this season still?

Even if we are just below the £39m it means this season we may pretty much have to break even to avoid the 9pt deduction next season.How many championship clubs manage to do that especially without the Parachute payments?? It may be the case that we can't dodge this 9 point deduction whether it's this season or next.

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Re: Are we still heading for a 9pt deduction?

by muirinho » 28 Jul 2019 10:12

paddy20 I would imagine the soft embargo was imposed as the EFL consider that last seasons trading may result in RFC exceeding the £39m losses allowed over the last 3 year period. Although this has been lifted it seems the club are only signing loan players or free transfers.
Remember Birmingham only had their 9 pt deduction half way through last season which coincides I guess when their full accounts were issued for the previous season. So will we be heading for the same 9pt deduction half way through this season still?

Even if we are just below the £39m it means this season we may pretty much have to break even to avoid the 9pt deduction next season.How many championship clubs manage to do that especially without the Parachute payments?? It may be the case that we can't dodge this 9 point deduction whether it's this season or next.


My understanding is that Birmingham were also under a soft embargo, but they broke it - hence the 9 point deduction (they bought in Pederson for over 2 mill and didn't sell anybody - previous season they bought 17 mill of players and sold 4 mill). If we breach FFP, but are seen to be trying to do the right thing, we're more likely to be hit with tighter transfer regulations rather than a point deduction.

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Re: Are we still heading for a 9pt deduction?

by Wycombe Royal » 28 Jul 2019 10:39

muirinho
paddy20 I would imagine the soft embargo was imposed as the EFL consider that last seasons trading may result in RFC exceeding the £39m losses allowed over the last 3 year period. Although this has been lifted it seems the club are only signing loan players or free transfers.
Remember Birmingham only had their 9 pt deduction half way through last season which coincides I guess when their full accounts were issued for the previous season. So will we be heading for the same 9pt deduction half way through this season still?

Even if we are just below the £39m it means this season we may pretty much have to break even to avoid the 9pt deduction next season.How many championship clubs manage to do that especially without the Parachute payments?? It may be the case that we can't dodge this 9 point deduction whether it's this season or next.


My understanding is that Birmingham were also under a soft embargo, but they broke it - hence the 9 point deduction (they bought in Pederson for over 2 mill and didn't sell anybody - previous season they bought 17 mill of players and sold 4 mill). If we breach FFP, but are seen to be trying to do the right thing, we're more likely to be hit with tighter transfer regulations rather than a point deduction.

The football league confirmed that the Pedersen transfer was NOT an aggravating factor in the points deduction. It was only for breaching the sustainability rules.

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Re: Are we still heading for a 9pt deduction?

by windermereROYAL » 28 Jul 2019 12:20

When do we normally issue financial results?

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Re: Are we still heading for a 9pt deduction?

by Nameless » 28 Jul 2019 12:24

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muirinho
paddy20 I would imagine the soft embargo was imposed as the EFL consider that last seasons trading may result in RFC exceeding the £39m losses allowed over the last 3 year period. Although this has been lifted it seems the club are only signing loan players or free transfers.
Remember Birmingham only had their 9 pt deduction half way through last season which coincides I guess when their full accounts were issued for the previous season. So will we be heading for the same 9pt deduction half way through this season still?

Even if we are just below the £39m it means this season we may pretty much have to break even to avoid the 9pt deduction next season.How many championship clubs manage to do that especially without the Parachute payments?? It may be the case that we can't dodge this 9 point deduction whether it's this season or next.


My understanding is that Birmingham were also under a soft embargo, but they broke it - hence the 9 point deduction (they bought in Pederson for over 2 mill and didn't sell anybody - previous season they bought 17 mill of players and sold 4 mill). If we breach FFP, but are seen to be trying to do the right thing, we're more likely to be hit with tighter transfer regulations rather than a point deduction.

The football league confirmed that the Pedersen transfer was NOT an aggravating factor in the points deduction. It was only for breaching the sustainability rules.


The EFL tried to prevent Birmingham registering him. They also said the points deduction considering 'all relevant factors'. It's hard to see how it did not play a part, although the rules may not allow additional points to be specifically deducted for wilfully breaching FFP. Obviously signing him increased the degree by which they broke the rules and therefore it would have impacted the deduction in some way.
I would imagine any club is potentially at risk given no one can be sure how their finances will play out this season. A good cup run, a poor league season, a sponsor going bust etc etc.


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Re: Are we still heading for a 9pt deduction?

by Snowflake Royal » 28 Jul 2019 13:07

Signing him may not have been an aggravating factor, but not signing anyone for money and working hard to reduce costs would be a mitigating factor.

If we're over, I think it depends how far... £1m - £5m I think we might squeak by on what we've tried and no points deduction. £5m+ and I don't think the FL would have much choice despite our recent efforts, especially as this summer they've not been hugely successful and we've been vocal about not selling our best.

Personally, I don't think we can have shifted enough to bring it into the safe zone yet. But one or two more should hopefully get it.

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Re: Are we still heading for a 9pt deduction?

by maffff » 28 Jul 2019 14:55

No, because we're ok for 18/19. The soft embargo was preventative, to stop us breaching in 19/20.

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Re: Are we still heading for a 9pt deduction?

by paddy20 » 28 Jul 2019 15:11

maffff No, because we're ok for 18/19. The soft embargo was preventative, to stop us breaching in 19/20.



How do you know?

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Re: Are we still heading for a 9pt deduction?

by Stranded » 28 Jul 2019 19:54

paddy20
maffff No, because we're ok for 18/19. The soft embargo was preventative, to stop us breaching in 19/20.



How do you know?


Because we were reviewed for FFP in March which included a forecast for 18/19. We will have passed that, else we would know by now.

For 19/20, things will be tight and the embargo will have been in place to assist us. The 19/20 review in March 20 will cover the period:

17/18 - £20.9m loss
18/19 - actual loss instead of forecast loss
19/20 - forecast of the seasons profit/loss to be submitted by March.

By March, we'll also know how much we actually lost in 18/19. I would suggest given the soft embargo the forecast probably had it at ca. 10m. The embargo will have been in place to help us keep this season's forecast losses to under 8m - the sales/loans, sponsorship and Stacey money will probably see we are likely to make this.


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Re: Are we still heading for a 9pt deduction?

by Pepe the Horseman » 28 Jul 2019 20:38

Can we change the thread title to "Are we still heading for 109 points?".

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Re: Are we still heading for a 9pt deduction?

by paddy20 » 28 Jul 2019 20:56

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maffff No, because we're ok for 18/19. The soft embargo was preventative, to stop us breaching in 19/20.



How do you know?


Because we were reviewed for FFP in March which included a forecast for 18/19. We will have passed that, else we would know by now.

For 19/20, things will be tight and the embargo will have been in place to assist us. The 19/20 review in March 20 will cover the period:

17/18 - £20.9m loss
18/19 - actual loss instead of forecast loss
19/20 - forecast of the seasons profit/loss to be submitted by March.

By March, we'll also know how much we actually lost in 18/19. I would suggest given the soft embargo the forecast probably had it at ca. 10m. The embargo will have been in place to help us keep this season's forecast losses to under 8m - the sales/loans, sponsorship and Stacey money will probably see we are likely to make this.


Hope you are right but I'm not so sure that we have only lost only £10m last season. Don't forget it took then quite along time before deducting points from Brum.

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Re: Are we still heading for a 9pt deduction?

by Stranded » 28 Jul 2019 21:14

paddy20
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paddy20

How do you know?


Because we were reviewed for FFP in March which included a forecast for 18/19. We will have passed that, else we would know by now.

For 19/20, things will be tight and the embargo will have been in place to assist us. The 19/20 review in March 20 will cover the period:

17/18 - £20.9m loss
18/19 - actual loss instead of forecast loss
19/20 - forecast of the seasons profit/loss to be submitted by March.

By March, we'll also know how much we actually lost in 18/19. I would suggest given the soft embargo the forecast probably had it at ca. 10m. The embargo will have been in place to help us keep this season's forecast losses to under 8m - the sales/loans, sponsorship and Stacey money will probably see we are likely to make this.


Hope you are right but I'm not so sure that we have only lost only £10m last season. Don't forget it took then quite along time before deducting points from Brum.


But for this season it doesn't matter if we lost more as it is done on a forecast, that will be pretty accurate.

Brum were charged eith failing FFP on 2nd August 2018, so it is likely if we were in danger the club would already know and be acting accordingly.

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Re: Are we still heading for a 9pt deduction?

by maffff » 28 Jul 2019 22:14

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Because we were reviewed for FFP in March which included a forecast for 18/19. We will have passed that, else we would know by now.

For 19/20, things will be tight and the embargo will have been in place to assist us. The 19/20 review in March 20 will cover the period:

17/18 - £20.9m loss
18/19 - actual loss instead of forecast loss
19/20 - forecast of the seasons profit/loss to be submitted by March.

By March, we'll also know how much we actually lost in 18/19. I would suggest given the soft embargo the forecast probably had it at ca. 10m. The embargo will have been in place to help us keep this season's forecast losses to under 8m - the sales/loans, sponsorship and Stacey money will probably see we are likely to make this.


Hope you are right but I'm not so sure that we have only lost only £10m last season. Don't forget it took then quite along time before deducting points from Brum.


But for this season it doesn't matter if we lost more as it is done on a forecast, that will be pretty accurate.

Brum were charged eith failing FFP on 2nd August 2018, so it is likely if we were in danger the club would already know and be acting accordingly.

The forecast from March would be what had the EFL looking at us with an eye on what we do this season. For 2018/19 calculation was
+4m
-20.9m
(18/19)
Out of a 39m total loss. We won't have lost over 22.1m last season.

The risk is a significant loss (over 10m) would limit the amount we could lose this season out of the 39m.


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Re: Are we still heading for a 9pt deduction?

by One87One » 29 Jul 2019 07:49

paddy20 I would imagine the soft embargo was imposed as the EFL consider that last seasons trading may result in RFC exceeding the £39m losses allowed over the last 3 year period. Although this has been lifted it seems the club are only signing loan players or free transfers.
Remember Birmingham only had their 9 pt deduction half way through last season which coincides I guess when their full accounts were issued for the previous season. So will we be heading for the same 9pt deduction half way through this season still?

Even if we are just below the £39m it means this season we may pretty much have to break even to avoid the 9pt deduction next season.How many championship clubs manage to do that especially without the Parachute payments?? It may be the case that we can't dodge this 9 point deduction whether it's this season or next.


No. Simply put. No.

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Re: Are we still heading for a 9pt deduction?

by Stranded » 29 Jul 2019 08:06

maffff
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paddy20
Hope you are right but I'm not so sure that we have only lost only £10m last season. Don't forget it took then quite along time before deducting points from Brum.


But for this season it doesn't matter if we lost more as it is done on a forecast, that will be pretty accurate.

Brum were charged eith failing FFP on 2nd August 2018, so it is likely if we were in danger the club would already know and be acting accordingly.

The forecast from March would be what had the EFL looking at us with an eye on what we do this season. For 2018/19 calculation was
+4m
-20.9m
(18/19)
Out of a 39m total loss. We won't have lost over 22.1m last season.

The risk is a significant loss (over 10m) would limit the amount we could lose this season out of the 39m.


Exactly - Forecasts are normally pretty accurate so if the forecast were for say a 10m loss then the EFL would know that for the 19/20 calculation we would be starting wih a 30.9m loss, so only have 8.1m to play with hence the embargo. The fact that it has been lifted means we must have shown the EFL that the moves we've made so far, would be enough to help us stay under this.

Come 1st July 2020 that 20.9m loss disappears from the calcs and life becomes a lot more comfortable.

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Re: Are we still heading for a 9pt deduction?

by paddy20 » 29 Jul 2019 08:24

One87One
paddy20 I would imagine the soft embargo was imposed as the EFL consider that last seasons trading may result in RFC exceeding the £39m losses allowed over the last 3 year period. Although this has been lifted it seems the club are only signing loan players or free transfers.
Remember Birmingham only had their 9 pt deduction half way through last season which coincides I guess when their full accounts were issued for the previous season. So will we be heading for the same 9pt deduction half way through this season still?

Even if we are just below the £39m it means this season we may pretty much have to break even to avoid the 9pt deduction next season.How many championship clubs manage to do that especially without the Parachute payments?? It may be the case that we can't dodge this 9 point deduction whether it's this season or next.


No. Simply put. No.


Personally still think we could easily have lost a lot more last season. EFL would not be able to take action on a forecast as it could never be legally binding until the official audited accounts are published. If we only lost £10m last season we would have a lot more leeway this season to spend some money as (based on at £10m loss last season) we could still lose £12m and be ok. There is no sign we are prepared to spend any money at all which tends to suggest the losses for last year are much higher. We may have just about survived the 9 pt deduction this year but we have to have a massive turnaround this season to get to a break even situation. I think we will have to sell either Moore or Swift or perhaps Loader & Olise in January if not before to avoid it.

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Re: Are we still heading for a 9pt deduction?

by WestYorksRoyal » 29 Jul 2019 08:37

How much did the sales of Bacuna and Ilori mitigate last season? It seems like we've been going all out to control things since January which will hopefully keep our 18/19 loss to £10m or so. Which gives us £5-6m to play with in 19/20 which could be tough given the lack of sales. I hope Casumo gave us a good deal. Also hoping the positive vibe around the club and an exciting young team who play decent football will boost matchday revenue.

Once we're through this season it'll get better. Some big contracts will expire and 17/18 will come off our rolling 3 year calculation.

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Re: Are we still heading for a 9pt deduction?

by Stranded » 29 Jul 2019 08:47

paddy20
One87One
paddy20 I would imagine the soft embargo was imposed as the EFL consider that last seasons trading may result in RFC exceeding the £39m losses allowed over the last 3 year period. Although this has been lifted it seems the club are only signing loan players or free transfers.
Remember Birmingham only had their 9 pt deduction half way through last season which coincides I guess when their full accounts were issued for the previous season. So will we be heading for the same 9pt deduction half way through this season still?

Even if we are just below the £39m it means this season we may pretty much have to break even to avoid the 9pt deduction next season.How many championship clubs manage to do that especially without the Parachute payments?? It may be the case that we can't dodge this 9 point deduction whether it's this season or next.


No. Simply put. No.


Personally still think we could easily have lost a lot more last season. EFL would not be able to take action on a forecast as it could never be legally binding until the official audited accounts are published. If we only lost £10m last season we would have a lot more leeway this season to spend some money as (based on at £10m loss last season) we could still lose £12m and be ok. There is no sign we are prepared to spend any money at all which tends to suggest the losses for last year are much higher. We may have just about survived the 9 pt deduction this year but we have to have a massive turnaround this season to get to a break even situation. I think we will have to sell either Moore or Swift or perhaps Loader & Olise in January if not before to avoid it.


They can and do take action on the forecast as it is part of the rules all clubs have signed up for. The audited accounts aren't due until March 2020 which would make waiting pretty pointless. If a club grossly underplays a loss in a forecast then it will only come back to bite them on the arse and I'm pretty sure that would be classed as cooking the books and see a harsher penalty handed down - doubt the PL or FA would take to it kindly if a club got promoted.

If we forecast a loss of 10m last season then yes our FFP result this year would be a 27m loss, so comfortably meeting the FFP requirements - however, 10m plus 20.9m means we start the 2019/20 assessment at -31m so we only have 8m to play with - if we've lost more then the leeway for the next assessment is clearly less. However, for the embargo to have been lifted and for us to have signed any players at all (free or loan) both the EFL and us must be comfortable that we stand an even chance of meeting the next assessment.

Lets look at what has come in/out:

Wages freed up for about 10 players
Fee for Bodvarsson
Sell on for Stacey
New Sponsorship
Fees for Bacuna and Illori in Jan will help this years forecast (lets say circa 3.5m for those two)

We may still see more players leave on loan/perm to free up more wages and we may see a fee or two. We have brought in - 2 players whose combined wage will be much lower than those who have gone and for the loans, the parent clubs are playing all (or the majority) of wages. We probably have scope to bring 1 or 2 more players on loan, free or for a very small fee.

None of this would be happening without EFL blessing, so we are not in any danger of losing points this season. For us to have breached FFP this year, we will have had to forecast a loss that will mean we are already over the restriction for next - so we would have already sold Moore, Barrow or anyone else we could get decent money for and would probably be fielding close to a full academy 11. The fact that we are not and have brought in some players to enhance the best academy players is a good sign. If, and it's a big if at this stage, come January we feel we are in dangerous waters then expect us to try and ship out a player or two for a decent fee.

The Championship is a different beast this year, clubs simply aren't spending money unless they have sold a player up to the PL. Brentford have spent a lot but pretty much all financed by 1 or 2 big sales. Bristol City sold a player for about 13m and have used this money to buy - without selling or a parachute payment - cash deals will be much fewer in number going forward.

So in short, relax - we won't see a points deduction this season and are doing all we can to ensure we meet the requirements for 2019/20, to avoid a penalty during the 2020/21 season.

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Re: Are we still heading for a 9pt deduction?

by WestYorksRoyal » 29 Jul 2019 09:00

I've enjoyed the return of sense to the Championship transfer market. Brentford have done some savvy deals off the back of sales, but there are no £10m signings by anyone. Is FFP finally starting to have an impact?

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Re: Are we still heading for a 9pt deduction?

by Stranded » 29 Jul 2019 09:06

WestYorksRoyal I've enjoyed the return of sense to the Championship transfer market. Brentford have done some savvy deals off the back of sales, but there are no £10m signings by anyone. Is FFP finally starting to have an impact?


Yes, the Birmingham points deduction has clearly had the effect of making other clubs aware that there will be consequences if you breach FFP. Brum were lucky they had had a good season until that point so the deduction didn't hurt too much beyond taking them out of a play-off race they were only really on the edges of.

You will still see the odd club take a gamble to try and get promotion, as say Villa did last couple of years, but they will do so knowing that if they miss out they will be hit hard as a result. Would be a calculated risk.

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