PSG under threat of violating FFP

But the FFP looks at the income statement. Whatever cash reserves you have does not affect the income statement, like you said, that's balance sheet stuff. PSG's income statement would still fail the FFP rules even if their balance sheet was loaded with cash.

As for Barca and Real Madrid, they have a lot of debt, but I guess they are able to service it (because their turnover is so high). So UEFA don't mind that, because their income statements seem to be fine.

That's the thing though...  the justification for the sanctions was twofold:  1) the market value of the club was being artificially inflated by the owners and 2) if we revalue the club based on what we (UEFA) think it's worth, it cannot meet its obligations organically without the aid of its owners' capital investment.

Well, if you go to a bank and get a loan.  That loan is based on a market value that the bank agrees to.  UEFA can't go and say that valuation is artificial.... it's an international bank.  Same with taking shares public. If you get 200 million from a bank, UEFA can't say it's only 100 million, which is what they're doing with the QTA deal.

Remember that FFP has to show that the club cannot internally meet its obligations.  It has certain criteria that is uses to make this assessment.  If the club can show that it can meet its obligations without a problem, then FFP cannot sanction it.  There's no better way to justify value than have an international financial institution or a stock market give its stamp of approval.

That's what PSG are going to use in the future.  If UEFA won't accept their internal valuation....  they'll go out and get someone else to validate it.  FFP cannot sanction you based on losses alone.  They also have to show that the club cannot sustain the loss and remain a viable entity.  People tend to forget the second part.  Since PSG have no debt and revenue above 300 mil right now, the losses they can sustain is pretty huge AS LONG AS the club valuation is validated.  They just have to show that they can sustain the current loss for 3-5 years since players' contracts don't run longer.

In an case, FFP is not long for the road.  The attorneys that represented Bosman in the 90s are all over it and its in front of the European tribunal and the WTO.  It'll be gone in a couple of years or vastly changed to be less limiting.

No, UEFA can sanction clubs on losses alone, that's the whole point. They're basically rules for breaking-even. The whole idea behind FFP is that if your income statement fails the criteria, you will face sanctions. Obviously PSG can sustain all losses under their Qatar ownership, but that's not going to make them FFP-proof.

Neither will a bank loan. I'm sure banks are willing to loan the club hundreds of millions should they wish to apply. But

a) that doesn't help your income statement and

b) isn't the same thing as UEFA's "fair value" principle in the FFP rules when assessing clubs' commercial deals. Just because a bank is willing to give you a massive loan doesn't mean that your commercial deals cannot be inflated above realistic market value.


As for selling part of the club on the stock market, sure they can do that, but if it's their "close associates" again buying the shares at inflated prices, I don't see why UEFA wouldn't apply the same "fair value" adjustment that they did when they deemed PSG's commercial deal with Qatar to be unrealistically high.

I'm not seeing a way round the FFP rules that would make PSG or any club completely immune to them, more like small tweaking if / when UEFA take a bit lenient approach.

That's not true.  If you accumulated losses that exceed 45 million, it needs to be shown that the club can sustain the additional amount organically because the loss is seen as a current debt.  Losses are a trigger to ask for explanations and to then either become convinced or not that the club is doing fine or needs to be put in line.   With clubs that have financial trouble, UEFA bans them from competitions and uses non-financial means to get them in line.  With clubs whose owners have deep pockets, they use financial fines.  The bottom line is that the club needs to show that it can sustain itself without capital injection for the life of the current contracts on its books.  No questions are asked before the 45 million threshhold...  after that, you need to explain yourself.

PSG had audited financial statements that showed a gain.  What UEFA did was say that the valuation of the contract for promotion of QTA was not at market value... although 200 million came in, it's only worth 100 million.  That contract was unsustainable according to UEFA if QTA went away

Atleti, for example, has carried HUGE losses.  And owed the Spanish government upwards of 100 million euros in back taxes.  But since it has brought its debt down and the banks of have kept their lines of credit open, they can cover their current obligation organically despite the losses.  Back in 2011, Atleti was on the verge of bankruptcy due to illiquidity.  Now they're liquid so UEFA is leaving them alone although they are massively in the red.  Read this:  http://swissramble.blogspot.fr/2012/08/atletico-madrid-its-mad-world.html

Why is UEFA staying off of Spanish clubs in general and Atleti specifically?  They aren't reliant on owner capital to cover their issues.  They have debt instruments that are collateralized by the assets of the club that give them enough cash coverage to make it.  UEFA can't say that the banks are overvaluing the clubs... although the EU is investigating it now.

PSG?  They have no debt and, after the UEFA haircut, are carrying 75 million euro loss per season over the next 3-5 years.  So, like the La Liga clubs, they just need to get a bank to back them up with loan that would cover the losses.  That would end that. But as of right now, they can't show that the club can internally cover these losses... hence the problem.

As far as going public and having hedge funds back the stock price... nothing UEFA can do there.  The hedge funds aren't owned by Qatar.  They just invest in them...  10s of them.  For UEFA to prove that Qatar coerced these hedge funds to invest in PSG would be beyond impossible.  QTA was easy since it was basically Qatar investing directly.  Investing through a hedge fund where there are other investors other than Qatar and the managers of such funds are independent... good luck

And i'm going on record right now saying that FFP will be thrown out in 2 years time by the EU or the WTO... maybe both.  It goes against all the trade accords.  The attorneys who handled the Bosman case have already filed suit last year and are going through the process... it;s just a matter of time before this gets thrown out.  Why?  You can't impose something like this unless the players agree to it as well....  they didn't.  It's a ruling that is being imposed on the players by the clubs.  It won't fly.  Salary caps are enforceable in the US because the players' unions sign off on them.  If they didn't, it wouldn't exist because it would be against the law for the owners to do it unilaterally.

SES---Kaka/Honda---Moura

El Shaarawy wrote:Emanuelson---Birsa---Menez

Fixed.

I think the points Sports has brought up are very likely to reflect the future of this issue given the precedent already set by the Spanish giants and others whose conduct has essentially been condoned by UEFA failing to take action before this point.

As far as the sanctions go, the only one that I see truly hurting PSG is the limit on the size of the Champions League squad that may be registered which may have ramifications later in the competition.

That rule hurts the kids.... which i hate.  The "homegrown"requirement has been reduced from 8 to 4 while the total number for 25 to 21.  What does this do other than take away an opportunity for the youth academy to make the trip to a CL game with the team.  That's what these things are used for... reward kids.  The pro squad itself only goes 22-23 deep and carrying 1 less keeper to the game and 1 less field player isn't going to do anything.

The whole thing is stupid.

You know what FFP really does... it protects the elite clubs.  Nobody is ever going to catch the elite clubs without investing and taking losses while the brand builds.  It has nothing to do with "making sure the clubs are financially stable".  Does anyone in their right mind think that PSG or City are financially unstable?  Stupid.

It could potentially still hurt if there's a crisis in a particular area of the team, say the defence, in the event of injuries and suspensions, which is when you might be forced to play players out of position. As you said though, 21 players should be sufficient for most eventualities. A lot of these issues rely on random chance of course, though PSG haven't seemed to have major issues with injuries as some other squads have.

Have UEFA passed any comment on whether it will affect B list registrations? PSG might still be able to include a couple of youngsters there.

Not sure about the B list registrations...

Guys like Douchez, Camara, Ongenda, etc never played anyhow. With Menez gone, i expect Ongenda, whom a i really like to take his place. There's also another kid, Kingsley Coman, who is great and only 17... he's the one that'll get hurt by this.

PSG will still spend. Pastore is likely gone and CM will come in. So you have 60 mil + the proceeds of Pastore to spend, which will be 20+. 80 mil is more than enough for a RB and a CM. Pogba wants to go to Madrid, so he's not the one. I think Pjanic and Alves are the two and that's plenty to buy both.

sportsczy wrote:That's not true.  If you accumulated losses that exceed 45 million, it needs to be shown that the club can sustain the additional amount organically because the loss is seen as a current debt.  Losses are a trigger to ask for explanations and to then either become convinced or not that the club is doing fine or needs to be put in line.   With clubs that have financial trouble, UEFA bans them from competitions and uses non-financial means to get them in line.  With clubs whose owners have deep pockets, they use financial fines.  The bottom line is that the club needs to show that it can sustain itself without capital injection for the life of the current contracts on its books.  No questions are asked before the 45 million threshhold...  after that, you need to explain yourself.

UEFA can and will punish clubs on losses alone. Nothing explains it more clearly than the actual regulations, so here:

1
By the deadline and in the form communicated by the UEFA administration, the
licensee must prepare and submit:
a) the break-even information for the reporting period T-1;
b) the break-even information for the reporting period T-2, if not already
previously submitted;
c) the break-even information for the reporting period T, if it has breached any
of the indicators defined in paragraph 3 below:

2
The break-even information must:
a) concern the same reporting entity as that for club licensing as defined in
Article 46;
b) be approved by management, as evidenced by way of a brief statement
confirming the completeness and accuracy of the information, and signature
on behalf of the executive body of the licensee.

3
If a licensee exhibits any of the conditions described by indicators 1 to 4, it is
considered in breach of the indicator:

i) Indicator 1: Going concern
The auditor’s report in respect of the annual financial statements (i.e.
reporting period T-1) and/or interim financial statements (if applicable)
submitted in accordance with Articles 47 and 48 includes an emphasis of
matter or a qualified opinion/conclusion in respect of going concern.

ii) Indicator 2: Negative equity
The annual financial statements (i.e. reporting period T-1) submitted in
accordance with Article 47 disclose a net liabilities position that has
deteriorated relative to the comparative figure contained in the previous
year’s annual financial statements (i.e. reporting period T-2), or the
interim financial statements submitted in accordance with Article 48
disclose a net liabilities position that has deteriorated relative to the
comparative figure at the preceding statutory closing date (i.e. reporting
period T-1).

iii) Indicator 3: Break-even result
The licensee reports a break-even deficit as defined in Article 60 for
either or both of the reporting periods T-1 and T-2. 37

iv) Indicator 4: Overdue payables
The licensee has overdue payables as of 30 June of the year that the
UEFA club competitions commence as further defined in Articles 65
and 66.


1
The break-even requirement is fulfilled if no indicator (as defined in Article 62(3))
is breached and the licensee has a break-even surplus for reporting periods T-2
and T-1.

2
The break-even requirement is fulfilled, even if an indicator (as defined in
Article 62(3)) is breached, if:
a) the licensee has an aggregate break-even surplus for reporting periods T-2,
T-1 and T; or
b) the licensee has an aggregate break-even deficit for reporting periods T-2,
T-1 and T which is within the acceptable deviation (as defined in Article 61)
having also taken into account the surplus (if any) in the reporting periods
T-3 and T-4 (as defined in Article 60(6)).

3
The break-even requirement is not fulfilled if the licensee has an aggregate
break-even deficit for reporting periods T-2, T-1 and T exceeding the acceptable
deviation (as defined in Article 61) having also taken into account the surplus (if
any) in the reporting periods T-3 and T-4 (as defined in Article 60 (6)).

4
If the break-even requirement is not fulfilled then, having also taken into
consideration other factors defined in Annex XI, the Club Financial Control Panel
may refer the case to the Organs for Administration of Justice, which will take
the appropriate measure(s) without delay in accordance with the procedure
defined in the UEFA Disciplinary Regulations for urgent cases.


http://www.uefa.com/MultimediaFiles/Download/uefaorg/Clublicensing/01/50/09/12/1500912_DOWNLOAD.pdf


There is nothing in the rules that says that it's OK to fail the break-even criteria if you just can demonstrate that you can stay afloat regardless of those losses. You fail the break-even criteria (or the acceptable deviation mark) and that's all it takes to risk UEFA sanctions.

sportsczy wrote:PSG?  They have no debt and, after the UEFA haircut, are carrying 75 million euro loss per season over the next 3-5 years.  So, like the La Liga clubs, they just need to get a bank to back them up with loan that would cover the losses.  That would end that.  But as of right now, they can't show that the club can internally cover these losses...  hence the problem.

No, debt is not the answer to help a club meet the break-even criteria. PSG is making too big a loss, even if they take out a billion in debt that does nothing to lessen their losses, just means that they have the cash (in-house as opposed to in Qatar) to pay for those losses.

As for the Spanish clubs, Real Madrid and Barcelona are in big debts, but that doesn't mean they're losing money in the present. I guess they're breaking even or close enough or even posting profits. At least not losing money like PSG are. As for Atletico, I don't know what's their current situation, but they were at least investigated already in 2012, I don't know where they sanctioned or not.

They can...  but do you understand the mission statement of FFP?  

Furthermore, they aim to achieve financial fair play in UEFA club competitions
and in particular:
a) to improve the economic and financial capability of the clubs, increasing their
transparency and credibility;
b) to place the necessary importance on the protection of creditors by ensuring
that clubs settle their liabilities with players, social/tax authorities and other
clubs punctually;
c) to introduce more discipline and rationality in club football finances;
d) to encourage clubs to operate on the basis of their own revenues;
e) to encourage responsible spending for the long-term benefit of football;
f) to protect the long-term viability and sustainability of European club football.

So even if they can take action, UEFA must make rulings within the concept of why FFP was created.  They let the Spanish teams get away with breaking FFP rules because they felt that they had enough ORGANIC cash flow capabilities that none of the goals mentioned above were jeopardized.  Could they have hammered them (all of them pretty much except 2-3)? Absolutely.  For example, every single one of La Liga clubs are behind on their taxes owed to the government of Spain AND many are behind in paying their players that breaks point b) shown above.  But they decided not to.  With PSG, they are saying that the ownership of PSG put the club in more jeopardy than any of the owners of La Liga clubs.  I mean, r u serious  

In the end, PSG aren't going to fight it because they way to get around FFP has a script written in Spain.  So they just need to follow it and UEFA won't do a thing because they would need to hammer everyone using that model then, which would mean the end of La Liga.  What's the model?  Although your club is in financial ruins, show that you have enough credit available that the commitments of the club aren't in jeopardy of going into default AND the club can continue to operate normally WITHOUT having to rely on capital infusion from the owner.  That's it.

http://www.lequipe.fr/Football/Actualites/-contre-productif-selon-triaud/462810

Bordeaux President:

"FFP started with a good idea in its intent. But it's become counter-productive and it has created an environment where the status quo is maintained to the detriment of clubs that want to grow. You're guaranteeing that Bayern, Man U, Madrid and Barcelona will always have budgets greater than anyone else and that no investor can come to another club and make up the difference. If you want to be coherent with the intent, you have to not only look at expenditures compared to revenue but also look at the debt of the clubs, which are colossal in some cases. For me, FFP is a mockery. I hope the Belgian lawyer that has taken up the case with the European tribunal will be successful and we can get rid of this thing that is completely out of order." wrote:

Actually, sports, from what I've learnt the homegrown rule of 8 players still stands despite the squad size being reduced from 25 to 21. That means it actually hurts the non-homegrown players rather than the home grown. So 13-8 instead of 17-8.

sportsczy wrote:http://www.lequipe.fr/Football/Actualites/-contre-productif-selon-triaud/462810

Bordeaux President:

he's right .

how can you punish PSG and city for something that teams like chelsea already did on an even larger scale to get to where they are today ?

sportsczy wrote:http://www.lequipe.fr/Football/Actualites/-contre-productif-selon-triaud/462810

Bordeaux President:

I do agree with him. FFP ensures that the top clubs in the world today will be the same top clubs in the world in 8 years time. That's quite unhealthy for the sport. It closes out other smaller clubs that might want to develop.

Chelsea, for example, have come a very long way. We recently had our first profit season(after having losses every season since Roman took over) and we're almost at a point where we're completely self sustainable. The next and final step for us is building a new stadium(which has been hard to do but will happen eventually). When that happens, we'll be completely on our feet and will start bringing in large amounts of profit every season.

It would suck if another aspiring club were denied such an opportunity.

Varying reports BB...  some say that the 8 homegrown rule is in place while some really well reknown journalists (Pierre Menes for example) are saying that it is coming down to 4.  I personally think it will come down to 6, not 4 so it's in line with the overall decrease (about 20%).  Rabiot, Ongenda, Matuidi, Digne, Cabaye, Camara, Douchez and Jallet qualify anyhow

Introduced in 2005, the rule requires clubs competing in the Champions League and Europa League to have a minimum number of “home-grown players” in their squads. These are players who, regardless of their nationality, have been trained by their club, or by another club in the national association, for at least three years between the age of 15 and 21.

All these guys are products of youth academies in the national association and were there more than 3 years between ages 15-21.  If they sign Aurier or bring in Lloris as rumored, that's another 2.  Rule won't really affect them.  Just means that they need to make sure they have French academy players on the squad regardless of club.