Supporters Trust statement on the January Transfer Window

Profitability and Sustainability - the January 2024 transfer window

Dear Member

You will recall that, in my last communication to you after the meeting called by Mehmet Dalman prior to the Preston game. I undertook to update you on the current situation regarding Profitability and Sustainability (formerly known as FFP). I have now been able to clarify some issues so here is my summary of the current situation and its impact on the January Transfer Window.

There has been quite a lot of criticism on social media about the club only making player signings very late in the transfer window and missing out on “first choice signings” so I thought that this brief explanatory note might be helpful.

Since March 2022 the monitoring of club finances in the EFL has been carried out by a separate independent panel of qualified accountants called the Club Financial Reporting Unit. It is they who decide whether EFL clubs are in an adequate financial position to have transfers authorised and to what extent. Their rules have become increasingly strict and their monitoring checks far more frequent recently.

The basic rules have not changed much. EPL and EFL clubs are monitored on the basis of the losses they incur. If losses are below £5m on average over a rolling three year period then no further checks are made. Greater losses are allowed if the difference is made up by new cash introduced and funding guarantees by club owners so that the average is increased to £35m in the EPL and £13m in the EFL. In Cardiff City`s case the “top up” has been made by new cash introduced by Vincent Tan by way of paid for new share issues .

There was a further restriction introduced in June 2023 in that if a club is even a few days late in paying its HMRC debt then this has to be reported as a Default Event and the EFL can introduce an immediate transfer embargo until the matter is sorted.

The impact in January was that the CFRU only gave clearance to a number of clubs very late in the transfer window. As a consequence, there were more Championship club transfers in in the last two days of the transfer window than in the whole of the rest of the full month.

Keith Morgan

Chair

Interesting to see the degree of scrutiny that Clubs are now subject to. Default on a payment to HMRC then an embargo immediately applies. The powers that be do not appear to be messing about.

Interesting.

Despite the increased and late scrutiny, and the last minute clearance to spend, if Bulut, Dalman etc are to be believed we had enough headroom on the last day to bring Moore in as well (if he hadn't decided on the stardust option of Ipswich).

There are some Championship clubs out there who seem to be sailing closer to the wind than us. I have read a few reports from football finance experts who claim Hull are gambling on promotion this season. They have brought in revenue from player sales, but if what I read was right they will have to have a fire sale if they don't go up. Stoke, Blackburn and others seem to be on the edge too.

Any clubs in their position that trigger points deductions in the next few months could give QPR or Wednesday a lifeline.

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Originally Posted by jon1959

Interesting.

Despite the increased and late scrutiny, and the last minute clearance to spend, if Bulut, Dalman etc are to be believed we had enough headroom on the last day to bring Moore in as well (if he hadn't decided on the stardust option of Ipswich).

There are some Championship clubs out there who seem to be sailing closer to the wind than us. I have read a few reports from football finance experts who claim Hull are gambling on promotion this season. They have brought in revenue from player sales, but if what I read was right they will have to have a fire sale if they don't go up. Stoke, Blackburn and others seem to be on the edge too.

Any clubs in their position that trigger points deductions in the next few months could give QPR or Wednesday a lifeline.

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The way things are going, the 3 teams with the worst playing record finishing in the bottom 3 will be a thing of the past.

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Originally Posted by A Quiet Monkfish

The way things are going, the 3 teams with the worst playing record finishing in the bottom 3 will be a thing of the past.

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That is a risk I think. The way the EFL are clamping down on club finances runs the very real risk of a number of clubs facing points deductions which could then lead to worse with a linked relegation increasing the risk of Administration.

Not shy on asking stupid questions. Would somebody like to explain to me like I'm 5...

How does a club that's been under an embargo, hence not been spending money, how are we in a position where we are having to watch the pennies? I know we gave a fee for Turnbull and I expect for some of the loans, I just can't understand after a period of literally spending zero we have to wait and hear last minute what we can spend.

Also, I spoke to a City fan in work (never met him before in my life) who said we've had £20mil for Sala? this surely isn't true?

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Originally Posted by Dembe

Not shy on asking stupid questions. Would somebody like to explain to me like I'm 5...

How does a club that's been under an embargo, hence not been spending money, how are we in a position where we are having to watch the pennies? I know we gave a fee for Turnbull and I expect for some of the loans, I just can't understand after a period of literally spending zero we have to wait and hear last minute what we can spend.

Also, I spoke to a City fan in work (never met him before in my life) who said we've had £20mil for Sala? this surely isn't true?

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We are having to restrict spending because for several seasons we have been incurring financial losses at or around the allowable level under Profitability and Sustainability rules (FFP) . The EFL have been clamping down on all clubs, especially at Championship level . for the last couple of years. The audited May 2023 accounts which are due to be filed at Companies House by the end of this year should make for interesting reading.

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Originally Posted by Ninian1962

We are having to restrict spending because for several seasons we have been incurring financial losses at or around the allowable level under Profitability and Sustainability rules (FFP) . The EFL have been clamping down on all clubs, especially at Championship level . for the last couple of years. The audited May 2023 accounts which are due to be filed at Companies House by the end of this year should make for interesting reading.

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Most clubs audited accounts for the end of year which have been submitted make very interesting reading, have a look at Swiss Rambles website

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Originally Posted by Dembe

Not shy on asking stupid questions. Would somebody like to explain to me like I'm 5...

How does a club that's been under an embargo, hence not been spending money, how are we in a position where we are having to watch the pennies? I know we gave a fee for Turnbull and I expect for some of the loans, I just can't understand after a period of literally spending zero we have to wait and hear last minute what we can spend.

Also, I spoke to a City fan in work (never met him before in my life) who said we've had £20mil for Sala? this surely isn't true?

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I don't think we are currently under any embargo/restrictions, but from what the OP said, there's a new body that has been scrutinizing clubs' accounts - up to end of December, and they took until late in January to confirm we were OK..

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Originally Posted by Ninian1962

We are having to restrict spending because for several seasons we have been incurring financial losses at or around the allowable level under Profitability and Sustainability rules (FFP) . The EFL have been clamping down on all clubs, especially at Championship level . for the last couple of years. The audited May 2023 accounts which are due to be filed at Companies House by the end of this year should make for interesting reading.

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Thanks

Makes you wonder what will happen to Hull if they don’t go up.

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Originally Posted by 2b2bdoo

Makes you wonder what will happen to Hull if they don’t go up.

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They will do a Leeds from a few years ago

The messenger got a right kicking on the other site.

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Originally Posted by sneggyblubird

The messenger got a right kicking on the other site.

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I`ve given up on there now because of the reaction of a certain individual who can hardly read or write and so doesn`t, won`t or can`t understand a lot of what is posted but claims to know everything about football finances, what happens with transfers etc and also claims that anyone who disagrees with him is either a liar or a mouthpiece for the club. It is a shame as it spoils it for the decent posters on there.

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Originally Posted by Ninian1962

I`ve given up on there now because of the reaction of a certain individual who can hardly read or write and so doesn`t, won`t or can`t understand a lot of what is posted but claims to know everything about football finances, what happens with transfers etc and also claims that anyone who disagrees with him is either a liar or a mouthpiece for the club. It is a shame as it spoils it for the decent posters on there.

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Don't blame you at all.

Thanks for the write up.

What has caused the HMRC restriction or is it standard practice that applies to all clubs?

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Originally Posted by Ninian1962

I`ve given up on there now because of the reaction of a certain individual who can hardly read or write and so doesn`t, won`t or can`t understand a lot of what is posted but claims to know everything about football finances, what happens with transfers etc and also claims that anyone who disagrees with him is either a liar or a mouthpiece for the club. It is a shame as it spoils it for the decent posters on there.

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Don't worry about it. It's a feather in your cap to have stirred things up over there. Well done :thumbup:

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Originally Posted by Ninian1962

I`ve given up on there now because of the reaction of a certain individual who can hardly read or write and so doesn`t, won`t or can`t understand a lot of what is posted but claims to know everything about football finances, what happens with transfers etc and also claims that anyone who disagrees with him is either a liar or a mouthpiece for the club. It is a shame as it spoils it for the decent posters on there.

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If your efforts aren't appreciated sod them.

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Originally Posted by Ninian1962

I`ve given up on there now because of the reaction of a certain individual who can hardly read or write and so doesn`t, won`t or can`t understand a lot of what is posted but claims to know everything about football finances, what happens with transfers etc and also claims that anyone who disagrees with him is either a liar or a mouthpiece for the club. It is a shame as it spoils it for the decent posters on there.

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It's why I phrased it like I did.If it's any consolation I've stopped posting too now.He can't take what he dishes out and bans most that disagrees with him.After reading that thread I was gonna post a mouthful at him but decided not to give him the satisfaction of banning me for about the forth time. Your right though there are some decent posters on there which makes it regrettable.

Thank you Keith. I had a look on t'other board after your comments, first time I've looked on there for a long time and wish I hadn't now. For someone who was a mouthpiece for a previous owner to accuse and berate you of doing similar, even though you don't, is frankly laughable

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Originally Posted by PontBlue

Thanks for the write up.

What has caused the HMRC restriction or is it standard practice that applies to all clubs?

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HMRC are creditors of any club who owe PAYE, NI etc. as a creditor they can ask the court to place a club into administration so they can recover their debts.

This doesn’t apply to us.

The previous FFP regulations have been changed by UEFA

UEFA have introduced ‘new’ Financial Sustainability Regulations in 2022.

“The regulations will ensure that all clubs will have to be stable, solvent, and keep their costs under control. The new regulations stand on their own and the new name of Financial Sustainability”

The notes explain the thinking behind the changes and the fact that the new regulations were given a 3 year introductory period.

There is also reference to squads, creative ‘dodgy’ kinds of transactions and the payments made to agents are key points which spring to mind.

They seem to be trying to catch up with the creative ways in which football clubs organise their finances. For example how can a club like Barcelona who are in effect broke with debts of more than €1.2 billion continue to spend huge amounts of money bringing in expensive players and pay for new stadium to be built.

https://www.theguardian.com/football...-revive-season

Somewhere in the new regulations is a reference to the auditing periods. December sticks out as a date. So if the City were being exercised under these new regulations then it’s quite feasible that it took some weeks for them to receive the all clear.


https://www.uefa.com/insideuefa/news...y-regulations/

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Originally Posted by PontBlue

Thanks for the write up.

What has caused the HMRC restriction or is it standard practice that applies to all clubs?

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Standard for all clubs since an EFL AGM in June 2023

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Originally Posted by 2b2bdoo

Makes you wonder what will happen to Hull if they don’t go up.

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What a ridiculous season to gamble. The 3 who came down last season were always going to be the top 3.

I know you can only beat what's in front of you but the twice we have gone up I'm sure there weren't as many strong teams at the top as this season?

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Originally Posted by Ninian1962

Standard for all clubs since an EFL AGM in June 2023

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:thumbup:

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Originally Posted by Ninian1962

We are having to restrict spending because for several seasons we have been incurring financial losses at or around the allowable level under Profitability and Sustainability rules (FFP) . The EFL have been clamping down on all clubs, especially at Championship level . for the last couple of years. The audited May 2023 accounts which are due to be filed at Companies House by the end of this year should make for interesting reading.

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I'll join the stupid question club as I have asked this before and no-one answered but why don't we have someone in the club who knows this rather than being told by an outside source what we can and can't afford and therefore not waste time chasing unrealistic targets or in our case being held up and then signing players from god knows how far down on our preference list

It's like going out on the field of play and Ng handling the ball in our area and the ref giving a penalty and our players asking why or am I missing the point here

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Originally Posted by Nobody's Rep

I'll join the stupid question club as I have asked this before and no-one answered but why don't we have someone in the club who knows this rather than being told by an outside source what we can and can't afford and therefore not waste time chasing unrealistic targets or in our case being held up and then signing players from god knows how far down on our preference list

It's like going out on the field of play and Ng handling the ball in our area and the ref giving a penalty and our players asking why or am I missing the point here

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FFP submissions include two sets of actual financial results and one of a forecast result - next set being actuals for 2022 and 2023 plus a forecast for 2024.
The forecast is scrutinised closely and requires "approval", this means clubs near the limits seek some definitive feedback during the Jan transfer window on what will be accepted so they can stay within the FFP limits.

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Originally Posted by JumpersforGoalposts

FFP submissions include two sets of actual financial results and one of a forecast result - next set being actuals for 2022 and 2023 plus a forecast for 2024.
The forecast is scrutinised closely and requires "approval", this means clubs near the limits seek some definitive feedback during the Jan transfer window on what will be accepted so they can stay within the FFP limits.

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So a further punishment for being close to the limits by having approval during the window but surely there should still be a degree of confidence within the club that allows them to commit to a certain budget even if it is conservative because looking from the outside in it looks like we thought we had one budget leading into the window and completely different one by the end??

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Originally Posted by Nobody's Rep

So a further punishment for being close to the limits by having approval during the window but surely there should still be a degree of confidence within the club that allows them to commit to a certain budget even if it is conservative because looking from the outside in it looks like we thought we had one budget leading into the window and completely different one by the end??

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I think it more likely that they were "pushing the envelope" on some things and were told they wouldn't get away with it in the final submission - hence, a little less leeway on available spend in the transfer window.