QUOTE (kurtsimonw @ May 8 2012, 04:35 PM)

Quoted here to not going OT in
Milan Financials thread - Probably a long, boring, post. So apologies in advance.

Not boring
QUOTE (kurtsimonw @ May 8 2012, 04:35 PM)

I can see where you're coming from, but I actually think that it is a way of keeping things the same. Here's an example.
(all figures used from financial year end April 2010)
My example will use Liverpool, Everton and Birmingham. 1 club is of CL level, at east in terms of £££, 1 is a Europa League/mid-table quality team and the other a relegation battler. The reason I used these 3 clubs is that they have a healthy wages:turnover ratio that is very similar (Liverpool 65%, Everton 67%, Birmingham 68%) and around the UEFA guideline.
Now obviously football is not completely predictable as a 'small club' can have a good season and a 'big club' can have a bad one, but here's the first thing I think of when I look at FFP rules.
Liverpool turnover for that year was £185m
Everton turnover for that year was £79m
Birmingham turnover for that year was £56m
So Liverpool have quite a clear advantage here over the other teams. Part of that is the money earned through qualifying for the CL which creates an unfair cycle. In theory a team will qualify for the CL, earn more money which will in turn help them qualify for the CL again and so on.
Revenue does not equal Cash - Liverpool have a higher Revenue stream because they are an international brand (more so than CL income), as opposed to Everton and Birmingham. Moreover, Liverpool has higher operating expenses than Everton and Birmingham; as such the Revenue figure of GBP185mm doesn’t seem to be so big anymore.
But I get the point you’re trying to get across and yes, Liverpool will always have the upper hand simply because of their brand, just as United and Barcelona. CL income is significant, but it is not tax-free cash, as there are costs to be allocated against it.
QUOTE (kurtsimonw @ May 8 2012, 04:35 PM)

The gap between mid-table/relegation isn't as big, but then there's little difference in terms of the money earned also. Whereas the difference between mid-table/Europa and CL is incredibly huge, it makes the rich richer.
But because Everton do want to try and make the CL, they can't afford to spend over, which means they'll not in theory be able to compete with the CL clubs spending. Birmingham can spend what they like right, because Europe is not a likely scenario? Well no. Relegation threatened teams will not spend big, because if they overspend and get relegated, the HUGE loss in Premier League tv money as well as gate receipts will mean they'll be crushed under debt. Portsmouth are a good example of this - overspend, relegated, administration, relegated again. Leeds were the same. So while in theory they could spend to try and catch up, it's not in their best interests to do so. The reward of making maybe £5m more moving a few places up the league is not worth the risk of losing around £40m a season if they were to get relegated.
Well, its not about who spends more. Its about leveling the playing field. It will stop teams like Madrid and City from raising prices of players (as their spending is limited to a % of their income and not via outside financing). It will allow for a healthy competition, ala the 70’s and 80’s, where you had your very own Villa crowned champions of Europe.
Clubs don’t need to spend big to get a CL birth; rather other factors should come with the FFP such as effectiveness and shrewdness of top management in the respective clubs. On top of that, it is my belief that clubs will finally be able to draw in the big names without tussling with the likes of City, just because City offered a 100mm fee versus our humble 20mm; if you get what I mean.
QUOTE (kurtsimonw @ May 8 2012, 04:35 PM)

To me all FFP is doing is saying "The teams with £50m can spend £50m, the teams with £1m can spend £1m".. how is that fair? Especially when UEFA are the ones giving the top clubs money for qualifying for the CL, it creates too much of a gap and it's really not fair.
You could say the same on a league scale. How can the 2nd tier nations like Holland, France, Portugal really compete with the big nations? They don't have big tv deals, they mostly don't have huge stadiums or attendances, they can't afford to compete.
I just think as I said before it's a way of ensuring the rich stay richer. Right now Villa can go spend £100m in the summer to try and push for the CL and break the status quo. In FFP? No chance.
Well, I do see where you’re coming from and yes if a team that makes net 50mm, then that team is definitely more attractive to the player than the one making 1mm; but then again that is down to the size of the clubs. For example, City won’t be the one making the 50mm; rather it could be Barcelona or Madrid that are making the 50mm. The FFP does not segregate and ensures that rich stay richer, it just defines that a team cannot borrow more than it’s capable of, and in effect it is ensuring that the team does not go bankrupt.
Where you suggest that Villa can spend 100mm and push for the CL, well where did that 100mm come from? Doesn’t it have to be repaid? And if so how will it repay? Unless it is laundered money, the investor wants a return on his 100mm. It’s really as simple as that.
QUOTE (kurtsimonw @ May 8 2012, 04:35 PM)

EDIT: There's always a misconception that the big teams pay big wages. In a way they do, but in terms of what they spend they don't pay much at all. That same years lowest wages:turnover ratio: Arsenal and Man U were the bottom 2. Blackpool and Wigan were 2 of the top 3 (Blackpool spending over 100% of their turnover on wages).
There you go, it is because United and Arsenal have a brand, which allures to the players. Hence wages are not as relevant. For example; if Lampard was to leave Chelsea, would he go to a historic club with a world-wide brand such as United or City? If City pays more then he will go to City, while if both City and United offer the same terms then it’s obvious who he’d choose.
The benchmark for the FFP is not who spends more than the other, but to allow for a common ground. Take Milan, in comparison to five years ago our wage bill has reduced very sharply. Some could even argue that we lost out on world-class players because the club is too stingy, or letting go of Pirlo would also be a prime example.