FFP, PSR, APT, SCR, WTF?

A new world of abbreviations all designed to maintain the status quo. Jack Dees on the ludicrous rules running football.

I hate acronyms but it’s impossible to write about football nowadays without using them. For those who don’t know it’s Financial Fair Play, Profit and Sustainability Rules, Associated Party Transactions, Squad Cost Ratios and What the F*** (can also be applied to non-football situations).

So a few thoughts on how these arrangements affect Newcastle United and the football world more widely.

FFP originated with UEFA in 2009, aiming to curb excessive spending by clubs and promote financial stability. The rules, which became effective at the start of the 2011/2012 season, require clubs to balance their football-related expenses with their revenue.

The main goal is to prevent clubs from spending more than they earn, encouraging them to operate within their means and avoid excessive debt. This is achieved through the "break-even" requirement, which limits the losses a club can report over a three-year period.

More specifically the purpose and benefits of FFP:

To promote financial stability and prevent clubs from becoming excessively indebted.

To ensure fair competition by preventing clubs from gaining an unfair advantage through excessive spending or “Financial Doping” i.e. using external funding (like owner investment beyond what's sustainable) to gain an unfair advantage over other clubs. (yeah I was surprised about that one)

To protect the long-term sustainability of football clubs.

To foster a more level playing field for all participating clubs.

Turning to PSR, the EPL’s version of FFP, the stated primary aim is to prevent clubs from overspending and potentially facing financial difficulties, as seen with Portsmouth's administration in 2010 and 2012.

Portsmouth went bust because they couldn’t service their loans so surely not owing too much should be an issue. However debt isn’t taken into consideration for PSR!

Why we wonder? If one of the purposes of PSR is stop clubs going bust with excess debt why are they not doing anything about it?

Might be worth looking at who these clubs are. Figures are from 2024

Club, Total Debt

Everton, £1b

Tottenham Hotspur, £677m

Manchester United, £651m

Manchester City, £454.1m

Brighton & Hove Albion, £293m

Liverpool, £251m

Arsenal, £209.3m

Wolverhampton Wanderers, £152m

Nottingham Forest, £88.9m

Burnley, £85m

Brentford, £71.1m

AFC Bournemouth, £60.1m

West Ham United, £55m

Sheffield United, £53m

Crystal Palace, £63.4m

Luton Town, £13.9m

Chelsea, £0m

Newcastle United, £0m

Aston Villa, £0m

Fulham, £0m

Scary and Interesting eh? Five of the “Cartel 6” in the top 7.

And then there are shareholder loans where clubs borrow money from their owners, usually interest-free. Everton top the list with £451m and eight clubs held no shareholder debt at last check. Figures are gross not net - e.g. Chelsea are owed £200m from fellow group entities.

Everton £450.8

Arsenal £324.1

Chelsea £303.2

Brighton & Hove Albion £299.7

Liverpool £198.7

Fulham £124.9

Bournemouth £89.8

Brentford £61.6

Aston Villa £13.1

Crystal Palace £12.1

Wolverhampton Wanderers £2.8

Three of the cartel 6 figuring prominently again.

How does this tally with Associated Party Transactions (APTs) and Fair Market Value (FMV) which were first introduced in December 2021 and amended in March 2024 then?

Some say these rules were rushed in after the Newcastle takeover of October 2021 to prevent Newcastle’s owners spending freely, surely not? The EPL say they were introduced with the aim of safeguarding the financial stability, integrity, and competitive balance of the League by “ensuring the veracity of the costs and revenues reported by Clubs” – essentially outlining that deals done should reflect ‘Fair Market Value’.

Well Manchester City believe that clubs not having to pay interest on loans from their owners gives them an unfair advantage. Interest on loans can amount to millions of pounds, so an owner helping a club avoid those should be considered in a similar way to how sponsorships are scrutinised if they are deemed to be from a company ‘associated’ with a club. City believe that if their sponsorship deals with Abu Dhabi-based companies are put under the microscope and have new values assigned to them, the loans should be scrutinised, too.

They say that these loans and market-rate interest rates should be factored into PSR calculations and in their latest legal challenge, they provide figures showing that some Premier League clubs have benefitted in this way.

Remember an independent tribunal concluded that the APT rules in place between December 2021 and November 2024 were “unlawful” and “void and unenforceable”. The EPL are disputing this and another hearing is imminent .

The overhaul of the APT rules will undoubtedly happen as City’s case is already proven and I’m sure we all await the next tribunal decision with bated breath.

We will probably have Squad Cost Ratio (SCR) coming in next season which limits what clubs can spend in relation to revenue which will help combat the loans issue but not obviously the debt issue. It is already in operation by UEFA for their competitions. This is a step in the right direction but obviously its effectiveness is as yet unknown.

Before I did the research for this piece one of the biggest mysteries to me was why other EPL clubs were voting with the Cartel 6. That mystery is partly solved when you look at the shareholder loans that are keeping Everton, Brighton, Fulham, Bournemouth, Brentford, Villa and Palace afloat.

Remember what UEFA said - To promote financial stability and prevent clubs from becoming excessively indebted.

What is excessive? I’m no financial expert but Everton’s £1 Billion has to be up there against a turnover of £187 million in 2023/24. Whether or not debt will be tackled remains to be seen but surely the spectre of Portsmouth’s demise must linger.

Whatever rules are brought in I’m sure their operation will be watched very carefully. The way clubs are treated under the current rules has noteven been close to fair. Did you know for example that Manchester Reds got a £40 million allowance for Covid while no one else got more than £1 million? Or that they were given an allowance of £35 million for “exceptional costs relating to the share sale to INEOS CEO Sir Jim Ratcliffe”?

Without these two examples of EPL largesse they would have failed PSR for the 23/24 seasonaccording to football finance expert Stefan Borson. No scrambling to sell great young players required from them. Why has this gone unchallenged? They’ve been spending like lottery winners this transfer window. It’s almost as if the EPL were trying to help certain clubs.

Does anyone apart from Richard Masters and his lackeys really believe Chelsea’s women’s team are worth £200 million? Just a little reminder that the first £million sale of a women player only happenedlast month. They also sold 2 hotels they owned to a sister company in 2023 for £76.5 million to ensure they were PSR compliant. Such transactions are not allowed in UEFA competitions and in the English Football League after they closed the loophole in 2021, but the Premier League opted against following suit. It’s almost as if the EPL were trying to help certain clubs.

So WTF? Are the smaller clubs scared of rocking the boat because of their debts? Will anyone other than Citeh stand up to Masters et al?

There is a school of thought that PIF are waiting to see the outcome of the next tribunal before making further large financial decisions on issues like the Aramco Training Complex or Uber St. James’s Park but what is stopping them taking the EPL on as well?

Something has to change but it has to come from within the EPL clubs. The “other 14” need to grow a collective pair.

Pump It Up

Jack Dees