I just wanted to get an idea of how the new financial rules for league one teams will impact us next season.
These changes focus on the Salary Cost Management Protocol (SCMP), which limits the percentage of a club’s turnover that can be spent on player-related expenditure.
Key Changes for League One Clubs:
Clubs can spend 60% of their turnover on player wages and transfer fees.
If an owner injects £1 million or more, only 60% of that can be spent on players.
Prize money, cup earnings, and transfer fees received will now be included in turnover at 60% instead of 100%.
Under-21 Player Consideration: Some young players who are established first-team members will be included in the SCMP calculation based on their appearances.
From this it seems owner injects is the key. If the owner injects £50m into the club, ‘only’ £30m can be spent on player wages and transfer fees?! The rest can go on infrastructure and community development (i.e. training ground and academy).
The rules are different in the championship, which has a focus on losses over time.
So my take on this is the new rules have no impact on us at the moment; its purely down to the owners’ plan how we progress from here. Clearly huge sums have already been spent and we’ll start to see that during the summer, with the academy set up and training ground move seeming likely. It’ll be fascinating watching the summer transfer activity too, will it be ‘steady as she goes’ until the academy pathway is working, or ‘lets do a Birmingham’ and player expenditure that’ll make our heads spin (again!)! Or something in between.
Is this a fair assessment of the new rules or have I missed something?
New buildings at the growing collection of training grounds, academy investment, the new pitch, bits like the Vere being tarted up will help the ability to spend on players if continued and you can’t really fault the amount of investment so far however misguided some of it has been. The problem for us with the rules as written I that the bigger clubs with more fans have far more income and this setup puts that constant 40% overhead on any investment ML makes in the team. That’s why many of the owner funded clubs in the prem see the whole setup as a cartel supporting the status quo. Longer term if it encourages him to sort out infrastructure it should leave us in a better place though and too many clubs have seen huge spending on players but nothing beyond.
MLs desire to keep ploughing money in will presumably be tested at some point if he doesn’t see results or isn’t enjoying it. I really don’t know what to make of his interest levels.
Definitely a cartel supporting the status quo. If we were still fan owned, we would be at a massive disadvantage (keep an eye on how Exeter cope - albeit on bigger crowds than us).
Where the rules say only 60% of owner injects can be spent on players, does it stipulate how the other 40% should be spent? I just assumed it was infrastructure, etc.
Does owner injects count as turnover then? I guess it must do.
The owners would have been aware of these new rules when they took over, so they must be planning for them.
Its a really good point about interest levels. Still the unanswered question, why us?!!
I don’t understand why transfer fees received come within the definition of income and only 60% can be used on players wages and/or transfers in.
Say our Academy is highly successful and it generates £100m income over 3 years, only £60m can be spent on players. What happens to the balance of £40m, there’s a limit to the amount of infrastructure you need? I know this scenario is unlikely.
There are also salaries of non playing staff, from the first team coaching team to office staff, bar staff and so on. Then match day operating costs as well a pitch maintenance.
So it’s not a 40% will go into improving training or academy
If it was 10 or 20 percent or everything was excluded no progress would be made on infrastructure. If every club in L1 and L2 has a good ground, training ground and community facilities in 5 years time the rules wouldn’t be needed but I won’t hold my breath.
This is the part of the new rule I like the most. One of the biggest dangers to secure football finance is the (fans) expectation that when you sell a player for £1M you’ve for £1M to spend. This at least puts a limit on that.
I agree with the restrictions on wages and that needs to be rigorously enforced by the Authorities. However, I can see no justification for preventing full reinvestment of transfer fee income. Also, if anyone wins £125m in the Euro Lottery next week and decides to give their club £60m of it, the club could only use £36m of it on transfers. I obviously won’t be handing over any to Lommy!
Because me selling a player for 1 million doesn’t automatically mean i can invest the million back to a new player as T&Cs may be significantly different.
Effectively an OpEx vs CAPEX decision.
No point in buying a player if you can’t afford to play them (Matt Spring comes to mind)
It’s probably worse than that, some owners get £1m in and spend it the same day on down payments for 4 players, forget the installments , the wages, forget taxes, deadline day is king and the club is screwed for years.
I guess the authorities are trying to encourage clubs to build up some cash reserves as any other business would be wise to do. A bit of a buffer against tougher times. I appreciate that football clubs are rarely run like a traditional business.
