Leeds Financial Fair Play situation at present - with help from ChatGPT
What ChatGPT taught me about Leeds’ Financial Fair Play situation.
Its that time again ..... January .... when some people start endlessly whining and complaining about how inept our management and owners are, not being able to bring in star players to instantly makes us a Champions League club. Blah, blah, blah
So I turned to ChatGPT and asked it to help me learn a bit about the financial restrictions we are currently facing (as you lot have just confused me more on this over the past months ).
Current PSR (Profitability and Sustainability Rules) for the Premier League:
Core idea: Clubs can spend a lot – but only if they can afford it!
Basic rule: A club’s losses over a rolling 3-year period must not exceed a set limit. Specifically - 105 million pounds over 3 seasons. Championship clubs have a lower threshold.
What counts towards the calculation?
•Player wages, transfer fees (amortized), agent fees, operating costs, manager and staff salaries.
•Clubs can invest in the following without penalty – youth academy, women’s football stadium and training facilities, community projects. NO – hiring Mbappe is NOT “a community project”
•Transfer fees can be amortized, but its strongly scrutinized.
•Revenues that count are broadcasting revenues, matchday revenues, commercial and sponsorship money (latter must be at fair-market value)
Its worth noting that precedent tells us that overspending to avoid relegation is not an excuse -e.g. Everton, Forest – because wages aren’t amortized, their losses were calculated over the limit. Also – manager payoffs are included immediately. Everton tried to use long contracts to spread transfer costs, but it didn’t work. When results dropped, revenues dropped but costs stayed high.
The issue we face is that our current numbers include 2 Championship and 1 Premier league season. So, yes our TV revenues went from about 10 million pounds to 100 million +, but we are still carrying very high losses, specifically from the 23/24 season, when Leeds reported about 60.8 million in losses. This was by far the highest in the Championship.
Leeds therefore have very little headroom in that 105 million limit, as that 23/24 loss is still weighing over us.
To mitigate this, the club sold players last season – the ones that we all winced about of course were Summerville, Rutter and Gray. This was done to prevent costs from continuing to mount. Previous wages and amortizations had been high, so there was (is) some real danger.
Going forward:
The rules change for the 26/27 season – 2 new cute little acronyms coming into play:
-SCR (Squad Cost Ratio) and SSR (Sustainability & Systematic Resilience).
SCR will add player wages, manager and coaching wages, transfer amortization and agent fees and consider what % that is of the club’s revenues (not set yet, but thought to be 70% to 85%).
The main audit question moves from: “How much have you lost over 3 years?” to “How much of your income goes on your squad RIGHT NOW?”
It is thought that the SCR is going to put more pressure on Leeds for a while. Why? .... we are a mid to low table club, but with premier league level squad costs and a recent history of high wage commitments.
The example given for Leeds is that if we earn, say, 140 million in revenues, squad costs will be capped at about 100 to 110 million.
So, suddenly a 30 million pound player on a long contract is a lot more expensive under these rules.
The conclusion is we are going to struggle to bring in top players for a season or two. We are going to have to look at younger, lower wage players with potential, and really be creative on sell-to-buy and loan strategies.
So interested to hear everyone’s opinions on this little AI analysis.
But the moral of the story is – if you are waiting on us bringing in big name stars and coaches – you may have to wait quite a while longer.
May the whining begin.
Its that time again ..... January .... when some people start endlessly whining and complaining about how inept our management and owners are, not being able to bring in star players to instantly makes us a Champions League club. Blah, blah, blah
So I turned to ChatGPT and asked it to help me learn a bit about the financial restrictions we are currently facing (as you lot have just confused me more on this over the past months ).
Current PSR (Profitability and Sustainability Rules) for the Premier League:
Core idea: Clubs can spend a lot – but only if they can afford it!
Basic rule: A club’s losses over a rolling 3-year period must not exceed a set limit. Specifically - 105 million pounds over 3 seasons. Championship clubs have a lower threshold.
What counts towards the calculation?
•Player wages, transfer fees (amortized), agent fees, operating costs, manager and staff salaries.
•Clubs can invest in the following without penalty – youth academy, women’s football stadium and training facilities, community projects. NO – hiring Mbappe is NOT “a community project”
•Transfer fees can be amortized, but its strongly scrutinized.
•Revenues that count are broadcasting revenues, matchday revenues, commercial and sponsorship money (latter must be at fair-market value)
Its worth noting that precedent tells us that overspending to avoid relegation is not an excuse -e.g. Everton, Forest – because wages aren’t amortized, their losses were calculated over the limit. Also – manager payoffs are included immediately. Everton tried to use long contracts to spread transfer costs, but it didn’t work. When results dropped, revenues dropped but costs stayed high.
The issue we face is that our current numbers include 2 Championship and 1 Premier league season. So, yes our TV revenues went from about 10 million pounds to 100 million +, but we are still carrying very high losses, specifically from the 23/24 season, when Leeds reported about 60.8 million in losses. This was by far the highest in the Championship.
Leeds therefore have very little headroom in that 105 million limit, as that 23/24 loss is still weighing over us.
To mitigate this, the club sold players last season – the ones that we all winced about of course were Summerville, Rutter and Gray. This was done to prevent costs from continuing to mount. Previous wages and amortizations had been high, so there was (is) some real danger.
Going forward:
The rules change for the 26/27 season – 2 new cute little acronyms coming into play:
-SCR (Squad Cost Ratio) and SSR (Sustainability & Systematic Resilience).
SCR will add player wages, manager and coaching wages, transfer amortization and agent fees and consider what % that is of the club’s revenues (not set yet, but thought to be 70% to 85%).
The main audit question moves from: “How much have you lost over 3 years?” to “How much of your income goes on your squad RIGHT NOW?”
It is thought that the SCR is going to put more pressure on Leeds for a while. Why? .... we are a mid to low table club, but with premier league level squad costs and a recent history of high wage commitments.
The example given for Leeds is that if we earn, say, 140 million in revenues, squad costs will be capped at about 100 to 110 million.
So, suddenly a 30 million pound player on a long contract is a lot more expensive under these rules.
The conclusion is we are going to struggle to bring in top players for a season or two. We are going to have to look at younger, lower wage players with potential, and really be creative on sell-to-buy and loan strategies.
So interested to hear everyone’s opinions on this little AI analysis.
But the moral of the story is – if you are waiting on us bringing in big name stars and coaches – you may have to wait quite a while longer.
May the whining begin.