Aston Villa and FFP.
There has been much talk recently about Aston Villa’s finances and how they are thought to be close to failing FFP rules next season. Since they lost the play-off final last night I’ve had a quick look at the truth behind the hype.
Calculating FFP
There are two great problems for fans looking at FFP: One is that accurate financial data is only ever available for the previous season and the other is that FFP uses different data to that shown in the official accounts.
FFP calculations ignore certain costs and so any FFP losses tend to be less than shown in the club’s accounts. Exactly how much less is rarely disclosed in an easy to read way and so we can only make estimates or delve deeply into accounts.
3 years FFP needed
However, what we are interested in here is a three-year analysis of Aston Villa’s accounts. We need to look at their last season in the EPL, their first season in the EFL (both of which we have club accounts for but not FFP accounts) and then we need to estimate what their accounts will be for this season.
I won’t go into detail, but my analysis shows that they probably made an FFP profit in EPL, a small loss last year and an FFP loss over £30m this season. When added together they do not exceed the FFP limit and so haven’t broken the rules this season.
Next Season FFP
However, the picture is much different for next season.
To decide if they will have a problem next season we need their FFP losses for last season, an estimate of losses for this season and then guess what they could do next season.
When I look at this and assume they just carried on next season as they have this season, without any major changes, I estimate their total FFP losses will be about £100m.
Major FFP fail
Since the losses can only be £39m they must take action or face fines or embargoes next season, they could even be denied promotion, even if they finish top, if their FFP losses remain at £100m.
My “do nothing” data is shown below but for them to get back inside FFP rules they will need to save £60m – yes, £60m – either by selling players at a profit or by cutting wages or a combination of both.
Consequences
As always, being a Leeds United fan I know how much damage cost cutting can do. It is a salutary reminder to we Leeds fans that overspending to reach the stars can result in an awfully hard bump if you fall short.
Action
I wish Aston Villa and their fans a good summer, but the indications are there is some nasty pain to come. They can act now and avoid FFP sanctions but maybe it would have been better, with hindsight, to have acted more like businessmen and not to have over-stretched themselves this season?
Broad Brush Estimated Data
Mike Thornton 27th May 2018