Another Reason Why I’m Against Stadium Sales Reducing FFP Losses
To further highlight the stupidity of the EFL’s change to FFP Profit and Sustainability Rules, consider this:
The stadium sale rules apply to training grounds as well in exactly the same way; they are banned from reducing FFP losses by UEFA but allowed under the EFL’s latest interpretation.
Let’s imagine a Championship Club in the north of England. Let’s imagine they buy a derelict piece of land from the local council; land that has lain unused for over 13 years because the council cannot afford to change it, land that is earmarked for sports use and is not attractive to developers, land that is in a run-down area.
Let’s imagine that Club buys the land for, oh let’s say £1m for illustration.
Let’s now imagine that planning permission is achieved to build a world-class training ground on the site; the value goes up accordingly.
Let’s say developers who own land in the surrounding area get planning permission to build new houses and massively improve the area for residents. The council are delighted.
Again, the value of the training ground increases substantially.
Now imagine that Championship Club gets an independent valuation saying the land with its new planning permission, sitting in a newly developed, vibrant community is worth £21m.
That Championship Club then sells the land to a group subsidiary located in Singapore and banks £21m cash and wipes out £20m FFP losses.
Now lets imagine that Championship Club builds a new training building at a cost of, oh let’s say £5m for illustrative purposes.
As any builder or property developer will tell you, a finished building is worth much more than it costs to build – that’s how they make their money, after all.
So the Championship Club gets a valuation for the finished training ground of £60m and sells the whole training ground to their group subsidiary located in Singapore.
This books a further £55m profit and instantly wipes out £55m of FFP losses.
Remember none of this complies with UEFA rules nor with the principles of FFP but is now fully allowed by the EFL.
This Championship Club gets a distinct advantage over other clubs and can spend massive amounts of money on players, making huge losses at the same time and gets NO SANCTIONS because the EFL have allowed them to book an extraordinary abnormal income as profit against FFP.
Other clubs in the EFL might complain that the EFL have created a distorted financial market and a sporting event that is not equal and fair to all.
They can complain all they like though because Derby County, Sheffield Wednesday and Aston Villa have all set the precedent.
In my opinion this change by the EFL is a stupid, flawed idea.
If the EFL want to prevent a free-for-all and a complete erosion of the principles of FFP then they MUST immediately withdraw the approval given to these three clubs and immediately issue them with the sanctions that FFP dictates.
Mike Thornton – 20th September 2019