Yahoo News Stoke City stance on Financial Fair Play as six Championship clubs lobby for major rule changes
The football news pages this week are being overtaken by Financial Fair Play, or Profit and Sustainability, or just plain trying to live by the rules and whether they are right as Manchester City make a legal case against the Premier League.
There are three of four strands to this which are particularly significant to Stoke City, even if they have just finished in the bottom half of the Championship. The club is in something of a financial straitjacket despite having some of the richest non-state owners in football, desperate to invest, as highlighted by this week’s announcements about infrastructure, which don’t count towards FFP calculations.
That’s not to say that Stoke didn’t make the most of opportunities when they had them, particularly in the summer of 2018, fresh from relegation but with parachute payments in their pockets.
But it is accepted that the chasm between the top flight and the Championship is one of the biggest issues that needs addressing – and Stoke have been lobbying to address it even while they were in the Premier League themselves. This week could be a milestone in the whole argument.
So here is the current state of play, Stoke’s stance and why everyone will be watching the outcome of Man City’s unprecedented compensation claims.
READ MORE: Bae Junho runs away in interview as he makes admission about Son Heung-min
READ MORE: Smaller squad, Bae Junho's 'top level' potential and obvious transfer target
The financial chasm between Premier League and Championship
As it stands, Stoke are allowed to lose up to £41.5 million over a rolling three-year period in the Championship. In brief, those losses do not include spending on things like the women’s team, academy, stadium and training ground.
It might seem like a lot but it pales in comparison next to the clubs they are trying to compete with who have just fallen out of the Premier League – or the clubs in the bottom half of the Premier League who could be feasibly described as peers of Stoke or West Brom, Middlesbrough or Norwich or the like.
The difference in television money and how that is shared means it’s a guaranteed income of at least £100m for a team finishing 20th in the pyramid, less than £10m for the team in 21st.
Parachute payments were introduced in 2006 to try to soften the blow of relegation. Teams receive 55 per cent of what they would get from Premier League television rights in their first year down, going to 45 per cent in year two, 20 per cent in year three and then nothing. Research has shown that clubs receiving parachute payments are three times more likely to be promoted.
The EFL has been pushing to scrap parachute payments and introduce a different redistribution of media revenue. There have been talks about a £900m payment from the Premier League to the lower leagues but they have stalled.
Stoke’s stance on Financial Fair Play
Sporting director Jon Walters has been clear this week that being able to spend big money in the transfer market is not a panacea in itself.
That is not the same as saying that he and the club agree with the current rules to limit spending.
If there is an argument that investment should be capped across the board to prevent another Derby County situation, when money was spent that the club couldn’t afford, there is a counter that there are other owners who can afford to spend more than is currently allowed and still pay the bills.
There is frustration that there is a two-tier structure in the Championship. The Coates family would like to at least be allowed to put into Stoke what the Premier League, as a third party, is putting into the three relegated clubs every year.
Walters said: “We’re restricted in terms of what we can invest into the team. The owners would want to go more in and invest heavily into the team but at the moment they’re restricted. We can still improve facilities at the moment and then, are the rules going to change? In my opinion they should anyway. Owners like this are not going anywhere.
“We know why the rules exist but it protects the top teams. In the Championship, you’ve got a third party injection straight into the three teams who come down (in parachute payments). We had that before and it’s an unlevel playing field in this division. When you have owners who want to match that investment in their own club and they’re not going anywhere then they should be able to do it.
“When you look at League One then the rules are completely different again. Ipswich came up and had a three-year cycle to spend big (if they wanted) to try to go up.
“There’s got to be something where it just makes it a little bit more of a level playing field. I do think they’ll change. They have changed slightly this year (going from £39m allowable losses over three years to £41.5m) and whether they change again next year or whether they will be gone...
“I know that benefits me! But in any other business or industry, if you have owners who want to invest without bankrupting the business – and they could actually guarantee money for the club and for the staff – then they would be allowed to do it.”
‘Crunch EFL meeting’ about the rules
The Telegraph reports that the EFL will meet in the Cotswolds on Friday to vote over proposed new spending rules.
It is claimed that Leeds, Hull City, Stoke, West Brom, Swansea and Cardiff are understood to be leading the charge to ease restrictions on spending amid ongoing frustration at the lack of any new financial deal between the EFL and Premier League.
It is reported: “One of the preferred proposals is to mirror Uefa’s newly introduced 70 per cent squad ratio for the 2025-26 season, though sources claim other alternatives will be discussed.
“Senior Championship officials will meet in the Cotswolds on Friday to discuss what is now a very hot issue, with a two-thirds majority required from the 24 clubs to trigger a vote.”
The EFL stance on 'the cliff edge'
EFL chairman Rick Parry continues to hammer home the importance of an agreement between the Premier League and the rest, addressing ‘the cliff edge’ between the top two divisions.
Thus far, however, there are no signs that an agreement will be reached – and although there is hope that a new independent regulator could break the impasse, the Football Governance Bill was not passed before the General Election. The Football Supporters Association appealing for both Conservative and Labour to pledge in their manifestos to implement the previously proposed bill.
Parry told the Sports Agents podcast this week: "I’m both fearful and optimistic. I am an eternal optimist, which is why I took the role at the EFL. The pyramid really matters but if we want to preserve it then we do have to change a few things. That’s been my purpose over the past four or five years and we’ve had various attempts.
"We’ve embraced the fan-led review and said, this has to be a catalyst for change. When I was first involved in the Premier League deal, the turnover of the Premier League - not the clubs the actual limited company in the first year was £45 million, whereas in the Football League it was £34 million - a gap of just £11m. Now, the gap has gone from £11m to £3 billion.
"It was never the intention to leave the Football League behind. The gulf is bigger than ever, and we have one primary concern, that is: the cliff edge - the gap between the bottom of the Premier League and the top of the Championship. Now, certainly for the none-parachute clubs, that figure is £100m and is an incredibly difficult bridge to gap.
"What we’re saying is, we’re all for sporting jeopardy - that’s what the game is. But what we need is sporting jeopardy without financial catastrophe, and that means on the way up or the way down. What we want to do is half the cliff edge so that clubs aren’t at the risk of busting themselves when they do go up.
"We think the parachute is just a completely bogus solution. We’ve got three clubs with wage budgets of £60-80m and the others are bouncing around at roughly £20m. How are they supposed to compete? The answer is, they can’t.”
Premier League clubs wait on Man City verdict
Manchester City’s legal dispute with the Premier League is making their top flight rivals drag their feet even more about any settlement with the EFL, says The Times.
Man City want to scrap rules that limit how much companies linked to club owners can pay in sponsorship. Their hearing will start on Monday and is expected to last a fortnight.
It is reported: “Senior Premier League club sources are also citing City’s legal claim as one factor in their failure to agree on a deal vital to the financial future of the 72 clubs in the three divisions below the Premier League, despite pressure from the government and a new £6.7billion top-flight domestic broadcasting deal.”
Up to 12 clubs have apparently provided letters or witness statements in support of the Premier League against Man City, champions for four years in a row who are being charged with 115 breaches of profit and sustainability rules.
But the Daily Mail claims there are at least three others who will side with Man City, suggesting that will be Newcastle United, Chelsea and Aston Villa.
