Football Finance

[Judge Jules]

This was admittedly some time ago, but I remember reading somewhere that FSG have quite a bit more invested in LFC than they do in the Red Sox. Given the way this season's panning out, they must surely be considering whether they need to amend their financial approach in order to protect an investment on that scale. I'm hoping this is why they've been looking for more inward investment into the club themselves.

 

[darkstarexodus]

I see… sone sort of soft salary cap, by the looks of it, where you can breach it, you just get taxed more.

So, the Red Sox appear to be keeping just under the cap, while other teams, like the Mets are paying loads more.

I’m sure it’s more nuanced than that - maybe one of our US based posters can explain better.

Yes, that's essentially it. You can spend up to a certain amount, beyond that you keep spending but get penalized financially, with the excess "tax" being distributed among the lower revenue teams.

[article]
Each year, clubs that exceed a predetermined payroll threshold are subject to a Competitive Balance Tax -- which is commonly referred to as a "luxury tax." Those who carry payrolls above that threshold are taxed on each dollar above the threshold, with the tax rate increasing based on the number of consecutive years a club has exceeded the threshold.

A team's Competitive Balance Tax figure is determined using the average annual value of each player's contract on the 40-man roster, plus any additional player benefits. Every team's final CBT figure is calculated at the end of each season. (Note: If a player signs a contract extension that doesn't kick in until a later season, his AAV for the purposes of the CBT doesn't change until the new deal begins.)

A club that exceeds the Competitive Balance Tax threshold is subject to an increasing tax rate depending on how many consecutive years it has done so.

First year: 20 percent tax on all overages

Second consecutive year: 30 percent

Third consecutive year or more: 50 percent

If a club dips below the luxury tax threshold for a season, the penalty level is reset. So, a club that exceeds the threshold for two straight seasons but then drops below that level would be back at 20 percent the next time it exceeds the threshold.

There’s also a surcharge threshold for clubs that exceed the base threshold by $20 million or more.

$20 million to $40 million: 12 percent surcharge

$40 million to $60 million: 42.5 percent surcharge for first year; 45 percent for each consecutive year after that

$60 million or more: 60 percent surcharge

Clubs that are $40 million or more above the threshold shall have their highest selection in the next Rule 4 Draft moved back 10 places unless the pick falls in the top six. In that case, the team will have its second-highest selection moved back 10 places instead.
[/article]

[article]
The Commissioner's Office then redistributes this money in a standard manner. The first $13 million will be used to defray clubs' funding obligations under the MLB Players Benefits Agreements. Of the remaining sum, 50% of the remaining proceeds collected for each Contract Year, with accrued interest, will be used to fund player compensation as described in the MLB Players Benefits Plan Agreements and the other 50% shall be distributed to clubs that did not exceed the Base Tax Threshold in that Contract Year.
[/article]

This is the model I believe best fits football. Allows the rich teams to keep spending but they're penalized for disrupting the level playing field by funding the other teams in the league/pyramid.

 

[bluebell]

This was admittedly some time ago, but I remember reading somewhere that FSG have quite a bit more invested in LFC than they do in the Red Sox. Given the way this season's panning out, they must surely be considering whether they need to amend their financial approach in order to protect an investment on that scale. I'm hoping this is why they've been looking for more inward investment into the club themselves.

Theg bought the Redsox in 2002 for $380m, the club has a turnover of $479m in 2022.
Their payroll is $198m if I read it right.
LFC turns over much more, but has way higher costs including wages.

 

[King Binny]

 

[bluebell]

When you tot up the basic salaries of Liverpool players you get about £150m but the amount the book shows is double that. Now it's one of two things, FSG has agreed very generous bonuses or FSG is taking large amounts out as salaries?
If it is the former, then fans need to talk about player greed. A player is almost doubling his enormous salary through bonuses.
PSG should be punished for their breaches

 

[MomoWASright]

I believe Director remuneration is separate in the accounts and not included in the salary section. All that you can take from the salary section of the accounts is playing and management. Maybe Beamy can confirm.

 

[Beamrider]

I believe Director remuneration is separate in the accounts and not included in the salary section. All that you can take from the salary section of the accounts is playing and management. Maybe Beamy can confirm.

Director's pay is included in the overall salary numbers in the accounts, but it also has it's own separate section with a bit more detail - ie "wages and salaries includes the following figures for the directors..."
My read on the directors disclosures in the accounts is that the FSG directors aren't taking any fees, all of the money seems to be going to the UK based guys who are working full time for the club. I'd guess the staff salaries account for £35-40m of the total (this will include match day stewards and catering staff), all the rest will be going to players and coaches (NB probably includes player share of agent fees as well which will add £20m+ every year).

 

[Red Bird]

Why is it clubs that have to pay agents’ fees?

 

[MomoWASright]

Why is it clubs that have to pay agents’ fees?

It’s always been a bug bear of mine.

 

[bluebell]

Why is it clubs that have to pay agents’ fees?

Because players won't. UEFA wants to cap it, but so far I've seen no progress on it.
We speak about owner greed, but player's are making before tax £15-30m before tax. My guess is if we don't make top 4, salaries bill will not fall by much

 

[Hyena]

Wow how much are they paying him? He could just do a Delle Alli for the next ten years and he'll still be made for life

 

[Red Bird]

Wow how much are they paying him? He could just do a Delle Alli for the next ten years and he'll still be made for life

Or, closer to home, Winston Borgaarde.

 

[Beamrider]

Why is it clubs that have to pay agents’ fees?

Because they don't have the collective bollocks to tell the agents where to get off, and that's because they need agents to help them break the rules on transfers with impunity.

 

[darkstarexodus]

Why is it clubs that have to pay agents’ fees?

Yeah, I don't get it. In North American sports, the players hire agents to get them good deals. Agents are paid by the player, which is rational. I literally do not understand why it's different in football.

 

[Red Bird]

It’s always been a bug bear of mine.

And Liverpool seems disproportionately to shell out huge amounts to agents.

 

[Beamrider]

Yeah, I don't get it. In North American sports, the players hire agents to get them good deals. Agents are paid by the player, which is rational. I literally do not understand why it's different in football.

It all comes out in the wash. You make the players pay, then tbe agent gets them a higher salary to make up the difference - the club still ends up paying one way or another, that's basically what happens in US sports.
The issue isn't the mechanism, it's the size of the fees. When I started out, the fee was 5% of guaranteed salary over the term of the contract. It's typically more than double that now.

 

[peekay]

It all comes out in the wash. You make the players pay, then tbe agent gets them a higher salary to make up the difference - the club still ends up paying one way or another, that's basically what happens in US sports.
The issue isn't the mechanism, it's the size of the fees. When I started out, the fee was 5% of guaranteed salary over the term of the contract. It's typically more than double that now.

It doesn't make sense why we need agents in the modern day. Standard contract negotiation templates should be available. If the agents and clubs have sense, they should get together and split that money. Everyone wins. For example, there are no agents in the IPL or for that matter any form of franchise cricket. It could very well be the case that the absence of agents is because franchise cricket is a new game.

 

[peekay]

And Liverpool seems disproportionately to shell out huge amounts to agents.

I read somewhere that is a strategy of ours. Under Edwards, we started cultivating very good relationships with the agents which has helped us get players.

 

[Red Bird]

It doesn't make sense why we need agents in the modern day. Standard contract negotiation templates should be available. If the agents and clubs have sense, they should get together and split that money. Everyone wins. For example, there are no agents in the IPL or for that matter any form of franchise cricket. It could very well be the case that the absence of agents is because franchise cricket is a new game.

I think most footballers-- not all mind-- are borderline innumerate (and not very literate either.) They need agents full stop. I remember during one of [numerous] Rooney's trials where he pretty much admitted that he (and his family) would be lost without Paul Stretford.

 

[Beamrider]

It doesn't make sense why we need agents in the modern day. Standard contract negotiation templates should be available. If the agents and clubs have sense, they should get together and split that money. Everyone wins. For example, there are no agents in the IPL or for that matter any form of franchise cricket. It could very well be the case that the absence of agents is because franchise cricket is a new game.

Most cricketers don't get themselves in the kind of trouble where they need an agent to bail them out by paying off underage girls or whatever..
And clubs need them to bend the rules - can't speak to a player under contract but nothing stopping you speaking to his agent.

 

[bluebell]

Fifa is capping it.
https://www.sportspromedia.com/news...ext=A cap on all service,a player and a buyer.

 

[Red Bird]

About time, too.

 

[King Binny]

 

[darkstarexodus]

What on earth for?

 

[tombrown]

So they can continue to "sell out" every week and balance the books. Not their fault if 30000 fans who buy tickets, with Saudi dollars, decide not to turn up on the day.

 

[bluebell]

Chelsea need to sell. As long as there is no other clubs going in for Mount, we probably could get him for £40mish
[article]
Chelsea face a major summer clearout in a bid to comply with the Premier League’s Financial Fair Play regulations, it has been reported.
The Blues have embarked on a major spending spree since Todd Boehly arrived at Stamford Bridge, but after recording losses of £121million for last season, several players could be chopped.

GETTY
3
Mason Mount is one of many Chelsea stars that could leave this summer
The Times report that after splashing out nearly £600m on player sales over the past two transfer windows, the west Londoners must find a way to balance the books – given the expectation they will miss out on Champions League football.
Graham Potter’s side are tenth, 11 points off the top four and face Real Madrid in the Champions League quarter-finals, so there might be a huge drop off in European revenue.
The transfer spending and the new players’ wages can be spread out over an extended period of time by a process known as amortisation.
But the money Chelsea have spent is significant and will leave the club close to the maximum loss of £105m over three years, according to football finance expert Kieran Maguire.
This three-year period currently includes the 2019/20 season but will soon be replaced by the club’s financial figures leading up to June 2023.
And Maguire suggested Boehly and co could sell players in an effort to comply with the top-flight’s rules.

“The one thing Chelsea have in their favour is that they have a very large squad, so they are in a position to raise money by selling players in the summer,” Maguire explained. “We have already seen speculation about Mason Mount and Conor Gallagher being sold.”
However, it’s understood if Chelsea are to use any money from player sales this summer in their current accounts, they must be sold by June 30.
But given the 2022 summer transfer window opened on June 10 last year, that doesn’t give the Blues very long to act.
Chelsea will be keen to avoid a similar charge to what has been presented against Everton. However, they might argue that last year’s government sanctions had an impact – to prevent any Premier League punishment.
The west-London based club were placed under a special license after former owner Roman Abramhovich was sanctioned for his reported links to Russia’s president Vladimir Putin.
Under the license, Chelsea were restricted in several areas, including selling tickets, accepting event bookings and signing contracts with players.

AFP
3
Chelsea might argue the restrictions linked to Abramovich impacted their ability to comply with FFP
Those restrictions were lifted at the end of May when Boehly’s consortium agreed a takeover and began pumping money into the club.
But the Blues might still try to claim the government license has impacted this season.
Chelsea recorded a profit of £123m from player sales for the previous year, but increased wages, lower Champions League income and the COVID pandemic saw those profits wiped out – leaving the Blues in a tricky situation.

[/article]

 

[MomoWASright]

[article]
The Premier League is likely to make an extra 60 matches available for television amid efforts to squeeze more money out of broadcasters in the next domestic auction.

A shake up in the tender process is being discussed, according to multiple sources, some of whom predict "meatier" packages of games to be made available to Sky and rivals.

Potential bidders also firmly expect the number of available games to increase significantly from 200 to at least 260 of the total 380 matches each season.
Two leading TV executives also believe the overall number of options will be reduced from seven "packs". One claimed just four could be made available to drive up the price of each individual package although others expressed doubt.

Reducing the options could make it harder for Amazon Prime to remain a rights-holder unless it bought a significantly bigger chunk of games.
Sources close to the auction process expressed caution at the claims but declined to comment on the possibility of increasing the number of matches. The tender document remains a work in progress, and there may yet be more change before it is shared potentially in October. Whatever is decided by the auction in the autumn, there have been assurances that the 3pm Saturday blackout will be protected.

However, valuations will be a major unknown for England's top tier as domestic valuations have gone untested since February 2018 when an initial £4.5bn deal was agreed. Amazon has since come to the market and a three-year rollover in cycles at a price closer to £5bn was agreed midway through the pandemic.

BT Sport - the main rival to Sky - becomes TNT Sports in July following its buy out by Discovery and they are likely to remain a major bidder. Under the current rolling deal due to expire in 2025, the 200 available games are split into seven packages shared between Sky, BT and Amazon. Sky Sports dominated the current UK cycle, with four sets of rights, equating to 128 matches per season. BT Sport — soon to be TNT Sports - owns two packages - one for the Saturday 1230 kick offs and the other for two midweek rounds. Amazon bought one package, which allows its Prime service to broadcast one set of Bank Holiday Christmas fixtures and a set of midweek fixtures.
Since 2016, domestic rights have largely plateaued but record Premier League revenues have been buoyed by a booming overseas market. NBC signed a £2billion agreement in late 2021 to exclusively show the Premier League to its audience in the US alone. The overseas market is now estimated to be worth in excess of £5bn to clubs.

[/article]

 

[bluebell]

[article]
The Premier League is likely to make an extra 60 matches available for television amid efforts to squeeze more money out of broadcasters in the next domestic auction.

A shake up in the tender process is being discussed, according to multiple sources, some of whom predict "meatier" packages of games to be made available to Sky and rivals.

Potential bidders also firmly expect the number of available games to increase significantly from 200 to at least 260 of the total 380 matches each season.
Two leading TV executives also believe the overall number of options will be reduced from seven "packs". One claimed just four could be made available to drive up the price of each individual package although others expressed doubt.

Reducing the options could make it harder for Amazon Prime to remain a rights-holder unless it bought a significantly bigger chunk of games.
Sources close to the auction process expressed caution at the claims but declined to comment on the possibility of increasing the number of matches. The tender document remains a work in progress, and there may yet be more change before it is shared potentially in October. Whatever is decided by the auction in the autumn, there have been assurances that the 3pm Saturday blackout will be protected.

However, valuations will be a major unknown for England's top tier as domestic valuations have gone untested since February 2018 when an initial £4.5bn deal was agreed. Amazon has since come to the market and a three-year rollover in cycles at a price closer to £5bn was agreed midway through the pandemic.

BT Sport - the main rival to Sky - becomes TNT Sports in July following its buy out by Discovery and they are likely to remain a major bidder. Under the current rolling deal due to expire in 2025, the 200 available games are split into seven packages shared between Sky, BT and Amazon. Sky Sports dominated the current UK cycle, with four sets of rights, equating to 128 matches per season. BT Sport — soon to be TNT Sports - owns two packages - one for the Saturday 1230 kick offs and the other for two midweek rounds. Amazon bought one package, which allows its Prime service to broadcast one set of Bank Holiday Christmas fixtures and a set of midweek fixtures.
Since 2016, domestic rights have largely plateaued but record Premier League revenues have been buoyed by a booming overseas market. NBC signed a £2billion agreement in late 2021 to exclusively show the Premier League to its audience in the US alone. The overseas market is now estimated to be worth in excess of £5bn to clubs.

[/article]

An NFL team make $300m/year. The NBA is negotiating a deal worth $75bn or $8bn annually.
Huge jumps in US Sports TV rights.
I wonder how long before football decides to have 5 mins breaks every 15 minute's to boost it's coffers?

 

[tomasjj]

money laundering

 

[King Binny]