I am feeling a bit tender from the best weekend of the year weather-wise. Two days spent out in the sunshine drinking quickly takes its toll at my age. A mixture of sunburn and over consumption (food and alcohol) is taking its toll this morning!
I have no issue with clubs selling youth products at inflated prices, and then buying youth products at equally inflated prices to try and create a short term balance of the books. All this does is kick a huge amount of debt down the road.
These badly run clubs are struggling to make ends meet now. these sort of deals are short term and will just lead them to breach the rules further down the line.
I am laughing at the fans celebrating “getting one over” the Premier League, not realising that these deals merely paper over the cracks and increase the likelihood of issues for seasons to come. It is basically like taking out a loan because you are struggling to pay the mortgage.
If you support another club, are reading this blog and have spent your weekend on social media talking about these deals in a positive mind-set, please educate yourself. These deals are not a loophole, they are not something to be celebrated. They just move a problem from 2024 to 2025 or 2026.
At the weekend I also had a giggle over Everton fans welcoming a bid from Newcastle United for Dominic Calvert-Lewin. if it was Arsenal, Manchester United or Liverpool bidding for their star striker, they would be moaning about PSR forcing them to sell and the “Red Cartel”. But as it is their “friends” at Newcastle, they have no issue selling.
It just shows that everything is just posturing and the attack on “bigger” clubs is just a deflection tactic to take away the attention from their badly run clubs.
The narrative of PSR is always that “it stops clubs competing”. But this is not true. What it actually does is dramatically reduce the risk of clubs going into administration due to owners signing cheques they know they can not pay.
PSR is needed to protect the future of clubs. I am sure if the rules did not exist, Everton would have already entered administration. Aston Villa, meanwhile, with their 80% wages to turnover, would have quickly become the “new Leeds”, bankrupting the club for future generations in an attempt to spend their way up the league.
In the 10 years since PSR / FFP came in, just 6 English clubs have gone into administration. In the 13 years previous, 44 clubs went bust!
You get fans of Newcastle complaining that PSR stops their oil rich, sportswashing Sheikhs bank rolling them to success. But I would rather Newcastle’s spending being restricted and them forced to build naturally, then return to a situation where we were losing 3 or 4 clubs a year to administration.
The issue we arrive to is fans want their clubs to be able to spend what they want, regardless of the long term damage it might to do their club. And it is very short sighted.
What we have learned over the last few months is many fans do not care about the long term survival of their club. They are happy their owners bankrupting their future on the off chance of short term success.
And the irony is, if they got rid of PSR, it would not make the likes of Everton, Aston Villa or Nottingham Forest ore competitive. They would still be the paupers in comparison to Manchester City and Newcastle United who could spend even more! And then their fans will be moaning about an uncompetitive league with state sponsored clubs ruining things!
My final thought is be careful what you wish for.
I always remember Everton fans celebrating when Moshri became owner. About how he would be financed by Usmanov and Everton would become a force to be reckoned with again. A few years down the line and after overspending by hundreds of millions and run poorly, the club is on the brink of administration.
Fans need to stop wishing for short term solutions. The only way to sustain success in football is by having a long term plan.
Enjoy your Monday!
Keenos
Updated 21st June.
She Wore Stuff Hoilday map 2024
Please post a picture on here, with where you are or have been this summer with stuff from https://t.co/DYtSIZ36ia
Aston Villa close on signing Ian Maatsen after agreeing terms on six-year deal Aston Villa forward Jhon Duran ‘excited’ to complete Chelsea transfer
Chelsea looking to sign Jhon Duran for around £40m, whilst Aston Villa pursue Ian Maatsen in a deal worth around £37m has raised a few eyebrows considering both clubs were on the list of “needing to sell” by the end of the month to avoid breaching Profit and Sustainability Rules.
How can they spend without selling first was a common comment under social media posts providing updates on the deal as many scratched their head. But what both clubs are looking to get out of their PSR predicament by scratching each other’s backs.
When you sell a player, 100% of the book profit goes straight into the accounts – the book profit being the difference between what you sell for minus what you still have remaining in amortised transfer fees.
But when you buy a player, you only need to account for 20% of their transfer fee if they are signing a 5-year deal.
Duran was signed in January 2023 by Villa for £14.75m. They have around £10m remaining in amortised transfer fees. If they sell for £40m, they then show a book profit of £30m. That is probably more than enough to keep them out of trouble with PSR.
Ian Maatsen has come through Chelsea’s youth system, so the £37m rumoured transfer fee would be 100% book profit.
Working the deals the other way (based on 5-year deals), Duran will cost Chelsea £8m a year, and Maatsen £7.4m to Villa.
For the 2023/24 accounts, the difference between Chelsea selling Maatsen and buying Duran is £29m, whilst Villa’s side of the deal will show a net £22.6m. These figures might be enough to ensure neither club falls foul to PSR for this year.
To make it clear, what they are doing is not a loophole, nor is either club twisting the rules. But it is the sort of transfer merry-go-round we will begin seeing clubs partake more in.
If you and another club are close to breaking PSR, instead of “having” to sell a star player to stay within the rules, you could just do a deal with another club in a similar situation for a “player swap”. But instead of just swapping players, you assign a fee to both.
At its extreme, you could both pick a 20-year-old academy graduate that you no longer really want, and sell them for £100m. Neither club is really spending anything as you are bank-transferring £100m across and then receiving £100m back. But what you are then doing is adding £100m profit to this years accounts.
Back in 2020, Juventus signed Arthur Melo from Barcelona on a five-year contract for €72m. “Going the other way”, Miralem Pjanić joined Barcelona from Juventus for €60m. The huge fees ensured that both clubs did not breach UEFA FFP rules.
The issue with this tactic is it is very short term.
Whilst you are adding £100m to your accounts for this year (based on if 2 clubs decide to push the situation to the max), it then adds a further £20m to a clubs amortisation costs for the next 4 years. That is money they then need to find. And whilst they could continue repeating the trick, each time you do it adds more to your costs for a player you might not really want.
And this is where a lack of knowledge comes in.
If Aston Villa, Chelsea, Everton, Newcastle or Nottingham Forest do this sort of deal together, their fans will celebrate “getting one over” the Premier League, not realising that they are not really solving the fact that their club is badly run.
I think we will see more of these sort of deals over the next few years. Aston Villa are this morning getting linked with Everton’s Lewis Dobbin. Do not be surprised if you see someone like Jacob Ramsey go the other way.
These sort of deals are a move of desperation. They are short-term. The footballing equivalent of taking out a pay day loan. They are not something a serious club would do.
Like Chelsea offering extreme long term contracts to bring down the amortisation costs, these sort of transfers are perfectly fine. But there is a huge downside that should be clear and obvious to all.
Badly run clubs need to come within the rules by ensuring their books naturally balance, and not by relying on selling hotels, training grounds or involving themselves in transfer merry-go-rounds. All of these are short term solutions and will just kick the can of debt and punishment down the road.
Yesterday it was leaked that 6 clubs were at the risk of breaking Profit and Sustainability Rules, and might have to sell before 30 June to avoid breaching them.
Chelsea, Newcastle, Aston Villa, Everton Nottingham Forest and Leicester City were the 6 clubs named. And as expected, fans of the clubs (alongside Manchester City fans) blame the rules their clubs signed up for, and the “Cartel 6” – their pet name for the “Big 6”.
Oddly, they include Chelsea as part of that Big 6. But the West London club are one of those facing punishment.
The truth is, these clubs are not being punished for being ambitious. They are being punished for being badly run. The Badly Run 6.
Everton – Last season Everton were hit with 2 points deductions, so it should be no surprise they are on this list.
Whilst their fans followed their red brothers and sisters and played the victims, the truth is they are the worst run Premier League club since Leeds United. And a perfect example as to why PSR is needed.
When Farhad Moshiri became major shareholder in Everton in 2016, their fans rejoiced. The expectation was he was a front for oligarch Alisher Usmanov and the Uzbeki would bankroll them to success.
Huge early spending was financed by sponsorship deals linked with the former-Arsenal owners companies. But huge money signings did not translate to success on the pitch.
Everton have continued to balance the books and, with Moshri wanting out, they have been taking out monthly loans from private companies to finance their day to day running.
Everton’s net debt increased to roughly £330m at the end of June 2023 up from £141m a year earlier. And that does not include the £200m they owe 777 Partnerships.
Instead of blaming the Premier League, and pointing fingers at clubs that are run better, they should be directing their anger to their owners.
Without PSR, Everton would be in administrations and plummeting down the leagues.
Chelsea – Is it any surprise that Chelsea are on this list?
Their new owners thought they were being clever, spending close to £1bn over the space of a couple of years, handing out long term contracts to everyone. There is a reason why other clubs never exploited amortisation and only gave out 5-year contracts on average.
The Chelsea plan was clear – to spend huge on young players, give them long contracts to spread out the transfer fee, and then sell academy graduates to balance the books.
Last season they raised £75m by selling Mason Mount, Ruben Loftus-Cheek and Callum Hudson-Odoi. This was topped up by cashing in on the Saudi boom.
It was always known that to stay within PSR, Chelsea would have to continue selling academy graduates and this season they will look to raise funds through the likes of Reece James, Conor Gallagher, Levi Colwill and Trevoh Chalobah.
It is an unsustainable model as it relies on academy graduates the calibre of Mount, James and Gallagher to come through each year, become regulars, and be sold for big money.
Chelsea will be in the “have to sell to buy” for years to come due to the contract situations.
Aston Villa – Villa are being upheld as the team who are “being punished for trying to be competitive; with loads of comments about how they sold an academy graduate for a record British transfer fee and are still in danger of breaching the rules.
There is a bit to unpack on this one, so we will start with Jack Grealish.
For years, any time Liverpool made a big money signing, they justified it by saying “we are just spending the Coutinho cash”, instead of just acknowledging they were a big spending club. Villa is becoming a similar joke with the Grealish money.
Grealish left them in 2021 for £100m. that same summer they signed Emiliano Buendia (£33m), Leon Bailey (£30m), Danny Ings (£25m). £88m and, Bailey aside (when fit), very uninspiring. Reminds me of when Spurs spent the Gareth Bale money on a load of rubbish.
To the above, they then added Lucas Digne (£25m) in January.
In 2022, their fans continued to claim they were still spending the Grealish money as they signed Diego Carlos (£26m) and Coutinho (£17m). A fairly quiet summer was backed up by a busy winter as they signed John Duran (£14.7m), Alex Moreno (£13.2m) and Leander Dendoncker (£13m).
Aston Villa are not in their current position because they have been ambitious, they are in the position because they have bought a load of tripe and wasted that Grealish money. And this is a continuation of what they have done since returning to the Premier League in 2018.
Aston Villa have spent nearly £500m since returning to the Premier League. They are the 8th highest spenders with only the “Big 6” and West Ham United ahead of them. Alongside this, they have consistently had a wage to turnover ratio of 80% – IE they spend 80% of their turnover on wages
Villa have “leapfrogged” other clubs who operate within PSR such as West Ham and Brighton through their spending.
There is a tight line between being “ambitious” and being “wreckless”.
Aston Villa’s owners took the gamble and got Champions League football as a reward. For them the gamble might have paid off. But for many others taking the gamble it does not. Villa could quite easily go the way of Everton if they are unable to sustain their spending.
Nottingham Forest – Like Chelsea and Everton, it should be no surprise these clowns are on this list.
Since promotion back to the Premier League in 2022, Notts Forst have signed 35 first team players. A further 11 have also joined on loan.
The majority of these players came in on short term deals, with sizeable signing on fees. Many have now left for free having seen their contract expire. It is not sustainable to run a club on signing almost a whole squad every summer, and releasing the same amount of players.
They have already been hit with one points deduction, and it will not be a surprise if they are hit with another. A badly run clubs.
Leicester City –The implosion at Leicester City has been on the cards for years.
After their success in 2016, they continued to building a team off the back of the Champions League money and sales that saw them also win the FA Cup and finish top 6 twice. In 2021 there was talk as to whether they had replaced Arsenal as a “Big 6” side.
But they were being quietly propped up by the income from their owners company – King Power. King Power International Group is a Thai travel retail group. They basically own and operate duty free shops across Asia.
When Covid hit, flights were grounded globally. And no flights meant no income for King Power. This is when things started going downhill for Leicester, and also highlights why the Premier League want to protect clubs from having “above market value” sponsorship deals from companies owned by owners.
Leicester City act as a warning to Aston Villa – ambition is not always sustainable and if you recruit players on big wages and do not maintain your league position, the debts will quickly rise.
“Victims of their owners ambition” is how I would label Leicester City’s current predicament. he club continued to gamble, expecting the income to continue rolling in, and it did not.
2 years ago Leicester were relegated. A warning of what could happen if you rely only on owners ambition, rather than running the club well.
Newcastle United – The final club on the list is Newcastle United. I was surprised they are close to being in breach.
Whilst they have spent big since the Saudi’s came in, it felt like they were operating sensibly and working withing PSR – clearly with one eye on the Manchester City case.
Last season they secured Champions League football. This season they have no European football. And that is maybe why they are sailing close to the winds on PSR.
That will be a £50m+ drop in income from 2023/24 to 2024/25. they now have to finance a huge wage bill without any European income.
Are Newcastle a victim of ambition? I would say no. Are they being held back from signing players due to PSR? Probably.
If anyone was to be against PSR, it would be Newcastle. They want to be where Man City are but can not spend the millions that their fellow PetroClub did.
But what is interesting is it is only their fans moaning about PSR, not the owners or management. This makes me think they are happy with PSR and are looking to grow the club sensibly, for generations to come.
Newcastle fans sum up the “fast food culture” that we live in. They want to be bank rolled to immediate success. They are not willing to wait and grow sensibly.
I do not think Newcastle are that badly run. They just have fans who have ideas above their station.
With all of this, it has to be remembered that PSR effects all clubs.
Fans hit out at the “Cartal 6” yet one of those facing punishment is Chelsea.
In January, Manchester United were unable to recruit due to PSR. Arsenal also pulled out of a deal for Mohammed Kudus due to PSR. Liverpool have also face restrictions on what they spend.
It is also nothing new for players to move to bigger clubs, where they will play on bigger stages, earn more money and have a greater chance of success.
I see fans of Everton, Newcastle, Aston Villa and Nottingham Forest moaning that PSR is the reason why they might have to sell Jarrod Branthwaite, Alexander Isak, Ollie Watkins and Morgan Gibbs-White this summer. But none of these were academy graduates.
Was PSR the reason Branthwaite left Carlisle for Everton? Or Isak joining Newcastle from Sociedad? Watkins joined Villa from Brentfod and Gibbs-White moved from Sheffield United to Nottingham Forest.
It seems fans moan about PSR when it is there player looking to move clubs. But when they are signing players nothing is said.
You can not sit their demanding your club sign X, Y or Z player from clubs below you in the league, then cry foul play when a club higher than you signs one of your players.
Chelsea, Everton, Newcastle, Leicester, Aston Villa and Notts Forest are not being punished for their ambition. They are being punished because they are badly run.
Ladies and gentlemen, introducing the Badly Run 6.
She Wore A Yellow Ribbon 