BCFC: FFP Worries

Not long before Birmingham City ensured their safety from relegation from the Championship, rumours broke on Twitter that Blues were facing sanction from the EFL due to breaking Financial Fair Play (FFP) rules.

Finances and BCFC

Chief Sports Writer for the Sunday People Neil Moxley tweeted on Sunday morning that Blues have major problems with FFP. He said that an embargo would be put into place on Monday morning, and that an independent panel would be convened to discuss penalties.

From a personal point of view I think the timing of the tweets was poor considering what was at stake that day, but with matters on the pitch now resolved I feel comfortable writing about it.

As always, I’d like people to remember that where I can cite facts I will, but that I insist people treat with scepticism what I have heard and reported and come to their own conclusions about the potential ramifications.

Are Blues under a transfer embargo?

I do not believe the EFL will make any announcement about an embargo.

I trawled back through Google to look through other teams that have been embargoed recently such as Bolton Wanderers and found that while things such as changes to the structure of the embargo were widely reported, they were not directly announced by the EFL.

Therefore I think it’s going to be difficult to ascertain whether Birmingham City have been placed under a transfer embargo without continually asking the club and/or the EFL for an update on the situation. From past experience with both entities I do not believe either will make a comment on the situation until they absolutely have to.

This is why it is very difficult to understand where Blues actually stand with respect to FFP regulations. The regulations themselves are somewhat Byzantine and difficult to follow – they are published online here for those who are interested.

Since I wrote my piece back in March about Blues potentially having problems I’ve tried to find out what the situation is. I cannot say with any great degree of accuracy that Blues are over limits or not, but the situation as I understand it from speaking to various sources would confirm that Blues are trying to resolve issues with respect to FFP.

What would a transfer embargo entail? Are there any other sanctions?

Should Blues fall foul of the FFP rules then Moxley is right, an independent panel would be convened to determine what penalties the club would face.

From reading the rules, a panel would have the powers to apply devastating sanctions such as points deductions and demotion from promotion places.

However, it is my belief that due to the ramifications of such a penalty the EFL would not apply those without serious cause as it would be fought tooth and nail in the courts – which would cause horrendous issues with respect to sorting out fixtures for the next season.

It’s my belief that IF (and I will repeat, it’s still IF) Blues have broken the limits, then an embargo and fine would come into play.

An embargo is more complex than just not being allowed to sign players. It would affect the ability of the club to offer new contracts to existing players too but it doesn’t mean that Blues can’t sign any player – just that they have to fit into certain rules such as a wage cap of approximately £11,500 per week for a player as a maximum. The full details of what an embargo entails is in the link above for the FFP regulations.

IF an embargo is applied, Blues would remain in that situation until they came back within limits.

How can Blues “fix” an FFP problem?

The idea behind Financial Fair Play is that it is supposed to stop clubs spending money that they don’t have.

Whether it works or not remains to be seen, but the idea is such:

• Clubs will only be allowed to make a certain amount of loss above and beyond what is needed to run the club.
• To prevent the “sugar daddy” scenario, clubs will also only be allowed to have a certain amount of money injected into them by an owner.

This means that to improve the amount of money that Blues are allowed to spend on wages and transfer fees, they have to make more revenue.

Obviously, Blues aren’t the only club who are struggling with this.

Our neighbours across the expressway announced in April that they have sold the naming rights to their training ground to the Recon Group, which of course is the company owned by their chairman Tony Xia.

However, the league are one step ahead of the pack and have as part of their rules the notion that such deals must be done at a fair market value. This is to prevent clubs from selling naming rights at exorbitant fees to inflate their revenues. One must wonder if the League are happy with what the mob at B6 have done.

This would of course hamper Blues if they were to try and do something similar such as renaming the ground “TTA St Andrews” in a bid to stave off FFP sanctions.

When will we know what’s going on?

The sad answer to this question is when we’re told. Blues have previously been embargoed for failing to supply accounts (in March 2012) and in that instance, the club confirmed it in a statement when the embargo was applied.

Until then, the assumption must remain that Blues have no sanctions applied.

This does not mean however that everything is rosy – there is no doubt in my mind that if Blues are not over limits then they are close to them; and as we saw in January, that may mean a transfer window where the chief business is outward rather than inwards.

As much as I think that might worry people, I don’t think it should.

We saw last summer how ripping up the team and bringing in a host of new faces can cause issues.

We’ve seen in the past few weeks that there is talent within the club waiting to step up – and I’m certain Wes Harding is not the only player who can do so.

IF Blues are embargoed, then it might be a chance to pare down some of the wages and to bring through more of that exciting young talent. Is that such a bad thing?

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