Hammers on FFP watchlist
This is what the UEFA FFP watchlist means for West Ham.
UEFA’s FFP new regulations are even stricter than those in the English Premier League. The allowable losses are just over £50m (or 60m Euros), compared to £105m in the Premier League.
West Ham lost £65million in 2020 and £26.5million in 2021.
The Irons then made a £10.5million in 2022 but the rolling losses total £81million, which is around £30million over the limit.
West Ham’s financial performance means they start next season on UEFA’s watchlist for FFP.
The Financial Fair Play (FFP) impact for players is a result of asset depreciation. Every year, a player loses value equal to 1/the length of their contract. So if you give them a five year contract they lose 20%, if you give them a 10 year contract they lose 10%. That is a loss that’s counted for FFP.
So in order not to fall foul of FFP, we have to be far more savvy in the transfer department and now that we have Tim Steidten, hopefully we are in safe hands.
Somewhat strangely, it appears that if we do get fined it would only relate to income the Hammers have generated in European competition.
That depreciation system makes no sense. It means that a player depreciates less and less, the older the player gets😅
It is something called amortisation, it is an accountancy protocol (beloved of UEFA) which is the action or process of gradually writing off the initial cost of an asset.
Much like when you buy a new car, once you first sit in it and turn the ignition key, you have already lost a couple of grand or so.
Yep, I get amortisation – however that accounting principle only makes sense when the asset will depreciate in value. Your example of a new car makes complete sense, as the car will never “get better,” or increase in value when it ages (some exceptions for veteran cars etc.).
However – amortisation for a football player would only make sense once the player is on top, or past, hi/her peak. Take Jarrod Bowen as an example (numbers might not be 100% correct). Signed in 2020 for £20 million on a 5 year contract:
2021: 20m -20% = £16m
2022: 16m – 20% = £12.8m
2023: 12.8m – 20% = £10.24m
In this case, we will have recorded a (n accounting) loss of £9,76m – when we would Bowen is obviously worth more than £10,24m now.
I don’t know if I’ve lost myself in my own head by now, but see where I’m getting at?
For the record: By no means attacking you post or statements – just that FPP is flawed hehe
Totally agree with you. The whole concept of FFP is laudable but it when you try to apply it , it is fundamentally flawed
Simon – very interesting. Has UEFA paid any attention to the impact of COVID during those two years during which players were paid, but income dropped? Wouldn’t every club have made a loss in 2020, thus isn’t it fair to increase the limit on losses to reflect that, with a gradual return to normal levels over the coming 5 years or so?
Post-pandemic, after losses of around 8 billion euros, European football simply could not afford to put in rules that overly penalised spending so they suspended them for two years. But they are well and truly back now and will be revised yet again, next year