West Ham’s huge FFP safety net
West Ham’s huge FFP safety net
Premier League rules dictate that the basic FFP issue is that all clubs must avoid making a loss of more than £105million over a three-year period, once adjusted but West Ham have a huge safety net writes Sean Whetstone.
In Everton’s case, the tribunal found that losses to 2021/22 amounted to £124.5million, almost £20million over that margin which allowed for a ten-point deduction.
The Premier League relaxed the regulations to neutralise the adverse impact of COVID, which means that the 2022 monitoring period assessed the seasons 2019/20 and 2020/21 as a single (average) period. It also means that this period effectively covered 4 years.
West Ham announced losses of -£28.1m in 2020 and -£65.3m in 2021 creating a combined average of -£46.7m loss as one period. That means the 2022 PL FFP monitoring period was 2019-2020 -£46.7m loss plus 2021 loss of -£26.9m and £12.2m profit for 2022. Total is £61.4m loss minus virtue spending meaning there is a large safety net.
The Hammers have not published accounts for last season 2022/2023 so we don’t know profit or losses yet but on the 2023 monitoring the Hammers can afford to lose £63.4m for last season without breaching Premier League FFP or subtracting virtue spending which would add many millions more.
Virtue spending subtractions include spending money on infrastructure, training grounds, Academy/youth development, Womens team and community projects. The Hammers have a healthy safety margin and are in no immediate danger of breaching Premier League FFP regulations at this time.
UEFA FFP regulations state that by 2025, a club’s total expenditure on transfers, wages and agent fees must not exceed 70 per cent of its total revenue which is a bigger challenge to West Ham. Ninety per cent of total revenue spending is permitted this season dropping to 80% next season in 2024/2025 as the stricter rules are phased in.
Clubs playing in European competitions will be allowed to lose €60m (£53.6m) over a three-year period, with an extra €10m (£8.9m) annual loss permitted if the club is deemed to be ‘in good financial health’.
Expenditure on infrastructure, training facilities and youth development are not included in the FFP formula. In West Ham’s last published accounts 2021/2022, the Hammers spent £136m on wages & £155m net in transfer fees including £12m on agent fees although this will be spread over multiple years on total revenues of £253m.