Stoke City FFP situation explained after another transfer window derailed
Stoke City FFP situation explained after another transfer window derailed
If the raison d’être of Financial Fair Play or profit and sustainability rules is to make sure clubs don’t go bump, there are now so many other complicated factors at play that it is difficult to keep that in sight.
Stoke City have just come through a transfer window when it has been laid on thick that they have had no or next to no money to spend, even if they are owned by a billionaire chairman who is desperate to support Mark Robins in the transfer market.
At the same time, for all the rights, wrongs, small print and clever accounting, it will be puzzling to a lot of supporters that Manchester City can face 115 unresolved charges of breaching the legislation yet still spend about £180 million in the January transfer window, almost as much as the other 19 Premier League clubs put together, even if they can clearly afford it.
We’ll take a step back to try to look at the situation in context, what it means for Stoke and why they kept their powder dry while heading into a massively important final few months of the season.
In the Championship there are other problems. There is what is proving a near unbridgeable gulf between the top flight and the rest, to the point where the club that finishes 20th in the English pyramid has a guaranteed income of about £100 million and for the team in 21st it’s about £10m. That does not lend itself to sensible or achievable long-term planning and allowable losses of £41.5m over three years in the Championship – it’s £105m in the Premier League – don’t really make a scratch on that kind of divide.
Then there’s a gulf between the clubs in the Championship parachute payments and the rest. You get about £50m in the first year down, £35m in the second and £16.5m in the third. It is intended to soften the impact of that cliff edge, but the ratio of clubs who can win promotion without parachute payments is incredibly small.
Ipswich Town managed it last season – partly because they could, surreally, invest more while they were in League One and, with superb management, went through two divisions in two years. Birmingham City are hoping for something similar and spent between £20m-£25m on transfers last summer after relegation from the Championship. The lower leagues are tightening up that loophole now in case anyone has the idea that going down might not be the worst thing in the world.
Stoke missed their chance with the parachutes. They spent badly in the summer of 2018 and had to go through much of the rest of at least the next three years trying to get a handle on outgoings. The wage bill was reduced by about 50 per cent under the watch of Michael O’Neill.
They still had to sell their stadium and training ground to bet365, the business which owned the club, to make sure they stayed on the right side of the FFP red line, as well as Nathan Collins to Burnley. There was a gap they still had to fill at the start of 2023 and the sales of Joe Bursik (about £500,000 to Club Brugge) plus the departures of Will Goodwin and Eddy Jones to Cheltenham and Altrincham respectively, and even £325,000 in FA Cup prize money helped haul them into the black.
It was the end of a gruelling cycle and Stoke had got themselves into a position where they could prepare to have fun again in the transfer market – especially because they had sold Harry Souttar to Leicester for £15m on deadline day. All that money would be given to Neil, technical director Ricky Martin and head of recruitment Jared Dublin to reinvest in the squad – and, with loan players leaving and others out of contract, the scope was huge for a major overhaul.
Neil resisted the temptation to spend that January, explaining at the time: “We pursued a few permanents that didn’t transpire for a number of reasons. But I need to make sure I’m a solution rather than compounding a problem. I don’t want to commit to something that is far too rich in a January window when people know we need to get players in that will then give you problems for two-and-a-half seasons. It would take a huge chunk of the budget away or whatever.
“I wanted to avoid kicking something down the road and leave ourselves with more issues. We’ve resolved all our FFP issues in the January window. And we have made sure that come the summer, this club is in a healthy position. It probably doesn’t help me much in the short term but it’s something I am willing to do to make sure that as a club we’re in a far better position come the summer.”
The issue with a rolling three-year cycle, which doesn’t particularly seem fair now, is that the £15m which Stoke had saved up to spend in the summer of 2023 came from the previous financial year. That £15m income will drop out of Stoke’s FFP calculations in 2025/26 while the cost of the signings it funded remain on the books.
Stoke also sold Josh Tymon and Jacob Brown in the summer of 2023 so that still counts but it does help explain why the budget has been so tight this season for the regime which has followed Neil, Martin and Dublin.
Spending last summer on permanent signings is believed to have been about £4m although there will be loan fees on top of that. There have only been two loan signings coming in during January, with the three other new faces for Robins being players who have returned from loans. Robins and sporting director Jon Walters had to keep the summer and next season in view. It helps that Robins is not a panicker and is confident he can get more out of the squad he has, especially with injured players returning.
“We’re in a position where we are doing things by the book,” said Robins last weekend. “We can’t go and throw a load of money around that we’re not allowed to. We are doing things by the book. We’ve got players here and I can focus on what we’ve got in the building and work hard with them.”
The FFP rules will change. They will certainly change in the next 18 months because that is coming down the road for the Premier League and they could change before that – but nothing had been resolved at this point. There have been working groups trying to thrash out solutions but a lot of clubs will clearly have different agendas.
John Coates would clearly like to do more. He has committed to spending £30m to upgrade infrastructure, which doesn’t come under the FFP umbrella. The stadium and training ground were transferred back to the club’s ownership and debts were cleared when Coates took over from bet365 in pre-season.
There have been suggestions such as allowing owners to match the level of money that is received in parachute payments – and putting that money in before it is spent with guarantees that it won’t be recalled down the line. There has been talk of a ‘luxury tax’ where the amount spent over allowable losses is matched by a donation to a communal pot then to be shared between every club.
In the wider world, the EFL has been lobbying the Premier League to try to adapt how money is distributed, making the case that you could swap about 14 clubs in the Championship for 14 clubs in the top division and it wouldn’t affect the glamour or pull of the competition.
“Nobody has disagreed with that and said it’s a ridiculous notion – but it’s becoming almost impossible to bridge the gap,” said EFL chairman Rick Parry, who said that owner funding in the Championship was “the most expensive lottery ticket on the planet”.
The fact that Stoke have lost an average of £676,000 per week since relegation in 2018 – and are still yet to finish even in the top half – probably proves that point.
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