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Appendix 5 - Financial Fair Play Regulations

PART 1 – CHAMPIONSHIP PROFITABILITY AND SUSTAINABILITY RULES

Notes:

Capitalised Terms have the meanings ascribed to them in Regulation 1 or 16 of the Regulations of The League unless otherwise indicated.

The following Rules are supplemental to the Regulations.

1 DEFINITIONS

1.1 Capitalised Terms have the meanings ascribed to them in the Articles of Association and the Regulations of The League unless otherwise indicated below:

 1.1.1  Accounting Reference Period means the period in respect of which Annual Accounts are prepared.

 1.1.2  Acquiring Registration Costs means amounts paid and/or payable for the acquisition of a Relevant Player’s registration, excluding any internal development or other costs. They include:

  (a)  transfer/loan fees and realised conditional transfer amounts, including training compensation and solidarity contributions, paid and/or payable to another Club (or club) and/or third party to acquire the Relevant Player’s registration; and

  (b)  any amount paid and/or payable to any Intermediary or other agent; and

  (c)  other direct costs of acquiring the Relevant Player’s registration e.g. transfer levy.

 1.1.3  Academy Player means for the purpose of this Appendix 5 only, a male player (other than an Amateur Player or a Trialist) who is in an age group between Under 9 to Under 21 and who is registered for and who is coached by or plays football for or at a Club which operates an Academy pursuant to the Youth Development Rules save for any Player who has made 10 or more starting appearances for:

  (a)  any Club in the following competitions:

   (i)  the Championship division of the League Competition;

   (ii)  the Premier League Competition;

   (iii)  any first team club competition organised by UEFA;

   (iv)  any other equivalent professional domestic league to the Championship division of the League Competition or Premier League Competition or first team Cup competition organised by a national association sanctioned by or affiliated to UEFA and/or FIFA (by way of example, Scottish Premiership, Ligue 1, Serie A and La Liga); and/or

  (b)  any other League Competition Match for the Club.

 1.1.4  Adjusted Earnings Before Tax means Earnings Before Tax adjusted to exclude:

  (a)  costs (or estimated costs as the case may be) in respect of the following:

   (i)  depreciation and/or impairment of tangible fixed assets (net of any capital grants);

   (ii)  amortisation or impairment of goodwill and other intangible assets (but excluding amortisation and/or impairment of the costs of players’ registrations);

   (iii)  Women’s Football Expenditure;

   (iv)  Youth Development Expenditure;

   (v)  Community Development Expenditure; and

   (vi)  in respect of Seasons 2019/20, 2020/21 and 2021/22 only, COVID-19 Costs; and

  (b)  with effect from, and including the Accounting Reference Period covering Season 2021/22, profit/loss on disposal of any tangible fixed asset.

 Each of Youth Development Expenditure, Women’s Football Expenditure, and Community Development Expenditure shall only be excluded from the calculation of Adjusted Earnings Before Tax if separately disclosed:

   (i)  by way of notes to the Annual Accounts; or

   (ii)  by way of supplementary information which;

   (iii)  has been identified and calculated in accordance with such guidance as issued by The League;

   (iv)  reconciles to the Annual Accounts; and

   (v)  has been subject to independent audit.

 1.1.5  Annual Accounts means:

  (a)  the accounts which each Club’s directors are required to prepare pursuant to section 394 of the 2006 Act; or

  (b)  if the Club considers it appropriate or The League so requests, the group accounts of the Group of which the Club is a member and which it is required to prepare pursuant to section 399 of the 2006 Act, or which it is required to deliver to the Registrar of Companies pursuant to section 400(2)(e) or section 401(2)(f) of the 2006 Act,

 provided that in either case the accounts are prepared to an accounting reference date (as defined in section 391 of the 2006 Act) which falls between 31 May and 31 July inclusive. If the accounting reference date falls at any other time, separate accounts for the Club or the Group as appropriate must be prepared for a period of twelve months ending on a date between 31 May and 31 July inclusive, and in such a case “Annual Accounts” means those accounts.

 Annual Accounts must be prepared and audited in accordance with all legal and regulatory requirements applicable to accounts prepared pursuant to Section 394 of the 2006 Act and the provisions of Annex 3 (Reporting Requirements in relation to Player registrations).

 1.1.6  Associate means in relation to an individual, any other individual who is:

  (a)  the spouse or civil partner of that individual; or

  (b)  a relative of that individual or of his spouse or civil partner; or

  (c)  the spouse or civil partner of a relative of that individual or of their spouse or civil partner; or

  (d)  a person who that individual is the parent or legal guardian of; or

  (e)  a person who any individual listed at paragraphs (b) and (c) is the parent or legal guardian of; or

  (f)  any other close relative of that person; or

  (g)  anyone else of a close relationship with that person who, in the opinion of The League is or is likely to be acting with or is financially dependent on that person.

 1.1.7  Associated Party means:

  (a)  a Person who has Control of the Club or would be deemed to be interested in the Club in accordance with Regulation 105.2;

  (b)  any Associate of any Person(s) who has Control of the Club or would be deemed to be interested in the Club in accordance with Regulation 105.2; and

  (c)  any Person of which any Person(s) who has Control of the Club or would be deemed to be interested in the Club in accordance Regulation 105.2:

   (i)  is a director; and/or

   (ii)  either directly or indirectly holds shares; and/or

   (iii)  is able to influence the financial, commercial or business affairs or management or administration of that company, and

  (d)  any Person of which any Associate of any Person(s) who has Control of the Club or would be deemed to be interested in the Club:

   (i)  is a director; and/or

   (ii)  either directly or indirectly holds shares; and/or

   (iii)  is able to exercise any influence or control; and

  (e)  any Person which is a Group Undertaking, Parent Undertaking, Subsidiary Undertaking or Associated Undertaking of any Person referred to in paragraphs 1.1.7(c) and 1.1.7(d) above;

  (f)  any Person who is an Associate, shareholder, director, employee or is able to influence the financial, commercial or business affairs or the management or administration of any Person referred to in 1.1.7(c), 1.1.7(d) and 1.1.7(e) and any Associate of any such shareholder, director or employee;

  (g)  any Person who is an employee or partner or Associate of any Person referred to at paragraph 1.1.7(f) of this definition;

  (h)  any Person who has an agreement with any Person listed referred to in paragraphs 1.1.7(a)-(g) in relation to the exercise of their voting power in the Club or the holding or disposal of their interests in the Club;

  (i)  a Person who holds and/or has possession of the beneficial interest in, and/ or the ability to exercise the voting rights applicable to, shares or other securities in the Club (whether directly, indirectly, by means of holding such interests in one or more other person) or by contract or otherwise including without limitation by way of any Concert Party) which confer in aggregate on the holder(s) thereof 5 per cent or more of the total voting rights exercisable at general meetings of the Club;

  (j)  any Person who holds a loan interest or other debt or security interest of any kind in the Club or an entity in the same group of companies as the Club, with the exception of any such interest held:

   (i)  as part of regulated banking services provided by a Financial Institution;

   (ii)  in the form of bonds, notes or other securities held by professional investors; or

   (iii)  pursuant to a debenture providing the holder with access to tickets to events at the Club’s stadium;

  (k)  where a government, public or state funded body has Control of a Club, any Person who that government, public or state funded body also has Control of.

  When considering where a Person is an Associated Party, The League will direct its attention to the substance of the relationship and not merely the legal form.

 1.1.8  Associated Party Transaction means any transaction, whether directly or indirectly, between a Club and an Associated Party. In considering whether a transaction is an Associated Party Transaction, The League will direct its attention to the substance of the transaction and not merely the legal form.

Guidance

If the accounting standards applied by the Club do not require the Club to disclose Associated Party Transactions within the notes to the Annual Accounts, the transactions should be detailed in a separate schedule and submitted to The League.

 1.1.9  Cash Losses means aggregate Adjusted Earnings Before Tax after write back of:

  (a)  COVID-19 Costs; and

  (b)  amortisation and/or impairment of Players’ registrations; and

  (c)  profit or loss on the transfer of Players’ registrations; and

  (d)  inclusion of net cash flow in respect of transfers of Players’ registrations.

Guidance

Covid-19 Costs have the effect of reducing losses for the purposes of ‘Adjusted Earnings Before Tax’ but that relates only to compliance (or otherwise) with P&S Rules. Clubs will still require such losses to be funded by way of a Secure Funding Agreement when losses exceed the Lower Loss Threshold.

This amendment therefore ensures that obligation applies with effect from the current Season. Clubs that wish to add-back Covid-19 Costs for prior Seasons based on the proposed updated definition of Covid-19 Costs may be required to provide evidence of injections of Secured Funding up to and including T, acknowledging the updated Cash Losses definition.

 1.1.10  Community Development Expenditure means:

  (a)  net expenditure by a Club directly attributable to activities (whether in the United Kingdom or abroad) for the public benefit to promote participation in sport and advance social development; and

  (b)  1 .5 .2 donations made by the Club:

   (i)  to United Kingdom charities in a form recognised by such charities; and/or

   (ii)  for foreign charitable purposes in a form which (had the donations been made to registered United Kingdom charities) would have been recognised as charitable.

 1.1.11  COVID-19 Costs means lost revenues and/or exceptional costs incurred by a Club that are directly attributable to the COVID-19 pandemic and that are identified and calculated in accordance with such guidance as issued by The League.

 Claims of COVID-19 Costs of up to:

  (a)  £5,000,000 in Season 2019/20;

  (b)  £5,000,000 in Season 2020/21; and

  (c)  £2,500,000 in Season 2021/22,

  shall be accepted by the League based on Club submissions alone . For any claim for COVID-19 Costs which in aggregate has an impact of more than £7,500,000 on the Club’s P&S Calculation (acknowledging the combination and averaging of Season 2019/20 and Season 2020/21) The League shall assess whether in order to be excluded from the calculation of Adjusted Earnings Before Tax, any part or all of the claim needs to be separately disclosed:

  (d)  by way of notes to the Annual Accounts; or

  (e)  by way of supplementary information which has been identified and calculated in accordance with such guidance as issued by The League and reconciles to the Annual Accounts or agreed upon procedures and which has been subject to independent audit.

Guidance

The express intention of this amendment is to introduce allowances of up to £5m in Seasons 2019/20 and 2020/21 with retrospective and/or retroactive effect in respect of results submitted in those Seasons and for any other reporting periods to which those Seasons relate.

Where a Club has claimed Covid-19 Costs which in aggregate are in excess of the £12.5m limit (averaged out to £7.5m for the purposes of the P&S calculation) The League will require a full breakdown of all Covid-19 Costs for review.

In the scenario where one single addback is material to the £12.5m limit a Club may apply to the EFL for only this element of the addback to be subject to the independent audit, providing that the remainder are otherwise in accordance with the issued COVID-19 Costs guidance and within the relevant amounts above.

Please note for P&S submissions in Season 2023/24, the COVID-19 Costs addback for Seasons 2019/20 and 2020/21 will no longer be relevant. Therefore only the COVID-19 Costs for Season 2021/22 will be included in the P&S Calculation and will be capped at £2.5m.

 1.1.12  Earnings Before Tax means profit or loss before tax, as shown in the Annual Accounts.

 1.1.13  Fair Market Value means the amount for which an asset could be sold, licensed or exchanged, a liability settled, or a service provided, between knowledgeable, willing parties in an arm’s length transaction.

 1.1.14  Group for the purposes of these Rules, has the meaning set out in Section 474(1) of the 2006 Act save that it shall also include any other entity that carries on any material aspect of the football operations of the Club.

 1.1.15  P&S Calculation means, save as indicated below, the aggregation of a Club’s Adjusted Earnings Before Tax for T, T-1 and T-2. In respect of:

  (a)  Season 2020/21 only, the P&S Calculation shall be the aggregation of:

   (i)  the mean of the Adjusted Earnings Before Tax of T and T-1; and

   (ii)  the Adjusted Earnings Before Tax of T-2; and

   (iii)  the Adjusted Earnings Before Tax of T-3,

  (b)  Season 2021/2022 only, the P&S Calculation shall be the aggregation of:

   (i) the Adjusted Earnings Before Tac of T; and

   (ii) the mean of the Adjusted Earnings Before Tax of T-1 and T-2; and (iii) the Adjusted Earnings Before Tax of T-3,

  (c)  Season 2022/23 only, the P&S Calculation shall be the aggregation of:

   (i)  the Adjusted Earnings Before Tax of T; and

   (ii)  the Adjusted Earnings Before Tax of T-1; and

   (iii)  the mean of the Adjusted Earnings Before Tax of T-2 and T-3.

 1.1.16  Player Registration Schedule means a: table (in such a format which shall be agreed by The League with each Club from time to time) which provides such information which is required to be disclosed in accordance with Annex 2 of this Appendix 5.

 1.1.17  Premier League Competition means the annual league competition for Premier League clubs organised by the Premier League.

 1.1.18  Relevant Player means:

  (a)  all Players whose registration is held by the Club at any time during the

period covered by the P&S Calculation (Relevant Period); and

  (b)  all Players in respect of whom some income/expense/profit (or loss) has been recognised at some point in time in the Relevant Period .

 1.1.19  Secure Funding means funds which have been or will be made available to the Club in an amount equal to or in excess of any Cash Losses which the Club has made in respect of the period from T-2 or is forecast to make up to the end of T+2. Secure Funding may not be a loan and shall consist of:

  (a)  contributions that an equity participant has made by way of payments for shares through the Club’s share capital account or share premium reserve account; or

  (b)  an irrevocable commitment by an equity participant to make future payments for shares through the Club’s share capital account or share premium reserve account. This irrevocable commitment shall be evidenced by a legally binding agreement between the Club and the equity participant and may if The League so requires be secured by one of the following:

   (i)  a personal guarantee from the ultimate beneficial owner of the Club, provided that The League is satisfied that

    (1)  he is of sufficient standing; and

    (2)  the terms of the guarantee are satisfactory;

   (ii)  a guarantee from the Club’s Parent Undertaking or another company in the Club’s Group, provided that The League is satisfied that

    (1)  the guaranteeing company is of sufficient standing; and

    (2)  the terms of the guarantee are satisfactory;

   (iii)  a letter of credit from a Financial Institution of sufficient standing and an undertaking from the Club’s directors to The League to call on the letter of credit in default of the payments from the equity participant being made;

   (iv)  payments into an escrow account, to be paid to the Club on terms satisfactory to The League; or

   (v)  such other form of security as The League considers satisfactory; or

  (c) such other form of secure funding as The League considers satisfactory.

 1.1.20  T means the Club’s Accounting Reference Period ending in the year in which assessment pursuant to Rules 2.2 to 2.9 takes place, and:

  (a)  T-1 means the Club’s Accounting Reference Period immediately preceding T;

  (b)  T-2 means the Club’s Accounting Reference Period immediately preceding T-1;

  (c)  T-3 means the Club’s Accounting Reference Period immediately preceding T-2;

  (d)  T+1 means the Club’s Accounting Reference Period immediately following T; and

  (e)  T+2 means the Club’s Accounting Reference Period immediately following T+1.

 1.1.21  Women’s Football Expenditure means expenditure by a Club directly attributable to activities to train, educate and develop players involved in women’s football teams (including, for the avoidance of doubt, such activities as they relate to female players under the age of 18);

 1.1.22  Youth Development Expenditure means expenditure by a Club directly attributable to activities to train, educate and develop Academy Players net of any youth development grant income received by the Club from any of the football governing bodies. Acquisition Registration Costs of an Academy Player cannot be included as Youth Development Expenditure.

 

2 PROFITABILITY AND SUSTAINABILITY

2.1 Each Club shall by 1 March in each Season submit to The League:

 2.1.1  copies of its Annual Accounts for T-1 (and T-2 if these have not previously been submitted to The League) together with copies of the directors’ report(s) and auditor’s report(s) and agreed upon procedures (where relevant), on those accounts;

 2.1.2  a Player Registration Schedule;

 2.1.3  its estimated profit and loss account and balance sheet for T which shall:

  (a)  be prepared in all material respects in a format similar to the Club’s Annual Accounts; and

  (b)  be based on the latest information available to the Club and be, to the best of the Club’s knowledge and belief, an accurate estimate as at the time of preparation of future financial performance; and

  (c)  if Rule 2.5 applies to the Club its P&S Calculation in a form approved by The League from time to time and which as at the date of these Rules is set out in Annex 1; and

 2.1.4  full details of each and any Associated Party Transaction.

Guidance

The League will in due course consider the Annual Accounts for the Accounting Reference Period in respect of which information pursuant to Rule 2.2.2 is submitted and in particular examine whether any material variances indicate that the estimated financial information was not prepared in accordance with Rule 2.2.2(b).

2.2A  In respect of Season 2019/20:

 2.2A.1  the deadline for submission of the information required by Rule 2 .2 shall be 26 August 2020; and

 2.2A.2  there shall be no obligation on each Club to submit the information referred to in Rule 2.2.2(b).

Guidance

The review of Clubs’ P&S Calculations for 2018/19 against actual figures in Clubs’ Annual Accounts (and supporting information) will still be undertaken by the EFL. The adoption of Rule 2.2A.2 does not release any Club from liability relating to any breach of these Rules relating to Season 2018/19 or any prior Seasons. The EFL Board will continue to seek sanctions in line with the existing sanction guidelines.

2.2  The League shall determine whether consideration included in the Club’s Earnings Before Tax arising from an Associated Party Transaction is recorded in the Club’s Annual Accounts at a Fair Market Value. If it is not, The League shall restate it to Fair Market Value.

2.3  The Club will indemnify The League for any associated costs incurred by The League when assessing whether an Associated Party Transaction is recorded at Fair Market Value (including but not limited to costs incurred by instructing a third party to provide a valuation).

Guidance

The League will likely only require an independent fair market valuation where it disagrees with the valuation provided by the Club.

2.4  The League shall not exercise its power set out in Rule 2.3 without first having given the Club reasonable opportunity to make submissions as to:

 2.4.1  whether the said consideration should be restated; and/or

 2.4.2  what constitutes its Fair Market Value.

2.5  If the aggregation of a Club’s Earnings Before Tax for T-1 and T-2 (or in the case of Season 2020/21 T-2 and T-3) results in a loss, any consideration from Associated Party Transactions having been adjusted (if appropriate) pursuant to Rule 2.3, then the Club must submit to the Secretary its P&S Calculation.

2.6  If the P&S Calculation results in a loss of up to the Lower Loss Threshold (calculated in accordance with Rule 3), then The League shall determine whether the Club will, until the end of T+1, be able to fulfil its obligations as set out in 16.19(a), (b) or (c).

2.7  Where The League determines, in its reasonable opinion and having considered any information provided to it by the Club, that the Club may not be able to fulfil its obligations as set out in Regulations 16.19.1, 16.19.2, The League shall have the powers set out in Regulation 16.20.

2.8  If the P&S Calculation results in a loss that exceeds the Lower Loss Threshold, then the following shall apply:

 2.8.1  the Club shall provide, by 31 March in the relevant Season, Future Financial Information to cover the period commencing from its last accounting reference date (as defined in section 391 of the 2006 Act) until the end of T+2 and a calculation of estimated aggregated Adjusted Earnings Before Tax until the end of T+2 based on that Future Financial Information;

 2.8.2  the Club shall provide such evidence of Secure Funding as The League considers sufficient; and

 2.8.3  if the Club is unable to provide evidence of Secure Funding as set out in Rule 2.8.2, The League shall have the powers set out in Regulation 16.20.

2.9  Where The League determines, in its reasonable opinion and having considered the Future Financial Information provided by the Club in accordance with Rule 2.7, that the Club is forecasting to breach the Upper Loss Threshold in T+1 and/or T+2 then The League shall have the powers set out in Regulation 16.20.

Guidance

In the event that a Club, based on the information provided by the Club to The League, is forecasting to exceed the Upper Loss Threshold in T+1 and/or T+2, The League will consider whether it is necessary to require the Club to operate in accordance with the terms of a business plan (to include, by way of example, requirements relating to player acquisitions, disposals, reduction in player costs (i.e. wages) and, where the Club thinks it is achievable, uplifts in revenue) in order to bring the Club back into compliance with Upper Loss Threshold for T+1 and/or T+2.

The League recognises that T+2 is so far in the future it would be difficult for Clubs and The League to accurately forecast for the purpose of P&S and the potential exercise of these powers needs to be considered in that context.

General Approach

The purpose of this Rule is to give Clubs and The League the opportunity to work together to develop the terms of a business plan which will include remedial measures to allow the Club to bring itself back into compliance with these Rules.

The following paragraphs detail The League’s general approach in respect of forecasted breaches in T+1 and/or T+2.

Forecasting Breaches in T+1

Where a Club is forecasting a non-material breach only occurring in T+2, The League’s general approach will usually be to request further information in order to gain comfort that the Club has the necessary plans in place to work towards compliance. The League, generally, in these circumstances will not seek to utilise the more restrictive powers afforded to it unless a change in circumstances deems this necessary. The League will then reassess the Club’s position in T+1 based on the updated results posted as part of the usual March submission process.

If a Club is forecasting a material breach occurring in T+2, The League’s general approach would be to require the Club to provide a significantly more detailed plan than would be the case if the forecasted breach was not material. The League would likely treat such instances in the similar manner it would for a forecasted breach in T+1. Again, The League will then reassess the Club’s position in T+1 based on the updated results posted as part of the usual March submission process.

Clubs will note that this guidance sets out The League’s general approach and that The League will need to determine each set circumstances based on the merits whilst also ensuring that all Clubs are treated consistently. This may lead to The League diverging from its general approach where it is appropriate to do so and nothing in this guidance will affect The League’s right to do so.

2.10  If the P&S Calculation results in a loss that exceeds the Upper Loss Threshold (calculated in accordance with Rule 3) then:

 2.10.1  the Club shall be subject to a Player registration embargo such that The League shall have the right to refuse any application made by that Club to register any Player or any new contract of an existing Player with that Club; and

 2.10.2  the League may exercise its powers set out in Regulation 16.20; and

 2.10.3 the Club shall be treated as being in breach of these Rules and accordingly The League shall refer the breach to the CFRP in accordance with Appendix 6 of the Regulations.

 

3 LOSS THRESHOLDS

3.1  Save for Rule 3A, the Lower Loss Threshold and Upper Loss Threshold for each Club shall be calculated based on the aggregation of the Annual Lower Loss Thresholds and Annual Upper Loss Thresholds set out in the following table, by reference to the league of which the Club was a member in the Season covered by the applicable Accounting Reference Period:

 

Annual Lower Loss Threshold

Annual Upper Loss Threshold

Premier League

Subject to Rule 3.2, £5 million

Subject to Rule 3.2, £35 million

The League

Subject to Rule 3.3, £5 million

Subject to Rule 3.3, £13 million

Guidance

By way of example, a Club that was a member of The League in 2016/17, the Premier League in 2017/18 and The League in 2018/19, will have:

  (a)  a Lower Loss Threshold of £15m; and

  (b)  an Upper Loss Threshold of £61m (using the figures set out in Rule 3.1).

3.2  The Loss Thresholds for any Accounting Reference Periods relating to Seasons when Clubs were members of the Premier League shall be calculated on the basis of the three year aggregated figures set out in Premier League Rules E.57 and E.59 respectively (as amended, extended or replaced from time to time in accordance with the Rules of the Premier League) divided into three equal annual instalments.

3.3  Where there is an adjustment to the Premier League’s Annual Lower Loss Threshold and/or Annual Upper Loss Threshold, as described in Rule 3.2, then The League’s Annual Lower Loss Threshold and/or Annual Upper Loss Threshold for the equivalent period shall be adjusted by a percentage equal to the percentage change applied by the Premier League.

Guidance

By way of example, if for Season 2019/20 the Premier League introduce an Annual Lower Threshold of £6m and an Annual Upper Threshold of £36m then the Thresholds for The League in that Season will be £6m and £13.37m. For ease, threshold figures will be rounded up to the nearest £10,000.

3.4  In respect of Season 2020/21, the Lower Loss Threshold and Upper Loss Threshold for each Club shall be calculated based on the aggregation of the Club’s Annual Lower Loss Threshold and Annual Upper Loss Threshold for T, T-1, T-2 and T-3 as per the figures set out table in Rule 3.1 as amended by dividing those figures by 4 and then multiplied them by 3.

3A LOSS THRESHOLDS – 2020/21, 2021/22 AND 2022/23

3A.1  Subject to Rule 3A.2, in respect of Season 2020/21, 2021/22 and 2022/23, the Lower Loss Threshold and Upper Loss Threshold for each Club shall be calculated based on:

 3A.1.1  in respect of P&S Calculations submitted in Season 2020/21:

  (a)  the Lower Loss Threshold shall be £15,000,000; and

  (b)  the Upper Loss Threshold shall be calculated by reference to the aggregate of:

   (i) the mean of the Annual Upper Loss Thresholds applicable to T and T-1;

   (ii)  the Annual Upper Loss Threshold of T-2; and

   (iii)  the Annual Upper Loss Threshold of T-3,

 3A.1.2  in respect of P&S Calculations submitted in Season 2021/22:

  (a)  the Lower Loss Threshold shall be £15,000,000; and

  (b)  the Upper Loss Threshold shall be calculated by reference to the aggregate of:

   (i)  the Annual Upper Loss Threshold applicable to T;

   (ii)  the mean of the Annual Upper Loss Thresholds applicable to T-1 and T-2; and

   (iii)  the Annual Upper Loss Threshold of T-3,

 3A.1.3  in respect of P&S Calculations submitted in Season 2022/23:

  (a)  the Lower Loss Threshold shall be £15,000,000; and

  (b)  the Upper Loss Threshold shall be calculated by reference to the aggregate of:

   (i)  the Annual Upper Loss Threshold applicable to T;

   (ii)  the Annual Upper Loss Threshold of T-1; and

   (iii)  the mean of the Annual Upper Loss Threshold applicable to T-2 and T-3.

3A.2 Clubs may instead elect to calculate the Annual Upper Loss Threshold and Annual Lower Loss Threshold based on the aggregation of the Club’s Annual Lower Loss Threshold and Annual Upper Loss Threshold for T, T-1, T-2 and T-3 as per the figures set out table in Rule 3.1 as amended by dividing those figures by 4 and then multiplied them by 3.

 

4 DUTY OF DISCLOSURE

4.1  The League may require a Club to provide such further information as The League deems necessary (acting reasonably) for the purposes of enabling The League to assess whether a Club has met (as applicable) the Profitability and Sustainability Rules or not. By way of example, and without limitation, additional information may be requested where:

 4.1.1  any submission is incomplete;

 4.1.2  there are insufficient assumptions; or

 4.1.3  additional evidence is required to support certain assumptions.

4.2  Any such request shall be made in writing (including by email to the Finance Director or equivalent) and shall be responded to in full within 5 Normal Working Days of any such request being made.

4.3  Without prejudice to the right of The League to refer any breach of rules to the Disciplinary Commission in accordance with section 8 of the Regulations, where any Club is in breach of any requirement of these Rules relating to the provision of information, The League may refuse any application by that Club to register any Player or any new contract of an existing Player of that Club.

4.4  Each Club shall, at all times and in all matters within the scope of these Rules, behave with the utmost good faith both towards The League and the other Clubs (provided always that only The League shall have the right to bring any action whatsoever for any alleged breach of this requirement). Without prejudice to the generality of the foregoing, Clubs shall not manage their affairs or submit information which is intended to seek to or take any unfair advantage in relation to the assessment of fulfilment (or non-fulfilment) of the requirements of the Rules.

 

5 CLUBS CEASING TO BE MEMBERS OF THE CHAMPIONSHIP

5.1  If a Club is promoted or relegated out of the Championship Division that Club shall, notwithstanding promotion or relegation, remain bound by these as if it were still a Championship Club, until such time as it has complied with all of its obligations relating to its last Season as a Championship Club.

 

6 REVIEW APPLICATIONS

6.1  Where in these Rules there is any reference to The League making a determination, including by way of example and without limitation:

 6.1.1  assessment of Secured Funding; and

 6.1.2  determinations by The League in accordance with Rule 2,

the Club shall subject to the provisions of Rules 6.2 and 6.3, have a right to have such decision reviewed by the CFRP in accordance with Appendix 6 of the Regulations (a Review Application).

 

7 CONFIDENTIALITY

7.1  Information provided by a Club to the CFRU in accordance with these Rules shall only be made available to such members of The League as are required to know such information in order to fulfil their duties to The League (and who are bound by obligations of confidentiality as part of their contract of employment).

7.2  Notwithstanding the provisions of Rule 8.1, the CFRU is expressly permitted to make available to the Premier League any and all information received by the League in relation to any Club that becomes a Promoted Club to enable the Premier League to exercise its rights under Regulation 86.4 and 86.5. This Rule will take precedence over any purported attempt by a Club to disclose information to the League on a private or confidential basis.

 

8 IMPLEMENTATION AND TRANSITION

8.1  For the purposes of Rule 2, the first ‘T’ Season will be 2016/17, and as a consequence these Rules are effective (in so far as they relate to T-1 and T-2) for the 2014/15 and 2015/16 Seasons.

8.2 If:

 8.2.1  a Club’s Adjusted Earnings Before Tax resulted in losses of £13 million (or greater) in Season 2014/15 and/or Season 2015/16; and

 8.2.2  that Club was sanctioned in accordance with the Championship FFP Rules in respect of the applicable Season,

 then, but not otherwise, the Adjusted Earnings Before Tax loss for that Club for that Season (for the purposes of these Rules) will be capped at £13m.

8.3  The Championship FFP Rules remain in force for Seasons 2014/15 and 2015/16.

 

 

PART 2 – LEAGUE ONE SALARY COST MANAGEMENT PROTOCOL (SCMP)

GUIDANCE NOTES

1 SCMP REQUIREMENT

1 .1 All League One Clubs (hereafter Clubs or Club) are required to meet the SCMP Requirement (as defined in Note 1 .2) for each Reporting Period (as defined in Note 1 .3) .

1 .2 The SCMP Requirement is a measure whereby a Club’s Player Related Expenditure (as defined in Appendix B) shall not exceed the sum of:

1 .3 60% of the Club’s Relevant Turnover (as defined in Paragraph 1 of Appendix A) for the Reporting Period, plus

1 .4 100% of the club’s Football Fortune Income (as defined in Paragraph 2 of Appendix A) for the Reporting Period .

1 .5 The Reporting Period in respect of which a Club is assessed for the purpose of the SCMP Requirement is (subject to Note 2) the 12 month period recorded in the Club’s Annual Accounts .

Guidance

For those Clubs with a financial year ending in the period May, June or July in any year the Reporting Period for the 20xx/yy Season is the 12 month period ending May, June or July 20yy.

1 .6 Measurement of a Club’s compliance with the SCMP Requirement is based on the submission by the Club of the Pre-Season SCMP Submission and Mid-Season SCMP Submission (each as defined in Note 3 below) (together the SCMP Submissions) .

2 VARIATIONS FROM ‘STANDARD’ REPORTING PERIODS

2 .1 Clubs may not adjust Reporting Periods for subsequent Seasons without the prior written consent of The League (acting via the CFRU), such consent not to be unreasonably withheld .

2 .2 If any Club has a financial year ending other than during the period May, June or July, then that Club must prepare its SCMP Submissions for a 12 month period ending on 30 June so as to provide the CFRU with an SCMP Submission aligned to the Reporting Period as defined in Note 1 .3 .

2 .3 If any Club has a financial year end other than in June, then that Club may opt to prepare its SCMP Submission for a 12 month period ending June so as to provide the CFRU with an SCMP Submission aligned to Player Contracts .

3 SCMP SUBMISSIONS

3 .1 By the third Friday in June each year, each Club must submit its Pre-Season SCMP Submission for the immediately following Reporting Period . The Pre-Season SCMP Submission will be in the form of an Excel workbook setting out the information required therein (and including the requirements set out in Note 5 below) and will be in such format as The League (acting via the CFRU) may prescribe from time to time . For the current Season this requires submission of the following Worksheets:

  1. 3 .1 .1  Assumptions

  2. 3 .1 .2  Key Indicators;

  3. 3 .1 .3  Relevant Turnover;

  4. 3 .1 .4  Turnover Reconciliation;

  5. 3 .1 .5  Player Related Expenditure; and

  6. 3 .1 .6  Player Salary Costs .

 
 

Guidance

By 17 June 2021 each Club must submit its Pre-Season SCMP Submission for the financial year ending May, June or July 2022 (exactly which date will be determined in accordance with Note 2).

  1. 3 .2  For the avoidance of doubt, the Pre-Season SCMP Submission must be supplied notwithstanding the fact that during the preceding Season the Club was either a Championship Club relegated into League One (Former Championship Club) or a League Two Club which was then promoted into League One (Promoted League Two Club) .

  2. 3 .3  By the second Friday in December each year, each Club must submit its Mid-Season SCMP Submission for the current Reporting Period . The Mid-Season SCMP Submission will be in the form of an Excel workbook setting out the information required therein (and including the requirements set out in Note 6 below) and will be in such format as The League (acting via the CFRU) may prescribe from time to time . For the current Season this requires submission of the following Worksheets:

    1. 3 .3 .1  Assumptions;

    2. 3 .3 .2  Key Indicators;

    3. 3 .3 .3  Relevant Turnover;

    4. 3 .3 .4  Turnover Reconciliation;

    5. 3 .3 .5  Player Related Expenditure; and

    6. 3 .3 .6  Player Salary Costs .

    Guidance

    By the 10 December 2021 each Club must submit its Mid-Season SCMP Submission for the financial year ending May, June or July 2022 (exactly which date will be determined in accordance with Note 2).

  3. 3 .4  The SCMP Submission must relate to the Club or if applicable and agreed with The League (acting via the CFRU) (as detailed in Regulation 16 .5), the Group of which the Club is a member .

  4. 3 .5  All SCMP Submissions must be sent to the CFRU by e-mail . In the event that an e-mail submission is not possible, the SCMP Submission should be posted to the Office so as to arrive not later than the relevant deadlines set out in this Note 3 .

4 DUTY OF DISCLOSURE

  1. 4 .1  The League (acting via the CFRU) may at any time require a Club to provide such further information as The League (acting via the CFRU) deems necessary (acting reasonably) for the purposes of enabling The League (acting via the CFRU) to assess whether a Club has fulfilled (or not) the SCMP Requirement . By way of example, and without limitation, additional information may be requested where:

    1. 4 .1 .1  any SCMP Submission is incomplete;

    2. 4 .1 .2  there are insufficient assumptions; or

    3. 4 .1 .3  additional evidence is required to support certain assumptions .

  2. 4 .2  Any such request shall be made in writing (including by email from CFRU) and shall be responded to in full within 5 Normal Working Days of any such request being made .

  3. 4 .3  Each Club shall, at all times and in all matters within the scope of these Guidance Notes, behave with the utmost good faith both towards The League and the other Clubs (provided always that only The League (acting via the CFRU) shall have the right to bring any action whatsoever for any alleged breach of this requirement) . Without prejudice to the generality of the foregoing, Clubs shall not manage their affairs or submit a SCMP Submission which is intended to seek to or does take any unfair advantage in relation to the assessment of fulfilment (or non-fulfilment) of the SCMP Requirement .

5 COMPLETION OF THE PRE-SEASON SCMP SUBMISSION

  1. 5 .1  For the purposes of these Notes:

    1. 5 .1 .1  Aggregate Player Salary Costs shall mean the sum total of all the Individual Player Salary Costs;

    2. 5 .1 .2  Individual Player Salary Costs shall, in respect of each Contract Player (as defined by Note 5 .9 .2) and Temporary Contract Player (as defined by Note 5 .9 .3), include such sums as are required to be disclosed in or annexed to the Standard Contract including, by way of example and without limitation:

      1. (a)  gross basic salaries;

      2. (b)  signing on fees;

      3. (c)  appearance fees;

      4. (d)  individual player bonuses; and

      5. (e)  accommodation / relocation / travel / motor costs;

    3. 5 .1 .3  Headroom means the amount by which Player Related Expenditure is less than the amount equal to:

      1. (a)  60% of Relevant Turnover; plus

      2. (b)  100% of Football Fortune Income;

    4. 5 .1 .4  Football Fortune Income is defined in Paragraph 2 of Appendix A;

    5. 5 .1 .5  Relevant Turnover is defined in Paragraph 1 of Appendix A;

    6. 5 .1 .6  Player Related Expenditure is defined in Appendix B;

    7. 5 .1 .7  the following years shall be given the following references:

      1. (a)  Reporting Period means the financial year / Season in which the Club is required to report in accordance with these Notes;

      2. (b)  RP-1 means the financial year / Season prior to the Reporting Period; and

      3. (c)  RP-2 means the financial year / Season prior to RP-1 .

    Guidance

    For the 2022/23 Reporting Period, RP-1 means the 2021/22 financial year/Season and RP-2 means the 2020/21 financial year/Season.

  2. 5 .2  All of the Worksheets within the Pre-Season SCMP Submission must:

    1. 5 .2 .1  be completed prior to submission to The League (acting via the CFRU); and

    2. 5 .2 .2  include any and all adjustments necessary to ensure the Club complies with the requirements of Note 2 .

  3. 5 .3  Key assumptions are to be detailed within the Assumptions Worksheet to support the estimated figures throughout the Worksheets for the Reporting Period .

  4. 5 .4  The Key Indicator Worksheet feeds information through from the relevant Worksheets in order to calculate the Club’s SCMP percentage . This will indicate the level of Relevant Turnover, Football Fortune Income and Player Related Expenditure and, if any, the Headroom the Club has available .

 
 
  1. 5 .5  When completing the Relevant Turnover Worksheet, and having regard to any adjustments required to comply with the requirements of Note 2:

    1. 5 .5 .1  Column 1 of the Relevant Turnover Worksheet should replicate, where relevant, the figures in the Club’s Annual Accounts and supporting management account schedules, for RP-2 . In the event that the Club’s Annual Accounts have not been finalised by the Club’s auditor, unaudited figures should be used;

    2. 5 .5 .2  Column 2 should replicate the Club’s latest forecast (or actual unaudited figures, if available) for RP-1;

    3. 5 .5 .3  Column 3 should reflect the Club’s budget for the Reporting Period; and

    4. 5 .5 .4  if there are any variances, a separate written explanation should be provided .

  2. 5 .6  Claims for any item of income to be treated as Football Fortune Income are subject to the prior written approval of The League (acting via the CFRU) .

  3. 5 .7  andA reconciliation between Relevant Turnover, Football Fortune Income (i .e . Column 1 in the Relevant Turnover Worksheet) and Reported Turnover per the latest Club Annual Accounts (or actual unaudited figures) is required to be performed on the Turnover Reconciliation Worksheet .

  4. 5 .8  When completing the Player Related Expenditure Worksheet:

    1. 5 .8 .1  Column 1 of the Player Related Expenditure Worksheet should, where relevant, replicate the figures in the Club’s Annual Accounts and supporting management account schedules, for RP-2 . In the event that the Club’s Annual Accounts have not been finalised by the auditor, unaudited figures should be used;

    2. 5 .8 .2  Column 2 should replicate the Club’s latest forecast (or actual unaudited figures, if available) for RP-1;

    3. 5 .8 .3  Column 3 should reflect the Club’s budgeted Aggregate Player Salary Costs and other Player Related Expenditure for the Reporting Period;

    4. 5 .8 .4  Columns 1, 2 and 3 feed directly through from the Player Salary Costs Worksheet . Where any other figures in the Player Related Expenditure Worksheet do not feed through from the Player Salary Costs Worksheet these must be completed by the Club, where relevant; and

    5. 5 .8 .5  if there are any variances, a separate written explanation should be provided .

  5. 5 .9  When completing the Player Salary Costs Worksheet:

    1. 5 .9 .1  completion of all sections is to be on a Player by Player basis and be the Club’s current best estimate of Individual Player Salary Costs that have been and/or must be paid during the relevant Reporting Period;

    2. 5 .9 .2  Section 1 is to be completed in full for all Contract Players, which term means for the purposes of these Notes, Players registered with the Club who are not classified as Temporary Contract Players (as defined by Note 5 .9 .3) or Professional Under 21 Players (as defined by Note 7 .1) .

    3. 5 .9 .3  Section 2 is to be completed for all Players who are registered with the Club on an:

      1. (a)  Emergency Goalkeeper Loan;

      2. (b)  Standard Loan;

      3. (c)  Multiplicity Contract;

      4. (d)  Monthly Contract;

      5. (e)  Monthly Extension Contract; and

      6. (f)  Non-Contract basis,

      (Temporary Contract Players) .

5 .9 .4 Section 3 is to be completed in full for all Players classified as Professional Under 21 Players .

5 .9 .5 For the avoidance of doubt, Players registered as Youth Players or Scholars are not subject to the requirements of these Notes .

6 COMPLETION OF THE MID-SEASON SCMP SUBMISSION

6 .1 All of the Worksheets within the Mid-Season SCMP Submission must:

6 .1 .1 be completed prior to submission to The League (acting via the CFRU); and

6 .1 .2 include any and all adjustments necessary to ensure the Club complies with the requirements of Note 2 .

6 .2 Any material variances from the Pre-Season SCMP Submission are to be detailed within the Assumptions Worksheet .

6 .3 When completing the Relevant Turnover Worksheet:

  1. 6 .3 .1  Column 1 of the Relevant Turnover Worksheet should, where relevant, replicate the figures in the Club’s Annual Accounts and supporting management account schedules for RP-1 . In the event that the Club’s Annual Accounts have not been finalised by the Club’s auditor, unaudited figures should be used;

  2. 6 .3 .2  Column 2 should replicate Column 3 in the Relevant Turnover Worksheet of the Pre- Season SCMP Submission for that Reporting Period;

  3. 6 .3 .3  Column 3 should reflect the Club’s actual Relevant Turnover figures up to the date of the Mid-Season SCMP Submission and any revised budget for the Reporting Period; and

  4. 6 .3 .4  if there are any variances a separate written explanation should be provided .

6 .4 A reconciliation between Relevant Turnover, Football Fortune Income (i .e . Column 1 in the Relevant Turnover Worksheet) and Reported Turnover per the latest Club Annual Accounts (or actual unaudited figures) is required to be performed on the Turnover Reconciliation Worksheet .

6 .5 When completing the Player Related Expenditure Worksheet:

  1. 6 .5 .1  Column 1 of the Player Related Expenditure Worksheet should, where relevant, replicate the figures in the Club’s Annual Accounts for RP-1 . In the event that the Club’s Annual Accounts have not been finalised by the auditor, unaudited figures should be used;

  2. 6 .5 .2  Column 2 should replicate Column 3 in the Player Related Expenditure Worksheet of the Pre-Season SCMP Submission for that Reporting Period;

  3. 6 .5 .3  Column 3 should reflect the Club’s actual Player Related Expenditure up to the date of the Mid-Season SCMP Submission and any revised budget for the Reporting Period;

  4. 6 .5 .4  Columns 1, 2 and 3 feed directly through from the Player Salary Costs Worksheet . Where any other figures in the Player Related Expenditure Worksheet do not feed through from the Player Salary Costs Worksheet these must be completed by the Club, where relevant; and

  5. 6 .5 .5  if there are any variances a separate written explanation should be provided .

6 .6 When completing the Player Salary Costs Worksheet for the Mid-Season SCMP Submission, the Club is required to update the Player Salary Costs Worksheet for any Player movements and re-negotiated contracts since the preparation of the Pre-Season SCMP Submission .

7 PROFESSIONAL UNDER 21 PLAYERS

7 .1 The Individual Player Salary Costs of an Under 21 Player registered with the Club as a Contract Player (save for an Under 21 Player registered with the Club on a Temporary Loan Transfer) are excluded from the Club’s total Player Related Expenditure for the purposes of assessing whether that Club has complied with the SCMP Requirement . However, the Individual Player Salary Costs for Under 21 Players shall be separately reported in the Player Salary Costs Worksheet of any SCMP Submission in accordance with Note 5 .9 .4 and/or Note 6 .6 .

Guidance

The definition of an Under 21 Player is a Player under the age of 21 as at the 1 January in the year in which the Season concerned commences (e.g. for Season 2022/23, born on or after 1 January 2001).

All Under 21 Players need to be disclosed in Section 3 of the submission.

Those Under 21 Players who are registered on loan at the Club need to be disclosed in section 2 of the submission and their cost is included in the assessment of Player Related Expenditure.

8 ON-GOING MONITORING

  1. 8 .1  Each Club is responsible for keeping their SCMP Submission updated at all times and (without prejudice to Note 9 below) reporting any variances to The League (acting via the CFRU) .

  2. 8 .2  The League will also monitor Player registrations made by Clubs .

9 NOTIFIABLE EVENTS

  1. 9 .1  Where:

    1. 9 .1 .1  the Player Related Expenditure of a Club exceeds, or is likely to exceed (having regard to all the circumstances), 95% of the maximum amount of Player Related Expenditure permitted under Rule 1 .2 (Additional Reporting Threshold); and /or

    2. 9 .1 .2  any Club fails, or is likely to fail (having regard to all the circumstances), to meet the SCMP Requirement,

    that Club shall forthwith notify The League (acting via the CFRU) to that effect in writing (by email or fax) (Notification) .

  2. 9 .2  Where The League (acting via the CFRU) considers, acting reasonably, that the Club may be subject to an obligation to notify under Note 9 .19 .1 and the Club itself has not so notified, The League (acting via the CFRU) may serve notice on the Club to that effect in writing (by email or fax) . Nothing in this Note 9 .2 discharges the Club of any obligation under Note 9 .1 .

  3. 9 .3  Where:

    1. 9 .3 .1  the Club serves Notification; and/or

    2. 9 .3 .2  The League (acting via the CFRU) serves notice under Note 9 .2,

    the provisions of Notes 10 and/or 11 (as applicable) apply .

10 CONSEQUENCES OF NOTIFICATION / OTHER FAILURE TO COMPLY

10 .1 A Club which:

  1. 10 .1 .1  does not file any SCMP Submission by the required date;

  2. 10 .1 .2  does not provide information where requested to do so by The League; and/or

  3. 10 .1 .3  fails to fulfil the SCMP Requirement,

shall be subject to a Player registration embargo (the “Embargo”) such that The League shall refuse any application made by that Club to register any Player or any new contract of an existing Player with that Club save in the circumstances set out in Note 10 .2 .

Guidance

A copy of the EFL’s Embargo Policy can be found on the Club Portal.

10 .2 The Embargo will be effective:

10 .2 .1 in the case of a Club which is in default of any obligation to provide information in accordance with Part 2 of Appendix 5, from the date of default until such time as the default is remedied to the reasonable satisfaction of The League(acting via the CFRU); and

10 .2 .2 in the case of a Club which fails to fulfil the SCMP Requirement, until The League (acting via the CFRU), has been provided with the necessary information in order to be satisfied that the Club is no longer in breach of the SCMP Requirement .

10 .3 For the avoidance of doubt, where the registration of any Player(s) will in the opinion of The League (acting via the CFRU), acting reasonably, result in a Club failing to meet the SCMP Requirement, such registrations will be refused .

11 CLUBS SUBJECT TO THE ADDITIONAL REPORTING THRESHOLD

11 .1 If a Club becomes aware, or if a Club is informed by The League (acting via the CFRU) that, the Player Related Expenditure of that Club exceeds, or is likely to exceed (having regard to all the circumstances including for the avoidance of doubt the Player Related Expenditure in respect of any Proposed Registration (as defined below)) the Additional Reporting Threshold, then that Club will be subject to the requirements of this Note 11 (a Threshold Club) .

11 .2 Any Threshold Club that wishes to register a new Player (each a Proposed Registration) must prior to the lodging of the Proposed Registration, submit a duly completed Self Certification on Club letterhead (in accordance with Appendix C) .

11 .3 Where any Proposed Registration will, in the opinion of The League (acting via the CFRU), acting reasonably, result in the Club failing to meet the SCMP Requirement, that Proposed Registration will be refused .

12 FORMER CHAMPIONSHIP CLUBS

12 .1 The SCMP requirement for a Former Championship Club shall, in its first season as a League One Club, be amended such that the Club’s Player Related Expenditure (as defined in Appendix B) shall not exceed:

  1. 12 .1 .1  75% of the Club’s Relevant Turnover (as defined in paragraph 1 of Appendix A) for the Reporting Period, plus

  2. 12 .1 .2  100% of the Club’s Football Fortune Income (as defined in Paragraph 2 of Appendix A) for the Reporting Period .

13 CONFIDENTIALITY

13 .1 Information provided by a Club to The League (acting via the CFRU) in accordance with these Notes shall only be made available to such members of The League (acting via the CFRU) as are required to know such information in order to fulfil their duties to The League (acting via the CFRU) (and who are bound by obligations of confidentiality as part of their contract of employment) and shall not be disclosed to the Board in any manner so as to enable Clubs to be identified provided always that:

  1. 13 .1 .1  generic management reporting to the Board and Clubs is permitted; and

  2. 13 .1 .2  The League shall be entitled to publish reports of any decisions relating to any breaches .

 
 

APPENDIX A – DEFINITION OF RELEVANT TURNOVER AND FOOTBALL FORTUNE INCOME

1 RELEVANT TURNOVER – DEFINITIONS

Relevant Turnover can be summarised as shown below, with explanatory note to explain the various treatments of different sources of income .

  1. 1 .1  League Distributions – All League distributions, including facility fees for TV and Radio, as included in the profit and loss account .

  2. 1 .2  Premier League Distributions – Include Premier League Solidarity and Parachute payments relating to the Reporting Period .

  3. 1 .3  Match Revenue, Season Tickets – Include only in the relevant season . Where season tickets are sold covering more than one season, income should be declared pro-rata for the relevant season .

  4. 1 .4  Match Revenue, League Gate Receipts – Actual receipts before deduction of match day expenditure and any levies .

  5. 1 .5  Match Revenue, Cup Gate Receipts – The home club should declare actual receipts net of away club’s expenses but before other match day expenditure and budgets should assume the Club does not progress past Round 1 of any competition . The away club should include actual receipts received .

  6. 1 .6  Match Revenue, Friendlies Gate Receipts – The Club should declare actual receipts net of direct match day costs .

  7. 1 .7  Commercial Net Income, Hospitality – The actual receipts less the cost of purchases of materials and any directly attributable costs (e .g . labour) required to supply hospitality, or where hospitality is outsourced, the actual amount received by the Club .

  8. 1 .8  Commercial Net Income, Commercial - The actual receipts less the cost of purchases of materials and any directly attributable costs (e .g . labour) required to supply commercial activities, or where commercial activities are outsourced, the actual amount received by the Club .

  9. 1 .9  Commercial Net Income, Sponsorship - The actual receipts less the cost of purchases of materials and any directly attributable costs (e .g . labour) required to supply sponsorship, or where sponsorship is outsourced, the actual amount received by the Club .

  10. 1 .10  Commercial Net Income, Programmes - The actual receipts less the cost of purchases of materials and any directly attributable costs (e .g . labour) required to supply programmes, or where programmes is outsourced, the actual amount received by the Club .

  11. 1 .11  Commercial Net Income, Shop Merchandise - The actual receipts less the cost of purchases of materials and any directly attributable costs (e .g . labour) required to supply shop merchandise, or where shop merchandise is outsourced, the actual amount received by the Club .

  12. 1 .12  Commercial Net Income, Club Lottery - The actual receipts less the cost of purchases of materials and any directly attributable costs (e .g . labour) required to supply the club lottery, or where the club lottery is outsourced, the actual amount received by the Club .

  13. 1 .13  Commercial Net Income, Catering - The actual receipts less the cost of purchases of materials and any directly attributable costs (e .g . labour) required to supply catering, or where catering is outsourced, the actual amount received by the Club .

  14. 1 .14  Stadium Revenue, Rental Income – Rental due on stadium and facilities in the relevant Reporting Period .

  1. 1 .15  Stadium Revenue, Share of Stadium Revenue – Include actual receipts .

  2. 1 .16  Other Football Income – To be assessed on a case by case basis .

2 FOOTBALL FORTUNE INCOME – DEFINITIONS

Football Fortune Income includes the following revenue streams on the basis that they can reasonably be regarded as a “bonus” to Clubs during the Reporting Period .

2 .1 EFL Cup and EFL Trophy Distributions – Include any EFL Cup or EFL Trophy prize money and facility fees on an actual basis . Budgets should assume the Club does not progress past Round 1 of any competition .

2 .2 Football Association Distributions – Include any FA Cup prize money and facility fees on an actual basis . Budgets should assume the Club does not progress past Round 1 of any competition .

2 .3 League Parachute Income – Include all Parachute income receivable from The League for the relevant Reporting Period .

2 .4 Net Transfer Income – means;

  1. 2 .4 .1  in respect of amounts which are contracted to be received or paid in accordance with any contract (transfer agreement or compensation agreement) originally entered into and registered with The League on or before 6 May 2022, actual cash received in the year from other Clubs or clubs by way of Compensation Fee, Transfer Fee and / or Loan Fee (in these Notes, “Transfer Fees”), less any actual cash paid to other Clubs or clubs by way of Transfer Fees . Any advances of Transfer Fees from organisations such as Close Leasing can only be included where the instalments being advanced against fall due within the Reporting Period covered by the relevant SCMP Submission; and

  2. 2 .4 .2  in respect of amounts which are contracted to be received or paid by Clubs in accordance with any contract (transfer agreement or compensation agreement) originally entered into and registered with The League after 6 May 2022, Transfer Revenue less Transfer Expenditure .

2 .5 Transfer Revenue means any monies which are contracted to be received by the Club from other Clubs (or clubs) by way of Compensation Fee, Transfer Fee and/or Loan Fee (in these Rules, “Transfer Amounts”) during the Relevant Transfer Period . Clubs must actually receive the monies in order to meet the definition of Transfer Revenue . Transfer Amounts received in a different Relevant Transfer Period to that in which it was contracted to be received will be treated as being received in accordance with the contract submitted to The League .

2 .6 Transfer Expenditure means any monies which are contracted to be paid to other Clubs (and/ or clubs) by way of Transfer Amounts during the Relevant Transfer Period . Transfer Amounts paid in a different Relevant Transfer Period to that in which it was contracted to be paid will be treated as being paid in accordance with the contract submitted to The League . Any advances of Transfer Amounts received by the Club from a Financial Institution can only be included in the Reporting Period in which the Transfer Amount is contracted to be received from the Financial Institution .

2 .7 Relevant Transfer Period means the period of time commencing on 1 May in the immediately preceding Reporting Period and ending on 30 April in the current Reporting Period .

Guidance

For example, if Club A entered into a transaction 1 June 2021 to sell Player 1 with the following instalments, paragraph 2.4.1 applies and would be recognised in SCMP as follows:

• 1 June 2021 - £10k – captured in SCMP for Season 2020/21
• 1 January 2022 - £10k – captured in SCMP for Season 2021/22

• 1 June 2022 - £10k – captured in SCMP for Season 2021/22
• 1 January 2023 - £10k – captured in SCMP for Season 2022/23

If the Club entered into a similar transaction on 1 June 2022, paragraph 2.4.2 applies and it would be treated as follows for SCMP:

• 1 June 2022 - £10k – captured in SCMP for Season 2022/23
• 1 January 2023 - £10k – captured in SCMP for Season 2022/23 • 1 June 2023 - £10k – captured in SCMP for Season 2023/24
• 1 January 2024 - £10k – captured in SCMP for Season 2023/24

In the event that a Club was contracted to receive a payment on 1 May 2023 but was paid on 30 April 2023, the Club would be required to include this in Season 2023/24’s SCMP Submission.

Note that any variations to contracts to which 2.4.1 applies which take place after 6 May 2022 will be treated in accordance with 2.4.2.

  1. 2 .8  Donations – Donations from independently run lotteries, PFA contributions for Private Medical Insurance, small gifts from benefactors, donations towards Player salary costs, payment for taxation losses etc . are allowable . Significant donations must be evidenced by a bank receipt or statement to show funds have been credited to the Club’s bank account by the end of the relevant Reporting Period . To be included in the Club’s SCMP Submission, a signed Letter of Guarantee (in the format required by The League from time to time and which as at the date of these Rules, is as set out in Appendix D) must be received by The League to confirm that there is no interest linked to the donation or any requirement for future repayment of the donation by the Club .

  2. 2 .9  Cash Injections – Significant cash injections from companies or benefactors must be evidenced by a bank receipt or statement to show funds have been credited to the Club’s bank account by the end of the relevant Reporting Period . To be included in the Club’s SCMP Submission, a signed Letter of Guarantee (in the format required by The League from time to time and which as at the date of these Rules, is as set out in Appendix D) must be received by The League to confirm that there is no interest linked to the cash injection or any requirement for future repayment by the Club of the cash injection .

  3. 2 .10  Equity Injections – Only include non-redeemable Equity investments received (or to be received) in the relevant Reporting Period . The:

    1. 2 .10 .1  conversion to Equity of any debt; and/or

    2. 2 .10 .2  writing off of any debt,

  4. 2 .11  where such debt was created in any prior Reporting Period, does not constitute a form of revenue as no cash is provided to the Club to finance wages in the current Reporting Period . Further, any linked transactions whereby loans are repaid followed by an injection of cash in exchange for Equity, will not be allowed . Any injection of cash as Equity must be evidenced by a bank receipt or statement to show funds have been credited to the Club’s bank account, and a copy of the signed Companies House forms confirming the issue of new share capital must be received by The League by the end of the relevant Reporting Period . To be included in the Club’s SCMP Submission, a signed Letter of Guarantee (in the format required by The League from time to time and which as at the date of these Rules, is as set out in Appendix D) must be received by The League to confirm that the Club’s shareholder(s) will inject the necessary Equity into the Club prior to the end of the relevant Reporting Period .

  5. 2 .12  Accumulated Profit – Only include reserves extracted from audited Annual Accounts that have been filed with Companies House . For the avoidance of doubt any revaluation reserves do not qualify for inclusion .

2 .13 Other Income – To be assessed on a case by case basis .

3 OTHER NOTES

3 .1 All amounts should be shown net of attributable Value Added Tax .

3 .2 Where a Club enters into a contra deal with a sponsor (e .g . perimeter advertising in exchange for the provision of motor vehicles to a Club) then, provided there is an independent third party valuation attaching to the supply being provided to the Club, this amount can be incorporated in Relevant Turnover (e .g . within Sponsorship income)

3 .3 Where a Club offers equity to investors then that equity is included in the year in which that offer becomes unconditional .

3 .4 No loan funding, from whatever source and on whatever terms, should be included .

3 .5 Youth Development funding should NOT be included as part of Relevant Turnover or Football Fortune Income for the purposes of the Salary Cost Management Documentation .

3 .6 Bad debts should be netted off against the Relevant Turnover line in the period in which any claim for bad debt relief is made .

3 .7 Management charges received from any group companies should also be netted off income in the year in which the charges are levied . This income should be specified as other income .

APPENDIX B – DEFINITION OF PLAYER RELATED EXPENDITURE

Player Related Expenditure includes all expenses that are due during a Reporting Period to a Contract Player, Temporary Contract Player or Under 21 Player under the terms of his contract (save for any payments made in accordance with clause 19 .2 of the Standard Contract), calculated in accordance with the following paragraphs .

Guidance

Clubs will note that clause 19.2 relates to Severance payments made following the expiry of the Player’s contract. Any amount paid to the Player in accordance with the terms of that agreement do not need to be included within a Club’s SCMP Submission.

2 .  Those Players transferred out on loan should be excluded for any period that they are out on loan . As Clubs have the ability to share the wages of Players sent out on loan, then the treatment of wages should be treated proportionately .

3 .  Clubs should include all Players registered with them at any point during the current Reporting Period, along with their associated costs for the period of registration .

4 .  Any salary, fees or remuneration due under the terms of the Player’s contract and any image rights contract (if any) should be included . This would include not only basic salaries but also any additional salary payments which may become due dependent upon age etc .

5 .  Clubs should include any signing on fees due to be paid on registration of a Player .

6 .  Any additional payments which may become dependent upon appearances, either full or substitute appearances should be included .

7 .  Clubs should include any match, win, loyalty, promotion or other kind of bonus, save that promotion bonuses would be treated as expenditure in the following Reporting Period .

8 .  Include any accommodation, holiday, or relocation expenses in relation to a Player (to include all expenses met on behalf of the Player whether the expenses are legal, removal, travel or other associated costs) .

9 .  Include the cost to the Club of providing any benefit in kind, such as the cost of vehicles used privately (the P11d benefit figure should be used in calculating the cost to the Club) and any hotel expenses (other than those directly relating to matches) . It is not proposed to include training/fitness Player Related Expenditure .

10 .  Clubs should include National Insurance Contributions and taxes accrued in respect of the Player .

11 .  Include any agents’ fees payable by the Club, as well as any settled by the Club on the Player’s behalf .

12 .  Pension contributions due in respect of any Player in relation to the current Reporting Period .

13 .  Clubs should include any insurance premiums paid in respect of any Player . Personal accident, health and life insurance etc ., whether or not these are specifically provided for under the terms of any employment contract should be included .

14 .  Any personal expenses paid as well as other expenses ordinarily and necessarily incurred in connection with complying in full with the obligations under the terms of any employment contract should be included within the Player Related Expenditure .

15 .  Any loan made, or to be made to a Player which is not repaid within the same Reporting Period should be included as other Player Related Expenditure .

16 .  Exclusions may apply in respect of any Players who are declared permanently unfit to play at any point during the Reporting Period, for the period after such declaration, but not for any other period of incapacity (e .g . short term injury and short term illness etc .) .

17 .  Redundancy and/or Compromise payments made to Players (e .g . the payment of the balance of the contract as a lump sum which has been discounted to represent accelerated receipt) should also be included for the purposes of determining Player Related Expenditure . Where redundancy payments are staged they should be allocated into the SCMP Documentation for the Reporting Period in which the payments fall due .

18 .  Some Clubs appoint Players to other roles e .g . manager or coach . So as to avoid Clubs seeking to load salary payments in favour of the second role, the payments under both roles will be amalgamated and the total will be attributed as Player Related Expenditure for the purposes of determining compliance with the SCMP Requirement . Clubs will have the right to apply to The League (acting via the CFRU) to exclude the payments relating to the individual’s secondary role .

Guidance

The CFRU’s general approach will be to require the Club to demonstrate that the sums paid in relation to the coaching role are bona fide and is not being used a device to load salary payments in favour of the second role. The CFRU may ask the Club to provide:

  • details of the work being undertaken by the Player in respect of the second role;

  • the relevant coaching contract;

  • where relevant, evidence of the coaching badges being completed by the Player; and

  • any other information that the CFRU may require.19. All of the Player Related Expenditure definitions will be described as being made to a Player or any third party on his behalf, either directly or indirectly, whether in this country or elsewhere.