Wages at 65% of Turnover

[Battery Rover]

We are keeping to the 65% of turnover this season. Plenty of income from advertisements, bar, gear sponsors, monthly draw and income from season tickets etc.

[pete]

I believe "Director Loans" can be included in the Turnover number.

[paudie]

He's already spent on Pats since he bought the shares, so does that count?

It depends on how the money he's put into the club is treated in the accounts. If it's shown as a loan it shouldn't really be treated as turnover as its a loan. A non refundable investment would be treated differently.

I'd be surprised if a successful businessman like Kelleher would treat the money he's put into the club as anything other than a loan, even if he thinks its unlikely to be repaid.

Once it's shown as a loan he can potentially be repaid down the line if the club is ever able to pay it back, say if Pats get a huge transfer fee, get big money from UEFA etc.

[paudie]

I believe "Director Loans" can be included in the Turnover number.

You mean in the FAI regulations?

That will make it a lot easier for clubs to comply with the 65% rule but defeats the purpose really.

[pineapple stu]

The 65% will be enforced in club licensing.

I thought it was 65% of expenditure.

That doesn't make any sense. The more you spend, the more you can spend on wages?

How far does this go? If a club has a bar that takes in a million a year with a profit of (say) 50,000 will the 1 million figure be used in the calculations?

Only one way to find out..

I believe "Director Loans" can be included in the Turnover number.

Have you any basis for that? It's not turnover, therefore it's not turnover. Quite simple really.

Great idea if it happens. Clubs clearly need to be forced to cop on to themselves, by and large (some clubs don't, but most do). Pat's and Drogs are losing a million a year, so it'll be very interesting to see what happens there - seems like the clubs that'll be hit most. I'd imagine it'll get fudged though, either by the turnover loopholes or by re-defining wages.

That said, it's worth remembering that Revenue are keeping a close eye on the league since the craic with Shels, so it mightn't be as easy to hide wages as you'd think.

[pete]

Have you any basis for that? It's not turnover, therefore it's not turnover. Quite simple really.

I thought i read it somewhere but no proof. Its simple if you are not the FAI.

[superfrank]

As far as I know all clubs accounts now have to be audited.

In these days of tight regulation it would be a foolish auditor who would put his name to accounts he had any reason to believe were "phoney" in any material way.

I woudln't be surprised by auditors doing that. I know it goes on in other fields of public life so why not football? Yes, it would be a very stupid thing to do.......if you're caught. Any person willing to take that risk would be smart enough to cover themselves. That said I hope no el club does it, I'm merely saying it is possibe to do.

[endabob1]

Any person willing to take that risk would be smart enough to cover themselves..

One word ENRON

[superfrank]

One word ENRON

Forgot about that.

[paudie]

I woudln't be surprised by auditors doing that. I know it goes on in other fields of public life so why not football? Yes, it would be a very stupid thing to do.......if you're caught. Any person willing to take that risk would be smart enough to cover themselves. That said I hope no el club does it, I'm merely saying it is possibe to do.

An auditor would have to bear in mind that the EL club accounts he signs off on WILL be examined by an independent body, ie the licencing committee.

With most accounts there is a good chance that they will never be checked by an independent person so an auditor might be prepared to sign when he's not 100% happy with them.

[galwayhoop]

How far does this go? If a club has a bar that takes in a million a year with a profit of (say) 50,000 will the 1 million figure be used in the calculations?

the € 1 million is turnover and the €50,000 is profit. therefore the €1m figure is used.
however if a bar is only making a profit margin of 5% the bar manager would be fired well before the year was over

does anybody know if this equirement will be in the next licensing manual or as the fai say it is aspirational

this season (2007) it is only a recommendation. next season (2008) supposidely it will be enforced. therefore any clubs who do not meet it will face sanctions at the end of 2008 or else the beginning of 2009 season - presumably when they look for their license

[passerrby]

looks like it will be hard to police but it needs to be done...

[Stato]

I spoke with St Pats Club Licensing Officer about this. Apparently the wording is "turnover". He said he'd been on to the FAI Licensing people to highlight the potential problems with the wording and he believes they will provide a full definition of what can and can't be included when the 2008 Licensing manual is issued, some time in the next couple of months. His guess is that it will be changed to "net income" i.e. turnover less direct costs (50c in the programme example and €50K in the bar example). He also suggested that directors loans won't be included but issue of shares would.

At the moment there's nothing to stop Garreth Kelleher "sponsoring" St Pats for €10m and then charging €3.5m in "director's fees" if he wanted to spend €6.5m on player wages.

[OneRedArmy]

The principle behind what defines the measure (turnover, income or whatever they decide it to be) is that it should exclude monies which can be taken out of the company by a benefactor/director at short notice, which would have the effect of trigger a breach in the 65% limit.

Detailed definitions are required on this and I have zero confidence in the FAI being able to administer it and the clubs being able to comply with it (either on competence or willingness grounds).

It will take at least 2 years to implement properly.

[passerrby]

Detailed definitions are required on this and I have zero confidence in the FAI being able to administer it and the clubs being able to comply with it (either on competence or willingness grounds).

It will take at least 2 years to implement properly.

have to agree the concept is great the implmentation could become another fiasco

[Mr A]

The principle behind what defines the measure (turnover, income or whatever they decide it to be) is that it should exclude monies which can be taken out of the company by a benefactor/director at short notice, which would have the effect of trigger a breach in the 65% limit.

Detailed definitions are required on this and I have zero confidence in the FAI being able to administer it and the clubs being able to comply with it (either on competence or willingness grounds).

It will take at least 2 years to implement properly.

It's been on the way for that long. There's no excuse bar incompetence (which isn't really an excuse) to get it right.

They won't though, not a hope.

[Bald Student]

I spoke with St Pats Club Licensing Officer about this. Apparently the wording is "turnover". He said he'd been on to the FAI Licensing people to highlight the potential problems with the wording and he believes they will provide a full definition of what can and can't be included when the 2008 Licensing manual is issued, some time in the next couple of months. His guess is that it will be changed to "net income" i.e. turnover less direct costs (50c in the programme example and €50K in the bar example). He also suggested that directors loans won't be included but issue of shares would.

That sounds reasonable enough.

I've been following this league for too long to trust the FAI but they seem to be cleaning up their act a bit recently. We'll just have to wait and see if they do this right.

[Macy]

It's been on the way for that long. There's no excuse bar incompetence (which isn't really an excuse) to get it right.

The fact that it's due to be in next year and the FAI still haven't issued what constitutes turnover, and it appears likely it isn't even going to be based on turnover, isn't an issue?

[Pablo]

The fact that it's due to be in next year and the FAI still haven't issued what constitutes turnover, and it appears likely it isn't even going to be based on turnover, isn't an issue?

In all fairness the FAI dont define what turnover is! Dear Oh Dear.

Standard accounting practice does.

[Macy]

In all fairness the FAI dont define what turnover is! Dear Oh Dear.

Standard accounting practice does.

Well the FAI have left enough wriggle room to suggest that it might not be the straight turnover figure, but now they're saying it might be net income rather than turnover anyway!