markwwfc1992
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Copy + Pasting an interview from our owner Jeff Shi regarding FFP
FFP has been a hot topic since Fosun bought the club and began spending tens of millions on players, with this summer's pending purchasing of Diogo Jota to take their outlay to £67m. Shi told the Express & Star that the EFL rules on profitability – which dictate that clubs cannot make a loss of more than £39m over three seasons – were misguided.
"There's a contradiction behind the rule," he said.
"It's about how you can't have a huge loss in three years but what's the intention?
"If it's to make a club more stable so you don't go into administration and have enough money to cover costs, then from a financial view profitability is a not a good judgement of that. The better judgement is equity and debt.
"For example, if I want to protect every club going into administration I'd ensure the club has lots of equity and not much debt.
"The loss/profit is not so important because it's not related to the long term stability of the club.
"If an owner wants to put money into the club, of course they'll have a loss in that year.
"But if you put money into equity the club has enough money to do everything."
Wolves' latest accounts, which cover Fosun's first season, showed the club made a loss of £23.2m, following on from a £5.8m profit the season before. With FFP judged on a rolling three-year basis they should be fine for the end of this season, but the picture becomes less clear if they fail to win promotion.
Shi added: "The rule is there and we will try to follow...so far so good, we are complying.
"But from an investment view it's strange.
"You're protecting some big clubs and not encouraging the small clubs to catch them.
"The big clubs have a big fanbase and more money from the commercial side.
"So how can a small club do something to chase them?
"I have every right to invest more into the club.
"If you really want to build a truly even field why do the three clubs relegated from the Premier League have so much money from parachute payments?
"If you want a truly even league they should cut that.
"We are competing with some big clubs who have parachute payments, six or seven in this league. So if we don't put money in, how can we compete? It's restrictive to clubs with ambition.
"Of course people should be careful with their finances but the rules should changed a bit.
"I just hope the league have more positive messages to encourage some innovation.
"In every industry in the world improvement and progress comes from new things...or the industry will be stale."
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I know the general feeling is that Wolves have bought the league this season, I'm not disputing that (to an extent) as without him I'm sure we wouldn't be top. However I think Shi has a point regarding FFP. If FFP restrictions increase it will be harder for 'smaller clubs' to ever compete on a level playing field with 'bigger clubs'. The main reasoning for this is due to the parachute payments for teams coming down from the Prem, who are always going to be at a huge advantage. It seems if you're going to have FFP restrictions you should scrap the parachute payments to make things fairer to other clubs. It shows how well teams like Sheff Utd/Preston/Cardiff (before Jan) etc who work on a relatively small budget have done that they can more than compete in this league. What are other people's thoughts on this?
FFP has been a hot topic since Fosun bought the club and began spending tens of millions on players, with this summer's pending purchasing of Diogo Jota to take their outlay to £67m. Shi told the Express & Star that the EFL rules on profitability – which dictate that clubs cannot make a loss of more than £39m over three seasons – were misguided.
"There's a contradiction behind the rule," he said.
"It's about how you can't have a huge loss in three years but what's the intention?
"If it's to make a club more stable so you don't go into administration and have enough money to cover costs, then from a financial view profitability is a not a good judgement of that. The better judgement is equity and debt.
"For example, if I want to protect every club going into administration I'd ensure the club has lots of equity and not much debt.
"The loss/profit is not so important because it's not related to the long term stability of the club.
"If an owner wants to put money into the club, of course they'll have a loss in that year.
"But if you put money into equity the club has enough money to do everything."
Wolves' latest accounts, which cover Fosun's first season, showed the club made a loss of £23.2m, following on from a £5.8m profit the season before. With FFP judged on a rolling three-year basis they should be fine for the end of this season, but the picture becomes less clear if they fail to win promotion.
Shi added: "The rule is there and we will try to follow...so far so good, we are complying.
"But from an investment view it's strange.
"You're protecting some big clubs and not encouraging the small clubs to catch them.
"The big clubs have a big fanbase and more money from the commercial side.
"So how can a small club do something to chase them?
"I have every right to invest more into the club.
"If you really want to build a truly even field why do the three clubs relegated from the Premier League have so much money from parachute payments?
"If you want a truly even league they should cut that.
"We are competing with some big clubs who have parachute payments, six or seven in this league. So if we don't put money in, how can we compete? It's restrictive to clubs with ambition.
"Of course people should be careful with their finances but the rules should changed a bit.
"I just hope the league have more positive messages to encourage some innovation.
"In every industry in the world improvement and progress comes from new things...or the industry will be stale."
-------------------------------------------------------------------
I know the general feeling is that Wolves have bought the league this season, I'm not disputing that (to an extent) as without him I'm sure we wouldn't be top. However I think Shi has a point regarding FFP. If FFP restrictions increase it will be harder for 'smaller clubs' to ever compete on a level playing field with 'bigger clubs'. The main reasoning for this is due to the parachute payments for teams coming down from the Prem, who are always going to be at a huge advantage. It seems if you're going to have FFP restrictions you should scrap the parachute payments to make things fairer to other clubs. It shows how well teams like Sheff Utd/Preston/Cardiff (before Jan) etc who work on a relatively small budget have done that they can more than compete in this league. What are other people's thoughts on this?
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