PSR conundrum

[hopelesslyoptimistic]

The great PSR conundrum. Accepting the rules are not very fair to promoted teams they broadly work as follows.

You can make a loss of 5m per year per season or 35m if the owners cover the other 30m. This runs over a three year period so 105m in total for teams that have been there for the last 3 seasons (and thus the reason why it?s important to try to bounce straight back up if you get relegated).

We have had two seasons out of the PL so our allowable loses over the following 3 year period will be 35m plus 13m x2 (as 13m is what is allowed in the EFL) and this 61m in total).

Sunderland will have 39m as there target due to not having had a season in the PL.

So the promoted clubs already start behind.

This is not about ability to pay any debts just the figure that PSR provides.

Only certain income counts and certain outgoing are excluded (such as training ground or main ground improvements).

On the plus side, when you sign a player the transfer fee can be divided by the length of contract awarded (hence why Chelsea tried to issue 9 year contracts until that loophole was closed) and then that amount counts each year in the debit column over the contract period.

Equally when you sell a player the whole transfer fee can be allocated to the year of sale (hence some clubs need to sell just one player each year).

The wages count in the debit column too but match day revenue, merchandise and sponsorship all count in the income side. The PL money also counts.

That then leaves the question as to why Leeds are so tight up against the limits.

Over the last two seasons we got the big wages off the books with loans and we sold getting on for 150m of players

Adams
Sinisterra
Kamara
Summerville
Rutter
Gray

All of that could be booked immediately. We also had the biggest turnover in the EFL. The EFL wages are a lot lower than they now are too.

In terms of this transfer window we have spend under 100m so assuming on average 4 year deals that is roughly 25m in the debit ledger plus their wages. Bar DCL none of the new players are on eye watering amounts (it?s all relative) and DCL is supposed to be on about 80k PW.

We have also moved a lot of players on and last year had two on loan.

That suggests there must be some financial event(s) hitting the books that they are worried about

jKA? - that was a 50m hit but don?t know if it can be spread over several years and we supposedly have 20m in promotion bonuses to pay too.

The board also put in a big cash injection via share issues (which is still permitted to a certain value) and the RB and Adidas deals will now generate more cash.

As such, why are we not spending more cash to stay up. Sunderland seem to be at about 160m now.

Tell me if I am missing something here or does it seem a little odd?

[norfolk white]

Don’t understand any of it, all I know is that Liverpool have spent astronomical sums yet can still pay 120 million for the Newcastle rebel, how come?

[ozleeds]

Don’t understand any of it, all I know is that Liverpool have spent astronomical sums yet can still pay 120 million for the Newcastle rebel, how come?

It's called fair play lol.
It is free for all for top clubs and fair play to the rest.

[Monaco_Totty]

The great PSR conundrum. Accepting the rules are not very fair to promoted teams they broadly work as follows.

You can make a loss of 5m per year per season or 35m if the owners cover the other 30m. This runs over a three year period so 105m in total for teams that have been there for the last 3 seasons (and thus the reason why it?s important to try to bounce straight back up if you get relegated).

We have had two seasons out of the PL so our allowable loses over the following 3 year period will be 35m plus 13m x2 (as 13m is what is allowed in the EFL) and this 61m in total).

Sunderland will have 39m as there target due to not having had a season in the PL.

So the promoted clubs already start behind.

This is not about ability to pay any debts just the figure that PSR provides.

Only certain income counts and certain outgoing are excluded (such as training ground or main ground improvements).

On the plus side, when you sign a player the transfer fee can be divided by the length of contract awarded (hence why Chelsea tried to issue 9 year contracts until that loophole was closed) and then that amount counts each year in the debit column over the contract period.

Equally when you sell a player the whole transfer fee can be allocated to the year of sale (hence some clubs need to sell just one player each year).

The wages count in the debit column too but match day revenue, merchandise and sponsorship all count in the income side. The PL money also counts.

That then leaves the question as to why Leeds are so tight up against the limits.

Over the last two seasons we got the big wages off the books with loans and we sold getting on for 150m of players

Adams
Sinisterra
Kamara
Summerville
Rutter
Gray

All of that could be booked immediately. We also had the biggest turnover in the EFL. The EFL wages are a lot lower than they now are too.

In terms of this transfer window we have spend under 100m so assuming on average 4 year deals that is roughly 25m in the debit ledger plus their wages. Bar DCL none of the new players are on eye watering amounts (it?s all relative) and DCL is supposed to be on about 80k PW.

We have also moved a lot of players on and last year had two on loan.

That suggests there must be some financial event(s) hitting the books that they are worried about

jKA? - that was a 50m hit but don?t know if it can be spread over several years and we supposedly have 20m in promotion bonuses to pay too.

The board also put in a big cash injection via share issues (which is still permitted to a certain value) and the RB and Adidas deals will now generate more cash.

As such, why are we not spending more cash to stay up. Sunderland seem to be at about 160m now.

Tell me if I am missing something here or does it seem a little odd?

Gotta get a grip on PSR snakes & ladders folks !

Firstly its how clubs are financed, which is critical.

Looking at Sunderland, the average Sunderland players weekly payroll in Nov 2024 for players was 242,769 pounds, with a average weekly salary of 8,371k.
Given that they have already increased ticket prices by 10% for this season they will get 20m there & they have projected a massive big increase commercially too, over triple what they did in Championship, so another easy 20m again !

Add all that together your at 150m - so with parachute payments as 'insurance' that goes to around 240m all-told secured for them.

Sunderland AFCs owners are Kyril Louis-Dreyfus, who holds a 64 per cent majority stake & Juan Sartori, owns the remaining 36 per cent.

AS Monaco actually have Sartori on their board as vice president & the Sunderland co-owner is the 'son-in-law of majority owner Russian billionaire Dmitry Rybolovlev, 'tho Sartori has no shares in Monaco his personal wealth isn't huge at a declared a net worth of 82m derived from his shareholdings in companies like Renio SA, Union Group IHL & Arvesa Corp plus 1m worth of property in London.

Leeds payed circa 20 million in promotion bonuses after securing Championship title, which was gonna directly impact the PSR calculation, for starters.

Yes, Leeds have the joint lowest loss cap in the PL, circa 61million, because every PSR cycle accounts for 3 seasons including the current one. In the case of Leeds each rolling period starts on July 1st & ends June 30th, ok.

Each season in the EFL Championship allows losses up to 13m per season.
In the PL it is 35m !
Leeds, like Sunderland, spent the past 2 seasons in the Championship before promotion, hence why both their totals sat at 61m.
Burnley only spent 1 season back in the EFL Championship so have a higher cap of 83m.

Importantly, all other non-promoted clubs given all of the last 6 promoted teams went straight back down, their loss limit sits at 105m due to having 3 full seasons in the PL.

How close Leeds are to the PSR line is something only the club will know but we have spent more than 100m this summer with barely circa 10m or so brought in via sales & loan fees as of yet.
To date Sunderland have shipped out 17 players

As explained before, the cost of a new player can be spread over the length of a contract, eg a 10m player on a 4 year deal sees a club pay out 2.5m per season, aka amortisation, blah blah blah.

As all the finance gurus have said, Leeds could sell players before the current accounting cycle ends on June 30 2026. So the likes Joseph at Mallorca, while Werder Bremen could opt at some stage to trigger the Schmidt buy out clause, too. 🤞

Gotta factor in too that our club owners issued shares recently which provided capital to 'boost' our transfer budget & into helping cover costs of the ER 2026 stadium expansion with surrounding land area projects to factor in.
Its important to recall 49'ers purchased LUFC with funds from the capital contributions & management fees from the investor consortium rather than directly from the 49ers NFL team, too.

Furthermore, complicated PL rules on APTs 'associated party transactions' regarding sponsorship & investment agreements with entities connected to clubs owners were set to be 'redrafted' this year, which only adds more 'haze' over where clubs stand within finance regulations currently. 😳
Hence my ER stadia brand renaming money opportunity quip on another thread.

As projected the 49ers ship is still financially steady-ahead, bearing in mind the Jan 26 window maybe further needed to help secure our PL safety which will defo need deep pockets if required.

Of course we could do a Forest or Eveton & to hell with the rules. 👍
But my previous comments on woes of multi- club ownership stand, Whether Sunderland are indirectly bank- rolled is a matter for the powers that be.

Just saying

[ozleeds]

That explains why we went all out early and brought more crap into the team, nice job Leeds.

[Billyni]

What's the consequences of breaking the psr law, and who has been prosecuted so far?

[hopelesslyoptimistic]

What's the consequences of breaking the psr law, and who has been prosecuted so far?

Fine and or a points deduction. Everton, Leicester and Blades definitely all have had sanctions and think Everton got a big points deduction which was reduced on appeal.

Fear is the PL, UEFA and FL all getting tougher with sanctions though.


MT I understand all of the points re PSR etc but given the large sums of revenue generated in the EFL and topped off with huge player sales revenue plus the share cash injection there must be something else in the accounts causing us to be worried I suspect as it makes no sense that Burnley and particularly Sunderland can spend such massive amounts and we relatively don’t.

Maybe there was the cash there but they’ve saved some for January.

Also think we may have yet again been a bit naive with the new team in place which doesn’t have as much experience as those who left for Merseyside and probably don’t have quite the contacts either - who knows.

Just all a bit at odds with the messaging from the chairman.

[ozleeds]

What's the consequences of breaking the psr law, and who has been prosecuted so far?

Well, Billy, none but you can just feel we will be the first, and they will come down hard by sending it to the Scottish Premier League to liven it up.

[ozleeds]

Fine and or a points deduction. Everton, Leicester and Blades definitely all have had sanctions and think Everton got a big points deduction which was reduced on appeal.

Fear is the PL, UEFA and FL all getting tougher with sanctions though.


MT I understand all of the points re PSR etc but given the large sums of revenue generated in the EFL and topped off with huge player sales revenue plus the share cash injection there must be something else in the accounts causing us to be worried I suspect as it makes no sense that Burnley and particularly Sunderland can spend such massive amounts and we relatively don?’t.

Maybe there was the cash there but they?’ve saved some for January.

Also think we may have yet again been a bit naive with the new team in place which doesn?’t have as much experience as those who left for Merseyside and probably don?’t have quite the contacts either - who knows.

Just all a bit at odds with the messaging from the chairman.

Everton learned a lesson, couldn't afford Harrsion but could afford Grealish, and millions spent on that new guy. That's how PSR works.

[spaldy]

I suspect we are also paying for "past sins".

we signed quite a few players that just didn't pan out. Raph, Phillips and Summerville sales made up for some of that but players like KJA, Koch, Wober Kristensen, Lorente didn't come anywhere near their upfront cost I suspect. I seem to recall we also have a huge fine added to the whole KJA fiasco but can't be sure.

This ownership group seems a lot more business savvy than any we've had in the past. Tough to stomach at times but also better for long term success.