Fulham Financials 2021/22 Part 1: Did Fulham breach FFP rules?


This is a first of a series of posts looking at Fulham’s finances and their position vs FFP.

In this post, I calculate that, in my opinion, Fulham have complied with their requirements under FFP up to the end of the 2021/22 season. 

However this calculation is based on two key assumptions:

  1. That Fulham’s adjustment’s made with respect to the cost of COVID will be deemed reasonable, particularly their probable claim that they should write off a chunk of squad value and attribute that to COVID.
  2. That promotion bonuses are exempt from the FFP calculation (which everyone says they are, but crucially the rules don’t say).

The table below shows my best calculation of the clubs Adjusted Earnings Before Tax against the FFP loss limit:

It shows that Fulham’s cumulative Earnings before tax over the FFP assessment period were -£167.5m which is considerably more than the loss limit for Fulham of £72m.

However (subject to the key assumptions above), I calculate the following adjustments to that Earnings Before Tax figure:

  • £27.1m for depreciation of tangible fixed assets
  • £30m for Youth development expenditure
  • £600k for Women’s Football Expenditure
  • £300k for Community Development Expenditure
  • £20.6m for COVID costs and,
  • £26.25m for Promotion Bonus adjustments

All of which leads to an Adjusted Earnings Before Tax figure of -£62.6m which is within the FFP loss limit of £72m.

The rest of the article is the detailed story of how these figures have been arrived at.


This article is going to set out the calculations I have used to determine if Fulham have breached FFP rules as at the end of the 2021/22 seasons based on the financial statements for that season, which have just been released.

There is no indication that Fulham have breached FFP rules, but it is well known that the club has been under pressure from the FFP limits due to the complications caused by yo-yoing between the Premier League and the EFL Championship while trying to absorb some heavy transfer fees paid out on (largely ineffective) players in the summer of 2018.

So let’s start with the rules that Fulham are subject to at the end of the 21/22 season. That was a season where Fulham were in the EFL Championship for that season the key rules we are interested in are the EFL Profit and Sustainability Rules for EFL Championship clubs (you can read those here )

These rules are more or less identical to the Premier League Profit and Sustainability Rules. The rules place restrictions on clubs as follows:

All championship clubs must calculate a total ‘Adjusted Earnings Before Tax’ (AEBT) figure for the FFP assessment period. That total AEBT figure must be less than an upper threshold for that period set in the rules.

The FFP Assessment Period

Normally the FFP assessment period is just the last 3 seasons…but COVID complicated matters somewhat.

One of the effects of COVID was that the 2019/20 season got suspended in the Spring and didn’t resume until the summer. One consequence of this was that many fixtures for the 2019/20 season got moved into the financial year that clubs have for the 2020/21 season. This means that clubs played way more games in the 20/21 financial year than they did in the 19/20 year, and this meant a lot of wages and revenues from 19/20 moved into the 20/21 year as well. This made calculating FFP and reporting financial performance difficult.

The solution to this, from an FFP point of view, was to combine the 2019/20 and 2020/21 financial years into a single period for the purposes of FFP assessment, and then just divide all the figures by 2, to give an average FFP performance for the 2 seasons.

To cut a long story short, this means that the FFP assessment covers the following 3 time periods

Period 1: Financial year 2021/22

Period 2: The average of financial years 2019/20 and 2020/21

Period 3: Financial year 2018/19

The FFP AEBT Loss Threshold

The rules explain how to determine how much money Fulham can lose in their AEBT measure (explained below) across the FFP assessment period. The rules explain that a club is allowed to lose:

  • £13m in an EFL Championship season and
  • £35m in a Premier League season

So for Fulham we can look at the seasons covered by the FFP Assessment Period and work out the total AEBT loss threshold

For Period 1 (Season 2021/22) Fulham were in the EFL Championship: Loss threshold £13m

For Period 2, Fulham were in the Premier League for season 2020/21 (Limit £35m) and the EFL Championship for 2019/20 (Limit £13m). As per the methodology above, we take the average of these to find the loss limit, (13 + 35) / 2 = £24m

For Period 3 (Season 2018/19) Fulham were in the Premier League: Loss Threshold is £35m.

So the total FFP AEBT Loss Threshold for Fulham is £13m + £24m + £35m = £72m

Adjusted Earnings Before Tax (AEBT)

So we know that Fulham are allowed to lose a total of £72mn across the FFP assessment period on an ‘Adjusted Earnings Before Tax’ basis. But what is AEBT anyway?

Well, it’s a calculated figure for each of the 3 time periods in the FFP Assessment period. The calculation starts with a figure taken straight from the financial statements, the Earnings Before Tax. Then the FFP rules say you can make some adjustments to this Earnings Before Tax figure. These adjustments essentially reverse out of the calculation of Earnings before tax things which football authorities want to encourage football clubs to spend money on. They also remove other items of expense which the league thinks are unfair to capture in the FFP assessment. The adjustments are listed below in the extract from the league rules, but I will explain them in more detail later in the article (because we have to calculate them).

We have already calculated Fulham’s Loss Threshold, but to know if Fulham have breached that Threshold, we are going to have to calculate the AEBT.

This is hard to do because not all of the figures needed to do it are published in the financial statements. Where the numbers are disclosed, I will use them, but where they are not, I will estimate them.

In doing the calculations, I will use the following table which I have put together:

This table sets out the overall FFP calculation we must do, it starts with the Earnings Before Tax figure at the top for each Time Period, (each time period is shown in a different colour) and then leaves space for all the adjustments needed to turn that figure into the Adjusted Earnings Before Tax figure (AEBT) at the bottom.

The final row shows our calculation of the FFP AEBT Loss Threshold. The time periods are summed into a total on the far right, so at the bottom of that far right column we will end up with our Total AEBT figure which we can compare to our total loss threshold (already calculated as £72m).

You may notice that I have already filled in the Earnings Before Tax row at the top. This is taken straight from the Profit and Loss accounts published by Fulham.

You can see that the total Earnings Before Tax for the FFP assessment period are -£167.5m, so we can see that for Fulham to not breach FFP rules, we need to find around £96m of adjustments.

Making Adjustments

Adjustment 1: Depreciation and/or Impairment of tangible fixed assets

The first adjustment we are going to make is for ‘Depreciation and/or Impairment of tangible fixed assets’.

This is quite an accounting / technical adjustment, but it basically means that where Fulham owns things like land, buildings or machines, these may lose value over time, but we don’t have to count this lost value in the FFP calculation so we can add such costs back into the AEBT figure. For Fulham the main tangible fixed assets are Craven Cottage itself and Motspur Park.

The accounts give pretty clear information on this, for example this extract from the latest accounts summarises changes to tangible fixed assets and shows a depreciation charge of just over £2m for tangible fixed assets.

This £2m is fairly typical for Fulham and we can get that number for all previous years in the accounts and enter it into our calculation table.

There is one season though where there is an added complication, the extract from the accounts for the 2018/19 season is shown below:

Here I have highlighted 3 elements that make up the impairment charge to tangible fixed assets and one of them is large at £21.5m.

This impairment charge is the result of Fulham decommissioning and demolishing the old Riverside Stand and, in the process, reducing the value of Craven Cottage by this amount. This is also FFP exempt and we can put it into our table as an adjustment:

So here is our updated table, and the first adjustment is complete. The good news is we have found a total of £27.1m of FFP adjustments already, so we are well on the way to FFP compliance!

Adjustment 2: Amortisation/Impairment of goodwill and other intangibles (excludes player registrations)

This is another accounting technical adjustment and this is an easy one. Fulham have two types of intangible assets, Goodwill and Player Registrations. Player registrations in not included in this adjustment and Fulham have never impaired or amortised the £3m of goodwill on their balance sheet.

This means there is no adjustment to be made, another line of our table is complete!

But this has brought us no closer to FFP compliance!

Adjustment 3: Youth Development Expenditure

This is the first adjustment where we will need to make some estimates. Youth development expenditure is defined as follows in the rules:

So for the sake of our calculation, it covers Fulham’s spending on its academy. The accounts give us no information on how much Fulham spends on this unfortunately, so we must estimate entirely.

What we know is that Fulham run a ‘Category 1’ and highly successful academy, and the website lists 14 employees of the academy as well.

I have done some research on this, but while it is hard to find figures for academy running costs the data points I have are these:

  • In 2012 the Football Supporters Association estimated a Category 1 academy would cost £2m a year to run
  • In 2018, Statista gathered data from the top two Bundesleague divisions and found they spent, on average, £4m a year on academies.
  • Aston Villa actually set out their youth development spending in their accounts, and the latest show it as £13.9m for 2021/22 and £10.8m the previous season.

I don’t really know how Aston Villa’s academy compares to Fulham’s, the only real comparison I can find is that Wikipedia lists 23 employees of the Villa academy and Fulham’s website lists 14 employees. But, without sounding too snobbish, Fulham’s academy is in West London…

For the purposes of this exercise, I am going to estimate an annual expenditure of £10m for Fulham’s academy.

We are now ready to punch these numbers into our FFP assessment table:

This has given us a nice £30m adjustment, we only have a little over £38m to go to FFP compliance!

Adjustment 4: Women’s Football Expenditure

With respect to the Fulham women’s team, my understanding is that after turning professional in the early Al Fayed era, there was a subsequent disbanding of the team which has recently reformed. However my understanding it is not formed on a professional basis (please correct me in the comments if this is incorrect). I believe that since 2018 the women’s team has played and trained at Motspur Park however, which presumably means a portion of the facilities running costs could be allocated to the women’s team.

The website lists coach Steve Jaye and Carla Joseph as part of the coaching staff, although I believe at least Steve Jaye has other roles at the club (reference a 2021 Peter Rutzler Athletic article).

I am going to estimate the cost of running these teams (including a women’s development programme) to be relatively low driven in large part by an allocation of Motspur Park expenses. I will estimate it at £200,000.

This figure can now go into our adjustment table!

Adjustment 5: Community Development Spending

Community Development Expenditure is defined as follows in the rules:

It includes charitable donations and we can see from the accounts that Fulham typically donate around £75k to the Fulham Foundation. As for the expenditure by the club to activates to promote participation in sport and social development, I have very little information on that. So I am going to round this to £100k for my adjustment estimate.

This can now go in the table:

Adjustment 6: COVID Costs

This is a tricky one, fraught with potential controversy. But at least we do have some information in the accounts to help us. First of all, the rules which state:

A lot to digest there but the key points are:

  1. Clubs can add back into AEBT lost revenues due to Covid (like lost gate receipts from playing behind closed doors) and remove additional costs that may have been incurred.
  2. The rules sets out the level of costs it will accept without asking too many further questions (£5m a year in 19/20 and 20/21 plus £2.5m in 21/22) but says it is willing to discuss larger adjustments, it just needs more information to assess them

Fulham don’t set out anywhere exactly what adjustment they think they are entitled to, but we can have a reasonable go at estimating what they are likely to think.

Firstly there is the matter of lost revenue due to COVID. The extract from the accounts below breaks down Fulham’s revenue from the main covid impacted seasons (19/20 and 20/21)

Note that 20/21 was in the Premier League and 19/20 in the Championship.

The next extract shows the same figures for the 2018/19 (Premier League) and 2017/18 (Championship) seasons.

If we assume the pre-pandemic seasons represent normal income for these divisions, and the pandemic seasons the Covid income, then the difference can be assumed to be the impact of Covid on revenue!

From these numbers we can see that:

  • Gate Receipts were £11,866k lower during the pandemic
  • Sponsorship was £6,726k lower during the pandemic

So it looks to me like a reasonable case can be made that there was a loss of revenue of about £18.6m during the pandemic.

There is another factor here as well, many clubs argued that the pandemic caused a collapse in transfer prices, and reduced the value of players contracts on the balance sheet. Fulham might have argued that the price they were being offered for key players like Anguissa or Mitrovic during the pandemic was less than it otherwise might have been.

We can be pretty sure that Fulham made this argument because in their accounts for the 2020/21 season we see the following entry:

This tells us that Fulham have made a one off reduction in the value of their squad of £20.9m. This write-off then forms part of the loss before tax. I am certain that Fulham will have claimed this write-off as a covid expense.

Fulham may also claim that in not being able to sell players during the pandemic, they also had to pay additional wages beyond what they otherwise might have had to.

For the purposes of this analysis, I am going to add the £20.9m player impairment charge as a covid adjustment in our table in the 20/21 season.

I am also going to apply a small AEBT uplift to reflect that many of the key players (like Anguissa) were later sold by the club, and in doing so, the fact that Fulham had already written down their value, would have inflated the profit Fulham recognised on the sale and I understand they would have had to offset that gain against their Covid adjustment (with thanks to @Somethingnew223 on Twitter for this point) Im going to estimate a £5m AEBT uplift to reflect this.

For one final adjustment, I note that the Championship rules allow up to £2.5m of COVID costs in the 21/22 season without detailed analysis, so I am going to assume Fulham claimed such costs.

We now have a new set of adjustments to put into our table for COVID:

We are now getting close to the FFP limit, only about £17m of adjustments left to find in the last two categories.

However, Im going to now narrow this down to 1 category, and a difficult one, because the final category (2021/22 Fixed Asset Sales) does not apply to Fulham (this basically means you are not allowed to sell and lease back your stadium which was added after a number of clubs including Derby County did this).

So that brings me to the last adjustment…

Adjustment 7: Promotion Bonuses

Or is it an adjustment at all???

The issue here is this: most Championship clubs reward players with very large bonuses when they get promoted. My estimation is that Fulham paid out to the players somewhere in the region of £15m to £20m each time they got promoted to the premier league.

Most experts on FFP including Kieran Maguire and Swiss Ramble say that such expenses should be deducted from the FFP calculation. Fulham also said this themselves in a meeting with the FST in April 2020 (see minutes).

This sort of makes sense, because clubs cant really predict if they will get promoted and its hard to plan your FFP compliance when you don’t know if you will suddenly have to pay your players millions of pounds in bonuses. You could also have a crazy situation where a team in the playoff final suddenly realised they couldn’t afford to win the game without triggering an FFP breach.

But it also doesn’t entirely make sense to me that promotion bonuses are completely exempt, after all the FFP rules could then be bypassed by a rich oligarch owned club offering Mbappe and Messi a huge wage based entirely on promotion bonuses, on the assumption they would storm the league!

The problem I have is this, I have read both the Premier League and Championship FFP rules in detail, and no where does it say that promotion bonuses are exempt.

Indeed all the exemptions are set out clearly in the rule extract I showed previously (reproduced below), and promotion bonuses are not mentioned.

So I have a problem, the most foremost experts on FFP and also Fulham themselves say promotion bonuses are FFP exempt. But the actual rules don’t say that. This is a big deal for Fulham, who, as a yo-yo club, usually find they have paid promotion bonuses twice in any given FFP Assessment Period!

Google doesnt help, if I search for an answer to this problem I mostly just see my own blogs, Twitter feeds and forum posts where I have hunted down experts to ask them (unsuccessfully) about this issue. If the only google returns on this problem are my own attempts to solve it, it suggests Im operating in a pretty niche area of interest!

So what will I assume here?

First of all I will estimate the size of the promotion bonus paid at £17.5m as I think this is reasonable based on analysis of Fulham’s wage structure and other clubs.

And we know the relevant seasons for paying this are the 21/22 and 19/20 seasons.

If I assume (like most FFP experts) that Promotion Bonuses are fully excluded from the calculation, then our final AEBT table looks like this:

This shows an AEBT loss of £62.6m against a limit of £72m, in other words Fulham are compliant with FFP with around £10m to spare!

If we assume that Promotion Bonuses are deferred (which I think makes sense, but the rules also don’t support this) then the final table looks like this:

This shows an AEBT loss of £88.9m against a limit of £72m, which is an FFP breach! The reason this is so bad is that it brings the promotion bonus paid to the 17/18 Jokanovic promotion team into the assessment period! The result is actually the same if we assume no adjustment for Promotion Bonuses at all.

Final Word

So it looks to me like Fulham probably are FFP compliant if we allow that their COVID adjustments are reasonable and, crucially, if promotion bonuses are exempt from FFP (which everyone except the actual rule book seems to agree on).

I hope you have enjoyed this journey through the accounts. If you have any comments or disagree with any assumptions, please put them in the comments or find me on Twitter (@cottageanalytic) and let me know.

The next articles planned based on these accounts will cover:

  • a prediction: will Fulham breach FFP in the current 22/23 season
  • What spending capacity might Fulham have in summer 2023!

One thought on “Fulham Financials 2021/22 Part 1: Did Fulham breach FFP rules?

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: