Left Brian: December

Ayup youth. Much like a Forest victory, it’s been a while since we last chatted, but whenever we do it feels like a 3-0 away win at Wolves.

Times are pretty tough on Trentside at the minute, and they’re not being made any easier by the crooked Financial Fair Play system (FFP) that seems to want to tie us up in knots and prohibit any development of sides from the lower reaches. You may note a chunk of this article may be dedicated to our transfer embargo, but I think it’s important that this is talked about as it’s probably the biggest factor that will affect our next few seasons.

However, I’ll start with our recent form. It’s been pretty poor. We’ve not played as badly as the results would have you think, though. With a good last-minute victory against a talented Norwich side followed by a convincing 3-0 win away at Wolves, it felt like the tide was finally turning for us.

That tide was quickly stemmed with an injury-time intervention from the fourth official at Birmingham, handing (if you excuse the pun) them a victory and our Britt a red card. A tricky thing to reconcile really, as I think the handball is definitely a handball. The controversy here is purely that the ref, nor the lino, saw it. In this instance the ref took advice from the fourth official, who was the furthest away of all the officials, and gave the penalty and red card. What’s difficult here is that it was the correct decision, but I’ve never seen an incident where the fourth official can make such a call. Psycho was magnanimous in defeat, merely saying he looks forward to the precedent now being set that the fourth official can help out, and that hopefully we’d benefit in the future from such things.

Magnanimous
 

Skip forward the bore draws with Charlton and Rotherham and into Nottingham come the only team who can legitimately lay claim to being more shambolic than us over the past couple of seasons. Indeed, Leeds have trod a very similar path to Forest in recent memory. Despite never actually being champions of Europe, they were the best team in the country not long before we arrived in the late 70s. They were Premier League giants, even managing to play in the Champions League this century, and then they fell from grace down to League One at the same time as us and now pin their hopes on a seemingly rich foreign investor who they hope has their club in his heart. That’s where the main difference seems to be, though. Their owner is a nutter who is banned from running a football club. Through whatever measures, Leeds also wound up in a similar embargo state to us. More on this later.

So, as the game drew nearer and the team sheets went up, something very peculiar seemed to be happening. The gaffer decided we should go 3-5-2 and left Britt on the bench with Dex starting up top. It didn’t take long before Blackstock picked up an injury, which brought Britt into the game, and within a few minutes we’d taken the lead. A lead we should have had earlier in the game when Matty Fryatt was incorrectly ruled offside to put us ahead. These things happen, though, and maybe we were just unlucky.

Soon after the break Leeds equalised with a penalty struck straight down the middle from former Reds fan favourite Billy Sharp, and we’re level at one apiece. As time passes and we look much the better side, a chance opens up and an onside Matty Fryatt slams the ball home again. However, the lino has different ideas and raises his flag like he’s sat in the Lower Bridgford during Mull of Kintyre. This time, though, the powers that be at Forest hit back and use Fawaz’s million pound screens to good effect. I’m sure a fine will come in for this, but they quickly flashed up a replay showing the goal should have stood.

One ex-Forest hardman shows his tender side toward the fourth official

 

It’s a ridiculous rule that referee’s decisions on things like this cannot come under any scrutiny. They have a hard job, and sometimes get things wrong. Before play had even properly resumed the home TV audience always get to see if it’s onside or not, and in this instance so did the crowd at Forest. Here’s my question, though: where is the fourth official? Why was he not able to intervene here? Everyone in the ground saw from the replay that it was onside, including, belatedly, the ref and the fourth official. Why did they not use the evidence at their disposal to make the correct decision? The ref at Birmingham used what was at his disposal to give a correct decision, and because it was against us we just had to swallow it. Hard done by, sure, but that was the correct decision. Indisputable. Yet when there is indisputable evidence that the ref has got a decision wrong and changing it in our favour is the option, nothing is done. We had TWO goals chalked off for incorrect offside decisions. We have had two points knocked off now, too. This is not good officiating of the game. This is appalling officiating of the game.

Now to those FFP rules, which state that as a club we are not allowed to lose more than £3m in a season, with varying limits of shareholder investment on top. For the 2013-14 season that limit was £3m. So, ostensibly Forest were only allowed to be £6m below the revenue generated by fans and sponsorship. For the 2014-15 season, that grows to £6m of investment, so £9m of losses. And then in 2015-16 it changes to £2m of losses and £13m of investment, so £15m losses. Clear enough?

Forest have not yet made public the losses that have led to this embargo, so it’s very difficult to comment too much. What’s important to remember, though, is that the current embargo is based on dealings from last season. What’s happened this season will be punished in the future, should we fall foul of FFP again. As Stuart Pearce has said: "If an embargo comes in then we will deal with it. We won't bleat. It is something that is historic and has not happened during my tenure. But that is neither here nor there - you deal with the moment in front of you."

Summat that looks proper FFP-y
 

So, what does this mean? Well, it means what it says on the tin. We can’t buy any players in January. We can, however, get some players on free transfers. Great, you say. However, we can only spend a maximum of £600k on these free transfers, which includes the players’ wages, agents’ fees and any other associated costs, like medicals, paying for accommodation, or fancy haircuts.

The other stipulation is that we can only have a squad size of 24. With this in mind, Stuart Pearce really needs to think about players shipping out. Happily, Thomas Ince has buggered off back to Hull after contributing only marginally more than me to our points haul in his 6 games for us. That gives us a little room to get someone in.

While it’s unlikely that those spaces will be filled with permanent signings, there is a small glimmer of hope, in that we’re able to sign loan players, and each loan player also has the maximum cost of £600k attached to them as per the free signings. In this instance we can possibly use that money more wisely. If, for example, we get a player from Man City, they’re not loaning him to clear some wage bill. Whether we pay the guy £12k per week or not is of no consequence to them. What they’re looking for is a decent standard of football, and a clear way of progressing said player in their own squad. This is where we have to be wise. What can we offer clubs besides money to get them to loan us a couple of decent players this Christmas?

So, this whole Financial Fair Play thing… Jim Price reckoned it wouldn’t stand up in court. Billy Davies clearly didn’t really care about the long-term future of the club, and most galling is that the players who have taken money from us that puts us where we are are people like Ishmael Miller and Matt Derbyshire, with their big wages and zero return [open goal for a Sheep fan here to make a joke about it not being the first time Forest have got zero return from Derbyshire - Ed.].

Miller and Derbyshire's wages being despatched
 

I’m probably most interested in Jim Price’s assessment, though. Would this stand up? Is it actually fair? What are the League hoping to achieve? On the face of it, restricting the money spent by football clubs is a good thing. We don’t want to see clubs going bust. Except maybe Leicester. And probably Cardiff. Is this the answer, though? If we follow it through, what the league are basically saying is that you can spend only what the club makes as a business and a little bit more but not a lot. Economically, that’s sound. All businesses need to spend within their means. If you forgive the next bit and bear with me, I’ll confide in you that the bosses at Leftlion don’t actually pay me for this; I get my beer tokens by being an accountant, hence the tone of what follows…

Losses are based on cost versus revenue. Cost is not cash – this is important to remember. Cost is the operating cost of the business running for the period of time measured by the revenue. This is why, as a business, we would capitalise things. What that means is if something costs £1000 but we intend for it to help make us money for the next 5 years, we only have to recognise cost at £200 per year for 5 years. This is called depreciation. To put this into footballing terms – we buy Britt Assombalonga for £5.5m in 2014-15. We sign him on a 3-year deal, which means his cost to us is £1.8m in this financial year. That’s what his contract has cost us. His wages. However, we cannot capitalise. They are an operating expense and have to be recognised in the year they fall due. Still with me?

Revenue is recognised in the period it is first applied – not when the cash comes in. (For those interested this is called IFRS 15 – Revenue from Contracts with Customers.) What this tells us is how we can view and report said revenue. Revenue doesn’t have to be cash, much like costs. So, if we take the sale of Darlow and Lascelles for £7m. Newcastle don’t have to physically give us a penny until their contract says so, but we can recognise that as revenue.

Accountancy
 

I appreciate some of you may have nodded off there, so I’ll cut to the chase. How do we make our costs smaller and revenue higher for any financial period? We extend the contracts of our players. These are depreciating assets (actually amortising, but it’s essentially the same thing). If, for arguments sake, we extend Britt’s contract to 10 years, then we recognise a cost of £0.5m per year, rather than £1.8m. We do that on a couple of players and, on paper at least, we’re in the black.

The point here is that this cost versus revenue thing happens in all businesses and it’s made to work. It has nothing to do with cash, or what someone is putting into the club. We could sign up some long term sponsors and recognise that revenue now. We could revalue the assets, we could re-life them. There has to be a way around this FFP nonsense.

And, if all else fails, remember, Man Utd sell a billion pounds worth of shirts. Can they buy Falcao because of this, or do they make the billion pounds because they can buy Falcao? Barcelona were under embargo when they bought Luis Suarez, too.

Hope you all have a wonderful Christmas. I’ll see thee in the New Year.