Financial Fair Play in the Championship explained: How do Leeds United compare?

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Following news of Aston Villa's struggles we shine a light on Financial Fair Play in the Championship - what is it and how does it effect Leeds United?

What is Financial Fair Play?

Leeds United owner Andrea Radrizzani.

Leeds United owner Andrea Radrizzani.

Football League clubs are assessed over a three year period on their profits and losses, with the Championship having ‘Profitability and Sustainability’ rules enforced at the start of the 2016/17 season.

This now means that clubs cannot exceed losses of £39m, or £13m a season, over a three year period otherwise they will face penalties from the EFL.

In November 2014 clubs voted to alter the Football League rules opting to change to the three year assessment rather than a one season system and are now obliged to submit their accounts in March instead of December.

This now means that Championship clubs are aligned with the Premier League in how they are ruled over their financial spending. Certain expenditure by a team is excluded from FFP regulation such as youth development investment, charitable spend and women's football spend.

Teams who are relegated from the top flight are allowed to incur losses of £35m for that specific campaign which was introduced to make the transition into the second tier a much more manageable situation following the loss of television rights and other bonuses that come with Premier League football.

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How is it enforced?

Any punishment incurred under the FFP rules will be determined by an independent panel of assessors. This can range from a fine to a points deduction or even a transfer embargo. The EFL could now even demote sides from an automatic promotion position if they are deemed to have gained an unfair advantage through their spend.

What is the point of it?

The idea behind FFP is to keep clubs from overspending above their means and maintain a competitive balance among divisions.

Which teams have been hit by 'FFP' penalties?

Most recently Queens Park Rangers were hit with a world record £40m fine by the Football League following their promotion to the top flight in 2015 but the club claimed that the EFL rules were "unlawful" and appealed the outcome.

Bournemouth and Leicester City were also investigated for breach of Championship regulation but the Premier League refused to aid the EFL in their quest to enforce any penalties following their promotions.

Which Championship clubs are sailing close to the wind?

Aston Villa are the most recent big name to have suffered at the hands of FFP with the club reportedly having to make major cut backs in the coming season to comply with regulations. Norwich City, Derby County, Birmingham City and Sheffield Wednesday are other teams who are also having to tighten their belts on expenditure.

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What about Premier League parachute payments?

The elephant in the room...

Top flight parachute payments are under continuing scrutiny with many believing they are creating an unfair playing field in the Championship. Stoke, West Brom and Swansea City will receive their first payments this coming season with Villa, Middlesbrough, Hull City and QPR all still under the payment cloud.

Sunderland will also continue to receive money following their relegation to League One.

Why was their uproar over Wolves in the 17/18 season?

Several clubs in England’s second tier, including Leeds, demanded the EFL and the Football Association investigate the relationship between Wolves’ owner, Chinese firm Fosun International, and high-profile agent Jorge Mendes.

Fosun owns a stake in Mendes’ agency, Gestifute, and a number of the Portuguese’ clients are on the books at Molineux, including their manager Nuno.

Vast spending on footballers of the calibre of Ruben Neves, Ivan Cavaleiro and Helder Costa helped Wolves run away with automatic promotion but rivals teams voiced concerns about Mendes’ influence and the finances involved.

Wolves announced a £23m loss for the 2016-17 financial year in March and are set to lose another sizeable sum on the way to the Premier League this term.

The EFL subsequently cleared Wolves of any wrongdoing freeing up clubs to follow the model they have set if they so wish.

How do Leeds United compare?

In the 2016/17 season the Whites posted a profit of £1m while the two campaigns previous United made losses of £7m and £9m respectively, leaving Leeds well within the £39m boundary to comply with the fair play regulations.