Profitability and Sustainability - The January 2024 Transfer Window

Last updated : 16 February 2024 By CCFC Trust

C:WindowsTempphpC17.tmpThere has been a lot of talk about the latest transfer window. Trust chair Keith Morgan sets out the issue of profitability and sustainability in a message to Trust members.

Dear Member

You will recall that, in my last communication to you after the meeting called by Mehmet Dalman prior to the Preston game. I undertook to update you on the current situation regarding Profitability and Sustainability (formerly known as FFP). I have now been able to clarify some issues so here is my summary of the current situation and its impact on the January Transfer Window. 

There has been quite a lot of criticism on social media about the club only making player signings very late in the transfer window and missing out on “first-choice signings”, so I thought that this brief explanatory note might be helpful.

Since March 2022 the monitoring of club finances in the EFL has been carried out by a separate independent panel of qualified accountants called the Club Financial Reporting Unit (CFRU). It is they who decide whether EFL clubs are in an adequate financial position to have transfers authorised and to what extent. Their rules have become increasingly strict and their monitoring checks far more frequent recently.

The basic rules have not changed much. EPL and EFL clubs are monitored on the basis of the losses they incur. If losses are below £5m on average over a rolling three-year period then no further checks are made. Greater losses are allowed if the difference is made up by new cash introduced and funding guarantees by club owners so that the average is increased to £35m in the EPL and £13m in the EFL. In Cardiff City`s case the “top up” has been made by new cash introduced by Vincent Tan by way of paid-for new share issues.

There was a further restriction introduced in June 2023 in that if a club is even a few days late in paying its HMRC debt then this has to be reported as a Default Event and the EFL can introduce an immediate transfer embargo until the matter is sorted.

The impact in January was that the CFRU only gave clearance to a number of clubs very late in the transfer window. As a consequence, there were more Championship club transfers in during the last two days of the transfer window than in the whole of the rest of the full month.

Keith Morgan