Wage cut for players and staff (Statement on 24/4)

[Footballfirst]

Extract from the SPFL rules on payment to players and coaches:

 

Default in Player and Football Manager/Coaching Staff Remuneration

 

E17 Except in circumstances where there is:

i. a bona fide dispute: as to liability for payment; to afford a benefit; and/or discharge of an obligation in relation to pensions, by a Club;

ii. where a Club is entitled to deduct or otherwise withhold payment of a sum otherwise due; and/or

iii. where a Club takes, suffers or is subject to an Insolvency Event,

 

any Club which shall:

a) fail to pay any sum due by it to and/or give any benefit in kind to or for a Player under and in terms of that Player’s Contract of Service;

b) fail to pay any sum due by and/or give any benefit in kind under a contract of employment to any Official engaged in football management and/or football coaching; and/or

c) fail to discharge a pension obligation arising in terms of contract, statute and/or regulation in relation to any one or more of any such employees (each of which a “Remuneration Default”), shall be in breach of these Rules.

 

E18 Any Club which suffers or is subject to a Remuneration Default shall within 2 days of such default notify the Secretary in writing of any such default with details of the amount(s) and Player(s) and/or Official(s) concerned and if it fails to so notify the Secretary it shall be in breach of these Rules.

 

E19 Any Club which commits a Remuneration Default shall not, except with the consent of the Board, to be given in the Board’s absolute discretion, apply to have Scottish FA Registered with it or Play any Professional Player who is not an Under 20 Player and/or who was not Scottish FA Registered with that Club at the date of the relevant Remuneration Default until the Board notifies the Club in writing that it is satisfied that such Remuneration Default shall no longer continue or subsist.

Edited March 19, 2020 by Footballfirst

[Pasquale for King]

Just now, graygo said:

 

I'll agree with you again if you want, yes the contracts will not hold up in court. The football authorities would take a dim view to this though and any club ripping up contracts and ending up in court over it would find themselves in serious bother.

Point is that the serious bother they threaten clubs with won’t stand up in court, I know you agree 😜.  
They would probably prefer us to go back into administration.

Budge must’ve surely taken the correct legal advice before going down this route. 

[graygo]

2 minutes ago, Pasquale for King said:

Point is that the serious bother they threaten clubs with won’t stand up in court, I know you agree 😜.  
They would probably prefer us to go back into administration.

Budge must’ve surely taken the correct legal advice before going down this route. 

 

No it won't stand up in court, it won't go to court. It would be UEFA or FIFA telling the SFA to kick the club out of the association.

It won't come to that.

[stan]

If we fail to pay any players who refuse to accept the pay cut or leave options, would we then risk incurring a points penalty?

Edited March 19, 2020 by stan
Typo play instead of pay

[East Lothian Jambo]

This quite possibly is a necessary step to take. Perhaps by doing so it will agitate certain individuals the club might not be terribly upset if they were to move on in the short term 

 

Worry might be the impact on morale by the time we get around to resumption of league. Some hadn't shown much stomach for it over the past 12 months anyway 

 

Liam Boyce is only 7 weeks into a three and a half year deal and his reported £6k a week just became £3k which might well be less than he was on at Burton 

 

This situation doesn't allow for individual considerations I suppose 

[soonbe110]

25 minutes ago, Paolo said:

If he is earning more that £18,700 he will have been asked to take a reduction, but it won’t be 50% if it takes him below that figure.  

Correct. That’s what I said. 

[soonbe110]

23 minutes ago, Footballfirst said:

Footballers aren't secured creditors in insolvency situations. They are employees just like all the club's office or shop staff.  They are just as likely to be asked to take a pay cut or made redundant as anyone else. I think any "preferred creditor" status only applies to redundancy payments.

 

That was evidenced in Hearts own administration.

 

It is the rule books of the Football Associations and Leagues that require all "football creditors" to be paid in full, under the threat of football sanctions.

 

Again, Hearts football creditors were paid in full, not because of the provisions of the CVA agreement, but because of the then SPL/SFA rules, otherwise the club could have had further sanctions applied. They were repaid from FOH's initial cash injection after the club exited administration.

Football rules likely to be re-written as we come out of this. 

[Footballfirst]

From another Celtic fan. 

 

His figures, while taken from each club's accounts, do not accurately reflect the actual situation on a like for like basis, e.g. the full £2.4m due to Bidco was shown as a liability in the accounts at financial year end, despite FOH having acquired £1.51m of the loan.  We all know that FOH would not seek repayment of the loan, in that it would be written off.  

 

John Bradshaw@JBLuvsCeltic

Replying to @DBestseventy2

I had just finished this and concluded Hearts was in the most precarious place regarding current liquidity when the Ann Budge announcement of 50% pay cuts came out.

[Mr Elwood P]

27 minutes ago, Footballfirst said:

Footballers aren't secured creditors in insolvency situations. They are employees just like all the club's office or shop staff.  They are just as likely to be asked to take a pay cut or made redundant as anyone else. I think any "preferred creditor" status only applies to redundancy payments.

 

That was evidenced in Hearts own administration.

 

It is the rule books of the Football Associations and Leagues that require all "football creditors" to be paid in full, under the threat of football sanctions.

 

Again, Hearts football creditors were paid in full, not because of the provisions of the CVA agreement, but because of the then SPL/SFA rules, otherwise the club could have had further sanctions applied. They were repaid from FOH's initial cash injection after the club exited administration.

In England they are protected by the football creditor rule, which makes players the preferred creditor ahead of even other clubs and the EPL and EFL themselves. Do similar provisions not exist in Scotland? 

[merseyjambo]

1 hour ago, soonbe110 said:

Not so. A compromise agreement can be agreed. Usually depends if said player already has another club lined up. 

Yes, but let’s be realistic, how many clubs are going to be in talks with players at this time.

 

We have no certainty about when or if this season will complete. If they are to complete the season, what happens with players who are out of contract in June as is likely to be at least June before football is back.

 

This sort of thing is the reason UEFA should have given clear instruction about dates for recommencing the season as opposed to a played by date. It gives clubs an idea of when they could possibly put season tickets for next season on sale. The UEFA announcement didn’t go far enough as it should have stated I’d play wasn’t able to be started again by a specific date, the 19/20 season would be written off/as it stands or whatever outcome they want. It would have given clubs an idea when prize money would get paid to them.

 

I know no club has got an income stream at the moment and it’s likely that most clubs will need to do something to help with their income costs but I really wish we hadn’t been the first in the papers about this as it give the idea that financially there are issues at the club

[i8hibsh]

So Budge is being found out off the field now too it seems. What a pile of shit she has built.

Edited March 19, 2020 by i8hibsh

[JamboAl]

40 minutes ago, Busby8 said:

 

Can you answer my specific question that you answered on behalf of Hackney ?

What was your specific question and I'll answer it if I can?

Meantime can you outline your strategy if different to AB's.

[Pagey]

8 minutes ago, Footballfirst said:

From another Celtic fan. 

 

His figures, while taken from each club's accounts, do not accurately reflect the actual situation on a like for like basis, e.g. the full £2.4m due to Bidco was shown as a liability in the accounts at financial year end, despite FOH having acquired £1.51m of the loan.  We all know that FOH would not seek repayment of the loan, in that it would be written off.  

 

John Bradshaw@JBLuvsCeltic

Replying to @DBestseventy2

I had just finished this and concluded Hearts was in the most precarious place regarding current liquidity when the Ann Budge announcement of 50% pay cuts came out.

FF, with your insights,, what constitutes the Current Liabilities. Seem high relative to assets given where we've come from in recent years? It is soft loans in the main?

[Ex member of the SaS]

24 minutes ago, Jambof3tornado said:

Well he is at work and planning his next few weeks so pretty sure the mowers will keep on mowing!!

I have half a gallon of two stoke if they need it to keep the mowers running.

[Pasquale for King]

17 minutes ago, graygo said:

 

No it won't stand up in court, it won't go to court. It would be UEFA or FIFA telling the SFA to kick the club out of the association.

It won't come to that.

If they did that we would sue them and win. Hopefully it won’t come to that. 

[Pasquale for King]

16 minutes ago, stan said:

If we fail to pay any players who refuse to accept the pay cut or leave options, would we then risk incurring a points penalty?

If they’re going to relegate us anyway it doesn’t matter.

[Mr Elwood P]

2 minutes ago, Pasquale for King said:

If they did that we would sue them and win. Hopefully it won’t come to that. 

Sue who for what?

[Fly the Saltire]

Borussia Mönchengladbach players to forego part of their salary with a view to helping the club & fellow employees. Club coaching staff, directors and CEO have joined the players in taking this stance. “Hard times, Special measures.” - CEO Max Eberl. “I’m very proud of the lads.”

 

Contrast the mind set of German players and  managers  to many in the UK .

 

Could be a master stroke by Mrs Budge  to get rid of  highly paid  under performing players  albeit risking  no transfer fees for saleable assets.

Hickey for example  was not intending to sign a new contract  and  even in normal circumstances could  have left for a fairly modest amount this summer

[itsnomarooned]

30 minutes ago, Footballfirst said:

Extract from the SPFL rules on payment to players and coaches:

 

Default in Player and Football Manager/Coaching Staff Remuneration

 

E17 Except in circumstances where there is:

i. a bona fide dispute: as to liability for payment; to afford a benefit; and/or discharge of an obligation in relation to pensions, by a Club;

ii. where a Club is entitled to deduct or otherwise withhold payment of a sum otherwise due; and/or

iii. where a Club takes, suffers or is subject to an Insolvency Event,

 

any Club which shall:

a) fail to pay any sum due by it to and/or give any benefit in kind to or for a Player under and in terms of that Player’s Contract of Service;

b) fail to pay any sum due by and/or give any benefit in kind under a contract of employment to any Official engaged in football management and/or football coaching; and/or

c) fail to discharge a pension obligation arising in terms of contract, statute and/or regulation in relation to any one or more of any such employees (each of which a “Remuneration Default”), shall be in breach of these Rules.

 

E18 Any Club which suffers or is subject to a Remuneration Default shall within 2 days of such default notify the Secretary in writing of any such default with details of the amount(s) and Player(s) and/or Official(s) concerned and if it fails to so notify the Secretary it shall be in breach of these Rules.

 

E19 Any Club which commits a Remuneration Default shall not, except with the consent of the Board, to be given in the Board’s absolute discretion, apply to have Scottish FA Registered with it or Play any Professional Player who is not an Under 20 Player and/or who was not Scottish FA Registered with that Club at the date of the relevant Remuneration Default until the Board notifies the Club in writing that it is satisfied that such Remuneration Default shall no longer continue or subsist.

I guess if we terminate the contract then we're not falling foul of these rules.

[joondalupjambo]

1 hour ago, Mikey1874 said:

 

No

 

You might have seen it's at start of April so the club has given notice. It's a change to contracts. Old contracts don't apply.

 

You accept new terms or you leave. 

Ah missed that so all makes sense with new contracts and before new FY if existing one ends on 6th April.  Cheers.

[Maple Leaf]

2 hours ago, Francis Albert said:

So it is horses heads in the in the players beds. 

Or large lawyers bills defending breach of contract claims.

 

I'm wondering if the contracts could be terminated by the Club quoting force majeure?

 

 

[Footballfirst]

35 minutes ago, Pagey said:

FF, with your insights,, what constitutes the Current Liabilities. Seem high relative to assets given where we've come from in recent years? It is soft loans in the main?

From the last accounts

 

Current Liabilities ........ i.e. what the club is due in the next 12 months.

 

Loans and overdrafts £3,972k   (£2.4m Bidco loan, £702k Bidco loan (stand), £870k Bidco short term financing (cash flow))

Leases £206k - Oriam rent???

Trade Creditors £2,868k  (payments outstanding for redevelopment contractors (£485k JB Contracts) , other football clubs etc)

Deferred Income £5,199k  (This is season ticket, sponsorship, and other income received in advance of the current season)

Other creditors £1,048k - I don't know what is included.

 

We can ignore the £2.4m bidco loan as it has been paid off, the £5.199m deferred income will have been released to the profit and loss on a game by game basis during the season. At the AGM it was stated that all scheduled payments to contractors in the redevelopment had been paid.  The headline figure is therefore doesn't reflect the current liabilities as of today.  

Edited March 19, 2020 by Footballfirst

[kila]

There is a risk for the players in walking away now. Will they find another club who wants them?

 

[Rudi5kaceldream1ng]

A few points- 

 

*Hearts are by no means the club worst affected by this current situation,we’re just the quickest acting and most transparent about it.

 

*Lets not pretend our squad isn’t bloated and full of overpaid rubbish already-a cull wouldn’t be a bad thing.

 

Finally Andra Tutto Bene.

 

 

[Diadora Van Basten]

3 minutes ago, kila said:

There is a risk for the players in walking away now. Will they find another club who wants them?

 

The only sellable players would be Hickey and Boyce.

[Diadora Van Basten]

5 minutes ago, Footballfirst said:

From the last accounts

 

Current Liabilities ........ i.e. what the club is due in the next 12 months.

 

Loans and overdrafts £3,972k   (£2.4m Bidco loan, £702k Bidco loan (stand), £870k Bidco short term financing (cash flow))

Leases £206k - Oriam rent???

Trade Creditors £2,868k  (payments outstanding for redevelopment contractors (£485k JB Contracts) , other football clubs etc)

Deferred Income £5,199k  (This is season ticket, sponsorship, and other income received in advance of the current season)

Other creditors £1,048 - I don't know what is included.

 

We can ignore the £2.4m bidco loan as it has been paid off, the £5.199m deferred income will have been released to the profit and loss on a game by game basis during the season. At the AGM it was stated that all scheduled payments to contractors in the redevelopment had been paid.  The headline figure is therefore doesn't reflect the current liabilities as of today.  

Our accounts look very strange to start the season with only £500k in the bank would be lunacy after selling £6m of season tickets.

 

I suspect that there is some kind of FOH financing of the stand that is off balance sheet.

 

I doubt we are in the worst position of the teams in the SPL. I actually suspect we are in the top half.

[OTT]

15 minutes ago, Maple Leaf said:

 

I'm wondering if the contracts could be terminated by the Club quoting force majeure?

 

 

 

If they can't play football they can't carry out their contract which is their express purpose for being here so I suppose thats a fair argument? Danger is that it would be blanket surely, so we would lose the entire squad if we tried that?

 

Outside of the youngsters (inc Hickey), Clare, Boyce and Naismith I wouldn't really be fussed. 

[fabienleclerq]

1 hour ago, Pasquale for King said:

How can you say that? I’ve never seen him even make a tackle so **** knows how you can make that spurious accusation  😜.

I got carried away alright! 

Edited March 19, 2020 by fabienleclerq

[adso7]

I see this as a sensible move wth the playing staff (but probably harsh on the lower paid staff).

 

We've effectively just doubled the length of time we have before we run out of money. Who knows how long this will last for, it could be six months may be more or less than that. Taking the action now is the best time rather than once we are a couple more months down the line.

 

Budge has moved first and will take a lot of flack, I'd expect other clubs will follow shortly, or maybe after they've burned thru the last of their cash they'll just stop paying entirely.

[Busby8]

44 minutes ago, JamboAl said:

What was your specific question and I'll answer it if I can?

Meantime can you outline your strategy if different to AB's.

 

It's the one you jumped in on an hour and a half ago.

 

Feel free to look back.

 

 

 

Edited March 19, 2020 by Busby8

[Ainsley Harriott]

Did we really have to go public with this? Surely it would have made sense to discuss with the players behind closed doors.

[Busby8]

3 minutes ago, Ainsley Harriott said:

Did we really have to go public with this? Surely it would have made sense to discuss with the players behind closed doors.

 

It would never have remained behind closed doors though unfortunately.

Under those circumstances it's better being up front.

[Ainsley Harriott]

2 minutes ago, Barack said:

So English football now suspended to at least the 30th of April. Can't imagine Scotland will be back before then. So that's another full month of wages and no income, that clubs will have to budget for.

Please please please let this be the cause of hamilton or st midden going into admin followed by a 15 point deduction 

[Mr Elwood P]

35 minutes ago, Maple Leaf said:

 

I'm wondering if the contracts could be terminated by the Club quoting force majeure?

 

 

Technically the players are in breach of contract. Material element of their contracts, play and train. Through no fault of their own the players cannot do either. Hearts, through no fault of their own, cannot afford to maintain their material part of the contract, to pay the agreed monthly wage. It would be interesting to see how any litigation would unfold. 

[Last Laff]

1 hour ago, Pasquale for King said:

They get made redundant just like anyone else who’s boss can’t pay their wages.

You can’t just make footballers redundant without going into admin/liquidation. 

[Mr Elwood P]

5 minutes ago, Barack said:

So English football now suspended to at least the 30th of April. Can't imagine Scotland will be back before then. So that's another full month of wages and no income, that clubs will have to budget for.

Be well into the summer before we see any football, with fans at least.

[Mr Elwood P]

Just now, Last Laff said:

You can’t just make footballers redundant without going into admin/liquidation. 

You can if the players are deemed to be in breach of contract or if specific clauses within the contract protect the club in such extreme circumstances. 
 

Still think mass unemployment won’t happen? You didn’t reply previously...

[Last Laff]

2 hours ago, Hackney Hearts said:

 

It's one or the other. It's not complicated.

What football club in the world just starts terminating contracts for players who won’t accept paycuts without it being some kind of insolvency event?  There’s no way legally the club would get around just tearing up contracts ffs. 

[Pasquale for King]

55 minutes ago, Mr Elwood P said:

Sue who for what?

Read the thread 

[Ainsley Harriott]

1 minute ago, Barack said:

I said facetiously in another thread, I hoped the same. Not so sure i feel the same now.

 

Anyway, the National League are wanting £20 million quid in Government help to get them through.(Until April's end. At least) 

 

£1.5 million amongst Scottish clubs, will not even keep the lights on, past May for most. The Spfl/SFA should be applying for the Government's loans facility now too, imo.

Maybe the scottish government will throw some money at scottish football. Problem is the general public wouldn't accept it when our schools and hospitals are in ruins.

[Last Laff]

Just now, Mr Elwood P said:

You can if the players are deemed to be in breach of contract or if specific clauses within the contract protect the club in such extreme circumstances. 
 

Still think mass unemployment won’t happen? You didn’t reply previously...

We will just have to wait and see then.  And if it is the case (which I don’t believe will be the case) then every single player will be in the same boat and not just ones the club decides so it will definitely be goodbye Hickey, Smith Boyce Washington for zero top. 
 

As for mass unemployment, for employees on open ended contracts I don’t believe it will. It will obviously depend on line of work though. 

[OldGorgie]

1 hour ago, i8hibsh said:

So Budge is being found out off the field now too it seems. What a pile of shit she has built.

Difficult to argue with that. It makes you wonder where the FOH money has been spent.

[Pasquale for King]

22 minutes ago, fabienleclerq said:

I got carried away alright! 

It’s ok it’s crazy times 😜

[Pasquale for King]

12 minutes ago, Ainsley Harriott said:

Please please please let this be the cause of hamilton or st midden going into admin followed by a 15 point deduction 

Both hopefully and we will be safe, probably 🙈.

[Ex member of the SaS]

10 minutes ago, Ainsley Harriott said:

Please please please let this be the cause of hamilton or st midden going into admin followed by a 15 point deduction 

Hearts would get the demotion and points deducted but I am sure every other club would get some sort of rule change due to the virus ( and it not being their fault etc. ) Don't underestimate the hatred within the Glasgow cabal. They can't have Rangers going bust and Hearts being saved, it looks bad for their darling club, add this to Levein's spat with the GFA and they would do anything to hurt us.

[Jamboelite]

3 minutes ago, OldGorgie said:

Difficult to argue with that. It makes you wonder where the FOH money has been spent.

FOH money has went to pay the loan off where do you think it went.....

[HMFC-1874]

9 minutes ago, Last Laff said:

What football club in the world just starts terminating contracts for players who won’t accept paycuts without it being some kind of insolvency event?  There’s no way legally the club would get around just tearing up contracts ffs. 

 

You ask what club... A club that is unsure how everything is going to pan out with this virus... I think it's a good idea, as currently we are not sure how long this could on go for...

It's the club attempting to save money and survive when no money is coming in for the foreseeable, by doing this they are able to make sure everyone still has a job, and at the very least everyone is being paid the living wage.

 

Surely compared to what other business and their poor employees are suffering at the moment it's a wise step going forward what hearts are attempting?

Edited March 19, 2020 by HMFC-1874
Fixed a word

[JimmyCant]

3 hours ago, Last Laff said:

The statement never said the higher paid ones?  It also never ruled out the staff either, it was an across the board statement to players and staff alike on wages low to high. 

Correct. With the proviso that no one would drop below the living wage of £18k or thereabouts. So someone earning £20k for example wouldn’t drop by 50%. Presumably they would drop to living wage (which is hard enough but not devastating for them)

[soonbe110]

4 minutes ago, OldGorgie said:

Difficult to argue with that. It makes you wonder where the FOH money has been spent.

Just do a little bit of research, it’s been well documented. Either that or don’t post on subjects you know nothing about. 

[Fly the Saltire]

3 minutes ago, Ainsley Harriott said:

Maybe the scottish government will throw some money at scottish football. Problem is the general public wouldn't accept it when our schools and hospitals are in ruins.

 

Scottish  schools and hospitals not in ruins and performing better than other parts of UK.   However priority during Covid19 is maintaining public services  and providing help for the less well off and most vulnerable.   Football is not more important than life and death .