Financial Rules - SMCP this season....An Explanation

This season we will no longer have to comply with the Profit & Sustainability rules. Instead we have to comply with the Salary Cost Management Protocol ("SCMP")

During the day I have been looking into SMCP a bit more and I understand that its a lot easier to comply with than the sustainability rules in the Championship.

1) The first rule is that we are allowed to spend a maximum of 60% of our turnover (see below) on 1st team salaries
2) The salaries of anyone aged under 21, on the first day of the season, can be excluded
3) The salary of an older player, playing outside of the first team, can be excluded
4) Owners can inject as much as they want into clubs - provided it is on a Cash to Equity basis

So if an owner loans £10m then £nothing counts towards turnover but;
If an owner converts £10m into equity then £10m counts towards turnover

Apparently our turnover is allowed to consist of the following:

(a) Gate Receipts - (Based on 15,000 supporters I would expect £6.5m in receipts)
(b) Sponsorship & Advertising - (Estimate drop down to £4m)
(c) Merchandise & Retail - (Estimate at £2m)
(d) League Distribution - (Estimate at £1.8m)
(e) Merit Payments - (Does not apply to L1)
(f) Cup Prize Money - (Estimate at £100,000)
(g) Parachute payments - (Does not apply to L1)
(h) Net Player Sales - (Estimate at £1m)
(i) Owner Injections - (Estimate at £10m based on previous seasons of £15m) This has a huge impact on SMCP

If the above figures were correct we would have £25.5m towards turnover for purposes of SMCP and this would allow us to spend in the region of £15m on salaries.

If the club operate an average 40% relegation reduction clause I would estimate we are paying £10m on salaries - so we appear to have plenty of room for manouever

Hope this assists.

Thanks Paul makes it easier yo understand!

I think this is how Brum managed it last season spent a vast amount on transfers (20+ million) which ultimately must have been covered by extra owner equity

Over to you Mr Tan a chance to splash the cash if you want to do it??

Thanks Paul, didn't know a lot about how it worked.

Definitely room for us to add to the squad as you say.