QPR financial situation: We explain why they face a huge fine

Queens Park Rangers’ 6-0 defeat to Manchester City on Sunday confirmed their relegation to the Championship but that is unlikely to be the end of their problems.

Although QPR filed accounts in March showing a loss of £9.8million during their last season in the Football League, that figure was reached by writing off loans of £60million – a move that might not be permitted under Financial Fair Play regulations.

With the help of Sky Sports pundit and former Sunderland chairman Niall Quinn, we examine the situation at QPR and look to explain why they could be facing fines in excess of £50million.

So what is the overview of the situation?

“A serious fine is hanging over their heads as a result of the last time they were in the Football League,” Niall Quinn told Sky Sports. “They overspent to the tune of some £68million. They put in their books that it was only £8m or £9m and they would take a hit as owners for the other £60m, but that doesn’t wash of course. Now they have this problem that if they go back into the Football League they may have to make up for that fine and pay a £58m entry back into the Football League.”

What is the argument for fining QPR?

Financial Fair Play (FFP) regulations were introduced in 2012 to “reduce the levels of losses being incurred at some clubs and, over time, establish a league of financially self-sustaining professional football clubs”. There is some leeway regarding certain losses such as investment in youth infrastructure but even though QPR’s owners are willing to write off the loans, operating losses brought about by high wages mean they could still fall foul of FFP.

How is the size of the fine decided?

Under the system voted in by the Football League, clubs in the Championship were permitted losses of £8m with £5m funded by shareholders for the 2013/14 season. Teams promoted back to the Premier League that year who exceeded those losses were subject to a fine. The next £10m of losses could be punished with a fine of up to £6.681m but the real difficulty comes after that point. Once losses exceed £18m, the fine is imposed on a strict pound-for-pound basis.

Could this even be the end for QPR?

Clubs that are still within the Football League that break FFP rules can be punished with various sanctions including the deduction of points and transfer embargoes restricting further activity. However, the only means with which to provide a deterrent for those clubs promoted outside of the Football League was to fine them. There is no precedent for a club in QPR’s situation returning to the Championship and Football League chief executive Shaun Harvey even refused to rule out the prospect of QPR being kicked out of the professional game if they do not pay the fine.

Is there any defence for them?

Recently relegated clubs have used impairment as a loophole to reduce their losses and this has been accepted by the Football League, but QPR did not do this. Moreover, the rules that were applicable for the 2013/14 season have already changed and that could form part of the club’s defence. “One bright side is that the rules have changed in the meantime since they left the Football League, you can actually spend more money,” said Quinn. “Their only real argument is that when they were there it was unworkable. The rules changed in the meantime, so don’t retrospectively punish.”

What do QPR say about all this?

QPR released a statement in March saying: “The club’s shareholders and directors are of the opinion that the club is moving in the right direction and on track with its mid-term and long-term business plans. The impact of relegation and promotion inevitably has a material impact on the short-term financial results of clubs but the shareholders are comfortable that the medium-term outlook is positive with Premier League revenues growing and the club’s costs continuing to fall.”

What do the Football League say?

“The club has previously filed accounts with the Football League in accordance with the requirements of the League’s Financial Fair Play rules,” a Football League spokesman said in March. “The treatment of certain items in those accounts, and how the League’s FFP rules should be applied to them, remains a matter of ongoing discussion between QPR and the Football League.”

Is a decision on this imminent?

The Football League are currently in discussion with QPR about whether they will be fined and it’s a conversation that is believed to have been ongoing since December. If the accounting treatment used by QPR is accepted by the Football League, the club could expect to receive only a minimal fine under FFP rules. If not then the fine is applicable. QPR chairman Tony Fernandes has previously vowed to resist any FFP fine and a challenge through the courts cannot be ruled out.

So what will it mean for QPR?

Fernandes has always maintained he has big plans for QPR in the long term but this crippling fine could test his resolve and scupper the club’s ambitions. “The situation absolutely destroys their plans to build a new stadium and a new training ground and all the strategy that QPR have had is at real risk,” added Quinn. “This is a hot potato that is going to grow and get bigger.”