Manchester City facing Financial Fair Play sanctions

Plugsy said:
Every little helps.
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It's not that simple. Obviously increasing the price of a good will not always lead to more revenue. Selling 20k tickets at £30 gives you the same revenue as selling 30k tickets at £20. They may not raise the prices if they figure it pointless (market studies and all that). All else being equal, at least let them have more people in the stadium.
 
KeninDC said:
The fine is pocket change for the owner-and he can pay for it out of his own funds without the expense being accounted for on City's books.

The requirement that City lose no more than €10M seems like something that will have some bite-especially as they will be prohibited from counting some of the revenues that are disguised subsidies. In addition-transfer market restrictions will make it harder for City to refresh the squad.

So-I wouldn't say the penalties are meaningless. I'm curious to see how City balance their books over the next two years without using creative accounting.
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They will balance them with a raft of new sponsorship deals from Abu Dhabi-based companies, combined with the increased revenue resulting from the Premier League TV bonanza (there's also a step up in the TV deal for those participating in the Champions League from 2015-16).

The £400m sponsorship deal signed with Etihad, an airline which had never turned a profit in 7 years of operation, and which is owned by an Abu Dhabi government headed by City owner Sheikh Mansour's half-brother, wasn't considered a related party transaction. No constraints therefore on future Abu Dhabi-based sponsorship deals.


Plugsy said:
How is it a non-punishment?
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The 'punishment' will have little/no material effect on the club, and from 2016 City will be free and clear, and will never need concern themselves about FFP ever again.
 
Arruda said:
It's not that simple. Obviously increasing the price of a good will not always lead to more revenue. Selling 20k tickets at £30 gives you the same revenue as selling 30k tickets at £20. They may not raise the prices if they figure it pointless (market studies and all that). All else being equal, at least let them have more people in the stadium.
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They're going to have to cut losses from €120m to €20m by next year, I think a rise in ticket prices is an absolute certainty, especially considering there's logical/competitive grounds for doing so if you look at their domestic rivals
 
Plugsy said:
They're going to have to cut losses from €120m to €20m by next year, I think a rise in ticket prices is an absolute certainty, especially considering there's logical/competitive grounds for doing so if you look at their domestic rivals
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If a rise in ticket prices will lead to increase revenue then yes, they will have to do it. My question is how do you know that by raising prices they will make more money? It depends on the price elasticity of demand. If it was an easy thing to figure, running businesses would be a lot easier.
 
Just to reiterate, UEFA's fine is the witholding of revenue from us. That means it is not money that the owner can just pay himself.
 
Infra-red said:
They will balance them with a raft of new sponsorship deals from Abu Dhabi-based companies, combined with the increased revenue resulting from the Premier League TV bonanza (there's also a step up in the TV deal for those participating in the Champions League from 2015-16).

The £400m sponsorship deal signed with Etihad, an airline which had never turned a profit in 7 years of operation, and which is owned by an Abu Dhabi government headed by City owner Sheikh Mansour's half-brother, wasn't considered a related party transaction. No constraints therefore on future Abu Dhabi-based sponsorship deals.
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I should have read @Manchester Dan's take-as there appears to be some truck-sized loopholes, as you point out. We'll see if UEFA continues to allow new subsidies in the form of above fair market value sponsorships on a go-forward basis.
 
Infra-red said:
The 'punishment' will have little/no material effect on the club, and from 2016 City will be free and clear, and will never need concern themselves with FFP ever again.
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Why will they be 'free and clear', if they don't adhere to reducing their losses to €20m next year and €10m the year before they'll be referred to the commission again for harsher sanction.

Having to find 8 home grown players from a squad of 21 when realistically they only have half that amount on their books at the moment who they'd consider of CL standard, will have a very big impact on them.

I dont know on what basis you're making your claims at all. They lose £51m of which £50m is discounted income. They're going to have to turn that close-to £100m loss by 90% in two years. As for simply having to sign new sponsorship deals, PSG says hello. Their $200m sponsorship deal with the Qatar Tourism Authority has been massively discounted by UEFA in their calculations.
 
By accepting the fine City are now free of the 3 year aggregate monitoring, meaning our worst year is now nullified and we are now being monitored on two standalone years (years where the club predict we shall break even). Also, FFP witholds prize money, but we can still declare this as revenue.
 
City have exploited the loopholes and skirted their way around FFP.

I personally think the punishment is about right, considering it's a first time offence of a brand new ruling that has no precedent.
And plus they've gotten so creative with their accounting it's difficult for the governing bodies to prove that it's illegitimate.

Everybody knows it is, but proving this is another issue.
 
Plugsy said:
Why will they be 'free and clear', if they don't adhere to reducing their losses to €20m next year and €10m the year before they'll be referred to the commission again for harsher sanction.

Having to find 8 home grown players from a squad of 21 when realistically they only have half that amount on their books at the moment who they'd consider of CL standard, will have a very big impact on them.

I dont know on what basis you're making your claims at all. They lose £51m of which £50m is discounted income. They're going to have to turn that close-to £100m loss by 90% in two years. As for simply having to sign new sponsorship deals, PSG says hello. Their $200m sponsorship deal with the Qatar Tourism Authority has been massively discounted by UEFA in their calculations.
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PSG's outlandish £167m per year contract with the Qatar Tourism Authority is clearly a different case though. The Etihad deal wasn't found to be a RPT. City will get round the FFP regs by channeling Abu Dhabi wealth into the club in multiple bite-sized and UEFA-compliant chunks, which individually, the authorities will find very difficult to argue against.

The squad registration cap is an inconvenience, but it lasts for just 1 year, and City only fielded 21 players in this season's Champions League anyway. The wage cap has no effect as performance-related pay is excluded from the calculation.

BobbyManc said:
Just to reiterate, UEFA's fine is the witholding of revenue from us. That means it is not money that the owner can just pay himself.
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City will be reimbursed with two-thirds of the sum of the fine if they comply with FFP during the next 2 seasons though. The club are briefing that it is now break-even in its operations, and is expecting to turn a profit in 2014-15 and the years that follow. There's no reason to doubt that assertion.
 
Infra-red said:
The £400m sponsorship deal signed with Etihad, an airline which had never turned a profit in 7 years of operation, and which is owned by an Abu Dhabi government headed by City owner Sheikh Mansour's half-brother, wasn't considered a related party transaction. No constraints therefore on future Abu Dhabi-based sponsorship deals.
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I suppose it ain't an according-to-Hoyle related party transaction. But we all know what it actually is. It's precisely this kind of thing which could make a mockery out of FFP.

Is it possible for UEFA to value such deals at an absolute minimum? By which I mean a value so low it would render the deal practically pointless in terms of legitimate turnover? In terms of precedence this sort of thing is crucial, surely. Look at PSG's ludicrous deals with the tourist authority of Qatar - or whatever it is. The equivalent of selling a bottle of coke to an "independent" party for ten times the market price.
 
The club itself doesn't seem too concerned. Maybe this is a case where an agreement is crafted such that both sides can claim victory.

MCFC Financial Fair Play Statement:
Manchester City Football Club can confirm that at the end of the current financial year (May 31st) it is on course to financially break even, as planned.

Operating with no debt, the Club is realising its football and commercial opportunities whilst continuing unprecedented investments in both youth development and the local community

From the outset, the Club has engaged with UEFA in its introduction of the Financial Fair Play Regulations in good faith and without prejudice and in a transparent and collaborative manner. The Club’s position is that it is beholden upon UEFA and the European football establishment to ensure the same.

The Club can confirm that it has been in discussions with UEFA over the last month - in relation to the application of Financial Fair Play regulations - as has been widely reported and communicated by UEFA. At the heart of those discussions is a fundamental disagreement between the Club’s and UEFA’s respective interpretations of the FFP regulations on players purchased before 2010. The Club believes it has complied with the FFP regulations on this and all other matters.

In normal circumstances, the Club would wish to pursue its case and present its position through every avenue of recourse. However, our decision to do so must be balanced against the practical realities for our fans, for our partners and in the interests of the commercial operations of the Club.

As a result of these considerations and the fact that the Club is now break even in in its operations, the Club has decided to enter into a compromise agreement with UEFA with the following practical outcomes:

  • - MCFC will lose 10m Euros of its share of income from UEFA for competing in the Champions League completion in season 2013-14.
  • - MCFC will lose 10m Euros of its share of income from UEFA for competing in the Champions League for season 2014-15
  • - Rather than having an accumulative allowance of 30m Euros of losses over the next two reporting years (like all other clubs), MCFC will have specific stipulated allowances for 2013-14 and 2014-15 of 20m Euros and 10m Euros respectively. Significantly, MCFC plans to be profitable in 2014-15 and in the years that follow.
  • - The MCFC Champions League squad for the 2014-15 competition will be limited to 21 players. In 2013-14 the club registered 23 players for the competition and used 21.
  • - The Club’s expenditure on new players for the upcoming summer transfer window, on top of income from players it might sell, will be limited to 60m euros. This will have no material impact on the Club’s planned transfer activity.
  • - The wage bill of the whole club (playing and non-playing staff) for 2014-15 will need to remain at the same level as that of 2013-14 season. It is important to note that additional bonuses for performances can be paid outside this number. Importantly, in reality, the existing MCFC business plan sees a natural decline in that wage bill.
  • - Given the unique nature of the new City Football Group structure – which incorporates MCFC, New York City, Melbourne Heart and a number of other companies, the Club has agreed to certain non-material terms in order to make FFP reporting as easy as possible for UEFA to discern.
The nature of conditions that will result in the lifting of sanctions means that the Club expects to be operating without sanction or restriction at the commencement of the 2015-16 season.

Importantly all non-financial sanctions agreed to would have been complied with as a natural course of the Club’s planned business operations.

 
The club are concerned. Not a few days ago we were told of impending legal challenges and outrage.
 
looks very dodgy. Why would City agree on specific terms regarding their allowed losses, if they dont have a concrete idea how to comply with that agreement?
There are only two ways how they can comply:
- generate a net-profit with transfers
- new "sponsorship" deals

The first thing wont happen so either they are just stalling (which makes very little sense) or they´ll already know how to get the needed money.
The squad restriction is an inconvenience for one season. I doubt that they care a lot about this, if they are "in the clear" after that.


This punishment has some effect, but as long as investors are allowed to continue to inject their money into the club via sponsorship deals/extra payments, FFP has little effect.
 
peterstorey said:
They're still suffering from superiority complex delusion.
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We are the biggest club in the country that's fact. When Bayern don't win the German league they are still the biggest club Germany, if Athetico win in Spain they will still not be as big as Barca or Real Madrid its pretty obvious players want to play for us, we are the most succesful domestic club, we have the biggest crowds every single home game and next season we will be back challenging while you'll be once again settling for forth. You and City for that matter are smaller clubs, although City at least are trying to push forward while Wenger's more interested in your bank balance, mind you the way Ozil plays it might not be the best idea to start spending!
 
Lawman said:
Ok so last year we were champions then one horrific year and now players want to sign for City over united (when offered same wages) are you that fickle or just dumb? No offence but its a no brainer United would be 99% of players choices.
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You're letting your bias cloud your view - something we all do from time to time. Any player joining either club doesn't really care that you were champions a year ago, or that we are the current champions (which actually makes your achievement last year irrelevant for this discussion anyway). Players want to win things themselves, and right now I disagree with the view that United are in a better position to do that than City over the next few years.

Brightonian said:
Yep. Despite what people think, the objective of FFP is not to nuke City but genuinely to try and make clubs obey the rules and start spending responsibly. This 'punishment' is not for punishment's sake, it's a way to hold City more strictly to the rules. If they break them again, UEFA will have given themselves the grounds to consider more serious punishments - transfer bans, competition bans etc - without City having much room for complaint.
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I actually thought about it a bit more today - and while I think the punishment itself is pretty tame for the club, rival fans can take a lot of solace in the fact that the rules are clearly going to curb further excessive spending from City - which is what so many were crying out for. I think some fans had unrealistic expectations that FFP would be the end of City as it is today, the club would have to sell all their players and climb back down the table, but that wasn't really going to happen. City will probably remain competitive in the league for many years, but FFP will make it more competitive for those clubs at the top. I still think FFP massively favours those clubs with larger income (of which we are now one of them), but fans who are that way inclined to support FFP can take comfort that it's 'effective' in its aims - it's just a shame that no other side can join the party.
 
Plugsy said:
The club are concerned. Not a few days ago we were told of impending legal challenges and outrage.
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I was going to say, what happened to City suing everyone in sight and carrying on as if nothing has happened?

I said from the beginning they wouldn't have any choice but to accept what UEFA do.
 
Ducklegs said:
I was going to say, what happened to City suing everyone in sight and carrying on as if nothing has happened?

I said from the beginning they wouldn't have any choice but to accept what UEFA do.
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Or City decided the sanctions were manageable and not worth the conflict when FFP will help cement the club a place in football's elite as no one else will be able to do what we did anymore.
 
BobbyManc said:
Or City decided the sanctions were manageable and not worth the conflict when FFP will help cement the club a place in football's elite as no one else will be able to do what we did anymore.
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That's another way of looking at it.

People,get too tied up in the fact it's City doing it, it was just as wrong when Chelsea was doing it, it was just as wrong when Jack Walker did it, and just as wrong when the next arab/russian billionaire who have not had to earn their money rolls up and elevates some tin pot club to levels above their current station through no effort of their own.
Clubs should manage their finances against what the club can sustain, competition fair or otherwise is so much more than what happens on the pitch, unlimited finances that a club haven't earned is just as unfair as fielding 15 against 4 in a league game.
 
Ducklegs said:
That's another way of looking at it.

People,get too tied up in the fact it's City doing it, it was just as wrong when Chelsea was doing it, it was just as wrong when Jack Walker did it, and just as wrong when the next arab/russian billionaire who have not had to earn their money rolls up and elevates some tin pot club to levels above their current station through no effort of their own.
Clubs should manage their finances against what the club can sustain, competition fair or otherwise is so much more than what happens on the pitch, unlimited finances that a club haven't earned is just as unfair as fielding 15 against 4 in a league game.
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So I take it you object to a person investing their own wealth into a newly acquired company in any aspect of business? Mansour and Abramovich are detrimental to football whereas Mike Ashley and Malcolm Glazer are more beneficial?
 
I'm still not sure how it'll work in the future. Let's say, UEFA never wanted to punish City for the sake of it and if they break the rules again, the punishment will be more severe.

But if their biggest deal with Etihad wasn't even considered a related party transaction, what's to stop the City owner from making every year a few bogus deals with various Abu Dhabi based companies (like Arabtec mentioned earlier) and complying with FFP that way?
 
gooDevil said:
Your a very thorough WUM Dan.

Tell me how Juve struggled to sign players when they went down.
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I'm sorry but arguing that City are better placed to win trophies in the next few years than United is not a wind up, it's definitely up for discussion and a reasonable statement to make. Congrats though, you are the first person to call me a WUM here, not bad after nearly 600 posts as a City fan on a United forum!

Your Juve point is completely irrelevant by the way, because at no point did I ever say 'United will struggle to sign players' (I don't think that you'll struggle at all) - what I did say was that not every player would choose United over City right now if they were offered the same wages, which was the point originally suggested, and a completely different point to the one you're trying to argue. You big WUM, you.
 
antihenry said:
I'm still not sure how it'll work in the future. Let's say, UEFA never wanted to punish City for the sake of it and if they break the rules again, the punishment will be more severe.

But if their biggest deal with Etihad wasn't even considered a related party transaction, what's to stop the City owner from making every year a few bogus deals with various Abu Dhabi based companies (like Arabtec mentioned earlier) and complying with FFP that way?
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But there's not much UEFA can do unless the legal definition of a related party transaction is changed. And as far as I'm aware Arabtec is not Abu Dhabi based and has no direct links to Sheikh Mansour.
 
BobbyManc said:
So I take it you object to a person investing their own wealth into a newly acquired company in any aspect of business? Mansour and Abramovich are detrimental to football whereas Mike Ashley and Malcolm Glazer are more beneficial?
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I can't follow the quite spectacular leap in logic required to get to that position.

A sporting competition is not comparable to commercial competition in any way, and me hating financial doping doesn't mean I agree with debt leveraged take overs or skin flint owners.

Show me your workings out how holding a position on one absolutely must mean a position on the other to help me out.
 
BobbyManc said:
But there's not much UEFA can do unless the legal definition of a related party transaction is changed. And as far as I'm aware Arabtec is not Abu Dhabi based and has no direct links to Sheikh Mansour.
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Just to clear that up - Arabtec's major shareholder is Aabar, who are 98% owned by IPIC, an Abu Dhabi government investment body, chaired by Sheikh Mansour.
 
Manchester Dan said:
I'm sorry but arguing that City are better placed to win trophies in the next few years than United is not a wind up, it's definitely up for discussion and a reasonable statement to make. Congrats though, you are the first person to call me a WUM here, not bad after nearly 600 posts as a City fan on a United forum!

Your Juve point is completely irrelevant by the way, because at no point did I ever say 'United will struggle to sign players' (I don't think that you'll struggle at all) - what I did say was that not every player would choose United over City right now if they were offered the same wages, which was the point originally suggested, and a completely different point to the one you're trying to argue. You big WUM, you.
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You'll get the mix of players you always do.

The players who want to play for a historic huge club like us, such as VP, who could have made more at City.
The likes of Nasri and Tevez who could have joined us/stayed with us, but chose higher money.

And the types like in your example who choose the club most likely to win stuff imminently.
 
BobbyManc said:
So I take it you object to a person investing their own wealth into a newly acquired company in any aspect of business? Mansour and Abramovich are detrimental to football whereas Mike Ashley and Malcolm Glazer are more beneficial?
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I agree with you somewhat Bobby but the Glazers have IMO went somewhat to repair the damage they have done (considerable) with smart business strategy/growth. Ashley and Lerner have just had enough and are now hurting Newcastle and Villa. On the other hand the new money clubs (City and Chelsea PSG) are hurting other clubs by paying over the odds to average players and driving the price of everything up. Something will give and if these chairmen lose interest then these clubs will die and that's a problem for me.
 
Sandikan said:
You'll get the mix of players you always do.

The players who want to play for a historic huge club like us, such as VP, who could have made more at City.
The likes of Nasri and Tevez who could have joined us/stayed with us, but chose higher money.

And the types like in your example who choose the club most likely to win stuff imminently.
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"Robin van Persie stands to earn an extra £10million on top of his mammoth £250,000-a-week wages at Manchester United - just for staying at the club for the duration of his four year contract"

I love this PR exercise about RVP choosing a club's stature and history over money. His wages are at least 200k a week at United. There is not a chance City would have gone above 250k for RVP. The second we made him our highest paid player we would have Toure's agent, Aguero's agent, Silva's agent etc. knocking on the door asking what the feck is going on. I think the fact City in the 11/12 Summer signed Javi Garcia, Scott Sinclair and Jack Rodwell tells you everything you needed to know about our willingness to spend exorbitant sums that summer.
 
BobbyManc said:
"Robin van Persie stands to earn an extra £10million on top of his mammoth £250,000-a-week wages at Manchester United - just for staying at the club for the duration of his four year contract"

I love this PR exercise about RVP choosing a club's stature and history over money. His wages are at least 200k a week at United. There is not a chance City would have gone above 250k for RVP. The second we made him our highest paid player we would have Toure's agent, Aguero's agent, Silva's agent etc. knocking on the door asking what the feck is going on. I think the fact City in the 11/12 Summer signed Javi Garcia, Scott Sinclair and Jack Rodwell tells you everything you needed to know about our willingness to spend exorbitant sums that summer.
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You don't actually know feck about RVP's wages, though, so your thoughts on the matter are moot.
 
Lawman said:
I agree with you somewhat Bobby but the Glazers have IMO went somewhat to repair the damage they have done (considerable) with smart business strategy/growth. Ashley and Lerner have just had enough and are now hurting Newcastle and Villa. On the other hand the new money clubs (City and Chelsea PSG) are hurting other clubs by paying over the odds to average players and driving the price of everything up. Something will give and if these chairmen lose interest then these clubs will die and that's a problem for me.
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But City were on the verge of bankruptcy prior to Mansour's takeover. City will be in a much healthier financial position in a few years than prior to the takeover. Same for Chelsea. How is that bad for football? Or would it have been better if City did collapse as that way we wouldn't have challenged the established clubs? Point is, it's all well and good saying 'what if the owners lose interest etc.' but FFP does not deal with that issue.
 
Wages aside, I suspect RVP coming to us had more to do with a desire to win trophies - and working with Fergie - than his supposed admiration for our grand history. The latter probably doesn't matter at all to most players - unless they happen to be die-hard fans of the club in question.
 
BobbyManc said:
And nobody on here knows feck about what wages City offered him so equally any thought on the matter is also moot.
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I agree completely. So have you just realised this or were you knowingly bullshitting when you acted like you knew what RVP was on and what we've offered him in your previous post?
 
Brightonian said:
I agree completely. So have you just realised this or were you knowingly bullshitting when you acted like you knew what RVP was on and what we've offered him in your previous post?
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Well if we can only debate things in football that we know and are certain of it would be a pretty dull thing, no?

I think it is a reasonable assumption to make that Van Persie is one of United's highest paid players. I also think it is reasonable to state he earns a minimum of 180k a week. I also think it is reasonable to state that City would not have offered Van Persie anything considerably more than what he earns at United.
 
BobbyManc said:
Well if we can only debate things in football that we know and are certain of it would be a pretty dull thing, no?
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Agreed. Doesn't change the fact that you stated RVP's salary, what City offered him and what United are offering now to keep him as if they were facts that you knew, whereas in fact they were pure speculation, and you've just admitted that none of us have a clue about any of those things. Yes, you can make your assumptions, but they're no basis for any kind of argument.
 
Lawman said:
I agree with you somewhat Bobby but the Glazers have IMO went somewhat to repair the damage they have done (considerable) with smart business strategy/growth. Ashley and Lerner have just had enough and are now hurting Newcastle and Villa. On the other hand the new money clubs (City and Chelsea PSG) are hurting other clubs by paying over the odds to average players and driving the price of everything up. Something will give and if these chairmen lose interest then these clubs will die and that's a problem for me.
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I'm surprised the bubble hasn't burst before now.
 
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