Financial Fair Play

[jts1882]

Re: O/T Financial Fair Play

Emirates Marketing Project's financial results for 2012-13 show a loss of £51.6m. Added to the loss of £97.9m for 2011-12 makes a combined loss for the two years of £149.5m (compared to the FFP permitted level of £37m). They will be allowed to exclude wages paid in 11-12 that related to pre-June 2010 contracts. Emirates Marketing Project said last year this amounted to £80m. They will also be allowed to exclude (for both years) losses relating to infrastructure and youth programmes. They said these totalled £15m for 11-12. After adjusting for these exclusions they are going to be very close to the maximum allowed losses under FFP.

Last year's accounts included income of £12.8m for "Design, Know-how and Other Intellectual Property rights" sold to the parent company Abu Dhabi United Group Investment & Development Limited. I notice that this year's accounts include a further £22.5m of income for the sale of "intellectual property" to other related companies. These are transactions that UEFA will need to investigate, along with the Etihad sponsorship deal, in assessing Emirates Marketing Project's compliance with the FFP rules.

Isn't there a clause allowing clubs to exceed the limits as long as they are going in the right direction. So £98m to £52m is a substantial improvement which might allow them to pass the test.

Those intellectual property charges look like the classic tax avoidance schemes of companies like Starbucks. Large payments to Swiss subsidiaries for their proprietary technique for burning coffee and other payments for proprietary recipes for adding gooey gunk to coffee flavoured beverages.

 

[Finney Is Back]

Re: O/T Financial Fair Play

When compared to other sponsorship deals that have been signed recently, I could justify describing the Etihad deal as undervalued.

Of course you could - but you would be comparing your deal with deals signed by truly huge global clubs/brands such as Man Utd, Bayern Munich, Real Madrid and Barcelona I'm sure. Alternatively you could just compare with France's own version of Oil Money FC - Paris Saint Germain.

Now don't get me wrong I'm sure that when it comes down to the legal aspects of FFP your lawyers will be able to argue that they represent 'fair value' (citing the clubs above I mentioned). In fact I would imagine that UEFA won't even have the nerve to get as far as getting lawyers involved.

However deep down I think even you know that your commercial revenue is as large as it is for one single reason.... or is it merely a coincidence that you happen to be sponsored by a company that falls under your owners umbrella?

But anyway - at least Emirates Marketing Project are "doing it in the right way" eh?

 

[Baleforce]

Re: O/T Financial Fair Play

I think worldwide, city are at that level now, the interested in the middle east/asia/us don't care about club history, they only care about now, and right now City have some real stars that people want to see, Aguero, Silva, Toure, Kompany etc, they are a big draw

 

[Finney Is Back]

Re: O/T Financial Fair Play

I think worldwide, city are at that level now, the interested in the middle east/asia/us don't care about club history, they only care about now, and right now City have some real stars that people want to see, Aguero, Silva, Toure, Kompany etc, they are a big draw

Really? Having spent a lot of time in Asia they are absolutely nowhere near to even Liverpool, let alone Man Utd. I have no doubt that this will change as their success continues but it is as clear as day that the commercial deals they signed bore no relation to their exposure (hence why it was an 'in house' company that became the sponsor). It would be interesting to see what sort of bids they were receiving from companies that were not connected to them at the time they did the Etihad deal - although, of course, we will never actually find out.

 

[SWP29]

Re: O/T Financial Fair Play

Really? Having spent a lot of time in Asia they are absolutely nowhere near to even Liverpool, let alone Man Utd. I have no doubt that this will change as their success continues but it is as clear as day that the commercial deals they signed bore no relation to their exposure (hence why it was an 'in house' company that became the sponsor). It would be interesting to see what sort of bids they were receiving from companies that were not connected to them at the time they did the Etihad deal - although, of course, we will never actually find out.

What you have to remember though mate, is that we were the first to sign a 'bumper deal' like this. Since then, the clubs much bigger than us have signed deals bigger than ever before too. Liverpool's shirt sponsorship is worth £20m a season, and that is despite years without exposure to European football. Our Etihad deal is worth £40m a season, but that includes shirt sponsorships, stadium naming rights, sponsorship for the campus around the stadium (which includes an athletics track, huge social area, bridges, and will soon incorporate our training ground and youth facilities) and training kits. If I was to estimate, I would say our shirt sponsorship is worth £15m of that maximum, which I wouldn't say is unfair. I would be very interested to see your sponsorship figures, so I will search them out later.

I agree with you (and therefore disagree with galeforce) that we aren't anywhere near the levels of the other massive clubs, we are more or less level with you, probably a bit further ahead at the moment due to larger exposure (trophies and players). At the time, I didn't think our deal was SO outrageous, but that was probably due to bias on my part. But now I am under zero doubt that its good value, as other teams have caught up and surpassed us. I'll try and find details of PSG's latest deal, too, for further comparison.

 

[P.D.]

Re: O/T Financial Fair Play

PSGs deal isn't really one to compare though, its as doped as yours.

 

[SWP29]

Re: O/T Financial Fair Play

PSGs deal isn't really one to compare though, its as doped as yours.

The point being that ours is genuinely market value though, which is what the issue was/is.

 

[Jordinho]

Re: O/T Financial Fair Play

Rivals ganging up to ban City: Liverpool, Chelsea and Arsenal may test Champions League ruling on Financial Fair Play

• Small print in UEFA FFP rule could affect Emirates Marketing Project's eligibility for the Champions League
• Jose Mourinho accuses unnamed clubs of 'dodgy FFP'
• 'Major clubs' away of potential rights to appeal against those considered to have cheated their way to passing FFP test

Arsenal, Chelsea and Liverpool could use UEFA small print to challenge Emirates Marketing Project’s right to play in the Champions League next season.

The rules now effectively set up a scenario where rivals can claim City have cheated their way to passing UEFA’s ‘Financial Fair Play’ (FFP) test.

It is understood lawyers for a host of ‘major clubs’ are aware of these potential rights to make appeals — thanks to recently amended Financial Fair Play (FFP) regulations — and are monitoring the situation closely.

On Saturday night Chelsea manager Jose Mourinho, who faces City on Monday in the game of the season so far, accused some unnamed clubs of ‘dodgy FFP’.

He said: ‘There are clubs that are following exactly the project of Financial Fair Play and there are other clubs doing it in a dodgy way. For me, that is very clear. I don’t say the clubs — that is not my job.’

When asked specifically about City, and a potential UEFA investigation, he added: ‘It’s for Mr Platini and other people to analyse it, it’s not for me… I’m waiting for that.’

FFP rules compel clubs to limit losses for the 2011-12 and 2012-13 seasons combined to £37million, with a ban from European competitions the severest theoretical punishment. City last week announced losses for 2012-13 of £51.6m, meaning they have lost £149.5m over two years.

They can perhaps ‘exempt’ as much as £110m of those losses to meet FFP requirements. But they face accusations their losses are artificially low after earning cash from ‘intellectual property’ sales to related companies. UEFA sources have confirmed this will be investigated to see if it is ‘real’ income.

Amended small print in the 2014 UEFA FFP rulebook, just published, includes two key changes; one allowing clubs to ‘plea bargain’ punishments for overspending, and another that allows other clubs to challenge those plea bargains if they feel the outcomes negatively affect them.

http://www.dailymail.co.uk/sport/football/article-2550222/Rivals-ganging-ban-City-Liverpool-Chelsea-Arsenal-test-Champions-League-ruling-Financial-Fair-Play.html

 

[Cochise]

Re: O/T Financial Fair Play

Chelski are just as bad, the difference being that they had their massive financial injection way before FFP was ever mentionned and so they are better off in the here and now. I don't think Mourinho cared all those years ago when Chelski could literally gazump any club to any player they wanted by offering millions more than the other team and stupid wages. They started the problem

 

[jts1882]

Re: O/T Financial Fair Play

Yes, Chelsea are as bad, but now they are in the castle they want to pull up the drawbridge.

While I see the inherent unfairness of a sugar-daddy owner helping a club leap-frog those who are carefully building, I'm undecided on the FFP rules. Is it better to allow new inputs of money and to allow new clubs to join the top table or is is better to protect the status quo by making it difficult to improve? In effect we have been kept out of the elite by Chelsea and City outspending us and now the rules will stop us ever taking the same route.

The rules do have a perverseness about them. A new Sheikh or Abramovich is blocked, yet these two have put close to 2 billion into football, money that has gone to footballers, coaches and others in football. On the other hand, the rules do nothing to stop the likes of the Glazers who have taken half a billion out of football to pay interest and bank fees. It's strange that an industry draws up rules to protect those taking money out and block those putting money in.

 

[AuroRaman]

Re: O/T Financial Fair Play

Would it be controversial for me to state that despite the 'sugar daddy' element of their practice, the drubbings and the fact that they have made it even harder for us to reach the top-table…

I actually quite respect the model City are building 8-[ They certainly don't have the ****ish element that Chelski have always had.

*dives for cover*

 

[SteveAWOL]

Re: O/T Financial Fair Play

Twitter / sportingintel: This list of 65 players bought by PL clubs for £20m+ (by @JakeFCohen) uses price-adjusted totals using RPI inflation pic.twitter.com/O99wzfQKUM

 

[SWP29]

Re: O/T Financial Fair Play

Probably sacrilege to say this here, but it's amazing that Arsenal are only in there twice, and one of those is Reyes.

 

[milo]

Re: O/T Financial Fair Play

Probably sacrilege to say this here, but it's amazing that Arsenal are only in there twice, and one of those is Reyes.

They pick up a lot of players towards the end of their contracts on lower fees but pay high wages.

 

[billyiddo]

Re: O/T Financial Fair Play

Arsenal do their financial bullying at he youth levels

 

[jaysea67]

Re: O/T Financial Fair Play

Isn't there a clause allowing clubs to exceed the limits as long as they are going in the right direction. So £98m to £52m is a substantial improvement which might allow them to pass the test.

Provided that the deficit is reducing each year clubs can remove from their losses the wages they paid in 2011-12 for players whose contracts were already in place prior to 1 June 2010. Emirates Marketing Project would certainly fail FFP without this rule. They said last year that this amounted to £80m.

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Here is Ed Thompson's take on Emirates Marketing Project's recently released results from financialfairplay.co.uk:

Emirates Marketing Project's long-awaited financial results were released last week. In many ways they raise more questions than they answer.

As a number of journalists have pointed out, there are a host of Related Party Transactions, Inter-company transactions as well as a sale of Image Rights to a company that the City Press Office insists is outside the club. These obscure transactions have been designed to generate one-off income for the club during the final accounting year that will be covered by the first Monitoring Period. City have remained publically silent over whether they will actually pass the FFP Break Even test and curiously, the accounts don't even mention FFP or the potential for reduced income if they were to be excluded from future competition. Given that their thousands of fans are keen to know if the club have passed the FFP test, the club's silence seems remarkably remiss.

If UEFA's CFCB panel were to accept City's accounts on face-value and not contest any of the items, then it seems that City will just squeeze under the FFP limits (largely due to a transitional clause that allows them to exclude a huge chunk of wages paid in 2011/12 to players who originally joined the club before the FFP rules were voted-in).

However, the CFCB panel are required by the rules to review a number of transactions, totalling £35 m, which have been badged as 'Related Party Transactions' in the club accounts. The CFCB will attempt to identify and apportion a market rate to these transactions In addition, a number of other items could also conceivably be reviewed. These items:

•May be classified as Related Party Transactions by CFCB
•May not be considered 'Relevant Income' and will need to be excluded from the FFP Break Even test
As we know, City's accounts included a number of contentious items. These included payments to the club from the Emirates Marketing Project Women's team and the new New York City franchise. These payments have been justified on the grounds that the payment is for use of the club coaching and infrastructure, in addition to use of the City brand. The payment from the women's team is particularly interesting. The club set up a separate limited company for the women's team and although this team is almost certainly a loss-making enterprise, it has apparently paid the main club millions for the use of the City brand (plus use of infrastructure). As all the benefit from the City branding of the women's team will be received by City, it is difficult to see the commercial justification for this payment. With the New York City transaction, Emirates Marketing Project gain millions from this transaction despite the fact that the US franchise has yet to kick a ball.

The sale of Image Rights is both interesting and intriguing. The club has not disclosed precisely what they are trying to achieve. In their usual form, Image Rights are essentially a vehicle to avoid/reduce tax and National Insurance. For example a footballer will have a sum equal to up to 10% of their salary paid into an offshore company (often paying zero tax). The rationale is that, as a proportion of their earnings essentially come from use of their image overseas, there is no requirement to pay UK tax on the overseas earnings. HMRC cap this benefit at 10% of salary.

On the face of it, it looks like City are introducing a commercial company through which a percentage of their overseas earnings can channelled in order to reduce their tax liability. It looks like this company has paid Emirates Marketing Project for 'Image Rights' so that they can collect their designated overseas earnings. Presumably this company will ultimately process the revenue off-shore so tax is greatly reduced on any profits. However, Emirates Marketing Project have not made any profits for a number of years and as such have not had to pay Corporation Tax - any benefit from such an arrangement is therefore likely to come in future seasons. In an ideal world, the club should provide more information on what they are attempting here - it is possible that the club have simply sold a percentage of Image Rights to a completely separate company (as their Press Office seems to be suggesting). However, even if the rights revert to the main club after a defined period of time, this seems rather unlikely - why would City (a club with zero debt) genuinely want to sell a percentage of their future Image earnings? Depending on the rationale, it seems possible that CFCB may determine that the Image Rights payments do not represent 'Relevant Income' (a term that defines income generated from broadly football-related sources).

Emirates Marketing Project have every reason to feel pleased with the performance of their accounting teams. Whereas PSG decided to fudge the Break Even test with a single commercial tie-in with the Qatar Tourist Authority (a deal that appears to be a fairly transparent Related Party Transaction), City have very deliberately adopted a much more complex approach. The CFCB will have unpick a multitude of Related Party Transactions, deals with associated companies; third party companies; Image Rights deals; a complex Naming Rights and sponsorship/development deal, in addition to further sponsorship deals from parties connected (if not 'Related') to the owner. You have to wonder whether CFCB will have the desire and tenacity to unravel and challenge each element

City's increase in Commercial Income is also intriguing. Their non-Broadcast Commercial Income increased by a huge £36m (from £107m to £143m) and it is difficult to understand where this comes from. It is the convention for club websites and publications to list club partners/sponsors in order of their contribution to the club - City list their top sponsors/partners in order as Etihad, Nike, Etisalat, TCA Abu Dhabi and aabar. Four of their five top sponsors are from parties connected to the club owner (Mansour is part of UAE's absolute monarchy which effectively controls all government and all state-owned assets). The only non-Mansour-related partner in their top five appears to be Nike (who are reportedly paying £12m a season, a £6m increase from the previous season). The remaining key-partners were all sponsoring the club during 2012/13 and none are new. As I say, it is difficult to say where the £36m increase in commercial income has come from. The CFCB will presumably want to know and depending on the answer this might open up the debate of Related Party Transactions.

The suspicion arises that various Image Rights and intellectual property deals were essentially 'balancing items' and that these deals would have appeared in their accounts for however much City needed to nominally pass the test. Interestingly, Mancini was sacked just three-weeks before the end of the accounting cut-off date. His pay-off resulted in a one off charge in the club accounts for at least £7.5 m (quite possibly considerably more). City's accountants would have us believe that if the sacking had not happened, the club would have reported a very healthy and somewhat implausible FFP pass. One of City's 'Intellectual Rights' deals apparently included in their accounts (Melbourne Hart women's team) was only announced this month; this rather gives the game away.

So, what does this mean for City? The most likely scenario is that the CFCB will challenge most of the contentious items and that some will be overruled. City's FFP pass will be turned into an FFP failure. It seems likely that UEFA will use their newly beefed-up FFP sanction for City (and PSG) - see below for extract. This sanction enables UEFA to withhold players from their competitions based on their overspend. So, if for example, City are ruled to have failed FFP by £20m, the club will have to field a Champions League Squad without a number of players who are paid a total of £20 m in wages. The mechanics of this punishment are still be outlined but UEFA seems happy that this provides a punishment that is directly proportionate to a club's overspend. Unlike an outright ban, this punishment would insulate them from any later legal challenge and claim for damages (i.e. should FFP be eventually overturned via the Striani case).

Article 29 – List of disciplinary measures
1 The following disciplinary measures may be imposed against any defendant
other than an individual:
a) warning,
b) reprimand,
c) fine,
d) deduction of points,
e) withholding of revenues from a UEFA competition,
f) prohibition on registering new players in UEFA competitions,
g) restriction on the number of players that a club may register for participation
in UEFA competitions, including a financial limit on the overall aggregate cost
of the employee benefits expenses of players registered on the A-list for the
purposes of UEFA club competitions,
h) disqualification from competitions in progress and/or exclusion from future
competitions,
i) withdrawal of a title or award​

http://www.financialfairplay.co.uk/latest-news/man-city-release-controversial-accounts

 

[Robbo]

Re: O/T Financial Fair Play

Article 29 – List of disciplinary measures
1 The following disciplinary measures may be imposed against any defendant
other than an individual:
a) warning,
b) reprimand,
c) fine,
d) deduction of points,
e) withholding of revenues from a UEFA competition,
f) prohibition on registering new players in UEFA competitions,
g) restriction on the number of players that a club may register for participation
in UEFA competitions, including a financial limit on the overall aggregate cost
of the employee benefits expenses of players registered on the A-list for the
purposes of UEFA club competitions,
h) disqualification from competitions in progress and/or exclusion from future
competitions,
i) withdrawal of a title or award​

[/I]

I'm sure we'll see plenty of a), a fair bit of b), some c), and none of the other punishments given to any major club. Measures d) to i) are reserved for the public spacegoats for all that is wrong with football, which will probably be some obscure Russian/Ukranian club and a few low level, underachieving, overspending clubs in Spain/England. Just to show how seriously UEFA takes financial doping.

 

[Denmark Spur]

Re: O/T Financial Fair Play

Uefa reveal 76 clubs, understood to include Chelsea, Emirates Marketing Project and PSG, are under investigation for possible Financial Fair Play breaches

Those that don't comply with the rules could face sanctions, with Uefa permitted to bar teams from European competitions

UEFA has revealed that 76 clubs in European competition this season - about one third of the total - are being investigated for possible breaches of its Financial Fair Play (FFP) rules.

The 76 clubs all failed UEFA's break-even calculations for 2012 and have been asked to provide financial information for 2013. Emirates Marketing Project, Chelsea and French club Paris St Germain are believed to be among the clubs involved.

The clubs will all now have their finances assessed by the Club Financial Control Body to see if the breaches have continued and whether sanctions should apply.

UEFA general secretary Gianni Infantino said: "This figure of 76 clubs is a high figure but it has to be looked at in the perspective of what the end figure will be."

Clubs face a range of sanctions from a warning or a fine up to being forced to play in Europe with a salary cap on the squad, or even being barred from competing and having trophies stripped.

http://www.independent.co.uk/sport/...ble-financial-fair-play-breaches-9161011.html

 

[milo]

Uefa to defend legal challenges from clubs over financial fair play

http://gu.com/p/3n75x

 

[Cochise]

I would love it if UEFA actually put their foot down and both Chelski and City got banned from European competitions next season. I mean I doubt it would happen and if it did we would likely see a two horse race for the league with those two being free from the constraints of mid week journeys, but imagine the UCL with Arsenal, Liverpool, Everton and us next year with UTD, Southampton and Saudi Sportswashing Machine in the Europa league . Would make a nice change