Bizarre twist as FFP expert praises City

[sir baconface]

The proposals put forward by Manchester United are so cynical that the people who should really be manning the barricades to protest are those genuine, honest and decent fans of Manchester United – maybe they are protesting, but are obviously so few in number that we can't hear them! If spending were the problem, then it is obvious that Sheikh Mansour's spending is not a problem to Manchester City, since he simply invests the money in the club as investment/equity and, actually, increases the value of the club at the same time. If David Gill or John W Henry was genuinely concerned about the threat to clubs by excessive spending they would, as has been pointed out on this thread many times, simply insist that owners put in money as an investment, not as an interest free loan. Results on the pitch, however, show that Manchester City's spending is quite clearly a problem, and a growing problem at that, to Manchester United. So, some way of stopping City spending must be found.

The way is to stop clubs “living beyond their means”. This appears to be one of those wonderful phrases like being in favour of all things bright and beautiful, but when we identify what those “means” are to be we begin to glimpse the dishonesty yet again. All those revenue streams developed by Manchester United over the last 25 years are to be permissible – increased ticket prices, TV income, sponsorship and any that I've missed. The only one which is not to be tolerated is the one used by that club on 4 separate occasions between the appointment of Ferguson in 1986 and the purchase of their first PL title in 1993 – you've guessed it, the injection of cash by the owners, in the form of rights issues and a flotation on the stock exchange.

The interesting thing is that the regulations put in place in the 19th century to make sure the football league remained competitive restricted or did not allow any of these revenue streams, apart from money put in by the shareholders! Sponsorship was not allowed until the 1980s and TV income was insignificant until the advent of Sky. Very interestingly, the regulations were much more concerned to stop shareholders taking money OUT of their clubs rather than putting it in. Restrictions were placed on dividends to shareholders and on salaries paid to directors (and players, by means of the maximum wage) and the like. Manchester United has done more than any other club to consign these regulations to the bin. They were the club which announced in the early 1960s that it would pay its players more than the maximum wage, they were second after Spurs to announce it would exploit the technicality of a holding company to float on the stock exchange and pay directors and so on. They were the club pressing to change the regulations so that they could keep all gate receipts from league games at OT. They pushed for the redistribution of TV income so that the PL kept virtually the whole lot. And most shamefully, given their new concern to save other clubs, they announced that it was no concern of theirs if other clubs went to the wall.

We all know what has changed their attitude. Their owners don't put money in like ours: their owners take it out, big style. And they want to keep coming back for more. And more. They want to subsidise their other businesses, which, funnily enough, are “living beyond their means”, with money which fans hoped was going to Manchester United! If they can just get these regulations into force, the Glazers won't have to spend much at all (or so they think) to keep United at the top, the money will roll in – they will NEVER have to pay the debt off and they'll be far more money to bleed out of the club, for whatever reason they need. Supporters of Manchester United who believe that their club has a cash flow problem ONLY until the Glazers can pay off the debt, don't recognise the animal they're landed with! The Glazers will bleed United dry for as long as they possibly can.

We face a future of decreasing popularity of the PL brand, lower wages, bleeding of players abroad and all manner of disastrous consequences - all to feather the Glazers' nest if we are stupid enough to let them foist these regulations on the PL.

Well put. Ironic that these regs are about restricting what owners put in rather than what they take out.

 

[ChicagoBlue]

Just in case ANYONE thinks FFP is some kind of real fiscal issue, it is a joke. The REAL driving force is to create a mechanism that makes it increasingly difficult for ANY other clubs than those that are the CURRENT large, established elite in Europe to break through.

Further, these same largest clubs are increasingly being OWNED BY LARGE, FINANCIALLY SAVYY INDIVIDUALS AND INVESTMENT GROUPS WHOSE GOAL IS TO NOT ONLY ENSURE CONTINUED SUCCESS AMONGST THEMSELVES, BUT TO DRIVE DOWN THE COST OF THAT SUCCESS!

In short, the City Model was spend big early to create virtually "instant" success, which will feed future success and reduce the cost of future acquisitions. When we were "second tier," it is obvious to all that we had to PAY OVER THE ODDS for players and their salaries. Today, that is no longer the case and, in and of itself, creates savings against FFP.

However, the BIGGEST ISSUE WE WILL FACE GOING FORWARD is the same issue that American Sports deals with......salary caps and future revenue sharing deals with the players. It is absolutely NOT a coincidence that more Americans are investing in British football, nor that they are nearly all ALSO American Sports Franchise Owners.

The sports profit model has already been built, by the US networks and the individual sports they cover, and it is the future of football in England, and across Europe. Most of the other Euro leagues are small potatoes when compared to the EPL. However, it is Sky Sports exposure AND MONEY that has driven English football to its current global dominance and the Premier League has to be cognizant that future growth may not be able to sustain the recent record levels of investment.

Against that backdrop, we see that almost no clubs are highly profitable, with some far from any notion of profitability. Accordingly, the salary cap model is an almost certain way to create a "more" level playing field. In addition, the current transfer system is an accepted distortion of the general football economy, but one found in virtually no other major sport in the world. If transfer fees were brought down to almost token levels, it would drive all the best players to the best teams. However, if those teams are restricted (by a cap) from paying the salaries those players would demand, then those players would flow to the next team, and the next and so on. This has an "equalizing" effect over time, but over the 4-5 year contract period of the top players, this allows the recycling of the top players to maintain the very top players to remain at the top teams at the peak of their skills, while allowing the "second tier" teams to pick up those players in their late 20's or early 30's for significantly lower costs.

Well, that is my thesis, anyway! ;)

 

[BluessinceHydeRoad]

I am speculating whether FFP for the Premier League might be challengeable in law as restraint of trade. I read that this didn't apply to the Champions League because technically it operates on an invitation basis. Would the same get-out apply to the PL I wonder?

On a similar note, a proposal to restrict increases in wages sounds suspiciously like a cartel practice. If a few employers got together in, say, the transport industry, all hell would be let loose.

Wouldn't mind betting that City (and Chelsea) have had their legal beagles take a good look at both European and country level. They are probably keeping their powder dry until such time as they need to wheel the big guns out.

Clubs like u*d are trying to pull the ladder up behind them. Surprise, surprise. How can the glass fitters' ploy of loading a club with debt be more ethical or less dangerous than what City's owners have done?

I think that an attempt to restrict investment by a shareholder is not permissible in European or British law. The maximum wage collapsed in the 1960s because clubs simply announced they would ignore it. Since it violates statutes from the Combination Laws of 1799 onwards it could only ever be enforced by voluntary agreement. This seems to me to be the status of FFFP both in Europe and England - if clubs are prepared to tolerate it it can be enforced by UEFA and/or the PL, but as soon as a club refuses to accept it and challenges it in law, the courts will declare it unlawful.

 

[Chippy_boy]

He's not strictly correct in saying that. The amount we spend on players only has a relatively minor impact on our overall expenditure because it is amortised (written off) over a number of years so our buying players two and three seasons ago will still continue to impact our accounts.

If you spend £100m on transfers every year amortised over 5 years, then your outgoings on transfers are still £100m per year. So in that sense, amortisation doesn't come into it. Had we continued to spend at a high level we would see much higher costs this year and next and thereafter in our books.

So he is 100% correct that our reduced transfer spending is moving us in the right direction and moving our books towards balance.

 

[SWP's back]

Sheikh Mansour has never claimed to be, and has never been, a “sugar daddy”. He has never set out to pour money endlessly into the club to maintain a position at the summit of the game. He has set out to equip the club to stand on its own two feet.

Excellent, excellent post. I've highlighted the bit that succintly describes what I & others believe but the mainstream media don't get. Sheikh Mansour has invested in the club as entrepreneurs do, in order to make an underperforming business perform better.

In 14 months time, when our 2012/13 accounts are produced and our wage bill is less than the UEFA recommended maximum ratio to turnover, it might start to dawn on people just what he has done for us.

I'm not sure how true this statement by BluesinceHydeRoad is. When the takeover first went through the gobby mouthpiece Sulamain Fahim was talking about endless spending and buying the best players in the world and dominating European football.

The initial reaction of the British media, wider football community, and many City fans was that it was tasteless, uncomfortable, and didn't reflect very well on Sheik Mansour and Abu Dhabi. The Sheik's advisors seemed to realise this very quickly, and appointed the more level headed, professional and charming figure of Khaldoon Al Mubarak as chairman, and voice of the club.

When all the formalities of the takeover has gone through some weeks later, there was clearly a more considered, level headed and respectful tone to the plans Khldoon and Sheik Mansour laid out on the City website and wider media. One of respecting the traditions of the club, investing in youth, continuing to support the community etc.

I think it's fantastic that they are taking this approach, and reflects very well on the club, the owners, and Abu Dhabi. However, I am unsure if it was their initial intention on the day we signed Robinho to approach this in a sustainable, investing in youth, complying with FFP way.

The club was clearly bought as a vehicle to market Abu Dhabi and generate as much positive exposure for the country as possible. Khaldoon has alluded to it himself, and Garry Cook even referred to Manchester City as a "Proxy brand of Abu Dhabi". Complying with FFP and making the club self sustainable is the best way to not upset the apple cart, and generate a positive image for Abu Dhabi.

If FFP did not exist, and there was no need to break even and be self sustaining, I would bet there would be continued heavy investment in the first team until we became European champions, as this would give the most exposure to Abu Dhabi, and would give Sheik Mansour the on field success he no doubt wants.

Sheik Mansour is the best owner in football, it is like a lifelong dream come true for me to be able to win trophies, and it largely down to his incredible investment. However, my opinion remains that he didn't initially buy the club because he saw City as a stand alone business that could be invested in, made self sustainable, and then sold on at a profit.

I think he saw taking a mid table Premier League club in the same city as one of the biggest clubs in the world, investing huge sums in it and winning trophies with it, he could gain more positive column inches, internet hits and TV minutes for Abu Dhabi than any other business.

It wasn't City as a company that he wanted to invest in, it was the exposure and profile City could generate for Abu Dhabi which was the motivating factor. And of course, I'm sure there is a big part of him that he loves football and wants his team to be the best. I hope we still will be European Champions one day, but there's no doubt in my mind that if FFP didn't exist we'd get there much quicker.

Supreb post mate.

Some crackers on this thread today, well done guys.

 

[Rammyblues]

He was only 45 mins away from purchasing Newcastle. When Ashley backtracked he then found us.

 

[VOOMER]

Just in case ANYONE thinks FFP is some kind of real fiscal issue, it is a joke. The REAL driving force is to create a mechanism that makes it increasingly difficult for ANY other clubs than those that are the CURRENT large, established elite in Europe to break through.

Further, these same largest clubs are increasingly being OWNED BY LARGE, FINANCIALLY SAVYY INDIVIDUALS AND INVESTMENT GROUPS WHOSE GOAL IS TO NOT ONLY ENSURE CONTINUED SUCCESS AMONGST THEMSELVES, BUT TO DRIVE DOWN THE COST OF THAT SUCCESS!

In short, the City Model was spend big early to create virtually "instant" success, which will feed future success and reduce the cost of future acquisitions. When we were "second tier," it is obvious to all that we had to PAY OVER THE ODDS for players and their salaries. Today, that is no longer the case and, in and of itself, creates savings against FFP.

However, the BIGGEST ISSUE WE WILL FACE GOING FORWARD is the same issue that American Sports deals with......salary caps and future revenue sharing deals with the players. It is absolutely NOT a coincidence that more Americans are investing in British football, nor that they are nearly all ALSO American Sports Franchise Owners.

The sports profit model has already been built, by the US networks and the individual sports they cover, and it is the future of football in England, and across Europe. Most of the other Euro leagues are small potatoes when compared to the EPL. However, it is Sky Sports exposure AND MONEY that has driven English football to its current global dominance and the Premier League has to be cognizant that future growth may not be able to sustain the recent record levels of investment.

Against that backdrop, we see that almost no clubs are highly profitable, with some far from any notion of profitability. Accordingly, the salary cap model is an almost certain way to create a "more" level playing field. In addition, the current transfer system is an accepted distortion of the general football economy, but one found in virtually no other major sport in the world. If transfer fees were brought down to almost token levels, it would drive all the best players to the best teams. However, if those teams are restricted (by a cap) from paying the salaries those players would demand, then those players would flow to the next team, and the next and so on. This has an "equalizing" effect over time, but over the 4-5 year contract period of the top players, this allows the recycling of the top players to maintain the very top players to remain at the top teams at the peak of their skills, while allowing the "second tier" teams to pick up those players in their late 20's or early 30's for significantly lower costs.

Well, that is my thesis, anyway! ;)

fortunately, there is one major issue that, it so large that it means we are safe from the Americanization of the EPL. Its the only truly global sport on the planet, there is no unity of thought, or practice in the way teams are run, let alone countries and their accounting and legal systems. The NFL, MLB, NHL and the NBA, are all American institutions, with limited global appeal, introduce relegation and we might take these sports seriously, but that won't happen so you can forget about it happening here.

 

[daztrueblue91]

I think all clubs should be in favour of proposals that can make the league more competitive and something should be done about clubs spending money that they cannot generate. However the current FFP proposals are seriously corrupt and I say corrupt as that is the only way to describe it. The fact that the Etihad naming rights deal has been investigated to prove that it is fair is complete and utter bullshit IMO, If a club can get a lucrative sponsorship deal worth 100 mil a season then who are UEFA to say no. At first I thought FFP was to stop clubs ending up like Portsmouth and Rangers however the fact they can try and stop a team from making more money through sponsorship deals as it is "Not fair value" really shows their true colours. I would like to see what UEFA consider fair value, If Wigan got a better sponsorship deal than Barcelona would that be unfair value because Barca are a bigger brand and club? if so all this is doing is allowing the Elite clubs to get the better sponsor deals as they are the bigger brands and there is nothing fair about this whatsoever. Personally I think clubs should be able to get whatever deals they can regardless of who their owner is or knows. After all the deals are there for the club so it will be the club who benefits.

Another point is the way the champions league is set out, we all know that the serious money is there when a team makes the latter rounds and the way the seeding works is set out so the bigger and more established clubs make the latter rounds. I mean how the fuck are Arsenal who haven't won sod all for 7 years seeded higher than the English, German and Dutch CHAMPIONS. It's all because of their history and reputation within the game which again stinks of trying to protect the elite. If United, Liverpool, Arsenal, Bayern ETC want FFP then it would be interesting to see if they would allow UEFA to split the Champions league prize and TV money with the Europa league money to try and have a more ever playing field and also scrap seedings to allow all the qualified teams a fair crack at the competition. I can tell you now that the Elite clubs wouldn't vote for this as what they want is to stay at the top, make more money while spending less.

Finally I would like to know that if FFP happened do you think the likes of United and Arsenal would lower their ticket prices to make it fairer on the fans? Would they fuck all they want to do is make as much profit as they can and screw over anyone what gets in their way.

 

[gordondaviesmoustache]

There have been some incredibly well considered posts on this thread and others in relation to FFP on Bluemoon lately. I have no doubt that the club has established its own position and has formed its own line of argument, but there are points this thread that may not have occurred to them which may be of some value in the battle that lies ahead. People who post on here care passionately about the club and caring about something can often be a tremendous catalyst for creative thought. The club could do a lot worse than read these threads.

What is key, for me at least, is the strategic long term interests of this football club. Of course I care about the wider game, but at the end of the day success for City is what really motivates me.

That is why I believe, as a club, we need to strenuously resist anything that is proposed by David Gill, who is clearly doing the bidding of the Glazers. This is not because of some innate dislike for united on my part, but because they represent the biggest obstacle to our hegemony in the English game.

As sure as eggs is eggs, any Glazer/Gill proposal is devised with united's self-interest at its very core. They care nothing for the wider interests of the game. We represent the greatest threat to them both financially and on the pitch. It therefore follows that anything they propose will be designed with restricting us in mind.

Any talk of 'we'll be ok, we got in just in time before the drawbridge went up' is not only the sort of selfish crap that we say we despise so greatly in them, but it is also incredibly short sighted. FFP might cement our place at the top table, but it will also enable united to keep us at arms length ad infinitum. The best seat at the top table. Any blue who has ambitions for our club that match our owners should resist it for these reasons.

What we now have is the gravitas and the personnel to take this battle to united and win. Gill, at the behest of his employers, is playing a dangerous game. Our owners have proved masterful at achieving their aims since 2008 and I see no reason why this skirmish should be any different.

David Gill should have learned by now that success in business, as in life, is about choosing your battles.

He who chooses to fight must first count the cost.

 

[Rammyblues]

IMO this is not about MCFC, the greater picture is that I want to see a league which is competitive and if in the near future a wealthy owner takes over a club and decides to invest in it, the fans of that club should have the same enjoyment out of watching their clubs rise as we have. It would be very easy for MCFC to say we will comply with these regulations because they are not our enemy but our friend in as much as competition from 16 other league teams will never happen.

I would prefer the league to be open as it once was before the Liverpools and Rags dominated, by bringing in these regs that hope and ideal vanishes at the stroke of 20 signatories on a piece of paper.