City & FFP | 2020/21 Accounts released | Revenues of £569.8m, £2.4m profit (p 2395)

[fbloke]

Re: City & FFP (continued)

do we know what city failed FFP on????
was it not allowing certain sponsorships or something else???

We failed because our losses were higher than those allowed. I don't believe sponsorships were a problem but the use of revenue from within the group for the sale of IP clearly gave UEFA some concerns, as we agreed not to include those in any future FFP calculations. But the key problem seems to have been our inability to use the wages paid in 2011/12 to players signed prior to June 2010 to offset our losses. I posted on this a while back but it now appears it might be more complicated than that. We might have tried to be a bit too clever and I'm not sure we were ever really in a position to pass FFP this summer. That's why I believe that the sanctions which effectively took out the losses in FY2012 & 2013 and allow us to start with a clean slate in FY2014 are probably the best thing to come out of this.

Would it be too much to think that the outcome was actually what the City bods wanted from the outset?

 

[route46]

Re: City & FFP (continued)

do we know what city failed FFP on????
was it not allowing certain sponsorships or something else???

We failed because our losses were higher than those allowed. I don't believe sponsorships were a problem but the use of revenue from within the group for the sale of IP clearly gave UEFA some concerns, as we agreed not to include those in any future FFP calculations. But the key problem seems to have been our inability to use the wages paid in 2011/12 to players signed prior to June 2010 to offset our losses. I posted on this a while back but it now appears it might be more complicated than that. We might have tried to be a bit too clever and I'm not sure we were ever really in a position to pass FFP this summer. That's why I believe that the sanctions which effectively took out the losses in FY2012 & 2013 and allow us to start with a clean slate in FY2014 are probably the best thing to come out of this.

cheers for clearing it up.
ive always had the belief that a team like Newcastle/everton should try and spend as little as poss just to survive (get 17th rather then 10th) for say 10yrs save £200m then go on a massive transfer spree, would this be possible under FFP or would they only be able to use 3yrs savings?????

 

[Prestwich_Blue]

Re: City & FFP (continued)

do we know what city failed FFP on????
was it not allowing certain sponsorships or something else???

We failed because our losses were higher than those allowed. I don't believe sponsorships were a problem but the use of revenue from within the group for the sale of IP clearly gave UEFA some concerns, as we agreed not to include those in any future FFP calculations. But the key problem seems to have been our inability to use the wages paid in 2011/12 to players signed prior to June 2010 to offset our losses. I posted on this a while back but it now appears it might be more complicated than that. We might have tried to be a bit too clever and I'm not sure we were ever really in a position to pass FFP this summer. That's why I believe that the sanctions which effectively took out the losses in FY2012 & 2013 and allow us to start with a clean slate in FY2014 are probably the best thing to come out of this.

cheers for clearing it up.
ive always had the belief that a team like Newcastle/everton should try and spend as little as poss just to survive (get 17th rather then 10th) for say 10yrs save £200m then go on a massive transfer spree, would this be possible under FFP or would they only be able to use 3yrs savings?????

Once again (and this has been said more than once) it's not about how much cash you have but your income and expenses. A club could have £500m in the bank but that isn't necessarily revenue, particularly if the owner has invested that money. But if they spend that £500m then it becomes an expense and if your expenses are higher than your revenue by more than the permitted amount then you'll fail FFP.

If you buy a player, you don't put the full cash amount as an expense but write it off over the life of the contract. So if you spend £200m in one transfer window on players given 5 year contracts then you end up with an expense of £40m a year, every year for those 5 years. If you buy players steadily over 5 years then it's less every year. But you have to replace players and refresh the squad regularly so how could a team not spend anything for 10 years?

 

[route46]

Re: City & FFP (continued)

I mean spend a minimal amount each season save as much as possible (say £10m), a team would have more chance of breaking top 4 spending £200m in 1 go rather then £30m each season for the next 10 years

 

[Prestwich_Blue]

Re: City & FFP (continued)

I mean spend a minimal amount each season save as much as possible (say £10m), a team would have more chance of breaking top 4 spending £200m in 1 go rather then £30m each season for the next 10 years

You could do that as long as your aggregate break-even result for the last 3 years was within FFP parameters.

Let's assume that a club made a profit of £20m every year then the season you spent that £200m you'd incur an additional expense of £40m if you spent the £200m on 8 players on 5 year contracts. You'd have to pay them wages as well but let's assume you set some of that off against the wages of players you'd let go so you were paying a net £15m a year extra in wages.

That £20m profit would turn into a loss of £35m in that year, which we'll call Yr0. So in Yr-2 you made a £20m profit, same in Yr-1 but a £35m loss in Yr0. That's an aggregate surplus of £5m and therefore you're OK.

The next year it will be a profit of £20m in Yr-2 but losses of £35m in each of Yr-1 and Yr0, giving an aggregate loss of £50m which means you'd fail. In the following year your aggregate 3 year loss would be £105m (3 x £35m) and therefore another fail.

If your profit before spending that £200m was £50m however, then your aggregate loss would be £15m at worst on that basis. But if you were making £50m a year then you could easily afford to spend some of that anyway, without getting into difficulty. But profit doesn't not equal cash, as you could make a profit but spend cash on a new stadium but you could also make a loss but have cash to spare, because the loss arose from a non-cash item like player amortisation.

 

[Blue Beard]

Re: City & FFP (continued)

I mean spend a minimal amount each season save as much as possible (say £10m), a team would have more chance of breaking top 4 spending £200m in 1 go rather then £30m each season for the next 10 years

You could do that as long as your aggregate break-even result for the last 3 years was within FFP parameters.

Let's assume that a club made a profit of £20m every year then the season you spent that £200m you'd incur an additional expense of £40m if you spent the £200m on 8 players on 5 year contracts. You'd have to pay them wages as well but let's assume you set some of that off against the wages of players you'd let go so you were paying a net £15m a year extra in wages.

That £20m profit would turn into a loss of £35m in that year, which we'll call Yr0. So in Yr-2 you made a £20m profit, same in Yr-1 but a £35m loss in Yr0. That's an aggregate surplus of £5m and therefore you're OK.

The next year it will be a profit of £20m in Yr-2 but losses of £35m in each of Yr-1 and Yr0, giving an aggregate loss of £50m which means you'd fail. In the following year your aggregate 3 year loss would be £105m (3 x £35m) and therefore another fail.

If your profit before spending that £200m was £50m however, then your aggregate loss would be £15m at worst on that basis. But if you were making £50m a year then you could easily afford to spend some of that anyway, without getting into difficulty. But profit doesn't not equal cash, as you could make a profit but spend cash on a new stadium but you could also make a loss but have cash to spare, because the loss arose from a non-cash item like player amortisation.

The goalposts were set to catch City out. If the goalposts were set to target football clubs being put into debt as they were first supposed to do (Portsmouth etc) then we would face no penalties.
FFP is far from fair and shows EUFA are bunch of dinosaurs that would prefer the established clubs of Europe to remain unchallenged

 

[1972Bramhall_Blue]

Re: City & FFP (continued)

UEFA use the word 'fair' the way the old East Germany used the word 'democratic', to hide the truth from the stupid and wilfully blind, having said that though as we aren't prepared to take it to court we have to work with it and the club seems to be doing the right thing.

 

[BayernMan]

Re: City & FFP (continued)

I find FFP hilarious, European football hasnt been fair for centuries!

 

[Marvin]

Re: City & FFP (continued)

City have been set our own individual target for 2013/14 which we are said to be confident of meeting

So going forwards, are there any English clubs at risk of failing UEFA's FFP?

 

[Centurions]

Re: City & FFP (continued)

City have been set our own individual target for 2013/14 which we are said to be confident of meeting

So going forwards, are there any English clubs at risk of failing UEFA's FFP?

Since it's only clubs who partake in their competitions that are affected, the only obvious candidate is Liverpool. They would have failed this season gone if they'd been audited I believe so how they're going to strengthen (which they have to do) I have no idea.