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

[Prestwich_Blue]

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?

Chelsea were in a little trouble but I imagine the sale of Mata helped balance their books during that season's accounts. Liverpool perhaps depending on how their revenue gets broken down. Arsenal, United, and Spurs should be alright.

Chelsea passed FFP because of their freak win in the CL two seasons back.

The sale of Mata will not have been reflected in any accounts yet but should see them Ok for the reckoning before the 2015-2016 season.

Liverpool's financial position will not dramatically improve for the coming assessment next Spring. They were not involved in European football last season and did not have any significant runs in either domestic cup competition. They will have improved TV revenue and PL prize money but little else. If they would have failed this time around then they will fail next time.

Liverpool would certainly have failed this assessment. Their losses were just under £50m in 2013 and £40.5m the year before, making an aggregate loss of £90.5m. Allowing £30m for youth development etc gives a break-even deficit of around £60m. They'd look to use the pre-2010 players wage exemption but the trend of their losses isn't improving, having gone up from 2012 to 2013. 2012 was only a 10-month accounting period and I'm not sure about the exact impact of that. It either makes no difference, as long as the accounting period ends in the right calendar year, or their maximum allowable deficit is reduced pro-rata. So it only makes things worse for them if the latter applies. Also, there is no indication in their accounts that the owners took out new shares in 2012 or 2013 so, in theory, their maximum allowable deficit would have been €5m this summer.

What happens now is that they have to submit their FFP assessment next month and, if they fail (as they presumably will) have to submit the 2014 accounts by October. Let's assume they break even in those accounts and have allowable expenses of £15m again. That makes their aggregate deficit around £45m, or €55m which is still too high. Then they'll have to rely on the pre-2010 contracts wages paid in 2011/12, which might or might not be enough, depending on whether their maximum allowable deficit is €45m or €5m. If the owners have converted some of their loans to equity in the 2014 accounts then it should be the higher figure. The only issue is then whether they can demonstrate an improving trend in their financial results. If they have to show that consistently over all three years then they obviously can't do that. But if they only have to show that 2014 is better than either 2013 (or 2012) then they should be OK.

 

[stony]

Re: City & FFP (continued)

Chelsea were in a little trouble but I imagine the sale of Mata helped balance their books during that season's accounts. Liverpool perhaps depending on how their revenue gets broken down. Arsenal, United, and Spurs should be alright.

Chelsea passed FFP because of their freak win in the CL two seasons back.

The sale of Mata will not have been reflected in any accounts yet but should see them Ok for the reckoning before the 2015-2016 season.

Liverpool's financial position will not dramatically improve for the coming assessment next Spring. They were not involved in European football last season and did not have any significant runs in either domestic cup competition. They will have improved TV revenue and PL prize money but little else. If they would have failed this time around then they will fail next time.

Liverpool would certainly have failed this assessment. Their losses were just under £50m in 2013 and £40.5m the year before, making an aggregate loss of £90.5m. Allowing £30m for youth development etc gives a break-even deficit of around £60m. They'd look to use the pre-2010 players wage exemption but the trend of their losses isn't improving, having gone up from 2012 to 2013. 2012 was only a 10-month accounting period and I'm not sure about the exact impact of that. It either makes no difference, as long as the accounting period ends in the right calendar year, or their maximum allowable deficit is reduced pro-rata. So it only makes things worse for them if the latter applies. Also, there is no indication in their accounts that the owners took out new shares in 2012 or 2013 so, in theory, their maximum allowable deficit would have been €5m this summer.

What happens now is that they have to submit their FFP assessment next month and, if they fail (as they presumably will) have to submit the 2014 accounts by October. Let's assume they break even in those accounts and have allowable expenses of £15m again. That makes their aggregate deficit around £45m, or €55m which is still too high. Then they'll have to rely on the pre-2010 contracts wages paid in 2011/12, which might or might not be enough, depending on whether their maximum allowable deficit is €45m or €5m. If the owners have converted some of their loans to equity in the 2014 accounts then it should be the higher figure. The only issue is then whether they can demonstrate an improving trend in their financial results. If they have to show that consistently over all three years then they obviously can't do that. But if they only have to show that 2014 is better than either 2013 (or 2012) then they should be OK.

Do you trust uefa to treat them the same as us ? I don't. Whatever Liverpools financial results say, uefa will put a positive spin on them and they will get away with little or no punishment.

 

[Matty]

Re: City & FFP (continued)

Chelsea passed FFP because of their freak win in the CL two seasons back.

The sale of Mata will not have been reflected in any accounts yet but should see them Ok for the reckoning before the 2015-2016 season.

Liverpool's financial position will not dramatically improve for the coming assessment next Spring. They were not involved in European football last season and did not have any significant runs in either domestic cup competition. They will have improved TV revenue and PL prize money but little else. If they would have failed this time around then they will fail next time.

Liverpool would certainly have failed this assessment. Their losses were just under £50m in 2013 and £40.5m the year before, making an aggregate loss of £90.5m. Allowing £30m for youth development etc gives a break-even deficit of around £60m. They'd look to use the pre-2010 players wage exemption but the trend of their losses isn't improving, having gone up from 2012 to 2013. 2012 was only a 10-month accounting period and I'm not sure about the exact impact of that. It either makes no difference, as long as the accounting period ends in the right calendar year, or their maximum allowable deficit is reduced pro-rata. So it only makes things worse for them if the latter applies. Also, there is no indication in their accounts that the owners took out new shares in 2012 or 2013 so, in theory, their maximum allowable deficit would have been €5m this summer.

What happens now is that they have to submit their FFP assessment next month and, if they fail (as they presumably will) have to submit the 2014 accounts by October. Let's assume they break even in those accounts and have allowable expenses of £15m again. That makes their aggregate deficit around £45m, or €55m which is still too high. Then they'll have to rely on the pre-2010 contracts wages paid in 2011/12, which might or might not be enough, depending on whether their maximum allowable deficit is €45m or €5m. If the owners have converted some of their loans to equity in the 2014 accounts then it should be the higher figure. The only issue is then whether they can demonstrate an improving trend in their financial results. If they have to show that consistently over all three years then they obviously can't do that. But if they only have to show that 2014 is better than either 2013 (or 2012) then they should be OK.

Do you trust uefa to treat them the same as us ? I don't. Whatever Liverpools financial results say, uefa will put a positive spin on them and they will get away with little or no punishment.

Yeah, In the same way that UEFA screwed us over and forced us to fail when we'd originally passed, I remain convinced UEFA will massage and manipulate what they do and don't allow, and quite how they define certain allowances and ensure Liverpool don't fall foul of FFP. Lets face it, FFP was always designed to help the likes of Liverpool, not hinder them.

 

[Centurions]

Re: City & FFP (continued)

Christ! Can you imagine the wailing and gnashing of teeth in the media if the bin dippers fail FFP?

Since UEFA have now been seen to punish heavily FFP transgressors and will presumably consider the sanctions imposed a warning to all clubs (not just the failing clubs from last season) should they not ban any failing clubs for 2015/16? After all the dippers, tarquins and all the rest were "disgusted" that we weren't banned this season coming.

 

[Impeccable One]

Re: City & FFP (continued)

Does anyone know if we buy a player for 10m and in the agreement it says a further 10m should we avoid relegation, does this count as 20m against FFP or 10m now & 10m next year, or just 10m now ?

You can see where I'm going with this.

Do you really think UEFA would let us (or anyone) get away with that?

The fact is variable fee transfers based on league position, trophy wins and appearances already exist, so I'm just wondering how they are treated by FFP. Pushing the clause so that it's a no brainer can't be ruled to be illegal, it just means the fee can be declared lower with other 'potential' ... Wink wink nudge nudge ... Add-ons.

Either way, would like to know how FFP addresses normal fee add-ons.

 

[Prestwich_Blue]

Re: City & FFP (continued)

Does anyone know if we buy a player for 10m and in the agreement it says a further 10m should we avoid relegation, does this count as 20m against FFP or 10m now & 10m next year, or just 10m now ?

You can see where I'm going with this.

Do you really think UEFA would let us (or anyone) get away with that?

The fact is variable fee transfers based on league position, trophy wins and appearances already exist, so I'm just wondering how they are treated by FFP. Pushing the clause so that it's a no brainer can't be ruled to be illegal, it just means the fee can be declared lower with other 'potential' ... Wink wink nudge nudge ... Add-ons.

Either way, would like to know how FFP addresses normal fee add-ons.

From an accounting point of view you'd normally take a prudent or worst case view. So I'd guess that if we agreed a transfer with a flat fee of £15m and £5m potential add-ons, we'd show it as £20m with a contingent liability fir the £5m. We would then write off any part of that liability we didn't need to pay.

 

[I'm no cynic but...]

Re: City & FFP (continued)

Do you really think UEFA would let us (or anyone) get away with that?

The fact is variable fee transfers based on league position, trophy wins and appearances already exist, so I'm just wondering how they are treated by FFP. Pushing the clause so that it's a no brainer can't be ruled to be illegal, it just means the fee can be declared lower with other 'potential' ... Wink wink nudge nudge ... Add-ons.

Either way, would like to know how FFP addresses normal fee add-ons.

From an accounting point of view you'd normally take a prudent or worst case view. So I'd guess that if we agreed a transfer with a flat fee of £15m and £5m potential add-ons, we'd show it as £20m with a contingent liability fir the £5m. We would then write off any part of that liability we didn't need to pay.

But when? Suppose such a transfer was to occur and the 'headline' figure was to take us beyond our £49m limit and we were penalised for this but the add-ons never actually materialised, could we claim retrospective recompense if the lack of an add-on meant we actually remained within our transfer limit?

 

[Impeccable One]

Re: City & FFP (continued)

Do you really think UEFA would let us (or anyone) get away with that?

The fact is variable fee transfers based on league position, trophy wins and appearances already exist, so I'm just wondering how they are treated by FFP. Pushing the clause so that it's a no brainer can't be ruled to be illegal, it just means the fee can be declared lower with other 'potential' ... Wink wink nudge nudge ... Add-ons.

Either way, would like to know how FFP addresses normal fee add-ons.

From an accounting point of view you'd normally take a prudent or worst case view. So I'd guess that if we agreed a transfer with a flat fee of £15m and £5m potential add-ons, we'd show it as £20m with a contingent liability fir the £5m. We would then write off any part of that liability we didn't need to pay.

Thanks, but as we know, what the figures are in the OFFICIAL accounts is of no importance to what UEFA feel should apply to FFP !

 

[petrusha]

Re: City & FFP (continued)

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.

I agree with you that, given our failure this time, it's a fantastic result to have a settlement that removes the 2011/12 financial year from the equation for future monitoring. In effect, we've been admitted to the top table as long as we can make pretty minimal losses from now on.

I'm also very interested in your comments that I've bolded. The word that seemed to be coming from the club over a long period up to this April seemed to be that we were confident of being able to use the wage exemption relating to pre-June 2010 signings and thus of passing FFP. In the light of this, the narrative that the goalposts had been changed seemed plausible. You now seem to be suggesting that all along the club was following a dubious and probably doomed strategy for FFP.

Are you able to add more detail on this? Did our top brass really miscalculate their tactics only to see us get lucky with the settlement agreement?

 

[Marvin]

Re: City & FFP (continued)

I'm not sure how fines, squad restrictions, and transfer cap equals "got lucky" for a club who were breaking even at the time of the sentence and for what was a first offence.

The monitoring periods would have moved anyway, they just brought that forward which helps hugely in the short term.