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

[FanchesterCity]

Re: City & FFP (continued)

I'm pretty sure we cannot use money that New York City make and count that in our accounts.

However, I do believe we can leverage the portfolio of clubs to negotiate better sponsorship deals by offering the entire portfolio as a package - as FSG (Liverpool's owners) do.

We can also probably provide an added incentive to older players in offering them a contract in the MLS when they leave City - which is better than having to cast them off, AND we should be able to receive a transfer fee for them too, but not at some implausibly inflated rate.

There's also a chance that our other clubs might be able to spot young talent and feed through to us, plus the 'City' brand becomes much more than Manchester alone - although we're the jewel in the crown (for now!)

 

[Marvin]

Re: City & FFP (continued)

Can the City Group sponsorship be used by Manchester City in our accounts?

I remember when UEFA reviewed City's last set of a/cs they weren't happy about related party income going through our books

CFG should be able to apportion revenues to ANY subsidiary they want, as long as it is deemed fair and reasonable to both UEFA and the relevant taxing authorities.

From City's statement following UEFA sanctions:

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.

That reads to me that City will not consolidate income from other parts of the group. Ambiguous. What does certain non material terms mean

 

[fbloke]

Re: City & FFP (continued)

Can the City Group sponsorship be used by Manchester City in our accounts?

I remember when UEFA reviewed City's last set of a/cs they weren't happy about related party income going through our books

CFG should be able to apportion revenues to ANY subsidiary they want, as long as it is deemed fair and reasonable to both UEFA and the relevant taxing authorities.

From City's statement following UEFA sanctions:

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.

That reads to me that City will not consolidate income from other parts of the group. Ambiguous. What does certain non material terms mean

Non-material would be IP/Image rights etc.

It doesnt preclude a deal bing signed for 100m and 90m of that bing apportioned to MCFC.

It would preclude a deal bing signed for 100m split 50m MCFC, 25m NYCFC and 25m MCFC but then MCFC charging the other two clubs 22.5m each for IP etc.

 

[FanchesterCity]

Re: City & FFP (continued)

CFG should be able to apportion revenues to ANY subsidiary they want, as long as it is deemed fair and reasonable to both UEFA and the relevant taxing authorities.

From City's statement following UEFA sanctions:

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.

That reads to me that City will not consolidate income from other parts of the group. Ambiguous. What does certain non material terms mean

Non-material would be IP/Image rights etc.

It doesnt preclude a deal bing signed for 100m and 90m of that bing apportioned to MCFC.

It would preclude a deal bing signed for 100m split 50m MCFC, 25m NYCFC and 25m MCFC but then MCFC charging the other two clubs 22.5m each for IP etc.

It's going to be interesting to see how that pans out. You may well be right, but I thought Manchester City F.C. operates as a distinctly (and legally) separate business from (say) New York City. It may ultimately fall under the the City group, but we have to demonstrate the deals we've done are under OUR own initiatives, and not some parent company - otherwise our parent company might start selling City petroleum, and making us billions a year!

If you're right, and you might well be - then it's all a bit too 'easy' isn't it?

I really did think we'd have to be a bit more crafty and buy players like Gareth Barry for 3 million to play in the MLS. OK, so it's only 3 million, but it's a fair market value, AND it could help us negotiate lower wage deals if player know that when they leave City, they have a contract in the MLS waiting for them, where they'll earn 200K a week there instead! ;-)


All of that said, the model you're suggesting is pretty much what every multinational already has. Assigning internal cost centers to be tax efficient... i.e. if Britain is tax heavy, they Britain doesn't make a big profit *nudge nudge*, but the Monaco branch does instead *wink wink*.... precisely what the British Government loathe about Starbucks et al, but it's perfectly legal too (for now).

 

[fbloke]

Re: City & FFP (continued)

From City's statement following UEFA sanctions:
That reads to me that City will not consolidate income from other parts of the group. Ambiguous. What does certain non material terms mean

Non-material would be IP/Image rights etc.

It doesnt preclude a deal bing signed for 100m and 90m of that bing apportioned to MCFC.

It would preclude a deal bing signed for 100m split 50m MCFC, 25m NYCFC and 25m MCFC but then MCFC charging the other two clubs 22.5m each for IP etc.

It's going to be interesting to see how that pans out. You may well be right, but I thought Manchester City F.C. operates as a distinctly (and legally) separate business from (say) New York City. It may ultimately fall under the the City group, but we have to demonstrate the deals we've done are under OUR own initiatives, and not some parent company - otherwise our parent company might start selling City petroleum, and making us billions a year!

If you're right, and you might well be - then it's all a bit too 'easy' isn't it?

I really did think we'd have to be a bit more crafty and buy players like Gareth Barry for 3 million to play in the MLS. OK, so it's only 3 million, but it's a fair market value, AND it could help us negotiate lower wage deals if player know that when they leave City, they have a contract in the MLS waiting for them, where they'll earn 200K a week there instead! ;-)


All of that said, the model you're suggesting is pretty much what every multinational already has. Assigning internal cost centers to be tax efficient... i.e. if Britain is tax heavy, they Britain doesn't make a big profit, but the Monaco branch does!.... precisely what the British Government loath about Starbucks et al, but it's perfectly legal too (for now).

Its interesting that FFP at its root had to make an allowance for united, liverpool etc to make money directly from their names via licensing as that is the model that they had been utilising, and indeed continue to follow.

Therefore FFP allows any revenues that trade on the name of a club. It was obviously envisaged that, for example, the Manchester United Noodle Bar in Shanghai would then benefit the club.

I do wonder though if the simple use of the name City for our sister clubs could in fact mean that ALL revenues from these clubs could be claimed for FFP calculations? In this model the monies raised can be claimed for FFP purposes but thy also dont have to be repatriated. A very healthy double whammy in MCFC's favour?

 

[bluecityste]

Re: City & FFP (continued)

Fbloke, sounds completely plausible except that they are not branded as a Manchester City subsidiary.

If our branding was to be pushed on to the sister clubs then this would work, but I doubt that the use of the word City would be enough to constitute this........it gives an overall identity, but not enough to justify the use of our brand for FFP purposes. That's how I read it anyway.

 

[FanchesterCity]

Re: City & FFP (continued)

Non-material would be IP/Image rights etc.

It doesnt preclude a deal bing signed for 100m and 90m of that bing apportioned to MCFC.

It would preclude a deal bing signed for 100m split 50m MCFC, 25m NYCFC and 25m MCFC but then MCFC charging the other two clubs 22.5m each for IP etc.

It's going to be interesting to see how that pans out. You may well be right, but I thought Manchester City F.C. operates as a distinctly (and legally) separate business from (say) New York City. It may ultimately fall under the the City group, but we have to demonstrate the deals we've done are under OUR own initiatives, and not some parent company - otherwise our parent company might start selling City petroleum, and making us billions a year!

If you're right, and you might well be - then it's all a bit too 'easy' isn't it?

I really did think we'd have to be a bit more crafty and buy players like Gareth Barry for 3 million to play in the MLS. OK, so it's only 3 million, but it's a fair market value, AND it could help us negotiate lower wage deals if player know that when they leave City, they have a contract in the MLS waiting for them, where they'll earn 200K a week there instead! ;-)


All of that said, the model you're suggesting is pretty much what every multinational already has. Assigning internal cost centers to be tax efficient... i.e. if Britain is tax heavy, they Britain doesn't make a big profit, but the Monaco branch does!.... precisely what the British Government loath about Starbucks et al, but it's perfectly legal too (for now).

Its interesting that FFP at its root had to make an allowance for united, liverpool etc to make money directly from their names via licensing as that is the model that they had been utilising, and indeed continue to follow.

Therefore FFP allows any revenues that trade on the name of a club. It was obviously envisaged that, for example, the Manchester United Noodle Bar in Shanghai would then benefit the club.

I do wonder though if the simple use of the name City for our sister clubs could in fact mean that ALL revenues from these clubs could be claimed for FFP calculations? In this model the monies raised can be claimed for FFP purposes but thy also dont have to be repatriated. A very healthy double whammy in MCFC's favour?

You couldn't do that. You COULD license the use of some stylised City logo, and imagery etc, and a club would pay a license to use that name...

But just as The Man United Noodle Bar might pay a license fee to use the name, it's not going to give up ALL it's income to United. It's just paying a license fee to take advantage of their name. They could buy a perpetual license, or pay yearly, or enter into some revenue share, but you'd have a hard time persuading people that New York City paid 100m a year to use the City brand / imagery. You might get away with a few million a year (wouldn't like to actually put a figure on it). And of course, because it's a related party, it would come under a lot more scrutiny.

City can't have these other related clubs as a direct part of Manchester City F.C. because they may well not make a profit in their early days, and that would then bring down City with them. Having them as distinctly separate entities allows normal trade between them all (with the caveat that they are indeed 'related' parties). But there's no ban on related parties, only fair market value. That's fine, We can sell our 'City' brand (or more accurately license it to them), So we could license 'City' to New York for 3m and to Melbourne for 1m.

We could then (in theory) also sell some of our UK football expertise to them. Not some made up consultation, but a genuine consultancy, or service to them, for a fair market rate - which mean we make a modest profit from selling our UK football knowledge / physios / admin services etc etc to New York and Melbourne.

People think it's 'fake' but it's not.

If you are a plumber, and your brother is a builder, you're selling your plumbing services to him. He's paying you less than he would have to pay some other plumber (actually BELOW market rate), but enough for you to still make a profit on. That's entirely legitimate, so I don't see why Manchester City can't sell genuine services and expertise to New York and Melbourne.

 

[Chippy_boy]

Re: City & FFP (continued)

Yeah. it's all a bit smoke and mirrors from both sides.

Ain't that the truth?

We are all guessing what the actual transfer restrictions (in terms of net spend) are for each window & for each season.

The only bit we know is 60m euros net spend for the first window.

I'M GUESSING that this is the figure for the season and that we've been told that we can't overspend the season's limit
during the first window with a view to recouping losses in the Winter window.

Worse possible case would be 60m euros for the 2014-15 season and 60m euros for 2015-16.
I'M GUESSING though that the club wouldn't have agreed to this and that the figure for 2015-16 is much higher.

But who knows?

How fucking ironic eh?

One of the stated goals of FFP is increased transparency, and then the very first time they are applied, we have a total confusion and a complete lack of transparency.

I don't know why this would be surprising though. It's not like it isn't bleedin obvious that the stated goals of FFP have fuck all to do with the actual goals. But you would have thought they would have just made a token effort at not looking like corrupt, bent fuckers wouldn't you. Just an effort, like.

 

[fbloke]

Re: City & FFP (continued)

It's going to be interesting to see how that pans out. You may well be right, but I thought Manchester City F.C. operates as a distinctly (and legally) separate business from (say) New York City. It may ultimately fall under the the City group, but we have to demonstrate the deals we've done are under OUR own initiatives, and not some parent company - otherwise our parent company might start selling City petroleum, and making us billions a year!

If you're right, and you might well be - then it's all a bit too 'easy' isn't it?

I really did think we'd have to be a bit more crafty and buy players like Gareth Barry for 3 million to play in the MLS. OK, so it's only 3 million, but it's a fair market value, AND it could help us negotiate lower wage deals if player know that when they leave City, they have a contract in the MLS waiting for them, where they'll earn 200K a week there instead! ;-)


All of that said, the model you're suggesting is pretty much what every multinational already has. Assigning internal cost centers to be tax efficient... i.e. if Britain is tax heavy, they Britain doesn't make a big profit, but the Monaco branch does!.... precisely what the British Government loath about Starbucks et al, but it's perfectly legal too (for now).

Its interesting that FFP at its root had to make an allowance for united, liverpool etc to make money directly from their names via licensing as that is the model that they had been utilising, and indeed continue to follow.

Therefore FFP allows any revenues that trade on the name of a club. It was obviously envisaged that, for example, the Manchester United Noodle Bar in Shanghai would then benefit the club.

I do wonder though if the simple use of the name City for our sister clubs could in fact mean that ALL revenues from these clubs could be claimed for FFP calculations? In this model the monies raised can be claimed for FFP purposes but thy also dont have to be repatriated. A very healthy double whammy in MCFC's favour?

You couldn't do that. You COULD license the use of some stylised City logo, and imagery etc, and a club would pay a license to use that name...

But just as The Man United Noodle Bar might pay a license fee to use the name, it's not going to give up ALL it's income to United. It's just paying a license fee to take advantage of their name. They could buy a perpetual license, or pay yearly, or enter into some revenue share, but you'd have a hard time persuading people that New York City paid 100m a year to use the City brand / imagery. You might get away with a few million a year (wouldn't like to actually put a figure on it). And of course, because it's a related party, it would come under a lot more scrutiny.

City can't have these other related clubs as a direct part of Manchester City F.C. because they may well not make a profit in their early days, and that would then bring down City with them. Having them as distinctly separate entities allows normal trade between them all (with the caveat that they are indeed 'related' parties). But there's no ban on related parties, only fair market value. That's fine, We can sell our 'City' brand (or more accurately license it to them), So we could license 'City' to New York for 3m and to Melbourne for 1m.

We could then (in theory) also sell some of our UK football expertise to them. Not some made up consultation, but a genuine consultancy, or service to them, for a fair market rate - which mean we make a modest profit from selling our UK football knowledge / physios / admin services etc etc to New York and Melbourne.

People think it's 'fake' but it's not.

If you are a plumber, and your brother is a builder, you're selling your plumbing services to him. He's paying you less than he would have to pay some other plumber (actually BELOW market rate), but enough for you to still make a profit on. That's entirely legitimate, so I don't see why Manchester City can't sell genuine services and expertise to New York and Melbourne.

When people first started talking about FFP and allowable revenues we correctly talked about the use of the City brand around the globe.

City Hotel Abu Dhabi or The City Cafe in Manhattan owned by MCFC would therefore allow for those revenues to be included, profit would have been very welcome.

The alternative is the licensing of the City brand the bounds of which MCFC are pushing against right now I suspect.

The BIG question of course is how far CFG will be allowed to go down that route.

The Nissan deal is likely to be the first of at least 6 or 7 such CFG deals as all tier 1 sponsors will in all likelihood only com on board because of the global presence of CFG teams.

As we know ADUG were looking at the football business with 21st century eyes where as many others were either too slow to se it or too hamstrung by lack of revnues to take advantage of the new realities.

UEFA are now having to adjust to these new realities as driven by CFG in their application of FFP.

 

[George Hannah]

Re: City & FFP (continued)

UEFA are now having to adjust to these new realities as driven by CFG in their application of FFP.

their adjustment will take the form of finding a way to disallow income from them for FFP I predict