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

[Cobwebcat]

Here's one for you all.

Probably way off the mark, but here goes.

Did Sheikh Mansour miss a trick?(with FFPR)

Instead of paying for the club, clearing the debts, buying the players, paying their wages, and everything associated with spending £1bill(the perceived figure), from his own wealth, shouldn't he have taken out a loan at a very favourable rate, ;-) over x amount of years, and placed that loan/debt onto the club, just like the Glazers did when they bought United?

In doing so, wouldn't City have passed FFPR, as debts don't seem count against FFPR.(United, Madrid, Barcelona, etc)

Or is that wrong?

Stick to taking pictures of the campus mate! You're quite good at that. ;-)

For one thing, we'd still have the same costs but loans don't count as revenue.

Second, Sheikh Mansour, as the sole owner of the shares, has to put any money to cover losses in as equity (i. e. buy shares) rather than loans.

I get what he means and is a point I raised right at the start of FFP. I still don't understand why it isn't possible. Forget that loans don't count as revenue I don't think that's the point. The point is that as long as turnover increases to the point that you can afford the interest on the loan then that is a FFP pass. So imagine that in a couple of years we are making a 50 million profit. We then use that profit to pay the interest off on a huge loan at favourable rates. The loan can then be used to buy players. It's exactly what United have done.

Of course it's nonsense for us because we don't need a loan but its a card we could, in theory, play once our turnover could cover our costs plus the annual interest on the loan.

If you can afford the interest on the loan UEFA say that's a pass. The loan is not revenue but it doesn't need to be.

I still don't understand why in the future we couldn't do this once our revenue increased in exactly the same way United have. I don't think it's part of our sustainability plan but the theory is sound as far as I can see. Not now but in the future should we want to suddenly fork out 400 million in a transfer window. We would be in huge debt but debt is not what counts.

 

[Cobwebcat]

Stick to taking pictures of the campus mate! You're quite good at that. ;-)

For one thing, we'd still have the same costs but loans don't count as revenue.

Second, Sheikh Mansour, as the sole owner of the shares, has to put any money to cover losses in as equity (i. e. buy shares) rather than loans.

Given that we currently have no debt and the likes of United have huge amounts, could ADUG leverage some debt in from the a ‘friendly’ such as The National Bank of Abu Dhabi of say, £300m, use this as a fund for future transfers/wages and have the debt guaranteed by Sheikh Mansour? It appears that debt is fine in FFP rules as long as you can service the interest payments, so it seems sensible to use the our current ‘zero debt’ position to sidestep the FFP restrictions. The servicing costs will of course depend upon the deal with the bank, but assuming that debt can be secured at say a one point over base, the annual servicing cost would be £4.5m. It seems counter intuitive, but the whole FFP scam lacks common sense, so maybe a solution that on the face of it looks ridiculous (i.e., bringing in debt when you don’t actually need it), is in fact the answer.

The only 'way round' FFP is to increase income and profit.

Taking on debt doesnt increase your profits.

It doesn't need to. That's not the point he's making. Imagine we don't need to increase profits as we are already profitable. Then ask what you do with the profit.

 

[VOOMER]

Erm UEFA looking to take on two club's who could drag them through court until there's not a single euro left in their coffers? Not going to happen, we will be spending big again this summer.<br /><br />-- Tue Apr 22, 2014 11:03 pm --<br /><br />Erm UEFA looking to take on two club's who could drag them through court until there's not a single euro left in their coffers. Not going to happen, we will be spending big again this summer.

 

[fbloke]

Given that we currently have no debt and the likes of United have huge amounts, could ADUG leverage some debt in from the a ‘friendly’ such as The National Bank of Abu Dhabi of say, £300m, use this as a fund for future transfers/wages and have the debt guaranteed by Sheikh Mansour? It appears that debt is fine in FFP rules as long as you can service the interest payments, so it seems sensible to use the our current ‘zero debt’ position to sidestep the FFP restrictions. The servicing costs will of course depend upon the deal with the bank, but assuming that debt can be secured at say a one point over base, the annual servicing cost would be £4.5m. It seems counter intuitive, but the whole FFP scam lacks common sense, so maybe a solution that on the face of it looks ridiculous (i.e., bringing in debt when you don’t actually need it), is in fact the answer.

The only 'way round' FFP is to increase income and profit.

Taking on debt doesnt increase your profits.

It doesn't need to. That's not the point he's making. Imagine we don't need to increase profits as we are already profitable. Then ask what you do with the profit.

If the club makes £10m profit but takes out a loan for £200m to buy players because it can afford the £15m p.a. interest payments you think that that is OK under FFP?

 

[Cobwebcat]

The only 'way round' FFP is to increase income and profit.

Taking on debt doesnt increase your profits.

It doesn't need to. That's not the point he's making. Imagine we don't need to increase profits as we are already profitable. Then ask what you do with the profit.

If the club makes £10m profit but takes out a loan for £200m to buy players because it can afford the £15m p.a. interest payments you think that that is OK under FFP?

Platini specifically said that clubs can take out whatever loans they like as long as they can afford the interest on them from turnover. Lots of the established clubs particularly in Spain do it.

We don't need to but in theory it's a daft way around FFP as debt is unimportant bizarrely. It's constructed this way so the establishment pass. All we would be doing was copying them.

We can't do it now but we could in theory in the future once our turnover increased to the point that we could afford the interest and still be in profit.

So yes.

Every time this question is asked people assume we mean why can't we do it now when in fact the question is why can't we do it in the future once we are profitable and want to splash out a huge amount on transfers.

We won't do it because its not part of our sustainability plan but as far as I can see that's all that is stopping us.

 

[halfcenturyup]

Access to cash isn't the issue for Sheikh Mansour and therefore City. If he wanted the club to take out a big loan, he could lend the money himself, and if he wanted to do that, he may just as well inject the money as capital.

The thing is, if you spend, say, 300 million, that 300 million comes into your costs over the next five year period as amortisation, as it would if you had used cash that you had generated and saved yourself. So you have to increase revenues for the next five years to cover those costs no matter where the money comes from, or else you reduce profitability again and then, at some point, the whole rigmarole with funding starts again.

Or to put it another way, if you are making a 50 million profit, you can increase your costs by 50 million a year and still break even, so you could afford to spend 250 million on new players (all other things being equal). If your revenue didn't go up in the future, however, you could never spend another penny without going into loss, even if you borrowed the money.

So those that say it's all about revenue are right. In fact, once you have moved from loss to breaking even (or even if you are making a good profit actually), it's a kind of balancing act between your expectations for increased revenue in the future and the effect on future costs of the investment decisions you are making now, irrespective of where the money comes from.

It works for United because, so far, they have made enough cash annually from their operations not just to service the debt, but also to cover the increased costs from the money invested, as their revenues are already high and increasing (until now anyway :))

It doesn't need to. That's not the point he's making. Imagine we don't need to increase profits as we are already profitable. Then ask what you do with the profit.

If the club makes £10m profit but takes out a loan for £200m to buy players because it can afford the £15m p.a. interest payments you think that that is OK under FFP?

Platini specifically said that clubs can take out whatever loans they like as long as they can afford the interest on them from turnover. Lots of the established clubs particularly in Spain do it.

We don't need to but in theory it's a daft way around FFP as debt is unimportant bizarrely. It's constructed this way so the establishment pass. All we would be doing was copying them.

We can't do it now but we could in theory in the future once our turnover increased to the point that we could afford the interest and still be in profit.

So yes.

Every time this question is asked people assume we mean why can't we do it now when in fact the question is why can't we do it in the future once we are profitable and want to splash out a huge amount on transfers.

We won't do it because its not part of our sustainability plan but as far as I can see that's all that is stopping us.

 

[Henkeman]

Generally speaking they're of course absolutely fine because they're profitable even with the debt, but not hugely so due to that weight dragging them down. But how does FFP affect United with this supposed £200 million spending plan? Would that not put them in peril over FFP if they splurged it all? Unless they renegotiated or paused their debt repayments anyway? How much can they spend, all things being equal, before it becomes an issue. I'm curious.

 

[Helmet Cole]

Big thing in the premier league version of FFP is the increase in the wage bill. Limited to £4m a year plus increases in commercial income or something like that.

FFS. They might as well say expenditure is limited to income derived from rag and dipper Asian shirt sales the twats.

 

[SWP's back]

Cobweb, you are not getting it mate.

Loans cannot count as income.

So we could take out a huge loan if we want and boost cash reserves (not that there would be any point) but as soon as we spent the money, it would count against us for FFP.

 

[Prestwich_Blue]

You're only allowed to lose up to €45m over 3 years if your owner or other related party covers any excess over a €5m loss in cash. The Sheikh can put money in as a loan or shares at any time. Doesn't make much difference either way. The only FFP stipulation is that the owner's cash injection to cover the €45m losses allowed under FFP as mentioned above has to be via equity.