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

[forensic onions]

I read the piece on the train back from London tonight and I'd say you certainly make the right sort of noises but your argument isn't developed as well as it could be. Also you haven't understood the difference between debt and losses. You can make a loss as a business without increasing your levels of debt. For example, one of the biggest costs to a football club is the amortisation of player contracts but that cost doesn't involve any cash leaving the club. Similarly, you can have high levels of debt but still be profitable, as long as your profit covers the interest payable on the debt. The issue with FFP from that point of view is that high debt levels, particularly when secured on the assets of the club, are potentially dangerous, even if the debt appears to be manageable.

The case against FFP, as I understand it, is based on the specific issue of the use of the break-even requirement rather than the whole world issue of financial regulation. No one who has the genuine interest of the game at heart could seriously object to an attempt to ensure financial stability and sustainability. There's nothing intrinsically wrong with trying to regulate the financial health of football clubs but regulation can also have unintended consequences and i nthe case of FFP, it appears to secure the status of the financially powerful clubs and discriminate against those willing and able to invest, even if that leads to losses in the short to medium term. The addition of Annex XII, which allowed investment under agreed & controlled circumstances, went some way to dealing with that issue.

But ultimately, any regulation that doesn't deal with the not uncommon situation where a club has debts either secured against its assets, which can lead to those being stripped away from the club, or owed to an owner, and that the club has no way of repaying if & when called upon to do so, is fatally flawed.

City could probably have challenged the specific issue which caused them to be sanctioned, as that involved UEFA moving the goalposts when to late to do anything about it and after we'd satisfied one of their original requirements. But this could have gone on for years, made us enemies at UEFA and would have been largely irrelevant if we can actually meet FFP for the foreseeable future.

I understand the facets and differences of turnover v profit/loss, debt, leveraged debt etc. I also start by saying we can all get on board with the fundamental aspects of trying the get football to clean up it's finical act and ensure better fiscal governance throughout the game in europe. But the blog is new and there are plenty of other more detailed analysis' of the situation out there that go into far more detail, what I was trying to do was bring attention to what I perceive is a very unfair, quasi-illegal section which I believe is designed to strangle clubs like ManCity, but do it in a concise way, without boring people rigid.

There should be nothing to stop an owner investing their money into the vehicle they own if it is not going to be in the form of a loan. This whole "you can't do it via (related entity) sponsorship" thing is even more ridiculous IMO.

ManU, Barca, RM have massive debt and are in far more perilous financial situations, despite generating massive revenue, than City and PSG are. Look how close ManU came to missing out on CL two years running, all it would take would be for them to lose their place in CL for 3,4 or 5 seasons and the 380m leveraged debt they have would start to be a very large fiscal millstone that would become harder to "sustain" through FFP regulated means.

 

[SilverFox2]

No, I fully understand the facets and differences of turnover v profit/loss, debt, leveraged debt etc. I also start by saying we can all get on board with the fundamental aspects of trying the get football to clean up it's finical act and ensure better fiscal governance throughout the game in europe. But the blog is new and there are plenty of other more detailed analysis' of the situation out there that go into far more detail, what I was trying to do was bring attention to what I perceive is a very unfair, quasi-illegal section which I believe is designed to strangle clubs like ManCity, but do it in a concise way, without boring people rigid.

There should be nothing to stop an owner investing their money into the vehicle they own if it is not going to be in the form of a loan. This whole "you can't do it via (related entity) sponsorship" thing is even more ridiculous IMO.

ManU, Barca, RM have massive debt and are in far more perilous financial situations, despite generating massive revenue, than City and PSG are. Look how close ManU came to missing out on CL two years running, all it would take would be for them to lose their place in CL for 3,4 or 5 seasons and the 380m leveraged debt they have would start to be a very large fiscal millstone that would become harder to "sustain" through FFP regulated means.

If you look at this thread you will note that it was originally started a long time ago.
You say you are not a City fan so unlike me you had probably no reason to be made aware of FFP's unfairness unless you understood the way cartels work.

You seem to have a better grasp of the detail PB tried to help you with (see your first para in your post) so presumably you saw through FFP in its original form for what it was ?
Just curious as to why it has taken up to now for you (as representative of the non City fanbase) to voice the same criticism we have been aware of for literally years ?

Really I am asking whether you were taken in by the obvious ''Barrier to Entry'' that the laughingly named Financial Fair Play rule originally imposed ?

 

[forensic onions]

If you look at this thread you will note that it was originally started a long time ago.
You say you are not a City fan so unlike me you had probably no reason to be made aware of FFP's unfairness unless you understood the way cartels work.

You seem to have a better grasp of the detail PB tried to help you with (see your first para in your post) so presumably you saw through FFP in its original form for what it was ?
Just curious as to why it has taken up to now for you (as representative of the non City fanbase) to voice the same criticism we have been aware of for literally years ?

Really I am asking whether you were taken in by the obvious ''Barrier to Entry'' that the laughingly named Financial Fair Play rule originally imposed ?

I've been a staunch opponent of the section of FFP which tried to curtail non debt affiliated investment by owners and related entities from the get go and have voiced this constantly from the get go on other forums (such as the ones of the club I support) in discussions about FFP.

I am all for much of the legislation, the making sure football clubs are fiscally better run etc, it was needed as the industry in general was a financial basket case. But what I don't like is UEFA/G14/ECA collaboration to preserve the hegemonic domination of the old order. It's bullshit.

I have only just started the blog. But, despite this not being a new issue, I wanted this to be one of the first posts because I think it's such a major issue. It's an endemic issue that resonates outside of football in general politics. Those in power and the financial golden geese that put them there scratching each others arses.

 

[BluessinceHydeRoad]

There are quite clearly defined approaches to FFP though they do eventually merge. The first is the financial approach, which takes as its starting point the chaotic state of football finance and is sympathetic to any realistic attempt to establish a framework which encourages, and even enforces, prudence and stability. To many of this persuasion, FFP is not entirely devoid of all virtue, though it was ill conceived, hastily implemented and allowed too much input from a minority of clubs allowed to accrue and exert too much influence in the game for a quarter of a century. What is needed now is remedial action to get rid of the flaws.

My starting point is different, and what may be called legalistic. I do not understand the finer points of accountancy, and my approach is not, therefore, whether these regulations are good financially (I'm fairly sure they're not!) but whether they are good law. Are they even handed? Do they stand to maintain the competitive nature of domestic and European club football? The answer is clearly no to both questions. Ambition will drain from three quarters of the clubs in Europe as they are locked in their own little goldfish bowl. All perfectly stable, but literally nothing ventured and nothing gained. A future of breaking even on ever reducing crowds and turnover.

Why is this? The answer lies in the intentions of the law makers. Very early I was convinced that Platini didn't know what he was doing, or, to put it in a more complimentary way, had a very confused view of his own aims. He was concerned about club finances, but about what exactly? Debt? Spending? And he clearly felt indebted to, and feared the intentions of, some of the most financially troubled clubs in Europe. They wanted rewards because, in their eyes, they had turned the CL into UEFA's cash cow and they didn't want others to pinch the prize money! Platini never talked about clubs other than those in the CL.

What really brought Platini's fears to a head was Sheikh Mansour. The Sheikh made no secret of his aims or his methods and he is fabulously rich. Rather than greet the Sheikh and his investment with open arms as good for the game, Platini's attitude was one of overt hostility resulting in FFPR designed overtly to prevent, or at least delay, the progress of a European club. The regulations were then changed so that City could be fined after four years of assurances that the club had complied. As the ultimate proof of Platini's ill will he then changed the regulations to allow other clubs to invest as City had been punished for doing, but City are not allowed to do so.

Platini has shown he is not fit to oversee European football's governing body because he is not even handed and open minded. At the moment he seems to have difficulty explaining what a disloyal payment of 2 million Swiss francs from Sepp Blatter, who is an honourable man, was actually for, and so football may be on the verge of better times, with Platini hopefully taking up residence on Devil's Island. FFP may be seen then as just another bent folly of a corrupt law maker.

 

[SilverFox2]

I've been a staunch opponent of the section of FFP which tried to curtail non debt affiliated investment by owners and related entities from the get go and have voiced this constantly from the get go on other forums (such as the ones of the club I support) in discussions about FFP.

I am all for much of the legislation, the making sure football clubs are fiscally better run etc, it was needed as the industry in general was a financial basket case. But what I don't like is UEFA/G14/ECA collaboration to preserve the hegemonic domination of the old order. It's bullshit.

I have only just started the blog. But, despite this not being a new issue, I wanted this to be one of the first posts because I think it's such a major issue, a major injustice. It's an endemic issue that resonates outside of football in general politics. Those in power and the financial golden geese that put them there scratching each others arses.

Thanks for reply.
The problem has been that it has been an injustice since it was first conceived and misrepresented as a way to Financially regulate all clubs.
If you read the thread you will find that FFP was originally conceived to regulate debt but was simply highjacked to stop investment via new money.

If you and I were aware of this cartel what caused the seemingly perpetual media witch hunt regarding our owners perfectly clean cash investment ?

 

[FanchesterCity]

By the way, FFP doesn't limit the amount of investment an owner (or anybody else) can make. It does restrict how the investment can effectively take shape though. You're free to spend as much as you like on infrastructure, and in theory, you're free to spend as much as you like on players (but with the breakeven / allowable losses rules applied which effectively inhibits the practical amount you can invest this way).

I know it's very tempting to say 'UEFA limits investment' but technically they don't. It's much more accurate to state that some of their rules effectively limit investment (not quite the same thing and a very important distinction). It might not matter too much in a pub discussion, but it does in a court of law.

 

[Prestwich_Blue]

Great, great post BluesinceHydeRoad. Platini is indeed a whore.

Platini promises his vote to the USA then Qatar come calling with fistfuls of gold and suddenly he's a Qatari.
Platini threatens to run against Blatter and suddenly a couple of million dollars find their way into his pocket and he's happy to let Blatter have a free run.
Platini wants to end the problem of excessive debt among European football clubs but the G14, among whose members are the most indebted but who bring UEFA vast swathes of cash come calling and it's suddenly all about rich owners rather than crippling debt.

On a separate track, I'm just formulating an article for KOTK and the premise is that a combination of FFP and escalating domestic TV deals have virtually killed competition in the PL. It's already clear that owners like the Glazers, FSG and Kroenke aren't prepared to take any sort of financial risk to win trophies and even clubs like West Ham and Newcastle reject the idea of doing well in European competition because it potentially impacts their league future and the reward isn't worth the risk. So a combination of FFP, which virtually forces them to make a profit, and huge TV revenues, which fill their coffers, effectively smother competition.

These revenues are so great that they will dwarf the revenues fron the CL, which themselves used to make the (financial) difference between the elite and the rest and were worth taking a risk for (as Leeds did).

 

[SilverFox2]

By the way, FFP doesn't limit the amount of investment an owner (or anybody else) can make. It does restrict how the investment can effectively take shape though. You're free to spend as much as you like on infrastructure, and in theory, you're free to spend as much as you like on players (but with the breakeven / allowable losses rules applied which effectively inhibits the practical amount you can invest this way).

I know it's very tempting to say 'UEFA limits investment' but technically they don't. It's much more accurate to state that some of their rules effectively limit investment (not quite the same thing and a very important distinction). It might not matter too much in a pub discussion, but it does in a court of law.

Thanks FC for the detail on which parts of investment have been targeted for effect. I must admit that my statements are usually of the 'Pub' variety rather than made with legal accuracy in mind.

I repeat that I have learnt so much from informed posts on this thread and the learning process continues for me, thanks again to all who post here.

 

[forensic onions]

By the way, FFP doesn't limit the amount of investment an owner (or anybody else) can make. It does restrict how the investment can effectively take shape though. You're free to spend as much as you like on infrastructure, and in theory, you're free to spend as much as you like on players (but with the breakeven / allowable losses rules applied which effectively inhibits the practical amount you can invest this way).

I know it's very tempting to say 'UEFA limits investment' but technically they don't. It's much more accurate to state that some of their rules effectively limit investment (not quite the same thing and a very important distinction). It might not matter too much in a pub discussion, but it does in a court of law.

What you are talking is semantics, in real terms FFP directly inhibits owner investment. Why, for example, should UEFA prevent Etihad paying ManC a vastly superior sponsorship deal than they have ? Why should this even be scrutinised by UEFA for "perceived value". IF Etihad's owners decide they want to pay ManC £3bn to wear their name on their shirts and no "proper" (i.e. legal or corporate) laws are broken in either jurisdiction (Etihad's corporate jurisdiction and ManC's) what possible negative impact can this have on ManC's fiscal situation ?

And this is the - supposed - stated intention of FFP, to enforce a code of of sustainable debt management on football. How does preventing ManC from raking in a huge (or bigger than they have) sponsorship deal - which is pure revenue and has no debt connotation - have anything to do with encouraging sustainable debt management ?

 

[forensic onions]

Great, great post BluesinceHydeRoad. Platini is indeed a whore.

Platini promises his vote to the USA then Qatar come calling with fistfuls of gold and suddenly he's a Qatari.
Platini threatens to run against Blatter and suddenly a couple of million dollars find their way into his pocket and he's happy to let Blatter have a free run.
Platini wants to end the problem of excessive debt among European football clubs but the G14, among whose members are the most indebted but who bring UEFA vast swathes of cash come calling and it's suddenly all about rich owners rather than crippling debt.

On a separate track, I'm just formulating an article for KOTK and the premise is that a combination of FFP and escalating domestic TV deals have virtually killed competition in the PL. It's already clear that owners like the Glazers, FSG and Kroenke aren't prepared to take any sort of financial risk to win trophies and even clubs like West Ham and Newcastle reject the idea of doing well in European competition because it potentially impacts their league future and the reward isn't worth the risk. So a combination of FFP, which virtually forces them to make a profit, and huge TV revenues, which fill their coffers, effectively smother competition.

These revenues are so great that they will dwarf the revenues fron the CL, which themselves used to make the (financial) difference between the elite and the rest and were worth taking a risk for (as Leeds did).

This is at the crux of it for me. FFP was in theory a reasonable idea. Making sure that if clubs wanted to reap the rewards of their domestic success (by playing in UEFA CL/Europa) they need to at least meet certain basic fiscal responsibilities - paying their staff, paying their taxes, paying their creditors etc - in other words being financially viable and not having owners bankrupting clubs (which are also quasi social institutions) for fifteen minutes of fame and exposure.

But this was being conceived around the same time the maverick G14 (mostly uber "old money") clubs who'd spent decades milking their geographic and monetary advantage to the max were coming under threat from a new breed of super wealthy owners looking to invest in football for various reasons. It's a bit like the Ferrari franchise in F1. Real, Barca, Bayern, ManU, Juve, AC, Liverpool, etc etc. These were UEFA's big brand names, the golden geese that continually laid, helping UEFA sell it's product ( the CL etc) globally for a kings ransom. G14 was threatening all sorts, including breakaways etc. over various issues.

The symmetry of the FFP's anti competitive amendments and the G14 acquiescing (forming the new ECA and signing documents acknowledging UEFA's and FIFA's ultimate authority - which is a really odd thing for clubs already affiliated to these organisations to do isn't it ?) is way too convenient.