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

[True_Blue69]

Re: City & FFP (continued)

I think we have to hold our hands up as supporters and recognise that City have been indulging in 'creative' accounting practices. However I would offset that by saying that I believe we are not the only club doing this kind of thing, and that ultimately there would be no need for these questionable revenue streams if it wasn't for FFP.

UEFA's accountants have obviously decided that they want to single us out for punishment, I believe our only course of action will be challenging FFP legally on the grounds that it is anti-competitive.

Eh? You know all this as fact? Or are you speculating that all the above is true? Its an important distinction, do you know what UEFA have said?

Isn't this thread just a load of speculation? If it is then does that preclude anyone from airing their views until the full facts have been established?

No, no, no you're completely wrong. Anything that has been said to suggest we might be in trouble with FFP is speculation, anything by those pretending to know what they're on about saying that we will pass and UEFA are wrong is fact.

 

[SPIDERBOY]

Re: City & FFP (continued)

I ain't no accountant or legal eagle,and reading through this thread has been a complete head fuck for me..my head is now about as organised as a £1 DVD bin in sainsbury's....can someone just tell me if we will be ok?.....a straight yes or no will do...thanks.

 

[BlueAnorak]

Re: City & FFP (continued)

I'm saying that the £24.5m deal with an unnamed 3rd party WILL probably have been accepted by PWC.
Its the sale of IP to City Football Group. That owns City, NYFC and Melbourne Heart that will probably be the sticking point. It is an RPT and it gives the CFCB the only chance they have to challenge our figures.

It's absolutely common practice though.

It is common practice outside of football.
But I think it is the only realistic chance the CFCB Star Chamber has of reducing our income.

 

[Henkeman]

Re: City & FFP (continued)

I ain't no accountant or legal eagle,and reading through this thread has been a complete head fuck for me..my head is now about as organised as a £1 DVD bin in sainsbury's....can someone just tell me if we will be ok?.....a straight yes or no will do...thanks.

Yes. And no.

 

[Matty]

Re: City & FFP (continued)

I ain't no accountant or legal eagle,and reading through this thread has been a complete head fuck for me..my head is now about as organised as a £1 DVD bin in sainsbury's....can someone just tell me if we will be ok?.....a straight yes or no will do...thanks.

No-one knows, depends what you mean by "ok". We'll still exist, so on that front we'll be ok, but as for next season's Champion's League, it's not been decided yet. We may have to pay a fine (a withholding of prize money to be more accurate), we may have to reduce our squad, we may even be banned from the Champion's League (although this is a worse case scenario that isn't hugely likely). Alternatively we may be fine and we may be able to prove, via adjudicatory panels and courts, that UEFA have got their accountancy wrong and we have, in fact, passed FFP.

There is no definitive answer at this point.

 

[welsh_andy]

Re: City & FFP (continued)

by how long this is taking shows uefa are worried, or after looking again there wont be any sanctions

 

[andyhinch]

Re: City & FFP (continued)

I'm saying that the £24.5m deal with an unnamed 3rd party WILL probably have been accepted by PWC.
Its the sale of IP to City Football Group. That owns City, NYFC and Melbourne Heart that will probably be the sticking point. It is an RPT and it gives the CFCB the only chance they have to challenge our figures.

It's absolutely common practice though.

It is common practice outside of football.
But I think it is the only realistic chance the CFCB Star Chamber has of reducing our income.

Football is still a business, I'm not saying they won't try it and for that matter find us guilty, it's still bollocks though

 

[BringBackSwales]

Re: City & FFP (continued)

<a class="postlink" href="http://www.independent.co.uk/sport/football/premier-league/how-are-bigspending-manchester-city-set-to-pass-uefas-financial-fair-play-rules-9097609.html" onclick="window.open(this.href);return false;">http://www.independent.co.uk/sport/foot ... 97609.html</a>

That article shows you how much of our revenue is actually fudged.

I think we have to hold our hands up as supporters and recognise that City have been indulging in 'creative' accounting practices. However I would offset that by saying that I believe we are not the only club doing this kind of thing, and that ultimately there would be no need for these questionable revenue streams if it wasn't for FFP.

UEFA's accountants have obviously decided that they want to single us out for punishment, I believe our only course of action will be challenging FFP legally on the grounds that it is anti-competitive.

when you say that City "have been indulging in creative accounting", are you aware that City's accounts get fully audited, by PWC I believe, who are 1 of the big 4 audit firm in the world, and as much as City are an important client to them, we would not be worth them losing their reputation for and they would not therefore allow unrealistic "creative accounting" if they felt that it would not meet reasonable challenge. Did you know that 15 years or so ago there used to be a "big 5" of audit and accounting firms, the other one being Arthur Andersen, and they had a big client called Enron with whom Arthur Andersen did not exercise proper audit controls, and it completely wiped them out and they no longer exist

 

[Matty]

Re: City & FFP (continued)

I'm saying that the £24.5m deal with an unnamed 3rd party WILL probably have been accepted by PWC.
Its the sale of IP to City Football Group. That owns City, NYFC and Melbourne Heart that will probably be the sticking point. It is an RPT and it gives the CFCB the only chance they have to challenge our figures.

As we declared the sale of Intellectual Property (as opposed to the sale of Image Rights) as involving a related party in our accounts then this gives PWC, on UEFA's behalf, the right to assess this sale against "fair market value" to see if it stands up. If it doesn't then they have the right to discount a proportion of this sale to reduce the value down to what has been determined by PWC to be the "fair market value". We can. of course, challenge any reduction and ask for a second opinion via the adjudication chalmber.

The other sale, that of Image Rights, hasn't been declared by City to be a sale to a related party (although we won;t say exactly who the third party is). If we can prove the 3rd party isn't a related party without letting UEFA know who they actually are (which someone previously stated is something we should be able to achieve) then PWC and UEFA can't reduce the value of this, as it's fair value as determined by the 3rd, unrelated, party.

 

[cibaman]

Re: City & FFP (continued)

Having looked at it all from scratch the only thing that the CFCB can realistically challenge is the IP sale to City Football Group for £22.43m.
Trying to change the meaning of RTP simply won't fly so the Etihad deal will be OK as will the IP sale to a 3rd party - it isn't an RPT deal and it is easy to identify that the firm is not an RPT by means of a letter to PWC from a well respected law firm stating this fact without revealing who the 3rd party is (this mechanism is used all the rime for calculating tax liabilities in various jurisdictions so it is nothing new).

The question over the nature of the 3rd party deal depends on what PWC have said about it. My guess is that they will have said it is a valid deal but as no one has done it before they cannot put a value on it.

That will give the CFCB all the ammunition they need to give it a fair value of zero.

That will mean us failing FFP by between £7m and £15m. Which means we can't deduct £80m in pre June 2010 wages which means a headline failure of £87m+.

City will fight this all the way to the end of the line as the punishment certainly doesn't fit the crime.

If we can prove the 3rd party we have sold out image rights to is not an RPT then it's of no concern to PWC whether or not they deem it to be fair value. If there's no related party link between us and the 3rd party then the value of the deal is fair value, as the third party has chosen to pay it without any internal influence from City. Otherwise you'd have to assess all sponsorship deals for fair value regardless of the RPT nature of the parties involved. Imagine the scenario, City sell our image rights to Nike for £25m, UEFA say, "that's inflated value, we're going to deduct 50% of the value of that deal". What UEFA are doing there is publicly calling into question the ethics, the professionalism and the ability of the Nike marketing board. They'd be sued before the ink dried on their FFP report. A sponsorship deal/image rights purchaes/whatever else you care to think of is worth what someone is willing to pay, as long as the someone is not a related party with undue influence being applied from within.

Haven't BDO effectively confirmed that its not a RPT? Its not classed as a RPT in the audited accounts and BDO have confirmed that they have received all of the information and explanations they require for their audit.