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

[Chippy_boy]

Re: City & FFP (continued)

Manchester City are really only the vehicle to showcase the ability of Abu Dhabi to represent and deliver commercial success. It could just have easily been dominance in Formula One for instance, but of course football is particularly popular and arguably better suited to rapid investment with almost immediate results (or so the theory goes).

I would expect our owners don't want to be seen as continuously throwing money at 'the problem' in order to gain success. I believe they accept it will be an accusation in the early years, but given time, and clearly visible improvements (like the infrastructure we're building), people will soon overlook the initial spending sprees. In time, people will (hopefully) interpret it as genuine investment that paid off, rather than Abramovich's image which is that he's propping up Chelsea.

With that in mind, I think the owners do want us to be a genuinely profitable business and operate well within any FFP rules. Our objection (as I see it) is we're hindered in our attempts to get to that position.

Despite all that, no matter how well run we eventually become, or how 'efficient' or 'profitable' a business we are, we will still be judged by our on field success, which ironically is the one aspect of the 'business' that's not very business like. There's no spreadsheet for winning football games, or mitigation for a dodgy penalty.

Imagine building a wonderful Manchester City brand (much like the Apple brand). Everything is right, all the business is logical and sustainable, all the marketing is in place, but there's just one catch.... your product design is partly based on the roll of the dice.

If Manchester City the team aren't successful, all the hard work behind the scenes will be overlooked. The image will be of a failed project. It must be very frustrating for the owners that a relatively minimal but hugely influential aspect of the business lies in part, to chance, and in part a clique called UEFA.
The whole brand rests on 11 players kicking a ball.

That academy we've built? it's beautiful, spectacular, impressive... but will only be deemed great business if we succeed domestically, and more importantly in CL.

Interesting to consider whether indeed success (long term success, as opposed to winning the odd match) is indeed based partly on luck. I would argue that it is not. Yes you get duff refereeing decisions and injuries and fluky goals against you and all sorts of adversities. Or the opposite, and your might have a run of good luck. This doubtless affects the outcome of games and even of seasons. But I don't think it affects the long term.

Over the long term, the better equipped you are, the better you will do. Better management, better coaching, better facilities, better players over the long term will reliably deliver better results. Look at British Cycling as an example of how meticulous attention to detail combined with excellent facilities, equipment and coaching, effectively took luck completely out of the equation. Over the long term football is also not a business about luck, it's a business like any other.

 

[SilverFox2]

Re: City & FFP (continued)

ADUG are attracting sponsorship and advertising revenue as a result of the exposure football gives via TV etc..
Other revenue comes via success on the field.
Obviously the two are linked but possibly ADUG will be happy to just maximise revenue and not necessarily win all trophies and may be restrained in their player purchases in future.
We as supporters of City want the reverse, we want success on the field at all costs so see Falcao type players as an opportunity lost.

Incidentally, I note in todays news that the UK must now pay an extra amount to the EU (some £1.7 Billion or thereabouts) as a result of doing better in recovery. This money to go to Germany and France who will get a rebate.
The fact that there is a black hole (fraud) of gigantic proportions in the EU accounting system is irrelevant apparently.
A little like FFP fines going to our G14 friends.

 

[Chippy_boy]

Re: City & FFP (continued)

Incidentally, I note in todays news that the UK must now pay an extra amount to the EU (some £1.7 Billion or thereabouts) as a result of doing better in recovery. This money to go to Germany and France who will get a rebate.
The fact that there is a black hole (fraud) of gigantic proportions in the EU accounting system is irrelevant apparently.
A little like FFP fines going to our G14 friends.

OT, I know, but you can why UKIP are gaining in popularity, can't you. Completely unelectable of course, but you can see why some people are turning to them.

 

[patrickblue]

Re: City & FFP (continued)

Very true, but the question is whether the way UEFA have gone about it is legal. Is it legal for a sports governing body to effectively stop a business man investing in his business in order to make it grow? Yes or No. My money is on no.

It's a tricky one. On the face of it, yours would seem like a sensible view.

But playing devil's advocate for a moment, (a) UEFA took extensive legal advice in drawing up the rules and have stated throughout that they are confident, no, certain of its legality. And (b) you could argue that they aren't stopping anyone from investing, merely suggesting that in order to play in their competition, you have to abide by certain rules. Those rules allow for investment up to certain levels and if you want to go beyond that you can, but you can't play in the competition.

That they have consulted legally doesn't mean it can't be challenged, but I think it does mean that it's not a straightforward case. If it was obviously and undeniably illegal they would have known about it and made changes when it was being drafted. There must be some qualified lawyers who think it is legal as it stands.

Purely based on my personal judgement, I think it will "probably" end up being deemed illegal, but I will only be very slightly surprised if that proves incorrect and it survives legal challenge.

Absolutely correct. It's managed to get to this point because it's not so clear cut.
I've also said a few times, that taking it to court COULD make matters far worse on two counts:

1) FFP is given the green light and an endorsement, thus putting one horrific feather in the cap of UEFA which might well end up with even harsher sanctions

2) UEFA are told FFP needs to be modified because aspects of it are deemed illegal. If this happens, it can have the knock on effect of spelling out to UEFA which parts are ok, and which aren't. So then they can correct the erroneous parts, and extend the legal parts, and no longer feel any fear over the 'threat' of being taken to court. Right now, the 'threat' works both ways and helps to create compromise. Once that threat is removed... it could get worse.

Imaging if someone trespassed on your property and you didn't know the law. You assumed it would be ok to give the trespasser a good hiding.
The trespasser took you to court believing you were entirely out of order. The judge says 'yes, he was wrong to punch and kick you, but I see no problem with him throwing a bucket of water over you'. Now you've had it spelled out to you what you CAN do. In that instance, UEFA would then attempt to drown you with one giant bucket of water.

Of course, if it transpired that FFP was massively wrong, then it would ruin UEFA's credibility and might be abandoned, but I can't see that happening.

I can see what you're getting at, but it's not a set of rules and regulations that are being challenged, it's the basic premise that a club cannot spend more than it earns that is under challenge as that is what on the face of it is in breach of EU law.
I would imagine the argument DuPont will be putting forward is (and he's hinted at this) that he doesn't disagree with UEFA's stated objective (to stop clubs overspending and ending up with unsustainable debt) but he does disagree with the way it's been implemented, and will argue that this is a restriction of competition.
I believe he will argue for a system in which any money spent needs to be guaranteed, probably by being paid up front.

 

[FanchesterCity]

Re: City & FFP (continued)

It's not 'on the face of it' in breach of European Law though.

The average punter in the street has been mislead into believing you can't put restrictions on how a business sector operates, but you can.
It's not 'wrong' per se to put financial restrictions on businesses, and certainly not teams. The law allows for it.

The question is more is it appropriate to be applying it, and if so, is the application a good implementation of it. UEFA have to demonstrate that there was a problem that needed fixing, and that any restrictions it imposes are truly for the benefit of the industry, including the consumer. That's the bit that's highly subjective.

In fact, it's more the other way around. On the face of it, what UEFA are doing is perfectly fine. That's how it's got this far. DuPont is trying to illustrate that below the surface, all is NOT fine at all, and the motives are questionable and the implementation is a poor one, and particularly punitive for some clubs.

I agree that one aspect of stopping clubs getting into financial trouble could be eased by paying up front, or putting the money in escrow to effectively guarantee all contracts can be honoured, but the very nature of debt usually means you can't honour it right now, nor can you put the money in escrow. Borrowing is a 'risk' that the lender and the borrower are both prepared to take - on account of the potential rewards for taking that risk.
So whilst City don't need to borrow, some clubs do, and if UEFA tried to impose rules that demanded up front payments, football would grind to a halt.

There's an argument too, to suggest that more clubs should go to the wall. Nobody's forcing them to overspend. In fact the sense of protected status that some clubs have is encouraging them to take excessive risk and overspend. The courts may well say that each club is a business in it's own right, but operate in a very specific market that is distinct from general businesses. But because 'sport' is a special sort of business, it doesn't make a sport related business immune from having to apply some self-control and must accept that some businesses are more successful than others, and some my find investment in some quite remarkable and innovative ways, and some might be fortunate enough to merely have a wealthy benefactor. These things happen in business, why shouldn't they happen in sport?

I would not be surprised is the courts made mention of UEFA choosing to operate on a very commercial and business like basis when it suits them (sponsorship, media rights, brand licensing etc), but adopting a more 'sporting' approach when that suits. Ergo, if you're going to act and operate as a business (as you do), you must accept that clubs are likely to do the same.... so tough luck Mr Platini, live by the business sword, die by the business sword.

But who knows the mind of a court, especially a European one. They could well say "well done Mr Platini, and for your efforts, we find all French clubs to be exempt from any punishments"

 

[patrickblue]

Re: City & FFP (continued)

It's not 'on the face of it' in breach of European Law though.

The average punter in the street has been mislead into believing you can't put restrictions on how a business sector operates, but you can.
It's not 'wrong' per se to put financial restrictions on businesses, and certainly not teams. The law allows for it.

The question is more is it appropriate to be applying it, and if so, is the application a good implementation of it. UEFA have to demonstrate that there was a problem that needed fixing, and that any restrictions it imposes are truly for the benefit of the industry, including the consumer. That's the bit that's highly subjective.

In fact, it's more the other way around. On the face of it, what UEFA are doing is perfectly fine. That's how it's got this far. DuPont is trying to illustrate that below the surface, all is NOT fine at all, and the motives are questionable and the implementation is a poor one, and particularly punitive for some clubs.

Financial restrictions on buisness of any sort do not say you cannot invest in your business. Unless it's a business governed by UEFA

 

[FanchesterCity]

Re: City & FFP (continued)

It's not 'on the face of it' in breach of European Law though.

The average punter in the street has been mislead into believing you can't put restrictions on how a business sector operates, but you can.
It's not 'wrong' per se to put financial restrictions on businesses, and certainly not teams. The law allows for it.

The question is more is it appropriate to be applying it, and if so, is the application a good implementation of it. UEFA have to demonstrate that there was a problem that needed fixing, and that any restrictions it imposes are truly for the benefit of the industry, including the consumer. That's the bit that's highly subjective.

In fact, it's more the other way around. On the face of it, what UEFA are doing is perfectly fine. That's how it's got this far. DuPont is trying to illustrate that below the surface, all is NOT fine at all, and the motives are questionable and the implementation is a poor one, and particularly punitive for some clubs.

Financial restrictions on buisness of any sort do not say you cannot invest in your business. Unless it's a business governed by UEFA

Neither do UEFA.
UEFA do not say you cannot invest. They put no restriction on the amount of investment you can make. It's unlimited.
Nor do they place any restriction on the amount you can spend, or on what you spend it on.

They do place SOME restrictions on what you can spend on players (and associated expenses) if you want to play in their competition (which you're not obliged to partake in). But again, even then, there's no restrictions on the amount of investment.
It's not without precedent either. There are various capping limits in multiple sports, be it player salaries, or in the case of formula one, technology spending. Although working against UEFA is the fact they've not implemented a flat figure. It's proportional, giving rise to the criticism it favours bigger clubs.

I'm playing devil's advocate a little here, but essentially the above is true. Already the picture becomes a lot more complex doesn't it?
They aren't stopping you doing anything except taking part in their competition. They aren't dictating any business practices to you whatsoever.
Of course, you can argue that taking part in their competition is virtually a necessity to succeed as a business, but already, you're into a different argument now.

 

[niall'sdiscoshorts]

Re: City & FFP (continued)

I think it fair to remind Mr Platini of the experience of Real Madrid. The "greatest club in the world" did not win the European cup at all between 1966 and 1998. The won it again in that year and twice more in 2000 and 2002, but that was that until 2014.

In 2000 Real sold their old training ground in the centre of Madrid for the amazing sum of €480 million because the land had been reclassified and could now be used to build office blocks on.
[Yes, they sold off land that was RENTED from the council but which was re classified and then sold off in cahoots with said very obliging council allegedly]
This sum was actually more than 3.5 times Real's annual revenue, and represented an enormous injection of cash from outside football ie it was an astronomical sum from outside which was available for investment. The decision was taken to pay off the debt, build a new training facility but also to spend most of it on players - Figo, Zidane, Ronaldo, Beckham and Owen over the coming years. This was the policy of the galacticos and it is important to acknowledge that in Platini's eyes they were players Real could not afford and should not have been allowed to buy.

Now, many point out that the galacticos strategy (which Real have not abandoned since) was a failure.

In football terms that may be true - Real took 12 years to win la decima, so they may have only managed to buy mercenaries with a sugar daddy's money, but what no-one can question is the business success of the strategy. The policy of heavy investment paid off handsomely. Real did not become a Leeds or a Portsmouth. Throughout the 1990s the richest club in the world (ie the one with the biggest income) was Manchester United) with Real lagging some way behind. Two years after the beginning of the policy of heavy investment in players in 2000, Real had overtaken United and have had a bigger income by far than any other club - now well over €100 million a year bigger than United's!
[but RM are not spending big on the team only. When Perez won back the presidency it all started again only this time they WANT to pay huge fees. The amount they spend is irrelevant as long as it more than anyone else. The bigger the fee the more the aura around the brand. It's partly for the footballer but mostly for shock and awe marketing to keep the hordes that consume anything and everything form this particular circus slack jawed at their massiveness. And it has worked (so far) if you see the constant stream of people who traipse through the stadium EVERY DAY, never mind the pot noodle partners. Ronaldo, Bale, James were cheap all things considered]
Now, Real's approach was exactly the one City have followed. Heavy initial investment is the only way yet known to grow an enterprise quickly, even if the capital for the initial investment has to be borrowed. Indeed the only difference between City and Real is thar Real is heavily in debt because of subsequent borrowing. When asked about this Platini described Real's debt as"just another item on the balance sheet" which was no problem because they could easily make the interest payments. He also thought he was being perfectly fair giving City 4 years to reach break even point. From now on he doesn't intend to give any club the chance.

It's not the only thing that has resumed since Perez returned either. The building work that the .. ahem Building Magnet started should have been nearly finished now. Once they'd got the council to re-classify the council's prime forecourt on the prestigious thoroughfare passing right by the stadium in exchange for the small corner RM owned on the worthless side they should have cracked on with the hote... stadium.
Only it stalled as amongst other things the economic crisis has given voice to an otherwise passive opposition which means they may even considering moving out of the Bernabeu altogether. Now with the rising associated costs even RM could do with a hand building a new stadium right? And this is where the erstwhile stinking petrodollars from Abu Dhabi come in for naming rights. Oh, the beautiful irony!
And finally to get a measure of the current regime let's not forget the new rule Perez passed on re-election which now require any challenger to his presidency must have been a club member for more than twenty years - irrespective of how deep their pockets may be. And the members voted for it!
I bet it's Platini in shock and awe at these cheeky scamps.

I hope you live up to the original nijinsky of here......Could be loads of fun but somehow I doubt it.

 

[Chippy_boy]

Re: City & FFP (continued)

It's not 'on the face of it' in breach of European Law though.

The average punter in the street has been mislead into believing you can't put restrictions on how a business sector operates, but you can.
It's not 'wrong' per se to put financial restrictions on businesses, and certainly not teams. The law allows for it.

The question is more is it appropriate to be applying it, and if so, is the application a good implementation of it. UEFA have to demonstrate that there was a problem that needed fixing, and that any restrictions it imposes are truly for the benefit of the industry, including the consumer. That's the bit that's highly subjective.

In fact, it's more the other way around. On the face of it, what UEFA are doing is perfectly fine. That's how it's got this far. DuPont is trying to illustrate that below the surface, all is NOT fine at all, and the motives are questionable and the implementation is a poor one, and particularly punitive for some clubs.

I agree that one aspect of stopping clubs getting into financial trouble could be eased by paying up front, or putting the money in escrow to effectively guarantee all contracts can be honoured, but the very nature of debt usually means you can't honour it right now, nor can you put the money in escrow. Borrowing is a 'risk' that the lender and the borrower are both prepared to take - on account of the potential rewards for taking that risk.
So whilst City don't need to borrow, some clubs do, and if UEFA tried to impose rules that demanded up front payments, football would grind to a halt.

There's an argument too, to suggest that more clubs should go to the wall. Nobody's forcing them to overspend. In fact the sense of protected status that some clubs have is encouraging them to take excessive risk and overspend. The courts may well say that each club is a business in it's own right, but operate in a very specific market that is distinct from general businesses. But because 'sport' is a special sort of business, it doesn't make a sport related business immune from having to apply some self-control and must accept that some businesses are more successful than others, and some my find investment in some quite remarkable and innovative ways, and some might be fortunate enough to merely have a wealthy benefactor. These things happen in business, why shouldn't they happen in sport?

I would not be surprised is the courts made mention of UEFA choosing to operate on a very commercial and business like basis when it suits them (sponsorship, media rights, brand licensing etc), but adopting a more 'sporting' approach when that suits. Ergo, if you're going to act and operate as a business (as you do), you must accept that clubs are likely to do the same.... so tough luck Mr Platini, live by the business sword, die by the business sword.

But who knows the mind of a court, especially a European one. They could well say "well done Mr Platini, and for your efforts, we find all French clubs to be exempt from any punishments"

We're going around and around old ground here mate. We are on page 1221 after all!

Suggest you have a read of this, if you haven't already:

<a class="postlink" href="http://www.soccernomics-agency.com/?p=469" onclick="window.open(this.href);return false;">http://www.soccernomics-agency.com/?p=469</a>

 

[patrickblue]

Re: City & FFP (continued)

It's not 'on the face of it' in breach of European Law though.

The average punter in the street has been mislead into believing you can't put restrictions on how a business sector operates, but you can.
It's not 'wrong' per se to put financial restrictions on businesses, and certainly not teams. The law allows for it.

The question is more is it appropriate to be applying it, and if so, is the application a good implementation of it. UEFA have to demonstrate that there was a problem that needed fixing, and that any restrictions it imposes are truly for the benefit of the industry, including the consumer. That's the bit that's highly subjective.

In fact, it's more the other way around. On the face of it, what UEFA are doing is perfectly fine. That's how it's got this far. DuPont is trying to illustrate that below the surface, all is NOT fine at all, and the motives are questionable and the implementation is a poor one, and particularly punitive for some clubs.

Financial restrictions on buisness of any sort do not say you cannot invest in your business. Unless it's a business governed by UEFA

Neither do UEFA.
UEFA do not say you cannot invest. They put no restriction on the amount of investment you can make. It's unlimited.
Nor do they place any restriction on the amount you can spend, or on what you spend it on.

They do place SOME restrictions on what you can spend on players (and associated expenses) if you want to play in their competition (which you're not obliged to partake in). But again, even then, there's no restrictions on the amount of investment.
It's not without precedent either. There are various capping limits in multiple sports, be it player salaries, or in the case of formula one, technology spending. Although working against UEFA is the fact they've not implemented a flat figure. It's proportional, giving rise to the criticism it favours bigger clubs.

I'm playing devil's advocate a little here, but essentially the above is true. Already the picture becomes a lot more complex doesn't it?
They aren't stopping you doing anything except taking part in their competition. They aren't dictating any business practices to you whatsoever.
Of course, you can argue that taking part in their competition is virtually a necessity to succeed as a business, but already, you're into a different argument now.

I was playing devil's advocate a little too regarding investment, but it's essentially the case that although investment is permitted, it's not a realistic amount to be able to compete with the top tier of clubs, and there is no way to be able to compete without investment far above that allowed in EUFA's FFP rules.
I would say that the rules as they stand are not fit for purpose and I would think in breach of Article 101 regarding collusion and cartels. Not being a lawyer myself, and even if I was, that will all come down to interpretation in the end, but that's what DuPont is fighting it on and as I said before, on the face of it, he has a valid point.
And I'm sure a lawyer wouldn't be taking this on if he didn't think he had a good chance of winning.