FFP Question

[Skashion]

Anyone that think we´ll beat Uefa in the courts are totally deluded..We want the FFP rules in place, Khaldoon himself are very keen on them.

The rules will safeguard our future you might say.

[youtube]http://www.youtube.com/watch?v=_OemNp6hgX4[/youtube]

 

[Rammyblues]

Anyone that think we´ll beat Uefa in the courts are totally deluded..We want the FFP rules in place, Khaldoon himself are very keen on them.

The rules will safeguard our future you might say.

We should welcome these rules because I think we will use them to our long term advantage. As the years roll by we will get stronger and stronger while those clubs who at the moment feel protected by them may find them becoming more and more restrictive as their marketing and financial investments dry up. eg Real Madrid already have a turn over 3 x s ourselves and make a profit, just read that one of their main incomes is the fact that they have their own TV rights but that will end 2015. Don't worry about them.

 

[persvenality cult]

Depict what is fair market value? - There is no such thing - of course there fookin is - if a mars bar cost a fiver no fooker would buy it that why they 60p or whatever

Sorry, there really is no such thing. There is fair value, and there is market value. These are terms recognised by economists, businessmen and accountants. Fair Market Value seems to be somewhere between the two in your mind, but really it's a meaningless term.

The sections of the FFPR document relevant to this deal only talk about fair value.

I put this definition up in another thread; apologies if the whole thing is getting boring but dctid seems keen to understand what's going on.

The latest edition of International Valuation Standards (IVS 2007) clearly distinguishes between fair value, as defined in the IFRS, and market value, as defined in the IVS:

As the term is generally used, Fair Value can be clearly distinguished from Market Value. It requires the assessment of the price that is fair between two specific parties taking into account the respective advantages or disadvantages that each will gain from the transaction. Although Market Value may meet these criteria, this is not necessarily always the case. Fair Value is frequently used when undertaking due diligence in corporate transactions, where particular synergies between the two parties may mean that the price that is fair between them is higher than the price that might be obtainable in the wider market. In other words Special Value may be generated. Market Value requires this element of Special Value to be disregarded, but it forms part of the assessment of Fair Value.[1]

What this means is that market benchmarks are important, but they are just the start. There is a huge amount of marketing synergy between City and Etihad.

 

[goat boy]

i recall noises suggesting that refusal to grant a license/ invite a team would be held as a most last resort. an open dialogue between city and uefa, which appears to be establised, seems the best approach. so long as the loss trend is falling, on published financials as opposed to press speculated figures, then we stand a fair chance. as SO4 points out, these regs might just close the door behind us.

 

[mcfc1632]

Once these things are done then there would be no interest whatsoever for european law / courts and the CAS is the clearly stated escalation body for any disputes - this is a documented administration process.

They are the escalation body for disputed interpretations of the regulations, not with the legalities of them. Is it really that hard to understand?

I often hear a lot about the Bosnam example - people take comfort in that case study - but it is 100% irrelevant for this topic and there is in fact 0% comfort to be had. That issue was a clear breach of a key aspect of european law that was receiving a high level focus at that time - an organisation taking part in a organised competition crying foul because the organising body has chosen to adhere to the competition regulations that it clearly set out and which the complainant fully signed up to is just a pure nonsense

And all this bollocks of restraint of trade is more just wishful nonsense - from well-meaning blues who mean no harm but are just ill-informed and delusional in their desire to avoid the truth.

This is where the crux of the disagreement is I think. The Bosman ruling was also on the basis of restraint of trade and so surely it is completely relevant? Surely you can see the similarities?

In this latest sponsorship example - there is no constraint on the sponsor - the club receive 100% of the sponsorship. Well-meaning blues just feel it is unfair (which it is) and scream about it - that counts for nothing

I'll try and explain this in terms of numbers (note that they are an example, they do not constitute the actual scenario that would be argued if this point of law was contested)...

City need £40m to buy a player. Imagine City are in the black after buying the player by £10m including all the Etihad sponsorship. UEFA rule that £20m is fair and so City are now in the red by £10m for FFPR. City can no longer invest in the players they need if they want to retain their Champions League related sponsorship levels due to the UEFA ruling and so their ability to trade freely is restricted.

Non-entry to the Champions League then costs City an additional £30m Champions League prize money on top of the £20m UEFA ruled out. This means the amount of money City can count towards FFPR is a negative £10m as a result of the sponsorship. This is obviously not in City's interests and so they would not wish to enter into the sponsorship agreement. This means that Etihad's ability to trade freely had been freely restricted as well.

No there would be no such legal ruling - mainly because there would be no hearing by the courts. The choice to buy (or not) would be City's - the compliance with published entry ctiteria would be UEFA's - for the european courts? - nothing to interest them - there is no impact with european law from this example

I know that you see logic in your argument - and indeed there is LOGIC - just that if you think that it has any relevance to european law - well sorry to say you are wrong


Again, I'm not saying it is necessarily a robust legal stance, but it is a legal stance nonetheless and could be contested in court. That court would NOT be CAS.

CAS is all there will be - 'cos there is not (under the way the regs are set out) any scope for illegalities to have taken place in the instance WHERE CITY HAVE FREELY SIGNED UP TO THE COMPETITION RULES AFTER THEY HAVE BEEN PUBLISHED AND DISCUSSED - understand your frustration and the seeming unfairness of these regs coming in after years of the rags spending what they want - but sorry - your position is just wrong
-- Sun Jul 17, 2011 11:17 pm --

Anyone that think we´ll beat Uefa in the courts are totally deluded..We want the FFP rules in place, Khaldoon himself are very keen on them.

The rules will safeguard our future you might say.

Agreed. I think we will work within the guidelines and that they will suit us very nicely as the club develops. :)

Now this is where the real good news lies - IF we get this current arrangement / sponsorship through - so we will be the benchmark - we will have shown other clubs the way to pour sponsorship in through the redevelopment of a major part of a city. Ok - but just how many sheiks are there out there - willinging to pour money in on such a scale.

So in reality - who will be able to afford to follow - we just need to get this initial deal agreed - so we need dialogue and cooperation - not conflict with UEFA.

Anyway - given this the subject of legal challenge is a moot point - if CITY did get a 'knock-back' in terms of the amount of revenue allocated - (IMO) this would likely be after some discussion/agreement with UEFA and with a plan on how to resubmit the proposals so that they fit

 

[mcfc1632]

A theme I see on here and elsewhere is CITY fans posting what (from my POV) they would "wish to see the outcome to be" and "what they think is only fair" couched in a pervading view of "....well the Sheik will have the best people and there is no way that UeFA can win....."

These views seem to be expounded every time someone tries to explain the facts / experience of the relevant European regulations and what would appear to be the ‘driving motives’ of the FFPR – do protect the old guard clubs and in particular stop situations like CITY (and elsewhere) that would allow big investors to muscle their way to the top table.

Our PL win will only sharpen that focus as it brings stark evidence that this CITY approach can be successful – the old guard clubs will start to marshal and group - they will feel the need to take assertive action - lets face it they are threatened.

The day after our victory saw baconface and Gill make reference to how the FFPR needs to be looked at – KHR and Hoeness at Bayern have been very vocal. Real Madrid also have been quite blunt.

You can bet that these people will be right into the ear of Twatini and now he speaks:

"UEFA president Michel Platini has told clubs to be careful about what they spend under new rules and is concerned about what could happen to Manchester City if their owners leave the club.
Financial Fair Play rules are being introduced to make sure European football is played on a more level playing field and by 2013/14 clubs will be required to break even on their balance sheets.
For the first couple of years a €45m (£36m) deficit will be considered an 'acceptable deviation' but clubs will then start getting punished for spending more than they earn.
Manchester City have invested heavily in their squad since Sheikh Mansour's Abu Dhabi United Group took over and this season they became Premier League champions.
Platini insists that money does not guarantee success, however, and has fired a warning about the future.
"We have to protect the clubs, because until they pay Manchester City will be happy but if they (the owners) leave Manchester City what is going to happen with this club?" Platini said in an interview with Fox Soccer America and broadcast on Sky Sports News.


Notice how he mentions Manchester CITY again and again - no other club!!! No PSG - No Malaga etc - Manchester CITY are the absolute focus of these regulations

These regulations are aimed mainly at us and they have been very carefully planned. In full recognition of the relevant European regulations they have been introduced in such a way that they do not infringe and there would not only likely to be a successful challenge - there is unlikely to be a challenge at all - because an unsuccessful one one cause major / further frictions

We have to achieve 2 things very quickly:


1/ Yet further major increases in revenue - 3 more years of 25% year on year growth

2/ On-field success with the current squad with only 'relatively modest' increases

We have to comply - not ignore to the point where we become part of the accepted elite (probably taking Chelsea's place) and the old guard take comfort in the fact that it cannot happen again

 

[gordondaviesmoustache]

A theme I see on here and elsewhere is CITY fans posting what (from my POV) they would "wish to see the outcome to be" and "what they think is only fair" couched in a pervading view of "....well the Sheik will have the best people and there is no way that UeFA can win....."

These views seem to be expounded every time someone tries to explain the facts / experience of the relevant European regulations and what would appear to be the ‘driving motives’ of the FFPR – do protect the old guard clubs and in particular stop situations like CITY (and elsewhere) that would allow big investors to muscle their way to the top table.

Our PL win will only sharpen that focus as it brings stark evidence that this CITY approach can be successful – the old guard clubs will start to marshal and group - they will feel the need to take assertive action - lets face it they are threatened.

The day after our victory saw baconface and Gill make reference to how the FFPR needs to be looked at – KHR and Hoeness at Bayern have been very vocal. Real Madrid also have been quite blunt.

You can bet that these people will be right into the ear of Twatini and now he speaks:

"UEFA president Michel Platini has told clubs to be careful about what they spend under new rules and is concerned about what could happen to Manchester City if their owners leave the club.
Financial Fair Play rules are being introduced to make sure European football is played on a more level playing field and by 2013/14 clubs will be required to break even on their balance sheets.
For the first couple of years a €45m (£36m) deficit will be considered an 'acceptable deviation' but clubs will then start getting punished for spending more than they earn.
Manchester City have invested heavily in their squad since Sheikh Mansour's Abu Dhabi United Group took over and this season they became Premier League champions.
Platini insists that money does not guarantee success, however, and has fired a warning about the future.
"We have to protect the clubs, because until they pay Manchester City will be happy but if they (the owners) leave Manchester City what is going to happen with this club?" Platini said in an interview with Fox Soccer America and broadcast on Sky Sports News.


Notice how he mentions Manchester CITY again and again - no other club!!! No PSG - No Malaga etc - Manchester CITY are the absolute focus of these regulations

These regulations are aimed mainly at us and they have been very carefully planned. In full recognition of the relevant European regulations they have been introduced in such a way that they do not infringe and there would not only likely to be a successful challenge - there is unlikely to be a challenge at all - because an unsuccessful one one cause major / further frictions

We have to achieve 2 things very quickly:


1/ Yet further major increases in revenue - 3 more years of 25% year on year growth

2/ On-field success with the current squad with only 'relatively modest' increases

We have to comply - not ignore to the point where we become part of the accepted elite (probably taking Chelsea's place) and the old guard take comfort in the fact that it cannot happen again

Does FFP comply with the Free Movement of People Laws within the EU?

 

[Pam]

People are forgetting about the severity or no severity of planned sanctions for breaching FFP rules. The ultimate sanction of exclusion from the Champs League is no longer on the table as a definite long term sanction. Fines is what they're talking and City really couldn't care less about fines. And if anyone at UEFA believes the Premiership won't kcik off the minute they see a weakening of their own league via wage and transfer caps and the like, then they are sadly mistaken. It just ain't going to fly. End of.

Here comes twenty years of glory for our club.

 

[Braggster]

Does FFP comply with the Free Movement of People Laws within the EU?

I think so, yes.

The fundamental freedoms (the relevant ones here would be freedom of capital, freedom of establishment and freedom of movement) are assessed by reference to a comparator. In other words, for a member state to breach one of the freedoms, there must be a comparison between how the infringing provision(s) treat a 'native' entity and a 'foreign' entity which establishes that there is a difference (direct or indirect) which disadvantages that foreign entity. The problem is that, in this instance, what is the comparator? There is uniformity of treatment across the entire EU.

A secondary challenge might be to say that there is (as you suggest) an indirect infringement of freedom of movement, because an EU citizen is indirectly impeded from moving to City and earning lots of money due to the requirement on City to comply with FFP (which results in him not moving to City, or receiving a lower offer than he otherwise would have done). My knowledge of European law as relating to employment is more sketchy (I am much more familiar with its effect on taxation, which tends to be under the freedom of establishment and free movement of capital heads), but while this sounds much more plausible as a ground of challenge, it would be for a player to do so, in the primary case, not for City. I would anticipate that any such challenge by City on these grounds would be very difficult to mount.

A further thought is that the cynic in me can't help but think that a deal has been cut between Platini/UEFA and the European Commission on this, by which Platini has got the Commission to buy in to FFP, and they have effectively agreed that they will not challenge its legitimacy. It does not seem to me to be the kind of initiative which the Commission would take an immediate dislike to; in the present climate, indeed, they may positively welcome it. While that would not bind the ECJ, who are the ultimate arbiter of such issues, it would certainly make a challenge much more difficult.

 

[gordondaviesmoustache]

Does FFP comply with the Free Movement of People Laws within the EU?

I think so, yes.

The fundamental freedoms (the relevant ones here would be freedom of capital, freedom of establishment and freedom of movement) are assessed by reference to a comparator. In other words, for a member state to breach one of the freedoms, there must be a comparison between how the infringing provision(s) treat a 'native' entity and a 'foreign' entity which establishes that there is a difference (direct or indirect) which disadvantages that foreign entity. The problem is that, in this instance, what is the comparator? There is uniformity of treatment across the entire EU.

A secondary challenge might be to say that there is (as you suggest) an indirect infringement of freedom of movement, because an EU citizen is indirectly impeded from moving to City and earning lots of money due to the requirement on City to comply with FFP (which results in him not moving to City, or receiving a lower offer than he otherwise would have done). My knowledge of European law as relating to employment is more sketchy (I am much more familiar with its effect on taxation, which tends to be under the freedom of establishment and free movement of capital heads), but while this sounds much more plausible as a ground of challenge, it would be for a player to do so, in the primary case, not for City. I would anticipate that any such challenge by City on these grounds would be very difficult to mount.

A further thought is that the cynic in me can't help but think that a deal has been cut between Platini/UEFA and the European Commission on this, by which Platini has got the Commission to buy in to FFP, and they have effectively agreed that they will not challenge its legitimacy. It does not seem to me to be the kind of initiative which the Commission would take an immediate dislike to; in the present climate, indeed, they may positively welcome it. While that would not bind the ECJ, who are the ultimate arbiter of such issues, it would certainly make a challenge much more difficult.

Thank you for taking the time to post such a thoughtful response.

I was thinking specifically with regards to the differing rates of income tax in different member states. Spain has a notoriously lower top rate of tax than the UK (although there are rumours of the Spanish government being put under pressure from the ECB to rectify that as a pre-requisite for any ongoing financial life-support).

I understand Yaya moved to City on the proviso that his net wages would be unchanged. Clearly this meant that we had to increase his gross wages. Anything that would prevent this could be argued is a restriction on his free movement. It may, however, be an academic point if the Commission has been persuaded as to the benefits of FFP.

As you say (and this was something I conspicuously failed to appreciate) it would be a matter for a player, rather than a club, but the shadow of an otherwise insignificant Belgian called Jean-Marc still hangs over the European game and given what is at stake I am sure that some player(s) could be persuaded to take this matter up, if people far better qualified than me (like yourself, it would appear) felt it was a worthwhile punt.