Prestwich_Blue said:
OK - here's my guide to FFPR which is as concise as I can make it. Mods - any chance of making this a sticky?
When does FFPR kick-in?
This is one of the most complicated bits. The first season that UEFA will do the sums will be in the 2013/14 season (the first “monitoring period”) and this will be based on accounts for the financial years ending in the previous 2 seasons. As our accounts run from 1st June to 31st May, the first accounts that will form part of FFPR will be the ones for the financial year 2011/12 starting next week. From 2014/15, it will be 3 years accounts that get considered. The results will determine if a club gets a licence for European competitions in the following season.
What do clubs have to do?
FFPR talks about breaking even but you can make an aggregate loss of €5m in the accounts making up the monitoring period. So you can make a loss in one or even two years as long as these are covered by a profit in the third. You are also allowed to make a further aggregate loss of €45m in 2013/14 and 2014/15 if the owners are prepared to cover it. After that it drops to €30m for the next 3 monitoring periods. After that is still to be decided.
What income is allowed?
The usual match-day, commercial & media income counts as well as profit on disposal of assets and players. In addition, we can count any non-football income from operations in or near to CoMS or that use the club branding as part of their operations. So income from any hotels or other leisure/commercial facilities in Eastlands owned by the club can count.
A lot of talk about excluding commercial deals above “fair value” but this only applies to related party transactions. These are tightly defined so the Sheikh buying a box for £50m would be excluded but a £50m sponsorship from Etihad probably wouldn’t. If Jaguar were to pay us £100m that would be OK as well.
What expenses can be excluded?
Any expenditure on the youth system and infrastructure can be excluded. Also, if you would have been in profit but for player amortisation incurred on players bought before June 1st 2010, then this can be excluded as well. As that was £71m in those accounts, that’s good for us.
Are there any other get-outs?
Yes. UEFA can ignore any losses if they think you are on track to be profitable up to three years ahead. So if we’re making losses and they’re getting smaller or we can demonstrate we will be profitable in a few years’ time, they can grant a licence.
How do we stand at the moment?
Our accounts to 31 May 2010 showed a loss of £121m, of which £71m was related to player amortisation. Increasing income by just £35m in the forthcoming financial year (to 31 May 2012) should allow us to meet the requirement and a decent CL run could give us most if not all of that.
Also
Grey Areas
What is 'fair market value' - and who decides?
The whole proposition of controlling what is acceptable in terms of income and fair market value is a hot topic for FFPR.
For example if BP wanted to sponsor City and pay £200m per season to have their name on the shirts would that be OK?
Some are suggesting that the 'fair market' value for City shirt deals is far below that as even Barca only get about 1/5 of that.
But if a company IS willing to pay can UEFA argue with such a commercial decision?
Surely not.
Why would BP be willing to do something as crazy as that though?
Well City are owned by very wealthy and important people whom companies want to be close to. There are also other countries who want to be 'in' with Sheikh Mansour and of course some are relatives and friends of the Sheikh and his family.
It could be argued that City are indeed unique in terms of 'fair market value' because of who controls the club.
Therefore commercial income could well be the panacea for all of City's FFPR ills.
Could UEFA fight that?
Of course they could but I suspect that that would be a fight UEFA (and perhaps City) wont want and
as such the fair market value will mean that City will get away with whatever they want to.
