Financial Fair Play/Financial Report (merged)

[Golden Balls]

Financial Fair Play (FFP) has been implemented to create greater competition. However, nothing will happen to Chelsea, PSG or even ourselves for that matter, and there are a couple of reasons why.

1) Losses Exclusions: Stadium infrastructure, youth and fixed assets do not count.
2) Player Transfer/Wages Amortization: The players’ wages and transfer fees equal to a yearly loss based on the contract that they have signed. Also, contracts signed prior to June 1, 2010 do not count.
3) Gaps in the UEFA license ban: If a club fails to show that it is sustainable and posts a negative loss below the FFP threshold they can escape a European ban. This can occur by two ways, i) by showing the trend of losses is improving; and ii) the over-spend is predominantly caused by the wages of players contracted prior to June 2010.
4) Allowed Loss: With an owner who is capable of contributing their wealth into balancing the financials, then the club is allowed to lose 45million per year over the monitoring period and not be punished.

Example – Manchester City:
2011/2012 reported loss – 97.9 mill
Stadium Infrastructure – 15 mill (excluded)
Wages (Prior June 1, 2010) – 80 mill (excluded)
Net Loss – 2.9 mill

Since we have a limit of negative 45 million, UEFA will view us as having a 42.1 million dollar profit.

Example – Player Transfer/Wages Amortization:
Take Sergio Aguero…
Transfer Fee: 35 million pounds
Wages: Say 200,000 pounds per wk (equals 10.4 mill per yr)
Contract: 5 years

Now, instead of adding the 35 million to our 11/12 losses, UEFA create an annual assessment (transfer fee/contract years). Therefore, the figure becomes: = (35,000,000/5) + 10,400,000 = 17.4 million
____

Hope I helped. Bottom line, City will not get punished, nor anyone else.

 

[Rösler von Stretfordbömber]

Re: Financial Fair Play will not affect us.

I am a bit dubious as to the extent that FFP can be implemented in a practical sense. At least as far as FIFA and UEFA are concerned.

I think if UEFA tried to impose a UCL ban on someone like PSG they'd back down from it about as quickly as those court papers could get filed in Paris. I actually think they would never even ATTEMPT to implement something like this. They should be scared shitless at the thought of a antitrust/restraint of trade lawsuit in some club-friendly jurisdiction just tearing the foundation out of their whole construct at one stroke.

Now the EPL proper imposing some sort of mischief that favours the old line Big 3? (Spending tied to overall global revenue or some such crap as they constantly are floating of late.) That kind of concerns me, given that the likes of the Arse and Liverpool are probably 100x more powerful politically than they ever figure to be on the pitch.

In the end, most rules in a club sport of transnational scope will have holes that you can drive a supertanker through. I think the OP does a good job of illustrating that.

 

[FantasyIreland]

Re: Financial Fair Play will not affect us.

So why have we recently resorted to shopping in Home Bargains....?

 

[S04]

Re: Financial Fair Play will not affect us.

Erm, it´s not €45m p.a allowed..It´s during the whole three year period.
And wages from pre-June 2010 only come into it if it´s what makes you fail during this 3 year period.

 

[01Bluefan]

Re: Financial Fair Play will not affect us.

Nice to know that.

 

[Golden Balls]

Re: Financial Fair Play will not affect us.

Erm, it´s not €45m p.a allowed..It´s during the whole three year period.
And wages from pre-June 2010 only come into it if it´s what makes you fail during this 3 year period.

Yes, it is over the 3 seasons. However without this €45m we still fall below the set €5m limit. Our profits will only rise from here considering commercial growth and on field rewards.

 

[alky313]

Re: Financial Fair Play will not affect us.

So why have we recently resorted to shopping in Home Bargains....?

To balance the books? The Sheikh didn't buy us to throw away money. It's an investment.

 

[The Pink Panther]

Re: Financial Fair Play will not affect us.

Erm, it´s not €45m p.a allowed..It´s during the whole three year period.
And wages from pre-June 2010 only come into it if it´s what makes you fail during this 3 year period.

Yes, it is over the 3 seasons. However without this €45m we still fall below the set €5m limit. Our profits will only rise from here considering commercial growth and on field rewards.

What if we fail to qualify for the Champions League, will that affect the figures much?

Yes I am being a sarcastic cÜnt. This stuff has been pointed out in loads of threads already

 

[Prestwich_Blue]

Re: Financial Fair Play will not affect us.

2) Player Transfer/Wages Amortization: The players’ wages and transfer fees equal to a yearly loss based on the contract that they have signed. Also, contracts signed prior to June 1, 2010 do not count.

Example – Player Transfer/Wages Amortization:
Take Sergio Aguero…
Transfer Fee: 35 million pounds
Wages: Say 200,000 pounds per wk (equals 10.4 mill per yr)
Contract: 5 years

Now, instead of adding the 35 million to our 11/12 losses, UEFA create an annual assessment (transfer fee/contract years). Therefore, the figure becomes: = (35,000,000/5) + 10,400,000 = 17.4 million
____
Hope I helped.

Not really. You've got a couple of key things wrong or not quite correct.

Firstly FFP figures are expressed in Euros whereas our figures are in Pounds so you have to convert between them, which makes our figures worse as €45m translates to less than £40m. You can lose an aggregate €50m in any FFP assessment period as long as an owner is prepared to fund 95% of that. So Sheikh Mansour can put in €45m over each FFP period, which is normally 3 years.

Second, clubs routinely amortise player contracts anyway, regardless of FFP, and charge that to the P&L account. This is the standard accounting treatment of intangible assets in most of the world. Wages are an expense so get charged to the P&L account as they are incurred.

The exemption for wages paid on contracts signed prior to June 2010 only applies to the last financial year (2011/12). Plus it can only be used if:
(a) it makes the difference between meeting and failing FFP and;
(b) we can demonstrate an improving trend in our financial results.

if we would still fail FFP even with the £80m added back, we can't use it. So you can't look at it in isolation of this current year's financial result, which could be the tricky one, particularly with our miserable CL performance. It is going to be very tight indeed for the first assessment period although hopefully we have something up our sleeve. We should be fine after that however, with the new TV and Nike deals so even if we fail FFP this year, we will be able to demonstrate an improving trend.

 

[Skashion]

Re: Financial Fair Play will not affect us.

I think we're ok now, and we'll clear FFP with the exclusions.