Financial Fair Play/Financial Report (merged)

[Ladybarn 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.

Can anybody explain in very simple words , i am getting a headache !!

 

[The Pink Panther]

Re: Financial Fair Play will not affect us.

Can anybody explain in very simple words , i am getting a headache !!

Our owner is one of the richest men in the world.
He will have the best people possible working on this
We will be fine

 

[Ladybarn Blue .]

Re: Financial Fair Play will not affect us.

Can anybody explain in very simple words , i am getting a headache !!

Our owner is one of the richest men in the world.
He will have the best people possible working on this
We will be fine

This is what i have being saying for ages .

I fully agree that we will employ only the VERY best .

Again i would like more details of the main board member appointed last year , he is an expert on legal financial matters but i cannot find out any more about him can anybody help PLEASE .

 

[Ladybarn Blue .]

Re: Financial Fair Play will not affect us.

Can anybody explain in very simple words , i am getting a headache !!

Our owner is one of the richest men in the world.
He will have the best people possible working on this
We will be fine

This is what i have being saying for ages .

I fully agree that we will employ only the VERY best .

Again i would like more details of the main board member appointed last year , he is an expert on legal financial matters but i cannot find out any more about him can anybody help PLEASE .

I have just been on the MCFC web site , ALBERTO GALASSI is his name .

It is worth a look on the MCFC web site about board members , sheer quality .

 

[Deleted member 52846]

Re: Financial Fair Play will not affect us.

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

We haven't. We tried to sign (possibly)Thiago Silva, Di Rossi, Hazard (possibly)Cavani and either they didn't want to join us or their clubs refused to accept the transfer. What can we do about that? We aren't a world leading city, we weren't the champions of Europe, we weren't one of the players hometown clubs and Napoli wanted more than £45m or in fact didn't want to sell. We can't do anything about these things.

 

[Prestwich_Blue]

Re: Financial Fair Play will not affect us.

Can anybody explain in very simple words , i am getting a headache !!

Let's say we buy a player for £25m on a 5 year contract. We don't charge the whole £25m as an expense in one go but we divide the value of the contract by the number of years and use that value as the figure we charge as an expense.

So in theory we'd charge £5m a year for that player to the profit and loss accounts for the 5 years of his contract. The accounting value of that player is reduced by the same amount each year so he'll be in the books at £20m after Year 1, £15m after Year 2 and £10m after Year 3. If we then renegotiate a new contract over 4 years, we do the same thing for the new contract so divide the £10m by 4, charging £2.5m to the accounts each year.

If we sell the player, then we subtract his book value from whatever we receive for him, which gives the profit or loss on sale. So if we get £12m after the first 3 years, we've made a £2m profit. If we only get £8m, we've made a £2m loss.

 

[Stretford Born Blue]

Re: Financial Fair Play will not affect us.

Good, I can sleep easy now..............!

 

[Dave Ewing's Back 'eader]

Re: Financial Fair Play will not affect us.

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.

Aha, so we can binge a few tens of millions on some new blood this month. WTF are we waiting for? Where's Falcao and the rest?

 

[StanGibsonspitchfork]

Re: Financial Fair Play will not affect us.

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

We haven't. We tried to sign (possibly)Thiago Silva, Di Rossi, Hazard (possibly)Cavani and either they didn't want to join us or their clubs refused to accept the transfer. What can we do about that? We aren't a world leading city, we weren't the champions of Europe, we weren't one of the players hometown clubs and Napoli wanted more than £45m or in fact didn't want to sell. We can't do anything about these things.

That's right. We also need a few more Premier League Champions crowns, and to get a lot further into the knock out stages on a good few occasions, and build up our revenue streams...then we might habe more success with recruitment, but it is not a given.

 

[Chippy_boy]

Re: Financial Fair Play will not affect us.

Beautifully summed up by PrestwichB.

There are two other points that I am not sure have been mentioned, but which are relevant:

• Income from non-footballing activity. We can include this provided it's either from revenues close to the ground (hotels, shops etc) OR provided it's Manchester City branded. So we can include revenue from a Manchester City store in Abu Dhabi, or even from a Manchester City bar in New York, if we want to open one. So there are lots of legitimate business opportunities to increase our FFP revenues which are quite inline with the rules and which in reality have bugger all to do with Man City. We could in theory, at a stroke call Abu Dhabi Airport the "Manchester City Abu Dhabi Airport" and add another £200m per year (or whatever) to our FFP revenues. Sorted.
  
  It is clear from the weasel words throughout the document that UEFA wish to retain full control of who is in, and who is out, irrespective of any FFP calculation. For example, they allow exceptions based on local applicable laws "or any other reason", which would seem to cover a lot of ground!

I cannot see them barring any big club like ours, provided we are not demonstrably taking the piss.