Financial Fair Play/Financial Report (merged)

[badmash]

Re: Financial Fair Play will not affect us.

I'm more worried about what the t**t Gill is trying to do with the Premiership

 

[Deleted member 52846]

Re: Financial Fair Play will not affect us.

All looks great on paper but unfortunatley judging by our transfer activity it looks like FFP IS effecting us.

What I find more supprising is that Chelsea seem to be able to spend, buying an incredible team (and are now linked with Fellani) and dont have the same concerns as us.

Again, we tried to sign players for what woukd have been huge amounts of money but they either didn't want to come to us or their clubs didn't want to sell to us. We didn't purposely scrimp and save last Summer.

 

[Hamann Pineapple]

Re: Financial Fair Play will not affect us.

I'm more worried about what the t**t Gill is trying to do with the Premiership

I'm worried why City and Liverpool voted for him to replace Bernstein

 

[BoyBlue_1985]

Re: Financial Fair Play will not affect us.

All looks great on paper but unfortunatley judging by our transfer activity it looks like FFP IS effecting us.

What I find more supprising is that Chelsea seem to be able to spend, buying an incredible team (and are now linked with Fellani) and dont have the same concerns as us.

You find it surprising that a team who have won 9 major trophies in the last 8 years are backed by a man who has his fingers in every money pot in Russia and are based in not just the most expensive area in London but the UK and probably most of Europe make more money than us! Really you find that surprising?

 

[waspish]

Re: Financial Fair Play will not affect us.

All looks great on paper but unfortunatley judging by our transfer activity it looks like FFP IS effecting us.

What I find more supprising is that Chelsea seem to be able to spend, buying an incredible team (and are now linked with Fellani) and dont have the same concerns as us.

You find it surprising that a team who have won 9 major trophies in the last 8 years are backed by a man who has his fingers in every money pot in Russia and are based in not just the most expensive area in London but the UK and probably most of Europe make more money than us! Really you find that surprising?

We made 235m last financial year where as Chelsea after winning all those trophies and for first time ever the champs league that gave them around 65m extra to there turnover was 266m think we are doing better at this stage than Chelsea did!

 

[BoyBlue_1985]

Re: Financial Fair Play will not affect us.

All looks great on paper but unfortunatley judging by our transfer activity it looks like FFP IS effecting us.

What I find more supprising is that Chelsea seem to be able to spend, buying an incredible team (and are now linked with Fellani) and dont have the same concerns as us.

You find it surprising that a team who have won 9 major trophies in the last 8 years are backed by a man who has his fingers in every money pot in Russia and are based in not just the most expensive area in London but the UK and probably most of Europe make more money than us! Really you find that surprising?

We made 235m last financial year where as Chelsea after winning all those trophies and for first time ever the champs league that gave them around 65m extra to there turnover was 266m think we are doing better at this stage than Chelsea did!

Im not arguing that and its amazing what the men behind the scenes are doing expansion wise. Though I should think are turnover expansion would slow down a bit now.
Im just saying its hardly surprising that they have got to a point where they can now purchase players and still make a profit after almost a decade of continous success and being in an area where they can charge £80 a ticket

 

[waspish]

Re: Financial Fair Play will not affect us.

You find it surprising that a team who have won 9 major trophies in the last 8 years are backed by a man who has his fingers in every money pot in Russia and are based in not just the most expensive area in London but the UK and probably most of Europe make more money than us! Really you find that surprising?

We made 235m last financial year where as Chelsea after winning all those trophies and for first time ever the champs league that gave them around 65m extra to there turnover was 266m think we are doing better at this stage than Chelsea did!

Im not arguing that and its amazing what the men behind the scenes are doing expansion wise. Though I should think are turnover expansion would slow down a bit now.
Im just saying its hardly surprising that they have got to a point where they can now purchase players and still make a profit after almost a decade of continous success and being in an area where they can charge £80 a ticket

Yeah fair point but think our income will go up even more

 

[Prestwich_Blue]

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.

Quite a lot of this 'everything will be all right' theory is wrong. First of all, losses for the 2012-13 season are actually expected to increase from £97.9M after this summer's transfer activity.

Last season the club also received £12.8m from selling 'certain Design, Know-How and other Intellectual Property Rights to Abu Dhabi United Group and Investment & Development Limited'. Unless the club can justify this figure it is likely to be discounted from FFP due to the rule on ‘Related Party’ transactions.

With losses set to rise the club will also be unable to discount the £80M (or £52.5M of wages depending on who you believe) from FFP as that is only possible if the club's losses are reducing over time.

Essentially if City report an increased loss this year, they will fail FFP by around £148M.

http://www.financialfairplay.co.uk/...s-2011-12-accounts-the-devil-is-in-the-detail

Are you Ed Thompson, the chap who owns that site? If so I know you have your own view and nothing will change it, despite the fact you're not clear on some basic concepts. Whether you are or not, if you're telling people they're wrong then it helps if you're not wrong yourself.

I don't understand why you believe losses are likely to increase as a result of some relatively modest (by our standards) transfer activity. One of the things Ed (you?) doesn't understand properly is amortisation of player contracts. As explained in the thread, the value of the contract is charged on a straight line basis over the life of that contract. However, when a contract is re-negotiated then the remaining book value is re-charged over the life of the new contract. To illustrate this, using the £25m over 5 years example, there will be a book value of £10m at the end of Y3. If the player then gets a new 4 year contract, amortisation will halve, going from £5m to £2.5m. Plus while we've bought a lot of players, many have left, which means we stop charging amortisation on them.

The net result is that, over time, unless we continue the same level of spending then amortisation will drop off significantly. I estimated an amortisation figure of £82m in 2011/12 and the actual figure was just over £83m so I think I've got a good handle on this now. On that basis, I estimate that amortisation on a like for like basis will be £53m this financial year. Our net spend was £40m according to the accounts so that should add another £8-9m this year, giving a total of around £62m, which is £20m less than 2011/12. So even if no other figure changed, then our losses would reduce by that amount.

That's not to say that our failure in the CL won't impact the bottom line but the transfer spending won't automatically make it worse.

The sale of IP rights took everyone by surprise and I don't know what that relates to but it could be something to do with trademarks or the new training complex/campus site. It is a related party transaction, as it involves our holding company, but that doesn't mean it will be automatically disqualified from the FFP calculation. What must happen is that the reporting entity (i.e. City not UEFA) have to declare whether it meets the fair value test and, if not, what the appropriate value would have been. Its not an "all or nothing" situation. Now I'm assuming our owners are not so stupid that they would artificially inflate this transaction and that, if challenged, they could justify it to the Licensing Panel. So I'm not too worried about that one.

Regarding the pre-2010 contract wages add-back, that figure also seems on the high side to me (my estimate was £55m) but if that's what the club says then I believe them. Why should they lie about a figure they will have to justify if UEFA or the FA carry out an FFP audit? We simply don't know what wages are paid to who and the figures of £180k a week quoted in the media for players like Tevez may be net, whereas these could be grossed up. Plus we've only considered first team players, who are just part of the overall squad. Even youngsters like Razak, Lopes and Suarez, who oars on the verge of the first team, are on at least £20k a week I believe.

There is certainly a possibility that unless we find an extra £25-30m this financial year that we will fail the first FFP assessment. I estimate we need to report turnover of £245m to scrape through. This year will see significant expenditure on the campus however and, assuming that's capitalised it won't hit the bottom line but I believe we can add it back for FFP purposes. So that might be our get-out.

But even if we do fail the first period the new Sky deal, as well as our deal with Nike, both kick in next financial year plus I believe there is at least one other mouth-watering commercial deal in the pipeline. So I'm confident we can demonstrate an improving financial result to UEFA & I anticipate a decent bottom line profit in 2013/14 of around £40-50m.

 

[Chippy_boy]

Re: Financial Fair Play will not affect us.

The thing that everyone seems to be neglecting to consider is this:

This is not a "opening of sealed tenders at noon" type of test, with no dialogue allowed before or after.

Don't you think our CFO and others will have been on the phone to (or will have met) UEFA to discuss this and to seek guidance on how we are doing and what we will need to do to get through?

I find it inconceivable that we would just be carrying willy-nilly in the blind hope that everything will be OK, when all we have to do is pick up the phone and ask.

I am not suggesting surprises never happen, but it would be an ENORMOUS bollock dropped if we somehow managed to get barred. Enormous cock ups is old City, not Khaldoon City. I do not expect it for 1/10th of a nanosecond.

 

[Pam]

Re: Financial Fair Play will not affect us.

The thing that everyone seems to be neglecting to consider is this:

This is not a "opening of sealed tenders at noon" type of test, with no dialogue allowed before or after.

Don't you think our CFO and others will have been on the phone to (or will have met) UEFA to discuss this and to seek guidance on how we are doing and what we will need to do to get through?

I find it inconceivable that we would just be carrying willy-nilly in the blind hope that everything will be OK, when all we have to do is pick up the phone and ask.

I am not suggesting surprises never happen, but it would be an ENORMOUS bollock dropped if we somehow managed to get barred. Enormous cock ups is old City, not Khaldoon City. I do not expect it for 1/10th of a nanosecond.

It wouldn't work to ask Uefa about FFP. They are too thick to see past the main concept.