PL charge City for alleged breaches of financial rules

[Len Rum]

No. FFP sets a limit on what you can spend. You can produce perfectly accurate accounts yet fail FFP.

False accounting is knowingly producing accounts that don't reflect the true financial position of the reporting entity. So my former bosses at an insurance company deliberately excluded some large claims from the system, which led to them reporting a significantly better result than the real one. Three of them went to jail for 14 years between them for that. That had a lot to do with it being a quoted company, plus there was a clear trail showing that the three knew what they were doing, plus the CEO was also doing secret deals with reinsurers. While I understood their motives, it was fraud, pure and simple.

But accounting isn't always black and white. You can treat certain things in very different ways. That's why there are accounting standards. Stock is one of those. You can value stock in a number of ways, all of which will have an impact the bottom line. Any issues would also have to be material though, and a few quid either way won't be.

In 2011 and 2012, when that Mancini Al-Jazira contract for £1.75m a year was in force, we made losses of £195m and £95 respectively. Even if the PL commission were to decide we should have included that in our accounts, it makes fuck all difference overall. So there's no way, in my view, of that leading to criminal charges. It certainly made no difference to FFP, as we failed anyway.

With Fordham and the image rights, that was a grey area, I'd say. We needed additional revenue (as we thought) to avoid FFP sanctions and that was one of the things we did to generate that revenue. It made no difference as it happens, as UEFA deftly moved the goalposts, leaving us stranded. But I assume we had solid legal advice on that, and it was one of those scenarios where there was no breach of the letter of the law. UEFA were aware of it, as I've said, and didn't pursue it even though it was within the six-year limitation period.

Thanks for that.
Got me thinking that alleged non compliance on FFP issues that have nothing to do with producing true accounts can be time barred, for example the Etisalat sponsorship?

 

[SilverFox2]

…or rather ”Qataris buying United is just a sign on how modern football operates. It has to be done to compete with City who has ruined football”

Certainly ruined the type of owner.

Ours is a world class investor who over time has competed with the best in the football sector.

Their reason to fear him by stifling his investment phase has been justified despite its. failure.

 

[Manx Blue]

White and Jordan discussing interview on TS now

 

[GaudinoMotors]

White and Jordan discussing interview on TS now

Hardly Niezsche and Goethe, but keep us posted.

 

[wolviedinho]

White and Jordan discussing interview on TS now

Fuck all else to talk about bar the cricket!

No doubt they will twist themselves round and round until they decide it’s wrong and bad for football.

 

[kinkyblue]

Can’t believe he’s just said close Your eyes, think of who is the biggest football brand, discount what city have won and Man Utd are much bigger!

 

[feedmpenzaandhewillscore]

Can’t believe he’s just said close Your eyes, think of who is the biggest football brand, discount what city have won and Man Utd are much bigger!

playing to the cheap seats discussing size of clubs, in that case we should discount everything United won under Busby and Ferguson as Preston North End were more successful than anyone else at one point,

 

[Prestwich_Blue]

Thanks for that.
Got me thinking that alleged non compliance on FFP issues that have nothing to do with producing true accounts can be time barred, for example the Etisalat sponsorship?

Well the sponsorships could fall foul of FFP in two ways.

One is that Etisalat (or whoever pays us far more than the consideration is deemed to be worth at fair market value. So they pay us £50m for a package which might only be worth £5m to another entity on a commercial basis. In that case, UEFA would probably disallow the additional £45m from our FFP calculation. They did this for PSG (although they seem to have been quite generous in what they did allow them for their Qatari Tourist Authority sponsorship). If you then failed FFP, as a consequence of that amount being disallowed, they'd sanction you, but I suspect there's no criminal offence been committed.

The other is that the owner pays all or part of the sponsorship income. Even that wouldn't be a problem if the owner was in control of the sponsoring entity. So if John Smith was our owner, and John Smith Ltd paid us a sponsorship, as long as that's fair value then that's perfectly OK within the FFP rules. The crux of the UEFA case against us though, was that ADUG had paid Etihad, who then paid us. That was proven to be a false claim at CAS but let's say it had been proven. That could amount to ADUG, the owner, putting in equity via a fake sponsorship agreement.

That's something Stefan and me never agreed on. He felt that as long as Etihad had paid the omeny and got fair value for that, it didn't matter. My argument was that this was disguised equity investment and it did matter. This argument wasn't tested though as it wasn't ADUG funding the majority of the Etihad sponsorship.

The point is that equity investment is a balance sheet item whereas sponsorship revenue goes into the P&L account. So we could be accused of artificially inflating our revenue by the amount paid to Etiahd by ADUG. Whether that would meet the threshold for criminality is open to debate though.

But my laying these charges going back over 10 years, the impication (by the PL) must be that criminality is alleged.

 

[Spanishbob]

Well the sponsorships could fall foul of FFP in two ways.

One is that Etisalat (or whoever pays us far more than the consideration is deemed to be worth at fair market value. So they pay us £50m for a package which might only be worth £5m to another entity on a commercial basis. In that case, UEFA would probably disallow the additional £45m from our FFP calculation. They did this for PSG (although they seem to have been quite generous in what they did allow them for their Qatari Tourist Authority sponsorship). If you then failed FFP, as a consequence of that amount being disallowed, they'd sanction you, but I suspect there's no criminal offence been committed.

The other is that the owner pays all or part of the sponsorship income. Even that wouldn't be a problem if the owner was in control of the sponsoring entity. So if John Smith was our owner, and John Smith Ltd paid us a sponsorship, as long as that's fair value then that's perfectly OK within the FFP rules. The crux of the UEFA case against us though, was that ADUG had paid Etihad, who then paid us. That was proven to be a false claim at CAS but let's say it had been proven. That could amount to ADUG, the owner, putting in equity via a fake sponsorship agreement.

That's something Stefan and me never agreed on. He felt that as long as Etihad had paid the omeny and got fair value for that, it didn't matter. My argument was that this was disguised equity investment and it did matter. This argument wasn't tested though as it wasn't ADUG funding the majority of the Etihad sponsorship.

The point is that equity investment is a balance sheet item whereas sponsorship revenue goes into the P&L account. So we could be accused of artificially inflating our revenue by the amount paid to Etiahd by ADUG. Whether that would meet the threshold for criminality is open to debate though.

But my laying these charges going back over 10 years, the impication (by the PL) must be that criminality is alleged.

Well having read that instead of being confident I’m a little bit despondent now.

 

[Exeter Blue I am here]

Well the sponsorships could fall foul of FFP in two ways.

One is that Etisalat (or whoever pays us far more than the consideration is deemed to be worth at fair market value. So they pay us £50m for a package which might only be worth £5m to another entity on a commercial basis. In that case, UEFA would probably disallow the additional £45m from our FFP calculation. They did this for PSG (although they seem to have been quite generous in what they did allow them for their Qatari Tourist Authority sponsorship). If you then failed FFP, as a consequence of that amount being disallowed, they'd sanction you, but I suspect there's no criminal offence been committed.

The other is that the owner pays all or part of the sponsorship income. Even that wouldn't be a problem if the owner was in control of the sponsoring entity. So if John Smith was our owner, and John Smith Ltd paid us a sponsorship, as long as that's fair value then that's perfectly OK within the FFP rules. The crux of the UEFA case against us though, was that ADUG had paid Etihad, who then paid us. That was proven to be a false claim at CAS but let's say it had been proven. That could amount to ADUG, the owner, putting in equity via a fake sponsorship agreement.

That's something Stefan and me never agreed on. He felt that as long as Etihad had paid the omeny and got fair value for that, it didn't matter. My argument was that this was disguised equity investment and it did matter. This argument wasn't tested though as it wasn't ADUG funding the majority of the Etihad sponsorship.

The point is that equity investment is a balance sheet item whereas sponsorship revenue goes into the P&L account. So we could be accused of artificially inflating our revenue by the amount paid to Etiahd by ADUG. Whether that would meet the threshold for criminality is open to debate though.

But my laying these charges going back over 10 years, the impication (by the PL) must be that criminality is alleged.

Does this tie in with the Der Spiegel email PB, where City informed Etihad they only needed to pay £8m of the £68m sponsorship, and how did we explain that away with CAS?