PL charge City for alleged breaches of financial rules

[Prestwich_Blue]

One thing that I cant get my head around, in hindsight if I am understanding this correctly we could have just taken out multiple loans totaling a £BILLION for our transfers and as long as we covered the interest we would have been untouchable. If this is the case then why would we even consider inflating sponsorship deals? There would be no need for it.

Lets say we used the bank of Abu Dhabi and negotiated a really low interest rate of say 0.5%, what could the PL or Uefa do about it?

People keep saying this without understanding the accounting and FFP issues, so you aren't understanding it correctly.

Yes we could hypothetically borrow £1bn from Sheikh Mansour, interest free, at a low rate or even at a commercial rate. But that goes into the balance sheet as a liability, with the cash going into the balance sheet as an asset. That's the double entry.

But FFP doesn't look at the balance sheet so there's no issue there. If we then used some of that money to spend £250m on players, then the balance sheet entries reduce cash by £250m and increase intangible assets (player contracts) by £250m. Again, that just impacts the balance sheet, with no impact on FFP.

However, we then have to amortise those players, which appears in the P&L account. That would amount to £50m a year over 5 years. That's an expense, not a balance sheet item, and impacts our profit or loss. And then there's the wages of course, plus interest on the loan. Let's say those are £100m a year. So we'll have added £150m to our expenses.

That's OK if we have enough revenue from the three normal revenue streams -TV, Commercial and Matchday - to cover this additional expense (plus all our other expenses) without breaching FFP, and loans are NOT revenue.

In summary, we can borrow as much money as we like, but our expenses still have to be commensurate with our revenue.

 

[Mazzarelli's Swiss Cheese]

For me the failed esl proposal, threat of external independent regulation of the pl, yank owners flouncing (or appearing to), and the hasty 115 charges are all part of a bigger picture.
I don't think either the glazers or dippers owners are serious about selling, but they will if they think esl is dead and buried and ffp can't contain us and Newcastle. It'll be interesting to see how Newcastle progress over the next few years as I can't see their owners fucking about and settling for the odd cup run and a uefa spot.

 

[ysmsa]

One thing that I cant get my head around, in hindsight if I am understanding this correctly we could have just taken out multiple loans totaling a £BILLION for our transfers and as long as we covered the interest we would have been untouchable. If this is the case then why would we even consider inflating sponsorship deals? There would be no need for it.

Lets say we used the bank of Abu Dhabi and negotiated a really low interest rate of say 0.5%, what could the PL or Uefa do about it?

Change the rules, again!

 

[Bluemoonadam]

Nothing will come of it, i'm very confident of that. I like to come on here and read the stressheads opinions though.

fine perhaps a transfer ban as well nothing to major.

 

[GaudinoMotors]

Let's try to move on from our gooner pet. He won't be taking part in this thread again.

Well done Sir.
About time.

 

[Inter Me Nan]

fine perhaps a transfer ban as well nothing to major.

Think only FIFA can impose a transfer ban.

 

[Bluemoonadam]

Think only FIFA can impose a transfer ban.

Oh I didn't know that, a fine and a point deduction most likely but hopefully it won't come to either.

 

[HelloCity]

Think only FIFA can impose a transfer ban.

EFL give them out all the time.

 

[Inter Me Nan]

EFL give them out all the time.

We're not in the EFL.

 

[citizen_maine]

We're not in the EFL.

You said you thought only FIFA could give out bans