Stadium Naming Rights / Press Conference [Merged]

[Balti]

"It raises the real question about the credibility of the financial fair play," Wenger said. . The difficulty and the credibility of the financial fair play is at stake.


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What fucking credibility??!!!<br /><br />-- Wed Jul 13, 2011 9:58 am --<br /><br />

From Red Cafe. Decent post. The rest is what you would expect. Some crackers BTH.

It was pretty inevitable that City would conjure commercial deals that would challenge the boundaries of "fair value", particularly when Uefa haven't (as far as I'm aware) established benchmarking guidelines. It is in City's interest to do so as quickly as possible. Finding out what the tolerances are now will enable them to know in advance what future commercial partners can and will bid for the opportunity to be associated with the club!!
Having bloated commercial deals isn't grounds for expulsion- the Regs merely state (in Annex X) that income amounts in excess of their assessment of "fair value" will be excluded from the break-even calculation. It's for city to challenge the regs for possible weaknesses, to see what's admissible; and it's Uefa's job to ensure that they don't lay an industrial pipeline through what I consider is the one big vulnerability in the Regs: The concept of "fair value".

As defined by the Regs, fair value is:


Quote:
Originally Posted by Annex X, P. 83
The amount for which an asset could be exchanged, or a liability settled, between knowledgeable willing parties in an arm’s length transaction. An arrangement or a transaction is deemed to be ‘not transacted on an arm’s length basis if it has been entered into on terms more favourable to either party to the arrangement than would have been obtained if there had been no related party relationship.

The bit in bold is why John W Henry (in the context of City's Etihad Airways deal) asked: How much was the losing bid? Indeed, was there a losing bid? Fair value is easier to ascertain when you have an open market consisting of numerous (and non-related) bidders vying for the opportunity to be sponsors with the winner essentially setting the fair market value. Did Etihad Airways experience fierce competition when they submitted their tender? That Cook creature must have had a terrible time trying to choose the bid that best suited his club.

The problem for Uefa's Financial Control Panel is that a benchmarking exercise to assess fair value is pretty difficult to implement in practice. Even for regular top tier contracts, comparisons can be obscured by customising (and so non-standardising) deals with all manner of "bells and whistles", fancy riders and options, conditional indexing, etc. For smaller secondary contracts, a fair value benchmark is difficult to apply where the tie-ups are unique. For a benchmark to be practical, it will need to allow for deviations, and I guess it's the size of these tolerances that City and Chelsea will try to exploit.

Having said all that, Uefa will have anticipated such shenanigans. Having invested a lot of time and money (and their reputations), I don't think they're going to fold easily when challenged by the likes of City and Chelsea. Rather than reacting to City’s new deal, it would be helpful (and proactive) if they published their benchmarking plans though.

The rags really hate GC. He must be doing summat right then! ~:-)

 

[jrb]

From Red Cafe. Decent post. The rest is what you would expect. Some crackers BTH.

It was pretty inevitable that City would conjure commercial deals that would challenge the boundaries of "fair value", particularly when Uefa haven't (as far as I'm aware) established benchmarking guidelines. It is in City's interest to do so as quickly as possible. Finding out what the tolerances are now will enable them to know in advance what future commercial partners can and will bid for the opportunity to be associated with the club!!

Having bloated commercial deals isn't grounds for expulsion- the Regs merely state (in Annex X) that income amounts in excess of their assessment of "fair value" will be excluded from the break-even calculation. It's for city to challenge the regs for possible weaknesses, to see what's admissible; and it's Uefa's job to ensure that they don't lay an industrial pipeline through what I consider is the one big vulnerability in the Regs: The concept of "fair value".

As defined by the Regs, fair value is:


Quote:
Originally Posted by Annex X, P. 83
The amount for which an asset could be exchanged, or a liability settled, between knowledgeable willing parties in an arm’s length transaction. An arrangement or a transaction is deemed to be ‘not transacted on an arm’s length basis if it has been entered into on terms more favourable to either party to the arrangement than would have been obtained if there had been no related party relationship.
The bit in bold is why John W Henry (in the context of City's Etihad Airways deal) asked: How much was the losing bid? Indeed, was there a losing bid? Fair value is easier to ascertain when you have an open market consisting of numerous (and non-related) bidders vying for the opportunity to be sponsors with the winner essentially setting the fair market value. Did Etihad Airways experience fierce competition when they submitted their tender? That Cook creature must have had a terrible time trying to choose the bid that best suited his club.

The problem for Uefa's Financial Control Panel is that a benchmarking exercise to assess fair value is pretty difficult to implement in practice. Even for regular top tier contracts, comparisons can be obscured by customising (and so non-standardising) deals with all manner of "bells and whistles", fancy riders and options, conditional indexing, etc. For smaller secondary contracts, a fair value benchmark is difficult to apply where the tie-ups are unique. For a benchmark to be practical, it will need to allow for deviations, and I guess it's the size of these tolerances that City and Chelsea will try to exploit.

Having said all that, Uefa will have anticipated such shenanigans. Having invested a lot of time and money (and their reputations), I don't think they're going to fold easily when challenged by the likes of City and Chelsea. Rather than reacting to City’s new deal, it would be helpful (and proactive) if they published their benchmarking plans though.

 

[oakiecokie]

I have repeatedly seen it mentioned that City worked closely with UEFA to make sure this deal fit. Probably they have bent the rules as far as they can without breaking them - they know everyone will be watching so it would just be stupid to just blatantly ignore it all.

City are not a flagship CL club like Real, Barca or United so I dont think UEFA would have any issue with turfing them out just to prove a point.

Without knowing the fine details it is difficult to say if the deal is 'fair value' or not - but taking your numbers:

I think £10m a year for naming rights could be fair (after all look at the amount of press they are getting already from it!)- it is still a pretty new stadium and Arsenal's deal was signed many years ago (2004) so they would get a lot more for the same deal today.

If they are getting £20m a year for shirt sponsorship then I would say it is too much and others would have cause for complaint - however your estimate is too low as they were already getting £8m a year and would expect a significant CL uplift (see Spurs new shirt deal last year).

The main thing that is not clear is how much of the deal is about development costs of upgrading the area around the stadium - it could well be that the bulk of it is for that, in which case it will easily pass the test as the guidelines allow owners to invest as much as they want into developing their ground.

I can`t believe I`m saying this,but at last a Rag with a bit of sense !!

 

[stalyblue]

The main thing that is not clear is how much of the deal is about development costs of upgrading the area around the stadium - it could well be that the bulk of it is for that, in which case it will easily pass the test as the guidelines allow owners to invest as much as they want into developing their ground.

This!! Until the figures are released which show just how much the deal is worth, and how much is for capital investment in "The Etihad Campus" and other facilities, everybody is guessing.

One thing we can be fairly sure of though, we do not have an additional £400m to spend on players!

 

[Dirty Harry]

It's funny.

<a class="postlink" href="http://www.redcafe.net/f7/man-city-sell-coms-naming-rights-etihad-334868/index3.html" onclick="window.open(this.href);return false;">http://www.redcafe.net/f7/man-city-sell ... ndex3.html</a>

I may be wrong but I always thought one of the conditions of Manchester going for and getting the 2002 Commonwealth games was that City (or another club) would use the stadium when it had finished saving them from ending up with a 'White elephant' ?

It was, United were interested in moving there but it was too small.

Cheers bud, so, in effect it was a case of this being a 'Goldilocks and the three bears' situation with us being 'just right' to enable said bid to move forward, I think many rival fans seem to forget this, without our co-operation we probably wouldn't have seen one of the best Commonwealth games in history in this city.

 

[jrb]

Posted by Nerd on SSC.

If you ever want to read a good posters comments/contributionS, look no further. Very well repected on SSC.

three points are key:

- the concept of fair value only comes into play if there is a 'related party' relationship. If the parties are not related, if they are genuinely at arms length, then any deal, however far off-the-scale, is deemed fair value. And on the face of it, that is in legal form, ADUG and ETIHAD are not related. That does not get City off the hook entirely though; as a number of the other large scale sponsors of MCFC are clearly 'related'; Ferrostaal for example, is chaired by Sheikh Mansour. So MCFC will need to demonstrate for some of its sponsorship deals that they represent fair value.

- the only way to establish fair value is by some sort of benchmarking of deals elsewhere in the market. It would plainly be fanciful to demand that all sponsorship deals must have gone out through competitive tender; as that would rule out every deal in football. This is not simply because that is not the way that clubs go about their business; it is more because sponsorship is not a competitive activity. Whereas a cllub is always trying to maximise its sponsor incoem, prospective sponsors are not trying to minimise their spend. What they are wanting is success (and the exposure that comes from that), and to the extent that more spend brings more success, the sponsor has as much an interest in maximising the deal as the club does.

- it follows that the objections of other clubs to the ETIHAD deal are not objections to the overall sum; but objections to that sum coming to MCFC. Liverpool, United and Barca have all just signed shirt deals for similar sums to those being mentioned in the ETIHAD deal (always noting that no actual sums have been confirmed). The argument is not that no club could be worth sponsoring for £20m-£30m per year; but that what is fair value for sponsoring Arsenal or Bayern would be over-valuation for City; that City are not 'worth' as much as the old established G14 clubs. But that is precisely what UEFA cannot do; they cannot discriminate between clubs on the basis of differentiating their inherent value. The test has to be the same for all, if any one club is 'worth' a particular level of sponsorship; then no club can be ruled as not worth that same sum.