EricBrooksGhost
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LoveCity said:
Interesting i didn't think we'd get cat 1 until the new place was built. Also surprised that another 8 got it
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The end of financial 'fair' play?
- Thread starter tolmie's hairdoo
- Start date
Interesting i didn't think we'd get cat 1 until the new place was built. Also surprised that another 8 got it
oakiecokie
Well-Known Member
.Buraspor had been suspended, not banned, from European competition for 1 year & fined 50,000 euros by the UEFA Appeals Body on 30 May 2012 for overdue payables for transfer activities dating back to 2007. CAS have now stipulated that Bursaspor be excluded from one UEFA club competition for which it qualifies in the next four years, but that this exclusion is suspended for a probationary period of 3 years. The club was also fined €250,000As the following states, UEFA will not be undermined by CAS & While the grounds for this decision will be examined with great care by UEFA, once they are made available, UEFA reiterates that it will continue to enforce its rules on club licensing and financial fair play in a strict and fair manner, and with all necessary due diligence. UEFA is of the firm opinion that it is imperative for clubs to pay their debts to other football clubs, and will remain vigilant to ensure that this happens in accordance with the rules laid down in the UEFA Club Licensing and Financial Fair Play regulations. These basic principles of good conduct should be strongly supported, and not undermined, by any future rulings from CAS. This ruling by CAS therefore in no way affects the implementation of UEFA’s financial fair play rules, which UEFA will continue to implement both equitably and universally. UEFA underlines that the rules on club licensing and financial fair play have been supported by the entire European football community, and that compliance with the system is vital to safeguard the interests of clubs and players alike, as well as protecting the future sustainability of football in Europe..........the ruling is the same, suspended but on a probationary period & the fine was increased five fold. Don't go hedging your bets on the CAS helping City out with their failings, as FFP was agreed by all in principle in Sept. 2009, so every club knew what was what.[/quote]
He obviosly knows very little about City !!
He obviosly knows very little about City !!
Posted by Nerd on SSC in reply to a question.
Not how transfers are treated in the profit/loss accounts.
For example, Silva was bought for £26m and signed a four year contract two years ago. In the accounts, his wage forms a line of expenditure, but there is no item corresponding to £26m outgoings. Instead his decreased value is shown as an amortisation charge of £6.5m per year over the four years of his contract. Consequently Silva's book value now stands at £13m.
Suppose, as is likely, Silva signs a new four year deal this month. His £13m current book value will now be spread over a further four years amortisation charges; i.e. £3.75m per year. So the profit/loss account in 2012/13 looks better by £3.75m.
If, as is less likely but possible, Silva is sold this month to Real Madrid for £33m. The profit/loss account for 2012/13 will show an income item of £20m (that is the differnce between the sale price and the book value). Amortisation reduces by £6.5m per year.
johnny crossan
Well-Known Member
<a class="postlink" href="http://www.financialfairplay.co.uk/latest-news/manchester-city-s-2011-12-accounts-the-devil-is-in-the-detail" onclick="window.open(this.href);return false;">http://www.financialfairplay.co.uk/late ... the-detail</a>
we are far from home and dry according to this bloke
we are far from home and dry according to this bloke
Manchester City's 2011/12 accounts - the Devil is in the detail
Posted by Ed Thompson on Sunday, December 16, 2012
Back in May, I published a projection on whether Manchester City were on track to meet the FFP criteria. Now that the club’s financial results for last season have been released, it seems a good time to revisit the original projection and look again at the club's FFP challenge.
On Friday, City officially announced a loss of £99.7m for the season 2011/12. Interestingly, many journalists were not impressed that the figures were released late on a Friday afternoon in an apparent, though fairly successful, attempt to minimise critical analysis of the information. Putting this issue aside, we can now look at the accuracy of my original projection and whether there are any 'oddities' hiding in the accounts (spoiler alert: there are several).
I have attached my original projection and added two new columns on the far right of the table below – ‘2011/12 Actual’ and the’ Difference’ (so we can see how far out I was).
The first thing to notice is the fact that my projection was out by £ 21.7.1m (figure in bottom right). City’s losses were £99.7m rather than the £121.4m that I projected. That seems like a lot – however, when you look at the detail, it was not as far away as it first appears.
I underestimated the uplift from TV and commercial income by £8.9m. These figures include the Commercial uplift from winning the title and the first appearance of the impact of the Etihad deal. City have never fully released the actual figures for the Etihad contract so there was always and element of estimation in the projection.
The biggest discrepancy relates to the item shows above as ‘sale of rights to owner’. This item is particularly interesting and has not been fully explained by the club. On page 114 of the report, the club advise:
“..the Company sold certain Design, Know-How and other Intellectual Property Rights to Abu Dhabi United Group and Investment & Development Limited for £12.8m have increased their income by £12.8 by selling.”
Quite what this figure actually represents is unclear and critics will suggest that City may have ‘sold’ something of little real value to the parent company in an attempt to artificially inflate income (and help the club meet the FFP rules). However, under the FFP rules ‘Related Party’ transactions have to be reviewed UEFA panel and this item may ultimately have to be adjusted downwards (potentially to zero). There may also be a further debate over this item and whether it is ‘relevant income’. The FFP rules permit clubs to include revenue received from football-related activities. The rules are somewhat vague but it is possible that this item would technically not be classified as ‘relevant income’ for the purposes of the FFP test. Understandably, I had not anticipated this item in my original projection and this was the main area of variance.
City’s wages increased by nearly £28m. I had been rather conservative and projected only a £20m increase.
Overall, if we exclude the £12.8m Related Party transaction, the original projection was a net £8.9m out. This figure equates to around 3.8% of Turnover and, all things considered, is a fairly pleasing result.
FFP Exclusions
As readers of this site will be aware, FFP rules allow for certain expenditure to be excluded from FFP calculations. These are:
Wages for players signed before June 2010
Depreciation of Fixed Assets
Expenditure on youth and community activities
Again, late on Friday afternoon, City provided journalists with the figures for the exclusions, together with some helpful explanatory ‘spin’ (which was reproduced unchallenged and word-for-word by three news outlets).
City advised that Pre-June 2010 wages were £80m and Youth and community & Depreciation activities totalled £15m. Again, we should look at how these figures compare to my original projection:
My original projection and the Actual figure differ by £24.1m. The Youth and community development figures were always a ‘finger in the air’ estimate – however they appear to have been fairly close. The main discrepancy relates to the amount of wages City paid to players in 2011/12 on contracts signed before 1 June 2010. The FFP rules permit the wages for these long-standing players, paid during the 2011/12 season only, to be excluded from the FFP calculations (as long as the contract was not subsequently re-negotiated or extended). So why was there a £27m discrepancy between my calculations and the £80m figure released to the press on Friday? Who were the players involved and did City really pay £80m to these players on pre-June contracts?
In my original projection, I used Swiss Ramble’s figures for projected wages for the players on pre-June 2010 contracts (the pale blue columns). The columns on the right (pale green) show how much the wages would need to be for City to have paid them £80m last season (as the club claim).
It seems extremely unlikely that the club would have paid £80m in wages to these players – the weekly salaries are simply too high. The £52.5m figure looks much closer to reality. We should also consider that the top-earner Tevez had his salary withheld for an extended period during the season. Although the club paid players a bonus for winning the title, the bonus for the entire 24-man playing squad equated to only £6.2m.
On the face of it, City’s claim to have paid these players £80m simply doesn’t seem at all credible.
Player Contract Write-down
In the previous year’s accounts (i.e. those released 12months ago, relating to 2010/11), the club reported one-off ‘exceptional items’ totalling £34.4m. Of this figure, £29m related to ‘impairment of player registrations’ – i.e. the one-off write-down of players who the club considered had no resale value. This write-down was performed immediately before the start of the first FFP Monitoring Period and had the effect of reducing the players Book Value (and Amortisation) to zero.
Swiss Ramble believes Santa Cruz and Bridge are included in this figure. Although this ‘write-down’ is perfectly acceptable for accounting purposes, it is not permitted under the FFP rules (a player has to be amortised evenly over the life of the contract, i.e. until the contract ceases to exist). Under FFP rules, Santa Cruz and Bridge should be amortised at the combined rate of £6.5m a season (or £13m over the two-year Monitoring Period). However City’s recently-released accounts do not contain this expense. It is interesting to speculate whether City will go out of their way to make the UEFA Licensing panel aware of this treatment and volunteer the fact that an additional £13m needs to be added to their expenses when the Break Even test is carried out.
City Projection
Now the accounts for last season are available, we can produce a much more informed projection of whether they are on course to meet the FFP test.
Based on the assumptions outlined below, City would fail the FFP test by around £68m. This projection carries a few health-warnings and assumes there are no player sales or purchases during the forthcoming transfer window.
Assumptions used
In producing the above, I have assumed City finish second in the Premier League (this seems sensible as City are currently second-favourites with bookmakers to win the title). I have assumed Turnover is flat (there will be fewer games owing to the early exit from all UEFA competitions; the TV Merit payments will be lower and a sizeable portion of last season’s Commercial Income uplift resulted from winning the Premier League plus the new Etihad deal). Although City made a net spend of £39.4m during the summer (page 114 of the Annual Report), wages or amortisation don’t appear to me to have changed. City also don’t appear to repeated the £10.6m profit on player sales that they achieved last season (indeed, depending on the treatment of Adebeyor, it is possible the club will actually report a loss on player sales of around £7m). I have assumed a reduction in wages compared to last season to reflect the fact that a bonus for winning the PL would not be paid should the team finish second. For the purposes of the projection, I have used City’s somewhat implausible £80m figure for the exclusion relating to wages for players on pre-June 2010 contracts. I have assumed that the club don’t repeat the sale of ‘Intellectual property’ for £12.8m next season.
If the above assumptions were to prove correct, the loss after Tax and Interest would actually increase next year compared to this (£116m compared to the £97.7m recently reported). Although it is fairly close, if this were to happen this would be significant as only if losses are trending downwards could the club make use of the provision in Annex XI which allows the club to exclude the pre-June 2010 wages (£80m). In this scenario, City would actually miss the FFP target by around £148m)!
Given the above figures, it is interesting to speculate on what City could pull out of the bag to enable them to hit the FFP targets. So far, City have used the following techniques:
· Significantly increased sponsorship from Related Party (Etihad)
· Write-down of players contracts outside of the FFP rules
· Seemingly inflated pre-June 2011 wages
· Sale of Intellectual Property to club owners.
Given the club’s stated confidence in their ability to meet the FFP criteria, it will be interesting to see what other techniques the club uses to get themselves over the line.
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Posted by Ed Thompson on Sunday, December 16, 2012
Back in May, I published a projection on whether Manchester City were on track to meet the FFP criteria. Now that the club’s financial results for last season have been released, it seems a good time to revisit the original projection and look again at the club's FFP challenge.
On Friday, City officially announced a loss of £99.7m for the season 2011/12. Interestingly, many journalists were not impressed that the figures were released late on a Friday afternoon in an apparent, though fairly successful, attempt to minimise critical analysis of the information. Putting this issue aside, we can now look at the accuracy of my original projection and whether there are any 'oddities' hiding in the accounts (spoiler alert: there are several).
I have attached my original projection and added two new columns on the far right of the table below – ‘2011/12 Actual’ and the’ Difference’ (so we can see how far out I was).
The first thing to notice is the fact that my projection was out by £ 21.7.1m (figure in bottom right). City’s losses were £99.7m rather than the £121.4m that I projected. That seems like a lot – however, when you look at the detail, it was not as far away as it first appears.
I underestimated the uplift from TV and commercial income by £8.9m. These figures include the Commercial uplift from winning the title and the first appearance of the impact of the Etihad deal. City have never fully released the actual figures for the Etihad contract so there was always and element of estimation in the projection.
The biggest discrepancy relates to the item shows above as ‘sale of rights to owner’. This item is particularly interesting and has not been fully explained by the club. On page 114 of the report, the club advise:
“..the Company sold certain Design, Know-How and other Intellectual Property Rights to Abu Dhabi United Group and Investment & Development Limited for £12.8m have increased their income by £12.8 by selling.”
Quite what this figure actually represents is unclear and critics will suggest that City may have ‘sold’ something of little real value to the parent company in an attempt to artificially inflate income (and help the club meet the FFP rules). However, under the FFP rules ‘Related Party’ transactions have to be reviewed UEFA panel and this item may ultimately have to be adjusted downwards (potentially to zero). There may also be a further debate over this item and whether it is ‘relevant income’. The FFP rules permit clubs to include revenue received from football-related activities. The rules are somewhat vague but it is possible that this item would technically not be classified as ‘relevant income’ for the purposes of the FFP test. Understandably, I had not anticipated this item in my original projection and this was the main area of variance.
City’s wages increased by nearly £28m. I had been rather conservative and projected only a £20m increase.
Overall, if we exclude the £12.8m Related Party transaction, the original projection was a net £8.9m out. This figure equates to around 3.8% of Turnover and, all things considered, is a fairly pleasing result.
FFP Exclusions
As readers of this site will be aware, FFP rules allow for certain expenditure to be excluded from FFP calculations. These are:
Wages for players signed before June 2010
Depreciation of Fixed Assets
Expenditure on youth and community activities
Again, late on Friday afternoon, City provided journalists with the figures for the exclusions, together with some helpful explanatory ‘spin’ (which was reproduced unchallenged and word-for-word by three news outlets).
City advised that Pre-June 2010 wages were £80m and Youth and community & Depreciation activities totalled £15m. Again, we should look at how these figures compare to my original projection:
My original projection and the Actual figure differ by £24.1m. The Youth and community development figures were always a ‘finger in the air’ estimate – however they appear to have been fairly close. The main discrepancy relates to the amount of wages City paid to players in 2011/12 on contracts signed before 1 June 2010. The FFP rules permit the wages for these long-standing players, paid during the 2011/12 season only, to be excluded from the FFP calculations (as long as the contract was not subsequently re-negotiated or extended). So why was there a £27m discrepancy between my calculations and the £80m figure released to the press on Friday? Who were the players involved and did City really pay £80m to these players on pre-June contracts?
In my original projection, I used Swiss Ramble’s figures for projected wages for the players on pre-June 2010 contracts (the pale blue columns). The columns on the right (pale green) show how much the wages would need to be for City to have paid them £80m last season (as the club claim).
It seems extremely unlikely that the club would have paid £80m in wages to these players – the weekly salaries are simply too high. The £52.5m figure looks much closer to reality. We should also consider that the top-earner Tevez had his salary withheld for an extended period during the season. Although the club paid players a bonus for winning the title, the bonus for the entire 24-man playing squad equated to only £6.2m.
On the face of it, City’s claim to have paid these players £80m simply doesn’t seem at all credible.
Player Contract Write-down
In the previous year’s accounts (i.e. those released 12months ago, relating to 2010/11), the club reported one-off ‘exceptional items’ totalling £34.4m. Of this figure, £29m related to ‘impairment of player registrations’ – i.e. the one-off write-down of players who the club considered had no resale value. This write-down was performed immediately before the start of the first FFP Monitoring Period and had the effect of reducing the players Book Value (and Amortisation) to zero.
Swiss Ramble believes Santa Cruz and Bridge are included in this figure. Although this ‘write-down’ is perfectly acceptable for accounting purposes, it is not permitted under the FFP rules (a player has to be amortised evenly over the life of the contract, i.e. until the contract ceases to exist). Under FFP rules, Santa Cruz and Bridge should be amortised at the combined rate of £6.5m a season (or £13m over the two-year Monitoring Period). However City’s recently-released accounts do not contain this expense. It is interesting to speculate whether City will go out of their way to make the UEFA Licensing panel aware of this treatment and volunteer the fact that an additional £13m needs to be added to their expenses when the Break Even test is carried out.
City Projection
Now the accounts for last season are available, we can produce a much more informed projection of whether they are on course to meet the FFP test.
Based on the assumptions outlined below, City would fail the FFP test by around £68m. This projection carries a few health-warnings and assumes there are no player sales or purchases during the forthcoming transfer window.
Assumptions used
In producing the above, I have assumed City finish second in the Premier League (this seems sensible as City are currently second-favourites with bookmakers to win the title). I have assumed Turnover is flat (there will be fewer games owing to the early exit from all UEFA competitions; the TV Merit payments will be lower and a sizeable portion of last season’s Commercial Income uplift resulted from winning the Premier League plus the new Etihad deal). Although City made a net spend of £39.4m during the summer (page 114 of the Annual Report), wages or amortisation don’t appear to me to have changed. City also don’t appear to repeated the £10.6m profit on player sales that they achieved last season (indeed, depending on the treatment of Adebeyor, it is possible the club will actually report a loss on player sales of around £7m). I have assumed a reduction in wages compared to last season to reflect the fact that a bonus for winning the PL would not be paid should the team finish second. For the purposes of the projection, I have used City’s somewhat implausible £80m figure for the exclusion relating to wages for players on pre-June 2010 contracts. I have assumed that the club don’t repeat the sale of ‘Intellectual property’ for £12.8m next season.
If the above assumptions were to prove correct, the loss after Tax and Interest would actually increase next year compared to this (£116m compared to the £97.7m recently reported). Although it is fairly close, if this were to happen this would be significant as only if losses are trending downwards could the club make use of the provision in Annex XI which allows the club to exclude the pre-June 2010 wages (£80m). In this scenario, City would actually miss the FFP target by around £148m)!
Given the above figures, it is interesting to speculate on what City could pull out of the bag to enable them to hit the FFP targets. So far, City have used the following techniques:
· Significantly increased sponsorship from Related Party (Etihad)
· Write-down of players contracts outside of the FFP rules
· Seemingly inflated pre-June 2011 wages
· Sale of Intellectual Property to club owners.
Given the club’s stated confidence in their ability to meet the FFP criteria, it will be interesting to see what other techniques the club uses to get themselves over the line.
Next post: Paris St-Germain... Previous post: Time to draw a...
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No Premier League consensus on FFP
TV revenue distribution – comparing Italian and...
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Stoned Rose
Well-Known Member
Perhaps PB or SWP could take a butchers and see if this bloke is talking shite?
laserblue
Well-Known Member
Well he doesn't understand what a related party transaction is for a start.
The Future's Blue
Well-Known Member
- Joined
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Seeing that he uses these, especially the first 2, to make his judgements I wouldn't take too much notice. Looks like he was trying to draw the Rag viewers to his blog.waspish said:. Significantly increased sponsorship from Related Party (Etihad)
· Write-down of players contracts outside of the FFP rules
· Seemingly inflated pre-June 2011 wages
· Sale of Intellectual Property to club owners.
Skashion
Well-Known Member
I've never had full clarification on this. Does FFP include amortisation as well as wages for pre-June 2010 contracts? I see no reason why it shouldn't, or is that what the write-down was?