This guy determined we will fail FFPR

[aguero93:20]

Prestwich. If you have ITK information and are happy the £12.8m Intellectual Property/Know How cannot be adjusted and will fully withstand the required CFCB Fair Value challenge, then when using the calculator, amend the adjustmment from -£6,400,000 to a zero.

Are you able to share with us what it was for? I would be interested to know.

everything from the commercial rights for our owners using the club insignia to lending our expertise to their development of football in Abu Dhabi and the middle east, its actually quite a small sum for its class and could well go up in future. ever heard of crystalised goodwill and intellectual property

 

[Matty]

The frustrating thing about RPT's is that it's actually pretty easy to explain.

There is a worldwide standard for defining RPTs.

The UK follows these standards and therefore so do Manchester City's accounts.

Not all countries within UEFA follow the worldwide standards.

UEFA have come up with their "own" standards to make sure everyone follows the same rules.

In reality the UEFA "standards" are the worldwide standards, word for word identical.

So, by default City's standards ARE UEFA's standards.

So, if City deem Etihad NOT to be an RPT based on the worldwide standards, this means under UEFA's own standards Etihad have already been proven to not be an RPT.

Technically UEFA can deem a sponsor to be an RPT even if a member club doesn't declare them as such within their own accounts, but this can ONLY occur when the accountancy standards/rules used by the club in question fall short of the worldwide standards (which, as mentioned about are identical to UEFA's standards).

In short, City and UEFA have the same rules to adhere to so, whatever City declares about a RPT is EXACTLY what UEFA will declare about a RPT, their own rules prohibit them from doing anything else.

 

[ffplay]

Prestwich - I understand what you are saying- yes I have read the club accounts and seen the RPT item.

Matty made a great point. Prestwich, you might well be right and the IP item will definitely withstand the challenge. If so then their Break Even task is £6.5m easier than I have said. I really don't know about this item as frustratingly we don't know what it is.
I really can't see how the player write-down could be treated any way other than i have said.

The £80m vs £52.5m looks closer to ££52.5m to me. However that might be light - as someone helfully pointed out on here, Hart,Zaballeta and ano might need to be added (I am not close to when they signed but surely Hart has been here for years). There has been some rule clarification since Swiss Ramble wrote his piece hence it could be light. if so, that means the £52.5m is understated by the value of their old contracts. If all on say £50k pw that is around £7m? So the £52.5m might need to £60m. Still doesn't look like £80m to me but we have discussed that.

I think this thread has probably died a death now - send me an email if you have a specific query and I hope this was useful.

 

[FogBlueInSanFran]

I'm certainly not an FFP expert, but Ed, the rigid perspective you hold on straight-line amortization of book value doesn't pass my common sense test. What if a player who cost 50 mm and is on a 5 year deal has a career-ending injury after his second year? Surely a club would be able to impair/write-off the remaining 30 mm on his contract as the value derived from the "asset" has gone to zero.

And the commentary about City and other clubs "missing a trick" seems ridiculous -- if the clubs knew they were going to derive value from the contracts on the books, writing them down would be just a blatant flouting of basic IAS standards.

Personally, as an ex-equity research analyst (i.e. Wall Street guy) who spent years dealing with companies that impaired book value of land assets during the late 2000s housing crash here, I have a particular intellectual curiosity about this particular issue. And I do appreciate that you've come on here to discuss this. And I am biased toward my club. But I really am trying to understand both sides the argument, and Prestwich Blue and others have made some points which seem to contradict yours. And you've not really responded to some of them.

 

[Prestwich_Blue]

I really can't see how the player write-down could be treated any way other than i have said.

Sorry Ed. Kudos to you for coming on here but you need your fucking eyes testing if that's what you think. I asked you to prove your case and you can't. There is simply no provision in FFP for prior year adjustments for non-allowable items in financial statements outside the monitoring periods.

I think this thread has probably died a death now - send me an email if you have a specific query and I hope this was useful.

Yes it was useful. You've proved what I said early on the in thread that you simply will never admit you're wrong. I'd like to think you'd learned something from this but I suspect you've taken nothing from it. In fact you just look like a man with a mission to rubbish City.

 

[gordondaviesmoustache]

Still incapable of engaging with the question I note.

[youtube]http://www.youtube.com/watch?v=wxokUMiArxM&list=PL1ED6DD17470B4681[/youtube]

 

[JoeMercer'sWay]

If you were such an expert and so qualified to talk about our club passing you'd know every little detail, like who can be included in calculations for certain things (like Hart, Richards, Zaba). Your admission that you aren't close to it says it all really, you aren't qualified to talk about our club's accounting practices and therefore not qualified to offer your assumptions about us failing FFPR as anything remotely resembling fact.

 

[OB1]

Look, Etihad are not a related party under the rules in question. I am telling you this as someone who has read that section in FFPR and who has over thirty years of experience of regularly having to make sense of accounting standards.

Mansour does not control or exert control over Etihad. You can debate to until the cows come home whether a close members of his family of a person are those family members who may be expected to influence, or be influenced by, that individual in their dealings with City but the family members concerned, to the best of my knowledge, out rank Mansour; plus they do not include his spouse or kids. Furthermore, City's auditors do not consider Etihad a related party so if UEFA tried to ignore that, they would find themselves in court facing a battle that they would, IMO, lose.

 

[mrtwiceaseason]

Can we say hes held up the white flag and done one ? Well done p.b and kun !!

 

[laserblue]

Ed - from your blog.

The 2011/12 accounts tell us that City were paid £12.8m by the club owners for Intellectual Property and Know How - the club have not disclosed what this 'Related Party Transaction' relates to. However, I am advised by an excellent source that this item probably wouldn't withstand a firm challenge. We can therefore expect UEFA's CFCB to apply a fair value adjustment (potentially halving the value of the item).

Again, you make speculative statements with caveats that seriously limit their validity. Where did you get this 'potential' figure of the club's RPT declaration being halved? Who is this 'excellent source'? If you can't name him at least let us know what his qualification is that allows him to make such an assessment. You also still seem not to accept that, as a declared RPT in line with the requirements of both IAS24 and UEFA's own identical financial reporting conditions, this matter is officially and legally closed.

Although UEFA has published 9 punishments for clubs that fail the FFP test, it has not published a tariff to explain how the punishments will be applied. UEFA has intimated that clubs that exceed the threshold by more than 20% will face the more severe sanctions. City may well end up 100%+ over the limit (putting them in real risk of exclusion or points deduction from the Group Stage of the 2014/15 Champions League). Assuming City fail, they will find out their punishment at the end of April/start of May 2014.

So your blog suggests City will face exclusion from or points deduction in next season's CL group stage but your earlier post on BM takes a far softer line.

As losses are trending in the right direction they can expect more leniency than if the trend was negative.

As your comment on BM was posted only 3 days after your blog do you accept that the comment in your blog was unnecessarily sensationalist and without foundation and that you therefore retract it? If so, will you be amending your blog accordingly?

One other point Ed. I understand you work as a project manager at HSBC. Do they approve of you regularly spending chunks of your working day discussing FFPR on Twitter seeing as it doesn't have any relevance to your job?

If he's gone it's a pity because he's managed to swerve all the questions I raised in my above post earlier today.

 

[Bozzie]

Can we say hes held up the white flag and done one ? Well done p.b and kun !!

This + 1 Well done guys !

 

[adrianr]

Not that the outcome was unexpected, but the thorough nature with which ffplay has been dispatched by PB, aguero93:20 et al is quite remarkable.

Really though this discussion needed a real time chair, with both parties able to address individual points in real time. There's probably still a few good questions that have gone unaddressed. It's very easy to ignore a few points and make posts relating specifically to the segments you can answer. We need a Bluemoon question time! Perhaps if Ed is so confident in his position he would kindly agree to a web debate? I'm sure PB and Co are game.

 

[pfazz]

Very we'll done boys, I think he was dispatched with great aplomb, it's good to know we have people of such intellect to keep us informed on financial matters.

 

[Le Havre Oswald]

I don't think Mr ed had any idea how well informed some posters are on the subject, I bet he thought it would be like explaining quantum mechanics to a 3 year old when infact he was trying to explain it to Stephen Hawking.

Great thread guys. Although you could say anything about ffpr and I would agree with you haha.

 

[Shirley]

If anything this discussion should be food for thought for many fans on here who believe we can discard players such as Dzeko, Garcia and Kolarov for virtually free after the club spent well in excess of £60 million and replace them with other expensive signings.

It just doesn't add up.

 

[2sheikhs]

Prestwich maintains that there doesn't need to be an adjustment if you write-down players in the season immediately prior to FFP (but keep the contract running at the club).

If this were true then City and every other club would have really missed a trick! They could have written down the book value of most of the players at the club (not just Bridge, Santa Cruz). As long as they could have made a compelling case for their resale value to be near zero owing to their high wages, then surely they could have written them all down. They would have reported HUGE losses in 2010/121 of course (immediately prior to the First Monitoring Period). However for 2012/12 their amortisation would have been near zero (assuming they had signed no new players. It would have been minimal in 2012/13. Amortisation accounted for £85m in 2011-2.

So if City had simply written down the value of all their players to zero, Prestwich's logic suggests there would be no sanction and they could have passed FFP with ease.

The FFP rules are very clear in that amortisation needs to be done evenly over the life of the contract. Hence there needs to be an adjustment for Bridge etc. Have a look at the FFP rules - there isn't any wiggle room.

and of course since they both were sold for 0 or close to it we were right to write down the contracts and yet again it was done before the ffp rules came in meaning that uefas already dodgy legislation doesn't apply to it, I've looked at the rules, there's plenty of wriggle room, the biggest part being that you cannot retrospectively introduce a law you cannot make something illegal today and prosecute someone for doing it yesterday. do you really think that mcfc, who employ actual ffp legislators and experts at the club to aid with this, know less than you on this subject?

As entertaining and informative as this thread has been, this post should have killed it off really. With the revenue at the Sheikhs disposal, does anybody seriously think we'd go about our business and just hope for the best?

 

[jay_mcfc]

Ed I have a question;

Do you feel like you have to portray us as a club in a certain light so as to keep yourself in work for this kind of thing? I imagine the people you write and do radio work for are keen for City to be seen as the bad guys, ruining football and spending money they haven't earned. Do you think that if you actually told and written the actual facts do you think those people will look elsewhere to get their opinions as they are only really interested in City being in trouble with the FFPR?

And also a genuine thanks for coming on here to defend yourself. You've suffered a bit of abuse but in general it's a fascinating thread and maybe even you yourself can learn something for your next article ;)

 

[St Helens Blue (Exiled)]

Wow..What a thread.Just caught up.
Am I allowed to say game set and match to PB???
is this FFFP guy for real????
Seriously??
I am no accountant but I am comfortable that City will be fine.
Our revenues are only going one way and we all know which way that is.
Anyway fffp.Sheikh Mansour has a message for you :-

 

[lloydie]

Ed - from your blog.

The 2011/12 accounts tell us that City were paid £12.8m by the club owners for Intellectual Property and Know How - the club have not disclosed what this 'Related Party Transaction' relates to. However, I am advised by an excellent source that this item probably wouldn't withstand a firm challenge. We can therefore expect UEFA's CFCB to apply a fair value adjustment (potentially halving the value of the item).

Again, you make speculative statements with caveats that seriously limit their validity. Where did you get this 'potential' figure of the club's RPT declaration being halved? Who is this 'excellent source'? If you can't name him at least let us know what his qualification is that allows him to make such an assessment. You also still seem not to accept that, as a declared RPT in line with the requirements of both IAS24 and UEFA's own identical financial reporting conditions, this matter is officially and legally closed.

Although UEFA has published 9 punishments for clubs that fail the FFP test, it has not published a tariff to explain how the punishments will be applied. UEFA has intimated that clubs that exceed the threshold by more than 20% will face the more severe sanctions. City may well end up 100%+ over the limit (putting them in real risk of exclusion or points deduction from the Group Stage of the 2014/15 Champions League). Assuming City fail, they will find out their punishment at the end of April/start of May 2014.

So your blog suggests City will face exclusion from or points deduction in next season's CL group stage but your earlier post on BM takes a far softer line.

As losses are trending in the right direction they can expect more leniency than if the trend was negative.

As your comment on BM was posted only 3 days after your blog do you accept that the comment in your blog was unnecessarily sensationalist and without foundation and that you therefore retract it? If so, will you be amending your blog accordingly?

One other point Ed. I understand you work as a project manager at HSBC. Do they approve of you regularly spending chunks of your working day discussing FFPR on Twitter seeing as it doesn't have any relevance to your job?

If he's gone it's a pity because he's managed to swerve all the questions I raised in my above post earlier today.

He also avoided my questions regarding the motives behind his Pellegrini article, given that it clearly does not fall within his self declared remit of FFP.

Speaks volumes.

Still think he's an FCUM fan with an outside bet on Leeds or Bayern.

 

[City Raider]

i've followed this thread with huge interest though i've not understood a fucking word of it

we are attacking ffplay as if he were platini himself and he's standing up to cross-examination like the fraudulent frenchman did with samuel - in fact i'm just surprised ffplay hasn't responded to a question by saying he'll have to ask rummenigge

someone should buy Messi just to blow the whole farce out of the water - like there'd be even a threat of him not playing