Could Manchester City "disappear" in few years?

[finneh]

They wouldn't because any revenue that is a Related-Party Transaction has to be declared and would have already been subject to UEFA's market value test or whatever it is.

"If FFP got very aggressive" was the operative line.

At the moment it's a *wink wink nudge nudge* approach whereby they allow clubs like City and PSG to openly get sponsored by their owners' companies, but give them a token fine or "sanctions" to appear like they are enforcing the rules. Likewise they clearly say "don't completely take the piss in the transfer market, otherwise it'll look like a completely failed project."

If they got aggressive and funded investigations thoroughly it'd all be different, not least because you and PSG would have been kicked out of the Champions League this season and would be around £75m short of hitting the break even this season. But of course they will never do this so it's all theoretical.

 

[Ronetta]

"If FFP got very aggressive" was the operative line.

At the moment it's a *wink wink nudge nudge* approach whereby they allow clubs like City and PSG to openly get sponsored by their owners' companies, but give them a token fine or "sanctions" to appear like they are enforcing the rules. Likewise they clearly say "don't completely take the piss in the transfer market, otherwise it'll look like a completely failed project."

If they got aggressive and funded investigations thoroughly it'd all be different, not least because you and PSG would have been kicked out of the Champions League this season and would be around £75m short of hitting the break even this season. But of course they will never do this so it's all theoretical.

Posts like this one above, portray a complete lack of understanding of the actual FFP rules. This ia all about what Finneh would presumably like to happen - which is fair enough - but it's nothing to do with FFP.

FFP has been drafted such that its rules on related parties are consistent with generally accepted accounting principles. and in particular with IAS24, which defines how related party transactions are to be handled. You may or may not like this fact, but it is a fact. Presumably it's been done this way so that audit firms, familar with IAS24 can use their expertise and also because much accounting and legal thought has gone into driving these accounting standards and there's no point in reinventing a complex and difficult to interpret wheel, when this work has already been done and is well documented.

For the uninitiated amongt us, IAS24 rigorously defines exactly what is, and what is not, a related-party. The objective of such rigorous definition is so that different accountants, auditors and lawyers can all inspect a set of accounts and interpret things in a consistent way and not come up with different answers depending on arbitrary and subjective points of view. Whether a party is related or not is objectively measurable against set criteria.

Critically, this is not UEFA's criteria. There is no opportunity for anyone - let alone anyone in UEFA - to do a "wink, wink, nudge, nudge" or to "get very aggressive". The accountants look at a transaction, they look at the party concerned and they use IAS24 standards to work out whether it was a related-party or not. And the auditors audit on the same basis. The FFP inspectors audit on the same basis. Everyone agrees.

 

[Ronetta]

What does Luiz have to do with it?

It's called humour mate, you should try it ;-)

 

[bishblaize]

UEFA have made noise about throwing teams out of the CL and haven't done it because they don't want to damage the brand.

Clubs will pay lip service to FFP and will try to meet it but it won't stop the big clubs being the big clubs and spending if they need to.

Im totally the other way. I thought that the fine and player limits were an exceptionally strong message for the first time the powers have been used. Only an fantasist would expect UEFA to kick teams out in year one, that was always a last resort and would probably take 2 or 3 years of not giving a feck. I thought City would get a stern letter and an agreement for a timetable of remedial action. That they got something much stronger was a real surprise.

 

[finneh]

Posts like this one above, portray a complete lack of understanding of the actual FFP rules.

FFP has been drafted such that its rules on related parties are consistent with generally accepted accounting principles. and in particular with IAS24, which defines how related party transactions are to be handled. You may or may not like this fact, but it is a fact. Presumably it's been done this way so that audit firms, familar with IAS24 can use their expertise and also because much accounting and legal thought has gone into driving these accounting standards and there's no point in reinventing a complex and difficult to interpret wheel, when this work has already been done and is well documented.

For the uninitiated amongt us, IAS24 rigorously defines exactly what is, and what is not, a related-party. The objective of such rigorous definition is so that different accountants, auditors and lawyers can all inspect a set of accounts and interpret things in a consistent way and not come up with different answers depending on arbitrary and subject points of view. Whether a party is related or not is objectively measurable against set criteria.

Critically, this is not UEFA's criteria. There is no opportunity for anyone - let alone anyone in UEFA - to do a "wink, wink, nudge, nudge" or to "get very aggressive".

My point is that City's sponsorship deals are clearly related-party transactions. Just because a body doesn't have the finances to prove that against the club and company involved that do have the finances to hide it, doesn't make it not the case.

By "getting very aggressive" I meant dedicating significant funds to delving into the nature of PSG's £150m agreement with the Qatar Tourist Authority, as well as the 10-15 partnerships that City have got relating to Abu Dhabi companies that has transformed their Commercial revenue from £18m to £166m over a six year period and caused them to eclipse significantly larger clubs such as Arsenal, Chelsea & Liverpool. Obviously on the face of it all these deals will be kosher, but you can blatantly see they are bent just by looking at the size of the losing bids. The fact that the only sponsorship deal that City have that can't be linked to Abu Dhabi (kit manufacturer) is worth 15% of United's and half of Liverpool's should give them an accurate reflection of City's Commercial pull. Then once they have ascertained the breach of FFP, being aggressive and kicking the teams out.

If I get banned from being a company director because of fraud; I can get my wife to set up a new company and I can essentially run the company in everything but the title. That doesn't mean the law was intended to be so flagrantly ignored and also doesn't mean that if the police had the time and inclination to look into the matter closely they couldn't shut me down.

 

[BobbyManc]

"If FFP got very aggressive" was the operative line.

At the moment it's a *wink wink nudge nudge* approach whereby they allow clubs like City and PSG to openly get sponsored by their owners' companies, but give them a token fine or "sanctions" to appear like they are enforcing the rules. Likewise they clearly say "don't completely take the piss in the transfer market, otherwise it'll look like a completely failed project."

If they got aggressive and funded investigations thoroughly it'd all be different, not least because you and PSG would have been kicked out of the Champions League this season and would be around £75m short of hitting the break even this season. But of course they will never do this so it's all theoretical.

Ronetta covered the response to this but yeah, UEFA cannot change the legal definition of what is a Related Party Transaction, regardless of how aggressive they may or may not want to be. Likewise, I highly doubt they would ever be able to enforce a ban on clubs getting sponsored by companies related to the owner. All they could do is control whether it represents fair value. City's deal when you actually look at all that it entails is nowhere near as ridiculous as people would have you believe, and UEFA's only response was that it cannot be renegotiated in the near future.

 

[finneh]

Ronetta covered the response to this but yeah, UEFA cannot change the legal definition of what is a Related Party Transaction, regardless of how aggressive they may or may not want to be. Likewise, I highly doubt they would ever be able to enforce a ban on clubs getting sponsored by companies related to the owner. All they could do is control whether it represents fair value. City's deal when you actually look at all that it entails is nowhere near as ridiculous as people would have you believe, and UEFA's only response was that it cannot be renegotiated in the near future.

If they committed significant resources to aggressively looking into the fair value definition (looking at the losing bids for each contract, seeing how their kit deals which can't be manipulated compare with their other deals etc) they'd realise that City's Commercial income should be around the Spurs level, possibly Arsenal level if they were being generous. As I said previously, the fact that City's kit deal is similar to Spurs' should tell you all you need to know about City's Commercial appeal in the real world.

As I said it isn't going to happen, which is why City will be fine.

 

[Alex99]

I think people are skeptical of how far UEFA will take their FFP sanctions because they've already been soft with City this year. They failed FFP and were punished with a reduction the 25 man squad. City then failed to meet the domestic player quota, which is usually punished by reducing the number of players that can be registered in the squad by how many the club missed the quota by. City didn't have to face further sanction because UEFA effectively re-wrote the rules for them.

In all honesty, whilst UEFA will, on paper, follow through with punishments for teams falling short of FFP, the biggest offenders probably won't suffer. The likes of City, PSG, etc. will get a slap on the wrist every time they fail to comply, but ultimately be allowed into the CL each year because they'll have the big name players in their teams and it's good for the CL brand to have them playing in the competition. Meanwhile, bans will be handed out for a discrepancies of a few thousand Euros to random Polish, Romanian and Turkish teams.

 

[Ronetta]

My point is that City's sponsorship deals are clearly related-party transactions. Just because a body doesn't have the finances to prove that against the club and company involved that do have the finances to hide it, doesn't make it not the case.

You are using your own arbitrary understanding of what is a related party. That's fine, it's up to you what views you have, but don't confuse that with the actual rules, which in most cases say they are not.

The rules are very clear and easily tested. I won't quote them here because it's a bit involved, but it's all easily googlable.

There's no question of "yeah well I think they are". If the rules say they are not, then they are not, according to the rules.

 

[BobbyManc]

My point is that City's sponsorship deals are clearly related-party transactions. Just because a body doesn't have the finances to prove that against the club and company involved that do have the finances to hide it, doesn't make it not the case.

By "getting very aggressive" I meant dedicating significant funds to delving into the nature of PSG's £150m agreement with the Qatar Tourist Authority, as well as the 10-15 partnerships that City have got relating to Abu Dhabi companies that has transformed their Commercial revenue from £18m to £166m over a six year period and caused them to eclipse significantly larger clubs such as Arsenal, Chelsea & Liverpool. Obviously on the face of it all these deals will be kosher, but you can blatantly see they are bent just by looking at the size of the losing bids. The fact that the only sponsorship deal that City have that can't be linked to Abu Dhabi (kit manufacturer) is worth 15% of United's and half of Liverpool's should give them an accurate reflection of City's Commercial pull. Then once they have ascertained the breach of FFP, being aggressive and kicking the teams out.

If I get banned from being a company director because of fraud; I can get my wife to set up a new company and I can essentially run the company in everything but the title. That doesn't mean the law was intended to be so flagrantly ignored and also doesn't mean that if the police had the time and inclination to look into the matter closely they couldn't shut me down.

Essentially, in City's accounts any Related-Party Transactions HAVE to be declared by an independent auditor. Once it is declared, UEFA can investigate whether it represents fair-value. If it is not declared, then that simply means it is NOT legally classed as a RPT. So yeah, some of City's sponsorships deals are RPT's of which UEFA are fully aware. It has nothing to do with them having the will-power or the finances to investigate it, and equally nothing to do with City hiding the fact; even if they wanted to they wouldn't be able to, not to mention the risk involved (not just for City but the company managing the accounts) would by far would outweigh the potential minor benefit to make it a completely illogical move.

 

[finneh]

You are using your own arbitrary understanding of what is a related party. That's fine, it's up to you what views you have, but don't confuse that with the actual rules, which in most cases say they are not.

The rules are very clear and easily tested. I won't quote them here because it's a bit involved, but it's all easily googlable.

There's no question of "yeah well I think they are". If the rules say they are not, then they are not, according to the rules.

The definition of a related party is incredibly broad and what falls into this it at the determination of the people scrutinising the club. Don't confuse not getting punished for whatever reason, with being fully compliant.

 

[Ronetta]

If they committed significant resources to aggressively looking into the fair value definition (looking at the losing bids for each contract, seeing how their kit deals which can't be manipulated compare with their other deals etc) they'd realise that City's Commercial income should be around the Spurs level, possibly Arsenal level if they were being generous. As I said previously, the fact that City's kit deal is similar to Spurs' should tell you all you need to know about City's Commercial appeal in the real world.

As I said it isn't going to happen, which is why City will be fine.

Again, this portrays a misunderstanding I am afraid.

If a party is not related (as is the case with the vast majority of City's revenues) then by definition the value is the market value. There would be no opportunity for it not to be the market value because that would need related-party type influence, which if it's not a related-party, by definition, does not exist.

Now, I do agree that in the case or related-party transactions, the question of what the fair value should be for FFP purpose, is open to debate. But I am not aware of any outlandish claims or assertions by City in these few areas. Bear in mind we are talking about a team with huge appeal across the Middle East - for obvious reasons - the current English Champions; the most successful English team in the last 4 years, with players like Aguero - perhaps one of the top 3 or 4 most admired players in the world.

It is not unreasonable that this will attract significant sponsorship revenues is it. To suggest a club with this profile should be "on a par with Spurs" is just plain dreaming on your part. It's a ridiculous suggestion.

 

[Ronetta]

The definition of a related party is incredibly broad and what falls into this it at the determination of the people scrutinising the club. Don't confuse not getting punished for whatever reason, with being fully compliant.

Sorry, you are just plain mistaken here. Suggest you have a read of the appropriate accounting standards, and try to differentiate what you would perhaps like to see happen from the actual reality of the situation.

Bobby raises a very good point. Were City to try to file in their accounts that certain transactions were not related-party when in fact they are, the directors would be criminally liable. The auditors who signed it off would be criminally liable. Blue chip audit firms aren't going to risk prison sentences for their audit partners simply to bend some football rules! Not least when they expect the accounts to be reviewed by UEFA's auditors as well.

 

[finneh]

Essentially, in City's accounts any Related-Party Transactions HAVE to be declared by an independent auditor. Once it is declared, UEFA can investigate whether it represents fair-value. If it is not declared, then that simply means it is NOT legally classed as a RPT. So yeah, some of City's sponsorships deals are RPT's of which UEFA are fully aware. It has nothing to do with them having the will-power or the finances to investigate it, and equally nothing to do with City hiding the fact; even if they wanted to they wouldn't be able to, not to mention the risk involved (not just for City but the company managing the accounts) would by far would outweigh the potential minor benefit to make it a completely illogical move.

Again, this portrays a misunderstanding I am afraid.

If a party is not related (as is the case with the vast majority of City's revenues) then by definition the value is the market value. There would be no opportunity for it not to be the market value because that would need related-party type influence, which if it's not a related-party, by definition, does not exist.

Now, I do agree that in the case or related-party transactions, the question of what the fair value should be for FFP purpose, is open to debate. But I am not aware of any outlanding claims or assertions by City in these few areas. Bear in mind we are talking about a team with huge appeal across the Middle East - for obvious reasons - the current English Champions; the most successful English team in the last 4 years, with players like Aguero - perhaps one of the top 3 or 4 most admired players in the world.

It is not unreasonable that this will attract significant sponsorship revenues is it. To suggest a club with this profile should be "on a par with Spurs" is just plain dreaming on your part. It's a ridiculous suggestion.

All I'll say to avoid a massive off topic discussion is that the rules were drafted to avoid clubs artificially inflating their own income so that they appear to fall within the FFP rules. The vast majority of Commercial deals that City have signed come from Abu Dhabi companies and it's obvious that City do not have some random, ridiculously strong pull only with a single Country (Abu Dhabi) where Football isn't even particularly popular. The deals they have signed with other companies outside of that single Country have clearly highlighted that City's Commercial appeal is similar to that of Spurs, at a push Liverpool.

Whether you want to accept this or not is academic. City won't be punished anyway as the resources aren't available to delve so deeply into the fair value and related party definitions. Provided City don't completely flaunt their wealth going forward they'll be fine and dandy and FFP will be seen to have slightly wotked.

So in answer to the OP: No; City are here for good.

 

[Orc]

So what exactly is stopping Abramovic from pulling a PSG or City and having a bunch of his company's sponsoring Chelsea? Why do they seem so much more hell bent on complying with FFP when it has been deemed acceptable to do that?

 

[BobbyManc]

All I'll say to avoid a massive off topic discussion is that the rules were drafted to avoid clubs artificially inflating their own income so that they appear to fall within the FFP rules. The vast majority of Commercial deals that City have signed come from Abu Dhabi companies and it's obvious that City do not have some random, ridiculously strong pull only with a single Country (Abu Dhabi) where Football isn't even particularly popular. The deals they have signed with other companies outside of that single Country have clearly highlighted that City's Commercial appeal is similar to that of Spurs, at a push Liverpool.

Whether you want to accept this or not is academic. City won't be punished anyway as the resources aren't available to delve so deeply into the fair value and related party definitions. Provided City don't completely flaunt their wealth going forward they'll be fine and dandy and FFP will be seen to have slightly wotked.

So in answer to the OP: No; City are here for good.

You are the one who simply cannot understand how a Related-Party Transaction works despite two people clearly pointing it out to you, evidenced by all this repeated nonsense about UEFA not having the resources to investigate, simply to substantiate everything else you have written. You are perfectly entitled to believe City's deals do not represent fair-value and you can debate that if you so wish, but don't dress it up as if City are sneakily breaking the rules and UEFA just can't be arsed to do anything about it.

 

[Ronetta]

I think people are skeptical of how far UEFA will take their FFP sanctions because they've already been soft with City this year. They failed FFP and were punished with a reduction the 25 man squad. City then failed to meet the domestic player quota, which is usually punished by reducing the number of players that can be registered in the squad by how many the club missed the quota by. City didn't have to face further sanction because UEFA effectively re-wrote the rules for them.

The rules say no club can field more than 25 players of which 8 places must be reserved for locally trained players. (There's further rules on club-trained vs locally-trained which are not relevant here. The rules say 8 locally trained players, which is all that matters).

The rules (Appendix VIII) explicitly show the different allowable combinations if you do not field 8 locally trained players. Registering a squad of 21 players with 17 free players and 4 locally trained players is perfectly acceptable under the rules, and is shown as an example.

In the FFP ruling, the Club Financial Control Body deemed that instead of 25 as maximum City are only allowed to register 21 players. So according to the rules (as defined in Appendix VIII) City should be able to register 17 free players and 4 locally trained players.

After the event, after the FFP ruling, the CCFB came back and said you know what, we are going to limit you further still to 16 and 5. Not 17 and 4. That was the extent of the re-writing of the rules - to make them worse than the actual printed version!

 

[SalfordRed1960]

People said that about Chelsea in 2005 I recall, 10 years later, they're on course to win the league again and have the best manager in the world!

Chelsea is a good example. They went from run of the mill to mercenary to champions, rebuilt and are challenging again. Admittedly though purchases. Can City get the next wave in to then let a crop of youths come through who knows.

We seem to be going the opposite way. We had youth and experience, then became a real buying club. I wonder whether our youth academy guys are going to get the chance to establish themselves.

 

[Ronetta]

All I'll say to avoid a massive off topic discussion is that the rules were drafted to avoid clubs artificially inflating their own income so that they appear to fall within the FFP rules. The vast majority of Commercial deals that City have signed come from Abu Dhabi companies and it's obvious that City do not have some random, ridiculously strong pull only with a single Country (Abu Dhabi) where Football isn't even particularly popular. The deals they have signed with other companies outside of that single Country have clearly highlighted that City's Commercial appeal is similar to that of Spurs, at a push Liverpool.

1. The FFP rules say that their intention is to prevent clubs spending beyond their means. They chose to implement this by way implementing a break-even result calculation comparing income and outgoings. And they chose to adopt international accounting standards to measure income and outgoings. That's it. They didn't draft anything at all to avoid clubs artificially inflating their revenues as you suggest. In fact, they didn't draft anything at all. They merely cut and pasted the IAS24 rules into the document. It's the same wording.

2. The vast majority of commerical deals have NOT come from Abu Dhabi by either volume or value. What you suggest is a myth.

3. Were 2 to be true, to consider this to be some sort of fiddle (a) would mean illegal accounting practices as already discussed and (b) completely ignores the fact that Middle Eastern companies, buoyed by the Qatar world cup, by the purchasing of Manchester City, by City being English Champions, are understandably excited and keen to be associated with Manchester City. It's not rocket science.

That's the reason United are getting £750m from Adidas - they want to be associated with a successful club. There's a clause saying the deals off and they don't have to pay you at all if you get relegated.

 

[Alex99]

The rules say no club can field more than 25 players of which 8 places must be reserved for locally trained players. (There's further rules on club-trained vs locally-trained which are not relevant here. The rules say 8 locally trained players, which is all that matters).

The rules (Appendix VIII) explicitly show the different allowable combinations if you do not field 8 locally trained players. Registering a squad of 21 players with 17 free players and 4 locally trained players is perfectly acceptable under the rules, and is shown as an example.

In the FFP ruling, the Club Financial Control Body deemed that instead of 25 as maximum City are only allowed to register 21 players. So according to the rules (as defined in Appendix VIII) City should be able to register 17 free players and 4 locally trained players.

After the event, after the FFP ruling, the CCFB came back and said you know what, we are going to limit you further still to 16 and 5. Not 17 and 4. That was the extent of the re-writing of the rules - to make them worse than the actual printed version!

This was my understanding of how the rules were supposed to work:

• All clubs entering the Champions League are allowed to register a squad consisting of a maximum of 25 players, subject to compliance with other rules.
  
• Within the squad, the club must register a minimum of 8 association-trained players, of which 4 must have been trained at the club.
• If a club is unable to meet this quota, their maximum squad size is reduced according to how many players they miss the quota by (i.e. missing by 4 leaves a maximum squad size of 21 players).
• City failed to comply with FFP, and were punished with a reduction to their maximum squad size, reducing it from 25 to 21. As far as I'm aware, there was nothing written in the FFP rules that stated such punishments would affect the necessity to comply with the "home-grown" rule, meaning City should still have had to register 8 "home-grown" players.
• With City's maximum squad size now 21, a compliant squad would have consisted of 13 free players, 4 association-trained players, and 4 club-trained players.
• City were only able to register 4 association-trained players (Lampard, Hart, Milner & Clichy), and 1 club-trained player (Boyata), meaning that they missed the quota by 3 players.
• This should have meant that their squad was further reduced to 18 players, but they were allowed to register a further 3 free players, taking their squad to its maximum size of 21 players.

All other clubs are expected to comply with both the "home-grown" rules, and the FFP rules. City failed both, but were only punished for one.

 

[Ronetta]

I'm no financial expert but I'm curious as to just how and why City will surpass United in terms of revenue in the next fiscal year?

Sorry, missed your post.

It's a combination of United getting smaller and City getting bigger. As I say, United's revenues will be down to around £390m this year due to loss of CL revenue primarily. City's revenue last year was £341m but it's been growing exponentially. Last year it grew by £75m. Even if this growth rate flattens out and City are "only" another £75m bigger, they will be bigger than United, revenue-wise. As the City Football Group continues its world-wide expansion we can expect further big ticket sponsorship deals in many regions, so there's considerable growth in the pipe.

 

[Beachryan]

I totally agree with the view that City is just a vehicle of PR - and as a user pointed out at <£200m per year it's not particularly expensive for the Sheikh to pay.

That said, please never say this is an 'investment' in of itself. It will never generate the profit as a standalone entity to pay back the >£1bn that has been sunk into it. That's why I've always had a problem with it. Why should one team in a league of 19 other teams be permitted to receive that kind of boost, but not any others? It makes a mockery of the entire idea of a 'league' at all.

Of course, the logical extrapolation of that is United shouldn't benefit just because it has the biggest stadium and worldwide fan base. I tend to agree. But I still fundamentally believe there is a difference between the sheer gap in spending perpetrated by City and Chelsea versus the league average - at least while they were 'building'. It was obscene.

 

[Ronetta]

This was my understanding of how the rules were supposed to work:

• All clubs entering the Champions League are allowed to register a squad consisting of a maximum of 25 players, subject to compliance with other rules.
  
• Within the squad, the club must register a minimum of 8 association-trained players, of which 4 must have been trained at the club.
• If a club is unable to meet this quota, their maximum squad size is reduced according to how many players they miss the quota by (i.e. missing by 4 leaves a maximum squad size of 21 players).
• City failed to comply with FFP, and were punished with a reduction to their maximum squad size, reducing it from 25 to 21. As far as I'm aware, there was nothing written in the FFP rules that stated such punishments would affect the necessity to comply with the "home-grown" rule, meaning City should still have had to register 8 "home-grown" players.
• With City's maximum squad size now 21, a compliant squad would have consisted of 13 free players, 4 association-trained players, and 4 club-trained players.
• City were only able to register 4 association-trained players (Lampard, Hart, Milner & Clichy), and 1 club-trained player (Boyata), meaning that they missed the quota by 3 players.
• This should have meant that their squad was further reduced to 18 players, but they were allowed to register a further 3 free players, taking their squad to its maximum size of 21 players.

All other clubs are expected to comply with both the "home-grown" rules, and the FFP rules. City failed both, but were only punished for one.

I've seen this argument before and I can see where you are coming from, but I don't share your interpretation. Doubtless my interpretation is that of a City fan and yours of a non-City fan.

All we can say for sure is that the punishment as described originally, simply said 21 players not 25. And the rules show examples of how a club can field 21 players and 4 homegrown.

Whether it was UEFA's intention to limit City's squad to even less than 21 players if they couldn't field 8 homegrown was never mentioned and what the intention was is speculation.

But let's not argue further - I doubt I will change your mind and you won't be changing mine, so let's leave it there. I respect your opinion.

 

[Ronetta]

I totally agree with the view that City is just a vehicle of PR - and as a user pointed out at <£200m per year it's not particularly expensive for the Sheikh to pay.

That said, please never say this is an 'investment' in of itself. It will never generate the profit as a standalone entity to pay back the >£1bn that has been sunk into it. That's why I've always had a problem with it. Why should one team in a league of 19 other teams be permitted to receive that kind of boost, but not any others? It makes a mockery of the entire idea of a 'league' at all.

Of course, the logical extrapolation of that is United shouldn't benefit just because it has the biggest stadium and worldwide fan base. I tend to agree. But I still fundamentally believe there is a difference between the sheer gap in spending perpetrated by City and Chelsea versus the league average - at least while they were 'building'. It was obscene.

Well in the first instance, I would suggest that in the wider context of being good for Abu Dhabi, if the expectation was that the Sheikh would never get his billion back, then doubtless they would never have bought the club. People talk about it being all about the wider promotion of Abu Dhabi, and this is likely true, but ask yourself the question, why? So everyone can say what nice chaps they are? No, it's all about money in the end. About attracting tourists, investment, boosting exports, helping Abu Dhabi. It's all about money in the end and I am 100% certain that Manchester City makes money for Abu Dhabi - or will do - as an overall project.

If we consider the more narrow business-case of whether Manchester City (actually City Football Group) itself will ever show an overall return, that's a more difficult question.

But it's not a very difficult one. The problem you have, and people in the west have generally, is a failure to look at things in the long term. Directors come and go over 3, 4, 5 year periods. Business cases are approved or turned down based on a 3 or 4 year ROI. Projects taking 20 years to break-even don't even get off the ground in the UK.

But that is not how some parts of the world operate. In the far east, it is not unusual for businesses to think about 10 or 20 year plans. I haven't worked in the Middle East personally so I can't say for sure what the perspective is generally like there. But certainly if you think about City as a 20, 30, 50 year project - as they may well do - it's very possible it will make a very handsome return, more than repaying the £1bn.

 

[Beachryan]

Sorry, missed your post.

It's a combination of United getting smaller and City getting bigger. As I say, United's revenues will be down to around £390m this year due to loss of CL revenue primarily. City's revenue last year was £341m but it's been growing exponentially. Last year it grew by £75m. Even if this growth rate flattens out and City are "only" another £75m bigger, they will be bigger than United, revenue-wise. As the City Football Group continues its world-wide expansion we can expect further big ticket sponsorship deals in many regions, so there's considerable growth in the pipe.

Very optimistic. There is no way that will happen organically.

First off, the only reason City had more growth in 2014 than 2013 is the new Premier league deal. Which benefits all clubs (even United) and is a step change which won't happen again in 2015/16 etc.
Secondly, over the last 5 years City's growth has been almost all driven by the increases in Commercial revenues - which are pretty much all the Etihad deal. Those have grown > 800% compared to match day of 128% etc. In fact, of all the clubs in Deloitte's list, only PSG derive a higher % of income from Commercial deals than City.
Thirdly, despite the second point, United actually grew its commercial revenues faster than City last year. And that's before the Chevy and Adidas deals kick in.

The only City's revenue will surpass United's is if the Sheikh's cousin decides he'd like it to. In which case he'll just 'renegotiate' the deal into whatever value he feels like.

But other than bragging rights, there isn't much point of doing that.

 

[Beachryan]

Well in the first instance, I would suggest that in the wider context of being good for Abu Dhabi, if the expectation was that the Sheikh would never get his billion back, then doubtless they would never have bought the club. People talk about it being all about the wider promotion of Abu Dhabi, and this is likely true, but ask yourself the question, why? So everyone can say what nice chaps they are? No, it's all about money in the end. About attracting tourists, investment, boosting exports, helping Abu Dhabi. It's all about money in the end and I am 100% certain that Manchester City makes money for Abu Dhabi - or will do - as an overall project.

If we consider the more narrow business-case of whether Manchester City (actually City Football Group) itself will ever show an overall return, that's a more difficult question.

But it's not a very difficult one. The problem you have, and people in the west have generally, is a failure to look at things in the long term. Directors come and go over 3, 4, 5 year periods. Business cases are approved or turned down based on a 3 or 4 year ROI. Projects taking 20 years to break-even don't even get off the ground in the UK.

But that is not how some parts of the world operate. In the far east, it is not unusual for businesses to think about 10 or 20 year plans. I haven't worked in the Middle East personally so I can't say for sure what the perspective is generally like there. But certainly if you think about City as a 20, 30, 50 year project - as they may well do - it's very possible it will make a very handsome return, more than repaying the £1bn.

While I'm far from an expert on investing habits of the Far or Middle East, I am close to an expert on business cases. Any business decision should come down to the best way to maximise your return. An option available to the Sheikh 5 years ago was 'stick that £1bn into a decent investment fund' and get maybe 8 or 9% on it. If he'd done that, he would have far more cash than he achieved through pumping money into City. He has not made a decision based on maximising his return, so I'm with you - it's been done either for non-financial returns (it's fun! But given he can never make time to show up, I kind of doubt that one) or it's being done for PR reasons, which are obviously much more difficult to evaluate.

But that comes back to my whole problem with it - 18 clubs in the premier 'league' have to make decisions based upon financial reality: they must make enough money to keep the lights on. City and Chelsea do not have to do that. Would Liverpool have loved to buy Aguero a few years back for £42m? Of course! But then they might have gone bankrupt, because they don't have the revenues to do so. City don't have to worry about that. So they were able to buy about 10 strikers all above £15m and just keep the few that stick. Other clubs cannot do that. Not United, not Arsenal never mind the Villas or Everton's of the league.

 

[Ronetta]

It is a bit of a nonsense debate. IAS24 standards might make it hard for the “normal” millionaire to inject cash into his club, but it isn’t able to stop someone like sheikh Mansour to do so. He doesn’t need to violate this rule to render FFP useless. The UEFA would need to draft stricter rules and they would need to enforce them to prevent that. That could lead to significant legal problems. From a legal point of view UEFA depends on the goodwill of City to act in the spirit of FFP.

Still the UEFA isn’t completely powerless (e.g. public shaming/threat of new rules/bureaucratic power). So both sides can’t overplay their hand without the risk, that the other side hurts their interests. This results in the current situation: a fishy compromise, where the core interests of both sides remain intact. City agrees publicly to comply with FFP and doesn’t “overdo” the spending and in return UEFA accepts, that City is still inflating their accounts for the next years. Both sides can save face, FFP might become a reality in the long run and City can still continue their project without major changes in their strategy. Win-win – at least for City and the UEFA.

I could pick holes in that, but on balance it's not an unreasonable view I think. And City were never going to take the "goodwill" position of artificially limiting themselves for the benefit of other clubs, were they. That's just unrealistic.

FFP is an ill-thought out and clumsy tool that at its heart has a desire to stop City and perhaps to a lesser extent PSG from changing the footballing landscape and maintaining the status quo. At this point I think we can say it has failed. As I mentioned earlier, people should not underestimate the effect it has had, however. It has reigned in City's spending (quite dramatically I would suggest) for the past 3 years at least. Were there no FFP, I imagine City would be in an even more dominant position today, and you can thank FFP for that.

But if City were ever to be completely stopped, at any price, then much stricter rules would have been needed. The problem was - I think - trying to come up with something that the other clubs could accept, without just having "anti-City" rules. FFP was the best they could come up with.

 

[Ronetta]

But that comes back to my whole problem with it - 18 clubs in the premier 'league' have to make decisions based upon financial reality: they must make enough money to keep the lights on. City and Chelsea do not have to do that. Would Liverpool have loved to buy Aguero a few years back for £42m? Of course! But then they might have gone bankrupt, because they don't have the revenues to do so. City don't have to worry about that. So they were able to buy about 10 strikers all above £15m and just keep the few that stick. Other clubs cannot do that. Not United, not Arsenal never mind the Villas or Everton's of the league.

So you're suggesting life is unfair? OK... I am with you there.

And regards your financial analysis, I take your point, but I was only speculating about revenues this year not decades forward. This year, United will be in at around £390m, you can count on it. And City will be above that imho. Not by miles, but marginally, in my view. And not by renegotiating anything. As you say City's commercial revenues have grown exponentially. We annouced another deal only yesterday with some big Chinese outfit (China being owned by Abu Dhabi, of course, because all our sponsorships are with Abu Dhabi, right?).

Anyway, we'll see. Perhaps one to bookmark eh?

 

[stevoc]

Sorry, missed your post.

It's a combination of United getting smaller and City getting bigger. As I say, United's revenues will be down to around £390m this year due to loss of CL revenue primarily. City's revenue last year was £341m but it's been growing exponentially. Last year it grew by £75m. Even if this growth rate flattens out and City are "only" another £75m bigger, they will be bigger than United, revenue-wise. As the City Football Group continues its world-wide expansion we can expect further big ticket sponsorship deals in many regions, so there's considerable growth in the pipe.

Would be interested in breakdowns of United and City's projected incomes if you have them.

I would have thought it would be very hard for City to catch United's revenue let alone surpass it any time soon with United signing record deals with Chevrolet and Adidas for £45m and £75m compared to City's deals which are no where near, what is it £9m from Nike and £25m from Etihad?

 

[RoadTrip]

I'm actually quite impressed and surprised with how much City's owners have invested in the club. The training facilities are probably the best in the world and the local work from what I hear has completely transformed the local area. I believe they are in talks with the council to take ownership of the stadium as well. They are investing heavily into their youth system through the training facility as well and you can't knock that. There is one thing to just throw money at the best players but they are clearly in this for the long term. I think they are quite concious of how they are seen as well, they got rid of that CEO who used to mouth off too much as well as Mancini. Not too many people at that club you could say are dislikeable.

Can't say I agree with the the way they've gone about things but at least they are investing into youth and the local area as well as the club.

Investors from that part of the world are incredibly business savvy. And their investment and wealth is no longer limited to oil. For example, Arab owners now own a vast amount of London property for example.

Of course that doesn't explain their willingness to invest in local structure and club structure too. I obviously dislike it as a United fan but if you're a billionaire ready to spunk money, at least they've done it with additional things as well not just making the club a toy.

 

[RoadTrip]

So you're suggesting life is unfair? OK... I am with you there.

And regards your financial analysis, I take your point, but I was only speculating about revenues this year not decades forward. This year, United will be in at around £390m, you can count on it. And City will be above that imho. Not by miles, but marginally, in my view. And not by renegotiating anything. As you say City's commercial revenues have grown exponentially. We annouced another deal only yesterday with some big Chinese outfit (China being owned by Abu Dhabi, of course, because all our sponsorships are with Abu Dhabi, right?).

Anyway, we'll see. Perhaps one to bookmark eh?

I would be massively surprised if City's revenue are close to ours let alone superseed them.

 

[Deleted member 78215]

Commercial income - £165m
Match day income - £47.5m
Champions League - £31m
Premier League - £100m

C'mon. We all know City's books have more fudge in them than Willy Wonka's chocolate factory.

In the space of about five years your revenue has grown larger than Chelsea's. Sounds legit.

And your fanbase and general reach really is small, at least compared to United, Arsenal, Liverpool, Chelsea.

 

[Ronetta]

Would be interested in breakdowns of United and City's projected incomes if you have them.

I would have thought it would be very hard for City to catch United's revenue let alone surpass it any time soon with United signing record deals with Chevrolet and Adidas for £45m and £75m compared to City's deals which are no where near, what is it £9m from Nike and £25m from Etihad?

I don't have them to hand but the expected reduction to between £385m to £395m are United's own figures, so you can bet your last £ they will come in within that range. Marginally above conceivably, but I doubt it by much. Historically, United calls the numbers about right.

City's revenues are public domain, as are the rates of increase they have shown in the commercial and overall revenues. The rest is speculation on my part, but far from wild speculation.

 

[Ronetta]

I would be massively surprised if City's revenue are close to ours let alone superseed them.

Get it bookmarked ;-)

 

[Beachryan]

We'll see. In 2014 United's revenue was £86m higher, take out CL gets you to about £50m. So City will need to grow £50m faster than United. Don't see it without something very dramatic happening. In theory if United get back into the CL in 2015/16, then 'order' will be restored.

 

[Nanook]

I don't have them to hand but the expected reduction to between £385m to £395m are United's own figures, so you can bet your last £ they will come in within that range. Marginally above conceivably, but I doubt it by much. Historically, United calls the numbers about right.

City's revenues are public domain, as are the rates of increase they have shown in the commercial and overall revenues. The rest is speculation on my part, but far from wild speculation.

United's revenue for 2015/2016 will likely be in the £500m range, City might get within 20/30m this season but the season after the gap will probably be over £100m.

 

[antihenry]

While I'm far from an expert on investing habits of the Far or Middle East, I am close to an expert on business cases. Any business decision should come down to the best way to maximise your return. An option available to the Sheikh 5 years ago was 'stick that £1bn into a decent investment fund' and get maybe 8 or 9% on it. If he'd done that, he would have far more cash than he achieved through pumping money into City. He has not made a decision based on maximising his return, so I'm with you - it's been done either for non-financial returns (it's fun! But given he can never make time to show up, I kind of doubt that one) or it's being done for PR reasons, which are obviously much more difficult to evaluate.

But that comes back to my whole problem with it - 18 clubs in the premier 'league' have to make decisions based upon financial reality: they must make enough money to keep the lights on. City and Chelsea do not have to do that. Would Liverpool have loved to buy Aguero a few years back for £42m? Of course! But then they might have gone bankrupt, because they don't have the revenues to do so. City don't have to worry about that. So they were able to buy about 10 strikers all above £15m and just keep the few that stick. Other clubs cannot do that. Not United, not Arsenal never mind the Villas or Everton's of the league.

I don't think your point applies to Chelsea anymore. It certainly was the case in the past, but clearly not now or over the last few years. For all the money Abramovich had spent to propel CFC into the European football elite, it was our success on a pitch that brought us recognition and marketing opportunities that are now paying our bills, not some ridiculous sponsorship deals five times the real market value of the club.

 

[Erebus]

FFP is an ill-thought out and clumsy tool that at its heart has a desire to stop City and perhaps to a lesser extent PSG from changing the footballing landscape and maintaining the status quo

I'm always amused by this argument. It conjures up images of UEFA officials in smoke filled dens with shady lights meeting in a clandestine manner to subvert Manchester City (with an occasional glance in the direction of PSG). The thought that Manchester City are the centre of UEFA's plans and they pursue their flagship financial policy purely to block the progress of any individual club is as laughable as it is preposterous - and arrogant.

 

[BobbyManc]

I'm always amused by this argument. It conjures up images of UEFA officials in smoke filled dens with shady lights meeting in a clandestine manner to subvert Manchester City (with an occasional glance in the direction of PSG). The thought that Manchester City are the centre of UEFA's plans and they pursue their flagship financial policy purely to block the progress of any individual club is as laughable as it is preposterous - and arrogant.

Well you have Platini on record saying he was first approached about FFP by the owners of clubs, specifically naming Abramovich, Morratti and Berlusconi if I recall correctly. Do you think they approached Platini because they wanted to see a fairer game, or do you think they hoped FFP or something similar would benefit their club (the very fact Abramovich supports FFP tells you everything you need to know about it)? The fact is United, Bayern, Madrid etc. are UEFA's most prestigious and important members. If they approached UEFA expressing concern about City and PSG (not specifically stopping them but preventing it happening again) then I think you're very naive to think any organisation would not act to protect the interest of its most important 'clients'.

Not to mention, you also have Platini on record saying how the 'elite' clubs only agreed to disband the G14 if it meant the distribution of CL revenue would not be reassessed. So we have evidence of their power and influence forcing UEFA's hand. It's hardly some preposterous conspiracy that FFP was something UEFA were pressured into, as opposed to innovating and championing the idea independently.

 

[Erebus]

Well you have Platini on record saying he was first approached about FFP by the owners of clubs, specifically naming Abramovich, Morratti and Berlusconi if I recall correctly. Do you think they approached Platini because they wanted to see a fairer game, or do you think they hoped FFP or something similar would benefit their club (the very fact Abramovich supports FFP tells you everything you need to know about it)? The fact is United, Bayern, Madrid etc. are UEFA's most prestigious and important members. If they approached UEFA expressing concern about City and PSG (not specifically stopping them but preventing it happening again) then I think you're very naive to think any organisation would not act to protect the interest of its most important 'clients'.

Not to mention, you also have Platini on record saying how the 'elite' clubs only agreed to disband the G14 if it meant the distribution of CL revenue would not be reassessed. So we have evidence of their power and influence forcing UEFA's hand. It's hardly some preposterous conspiracy that FFP was something UEFA were pressured into, as opposed to innovating and championing the idea independently.

I'm just amused because every time I discuss FFP with city fans all I get is the whole issue is an attempt to stop city. Nothing else. A plot designed purely and simply to stop City. They genuinely believe the whole football world is trying to stop poor old Manchester City - and it's laughable. It's almost a persecution complex to listen to some city fans.