Financial Restrictions Rules

[Fish111]

Thanks for that lads, clear as mud ;-) The upshot is that no-one really knows then?

[john@staustell]

The sheik is going to setup his own champions league competition and stick two fingers up to Eufa

That is not as unlikely as it sounds. Wasn't UEFA originally meant to be an organisation representing clubs, not dictating?

This mornings Telegraph:

"We would ban Manchester United and Manchester City", Gianni Infantino, UEFA's general secretary, said. "You cant spend more than you earn. We have not made these rules to put them in a nice frame on the wall".

WTF? What about the mega-overspent clubs of Italy and Spain?

[MaineRoadMemories]

The sheik is going to setup his own champions league competition and stick two fingers up to Eufa

Could not be far off the truth IMO. If all the "big" clubs fail to make the grade in a couple of years UEFA have a very big decision to make - one which could spell the end of the Champions League and the formation of a new competition run by a rich benefactor.

We could end up with everyone playing in Europe by 2018 ;-)

New super-duper European League for all the big teams don't meet the requirements (e.g. United, Arsenal, Liverpool, Chelsea, City)

UEFA Champions League for everyone else (e.g. Everton, Fulham, Blackburn, Aston Villa)

UEFA Europa League (e.g.Wigan, Newcastle, Birmingham, Sunderland)

[El_Quince]

It will be interesting to see if UEFA does have the balls to boot out any of their biggest clubs, when push comes to shove. With any luck the first victims will be Platini's buddies at Juventus.

Incidentally, UEFA note that the big clubs are all in favour of this. Of course they are: on the face of it, the rules look specifically designed to keep out any upstarts such as City, and preserve the closed shop.

I saw this story a few days ago and initially ignored it, but I am intrigued. I am an accountant and have started to wonder how the rules will be bent.

First of all, in 2013/14 and 2014/15, clubs are allowed to make a €45m loss if it is covered by equity contributions: this means buying new shares in the club, which so far is what has been done by City's owners. For the seasons after that it drops to €30m.

The loopholes that I can potentially see at the moment will be around the valuation of players.

At the moment, a players' transfer fee is charged through a club's books over the length of the contract. For a player bought for £4m on a 4 year contract, a club would show £1m per year cost in their profit and loss account. If, say, at the end of year 3, the player was sold for £5m, you would get a £4m profit in that year: the players 'value' has been written down to £1m, so a £5m sale gives that profit.

As things stand, I think it would be difficult to convince clubs external auditors that it would be reasonable to write down these costs in the year that the player is bought.

However: clubs will be able to, now and in future, apply International Accounting Standards. As far as I can see, these rules allow 'intangible fixed assets' (which is what players registrations are referred to in the books) to be revalued upwards. For example, in the example above, let's say the player instead of leaving signs a new 5 year deal and the £5m offer is rejected. I can't see why the club wouldn't be able to revalue the chap to £5m in their accounts, recognising a £4m 'profit' in their books.

Could we see big clubs agreeing to make large spurious offers for each others players that are then rejected, but used as a basis for upping the values of the players on their books? (EG Real Bollocks offered £93m for our 17 yr old youth teamer - so that's what he is worth).

[Ted Hughes]

Thanks for that lads, clear as mud ;-) The upshot is that no-one really knows then?

Absolutely & anyone who says they do, is full of shit (unless he's called Khaldoon). It's all guesswork.

[Ted Hughes]

It will be interesting to see if UEFA does have the balls to boot out any of their biggest clubs, when push comes to shove. With any luck the first victims will be Platini's buddies at Juventus.

Incidentally, UEFA note that the big clubs are all in favour of this. Of course they are: on the face of it, the rules look specifically designed to keep out any upstarts such as City, and preserve the closed shop.

I saw this story a few days ago and initially ignored it, but I am intrigued. I am an accountant and have started to wonder how the rules will be bent.

First of all, in 2013/14 and 2014/15, clubs are allowed to make a €45m loss if it is covered by equity contributions: this means buying new shares in the club, which so far is what has been done by City's owners. For the seasons after that it drops to €30m.

The loopholes that I can potentially see at the moment will be around the valuation of players.

At the moment, a players' transfer fee is charged through a club's books over the length of the contract. For a player bought for £4m on a 4 year contract, a club would show £1m per year cost in their profit and loss account. If, say, at the end of year 3, the player was sold for £5m, you would get a £4m profit in that year: the players 'value' has been written down to £1m, so a £5m sale gives that profit.

As things stand, I think it would be difficult to convince clubs external auditors that it would be reasonable to write down these costs in the year that the player is bought.

However: clubs will be able to, now and in future, apply International Accounting Standards. As far as I can see, these rules allow 'intangible fixed assets' (which is what players registrations are referred to in the books) to be revalued upwards. For example, in the example above, let's say the player instead of leaving signs a new 5 year deal and the £5m offer is rejected. I can't see why the club wouldn't be able to revalue the chap to £5m in their accounts, recognising a £4m 'profit' in their books.

Could we see big clubs agreeing to make large spurious offers for each others players that are then rejected, but used as a basis for upping the values of the players on their books? (EG Real Bollocks offered £93m for our 17 yr old youth teamer - so that's what he is worth).

Welcome.

Interesting idea. These rules are inviting all kinds of corruption on a myriad of levels & they're going to be up to their necks in crap trying to sort it all out. Imo it will probably end up with Platini getting the sack & some bloke who does what he's told taking over.

[Murph]

This is worth bookmarking and reading at leisure for those interested. Long document.

http://www.timesonline.co.uk/multimedia/archive/00701/Club_Licensing_Disc_701933a.pdf

[Rag_hater]

It will be interesting to see if UEFA does have the balls to boot out any of their biggest clubs, when push comes to shove. With any luck the first victims will be Platini's buddies at Juventus.

Incidentally, UEFA note that the big clubs are all in favour of this. Of course they are: on the face of it, the rules look specifically designed to keep out any upstarts such as City, and preserve the closed shop.

I saw this story a few days ago and initially ignored it, but I am intrigued. I am an accountant and have started to wonder how the rules will be bent.

First of all, in 2013/14 and 2014/15, clubs are allowed to make a €45m loss if it is covered by equity contributions: this means buying new shares in the club, which so far is what has been done by City's owners. For the seasons after that it drops to €30m.

The loopholes that I can potentially see at the moment will be around the valuation of players.

At the moment, a players' transfer fee is charged through a club's books over the length of the contract. For a player bought for £4m on a 4 year contract, a club would show £1m per year cost in their profit and loss account. If, say, at the end of year 3, the player was sold for £5m, you would get a £4m profit in that year: the players 'value' has been written down to £1m, so a £5m sale gives that profit.

As things stand, I think it would be difficult to convince clubs external auditors that it would be reasonable to write down these costs in the year that the player is bought.

However: clubs will be able to, now and in future, apply International Accounting Standards. As far as I can see, these rules allow 'intangible fixed assets' (which is what players registrations are referred to in the books) to be revalued upwards. For example, in the example above, let's say the player instead of leaving signs a new 5 year deal and the £5m offer is rejected. I can't see why the club wouldn't be able to revalue the chap to £5m in their accounts, recognising a £4m 'profit' in their books.

Could we see big clubs agreeing to make large spurious offers for each others players that are then rejected, but used as a basis for upping the values of the players on their books? (EG Real Bollocks offered £93m for our 17 yr old youth teamer - so that's what he is worth).

Someone who knows how these things work.
Nice to have somebody who knows what they are talking about.
Personally I think everyone of our players is worth 100mil.

[Socrates]

18 months ago I was worried that the new owners hadn't understood the severity of the threat.

12 months ago it was clear the penny had dropped, when the decision was made to bring forward planned spending, but I was concerned we might need Champions League revenue in 2010-11 in order to have a hope of meeting the rules. I was also concerned that City fans would judge the owners harshly if they took drastic action so was keen to explain why drastic action might be necessary.

We now know that UEFA allowed a little more time to adjust than they originally planned and we have an opportunity to get some fast spending in for one last season. Even so, with the wage bill we will have, it will be very tight to get within the rules and Champions League qualification this season, to raise our turnover in 2011-12, is now very very important to us. For us as fans, we need just to be grateful that the owners have acted to deal with the situation and we need also to view all their actions - the big spending, the change of manager when it happened, the sheer speed of change - within the context of the pressures put on by these new rules. I am sure they would have preferred a steady progression along the ten year plan they originally envisaged, but that wasn't going to be possible with these rules so they have had to do things rather differently and there is an element of a gamble to it, but one where the odds are stacked in our favour. Our job is to get behind them, their chosen manager, their chosen players and get us over that CL qualification line.