I need an explanation in laymens terms of these impending

[gillie]

Financial fair play rules as a rag on FB has just said we need to make sure we are profitable like them over the next 2 years.

[craigmcfc]

You're not alone in your thoughts Gillie, had major concerns myself about it until recently. All you and the rag need to do is watch Khaldoons interview on the OS and no further words are needed.

We are run by experts who have it all under control. The ins and outs don't matter to me and thee, we'll be fine

[Bear60]

Michael , look him in the eye and tell him to FUCK OFF

[Lee_R]

Im completely convinced of two things about this issue.
One, we'll be fine and two.. because not only will we satisfy requirements but we will push marketing and club income in a brand new direction.
I believe Citys bosses have huge plans for MCFC's global marketing. They dont want to rival other clubs, they want to be number one on every level. I think their ambiitions probably exceed what we expect. Thats the feeling I get from Khaldoon.

[LookMumImOnMCF.net]

The FFP rules are so full of holes that I almost wouldn't pay attention to them.

The club will work (and they need not work very hard I might add) to find a way, not around them, but to comply whist still investing in the club and team greatly.

The only thing I can foresee happening is that transfer prices may come down. This will obviously be across the board though.

[Foreverinbluedreams]

Gabriele Marcotti - as layman an article as I can find. Hope this helps.

UEFA's application of Financial Fair Play regulations won't be rigid

UEFA's Financial Fair Play (FFP) rules are a bit like parenting. You can tell your eight year old that if he doesn't tidy his room by the end of the day you'll take his bike away. But if dinner rolls around and it's not quite neat, but still not the absolute mess it was that morning and you believe he made a genuine effort to clean things up, you may let him keep the bike. Especially if you were really looking forward to that father-son bike ride the next day.

UEFA-bashing is popular these days (especially from Special Ones) but, in fact, European soccer's governing body has approached the Herculean task of implementing FFP with two much needed ingredients: common sense and flexibility.

The basic concept behind FFP is that you can't make more than a certain amount of losses over several seasons or UEFA will punish you by not awarding a license to play in the Champions League or Europa League. This will kick in from the 2013-14 season, when the maximum "losses" (acceptable deviation) will be €45 million ($66.8M) over the first two "monitoring periods," 2011-12 and 2012-13. (If you have time on your hands and enjoy both legalese and accounting, you can download the regulations.)

Now, you may remember that Chelsea announced a loss of €83 million ($123.2M) for the 12 months ending May 2010 and, since then, splurged roughly the same amount on Fernando Torres and David Luiz, virtually assuring a comparable, if not greater, loss for the 2010-11. Or that Manchester City, was around €150 million ($222M) in the red for 2009-10 and that was before splashing out north of €200 million ($296M) over the past two transfer windows. So how on God's green earth can these two clubs hope to comply with FFP?

The answer is that FFP is, at once, stringent and fuzzy. For a start, bear in mind that a club's annual financial statement is not equivalent to what the UEFA Financial Control Panel will be considering in terms of FFP. A whole bunch of expenses and revenue streams get included in a club's accounts which are not included in assessing FFP compliance. For example, much of the investment in youth development or stadium/facility expenditure is not counted toward FFP. For some clubs that can mean as much €20 million ($29.6M) lopped off the annual expenses.

Oh, while we're at it, let's knock one widely held misconception on the head right now. UEFA will be vigilant when it comes to any kind of attempt to circumvent the rules. So, for example, Sheikh Mansour can't buy, say, a used football from Manchester City for €100 million $148M) and then book that as revenue for City. Or, rather, he can, but UEFA will only count what it considers the "benchmark fair value" of the ball as revenue ... probably €19.95 ($29) or so. By the same token, Roman Abramovich can't get one of his companies to sponsor Chelsea for €200M a year: UEFA would look at the "benchmark" sponsorship deals -- probably Barcelona's with the Qataris -- and only count, say, €25M ($37) toward FFP.

Another key factor which is often ignored is that if a club can prove that it's outside the FFP parameters because of contracts signed before FFP came into effect, then UEFA will look the other way. So basically any contract signed before June 2010 which causes an overspend won't be counted. The effect of this rule will, obviously, wane over time, but, initially should provide a decent cushion in reducing the wage expenditure.

Also, transfer spending does not automatically show up in a club's account as an expense. Or, rather, not a full whack, because clubs tend to amortize player acquisition costs. Take Torres, for example. It's not as if his arrival automatically added €60 million ($80M) expense to Chelsea's 2011-12 accounts. What clubs do is spread out the acquisition costs of a player over the life of his contract. In Torres' case, it was five and a half years so Chelsea "only" takes a hit of around €11M ($16.3M) in 2011-12 (plus, of course, his annual salary).

But perhaps the most important factor is hidden away in Annex XI of the FFP regulations. And this is where things get fuzzy. If a club can make a persuasive argument that it's losing money today, but that this is part of a long-term strategy that will lead to break-even or at least FFP compliance, then UEFA may decide to grant a license anyway. Now, obviously it can't be as simple as "We'll make a €500M loss this year but don't worry because we've signed Leo Messi, Cristiano Ronaldo, Xavi, Wayne Rooney and Manuel Neuer and our strategy is to win the Treble every year while selling out our stadium and charging fans a thousand euros a ticket while selling a billion jerseys around the world..." It has to be "credible." But, of course, "credible" can mean different things to different people. (Some of those subprime mortgages looked awfully "credible" to a lot of folks until they blew up in everyone's faces.)

The other factor is that UEFA will consider a club's "trend." (And this may be the saving grace for clubs like Chelsea, City, the two Milan teams,etc.). In other words, if you cut your losses year on year and show UEFA you're moving in the "right direction" then they may license you anyway, even if you don't meet the requirements. A bit like the dad and son bike examples above: show good will, stick to it and we'll be understanding.

Some of the more virtuous clubs will, no doubt, complain, if and when UEFA's Financial Control Panel applies the rules in Annex XI to give somebody a "pass" into the Champions' League. But, in fact, UEFA is using common sense. Make regulations too hard and inflexible and clubs who don't have a prayer in terms of compliance will simply give up (which, incidentally, would weaken the Champions' League appeal). The trick in applying this "common sense" of course will be to do it in a way that seems "fair." Because if you're a little too understanding then your daughter, who always keeps her room nice and neat, might get a little peeved when her brother suffers no consequences and gets to keep his bike when, in her opinion, his room is still a relative pigsty.

[john68]

Michael , look him in the eye and tell him to FUCK OFF

You tight git Bear...That was cruel and you should be ashamed....You know that Our Michael is horizntally challenged and would need a box to stand on to go eye to eye. Unless the rag was a dwarf....:-)

[gillie]

Michael , look him in the eye and tell him to FUCK OFF

You tight git Bear...That was cruel and you should be ashamed....You know that Our Michael is horizntally challenged and would need a box to stand on to go eye to eye. Unless the rag was a dwarf....:-)

You defo need to go to specsavers you old rascal lol.

[gillie]

So lets say we dont meet the rules when they kick in but we are prem champs surely UEFA would'nt or could'nt ban us as thier own competion would be made to look silly CL without the English Premier League Champions.

[john@staustell]

The key is to work with Waffa, not against them. Just keep nodding and say yes.

The bottom line is in that annexe. The business plan for City is absolutely huge. This is what most of these fools in the media cannot grasp, as they can only think short-termism. In 10 years time the Sheik will be raking it in.

Not sure how Inter or Real will be approaching this though.

[simon12]

So lets say we dont meet the rules when they kick in but we are prem champs surely UEFA would'nt or could'nt ban us as thier own competion would be made to look silly CL without the English Premier League Champions.

I would presume that if our losses, say, over 3 years reduced year on year we would get a pass as we were making an effort to comply. I was also under the impression that if we put our name ( MCFC) to something outside football that created revenue, we could use 25% of it or have I misunderstood something?

[Chad]

The Marcotti article posted by Foreverinbluedreams is really helpful. Thanks FIBD.

[aaron bond]

So lets say we dont meet the rules when they kick in but we are prem champs surely UEFA would'nt or could'nt ban us as thier own competion would be made to look silly CL without the English Premier League Champions.

I would presume that if our losses, say, over 3 years reduced year on year we would get a pass as we were making an effort to comply. I was also under the impression that if we put our name ( MCFC) to something outside football that created revenue, we could use 25% of it or have I misunderstood something?

Plantini himself said recently that clubs don't have to exactly meet the 45m annual loss target, but if they can demonstrate they are working towards it then everything is ok.

Essentially, as long as we are reducing our losses each year, and increasingly rely on our own revenue instead of the Sheikh's bank account, then we'll be fine.

You can see we're already taking the right steps as our commercial revenue increased significantly last year vs. the previous year. I expect that only to get better in the upcoming years, plus with the Champions League money, we will move towards a sustainable business model.

Pretty much all of the top Europe clubs would struggle with these rules if they are enforced exactly to how they are stated. Even United would have made a loss last year if it wasn't for the Ronaldo sale. UEFA do not want a Champions League tournament with lots of clubs banned due to financial reasons, but these guidelines ensure clubs must at least work towards a model where they can survive from their own sources of income.

[Dameerto]

They basically left several loopholes in the regulations to ensure they dont miss out on their bribes ALLEGEDLY.

[john68]

It was clearly stated by a UeFA official that banning clubs from competition was only a last resort and there were other sanctions that could be imposed, such as a transfer embargo etc.
He also clearlt stated that whatever the rules may say, it is sufficient for the club to show they are moving in the right direction to meet the rules.

Judging by the comments from just about everyone who has seen the projected development plans for City over the next few years. They have been blown away at the scale and imagination of them. I cannot see UeFA being able to argue that we are not seeking to sort things out,nor travelling in the correct financial, investement direction.

[Fesan]

Profitable like them? I would'nt trade places with them for a billion pounds....

They are loosing money worse than a drunk notorious gambler in Las Vegas. They have close to 100m in interest expenses each year and only barely broke even because of the sale of Ronaldo. So in reality they lost 80m that year and they did not buy any players.

We lost 150m or something and we bought players for over 100m meaning our loss was far smaller than theirs if you take player acquisition/sales out of the picture. Now that we have a deeeeecent team we won't have to spend 200m each year and thus are close to breaking even. Add on top of that the fact that we are not even close to maximizing our marketing income potential while they have pretty few places to look for more money and owners hell-bent on keeping the finances tipping on a blade's edge and taking as much money out of the club as possible I'd say we are in good shape:-)

[Murph]

I don't think we will have a problem with ffp. There's already been a big increase in revenue since the takeover and we've only scratched the surface, yet we are already 11th on the Deloitte rich list.

Short term, there's the mooted stadium naming rights that should bring in over £10m per annum. We now have champs league income £30m plus and it wouldn't surprise me if we have a separate shirt sponsor for the CL with maybe another £5/10m of income for that.

Also the shirt sponsorship deal is up for renewal in a year, and if we just get parity with the rags and l/pool that would bring in another £12/13m per annum. We could also do loads of smaller sponsorship deals for £3/4m in the same way Bayern do.

And longer term we will have a larger ground capacity increasing match day revenue and also the income from the sports city development.

I think we'll be fine, the suits running the club will be well on top of this.

[Florida Blue]

Im completely convinced of two things about this issue.
One, we'll be fine and two.. because not only will we satisfy requirements but we will push marketing and club income in a brand new direction.
I believe Citys bosses have huge plans for MCFC's global marketing. They dont want to rival other clubs, they want to be number one on every level. I think their ambiitions probably exceed what we expect. Thats the feeling I get from Khaldoon.

Lee you are spot on, and I really think any interest we have in a player like Honda is tied toward opening up Japan to the City experience, and they will buy merchandise.

[bobby brows]

Found this article on the swiss ramble on how we could break even

http://swissramble.blogspot.com/2010/10 ... -even.html

Its quite interesting (and detailed) except the bit about raising ticket prices! grr Don't give them any ideas.

I think the Sheiks are looking for a fee for naming rights in comparison to the NFL.

1. Reliant Stadium, Houston Texans- Reliant Energy paid the Texans 400 million dollars for the naming rights to their new stadium for 32 years
2. Fed Ex Stadium, Washington Redskins- Fed Ex is paying the Redskins 200 million for the naming rights to their stadium for the next 27 years
3. University of Phoenix Stadium, Arizona Cardinals- The leader in online education is paying the Cardinals 154 million for the naming rights to their new stadium for the next 20 years
4. Bank of America Stadium, Carolina Panthers- Why they were receiving Billions of dollars in tax payer bailout money, this bank shelled out 140 million dollars for the naming rights to the Panthers stadium for 20 years
5. Lincoln Financial Field, Philadelphia Eagles- This financial institution is paying the Eagles 139.6 million to place their name on their stadium for 20 years.
6. Lucas Oil Stadium, Indianapolis Colts- This Oil Company is giving the Colts 121.5 million dollars for the naming rights to their new stadium for 20 years.


I also think what City have been doing in America has been underestimated the trio of Umbro (under the nike umbrella), ESPN and Gary Cook could reap dividends over there. We went last year, were coming back again this summer. Are games are going to be live on ESPN. Add a trophy and it could reap dividends too. I mean MLS is only 17 years old and is the 5th biggest sport in america.

[Goaters 103]

Simple - The FFP Rule is really the Manchester City rule, instituted amazingly when we appeared on the Uefa radar and threatened the current staus quo and cartel at the top table who have been filling their boots for years.