American operation and FFP

[john@staustell]

"City have invested more than £300 million into their MLS franchise and New York City will have the biggest budget in the American game."

Quote from one of Chinners' bollox articles.

So does anyone have any idea how the US operation sits with our accounts? Is it indeed 'City' that are investing money or will it come direct from ADUG or elsewhere? Who will reap future benefits, City or elsewhere? How does this sit with FFP - are City laying out £300M which will be put into our club by the Sheik and will be disqualified from FFP? Will it therefore raise our balance sheet accordingly in the short term?

Does anyone have any idea at all or is it all secret?

[Ted Hughes]

+1 on this question.

I have been meaning to ask this, because it seems to be under the name of 'City' as owners rather than ADUG etc, as I thought it would be

[Slim]

If City bought £100M in shares, would it be considered a £100M loss?

[Goaters 103]

An interesting question. Anyone know or can clarify this?

I also see our New York "franchise" in reportedly interested in Xavi. Hmm.

[BlueinBosnia]

I thought there were certain expenditures excluded from FFP, which included stadium expansion, construction of infrastructure, etc. Would this somehow fall into such a category?

[Beefymcfc]

I think it will come under it's own guise for now with investment from the Sheikh, then be attributed to infrastructure/growth in the future.

[john@staustell]

I thought there were certain expenditures excluded from FFP, which included stadium expansion, construction of infrastructure, etc. Would this somehow fall into such a category?

Probably UEFA haven't even considered it. How far does'infrastructure' reach? Your own immediate club? Any subsidiary? If it's about 'Financial Fair Play' then it should be anywhere that brings in club revenue.

[BlueinBosnia]

I thought there were certain expenditures excluded from FFP, which included stadium expansion, construction of infrastructure, etc. Would this somehow fall into such a category?

Probably UEFA haven't even considered it. How far does'infrastructure' reach? Your own immediate club? Any subsidiary? If it's about 'Financial Fair Play' then it should be anywhere that brings in club revenue.

I'm pretty sure training facilities and 'academy spending' (can't remember how it was defined, or even if there was a definition) were exempt. The question is, how far can a club expand these definitions. It's become pretty clear now that UEFA are having to make up the interpretations of the rules as they go along (partially due to PSG's cosy relationship with the Platini family), so I don't know who will make what of it. Also, do UEFA have any (and if so, how much) control of a club's in-game spending outside of the UEFA jurisdiction (i.e. within another Confederation's League)?

[Herb]

I've dealt a lot with group finance down the years and, following standard patterns, my thought is that NYCFC will likely be a separate company under the ADUG umbrella but contractually tied to MCFC via a cooperation agreement.
Money goes into NYCFC and is then paid to MCFC for use of the MCFC support. Ergo; all MCFC senior staff will book a portion of the cost of their time and facilities to NYCFC such that the actual cost of setting up NYCFC can be correctly apportioned - no such thing as a free ride in business!
As NYCFC will be supported by MCFC in training, medical, scouting, etc. etc it means that maybe as much as 25% of the MCFC running costs may be attributable to NYCFC and therefore paid by NYCFC and thus the trade of MCFC expertise is paid for in return by cash hitting the MCFC books. Nice.

[john@staustell]

I've dealt a lot with group finance down the years and, following standard patterns, my thought is that NYCFC will likely be a separate company under the ADUG umbrella but contractually tied to MCFC via a cooperation agreement.
Money goes into NYCFC and is then paid to MCFC for use of the MCFC support. Ergo; all MCFC senior staff will book a portion of the cost of their time and facilities to NYCFC such that the actual cost of setting up NYCFC can be correctly apportioned - no such thing as a free ride in business!
As NYCFC will be supported by MCFC in training, medical, scouting, etc. etc it means that maybe as much as 25% of the MCFC running costs may be attributable to NYCFC and therefore paid by NYCFC and thus the trade of MCFC expertise is paid for in return by cash hitting the MCFC books. Nice.

Thanks Herb. Interesting.

[Blue Since 76]

+1 on this question.

I have been meaning to ask this, because it seems to be under the name of 'City' as owners rather than ADUG etc, as I thought it would be

I'm certain the ownership is City, rather than the Sheikh. That does make it interesting as any turnover is also our turnover, same for profit (or loss).

MLS is a bit different though, so I'm not sure if, I don't know, maybe some rich middle eastern person wanted to sponsor NYCFC to the tune of several hundred million a year, does that have to be shared amongst all the clubs?

Herb's comments about some of MCFC's support costs being transferred though is interesting. If Aguero was to go and do some promotional work for them in our closed season, who pays his wages that week?

[Rag_hater]

FFP F***k Off

[Herb]

+1 on this question.

I have been meaning to ask this, because it seems to be under the name of 'City' as owners rather than ADUG etc, as I thought it would be

I'm certain the ownership is City, rather than the Sheikh. That does make it interesting as any turnover is also our turnover, same for profit (or loss).

MLS is a bit different though, so I'm not sure if, I don't know, maybe some rich middle eastern person wanted to sponsor NYCFC to the tune of several hundred million a year, does that have to be shared amongst all the clubs?

Herb's comments about some of MCFC's support costs being transferred though is interesting. If Aguero was to go and do some promotional work for them in our closed season, who pays his wages that week?

Whether MCFC and NYCFC sit under ADUG or whether NYCFC sits under MCFC, I think we'll find that they report separate accounts and that the NYCFC account will not be assessed under FFP because it's an MLS club.
Cost transfer will most definitely be managed between the accounts and that's to the benefit of NYCFC as they'll have the full support of the MCFC machine and to the benefit of MCFC as they can rightfully cross charge the cost of that support to NYCFC.
It's an 'efficiency' that MCFC will have to their advantage and it should serve to assist us with regard to meeting the FFP criteria.

It's more subtle than 2 fingers up to FFP and much more effective. This is more than about making MCFC successful in europe, it's about making the City brand the biggest thing to hit football . . ever! As things unfold I'm constantly and pleasantly surprised as our owners think bigger than I could ever have imagined, and they're serious about their aims and proving to be very effective at achieving them. All good stuff - it's great to be blue when dreams come true eh?!

[Tesl]

+1 on this question.

I have been meaning to ask this, because it seems to be under the name of 'City' as owners rather than ADUG etc, as I thought it would be

I'm certain the ownership is City, rather than the Sheikh. That does make it interesting as any turnover is also our turnover, same for profit (or loss).

MLS is a bit different though, so I'm not sure if, I don't know, maybe some rich middle eastern person wanted to sponsor NYCFC to the tune of several hundred million a year, does that have to be shared amongst all the clubs?

Herb's comments about some of MCFC's support costs being transferred though is interesting. If Aguero was to go and do some promotional work for them in our closed season, who pays his wages that week?

Whether MCFC and NYCFC sit under ADUG or whether NYCFC sits under MCFC, I think we'll find that they report separate accounts and that the NYCFC account will not be assessed under FFP because it's an MLS club.
Cost transfer will most definitely be managed between the accounts and that's to the benefit of NYCFC as they'll have the full support of the MCFC machine and to the benefit of MCFC as they can rightfully cross charge the cost of that support to NYCFC.
It's an 'efficiency' that MCFC will have to their advantage and it should serve to assist us with regard to meeting the FFP criteria.

It's more subtle than 2 fingers up to FFP and much more effective. This is more than about making MCFC successful in europe, it's about making the City brand the biggest thing to hit football . . ever! As things unfold I'm constantly and pleasantly surprised as our owners think bigger than I could ever have imagined, and they're serious about their aims and proving to be very effective at achieving them. All good stuff - it's great to be blue when dreams come true eh?!

Spot on and I agree with everything there. We are immensely lucky.

[Wooders]

Spot on and I agree with everything there. We are immensely lucky.

Do you think so?

[Mikhail Chigorin]

I've dealt a lot with group finance down the years and, following standard patterns, my thought is that NYCFC will likely be a separate company under the ADUG umbrella but contractually tied to MCFC via a cooperation agreement.
Money goes into NYCFC and is then paid to MCFC for use of the MCFC support. Ergo; all MCFC senior staff will book a portion of the cost of their time and facilities to NYCFC such that the actual cost of setting up NYCFC can be correctly apportioned - no such thing as a free ride in business!
As NYCFC will be supported by MCFC in training, medical, scouting, etc. etc it means that maybe as much as 25% of the MCFC running costs may be attributable to NYCFC and therefore paid by NYCFC and thus the trade of MCFC expertise is paid for in return by cash hitting the MCFC books. Nice.

If NYCFC do buy Xavi, they can then loan him to City whilst still paying all of his wages.

Nicer than nice.

[Ted Hughes]

+1 on this question.

I have been meaning to ask this, because it seems to be under the name of 'City' as owners rather than ADUG etc, as I thought it would be

I'm certain the ownership is City, rather than the Sheikh. That does make it interesting as any turnover is also our turnover, same for profit (or loss).

MLS is a bit different though, so I'm not sure if, I don't know, maybe some rich middle eastern person wanted to sponsor NYCFC to the tune of several hundred million a year, does that have to be shared amongst all the clubs?

Herb's comments about some of MCFC's support costs being transferred though is interesting. If Aguero was to go and do some promotional work for them in our closed season, who pays his wages that week?

Whether MCFC and NYCFC sit under ADUG or whether NYCFC sits under MCFC, I think we'll find that they report separate accounts and that the NYCFC account will not be assessed under FFP because it's an MLS club.
Cost transfer will most definitely be managed between the accounts and that's to the benefit of NYCFC as they'll have the full support of the MCFC machine and to the benefit of MCFC as they can rightfully cross charge the cost of that support to NYCFC.
It's an 'efficiency' that MCFC will have to their advantage and it should serve to assist us with regard to meeting the FFP criteria.

It's more subtle than 2 fingers up to FFP and much more effective. This is more than about making MCFC successful in europe, it's about making the City brand the biggest thing to hit football . . ever! As things unfold I'm constantly and pleasantly surprised as our owners think bigger than I could ever have imagined, and they're serious about their aims and proving to be very effective at achieving them. All good stuff - it's great to be blue when dreams come true eh?!

Spot on and I agree with everything there. We are immensely lucky.

NYC's books can't be included in ffp because ffp is a UEFA thing, but if 'we' have spent £300 mil on it, then that also must be exempt from the accounting as far as ffp goes or we'd be fucked.

All very intersting & no doubt close to impossible for Platini & Co to regulate (as will many of our sponsorship deals be imo).

Interesting ideas from Herb as to how we may benefit with expenses.

[Im_Spartacus]

NYC's books can't be included in ffp because ffp is a UEFA thing, but if 'we' have spent £300 mil on it, then that also must be exempt from the accounting as far as ffp goes or we'd be fucked. All very intersting & no doubt close to impossible for Platini & Co to regulate (as will many of our sponsorship deals be imo). Interesting ideas from Herb as to how we may benefit with expenses.

The £300m is a capital investment, so the cash is simply converted into another type of asset, eg equity and this we still have £300m on the balance sheet after the transaction. As a result it is a totally neutral transaction for FFP purposes as it has no impact on operating profit, which is largely (though not entirely) the measure for FFP

[Blue Since 76]

The £300m is a capital investment, so the cash is simply converted into another type of asset, eg equity and this we still have £300m on the balance sheet after the transaction. As a result it is a totally neutral transaction for FFP purposes as it has no impact on operating profit, which is largely (though not entirely) the measure for FFP

It would be interesting to hear how MLS finances work. I know they have the issue with big wages and special cases, but do they have any sort of FFP and what happens to their profit?

If that's not an issue, I could see them paying rather a lot for our support and yet still making huge profits which go to their owner. I'd also expect some big friendlies in New York as well.

[ashton287]

I figured city would get money from them. But with it being in America the accounts over there and where their money comes from won't be scrutinised by FFP so the sheikh can pay directly into nycfc and then it can be passed on to city and we are in the green from the extra income which we then use to sign messi.