Good post KPR I doubt it will work. The owners couldn't do that though as they are related parties and it would be picked up on. They could however just promise to put a certain amount of business another companies way in return for sponsorship of X or merchandise purchase.
They aren't related parties. As I've stated is that their company and themselves are separate entities.They are worth more than the company.Their company could be worth say £5 Billion,but they are worth £500 Billion. You're right in what you said that they could easily set up a marketing company and sell merchandise across the globe.They bought it for their company and then sell it.However the funds will appear on the Man City balance sheet.Its legal and above board,as its contributing to another arm of their overall business,as they are likely to have a very broad objects clause which basically means they can dip their fingers into as many different businesses as they like.Its diversification.Instead of ''strategic fit'' its ''Financial fit'' as all the businesses are un-related.
Yes but they are directors/ shareholders which makes them relates parties KPR and auditors will pick up and disclose this due the nature of te amounts involved being so material. Also if they set up another company there would be common control so again it would be disclosed - depending upon the control set up. As these companies are mainly groups all intercompany transctions are removed from the parents accounts. What you are saying is correct in essence but factually incorrect.
But Man City aren't the parent company.The holding company owned by Shiekh Monsour is.Everything goes through that.All they need to do is sell stock from one arm to another and then hedge the profits into all of the arms.Each seperate arm will have its own board of directors.
But all group transactions will still have to be valued at arms length ( PUP adjustments if you like ). There my be a problem valuing these transactions however as sponsorship is worth whatver the buyer is willing to pay. As the Shiek owns the holding company which in turn owns Citeh they will be related party transactions. If the fair play rules are to work there has to be rules in regards to related party / intercompany transactions or it's pointless. I think the whole thing is stop things like Citeh happening again, I don't think they can particularly do much about the Clubs that hav already done this as like stated before there will always be a way around it I take it you are also an accountant then ?
I've stayed out of this thread purely because I have not seen the detail of these regulations, I've only read some press comment about them and, of course seen the general ill-informed media comments. Without having seen them none of us are really in a position to make definitive comments. The underlying rationale appears to be an attempt to save clubs from themselves i.e. to operate within their financial means. On face value that appears equitable but I fear that there will be unforseen consequences. its pretty pointless asking KPR if he's an accountant. In these circumstances its not an accountant that you need - this is a game for financiers and legal eagles. It's a bit like saying we need a professional driver. Well jensen Button is a professional driver but then so is the guy who drives the No 17 bus. Now I've got an MBA and an MA in Corporate Strategy so I think I'm fairly informed but I would be out of my depth in trying to see how these regulations can be implemented or avoided.
When asking if he was an accountant it wasn't a pop, it's just he seems fairly knowledgable on this particular subject. In regards to discussing related parties, which is the point we were discussing if you look back, an accountant is exactly what you would need not a legal eagle. Your legal guys will look for the loop holes whereas it's the accountant will have the final say in what figures the ruling body sees, unless the club disagree in which case they would get a qualified audit report.
It's a good job there's such an august body at the top of football to police all this financial tomfoolery.
Thank god for that, otherwise the whole scheme would be ruined by a mixture of political wrangling, fraud and downright incompetence. But as you say, that's not gonna happen no..no...no
I'm not an accountant. However in order for the FFP to work.UEFA need accountants and legal eagles.They know every trick in the book.There is many loopholes clubs can use.There is a large numbers of cracks in the system that can be exploited by clubs.However by appointing legal eagles and accountants,they can plug holes to ensure that none of these loop-holes can be exploited.
Coincidentally there's an extensive and free article about FFP on Paul Tomkins' site today: http://tomkinstimes.com/2011/06/fair-play-for-fenway/
I've read it.However it doesn't show any of the possible loop-holes that clubs can exploit.And they will find loop-holes.There is cracks in every system.None of them are flawless.
KE7, I can assure you that it is the other way around. In these circumstances the accountants are TOLD what should and should not appear. As for the auditors, well firstly they are accountants and secondly they are paid by the clubs!
As an accountant and auditor myself to suggest we are told what to show is a joke. Auditors, as you know must be independant ( therefore the fact they are paid should, athough sometimes it may not be the case if the audit firm is too small, make no difference ) We are paid by the club but responsible to all stakeholders, in the case of disagrement we will simply qualify the audit report. There is no way a legal bod can tell an accountant who is a related party as we are governed by our own rules and regs. Anyway,just took the kids to see Green Lantern - good film
Theres plenty of ways to ''hide'' money.The balance sheet will show that the clubs are making profits.Once that happens the FFP can't affect them.
And as somebody who has over 20 years experience of international corporate management with particular emphasis upon multinational strategy, I can assure you that accountants are considered as operational managers. In larger complex international organisations they are instructed by executives as to how they are to present their published information (within legal requirements). Please don't get me going about auditers. No names or packdrill but I have been in boardrooms in the UK, Germany and the USA where leading accountancy firms have presented their draft audit reports to be agreed prior to publication. Especially in large complex organisations, it is just too easy to ensure that national auditors just do not have access to information or have to rely upon information fed them from outside parties who ostenstably have no relations to the organisation being audited but are in fact directly or indirectly associated. The difference here is between executive and operational management. Glad you and the kids enjoyed the film
And that is the difference. Auditors won't present information what the client wants due to the fact they pay them. They will however present information based upon reliance of third parties ( which as you say may not actually be third parties in the complete sense. I hope your not trying to tar my great profession sir, so interesting and charasmatic as it is
No way mate. Auditors have their job to do and if done properly they can be very useful for the organisation being audited. In the great sleeze (or should I say those who may not always adhere to either high legal or moral standards) pecking order I have found Bankers, Lawyers and Civil Servants stand far higher than auditors and accountants [though I will leave you to decide between them!] As for me, I'm now happily retired and living in penury (well not quite )
