Should wages be coming out of the £35?

Well there just might be if these Financial Fair Play Rules are strictly enforced by FIFA...

 

Haha. Hopefully!

 

FIFA were expecting to have to deal with these sorts of issues. The regulations cover them quite comprehensively and they set up a committee to rule on them.

What will probably happen is that an auditor or impartial expert will be asked to carry out a review and determine what "fair value" for the deals actually is, i.e. what are the sponsorship deals actually worth in the market to anybody who will only pay the minimum amount they can and will expect it to be cost effective. The sum agreed is what Man City will be allowed to include in their break even calculation regarding the Fairplay Regs, the excessive balance would be excluded from this calculation completely. The rub is though that they still get to keep the rest of the cash and can still use it to benefit the club, they just can't show it as income in the break even calc.

I am also hoping that the tax authorities in the Uninted Arab Emirates (or wherever it is Etihad are registered) also take a look at this. There are international laws regarding something called "Transfer Pricing" which have been around for donkeys years which could also be applicable here. They prevent one company from transferring excessive assets to a related company/individual in another tax jurisdiction. The UAE in this instance could argue that by paying well over the odds for this advertising Etihad has artificially reduced its taxable profit in the UAE by transferring it to a related party that is taxable in another country (effectively keeping the wealth within a common ownership but reducing the income owing to the UAE). I hope that this happens as well.

Get Man City spit roasted between FIFA and some UAE tax men. That would teach them!

 

I am also hoping that the tax authorities in the Uninted Arab Emirates (or wherever it is Etihad are registered) also take a look at this. There are international laws regarding something called "Transfer Pricing" which have been around for donkeys years which could also be applicable here. They prevent one company from transferring excessive assets to a related company/individual in another tax jurisdiction. The UAE in this instance could argue that by paying well over the odds for this advertising Etihad has artificially reduced its taxable profit in the UAE by transferring it to a related party that is taxable in another country (effectively keeping the wealth within a common ownership but reducing the income owing to the UAE). I hope that this happens as well.

Get Man City spit roasted between FIFA and some UAE tax men. That would teach them!

Apt description.

 

Haha ... I thought that when I typed it but it seemed apt so I left it in. Wondered if anybody would notice/comment.

Thought my answer was so long/boring that it might go unnoticed

 

You've certainly highlighted the unfairness of it all, I'm expecting it to take some time after the fair play rules kick in for the likes of us to feel the benefits. When new regimes and laws are enforced you usually find there are loopholes or unforseen circumstances that need to be ironed out.
I wish that something was done with regards agents fees, this cost should fall entirely on the players concerned.

 

I do, put a post on our board and most replies were huh lol

I havnt read all this thread but the one think i think you missed is, you can have loans, but your turnover-expenses has to be more than your loan payment, just pulling figures out my arse here but take Man U.

280 million turnover a year.
130 million expenses
interest on loans 50 million

they are fine and can even loan more if they want.

another team, lets say liverpool.

120 million turnover
100 million expenses
45 million loan interest

= scuppered in the fair play rules, as thei loans are 25 million more that there turnover-expenses.

The other thing is, with these fair play rules, you may as well give players longer contracts.

Buy a player for 12 million give him £25,000 a week, over 3 years thats 4 million a year. (on the transfer)
Buy a player for 12 million give him a 6 year contract = 2 million a year, but then you can give the player another 500,000 a year, taking his wage to 35,000 a week (more chance to sign for you), and you have 1.5 million a year more to spend in the future years, than you would have with the 3 year contract (obviously it costs the club more over the 6 years, but for the fair play rules as it only goes back a max of 3 years, you are in profit every year.

and yet another scenario.

You buy a player for 20 million, give him a 4 year contract = 5 million a year, you sell him for 15 million 2 years into his contract, 2 years have already been wrote off, so for the fair play you have made 5 million profit, obviously supporters dont see it that way, but the fair play does.

anyway been up all night, daughter got rushed to hospital at 3am, had a really bad convulsion, so will leave it there, just hope it makes sense lol

 

i seriously don't give a monkies about the the total sum of £35m going on transfers. the fact stands that the idiots that ring into talk sport don't have a ****ing clue about the realities of running a club and what the financial implications are of every single action. they're in cloud cook koo land if they think that free signings are actually 'free' what they fail to realise is that most opf the £35m is already spent. you don't hear them complaining about tiote getting a nice big contract or us trying to give enrique one either. both will be coming out of that pot too. as for saying they've wiped nolan and carrolls wages off the books maybe they have, but the club is in a tonne of debt and we're trying to REDUCE the wage bill not just sustain it.

multi millionaires don't get to be just that by spunking millions into financial black holes without a plan at long term gain/stability. As long as we get the players we need into the squad i don't care what they cost as long as they prove to be a smart purchase down the line. every signing is a gamble. look at luque and boumsong big money for little return. I'm all for us trying to get the best deal for N.taylor if you were bidding on a buy it now on ebay and they suddenly asked you for 50% more after you'd bid the buy it now price would you be happy to give him the extra just because he asked you to?

 

I don't care which way the maths are done as long as apples are matched with apples and not oranges.

Selling Carroll generated £35 million and saved 5 years wages. If we want ot take wages into account, thats a total of about £42 million. Similarly, Nolan Generated £4million and saved about £4 million.

If wages are being taken into account, the amount available is £50 million, more or less.

If wages aren't being taken into account, fine: leave them out of both sides of the equation

 

i personally have no problem with some of the cash being spent on the training ground either and a lot of people are saying that it sohouldn't come out of that money. but i take the view that if we're buying a new winger it's to improve the squad, similarly if we are paying for under pitch heating at the training ground our squad can train properly during increasingly harsh winters thus improving the squad on the whole.

for me the whole argument is similar to a family that is snowed under in debt in 100s of 1000s hitting the jack pot on the lotto and instead of clearing there debts with some of their winnings there gonna blow it all on expensive flamboyant hire purchase schemes which will ultimately bury them in even more debt down the line. everyone would call them ****ing ******ed for doing so yet put it into a football landscape and its suddenly a desireable alternative?? it makes no sense.

 

Pipe4Life:

Your points that spending money on training ground and on wages are fair ones. Other poitns of view could be taken, but if you want to say that investing the Carroll money into infrastrutre and to pay wages is a sensible stratefy, that is a defensible point of view.

It does, however, leave the long running issue of honesty. Pardew (and I think he was telling what he beleived to be the truth) publically assured the fans that the £35 million would be invested in the team. That doesn't mean the pitch, and really shouldn't mean day to day running costs such as wages. If the plan was to not invest the money in the team but to plow it back into general club running costs, then they shouldn't have lied about it. It just generates ill feeling in the long run

 

i wouldn't consider it lying personally. he didn't say "ive been assured we're gonna spend the whole £35m on transfers..." he said it would go back into the team. now call me a cynic (maily because i am most of the time) but spending money on team wages and team facilities sounds a lot like the money is being invested into the team from where i'm sat.

maybe its a case of a lot of fans hearing what they want to hear. the media instantly start printing that we now have a definite £35m transfer war chest and before you know it, we have it being taken as fact by the majority because thats what they wanted to hear from the off.

 

Pipe4Life:

If you say something knowing that it will be understood by your listener to have a certain meaning, and if you know that what your saying as understood by your listener is not true, then that is lying. That is not my opinion: the police and the Courts think they same.

Equally importantly, it is stupid. If you care about what your listener thinks, you are saving up a major sourceof discontent for the future. If you don't care what he thinks, why not just say what you mean from the outset ?

 

who's to say that amount of thought was put into what he was saying? its easy in hindsight to sit and disect his words and intended messages afterwards. I personally believe he was simply trying make it clear that mike ashley wouldn't be pocketing the cash and that it would be staying within the club. as soon as the sale of carroll was announced everyone was saying mike would be taking the money and running. that was my feeling at the time he said it but that is only my opinion. but this is why i don't necessarily think what he said was a lie as i don't really think he went to through the ramafications of what his precise wording could POTENTIALLY be interpreted as meaning by a million hurt fans afterwards.

 

Hi Blackcat! Hope your daughter is alright mate!

Don't worry my comment about the Mackems not knowing was just me being flippant, I know you are well informed on this because i've spotted some of your comments before. I tend to get shouted out on your board though so I didn't chip in in support of your comments.

Not fully following your comment on loan interest repayments. I don't recall a clause in the regs specifying that the loan interest expense has to meet any sort of ratio. Are you able to point me towards the clause? As for NUFC you will see from my earlier post that we actually have interest free loans from MA at the moment, but will have to build fair value interest expenses back into the calculation. That is one expense that I am positive most fans are not aware off.

As for the benefit of the long term contracts I agree and actually I think it may already be part of NUFC policy. Tiote's new contract was for 6 years, Cabaye, Marveaux and Ba I think (?) were all signed on five year deals. Like you say, spreading the depreciation expense, and for that matter the Agent fee expense over as many years as possible will help with the break even calculation. Although I would hope that the club does not lose sight of the need to manage long term cash flow as well by not also realising that you don't want to have to pay too much more over the length of the contract (in actual terms). A happy balance is important here.

As for the acknowledgement of the difference between the sale value of a player in comparison to NBV (net book value) as opposed to purchase price, you are again right. What appears to be a loss can actually still be an accounting profit (and break even calc income). This realisation has to cut both ways though. I have seen a number of posts in recent days suggesting that we should look to raid Man City for their fringe players, on the assumption that they will be available on the cheap. But the reality is that Man City will want to at least re-coup the current NBV of the player so that they don't have to show a loss during the year. As they have often paid well over the odds for some of these players (Lescott for instance) that means that some of these players will actually be quite expensive.

Anyway, enought for the moment, there will be many more discussions like this as it all unfolds!

 

You are right there will be loopholes and ways around it and the richer your owner the greater the possibilities to find and exploit them. Especially if the owner is also willing to take a big personal loss in order to subsidise the club. The £400m for instance now gives Man City a massive investment opportunity which they can use to increase their future income.

I am also concerned that clubs will find ways of diverting wages into fringe contracts (personal sponsorship paid by a third party company) meaning that the player gets a reduced proportion of their income from the club, thereby reducing the wage expense.

As for agent fees, yes I agree, in the real world the player should pay this, but in reality they will include the clause that the club has to pay as part of the contract negotiation. So unless clubs show a united front on this and insist I can't see that ever changing.

 

Fredd - Agree 100%. The clubs problem is not that they are not spending money, it's the lack of transparency, the lack of respect for their listener (the fans) and the general way in which they go about things. The bottom line is the Pardew said that 35m would be invested in the team. Not the training ground or any other of the smokescreens now being chucked out there. It's a typical mistake of this regime. They panic and make rash statements thinking it'll be washed away over time. But the fans are like elephants and don't forget. So to then not be true to your word, and try and mask this by accusing fans of amateur mathematics because of fees, training ground etc is just sheer stupidity. I don't have any problem with them not spending the 35m, the transfer budget they must have had already ear marked for this summer or any other money. I wouldn't be overly happy if we spent jack all due to the risk that comes with that, but as long there are 11 players out on the field putting the effort in I'm fine with it all. I fully expect spend this summer to be near enough zero. There is nothing wrong with that if it is all geared towards financial stabilty.

But FFS lets have a bit of transparency, and a bit of honesty. yes there are fans out there that are complete morons who'll never be happy unless we spend a gadzillion pounds and go massively into debt. They're a minority though so have a bit of respect for the rest.

 

while i'm not trying to defend the regimes record of transparency or PR capabilities i would say that they'd likely be crucified regardless of what they'd said. if he turned around and said it'd all defo be used for transfer fees then we only used a portion of it this transfer window keeping some for the Jan window; people would say he's tightening the purse strings. If they spent the whole lot they'd be kicking off in the Jan window that we weren't spending. this is whilst we have a mountain of debt that we're just starting to get a handle on. i just think a lot of the time peoples loathing of the regime clouds the fact that what we're currently doing is constructive up there. the money is being used towards the team be it training ground or wages not to mention the general running costs, charity commitments etc etc.

I'm not saying every fan is a talksport slavering mong but i literally cringe when i hear the the old "when are you gonna spend the £35m?" when you sit back and think about it most of its gone already. i know TV revenue etc is still there but its being used (and wisely in my opinion) to service club debt whether that be to ashley or the banks.

 

Don't bother reading the comments on the Chronicle site. The moronic keyboard warriors on there are ridiculous. I think they just interchange the words "LIES" "PUPPET" "DELUDED" "COCKNEY" and "£35m" while shouting down anyone who attempts a sensible discussion.

 

i physically CAN'T read the comments on the chronicle. if i do i literally start screaming at my screen while i call my wife through so i can knock her about a bit. that always makes me feel better...and bigger

(for the love of god i'm joking!)

i know the majority of fans are perfectly reasonable but its the idiots who unfortunately shout loudest and the media tend to hear them first which means the utter ****e they're spouting gets circulated nationally makin gus all look like a bunch of berks.