I GOT myself into one of those ‘mini-wars’ on Twitter the other day. The type where you spew 140 characters quickly but are then forced to regret at leisure. My ire concerned news of further ‘reforms’ to UEFA’s Financial Fair Play regs, and was fuelled by the reading of a piece of transfer gossip that projected that Manchester City hoped to bag both Raheem Sterling AND Paul Pogba for about £120m. “How can those shameless fuckers be getting away with this profligacy again!” I railed. Something like that.
Anyway. I was taken to task by a Mr Ahsan Naeem — @ahsannaeem — an erudite Manchester City fan, who it transpires also really enjoys listening to The Anfield Wrap. Ahsan asked if he could make his counter case to my sophisticated dismissal of Man City’s reckless business plan and its relationship to FFP via a direct email, rather than within the constraints of Twitter. What followed was this: a thorough lecture that entirely contradicted my (and I suspect most lay) understanding of the Manchester City ownership model.
His case was something of a paradigm shift for me. Read it and see what you think. Then hassle John Henry on Twitter, and get him to have a look too. Cheers. Over to you Ahsan:
LAST summer City actually only made an operating loss of £7million. However, due to UEFA deciding that City had failed FFP with regards their 2013 accounts, they were fined £16m. This fine was ‘suspended’ in the sense that if City’s 2014-15 accounts showed that the club had turned a profit (which they will) the fine would be returned. The way in which the fines work is that UEFA simply withhold Champions League prize money. Effectively the sanctions were imposed based upon 2013, but implemented in 2014, when the club had already almost entirely wiped out their losses.
The effect of this is that as of this summer City are now free fromUEFA sanctions. At the same time their profits this summer will be significant due to the returned Champions League monies onto the books, plus the new television deal. Conservatively, before sales, City will have somewhere in the region of £75m to spend before any outgoings.
You asked the question on Twitter about how City square the circle of spending double that if not more this summer. Well, simply put, I would suggest that the club are confident that their revenues will continue to grow exponentially. If the club take the same approach as post 2011’s spending, i.e. the squad is complete so any movements with regards incoming players after this summer will be directly linked to players leaving, then it’s simply a matter of them being able to keep the wage bill steady, and then believing in their own ability to continue to grow revenues significantly enough to cover a heavy one summer outlay. As fees are amortised for accounting purposes, a heavy spend one summer is easily workable.
Our wage bill is already significantly less than it was in 2012, and with Dzeko, Jovetic and maybe another first teamer to leave on top of Milner and Lampard, that bill comes down even further. That leaves plenty of room for the wages of Sterling, Pogba, and one or two others. Even if the bill were to go up marginally from 2014 that is more than acceptable with regards to FFP because we’re a profitable business investing in it’s own future.
(All of this is of course premised on the notion that FFP will still exist in three years’ time, which judging by the recent Belgian court ruling is, in my opinion, unlikely.)
On a more general note, I’m a long time listener and a subscriber to the TAW player shows. You have generally always been relatively fair to City, up to and including The Price of Sterling show where some of you guys were honest enough to say that a move to City might actually be good for Raheem.
However, the one misconception you guys have, which in many respects is understandable, is that the club is run in an ad-hoc manner when it comes to spending with no controls in place or no interest in being sustainable. The truth is quite the opposite. When the club was bought out the owners put forward a plan, and said that they expected the club to be relatively self sustaining by the end of their first five-year cycle. That has come to fruition and yet it’s something that the club rarely, if ever, gets any credit for. It was a bold plan which required heavy investment early on, but it has paid off as we have won two leagues and two domestic cups in five years, have established ourselves in the top four, and yet this summer will show a rather large profit.
This is from December when our accounts were released:
“We have moved beyond the period of heavy investment that was required to make the Club competitive again, it is commercial growth of the kind we are seeing today that will underpin and support our operations in the future.”
The Chairman concludes that today the Club “is where we hoped it would be when we began this transformation six years ago” and eagerly looks to what lies ahead for the Club and its supporters.
Chief Executive Officer Ferran Soriano, supporting the thoughts of the Chairman points to “a new level of financial sustainability” and outlines that not only has the Club halved losses for three consecutive years, but that it has budgeted for a profit in 2014-15 and the club expects to be entering the 2015-16 season with no outstanding sanctions or restrictions.
I can hear the cries now of “yeah, but he’s just using his own companies to sponsor the club”. The reality is that since Etihad sponsored City in 2011 their own market share as an airline has grown exponentially, as have their own revenues worldwide. It represents less than 10 per cent of our overall revenue now, and it is in fact something that UEFA went through with a fine toothcomb before signing off on because it’s clear that it benefits both parties as all these kinds of deals do.
Personally, I think FFP is a quagmire of bullshit which is awful for football. Our league has grown as has the money available from Premier League television rights precisely because of the investment of Abramovich and Sheikh Mansour. This has led to a far more competitive and interesting league than the one previously dominated by Liverpool, Manchester United, and latterly Arsenal. Although you might wish those days back, I think you can understand why the supporters of clubs outside of the traditional hegemony within European football would welcome anything that gives them a chance to compete.
It’ll be interesting to see what FSG do next. I don’t for one minute believe that you’ve spent hard this summer without banking on the Sterling money coming in. But lets imagine for one minute that they have. Is there really a plan there to aggressively get you back into the top four? As Neil Atkinson said on a show recently, you can’t buy players to finish fourth — you have to buy to try to win the league because ultimately that’s exactly how City, Arsenal, United and Chelsea are going to spend.
I don’t see FSG spending like that. I see them spending in exactly the same manner as Spurs, right up to and including the signing of Firmino which has all the echoes of Lamela joining Spurs after Bale left. Their trying to find a back door to the Champions League without committing anything like the wages required to do it. This is just my opinion, but that’s not good enough for where Liverpool should be. I don’t spend the hours I do listening to the Wrap and the TAW player stuff because I hate Liverpool, quite the opposite. I feel a real affinity with the supporters, not least because one of my best friends is a life-long Red. I’d love to see you guys usurp United, but to do that you need an owner committed to doing it, with a long-term plan.
FSG’s plan seems to be bank on UEFA and FFP doing them a favour, which is never going to happen. We all know in ANY walk of life money talks, especially when it’s cash money not loaned from a banking institution.
I hope you take this in the spirit intended. Just wanted to give you a City supporters’ perspective on your question, FFP, and generally how our club is run in comparison to others. It won’t surprise you to learn that I think we have the best owners in European football and the best executives making sure that we continue to grow in the right way. This isn’t about sugar daddies and whatever other cliché you want to throw at City or Chelsea. It’s about growing a business to challenge already established businesses.
Pics: David Rawcliffe-Propaganda Photo
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