By Tony Attwood
I have been pondering on this site for a little while exactly how Manchester City are going to comply with Financial Fair Play. As we might expect, as FFP gets closer and closer so it seems that Manchester City are working on the problem to, and now we are getting the first inklings of what they are going to do.
Their initial approach has been to recruit people from Deloitte, the firm which worked with Uefa to set up FFP in the first place. Among their captures are Alex Byars and Martyn Hawkins and it seems that they, or those around them, have come up with a new wheeze to allow compliance with FFP.
In its simplest form Manchester City either need more income, or a dramatic cut in expenditure. The latter is difficult with their salary bill being higher than their total turnover.
Arsenal upped their turnover (enabling the club to pay higher salaries) by moving stadium and incorporating the money-making club level into the equation. But for Man City I believe there are worries in some quarters that if they expanded their ground (the cost of which would not be counted under FFP towards their losses, and so is a “good thing”) they would not sell out every match.
(When Arsenal contemplated moving to the Ems, they were able to look at the length of season ticket waiting lists, and also did the experiment of moving to Wembley for Champions League games. Both convinced the club that regular sales of 60,000 seats were quite possible.)
Big attendances lead to more money, not just from the entrance fees, but also from the marketing that goes with it, and on the marketing front Man City are a long way behind market leaders Man U. So they are looking for something else – some other way forwards.
And it seems that what they have come up with is a way of making money through buying up clubs outside England.
Now the notion of Arsenal fielding teams in leagues outside of England has been a theme of Untold almost from the start of this blog.
We have spoken about putting a side in the Scottish league, perhaps even building a small stadium and applying for a place in the league. Or maybe just investing heavily in one of the clubs that plays for ever in the bottom tier.
There has also been talk of taking over a third division club in France or Spain, or indeed any other country that allows their own clubs to play reserve teams in lower divisions.
All this comes about because the rules in England mean that one club cannot own another, and so the very sensible system that operates elsewhere, through which players can get a taste for really competitive matches, and indeed play more games, has failed to grow naturally in England.
The idea of buying up clubs in other countries however has been growing. One of the best known is that instituted by the Pozzo family who took over Watford, giving the club very strong links with Udinese and Granada. Their approach however may be more about making money than about developing their clubs, for they seem to work by buying players from around the world, playing them in their different teams, and then selling the ones who turn out to be gems for big profits. Getting Watford into the top League (as per Elton John’s tenure) doesn’t seem to me (as an outsider of course) to be on the cards.
To me, what the Pozzo’s have is in fact a model of football harvesting. Good for the owners, but it must be fairly heart breaking for supporters of the various clubs.
Now it appears Manchester City are looking at the same issue, although they are going at it in a somewhat different and much grander way.
I mentioned that when I was in Australia last year I was surprised to see just how global their owners expansion is, in terms of stadium branding. Now they want to establish not nursery teams, but rather “partner clubs” around the world.
The aim is always branding, and that is where the scheme is so different from the one some of us proposed for Arsenal.
The aim with the Arsenal junior side was to give more chance to control the development of young players, who at the moment go out on loan. With Man C the aim is quite different, although not unique, for I do recall Manchester United looking at this some time ago.
Man City want big branding and big publicity, and so they are looking at countries like Mexico, China, the rest of Asia and the USA, with the idea of taking over (or forming a partnership with) a club in each country with the aim of making enough money to placate FFP regulators in Europe.
The story began to develop when Ferran Soriano (CEO of Man City) said he was looking at “new creative ideas and business models” to forge a “historic transformation” of Man City.
Under Soriano Man City have been expanding their commercial department and branding quite considerably.
But that is just a part of it. Such an international array of companies running clubs in other countries will allow Manchester City to expand its approach in which people who work for the club are technically paid for by another company, not Manchester City. That already reduces their expenditure a little, in terms of losses (which affects FFP) but that would be nothing when compared to what could be achieved through a worldwide net of companies, each reporting to different football associations, and each paying tax under different tax regimes.
It would allow, for example, a profitable club in China, to employ staff who work in Manchester as “consultants”, thus taking them off the club’s books and so reducing the losses.
This route has been travelled before, not least by our neighbours Tottenham Hotspur who were owned by Enic, registered in the Bahamas. Enic built up investments in a portfolio of clubs including also Rangers, Vicenza, Basel, AEK Athens, and Slavia Prague. from the late 1990s.
Having initially gained control of Tottenham from Alan Sugar, and made Daniel Levy chairman, Joe Lewis and Levy (who between them owned 52% of ENIC) bought out the other shareholders.
However in order to get total control of Tottenham Hotspur ENIC needed more funds so at that stage changed the operating model and sold off its other football clubs.
So what next? Feeder clubs (as Man U have had with clubs like Royal Antwerp) are one thing – their aim is to develop new talent for the main club. But setting up partner clubs in order to spread the brand and change the accounts so that FFP regulations are met, is quite another.
I wonder if those running FFP have any answers to this.
The books…
- Woolwich Arsenal: The club that changed football – Arsenal’s early years
- Making the Arsenal – how the modern Arsenal was born in 1910
- The Crowd at Woolwich Arsenal FC: crowd behaviour at the early matches
- Royal Arsenal: from the Common to the Manor. Coming next.
The sites from the same team…
- Other Web Sites from the same team
- Referee Decisions - just what are the refs up to this season?
- Parent News - what is going on in schools these days?
- The weight loss programme: The only guaranteed way to stay fit
- The Arsenal History Blog from the AISA Arsenal History Society
- Untold Dylan - the music, the lyrics, the meaning
- Looking for a terraced house in Northamptonshire?
- School sports minibuses: providing your child’s school with a bus
- The Direct Marketing blog: direct mail, email, websites, blogs
- Good Ad: reviews of some of the best and worst direct advertising there is
- The Massage Centre, serving Northants and Rutland
- Teacher News – UK schools from the teachers’ perspective
- UK Education News - rolling news service
avoid avoidance of international football and labour regulation…must re-read posts ;(
Beavis I think that your argument would have a little more credibility if you said how the EU has handled football and placed it, along with other sports, outside of the general rules of competition. Or perhaps mentioned the EU declaration that the original rules it laid down vis a vis competition in sport have been violated by recent trends. My article earlier in this series covers a few points that you may not be aware of.
Man city fans surely are funny cause in their world, only arsenal charge £59 to away fans & play their first choice of 17 french players. That or beavis is mistaking newcastle for arsenal.
@rolee:
“they [ManCity] are paying salaries in line with Barca and Real Madrid who they are competing against in Europe.” – See more at: http://blog.emiratesstadium.info/archives/27571/comment-page-1#comments
Competing? Last time I checked, ManCity had yet to record a win in the CL, never mind getting out of the group phase.
No, the reason for paying high salaries has nothing to do with European competitions, so stop using that argument. There will be quite some time until City becomes competitive in Europe.
Actually, paying high salaries has everything to do with attracting players to the club, as City have not much else to show for. They certainly had nothing to show for when they started spending that ludicrous amount of money. But what City has accomplished (together with Chelsea) is called inflation, which was not a problem less than 10 years ago. The effects are of course the diminishing value of the coaching staff, as they can hardly make a difference at this level, and second the underdevelopment of the local talent, as they see their opportunities for top-level football reduced since it’s easier to buy than to build. That’s what needs to be addressed in the medium and long term. Otherwise we might as well stop watching the competition since the result is pretty much known already.
“Getting Watford into the top League (as per Elton John’s tenure) doesn’t seem to me (as an outsider of course) to be on the cards.
To me, what the Pozzo’s have is in fact a model of football harvesting. Good for the owners, but it must be fairly heart breaking for supporters of the various clubs.”
I can’t be bothered to point out the inaccuracies in the article regarding Manchester City because some fellow blues have done that already so I’ll refer to the quote above instead.
Seriously, did I just read that correctly? At the time of writing Watford currently sit 2nd in the Championship table and are well placed to make a final push for automatic promotion. Far from being heartbroken, I’d imagine their supporters are currently over the moon. Similarly, Udinese have enjoyed good times over recent years, and got to within one game of qualifying for the CL group stages. As for Granada, well in 2011 they returned to the top flight of Spanish football for the first time in 35 years.
So to criticise the Pozzo ownership model by inferring that the fans of those 3 clubs aren’t getting any enjoyment out of it (when they clearly are) is bizarre in the extreme.
Wow another anti city blog from a Gooner! Not seen one of these before!
Best qualify for the champs league Gooners else FFP will mess you up!
Wow, another city troll on a Gooner blog. Not seen one of these before!
Best qualify for the FFP, Citeh else the champs league will mess you up!
Hello again Walter and Tony
I think the lesson to be learnt from this article is, where there’s rules and regualtions to hamper competition, there will always be a group of people finding a way around them, and if they happen to be stinking rich and highly motivated, they will play this game as seriously as the sport on the pitch, if not harder.
The evidence is becoming irrefutable with every month that goes by, that Manchester City will comply with FFFP regs, and even welcome them as a means to remain at the top of world football, at the expense of clubs who have failed to grasp the basics of football management, like the Arsenal and Liverpool – and before you blow a gasket, kindly reflect on all those embarrassing cup exits against minnows, and league performances which leave both clubs facing another barren season.
Success on the pitch is all, something is wrong when given the opportunity to spend the “warchest”, hardly a penny has been invested in playing squads, despite the whole world seeing deficiencies.
Soon enough all those foreign fans and tourists will abandon the Arsenal and Liverpool for the latest, cup winning teams like City, then FFFP will work against them, not for.
The new TV revenue kicking in next season will allow lots of teams like Newcastle etc.. to compete for players that Arsenal could do with buying, so by failing to invest this summer just gone, and in the January window, an opportunity ha been lost, possibly which will not come along again for a very long time.
If Spuds give you Gooners a footballing lesson this week, then you really will have hit a new low point, continuing on this downward spiral which will take some reversing.
So, Grim Reaper, when Arsenal lost to Walsall in the third round of the cup that was a low point in the club’s fortunes. We were the league champions, and then it was all over…
Hmmm… next thing you know, our manager dies, and we go on to win the league twice more making three in a row.
Not quite sure your logic always follows. If you really want to know about Arsenal’s disasters in the FA Cup, and League Cup, take a look at http://www.blog.woolwicharsenal.co.uk/archives/5446
Pah,
that’s nothing Tony, we’ve been dumped out of not just the Prem, but the Championship before now, never mind some two bit tin pot vase (except when we win it, then it’s the best thing since sliced bread
) – that takes dedication to the art of snatching defeat from the jaws of victory, you’ve got a long way to go before you get the bragging rights in that argument.
Why do I feel a sharp pain in my lower leg region all of a sudden
????!!!
Is the Grim reaper also aware that Arsenal’s commercial revenue is set to increase by 30m from the second half of next season?
We’re also still looking out for what we will get for our new kit deal but if my calculations are right, Arsenal is set for an increase in annual cash flow of between 40 – 50m per season from next season. Does that look like a club that has missed the boat to you?
Why do people think there is a lot of sudden interest in buying Arsenal? we are now having ‘unnamed’ groups making a lot of promises in the Sun and the Mirror. A lot of people have their eyes on the cash pile at Arsenal which is set to increase even more.
I dare say that anyone who wants to buy Arsenal now is not doing so for Altruistic reasons.
@Tony
I’d like to send in an article, please confirm how I can do this through my email address.
dudspace.
You say
I dare say that anyone who wants to buy Arsenal now is not doing so for Altruistic reasons
Nail on head and dare I suggest that is why Kronke. wont sale. He in reality is looking at a huge return on his investment
I don’t for a second believe all this “Arab consortium” nonsense being fabricated in the media exists, it’s not how they do business, and is far too convenient for Usmanov’s agenda.
Nor do I believe Kroenke will do anything other than continue to milk the cash cow which is Arsenal PLC until the day he shuffles off this mortal coil.
The reality for Arsenal going forwards from my perspective is that they will continue to emulate Kroenke’s other sports “franchises” – middle of the road, steady earners – until the fans have had enough.
The extra TV monies next season will be proportionally equal to all the competition, but eaten into by loss of Champions League revenues, at least £20 million, probably more on recent season’s performances getting past the group stages – so again, competitors with a greater willingness to invest, such as perhaps Spuds, Liverpool, Newcastle, Sunderland, Everton, will take those players normally destined to the Emirates, or drive up their prices and wages.
Arsenal need to spend big to become competitive for Champions League, and domestic silverware, it’s as simple as that, and with the current regime stubbornly keeping the warchest locked down, (if it exists at all), then I expect the continued downward trend of results on the pitch to continue, possibly leading to a meltdown similar to Liverpool’s if a change of management is implemented.
I think you lot are rather paranoid at times, but I do agree Wenger should stay, he should just fight for the right to spend to compete (behind the scenes by all means, no one should wash their dirty laundry in public), and if he doesn’t, then more fool him, and he should go if the aim is to compete at the top – it’s becoming questionable he really is interested in anything more than fourth place the longer he fails to improve the squad.