Football club finances / FFP

[Bradesmaen]

Different issue there, but as this is the FFP thread, there is no rules forbidding associated parties to sponsor football clubs, and there are plenty of examples in England and Europe.

So why is it an issue with Newcastle?

RB Leipzig/Salzburg and Red Bull for starters. Leicester have the King Power stadium. Newcastle had Sports Direct stadium.

 

[Bojan KantKick]

Someone in that twitter thread said that the sponsoring company had revenues of £70m so I can't see how they would pass any legitimate fair value tests.

 

[moomba]

Someone in that twitter thread said that the sponsoring company had revenues of £70m so I can't see how they would pass any legitimate fair value tests.

A fair value test would have nothing to do with sponsors revenue, it would be about what Newcastle could get on the open market.

At the prices I've seen, the deal seems entirely reasonable.

If PIF are subsidising the sponsoring company then that really isn't a football issue.

If on the other hand, the deal isn't fair market value then its still allowed. Just that the authorities might make an adjustment for the difference in FFP calculations.

 

[Bradesmaen]

A fair value test would have nothing to do with sponsors revenue, it would be about what Newcastle could get on the open market.

At the prices I've seen, the deal seems entirely reasonable.

If PIF are subsidising the sponsoring company then that really isn't a football issue.

If on the other hand, the deal isn't fair market value then its still allowed. Just that the authorities might make an adjustment for the difference in FFP calculations.

Think the point he is making is that how can the company have a massive sponsorship deal with Newcastle if they have * all incoming money.

 

[Bojan KantKick]

A fair value test would have nothing to do with sponsors revenue, it would be about what Newcastle could get on the open market.

At the prices I've seen, the deal seems entirely reasonable.

If PIF are subsidising the sponsoring company then that really isn't a football issue.

If on the other hand, the deal isn't fair market value then its still allowed. Just that the authorities might make an adjustment for the difference in FFP calculations.

Which would be not much. If the FFP tests don't involve testing whether the actual sponsoring company can fund the sponsorship then it is worthless. You will just have the same bullshit sponsorship model that City have where the UBO is funding the sponsoring company which just sits in the middle and sends the money to the club.

What are the prices you have seen out of interest?

 

[moomba]

Think the point he is making is that how can the company have a massive sponsorship deal with Newcastle if they have * all incoming money.

They might be getting subsidised by the Saudi Government.

Don't know what this company does but the government might be funding them to get the international exposure that comes from the deal.

 

[moomba]

Which would be not much. If the FFP tests don't involve testing whether the actual sponsoring company can fund the sponsorship then it is worthless. You will just have the same bullshit sponsorship model that City have where the UBO is funding the sponsoring company which just sits in the middle and sends the money to the club.

What are the prices you have seen out of interest?

£30m a year.

 

[Bojan KantKick]

Classic haha

Newcastle: 'Our plan is to buy loads of players. Can you help us?'
Sela: 'Sure thing guys, How much to do you want? I'll have PIF send over the money'
PIF: 'If anyone questions this then invite them to the embassy and we'll take care of it'

 

[Bradesmaen]

Coming soon, a brand new company made up for fun.

EDIT: Apparently it was started in 1995 as a sports agency.

 

[Zidane98]

Different issue there, but as this is the FFP thread, there is no rules forbidding associated parties to sponsor football clubs, and there are plenty of examples in England and Europe.

So why is it an issue with Newcastle?

There's plenty of issues. You'd have Saudi Arabia government effectively funding the club. They did promise that they wouldn't be involved in the running of the club which was also laughable:

Amnesty asks Premier League to re-examine Newcastle ownership

Amnesty International has asked the Premier League to re-examine assurances made by Newcastle United’s ownership that the Saudi Arabian state will not be in control of the club. The request follows the publication of court documents in the United States this week, which suggest a closer...

theathletic.com

When a club has the backing of a state backed sovereign wealth fund the playing field simply isn't fair or equitable in any way. We see that with PSG, we see that with Man City. I can guarantee that we will see this with Newcastle. They'll just keep buying players / hiring managers / backroom staff until they find the right mix to win trophies. It's an absolute inevitability.

The only way this could possibly be ok is if there's a limit on the total amount of commercial income derived from club owned or ownership related sponsorship. There should be an absolute hard limit as a percentage of commercial revenue that no club can exceed for commercial income derived from such sources.


If the PIF is allowed to fund a companie's sponsorship of Newcastle United it should be considered owner equity investment, not commercial income for me. I guess being a Man City fan you should be an expert on that topic by now.

 

[Magma]

but it doesn't matter how we see it. only matters if the pl ticks off on it or not.

I do believe there needs to be a clean up club to club with sponsors, clubs have so many now and some are obviously dodgy in some way. Up to the league though, clubs will always continue to chance their arm

 

[Zidane98]

but it doesn't matter how we see it. only matters if the pl ticks off on it or not.

I do believe there needs to be a clean up club to club with sponsors, clubs have so many now and some are obviously dodgy in some way. Up to the league though, clubs will always continue to chance their arm

The thing is there were legally binding assurances given that Saudi Arabia wouldn't be involved in running of NUFC.


Now we have a Saudi Arabian state owned business wanting to sponsor Newcastle for 30m which is 40% of its actual turnover being funded by the PIF who are owners of Newcastle. I don't care what anyone claims the fair value to be, commercial income has to be a genuine commercial transaction and that "deal" absolutely is not a genuine business transaction. I'd say the only fans claiming that to be a genuine business transaction are either Newcastle United fans or fans of other clubs with similar setups.


Sorry but that's not an acceptable scenario. If the sponsorship is genuine go and get it from sources not linked backed to the Saudi government. It'll start at 30m for one state owned business. Once that's allowed more will follow. Best to shut it down now if it can be before the horse has bolted.

 

[Bojan KantKick]

The thing is there were legally binding assurances given that Saudi Arabia wouldn't be involved in running of NUFC.


Now we have a Saudi Arabian state owned business wanting to sponsor Newcastle for 30m which is 40% of its actual turnover being funded by the PIF who are owners of Newcastle. I don't care what anyone claims the fair value to be, commercial income has to be a genuine commercial transaction and that "deal" absolutely is not a genuine business transaction. I'd say the only fans claiming that to be a genuine business transaction are either Newcastle United fans or fans of other clubs with similar setups.


Sorry but that's not an acceptable scenario. If the sponsorship is genuine go and get it from sources not linked backed to the Saudi government. It'll start at 30m for one state owned business. Once that's allowed more will follow. Best to shut it down now if it can be before the horse has bolted.

I think the horse bolted quite some time ago with Etihad. The Saudis will be less subtle though.

 

[Zidane98]

I think the horse bolted quite some time ago with Etihad. The Saudis will be less subtle though.

Did any of their dealings amount to a sponsorship deal to MCFC that accounts for 40% of their revenue? I don't believe any of their Abu Dhabi dealings were that obvious. It must be noted that despite Etihad airways making losses of nearly $2 billion over the covid pandemic, thousands of jobs furloughed and delay / withdrawal from aircraft purchase contracts they still kept paying their Man City obligations in full like nothing had happened.

 

[moomba]

There's plenty of issues. You'd have Saudi Arabia government effectively funding the club. They did promise that they wouldn't be involved in the running of the club which was also laughable:

Amnesty asks Premier League to re-examine Newcastle ownership

Amnesty International has asked the Premier League to re-examine assurances made by Newcastle United’s ownership that the Saudi Arabian state will not be in control of the club. The request follows the publication of court documents in the United States this week, which suggest a closer...

theathletic.com

When a club has the backing of a state backed sovereign wealth fund the playing field simply isn't fair or equitable in any way. We see that with PSG, we see that with Man City. I can guarantee that we will see this with Newcastle. They'll just keep buying players / hiring managers / backroom staff until they find the right mix to win trophies. It's an absolute inevitability.

The only way this could possibly be ok is if there's a limit on the total amount of commercial income derived from club owned or ownership related sponsorship. There should be an absolute hard limit as a percentage of commercial revenue that no club can exceed for commercial income derived from such sources.


If the PIF is allowed to fund a companie's sponsorship of Newcastle United it should be considered owner equity investment, not commercial income for me. I guess being a Man City fan you should be an expert on that topic by now.

If the market value of their shirt sponsorship is deemed to be £30m and they get £30m there is no unfair advantage to Newcastle that it comes from Saudi sources.

What you're suggesting is that certain clubs (all from the same region) not be able to take advantage of the contacts and business relationships they have because you perceive all transactions from that region to be dodgy.

All associated sponsorships, as I understand it, have to pass a fair market value test. I'm not sure nowadays, there might even be a limit on the percentage of your commercial income that comes from associated sources.

 

[jd2010]

Someone in that twitter thread said that the sponsoring company had revenues of £70m so I can't see how they would pass any legitimate fair value tests.

It's dodgy as * but if a business is stupid enough to spend that amount of its revenue on a football club sponsorship it's not really the football club or its associations problem.

Just wish these idiots would be stupid enough to give us 30m a season for naming rights for our new stadium. Can we still call it new being 4 yrs old and without a sponsor?

But in all seriousness there's a clear loophole being exposed here. Shell company clearly. But hard to stop from happening

 

[Bojan KantKick]

Did any of their dealings amount to a sponsorship deal to MCFC that accounts for 40% of their revenue? I don't believe any of their Abu Dhabi dealings were that obvious. It must be noted that despite Etihad airways making losses of nearly $2 billion over the covid pandemic, thousands of jobs furloughed and delay / withdrawal from aircraft purchase contracts they still kept paying their Man City obligations in full like nothing had happened.

There was that gambling company that didn't really exist that sponsored them earlier this season or last season.

Investigation into Man City’s dubious betting partner

Manchester City announced a regional partnership with 8Xbet in July, in a move that would see the brand become their official Betting Partner in Asia.

manchestercity.vitalfootball.co.uk

The Etihad thing was funny. Etihad sent City money for sponsorship after Abu Dhabi sent Etihad money lol

All detailed in an email trail.

 

[Bojan KantKick]

If the market value of their shirt sponsorship is deemed to be £30m and they get £30m there is no unfair advantage to Newcastle that it comes from Saudi sources.

What you're suggesting is that certain clubs (all from the same region) not be able to take advantage of the contacts and business relationships they have because you perceive all transactions from that region to be dodgy.

All associated sponsorships, as I understand it, have to pass a fair market value test. I'm not sure nowadays, there might even be a limit on the percentage of your commercial income that comes from associated sources.

As long as it is not coming from PIF...If these are independent businesses paying fair value sponsorship from their own generated cash flow then nobody should have a problem with it imo. If it is a cover for additional owner funding to get around FFP or other regulations then it should be heavily scrutinised. There is a difference between City and Newcastles ownership and funding model and how they should be scrutinised. There were no regulatory issues with state ownership when Mansour purchased City IIRC. The Saudis takeover of Newcastle was only approved on the basis that it was not funded/controlled by PIF.

 

[Zidane98]

If the market value of their shirt sponsorship is deemed to be £30m and they get £30m there is no unfair advantage to Newcastle that it comes from Saudi sources.

What you're suggesting is that certain clubs (all from the same region) not be able to take advantage of the contacts and business relationships they have because you perceive all transactions from that region to be dodgy.

All associated sponsorships, as I understand it, have to pass a fair market value test. I'm not sure nowadays, there might even be a limit on the percentage of your commercial income that comes from associated sources.

There's no suggestion of that at all. Infact Newcastle should be encouraged to source commercial income from non Saudi government related sources within Saudi Arabia. Kinda kills your all transactions from that region are dodgy "vibe" in its tracks.

Out of interest how many commercial partners does MCFC have in Abu Dhabi that are not Abu Dhabi investment fund related? Surely they are all begging to get on board.

 

[moomba]

As long as it is not coming from PIF...If these are independent businesses paying fair value sponsorship from their own generated cash flow then nobody should have a problem with it imo. If it is a cover for additional owner funding to get around FFP or other regulations then it should be heavily scrutinised. There is a difference between City and Newcastles ownership and funding model and how they should be scrutinised. There were no regulatory issues with state ownership when Mansour purchased City IIRC. The Saudis takeover of Newcastle was only approved on the basis that it was not funded/controlled by PIF.

You won't find too many premier league clubs that don't have, or haven't had deals with these Isle of Man White label betting companies. United have had a couple of different one, not sure if they still do.

You could argue that the league should regulate against this sort of thing (they may have already) but while you're looking at everything through the prism of FFP, it's much more likely that these deals are more about getting around betting laws in Asia.

As for Etihad, I guess we've been here before and it may well form part of the current proceedings.

Worth noting that neither UEFA or CAS argued that the Etihad deal was above market value. And as Etihad wasn't a related party under the rules of the time (they're probably now deemed an associated party) they could have given us above market value and it would have been perfectly legal.

So for me at least (I'm sure you'll disagree) it's much more about a government subsidising its national airline than subsidising City.

 

[moomba]

There's no suggestion of that at all. Infact Newcastle should be encouraged to source commercial income from non Saudi government related sources within Saudi Arabia. Kinda kills your all transactions from that region are dodgy "vibe" in its tracks.

Out of interest how many commercial partners does MCFC have in Abu Dhabi that are not Abu Dhabi investment fund related? Surely they are all begging to get on board.

So Man United or Liverpool can make a deal with a Saudi government linked business but Newcastle can't. Sounds fair.

As for our sponsors, no idea. And if the deals are fair market value I don't really care.

 

[moomba]

As long as it is not coming from PIF...If these are independent businesses paying fair value sponsorship from their own generated cash flow then nobody should have a problem with it imo. If it is a cover for additional owner funding to get around FFP or other regulations then it should be heavily scrutinised. There is a difference between City and Newcastles ownership and funding model and how they should be scrutinised. There were no regulatory issues with state ownership when Mansour purchased City IIRC. The Saudis takeover of Newcastle was only approved on the basis that it was not funded/controlled by PIF.

If they are paying fair market value it can't be a ruse to get around FFP.

I'm not sure if the rules have changed, but back in the day if Sheikh Mansour wanted to sponsor our shirt and he paid fair market value there would have been nothing in the rules to say he couldn't. He could wall into the Etihad with a wheelbarrow of cash, and if its not inflated sponsorship it would be totally within the rules.


£25-30m (I've heard both numbers suggested now) seems pretty much market rate. If Newcastle don't get it from a Saudi business they should be able to get the same elsewhere.

 

[Bojan KantKick]

If they are paying fair market value it can't be a ruse to get around FFP.

I'm not sure if the rules have changed, but back in the day if Sheikh Mansour wanted to sponsor our shirt and he paid fair market value there would have been nothing in the rules to say he couldn't. He could wall into the Etihad with a wheelbarrow of cash, and if its not inflated sponsorship it would be totally within the rules.


£25-30m (I've heard both numbers suggested now) seems pretty much market rate. If Newcastle don't get it from a Saudi business they should be able to get the same elsewhere.

If they can get that money at market value elsewhere then sure. The Newcastle situation is different to Man City's. Supposedly, as part of the takeover, if Newcastle were subsequently found to be controlled by the Saudi Royal Family then the club would be subject to a Chelsea style forced sale scenario. This does not apply to Man City.

 

[Bojan KantKick]

You won't find too many premier league clubs that don't have, or haven't had deals with these Isle of Man White label betting companies. United have had a couple of different one, not sure if they still do.

You could argue that the league should regulate against this sort of thing (they may have already) but while you're looking at everything through the prism of FFP, it's much more likely that these deals are more about getting around betting laws in Asia.

As for Etihad, I guess we've been here before and it may well form part of the current proceedings.

Worth noting that neither UEFA or CAS argued that the Etihad deal was above market value. And as Etihad wasn't a related party under the rules of the time (they're probably now deemed an associated party) they could have given us above market value and it would have been perfectly legal.

So for me at least (I'm sure you'll disagree) it's much more about a government subsidising its national airline than subsidising City.

Yeah, some cursory research shows that United have been sponsored by Betfred and Betfair in the past...but then I found this which was amusing. The Vanishing.

Given the history of these deals, when a newco suddenly starts sponsoring football teams it raises suspicions. Historically, they have tended to come and go just as quickly or as soon as they have been found out. Is it lack of regulation, an FFP get around, incompetence from owners, all of the above or other. Probably different depending on the club. It's fair to say that the Glazers couldn't care less who sponsors them.

I'm not looking at the Etihad original deal on the basis of FFP per se but clearly Etihad didn't feel that it was market value. If City had a sponsorship offer at that level from an unrelated party (not talking about accounting standards here), maybe they then take it to Etihad or other Abu Dhabi companies and get them to match it on paper with Mansour topping up any shortfalls.

Regarding the bolded, Airlines in almost every country are subsidised in some way and sometimes fully by the government. It is a very unique industry in that way and is historically heavily loss making. Football is not and should not be like that imo.

 

[Bojan KantKick]