KT: City's spending could backfire instead

ESPNSTAR.com's Kelvin Tan wonders if Manchester City's finances can withstand the scrutiny of UEFA's new financial fair play rules this season.

Football News: Eastlands

While football's biggest spenders were enjoying their moment on Europe's biggest stage against Napoli in an exciting 1-1 draw at Eastlands, one can imagine UEFA president Michel Platini looking on disapprovingly whilst watching the game. 

The Frenchman was instrumental in drawing up UEFA's financial fair play regulations (FFP) that were supposed to stop money from rich benefactors from ruining the game.

History is littered with clubs that have crumbled after either losing their sugar daddies, or simply because of their inability to sustain ill-advised spending models. While there is no doubt that the Manchester club's oil owners can afford to spend lavishly, Platini's argument is that such injections of cash - Arsenal manager Arsene Wenger calls it "financial doping" - are inherently unhealthy for the game.

UEFA Fair Play Regulations (FFP) in a nutshell

- Clubs looking to play in the UEFA Champions and Europa Leagues must balance their books over a three-year period.

- This season marks the first that will count to an assessment done in 2013/14, and clubs will be allowed to make a total loss of about £40 million over the three years, which will then fall to £30 million from 2015/16.

- By 2018, all clubs will have to bring their annual losses down to below £8.8 million.

- Clubs that fail to comply with the FFP regulations will be banned from European competition.

However, through the use of City's sponsorship deal with Etihad Airways, Sheikh Mansour and the Manchester City hierarchy could be accused of trying to pull the wool over UEFA's eyes by disguising a clearly inflated sponsorship deal that will, in one swipe of the checkbook, take the Citizens' much closer towards balancing the books ahead of the FFP.

Over the two years from 2008 to 2010, City recorded a total operating loss of £ 213.9 million, thanks largely to their massive £180.2 million expenditure on wages, according to figures released by the club. 

While the state of their finances for the 2011-12 season is yet to be revealed, it is almost a certainty that they will break the bank yet again, especially in light of their big money purchases and salaries splashed out for Gael Clichy, Stefan Savić, Sergio Agüero and Samir Nasri during the recent summer transfer window.

In that context, it looks to be mission impossible for City's chief football operations officer Brian Marwood to actually squeeze his club's budget to fit the FFP, which requires that clubs begin lowing their debt levels to no more than £13 million a year from this season.

What have City been doing to try to balance the books? The belief at Eastlands must be that they have to earn more than what they spend as quickly as possible, which is evident from Etihad Airway's £400 million contribution to the club's coffers - a deal that covers a ten year sponsorship of the club's shirt and stadium. 

Marwood will also have his eyes on the riches that City are guaranteed just for making the group stages of the Champions League.

The Citizens will be entitled to £22.5 million for qualifying to the competition, but will be well aware that there will be more to gain if they progress further, like Manchester United, who pulled in £46 million en-route to the final at Wembley against Barcelona last season.

They will also receive a participation payment of £3.35m and then £470,000 for each subsequent game in the group stages, and performance bonuses worth £687,000 for a victory, and £340,000 for a draw.

Cash will continue to pour in at Eastlands should Manchester City make the lucrative later stages of the competition, with a total of £ 9.2 million for reaching the final, and another £7.7 million for winning. In addition, each club will be given a share of the television money. Last season Chelsea picked up a cool £23 million after being beaten by United in the quarter-finals.

On top of that, the Citizens will also profit from increased ticket revenues, corporate hospitality packages, merchandise and other smaller income streams. Combine all that with their Etihad deal, and Marwood can breathe a little easier about UEFA's new financial regulations.

Or maybe not.

According to reports from the BBC, when asked what his first thoughts were on the Etihad deal, the chairman of UEFA's Financial Control Penal, Jean-Luc Dehaene, admitted: "I had some questions, yes."

"You know where the problems are and you know you will have to confirm them", the former Prime Minister of Belgium added. "If we see clubs looking for loopholes we will act."

"It is not enough to say ‘we've got a sponsorship contract and that's OK' if the contract is out of line", the 71-year-old remarked, confirming his panel would "benchmark" all deals to ensure they were "fair value".

This is where eyebrows will be raised about the vast sums of money being thrown around by Etihad Airways, especially in light of sponsorship deals negotiated elsewhere, as well as the prospect of yet another global financial tsunami.

One doesn't have to look far to see how inflated the numbers are, with Arsenal's deal with the Emirates valued at a mere £100 million over 15 years, which also includes an eight-year shirt sponsorship worth about £6 million a year.

The transparency of the deal should also be questioned by UEFA, as Etihad Airways is owned by the Abu Dhabi government, with the country's ruler, Sheikh Khalifa bin Zayed Al Nahyan, the half-brother of Man City's owner, Sheikh Mansour.

The irony is that while the Citizens may enjoy the glory of Europe this season, they could very well end up being disqualified from Europe, should their deal with Etihad fail to stand up to scrutiny.

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