OKX: Manchester City’s Next Finance Scandal

A lot has happened since this writer took to these pages. Manchester City FC has faced further Financial Fair Play charges, to which they will no doubt respond to as forcefully as the UEFA case. At this point, we shouldn’t lose sight that FFP itself is a corrupt, broken system. Created to keep new teams changing the old status quo. I make no apologies for stating this for the thousandth time: its proponents – or those who believe everything the agenda in the mainstream media prints – pivot away from this key point.

Manchester City’s biggest crime with FFP was trying to prove compliance within its ever-changing arbitrary rules instead of hiring lawyers to disassemble the system. FFP being removed entirely should have been the Bosman case for this generation.

With so much spotlight on Manchester City’s financial dealings, the club could do itself a few favours. A controversial area of finance is the crypto world. Often seen as the Wild West to the traditional banking system. In the United States, there is now a steady march forcing crypto companies into regulation. A catalyst for this has been the FTX scandal, and more recently, the collapse and bailout of SVB, a FinTech bank which held the real-world deposits for crypto firms.

What the U.S. Securities and Exchange Commission (SEC) would like to do is declare all cryptocurrencies (aside from Bitcoin, which doesn’t meet the criteria in the Howey test) a security. It should also be noted, all the concerns the SEC has surrounding crypto sounds like concern for the consumer, but the allegations about its harmful potential are nothing the traditional banking system hasn’t already done or continues to do on a daily basis. It’s about keeping control of your money.

Admittedly, the United Kingdom appears less concerned with this type of crypto clampdown, so Manchester City may feel less pressure to examine the practises of its key business partners. But they won’t be able to claim it completely blindsided them like the Mercedes F1 Team, who were quick to remove FTX sponsorship from their cars last season.

We’ve had several warnings recently that not all crypto exchanges can be trusted.

With all this fully established, Man City display OKX as one of its key sponsors. OKX’s signage is burnt into the grass at The Etihad Stadium. Its advert scrolls around the stands, claiming to be your new favourite exchange. Its logo features on every background as Pep and the players take interviews. There’s no doubt advertising works. Eventually, after months of seeing OKX on match days, I took the plunge and visited the exchange.

None of this is financial advice – let’s make that abundantly clear – in my opinion, while someone still has a mortgage, that’s a better place to put disposable income and pay it off sooner. The idea of putting money into a cryptocurrency, to me at least, is akin to putting money on a football accumulator.

At first, there wasn’t anything that grabbed this writer about OKX. But with the relentless exposure at The Etihad, I went back to the app. I appreciate this is all freewill, but as a City fan, I have a couple of simple rules regarding sponsorship: if a company has been the main shirt sponsor for Manchester United, I can’t use them ever again (which means my dream ride of a Chevrolet Matiz will forever elude me; if someone is associated with City, I give them first dibs. Which is why I buy all my fax machines from Brother.

OKX offers a high APY (the yield or return on your investment) in its Earn section. The stablecoin Tether USDT currently offers a 16% return. No savings account will get anywhere near this, and being a stablecoin it should – as the name suggest – avoid price fluctuations. They are supposed to be pegged to the associated fiat money. With Tether USDT, it’s the American dollar. These sometimes lose their peg, but that’s an article for a different day. So, converting British pounds to USDT should be no different than converting money before a holiday.

Every crypto exchange adds a degree of “slip” at the point of sale. All cryptocurrencies are volatile. In the thirty seconds it takes to process the payment, it may jump a percentage. If they say they don’t add it, they’re liars (OKX said they didn’t). You wouldn’t expect any slippage on a stablecoin. Only the movement of the dollar against pound sterling should affect the conversion.

Deciding that a little bit of savings in a stablecoin sounded too good to be true, I forgot the golden rule: if it sounds too good to be true, it usually is. And this is aside from the fact all crypto kept on an exchange – “stable” or otherwise – isn’t really yours, they’ve just written an IOU that the FCA can ’t retrieve. I placed a deposit into USDT, with the sole intention of using the Earn feature.

OKX were transparent with a 2% fee – this was the last time they were open and honest regarding the transaction. There was 6% of the money missing. It was clear to see, as the value of USDT was also displayed in pound sterling. After two lengthy (because of the amount of hold time) chats on the in-app customer service, they claimed the missing money was a charge by my card issuer.

The card issuer denied this and has previously – and to this day – displays all card fees on the transactions page. Going back to OKX, I worked out that the “missing” money was because OKX added a 6% slip to USDT. 6% would be high for something like Bitcoin, it’s ridiculous for a stablecoin. The next in-app agent I spoke to agreed, and admitted this was where the money had gone. That person was the last to acknowledge the obvious. They said the relevant team would email. This never happened.

I emailed them instead. At this point, I added Manchester City to the email thread. The club should know unsavoury practises of its business partners. It was only because GBP to USD is a clearer conversion the 6% was noticed. I was using the Lite version of the app, where the slip can be added to the less experienced user without detection. On the Trading version of OKX, this couldn’t have occurred so easily. There are undoubtedly hundreds (maybe thousands?) of City fans, using the Lite version in OKX, buying a coin like Ethereum for the first time, have no idea how much £20 is represented as a fraction of that coin, and OKX takes its 2% fee and 6% slip every time.

Neither the club nor OKX responded to the email.

This week, OKX issued the same copy and paste response – they added no slippage, the card issuer took the disputed amount. This is a blatant lie. In the Wild West of the crypto world, the last thing a club like Manchester City needs is to be associated with a company that lacks transparency with its financial operations.

OKX can’t be trusted, and Manchester City shouldn’t encourage – by agreeing to a sponsorship deal – its fanbase to trade on such an opaque platform. It’s not like investigators won’t be taking a keen interest in this relationship. In addition to the aforementioned sponsorship agreement, OKX made a $20M deal to become City’s training kit sponsor. In a sense, every fan who gets hoodwinked on the exchange platform is paying for this directly out of their own pockets.

Manchester City accepted the unfairness of FFP, it shouldn’t expose supporters to the whims of a dodgy crypto exchange.

Pound Sterling

So after much mudslinging, with press speculation on the reasons why and possible motives, Raheem Sterling has joined Manchester City for a fee that could rise to £49M. Liverpool fans are soothing themselves with the loss of a prized asset by revelling in the amount received. Openly taunting at taking the coffers to the cleaners. To put it another way: Scousers are laughing at committing robbery. But as high as the fee sounds – and it does sound a lot – it’s the same fans that tried to convince the world £35M for Andy Carroll made sense. It wasn’t, whereas the Sterling figure won’t seem so stupid if he reaches his potential.

Therein lies the first problem. Is Sterling going to reach that “potential”? City fans have heard this term banded about a lot in recent years. Mario Balotelli was given all the chances in the world because he had lots of it. Rodwell and Sinclair were brought in as it was assumed City could fill them out into the players we all hoped they could be. Buying potential is a trip to the casino.

Sheikh Mansour is justified – on this occasion, especially – to feel he can bet on red or black a few times. In reality the chances are stacked higher in his favour than the slightly less than half a roulette spin offers. If Raheem becomes the next big young talent his value will quickly eclipse the £49M shelled out. Take Paul Pogba, another City target, the fee floating around for him currently stands at £71M. This is with the proviso he still hasn’t reached his full potential.

Transfer fees will always be a bone of contention. They continue to rise in a time when the world is facing tough austerity measures and countries like Greece face economic collapse. To make matters worse, they continue to rise from an already over-inflated base line. Yes, £49M is a lot. But it also happens to be the market value for a young promising, home-grown talent.

What I find more disturbing than the price is the treatment of a young twenty year old by members of the press, former teammates and “fans.” Stevie G, the Liverpool legend that never won a league title, not so subtlety sounded Sterling out as unprofessional and possessing a bad attitude when comparing him to the new Liverpool captain Jordan Horrenduson. Nice to know Steven helped nurture that talent under his watch.

Gerrard is obviously offended that a player would choose to leave his club for a rival. It makes the statement that the modern day professional sees Liverpool as a place less likely to collect titles. He should remind himself he once thought the same and agreed to join Chelsea, only changing his mind when the threats from fans came in.

Raheem has also faced disgusting abuse and threats to his wellbeing along with his daughter’s. He has stood tall and will see out the storm. Hopefully there’ll be an added element of protection surrounding him during this time. And perhaps a little TLC will work wonders too. I can’t begin to imagine how he feels reading such threats when his own father was murdered back when Raheem was only nine years of age.

Jamie Carragher has also been outspoken and condemned Sterling. It doesn’t come from the mouth of a neutral Sky Sports presenter. He lacks the ability of Gary Neville, who can be a Manchester United man at heart but still speak sense, of reporting the news rather than opinion as fact. He clearly wanted Sterling to stay and arrogantly assumes it will be better for Raheem if he did. Apart from the argument he would get more game time at Liverpool, it is founded on nothing more than blinkered hearsay.

It’s typical of the anti-City media to turn the transfers of the Citizens into a carnival while applauding preferred click-bait teams for their market endeavours. Memphis Depay, not exactly a snip at £25M, has been packaged as future world-beater. I don’t have a crystal ball, so I can’t say either way. It seems only bitter former pros and bad journalists can see future events with any clarity. To top off this sentiment, SportYapper notified users today Sterling had asked for a nap during his Man City medical.

Back to the price, it also needs to be noted QPR receive a slice as part of their sell-on clause. This will have ramped it up. Add this to the home grown quota he fills, along Liverpool’s reluctance to sell, and it’s less grotesque. The price tag will hang heavy for a while. Di Maria still carries his around in a wheelbarrow. All Raheem Sterling can do is produce form on the field. With every successful game the pounds will drop away. With success he can prove this was never about cash but about football.

About winning.

Financial Fair Palter

A little over two years ago I made my opposition to Financial Fair Play clear in Financial Fair Prejudice. At the time the arguments against the system felt like the final futile attempts of resistance before football’s fair days of competiveness would be glazed over by a constant status quo. But this week Michel Platini proved that money’s more fluid than the previous positive counter-arguments. He announced that FFP would be eased this summer.

Victory at last? Not quite, well, not quite yet. It won’t be until the end of June we see exactly how much UEFA will ease the current rules. It also remains open to debate how they will do this and maintain a governable system. It is a step in the right direction. Or more accurately, a shuffle away from the wrong one.

Throughout various articles here I have attempted to demonstrate the reasons FFP is wholly unfair. That’s not to say I scoffed at Platini’s other remarks this week, namely the claim FFP was “working well.” To some degree, it is. If you recall, I have always been an advocate of a system that prevented a future Leeds or Portsmouth situation. My distaste for FFP has never meant I’ve overlooked this sentiment.

The figures themselves highlight the areas where FFP has been a positive force for change. But these should be used with caution, as other figures indicate an alternative version why FFP is being eased. Far be it from me to think ill of Platini or UEFA, or question their motives, but one could argue they aren’t acting out of benevolence at this point.

First, those good stats. The easiest demonstration is the net debt across all of Europe’s clubs. This has fallen from €1.7Bn to €400M over the three years from 2011 to 2014. Here in the Premier League transfer spending was the same in the recent January window as it was twelve months before, but notably less (by approximately £95M) than the 2011 January window. If we examine the club punished on our shores due to FFP, Manchester City, they have reduced their wage bill by £40M over this period.

Some will argue clubs, such as Manchester City, have shuffled some wages on their accounts (it’s reported support staff at Manchester City now are on the City Football Group’s payroll) but no one can deny a concerted effort has been made by England’s leading clubs to become more financially responsible. This is if we ignore the example set by Manchester United since their departure from the Champions League.

Newly crowned champions, Chelsea, did their business in the summer and reluctantly had to balance the books to bring in the signings they wanted. Arsenal have been doing this for years and continued to do so. The aforementioned City may not have spent as wisely but it was all within the tight confines their punishment afforded. Relegated Burnley resisted the urge to splash to survive and depart the top flight as a healthy model.

As a whole it appears that the majority are making the transition from potentially reckless to greener pastures.

This article now sets a record for the longest I’ve spoken about FFP without a criticism. Don’t worry, I have a few to hand. One last positive before we get there, and an example why we do need FFP to some (lesser) degree, the QPR model. They claim to be cutting costs but they are leaking money without any sign of on-field progression. Shareholders wrote off £60M worth of debt but they are still accountable to the Football League for financial irregularities. This alone could see them plummet through another division. Tony Fernandes isn’t fooling anyone when he says the club has learned from previous mistakes.

Fernandes is also the embodiment of the fair-weather rich chairman, fans of clubs without money threaten to those with new wealth. Manchester City fans have heard for the last few years, “What happens when they get bored and take their money with them?” It’s similar to what people levelled at Chelsea supporters when Roman Abramovich first appeared on the scene. He’s still going strong and so will Sheikh Monsour for years to come. It’s the QPR owner that has invested in a reckless, ill-advised, foolish manner, without an overarching plan or ways to improve club revenue streams, and he’s also the only one that has flirted with the idea of turning his back on football.

Roman and the Sheikh are successful business men. Most of these are rich because they are good with cash. They don’t consistently lose money. Rich football owners – those running the club with cash, not debt – are bound to apply similar rules. Losing cash isn’t in their DNA. The difference with Fernandes and his sporting ventures, QPR and the Caterham F1 team, have been treated like pet projects. Chelsea and Manchester City were extensions of successful business portfolios. As such they were examined and reshaped to flourish as a business. Success on the pitch was intertwined with eventual profits off it.

What irks me is the two-faced side emanating from Stamford Bridge in recent years. They should take applause for being an example of why FFP is bad for the game. The Chelsea model should be a term for how to achieve success. Instead they shade over their accelerated growth period and pretend they are on board with FFP for the good of the game. They’re on board to prevent new money clubs catching up with those in the elite party.

José Mourinho speaks as if he’s a crusader for FFP. That heavy spending – regardless of how it is sourced – should be stamped out. That this is Year One and the income you generate now is the only allowed money. No accelerated growth periods for anyone else. This is repulsive for more than one reason. Mourinho never mentions how Chelsea posted a £140M loss in 2005 in order to transform the club from also-rans into the outfit they are today.

During this heavy investment the model has seen Chelsea become the third largest generators of income in the Premier League. They only achieved this by spending in the first place. José also speaks as if they now comply because of the rules. This is a fallacy. In 2006, then Chelsea Chief Executive Peter Kenyon, claimed they would be self-sufficient within a year. His figures may have been out but the business model was clear: Roman didn’t want to run at a loss forever. Just like Sheikh Monsour, he knows to make a better business an initial loss has to be absorbed.

As usual Arsène Wenger sits in room complaining without many listening. This week’s snippet from Moan Corner was how UEFA lost FFP when it removed youth investment from the calculations. It seems Mr Wenger not only wanted to ensure the Have Nots never will have, but that the Always Haves also corner the youth market.

This encapsulates the reasons why the voices that at first appeared ignored, (I myself wrote: “There’s no point arguing against Financial Fair Play anymore,”) have suddenly found welcoming ears. The idea that clubs could never catch the big guns without being allowed to follow a well-implemented growth period, albeit running at a temporary loss, found traction. It did this slowly and with a dawning realisation across Europe.

The impending court cases levelled against UEFA have played their part. They highlight the moral hypocrisy of the current system but more worryingly for defence lawyers, the legal problems set off alarm bells. UEFA is tied to EU laws. And while the EU doesn’t want to see a sport in their lands defy current convention, they are accountable by their own mandates. Freedom of trade and competition laws being the major headaches.

Also, the money in football generates its own mini-economy. If the cash at the top is prevented from purchasing assets then smaller clubs find reduced revenue. Debts may reduce for those chasing the perfect model but ends can’t be met in smaller boardrooms. Blackburn Rovers are a solid example here. Their debt has increased by £24M in spite of reducing the wage bill. The secondary economy – but most important to me – is the impact on the fans. FFP, in its original form, will mean supporters pay the price as clubs try to balance the books.

Everything has a breaking strain. For the current FFP it came from European clubs struggling to stay on the top level without extra investment. They saw the Premier League sell its TV rights for £5.5Bn and realised the gap was about to become unbridgeable. Even Platini admits the Italians have asked for FFP to be eased even though it is other nations that currently benefit most from foreign investment. Monaco had already reacted by loaning out Falcao to remove his high wage from their books. Their loss was the gain of nineteen other clubs in the Premier League.

It’s possible big clubs like Manchester United – going through an accelerated growth period of their own – and Real Madrid lent on UEFA to lessen FFP because of the impending cases. They do operate with large debts; something that clubs like City and PSG have argued should be factored into calculations. Easing FFP takes the spot light away from those with big debt but large fan bases, reducing the microscopic moral investigation.

The most telling statement from Michel Platini was: “Any potential changes will look to encourage more growth, more competition and market stimulation while strengthening the emphasis on controlling spending and safeguarding financial stability.”

He’s summoned up perfectly the Manchester City model, the very ethos I championed before FFP was introduced. But don’t worry Michel, hindsight is 20/20.

The Reflective Page

Tag: FFP

OKX: Manchester City’s Next Finance Scandal

Pound Sterling

Financial Fair Palter

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