Written by Red Arse
O.K., with the transfer window coming to a close very soon, it might be worth having a look, again, at the new UEFA Financial Fair Play Rules, which will, in conjunction with the new EPL Home Grown Players rules, change forever the way Clubs administer their finances and have a huge knock on effect on the valuation of transfer values and players’ wages.
The background to this new onslaught on the financial funds sloshing around European Football is undoubtedly specifically aimed at the English Premier League clubs.
Unlike the prudent Gunners, many clubs in the PL are funded to a greater or lesser extent by sugar daddy owners. The most notorious abusers of the current Premier League financial laissez faire has been for many years the Chavs, where Abramovich has poured hundreds of millions of pounds in “loans” to bolster what was essentially a bankrupt club.
This money was poured into acquiring players, at hugely inflated prices and wages, with which no club other than, peripherally, Manure could compete. This tactic of collaring the market for the best players, eventually won the braggart Mourhino the PL. Boo!
The Mancs have also been funded in an extraordinary way by the Glazers, who have funded the club by borrowing huge bucks. And now, Citeh have been subsidised by its new owner, Sheikh Mansur, again with hundreds of millions of £’s being poured into the club.
In the most recent accounting period, 2008/9, 15 out of the 20 clubs made substantial losses.
In other words, a massive three-quarters of the Premier League clubs will need to reduce significantly their spending on players’ wages if they are to qualify for European competitions, once Uefa’s “financial fair play” rules are introduced. With effect from season 2012/13, they will have to, at least, break even.
Wow! Do some of these clubs realise how little time they have left to get their houses in order?
However, owners will, according to the rules, be permitted to invest in clubs, via permanent shares rather than by way of repayable loans, which will enable them to build a solid infrastructure such as training grounds or youth development facilities, but will not be allowed to overspend on wages or transfers. The sugar daddies will not be able to call in their loans and simply walk away, if the going gets tough, however unlikely you think that might be, and the normal Company Law rules will apply to their shareholding.
Michel Platini, who many think of as an anti-English plonker, and that includes me, warned of the “danger to football” posed by debt, overspending and “rampant commercialism”. As I said, I don’t like the man, but there is an element of sound commonsense in this.
Clubs cannot return losses of more £38m for the three year period, 2012-15. After 2015 the clubs will be given a further leeway of £25m, for losses during an additional three year period, after which the figure will be substantially reduced.
In the Premier League, besides Chelsea and Citeh, Aston Villa are subsidised by the club’s owner, Randy Lerner, and they lost £46m in 2008-09, while Sunderland lost £26m. Liverpool lost £55m, principally because they had to pay £40m interest on the £250m “purchase” price borrowed from their bank, RBS, by Gillette and Hicks.
Manchester United made a profit in 2008/9 only because of the £81m sale of Cristiano Ronaldo to Real Madrid; in previous years, since the Glazer family took over what was then the world’s most profitable club and ladled huge debts on to it, United have sustained substantial losses every single year.
Clearly, (heh, heh), it is going to be a difficult period of adjustment for all the loss making clubs, like Manure, Citeh, Villa and Chelski etc, who play, or are hoping to play, in European competitions.
Put simply, clubs in European competition can only spend what they earn. The financial fair play rules will require clubs to break even over a rolling three-year period, if they want to play in the Champions League or Europa League.
There will be some leeway enshrined in the rules for the six years after 2012, but as mentioned, some Premier League clubs, notably Manchester City, Chelsea and Aston Villa, could still fall foul of the rule unless they change their spending habits pronto.
Manure, however, believe they will pass the rules threshold, despite the handicap of paying out £45m to service their debts every year. Should be a neat trick!
On the other hand beautiful Arsenal (hooray) and shitty Tottenham (boo, hiss) will pass the test comfortably.
Clubs that breach the rules will not be granted a Uefa club licence to take part in European competitions.
In recent years, Arsenal’s prudence has played a part in their being priced out of the transfer market, which has been dominated by the usual suspects. Starting next year the boot will be very firmly on the Arsenal foot!
We are the Mighty Arsenal! You Will Feel the Financial Power!