Manchester City are expected to report the biggest ever losses in English football history when they release their accounts in the next fortnight. This raises once again the issue of whether they will fall foul of Uefa’s financial fair play rules.
Manchester City are expected to report the biggest ever losses in English football history when they release their accounts in the next fortnight. This raises once again the issue of whether they will fall foul of Uefa’s financial fair play rules.
Uefa will want to demonstrate that the rules are enforceable by taking action somewhere and City apparently offer a textbook case. However, Uefa’s own credibility has been dented by the spectacle of the chair of their enforcement panel, former Belgian prime minister Jean-Luc Dehaene, seeing the bank that he chairs (Dexia) go bust.
City hope that their efforts to reduce their losses and the amount they are investing in youth development will be taken into account by Uefa whose apparently strict rules are full of get out clauses.
As Arsene Wenger pointed out a few weeks ago, Uefa have also been moderating their position because there is a real question about whether the rules would stand up to a court challenge. There are grounds for thinking that they may constitute a breach of EU competition law, a body of law of which football has fallen foul before. Competition law is a Treaty of Rome provision and is likely to survive whatever happens to the eurozone.
Speaking in Milan, Michael Platini has reaffirmed his support for the financial fair play rules. Given that he was their architect, he was hardly likely to say they were a big mistake, but his arguments are of interest.
He said, ‘Financial fair play is very important in this period of economic crisis. I don’t understand why, while the economy is suffering, football squads should have so much debt. Clubs shouldn’t spend more than they earn. Every year professional football produces ($1.9 billion) of debt in Europe. I was the annoying one who said it’s time to stop that.’
Manchester City are expected to report a loss well in excess of £150m for the year ended 31 May 2011. This would be a sharp increase on the £121.3m loss made in the previous financial year. The wages bill is expected to rise from £133.3m to a figure close to the £172.5m paid out by Chelsea.
The club hopes that the losses will be below £100m in the year ended May 2012 when increased revenues from participation in the Champions League and the lucrative sponsorship deal with Etihad Airways will come on stream.
Commercial revenues are expected to be on the up at around £70m. Most of their sponsorship deals so far have come from the Middle East, but they now want to go global. However, as a global brand there is more catching up to do with Manchester United.