The losses incurred by the teams in Europe’s top divisions nearly doubled to €1.2bn in 2008-9. This was revealed by Uefa in its annual overview of the state of European club football which it published alongside its 85-page rule book on the new financial fair play measures that will start to come into force this summer.
The losses incurred by the teams in Europe’s top divisions nearly doubled to €1.2bn in 2008-9. This was revealed by Uefa in its annual overview of the state of European club football which it published alongside its 85-page rule book on the new financial fair play measures that will start to come into force this summer.
The study covered 664 clubs accounting for 90 per cent of all top division club revenues. Auditors in one out of eight clubs qualified their accounts in the 2008-9 season, compared with one in 11 the previous season. The total income of the clubs was up 4.8 per cent to €11.7bn, but this increase was out paced by rising costs which rose by 9.3 per cent to €12.9bn.
Salaries, mostly those of players and coaching staff, accounted for nearly two-thirds of costs. Accountants specialising in the sports sector such as Deloitte recommend that wages should account for no more than 50 per cent of costs measured against turnover. Yet nearly 250 clubs reported a wages to turnover ratio of 70 per cent or more. At 73 clubs the ratio was more than a staggering 100 per cent, Manchester City offering one example.
Uefa thinks that Arsenal offers an example of how to acheive success whilst complying with the new regulations.
Eleven of the clubs taking part in this season’s Uefa competitions would have fallen foul of the financial fair play regulations. However, it would hardly serve the credibility of the competitions to throw out eleven clubs. Hence, there will be some wiggle room: without it Uefa could face challenges in the courts (and might do so over the use of discretion).
Among the criteria Uefa will take into account are:
- The size of the deficit
- Projections of better financial performance (which could be optimistic)
- The level of debt relative to earnings
- Events beyond a club’s control (potentially a big loophole)