Uefa is pushing ahead with plans backed by their president Michel Platini to curb spending by clubs, forcing them to break even and spend only what they earn. When implemented over a three-year period up to and including 2015, they should benefit French and German clubs but hit those in England and Spain.
Uefa is pushing ahead with plans backed by their president Michel Platini to curb spending by clubs, forcing them to break even and spend only what they earn. When implemented over a three-year period up to and including 2015, they should benefit French and German clubs but hit those in England and Spain.
In the initial three-year period of the plan owners would be allowed to cover losses totalling €45m. This would then fall to €30m over the next three years and then be cut back even further. There are, however, no limits on investment on infrastructure or the youth team. The former concession takes account of the fact that in continental Europe stadiums are often provided by local authorities rather than funded by clubs.
Uefa has introduced measures to stop a wealthy owner ‘sponsoring’ a team beyond a fair market price to inflate the club’s income, but there are doubts about whether these measures can be enforced. The regulators would have a reserve right to target those clubs whose debt is in excess of annual turnover, but it is far from clear whether they would intervene on these issues. Similarly, the new regulations state that players’ salaries should not add up to more than 70 per cent of annual turnover, which would hit clubs like Manchester City where the figure is in excess of 100 per cent. But again would this actually be enforced?
The potential for argument about interpreting the rules could create a field day for accountants and lawyers. Uefa could well find itself bogged down in costly legal disputes. Drawn-out legal battles would create problems when it is proposed to enforce the rules by banning clubs who break them from the Champions League and Europa League.
The intention is to try and stop English and Spanish clubs borrowing large amounts of money to create more successful teams. This overlooks the fact that debt is an important tool in funding any company’s growth. Clubs might well be obliged to increase their revenues from gate money, television and income from sponsors and fans. Fans could end up paying more for their football.
Leagues could become more predictable with United using their exceptional turnover to dominate the Premiership and Real and Barcelona doing the same in Spain. The real losers could be mid-sized clubs like Fulham and Wigan Athletic who have benefactors as owners. On the continent, the likes of Parma and Deportivo La Coruna have benefited from sugar daddies in the past.
The European Club Association, the successor to the powerful G-14 grouping, has already obtained some concessions and intends to fight for more. It is arguing for a five-year accounting period rather than three and for owners to be allowed to invest extra funds through equity rather than debt.