Let’s face it. The Premier League elite are like devious little school children, running amok in constant defiance of the rules set by the FA. If David Bernstein asked Manchester City to go to bed, Sheikh Mansour and all his Citizens would sulk upstairs before sneaking out of a window to enjoy a night full of expensive frivolities.
The point I’m trying to make is that clubs will always seek to elude any restrictive implications in their search for glory, even if it means risking the very existence of the club itself.
Shockwaves were sent reverberating across the country when SPL giants Glasgow Rangers conceded they were filing for administration. Many will argue that their rapidly swelling tax bill was sending them spiralling towards despair, but the sudden realisation that a club of that magnitude could even consider administration is a terrifying revelation.
There is still a misguided perception that Premier League clubs make a fortune, immune from the effects of soaring levels of debt in the modern economy. Over the past decade, an increasing number of clubs in the Football League have endured administration, which raises the issue as to whether the FA should do more to prevent this ugly trend.
UEFA are attempting to quell escalating debts emerging from top European clubs with the introduction of Financial Fair Play. The scheme aims to revolutionise how clubs operate, with strict punishments if teams do not ‘operate within their means’. But what does this mean? Well UEFA say they want clubs to be breaking even by 2014, failure to do so could mean expulsion from the Champions and Europa League competitions.
It’s not quite as ruthless as it sounds. Over a 3-year transition clubs will be allowed to make a maximum loss of £39.5m in the first period, which will fall to £26.3m towards the end. There are also some factors that won’t be included in the overall financial evaluation at the end of each year including youth development, stadium infrastructure and community schemes.
“In the case of Chelsea, for instance, analysts estimate that around £10m a year is spent on a youth set-up that has yet to really bear fruit, while another £9m can be lopped off for depreciation on tangible fixed assets such as spectator facilities at Stamford Bridge or training facilities at the club’s Cobham headquarters. Therefore, FFP rules would allow Chelsea to reduce their expenses by £19m, which is a considerable portion of the £70.9m loss revealed on their last annual balance sheet.” Goal.com
These new financial boundaries will inevitably mean owners will seek more income from new commercial ventures. In 2011, Manchester City agreed a controversial £400m sponsorship arrangement with Etihad Airways. The move was criticised by some including Mr Wenger, whose Arsenal side had agreed a similar yet distinctly inferior deal with Emirates. The problem was that Sheikh Mansour was seen as using his family ties within the company to ensure he would receive a greater income. However, UEFA stress all deals will be market-tested for fair value and judged by an independent council.
“Nobody should try to be clever about the possibility of circumnavigating the rules,” warned Gianni Infantino, Uefa’s general secretary. “If the panel have the feeling that the rules are circumnavigated, then this corresponds to a violation.” Goal.com
It remains to be seen whether clubs will severely alter their business strategies or whether UEFA will uphold their proposed penalties. Yet the FA should be seriously considering the implementation of a similar strategy, albeit on a smaller scale, which seeks to protect the future of clubs, banning those who continue to be financially irresponsible from its domestic cup competitions.
Judging by the findings from the Guardian’s David Conn in his annual analysis of Premier League finances (2009-10) the FA should employ each team with a monetary babysitter tasked with erecting a baby gate in front of the loan department of local banks.
Arsenal are often perceived as the only club operating in profit, with the sale of the property from the former grounds of Highbury lifting them to a £56m profit that year. Yet their mediocre spending has seen them surpassed by the financially more aggressive teams who appear to be reaping all the rewards.
United benefited from a £286m turnover, but the influence of the Glazer family is proving significant as their loading of debts onto the club pushed the Red Devils into a negative figure of £79m.
Elsewhere Villa lost £38m with their income failing to match their exuberant transfer dealings. Liverpool made revenues of £185m, more than double that of Villa, yet lost £20m, in the last full season owned by Hicks and Gillett. The American pair borrowed £200m to buy Liverpool but remarkably made the club responsible for paying their interest. Maybe special circumstances should be made to allow the punishments to fall directly on the individual responsible rather than the club itself.
The £9m profit obtained by Wolves is the sole shining light and yet it stems from their first season up from the Championship with new television income and improved attendances perhaps disguising their true financial state. The overall outlook is bleak, clubs lost close to half a billion pounds and 16 out of the 20 teams found themselves in the red.
Teams won’t risk missing out on the best players by restructuring their wage budget or refusing to play huge transfer sums. Instead ticket praises will sky rocket along with official merchandise such as replica shirts to every fans favourite, the nodding dog.
At the start of the season Arsenal were revealed to be first club to break the £100 ticket barrier for a seat in the Emirates, whilst Liverpool offered the most expensive ‘cheap day out’ package* at a princely sum of £46.95. It seems that fans are always going to be the ones that hurt, either through their wallet or in their heart.