So what is it that the Premier League has learned from American investors saddling their debt onto two of the greatest institutions we have to offer? Uefa’s financial fair play regulations see one major change being implemented: the new rules will come into play for the 2012-2013 season and will require clubs to break even instead of making persistent losses.
In America sport is treated as a unique business not completely at the whims of the free market ideals we come to associate with the country; there are stringent rules in place to ensure such things as tapping up players contracted to other clubs are kept to a minimum. The same goes for potential takeovers. Besides the logic defying method of just how the American investors ‘bought’ Manchester United and Liverpool the reasons why are fairly obvious; in essence the Glazers, Tom Hicks and George Gillett are flagrant profiteers and they couldn’t have levied the same kind of debt onto a club in order to ‘buy’ it back home as they could in this country.
This leads us onto the point of woeful under-regulation in the English game. If we take United as representative of the financial health of football what we see is money being generated at a previously unfathomable rate with gate receipts being sustained, despite recession, and an overseas TV rights deal worth approximately £1.4bn. The problem has never been generating money but more ridiculous (illogical) overspending on wages and the cost of borrowing. Overspending becomes a circular danger: clubs borrow to cover their overspending, and then borrow more to cover the costs of interest payments as well as the initial overspending. John Maynard Keynes said, ‘If I owe you a pound, I have a problem; but if I owe you a million, the problem is yours.’ The adage takes a sinister turn when considering the American influence.
So how will the financial fair play regulations alter the landscape of debt in the Premier League? After a phased implementation over three years – 2010, 2011 and 2012 – the overarching subject of the regulations, the ‘break-even’ requirement, enters into force for the financial period ending 2012 (to be assessed during the 2013/14 UEFA club competition season). Michel Platini, talking on the future well-being of the European game, said:
“We have worked on the financial fair play concept hand-in-hand with the clubs, as our intention is not to punish them but to protect them. We have an agreement with the clubs. The philosophy is that you cannot spend more money than you generate.”
But with more than half of the Premier League foreign-owned all the profits will be going abroad (when the force of the regulations are in full swing) and, counter intuitively, the regulations may instead help the investors who have shamelessly saddled the debt of buying clubs onto the clubs themselves. Ultimately the ever pallid FA must surely realise the need to vet potential buyers after the soaring debt collected by Manchester United and Liverpool in particular. But the question then becomes whether it’s the duty of the governing body or the teams in question but, quite simply, it would be in the best interest of both to make it harder for history to repeat itself.
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