In May UEFA’s Executive Committee approved a set of new regulations embodying their financial fair play initiative. As the brainchild of UEFA President Michel Platini, the concept is designed to bring greater financial stability to European club sides. Essentially clubs will have to break even, not spending beyond their means or face the possibility of sanctions. These rulings are operational as of 2012 but the ‘break even’ concept will be applied stringently as of the 2013/14 season on the basis of a club’s financial performance from the previous two years. The implications of this decision may be widespread given the governing body found that 50% of the clubs they surveyed across Europe were making losses. Will the introduction of a football handicap force Premier League sides to spend big in the next two transfer windows before prudence is mandatory?
The ultimate sanction available to UEFA for those who fail to comply is the threat of exclusion from the Champions League and Europa League. How this will operate in practice is a different matter considering clubs such as, Manchester United, Real Madrid and Chelsea are saddled with debt but are commercially important to the success of the competition. However speaking in Monaco at the Champions League draw, Platini said, “The clubs will comply or they will not play.” This is one aspect of bureaucracy which has found favour with Arsenal’s Arsene Wenger, who described the PL’s 25-man squad ruling as an unnecessary restriction on trade and employment. As one of Europe’s leading exponents of financial frugality, the rules will benefit Arsenal and help to level the playing field.
Wenger said, “I don’t want to go into excuses but you want a business to be run properly and I believe that to lose £150 million a year you don’t deserve a lot of credit to win a competition.” Chelsea and Manchester City are two obvious casualties of this directive with the Eastlands based club reporting an annual loss of £92.6 million for the 2008/09 financial year. The extravagant spending by both sides in recent times may seem sustainable but clubs whose owners have burdened them with high levels of debt will be penalised too. Before clubs focus on other streams of revenue including gate receipts, sponsorship and commercial activities, the next two transfer windows may be distorted. With a two year gap and a phased introduction of the rules do clubs have carte blanche to splurge in the market?
Based on the profitability of European competition, newly rich or ambitious clubs may show their hand in the transfer market. Manchester City and Tottenham have already been huge spenders but will clubs like Birmingham and Sunderland with wealthy backers see this as a golden opportunity to invest before enforced austerity? David Cameron quipped in the week that even the Cuban leader Fidel Castro had woken up to the need for deficit reduction. A more apt and surprising witticism would be that the PL has acquiesced to sensible economics. The PL Chief Executive Richard Scudamore has spearheaded new regulations on club ownership and is canvassing opinion on a possible salary cap. Despite qualifying for Europe’s top club competition, Daniel Levy has said Spurs will not gamble their future on the Champions League. Aston Villa have been on the cusp of qualification but refused to further load their bloated wage bill. Liverpool’s debt restricted their spending until the sale of Javier Mascherano to Barcelona.
Conversely Manchester City continues to freely spend but even their football administrator Brian Marwood has inferred that following transfer windows will not be as eventful. The potential implications and seriousness of UEFA’s regulations are still massive as clubs across Europe are way off the pragmatism of Arsenal. But Platini’s message has been received and understood.