The Union of European Football Associations (UEFA) has emphasised the importance of its Financial Fair Play concept for the overall good health of European football and the financial stability of its football clubs.
UEFA president Michel Platini and general secretary Gianni Infantino maintain that the Financial Fair Play initiative is a key element for the future of European football and is aimed especially at curbing the financial excesses that have brought a considerable number of clubs into financial difficulty in recent times.
Appropriate regulations have been put in place by the UEFA Club Financial Control Panel, chaired by former Belgian Prime Minister Jean-Luc Dehaene and it has been set up to monitor and ensure that clubs across UEFA’s member association adhere to the Financial Fair Play requirements included in the regulations.
The concept will be implemented over 2010, 2011 and 2012.
The UEFA Financial Fair Play criteria will become mandatory from the beginning of the 2013/14 season, when the Club Financial Control Panel can start pronouncing sanctions against clubs based on financial statements from the 2011/12 and 2012/13 reporting periods.
Under the Financial Fair Play concept and the regulations, European football clubs will be encouraged to operate on the basis of their own revenues and not spend more than their income.
Clubs should also settle their liabilities with players, authorities and other clubs in a punctual manner. In addition, they will have to provide information about future financial planning.
To put that into some sort of perspective of how the English Premier League is tracking to meet the UEFA’s Financial Fair Play Criteria in 2010, the Guardian has reported that the 20 EPL clubs collectively lost close to half a billion pounds last season.
In the 2009-10 financial year, the clubs currently in the Premier League made total revenues of £2.1bn ($3.5bn) principally from their multi-billion-pound TV deals and the world’s most expensive tickets.
Yet 16 of the 20 clubs made losses, totalling a record £484m ($800m) relying on funding from their wealthy owners to keep them going.
Since the owners took over their clubs, they have put in a staggering £2.3bn ($4bn) by way of loans or shares, mostly to pay ever-escalating players’ wages and transfer fees.
The Premier League’s total wage bill in 2009-10 was £1.4bn ($2.3bn) at an average of £70m ($110m) per club, accounting for an average 68% of the clubs’ total revenues.
All the clubs in the top seven made substantial losses and by far the biggest loss was at Manchester City, where Sheikh Mansour of Abu Dhabi put his dynastic oil millions into bankrolling a £121m ($200m) loss from signing and paying the galactic wages of players who could lead City to trophies. Even Manchester United in the red part of town, lost a staggering £79m ($130m).
League and Cup double winners in 2009-10, Chelsea, whose owner Roman Abramovich is always cited as a keen supporter of UEFA’s Financial Fair Play initiative, made the next biggest loss of £78m ($128m).
Those financial losses just keep adding to the clubs ongoing debt. Chelsea now has an enormous football club debt of £734m ($1.25bn). Manchester United owes £590m ($990m) and even Mark Schwarzer’s Fulham FC has accrued debts of £123m ($200m).
Those financial losses took the EPL clubs to a mind-boggling total cumulative net debt of £2.5bn ($4.15bn).
Concerns over English football’s financial wellbeing and their ability to meet the Financial Fair Play mandatory standards by 2013 are set to deepen further with the impending release of a UEFA report, which will show that Premier League clubs owe more money than all the other clubs in Europe’s top divisions put together, plus some.
The Premier League of course defended the amount of debt carried by its clubs, arguing that as they make the most money of any in Europe, they can be expected to spend more too.
However, the meltdown at Portsmouth and the de-registration of West Ham from UEFA because of financial concerns came about because of the standard Premier League practice of borrowing from an owner and banks to pay high wages for otherwise unaffordable players.
It has seriously shaken the financial credibility of the English football league.
The sunnier side of that picture is that the English top flight makes hugely more money than its nearest rivals, like the Bundesliga, due principally to the willingness of English men and women to pay for very expensive Sky TV Sports subscriptions and the highest football season tickets prices in the world.
But surely time is running out for EPL clubs. There is less than two years to get clubs operating above the break-even point or face sanctions from UEFA – whatever that may be.
Although UEFA has shown it is not afraid to de-register clubs and make them ineligible for European competitions.
Imagine Manchester United, Liverpool and Chelsea being banned from competing in the UEFA Champions League because of their overly generous owners.
“We are very clear that the principle of the break-even rule has been agreed: clubs cannot spend more than the income they generate, and that income is not a gift from somebody,” said Infantino. “This is for the long-term health of clubs and the European game in general.”
One of the Premier League and FA’s arguments is that if English clubs have to live only within the income they generate, the rich clubs will surely dominate.
But at present, isn’t that just what we are seeing in the EPL anyway?
Financial Fair Play or not, the richest European clubs will still continue to dominate their respective football competitions.
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