An excellent article in the Guardian today, on the financing issues of major European clubs, especially those in England.
Platini targeting Man United and Chelsea, because of their huge debts
Michel Platini, the UEFA President wants to reform the finances of Europe’s top football clubs, who are in huge debt.
Platini, a great player in his time, also understands this is as much an issue in Spain and Italy, as it is in England.
But two clubs he has set his sights on are Chelsea and Manchester United in England. Together, according to their most recent financial accounts, owe together Â£1.5B to their creditors.
That’s just ridiculous, and no way to run a business.
Platini had the G14 set of clubs disbanded, and will replace it with the ECA (European Clubs Association), which will have a full 103 members, one of which will presumably be Newcastle United.
Karl-Heinz Rummenigge is the chairman-designate, and he will be confirmed when the body convenes for the first time next July 7th and 8th.
The former German striker told Kicker magazine last week.
“Football is sick.”
“I read a statistic which says 85% of all professional football clubs are running at a loss.”
85% football clubs running at a loss!
As it turns out the latest figures available had Newcastle United in the black, as it turns out for season 2006-2007, according to the latest Deloitte & Touche report.
Rummenigge recommended the percentage of revenue (turnover) spent on wages should not exceed 55% for any football club, and only yesterday, Platini agreed that was the kind of limit he could fully support.
Chelsea’s wages, which are Â£133M a year, stand at 70% of their Â£190M of revenue, although Manchester United’s wages of Â£92.3M, are only around 43.5% of their huge Â£212M revenues.
The debt seems to be what Platini doesn’t like about the Manchester United financial situation.
The Red Devils owners are the Americans, the Glazers family, who also own the Tampa Bay Buccaneers, the American Football team.
In England, there are several clubs who have let wage costs run out of control and at Newcastle our wage bill last season was around Â£72M of our revenue of an estimated Â£103M.
That wage figure is close to 70% of revenues, the same as Chelsea’s, and it’s something the business savvy Newcastle owner Mike Ashley is trying to reduce, and get under control.
If Platini gets his way, all these clubs will have to reform themselves and reduce their wage bills.
This is a form of a salary cap that we had discussed recently on this web site.
Certainly some financial limitations have to be placed on clubs, so that clubs are more competitive.
And we cannot again allow a Billionaire to come in and spend Â£300M on new players as the Russian Roman Abramovich did a few years ago at Chelsea.
Platini seems not too unhappy with the spiraling transfer fees paid for players however, and said:
“If Real Madrid pay â‚¬100m for a player that’s OK if they have the money,”
“If they don’t it’s a worry.”
Maybe a first small but important step would be to limit the total wage bill at clubs to 55% of their total revenues.
That would at least be a good start in attempting to get a more level playing field, (excuse the pun), because if we don’t do something soon, there will be fewer and fewer clubs able to compete at the top level.
Newcastle United are finding that out right now.