Newcastle Well Prepared For UEFA New Financial Fair Play Rules

UEFA is expected to ratify the “financial fair play” rules drawn up by the European football’s governing body today.

Michel Platini – behind most of the new financial rules

That will finally require all clubs to break even from 2012 – what a concept – or they will risk being excluded from all European competitions.

We have found it hard to believe that most English Premier clubs have refused to put their own financial houses in order, and will therefore now be forced to do just that – before more of them become bankrupt like Portsmouth did earlier this year.

Michel Platini, the UEFA President, suggested these moves way  back in 2007, and it was to curb the ridiculous over-spending by European football clubs, especially those in the Premier League in England.

These rules should have an immediate impact on clubs like Chelsea and Manchester City, because they run up huge losses each year, but are being bankrolled by billionaire owners.

The same is also true – to a lesser extent at Newcastle – where English owner Mike Ashley has loaned the club at least £111M, with an interest free loan – but at least Newcastle have voluntarily started to get their financial house under their own control – to the club’s credit.

The new rules will disallow club owners to continue to carry enormous debts – such as the owners of Manchester United and Liverpool, as just two examples, where the US owners of these clubs borrowed enormous sums to buy the clubs in the first place – and still carry massive debts.

Manchester United have debts of around £750M, and are owned by the Glazer family in Tampa, Florida, and Liverpool have debts of around £240M, and are owned by Tom Hicks and George Gillette Jr.  Neither of these American owners is very popular with the fans, we may add.

The many financial restrictions proposed, could also lead to players’ wages being reduced, simply because these are the largest costs at any club,  and some PL clubs currently have wage bills which are over 90% of their revenues – which is quite simply financial suicide.

Owners will be able to invest in their clubs, but only in areas that are good for the club (rather than good for themselves), like in developing new stadiums or building up the club youth academies.

A  UEFA spokesman said today:

“We’re not trying to level the playing field,” “We want to make sure that the middle-ranked clubs don’t go spending millions that they don’t have as they try to compete with the big clubs.”

“The underlying principle is that clubs cannot repeatedly spend more than their generated revenues.”

As we said before what a concept – and it’s quite simply business 101.

It’s always hard to give praise to Newcastle owner Mike Ashley, because he is still immensely disliked by many fans, and Mike refuses to communicate sufficiently well with the club’s loyal fan base – which we have to add  is his lifeline at the club.

Make Newcastle fans happy and everything else takes care of itself on Tyneside would be a good thing to drum into Mr. Ashley.

But it’s got to be said to his credit, that he seems to have saw all this coming, and has already imposed some sensible financial restraints at the Newcastle club.

Remember that in times gone by,  spending huge transfer fees on trophy singings each summer – money the Tyneside club didn’t have by the way (picky, picky) – seemed like the popular sport.

Comments welcome.

11 comments so far

  • Ben_nufc

    May 27, 2010 at 6:00 PM

    Comment #1

    Hey guys, have a look at this video

  • MacToon

    May 27, 2010 at 6:25 PM

    Comment #2

    Will be very interesting to see what happens with some prem clubs, not just Chelsea and Man City but Liverpool who have failed to qaulify for the champion league and have huge debts.

    I can see why this is being introduced but think it will be difficult to enforce. It may just have the adverse effect and drive a bigger gap between the top 4 and the rest of the league.

  • chuck

    May 27, 2010 at 7:05 PM

    Comment #3

    The club owners not Platini will be the ones to decide how they run their businesses.
    If they decide to continue to run their business as things are then Platini will have to back down.
    Could in fact be a reason for the long expected European super league, with those clubs not agreeing with Platinis new regulations, breaking away from the two big regulatory bodies and forming their own league which presumably would include the group of 18.
    Something many clubs have been in favor of.
    Both tv and advertisers would be more than happy to get the contracts with such a league
    and the money would be enormous.
    And what could EUFA or FIFA do about it ?

  • DrMagpie

    May 27, 2010 at 7:16 PM

    Comment #4

    A great move but clubs like Man City and Chelsea will still get around this, their owners will just make huge “advertising” deals with their clubs instead of giving the money straight to the club.

    @MacToon – If this widens the gap between the top clubs and the middle and lower league clubs its only because the gap was already there but was just hidden by owners running the clubs in an unsustainable way.

  • flair20

    May 27, 2010 at 7:24 PM

    Comment #5

    Everyone makes mistakes but Mike Ashley is currently running our club extremely well, no matter how bitter some people are about certain things that have gone on in the past – let go and move on. I feel genuinely positive about NUFC’s future and can’t wait for the new season to start.

  • MacToon

    May 27, 2010 at 7:26 PM

    Comment #6

    The reason I would say it would widen the gap is the reliance on Europen leage money, gate money, sponsorship money and tv money. This would mean that the top 6 or 7 teams would continually make more money than the rest (not always but mostly) of the clubs.

    Without owners investments other clubs will struggle to compete.

    I would have said a wage cap or something used in American leagues would have been more effective.

    but like I originally said… it will be interesting to see what happens.

  • cupiddstunt

    May 27, 2010 at 7:26 PM

    Comment #7

    Chuck that just about sums it up if the big clubs decided to get together and tell the frog to stuff it there is little he could do.

    He would be the figure head of an organisation that has just lost its money earners, tv and advertisers would be running to throw cash at such a league

  • fongct

    May 27, 2010 at 9:49 PM

    Comment #8

    Every clubs’ owners can run the club whatever way they like, especially Chelsea and Mancity, they are a private company, their owners can spend whatever amount they like on their own expense… he has no right to restrict the freedom of rich owners to spend the money which they can totally afford it

    Arsenal is also running with massive debts because of their new stadium, but the debts are still under control….and it can generates more cash flows, earn a bigger income in the long run….without those debts, Arsenal cant expend, and they will just stand still without improvement…

    and I agree, with this rule, the gap in the league will get bigger and bigger….Bayern, Lyon etc are the prefect examples

  • G

    May 27, 2010 at 10:05 PM

    Comment #9

    Some interesting points brought up here. If memory serves, the last time such rules to govern how football runs as a business were brought up by the FA to give a broader sense of fair play accross all 4 full time divisions in England. The result was breakaway group who formed the Premier league. Clubs do have a certain amount of power outside of the powers that be, however, given that Platini has give clubs 8 years to get thier houses in order, I think the next few years in football could actually be a great leveler.

  • Artemus

    May 28, 2010 at 2:29 AM

    Comment #10

    Breakaway from UEFA? Good luck. Besides, this will be good for all teams. As someone noted, the spending gap was already there. Even with the overspending it was as bad, or even worse.

    The big clubs couldn’t cut their spending unilaterally, because they’d get overtaken by those who wouldn’t. They literally couldn’t stop themselves from being as reckless as they thought they could get away with. I only wish these rules had come in time to stop Man City from buying their way into the top four (they’ll probably get there next year.)

    Now we’ll have a better picture of whose club is being run well, and who has the best eye for talent. Does someone think this system will be less fair? The only complaints should be from the players who may see wages fall dramatically. How much of a transfer fee will a successful club be able to amass while still meeting the UEFA requirements.

  • Widowmaker

    May 28, 2010 at 10:27 AM

    Comment #11

    Don’t think the new rule will work and neither like it.


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