It looks like the Financial Fair Play rules that are being introduced by UEFA President Michel Platini do have some teeth, with the news that 23 clubs have had their funds from last season’s European competitions withheld, due to their financial siutation.
Michel Platini – there’s no going back
When Michel first talked about Financial Fair Play (FFP) rules a few years ago, he always said that if clubs didn’t balance their books, and only spend what they bring in with their revenues, then they would be barred from European competition.
And it seems the withholding of funds from last season is the first step by UEFA in clamping down on clubs who keep spending money like it’s going out of style, and often have wage bills which are even bigger than their revenues.
And it seems that some clubs now don’t have the money to pay their players, or to pay other clubs for players they have purchased, and Atletico Madrid, Malaga, Fenerbahce and Sporting Lisbon are some of the clubs who have until September 30th to settle those types of debts.
If they don’t do that, they will be hauled in front of UEFA to explain what they are doing – which seems just fine with us.
Atletico are the current Europa League champions so Michel Platini is not holding back on who he goes after – and that’s very good to see.
Clubs in England that are probably going to get a call from UEFA include Manchester City, Chelsea and QPR, simply because they are nowhere near balancing their books, but also show no signs of cutting back on their expenditures.
And as an example of that, City lost £197M in their last financial year for which records are available – the 2010-2011 season.
FFP is a long overdue control on clubs’ spending, and between 2011 and 2014, no club is allowed to lose more than £39.5M in one financial year, and between 2014 and 2017 that figure is reduced to £26.3M, and after that clubs are expected to break even – so it’s not as if clubs haven’t had ample warning or time to get their books in order.
Some clubs have not taken Platini’s initiative seriously, and Qatari-backed Paris Saint Germain are another club who are spending money like it grows on trees, and at some point they will need to be confronted on what they are doing.
Last summer PSG spent £120M on players like Zlatan Ibrahmovic, Thiago Silva and Ezequiel Lavezzi and Russian club Zenit St Petersburg have spent around £75M on just two players in the summer – Hulk and Axel Witsel.
As a reminder this is what Platini told Gazzetta dello Sport a couple of weeks ago:
“These rules were unanimously approved by all clubs, politicians, judges and the European Union. There’s no going back from here on.” “FFP is a hard rule for any team, regardless of whether we’re talking about PSG, Juventus, or any other team.”
“I have spoken with directors from all clubs. They have all stressed that they would follow the new rules. It seems that some worry a bit more about FFP than others, though.”
“Financial Fair Play does not stop clubs from buying players. Clubs can still spend as much as they want as long as their budget accounts for it.”
There have also been discussions in UEFA of high sponsorship deals such as exists for the Etihad Stadium with Manchester City, who are getting £400M over 10 years from Etihad Airways for the naming rights.
Etihad are owned by the Abu Dhabi government and the Manchester City main owner, Sheikh Mansour, is a member of the Abu Dhabi royal family, and there certainly seems to be an unfair link there.
And £40M per season is hardly the fair market value of such a deal – it’s a sweetheart deal in other words, and we’re surprised UEFA haven’t yet done something about this.
As an example of other naming rights deals which currently exist, Arsenal struck one with Emirates Airlines back in 2004, to name their then new stadium The Emirates Stadium, and those naming rights are worth just £2.8M per year for 15 years – so you see what we mean.
We have no idea what Mike Ashley and Sports Direct s paying Newcastle United for the naming rights to St. James’ Park – and it would be nice to know what that figure is – with Newcastle hoping to get up to £10M a year off the naming rights, but no company seems to interested, with the fans dead against it.
But the good news is Michel Platini is putting teeth into the FFP rules for European clubs, and that’s got to be good news for Newcastle, since we only lost £3.9M in the financial year 2010-2011.
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49 comments so far
toonhorse
Sep 12, 2012 at 3:03 PM
Comment #41cheers dave1961 🙂
valle
Sep 12, 2012 at 3:17 PM
Comment #42The argument about the top clubs forming their own leagues dont hold ANY water at all… Ok, so Barca, Real, Man City, Man Utd, Liverpool, Chelsea and a few others form their own league. They would have to play the same teams 3-4 times a season. No idea in having cups, since its again the same 10 teams playing. No European competition, except for tha fact that you could argue that that was all it really was with fans having to travel all around europe constantly, and finally no excitement whatsoever. Clubs such as liverpool would start being bottom feeders and football fans would accept their former clubs for dead and find a new team… Look at it this way, if NUFC were part of it would you be able to live with the above? I would mourn the death of my club the minute they entered such a “league” and i think most fans would if it came to it.
mindshaft
Sep 12, 2012 at 3:18 PM
Comment #43Interesting list of indebted clubs – surely Newcastle should be on there as we keep hearing that we owe Fat Ash £200 million and are therefore £200 million in debt
cupiddstunt
Sep 12, 2012 at 3:46 PM
Comment #44ONLINE GUY @ # 40
There is a small stumbling block to that breakaway idea.
All football clubs that play in Europe are licensed by Uefa so for the breakaway to happen all the clubs in question would have to work outside Uefa i.e. unlicensed which means they would be unable to compete in any other venues.
That being the case every second game would be a long travel so they would drop a huge amount on gate money and it’s arguable as to just how much they would get for tv rights as you would have a smallish league with no relegation and no promotion how quick would it be before it became boring?
Would they continue to hold their level of supporters as they would have no domestic games whatsoever?
The “top” teams have been discussing the idea of a super league for quite some number of years now and are no further forward and not without good reason the repercussions could be catastrophic to those that take part if it is anything but a rampant success.
dave 1961
Sep 12, 2012 at 3:53 PM
Comment #45mindshaft
when Ashley purchase the club in 2006 we had an external debt of £75 with £50m being debt for the stadium expansion.
wynsleap
Sep 12, 2012 at 3:58 PM
Comment #46Online Guy @ 40 – You are right unfortunately. People with untold wealth will not be dictated to and will find their own way to get round any problem.
As far as I am concerned, however, I personally feel in a no-win situation here as without FFP rules coming in we’ll never win anything against the mega rich teams and if it does come in we’ll never get rid of Ashley (who I can’t abide).
If we HAVE to put up with the latter I’d rather see salary and transfer caps, a top limit to sponsorships of stadia rights and shirts, a world wide limit to the money syphoned to agents and a maximum value to a squad (as in Fantasy Football). This would give some parity across the globe to all teams and give fairer competition.
(Although whether Sky would still plough their considerable money into football without the lucrative hype of the dominating ‘cream’ is debatable).
With sensible grass roots solutions like that let’s see then who are the really talented owners and managers.
stoner
Sep 13, 2012 at 7:31 AM
Comment #47The money that Ashley is owed is what he paid for the club. This sum can be recovered through profits from the club over time or realistically whenever he sells the club. Technically we are debt free as the money owed to Ashley is the net value of the club (or thereabouts) Unless he was given the club for nothing?
It is correct that he has classed the money owed as a personal loan to the club as this is the most tax efficient way to allow him to recover his money at some time in the future. For example if he wrote this off via losses in the club then he would be taxed through capital gains at around 50% when he sells the club. So it’s a loan the club can afford via its turnover and I imagine Ashley will be very happy with his investment as its no coincidence that sports direct is booming through the exposure of the nufc brand. In reality the loan should be offset by the sponsorship of Sports direct over the next 10 years or so.
stoner
Sep 13, 2012 at 7:33 AM
Comment #48The money that Ashley is owed is what he paid for the club. This sum can be recovered through profits from the club over time or realistically whenever he sells the club. Technically we are debt free as the money owed to Ashley is the net value of the club (or thereabouts) Unless he was given the club for nothing?
It is correct that he has classed the money owed as a personal loan to the club as this is the most tax efficient way to allow him to recover his money at some time in the future. For example if he wrote this off via losses in the club then he would be taxed through capital gains at around 50% when he sells the club. So it’s a loan the club can afford via its turnover and I imagine Ashley will be very happy with his investment as its no coincidence that sports direct is booming through the exposure of the nufc brand. In reality the loan should be offset by sponsorship
stoner
Sep 13, 2012 at 7:33 AM
Comment #49The money that Ashley is owed is what he paid for the club. This sum can be recovered through profits from the club over time or realistically whenever he sells the club. Technically we are debt free as the money owed to Ashley is the net value of the club (or thereabouts) Unless he was given the club for nothing?
It is correct that he has classed the money owed as a personal loan to the club as this is the most tax efficient way to allow him to recover his money at some time in the future. For example if he wrote this off via losses in the club then he would be taxed through capital gains at around 50% when he sells the club. So it’s a loan the club can afford via its turnover and I imagine Ashley will be very happy with his investment as its no coincidence that sports direct is booming through the exposure of the nufc brand.