The 20 Premier League clubs are currently discussing how to impose some voluntary financial controls on themselves, so they don’t go into huge debts, and voluntarily abide by some financial controls, which are in line with UEFA’s Financial Fair Play rules, which are coming into effect over the next few years.
Wigan’s Dave Whelan – proposed a flat salary cap
In the Football League, clubs already have agreed to some controls, and wages have been set at a percentage of the clubs’ total revenues – it’s 65% in League One and 55% in League Two.
If clubs don’t abide by these rules, they will have a transfer embargo put on them, which simply means they will not be able to buy new players until they get their financial books in order.
Bear in mind there are Premier League clubs such as QPR, whose wage bill exceeds their revenues, which is simply ridiculous and simply amounts to suicidal financial management.
In the United States some sports have a total wage cap, which sets the limits in dollars of how much a club can spend on thee wages of players, but West Ham’s David Gold says that’s like communism (don’t tell the US that!):
“Wage capping is almost communism, that’s abhorrent. Most Premier League clubs support UEFA’s Financial Fair Play, but I think what clubs want is something that works alongside that to stop the ever upward spiralling wages.”
The flat wage cap was put forward by Wigan’s Dave Whelan, and it’s getting little support and may even be illegal in the European Union.
The flat wage cap may not be supported but what is supported is the Football league scheme by capping the wages at a percentage of revenue, which of course favors the richer clubs, because the more you make the more you can pay out in wages.
What a lot of the Premier League clubs want to stop is what happened at Chelsea and Manchester City, when a super rich owner comes in and spends unrestricted and huge amounts of money on both transfer fees and wages.
Both Chelsea and Manchester City lost money in the financial year 2010-2011 – and City lose £197M – and that’s both ridiculous and amazing, that a club is allowed to lose so much money on one financial year.
Needless to say both Chelsea and Manchester City oppose any financial controls being placed on them in these meetings.
But with incomes of the PL clubs starting to rise significantly, there may be a silver lining, and this is what a Premier League spokesman said yesterday:
“Income is rising while debt is falling and it’s from this position of strength that the 20 clubs are currently discussing what further financial regulation might look like. At least 14 clubs will have to agree before anything’s implemented.”
On the last available financial figures available (2010-2011), only seven clubs made an overall profit and they include Newcastle United, with the other clubs being Arsenal, Fulham, Manchester United, Tottenham, West Bromwich Albion and Wolves, who were relegated.
We expect the clubs to agree to some sensible financial controls and then in years to come we’ll wonder why we ever allowed clubs like Chelsea and Manchester City to spend ridiculous amounts of money – at Chelsea it’s now exceeded £1B – in building teams that can win trophies.
That has to stop.
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