We’ve seen clubs like Manchester City, PSG and recently QPR spend money like it’s going out of style, and the Financial Fair Play Rules (FFP) seem to be having little or no effect on some of the big spending European football clubs.
Michel Platini – UEFA President
And some clubs – notably PSG and Manchester City – are trying to find creative (but illegal) ways to beat the system – with City’s deal with Etihad Airl;ines of £400M over 10 years being way above the fair market price of such deals, and the Airline is also closely linked to its Abu Dhabi-based owner – so there’s a conflict of interest there too.
And we hear that PSG have recently done a deal with the Qatar Tourism Authority, for £125M a year with the Qatar Tourist Authority over four years - to promote tourism in the country – give me a break – what’s this to do with football?
In business, these types of deals have to be at the “fair value” or market value of other sponsorship deals – basically it’s what the market will pay for the deals – and you cannot inflate these by up to ten times their value and expect to get away with it – well not in the real business world that is.
UEFA have just released their latest report, and losses have gone from €0.6B(£0.52B) in 2007 for European clubs to €1.7B in 2011, and 46 clubs would have failed the financial break-even test – and we’re certain Newcastle are not one of them.
UEFA’s General Secretary, Gianni Infantino had this to say about the losses:
“It is a hell of a lot of money and a very worrying situation that the clubs have the responsibility to take very seriously. It is not about just one club that might go bankrupt. The whole of football cares, because the consequences of a club going bankrupt are felt across the game,”
“Everyone, including PSG, know the rules and knows when they kick in. They know the rules are that they have to generate revenues to cover their costs without cheating know the rules and knows when they kick in.” “When we first discussed FFP it was Chelsea that attracted some questioning, then you have Manchester City, then it was PSG”
“Our responsibility is to have a system that works for more than 630 clubs and not look at one club and neglect the rest. Each individual situation will be assessed very carefully by these two panels.” “PSG have to respect the rules, they want to respect the rules.” “They are telling us they want to respect the rules.”
“The FFP rules are there to help the clubs. UEFA doesn’t want to sanction the clubs, we want to help them. But sometimes we have to sanction someone to help the clubs.” “We have a regulation which speaks about fair value of deals and the fact that a related party cannot just inject money into a club directly or indirectly.”
UEFA has a team of team of 15 accountants who will begin analyzing financial figures next spring for the years 2011-12 and 2012-13, and that is the first period to be looked at under the new break-even regime.
Clubs will be allowed an acceptable loss of up to €45M over those two years, as long as it is met by some benefactor – which are usually the club owners.
And news that PSG are donating David Beckham’s wages of £3M over five months to charity, hoping it will not be included in the FFP calculation – good try but what nonsense!
Finally. Infantino had this to say about FFP:
“It is healthy and much more sustainable than someone coming in, promising a lot and then the next day the club is bankrupt. Look at the situation with Rangers. Secondly, big clubs have always existed, this will not change.”
“In the past this was attendances, then commercial rights and TV rights.” “”We think this should be the case all over the world, certainly all over Europe. If FIFA will not do it, we will certainly do it as far as Europe is concerned,”
Mike Ashley has done a of things wrong since he took over the club in June of 2007, by his own admission, but one thing he has been very good at is to get Newcastle United on a solid financial footing, and yet still we have still been able to bring some top players in on fantastic bargains – the most recent one being the great Moussa Sissoko for just £2M.
And one last thought – have UEFA had a look at QPR’s books recently?
You can also reach Ed at firstname.lastname@example.org