Financial Fair Play Really Starts To Bite The Big Spenders

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News that both English Premier League Champions Manchester City, and French Champions Paris Saint-Germain have each been fined €60M (£48.8M)by UEFA yesterday, for not abiding by the Financial Fair Play rules over the last three years, and both teams will also have their Champions League squads for next season reduced from 25 players to 21 players.

Michel Platini     987

Michel Platini – UEFA President

Manchester City had been negotiating with UEFA for the past week or so, and have finally agreed not to appeal the penalty, but they don’t agree with the ruling by UEFA – but that’s not surprising, as they try to save face.

In all, nine European clubs were handed penalties in an attempt to stop the gross spending of huge amounts of money that Billionaire owners have been allowed to spend over the last decade – starting with Chelsea and Roman Abramovich back in 2003.

Manchester City has accepted the sanctions, but they point out they have a ¨fundamental disagreement¨ with UEFA about its ¨interpretations of the FFP regulations on players purchased before 2010.¨

But since UEFA created the rules, we think they are clear what the rules are – but as we said – both City and PSG have to save face after simply flaunting the rules of FFP over the last three years.

UEFA has said that both clubs have agreed to reduce their spending in the transfer market in the next two years, although City said it will not affect what they had already decided in transfer outlays in that time period.

It’s now a full five years since UEFA President Michel Platini launched the program, to try to curb big spending by wealthy owners, which at the time he referred to as ¨cheating” – and its interesting at the time it was mainly Premier League clubs who were spending the big money.

But some would argue that Platini has waited too long to clamp down, and both clubs have significantly flaunted the rules and are now both in the Champions League and Champions of their respective countries, because of the over-spending – for instance City have spent a round a £1B gross on players since the new owners took over in August of 2008.

And PSG have spent huge amounts in less than three years, since they were acquired by Billionaire owners in July of 2011.

Other clubs fined by UEFA include Galatasaray, Trabzonspor and Bursaspor from Turkey, Zenit St Petersburg, Anzhi Makhachkala and Rubin Kazan from Russia, in addition to Levski Sofia from Bulgaria.

And the other thing that UEFA has clamped down on are some of the ridiculous commercial deals both PSG and City have been operating, including selling image rights and consultancy fees to third parties.

City also have a ten-year commercial deal – worth £40M a year with Etihad Airways – over ten years for the stadium naming rights, which is hardly the going commercial rate – and exceeds the fair market value by as much as maybe a factor of five, and that deal has been in effect for three years – so why did UEFA wait this long to clamp down?

Since both  Manchester City and PSG have won their country’s League twice in recent years, they probably think it was worth the fines they have just received from UEFA – so it paid off.

Newcastle United have abided by the rules, and over the last three seasons we have broken even financially in every single season, with a £9.9M profit in the last financial year, and that’s expected to be a lot more than that in the financial year ending at the end of June.

However, we were 10th in the Premier League and nowhere near qualifying for the Champions League.

So it has its trade-offs. 🙁

What do you think?

Comments welcome.

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