UEFA President Michel Platini today warned Europe’s top football clubs, that they will have to abide by the new UEFA Financial Fair Play rules, due to take effect next season, or face the consequences.
Michel Platini – new rules go into effect next season in Europe
UEFA’s latest financial figures on European clubs, not surprisingly, show that financial problems affecting European clubs are getting worse rather than better, with spending on player wages up almost 10% – and increasing at a much faster rate than revenues coming in.
Under the new UEFA rules, clubs will face bans from European competition, beginning in the 2014-2015 season, if they spend more than their revenues in the three preceding years.
In short, and in simple financial terminology, the clubs are being forced to balance their books – and it’s about time too.
Manchester City’s recent £121M loss, which they reported as good – what a joke – means that the richest club in the world are facing the greatest difficulties to abide by the new rules.
That’s because all of their money for transfers and the like is coming from the owner, and is not being generated by revenues of the club, in terms of gate receipts, TV revenues, strip sales, and the like – hence the huge loss being reported.
UEFA President Platini said the European governing body would not hesitate to take action when necessary, whichever club failed to abide by the new rules.
Speaking at UEFA’s headquarters in Nyon, Switzerland today, this is what Michel Platini said:
“If a club doesn’t fall in line and follow the same rules as everyone else then it will be time to face the music.”
“Certainly it is not something we want to see. Our objective is not to put clubs into financial difficulty.”
“Financial fair play is to help them escape from this devilish spiral and have a viable economic strategy in the long term.”
“This is not a witch-hunt, this is so they no longer continue blindly and mindlessly.”
“Last year in Abu Dhabi I met up with the owner of Manchester City, and he promised they would live with the new rules and regulations.”
UEFA’s General Secretary Gianni Infantino admitted that most of the new rules, that go into affect starting next season, are aimed specifically at keeping the amount of money spent on the club wage bills to manageable proportions.
In some clubs in England, the wages right now are more than 100% of the revenues, which is simply ridiculous and financial suicide.
That means clubs in England are paying out wages to their players, which exceed all revenues coming into the club, and that’s one reason why Mike Ashley is being extra careful in the new wages he is paying out to players getting new contracts at the Newcastle club.
General Secretary Infantino said.
“It is about better cost management, in particular the wages of players – it is an indirect salary cap,”
UEFA allocated a whole day to explain the system to the global media, and Infantino pointed to Arsenal as an example of a well-run club, who have increased their income without ever overspending like a lot of other English clubs.
And unfortunately, at the same time, he implicitly contrasted it to Newcastle United, who have hardly been well run financially, since 2000 – sorry Freddy:
“Ten years ago, Arsenal reported less income than Chelsea, Liverpool and Newcastle. Now it is more than those clubs and in 2009 was more than double Newcastle’s.”
“This shows what is possible with good management and careful investment.”
“What kind of healthy business model is it to wait for a knight rider on a horse with a lot of money to throw around and then one day jump back on his horse and ride away?”
The news is that Manchester City have already sent some of their executives to meet UEFA officials about complying with the new Financial Fair Play rules.
Andrea Traverso, UEFA’s head of licensing, said:
“We are in talks with the club – they are aware of the rules and they probably have a strategy to raise their income.”
“They have been to see us and they are confident that they can manage this challenge.”
Under the new system, UEFA will start to put clubs who are not meeting the new rules into a special category, and the various warning signs include:
- Recording a loss in the financial year
- Spending more than 70% of the revenue on wages alone
- Not being able to pay football-related payments or taxes on time
- Having a level of debt higher than the annual revenue (called turnover in England)
With these new warning signs, both Chelsea and the Manchester clubs, would be put into the special category of clubs being monitored.
The European Clubs’ Association (ECA), which had Newcastle United as one of the five clubs representing England, before we were relegated two years ago, have thrown their full support behind the new Financial Fair Play rules.
It’s almost a joke that UEFA have been forced to do this, and that football clubs, especially in England, have continued to spend way over what they bring in in revenues.
We can only assume that the financial people in charge of most of the top English clubs have never read Charles Dickens’ book David Copperfield, in which Mr. Micawber gives the very sound advice:
“Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness.”
“Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery”
It seems that Platini and the new UEFA rules could make it quite miserable for some top English clubs, if they don’t get their financial act together.
It’s also good that Newcastle are trying to follow the Arsenal model, as the London club have been branded as one of the best run clubs in Europe, although most people in football already knew that.
Newcastle have also to become as successful as Arsenal have been over these last 10 years, that’s the hard part.