Three-quarters of the Premier League’s clubs will need to significantly reduce their spending on players’ wages if they are to qualify for European competitions after Uefa’s “financial fair play” rules are introduced. The European governing body’s executive committee is set to approve the regulations, which will require clubs to breakeven, and not make persistent losses, from 2012-13.
In 2008-09, the most recent year for which the Premier League’s 20 clubs’ accounts are published, 14 made substantial losses. One other, Blackburn Rovers, made a £3.6m profit but were subsidised with a £5m loan from the club’s owners, which will no longer be permitted. Most clubs in the Premier League are funded by owners, most spectacularly at Chelsea and Manchester City, where Roman Abramovich and Sheikh Mansour subsidised losses of £47m and £93m respectively. Owners will, according to the rules, be permitted to invest in clubs, via permanent shares rather than repayable loans, to build solid infrastructure such as training grounds or youth development facilities, but not overspending on wages or transfers.
Uefa has taken more than three years to develop the rules since the organisation’s president, Michel Platini, warned of the “danger to football” posed by debt, overspending and “rampant commercialism”. They will be phased in, with club owners allowed to subsidise €45m (£38m) losses over the three years from 2012-13, reducing to €30m intotal over the next three years.
The truth is, the economies of the other leagues are torn to shreds and bursting at the seams. The Germans’ foresight and willingness to act unprompted puts to shame the inclination of the other leagues to turn a blind eye, cross their fingers and hope. In fact, to describe the financial state of European football as a mess would be a gross understatement.
The model in the Bundesliga means that the clubs are debt-free and can pass on the benefits to the fans, who pay as little as £11 to go and see the mighty Bayern play. Season tickets are similarly much cheaper and to become a “member” at Schalke for example will set you back a mere £86. You can’t even accuse them of having such cheap prices to simply get bums on seats. According to Deloitte’s Annual Review of Football Finance in 2009, the German top division had an average of 8,000 more people per game than their English counterpart, while the Premier League suffered a loss in revenue over the same period. UEFA is all too aware of this. As of the start of the 2012 season, new rules will be in place which, the governing body hopes, will curtail this culture of “spending at will” within the current elite. Plans were announced in 2009 to give the continent some time to basically pull its finger out and get its finances in check. These clubs are a long, long way off meeting the criteria.
Serie A has plans to emulate an English idea. In May 2009, 19 of the 20 league sides voted in favour of separating from Serie B and forming a breakaway league, similar to the English Premier League. Italian sides came under fire after only Udinese reached the quarter-finals of a continental competition in their 2009 UEFA Cup campaign. The clubs argued that they were unable to compete with the wages in England and Spain. Lega Serie A went live on July 1st, 2010 and on the same day, Lega Calcio folded; leaving the top sides free to sign their own TV contracts and establish their new division. They’ll have to wait two years however, as the defunct Lega Calcio had already signed €1.7bn worth of deals with Sky Italia, Mediaset Premium and Dahlia TV. The Serie A clubs do have control of the income and what’s rather concerning is that it is up to them to decide how much of the money, if any, should filter down into the leagues below them.