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Uefa outlines threat to ban European clubs who break rules on finance

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Uefa outlines threat to ban European clubs who break rules on finance
New financial rules put the Uefa president Michel Platini on a collision course with many of the most powerful clubs in Europe

http://www.guardian.co.uk/football/blog/2011/jan/11/uefa-financial-fair-play-rules

Looking out over the calm waters of Lake Geneva, Uefa executives today considered the far-reaching effects of new rules that they claim will irrevocably change the landscape of European football.

Their accountants outlined, in painstaking detail, the intricacies of the financial fair play rules and revealed the figures which they say make the new rules vital for the game's future. Clubs who do not comply with the central tenet of living within their means could be banned from Europe before the 2014-15 season.

Meanwhile, at their Carrington training ground Manchester City were unveiling their £27m striker Edin Dzeko, the latest addition to a playing squad assembled at huge expense by Sheikh Mansour since he bought the club in August 2008 and began a unprecedented spending spree that led to losses of £121m.

As City's manager, Roberto Mancini, again insisted that this was just one last splurge before the club would knuckle down to the business of meeting the new standards, Platini was unequivocal about the consequences for any club that did not ultimately comply.

"With power comes the responsibility to help and protect football," said Platini, who is virtually certain to be re-elected as Uefa president for another four-year period in April. The success or failure of that tenure will be defined by the effect of his bold initiative.

He said Mansour had personally assured him last year that City would comply, but Uefa insiders said the club faced a "big challenge".

Uefa's 2009 benchmarking report, published today and running to 111 pages of dense graphs and statistics, showed that this was far from an English disease. More than half (56%) of the European top division clubs reported net losses in 2009, compared to 47% in 2008.

An in-depth analysis of the accounts of the Premier League's own clubs for the same period carried out by the Guardian last year showed that almost three-quarters of them would fall foul of the new Uefa regulations, if they were applied tomorrow.

Under the new rules, clubs must pledge to break even on all football activities, subject to a sliding scale of acceptable losses that can be covered by a club's owner. In the first two years that will be analysed by Uefa's team of accountants – 2011-12 and 2012-13 – clubs will be permitted to overspend by a total of €45m (£37.4m) as long as that figure is cancelled out by an equity injection from the owner.

Over the following three seasons, the permitted losses will again be set at €45m over the entire period. That will then drop to €30m over three seasons, then €15m, then zero.

Once a club, which will be investigated in detail if it exhibits one of a number of warning signs, fails the test the case will pass to a new panel set up to decide on sanctions.

But there are crucial caveats. If clubs can show that they are travelling in the right direction, that their losses are reducing year on year and can point to them being a result of contracts signed before June 2010 when the rules were enshrined in Uefa's rulebook, that may reduce the sanction. An outright European ban is being described as a last resort – but an eminently plausible one.

As such, the process will be far from as straightforward as the basic "live within your means" premise suggests. But Manchester City aside, Platini claimed the new rules were already having an impact on the spending habits of Europe's major clubs.

Indeed, for very different reasons, they have been positively welcomed by Roman Abramovich at Chelsea (having already ploughed £700m into the club), by the Glazers at Manchester United (who hope to use their natural revenue-generating strengths to increase their competitiveness without spending more) and by Arsenal's chief executive, Ivan Gazidis (who believes it will reward his club's careful financial husbandry).

Gianni Infantino, Uefa's general secretary, today described the new rules as a de facto salary cap because they would stop clubs overspending on wages. He pointed to the 2009 figures as the reason why the status quo could not continue.

Uefa's figures showed that top-flight clubs across 53 countries increased their revenue by 4.8% to €11.7bn during the year despite the impact of the recession. But costs rose by twice that, 9.3%, to result in total losses of €1.2bn – more than twice the previous record. More than half of the 733 clubs audited [56%] reporting a net loss. Just four leagues broke even – Germany, Austria, Belgium and Sweden. At 249 clubs, more than 70% of turnover was spent on players' wages and at 73 of those more than 100% of all the club's income went on player wages.

The overall aim, said Infantino, was to curb wage inflation and break the cycle that has taken hold in the Premier League and elsewhere – of fans desperately hoping for a "white knight" on a steed: "What kind of healthy business model is it to wait for a white knight on a horse with a lot of money to throw around and then one day to jump on his horse and ride away?"

Platini is deeply committed to his quest but many practical questions remain. Uefa tried to meet some of those head on today, describing in detail how the analyses would be carried out and how factors such as sponsorship revenue from owners would be subject to market value tests.

Uefa still has trouble answering the charge that all this could merely result in preserving the existing order in aspic, enabling the big clubs to extend their advantage by virtue of their natural advantage. The Premier League has forcefully pointed out that investment of the kind that once took Blackburn Rovers to a title or Fulham to the Europa League final would be impossible under the new rules.

Instead, Infantino pointed to the advantages of long-term investment in stadium infrastructure and youth development. Owners can still plough unlimited sums into both, and goodwill costs will also be written off.

"A decade ago, Arsenal reported less income than Liverpool and Newcastle. In 2009, after a decade of investment, their income is more than double Newcastle and higher than Liverpool. It is possible for a club to come up with good management but it does it in a healthy way. That is what we want, long-term benefits."

Ultimately, the political trade-off between the European Clubs Association (ECA), the organisation that represents 197 of the biggest clubs, and Uefa will result in a new landscape in which there will be winners and losers – with the biggest clubs likely to be among the former.

Platini is confident it will help usher in a new era of responsible club ownership. Others are convinced that the most determined would find a way round the new rules, although Uefa warned it would come down twice as hard on those who tried to mask overspending.

But the climate of being under constant review by Uefa and at risk of what the ECA chairman, Karl-Heinz Rummenigge, described as the potential "meltdown" scenario of not being allowed to enter European competition would be more than enough to bring clubs into line, he said. "It's time to step on the brake and bring a bit of rationality to football."
 
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Blah blah blah. Talk is cheap. Come back to me when you have the balls to kick a major club out of European competition.
 
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I guess all of Chelsea will be looking to sell naming rights to Stamford Bridge to break even especially as we are finding it difficult to build a new stadium
 
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I heard that Wages wont count for the first 2 years in FFP. Can someone shed some light on this.
 
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I heard that Wages wont count for the first 2 years in FFP. Can someone shed some light on this.
If the club miss the target but can show they are actively going in that direction (getting players out on loan etc, offering lower wages) they can get dispensation,
 
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If the club miss the target but can show they are actively going in that direction (getting players out on loan etc, offering lower wages) they can get dispensation,
Why should clubs get disponsation, its not like Uefa is springing this on them now for introduction next season, clubs have had plenty of warning about this...
 
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Why should clubs get disponsation, its not like Uefa is springing this on them now for introduction next season, clubs have had plenty of warning about this...
because you cant exactly cancel someone's contract
 
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Wage cap is the ultimate thing we are looking for here. It has to be implemented but there is bound to be some opposition.
 
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Wage cap is the ultimate thing we are looking for here. It has to be implemented but there is bound to be some opposition.
huge opposition, but for the good of football it must happen
 
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huge opposition, but for the good of football it must happen
It'll certainly mean the end of silly spending. No longer would City/Chelsea be able to offer £200k p/w +. It is a necessity if these fair play rules are to work.
 
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It'll certainly mean the end of silly spending. No longer would City/Chelsea be able to offer £200k p/w +. It is a necessity if these fair play rules are to work.
it could be argued that the incoming FFP rules are the stepping stone to wage caps, and that can only be good
 
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it could be argued that the incoming FFP rules are the stepping stone to wage caps, and that can only be good
Absolutely. for me they wont work without each other, for the FFP rules to work i think a wage cap has to be put in place. otherwise it may just become redundant
 
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Absolutely. for me they wont work without each other, for the FFP rules to work i think a wage cap has to be put in place. otherwise it may just become redundant

How? For Ex. Team A have huge income so can spend big on wages. On the other hand, Team B dont have big revenue so they cant spend huge on wages.

By putting salary cap say 100 million, you are also restricing team with huge revenue.

So i dont think Salary cap is really needed to bring FFP. It should be left for clubs to sort it out.
 
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in essence it is a very good rule, but I have a few doubts
a) too many loopholes, so clubs will hire expensive lawyers to find and exploit them, so I hope UEFA will stay strong.
b) creative accounting so clubs will shift debt around, they should force clubs to be tranparent in their dealings (hate it when clubs dont disclose transfer fees )
c)Hope they will be strong in their punishment, and not only target the small weak and less powerful clubs
 
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As I said in the last one of these bullshit stories from UEFA trying to be "hard", go and ban one of Europe's top clubs, I dare you.
 
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because you cant exactly cancel someone's contract
but with all bar a few, when this was announced, no contracts would of ran into this period, or would be in the last year at the start of the period being measured. Therefore clubs who signed players on long term contracts should of been aware of these rules when they signed the player.
For example, Chelsea who are reportedly paying torres £175k a week, on a long term contract, will be aware that this contract will go into the period being examined.
 
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How? For Ex. Team A have huge income so can spend big on wages. On the other hand, Team B dont have big revenue so they cant spend huge on wages.

By putting salary cap say 100 million, you are also restricing team with huge revenue.

So i dont think Salary cap is really needed to bring FFP. It should be left for clubs to sort it out.
But their wages spending should be a percentage of the income
 
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