Financial Fair Play equals nothing, but someone is going to go bust « Untold Arsenal: Arsenal News. Supporting the Lord Wenger; coach of the decade
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Billy the Dog McGraw runs his finger over Uefa’s financial fair play rules, gets it snagged on a sharp bit and scuttles off to the local A and E for a quick repair.
There is a report on the BBC web site this morning that “Two of English football’s top-four clubs could be excluded from European competition in future as they fail Uefa rules that are about to be introduced.”
This is interesting to me at least because in the last few days a whole swirl of stories relating to the new financial regs have emerged. There’s been little on them for months, and suddenly everyone and his grandmother’s pet rat are dripping pieces into the media. What, one might ask, if one had the time and was not already 10 minutes late for work, is going on?
Well bugger work for a bunch of soldiers, I’m staying put while I type this up.
As our august overlords of the news, the BBC, point out, the Financial Fair Play Regulations do not come into force until 1 June and will not really bite until 2013. So why suddenly get multo agitato just now?
The BBC says that “a study of recent accounts by BBC Sport shows Chelsea and Manchester City would fall well short of the rules if they were being applied today. City were £110m in the red while Chelsea showed a deficit of over £50m. Uefa’s rules allow clubs to run up losses of £65m over the first five years.”
Uefa will have the power to ban any side that repeatedly flouts the rules from European competition, but as we have noted in past discussion, any revenue earned from side businesses such as property, hotels or media are excluded. Hence the Manchester City plan to build lots of emporia in sunny Manchester next to the ground, and Tottenham’s plan to build a superb six star hotel next to their ground, making use of the exquisite local features, the water fountains, the open garden spaces, and the proximity to more prostitutes and drug dealers than you can shake a stick at. (Some of that sentence is ironic, some of it is true – you have to sort it out. I would do it but I am too busy typing this).
Using this bit of rope Manchester IOU can get out of some of their problems because the interest payments incurred by the Glazer family won’t count. So although Man U made a pre-tax loss of £79m in 2010 according to the Uefa Book Cooker in Chief, they made a profit of £42m. Clever eh? (That fellow used to work at Lloyds).
Arsenal would also easily meet the guidelines, posting a surplus of £55m. But you, me, Andersred of Man U (whose knowledge of such things is spoken of from the plains of Cornwall where their supporter base is to the wild uplands of Mongolia when the Ulan Bator clan climb aboard their bus for home games) and Swiss Ramble have some doubts about the rest of the gang.
Take Manchester C and Chelsea (I wish). Andersred considers that a ground like Arsenal’s might pull in enough dosh for Chelsea. Swiss Ramble, the other financial blog of note on such matters reckons Man City have a cunning plan relating to property.
But for any of this to work – indeed for the clubs to survive, the financial players need the Champs League each year. There is no choice in this for Man City, Chelsea and Man U if they are going to meet the Uefa requirements. Arsenal can survive outside the top four, because the finances are so sound. But if Man U Man C Chelsea and Arsenal do constantly secure the top four, for the little clubs like Tottenham and Liverpool trying to break into to the big boys room, life is tough and money is hard to come by.
Of course this is Uefa, so there’s always a laugh on the horizson. This time it is Uefa general secretary Gianni Infantino. Try this one for size…
“The English clubs are among those generating the highest revenues in Europe. The basic rule is the break-even rule that says you cannot spend more than you generate, so if you generate more than the others you have an advantage. So I am not worried at all about the English.” Yes, well, I suppose so. Like Nat West, Lloyds and Northern Rock… Or come to think of it, Woolworths.
“They know what these rules mean and how we will implement them. I am sure that tomorrow they will put their finances in order so they are able to break even. Our president spoke to Manchester City’s owners over a year ago when we started with this process and they were very happy with it.”
So there we have it. Uefa speaks to Man City and Man City says, there there little man, let the big boys sort it out.
Of course clubs can change – that’s true. As Mr Infantino said, “Ten years ago Arsenal reported less income than Chelsea, Liverpool and Newcastle. Now it is more than those clubs and in 2009 more than double Newcastle’s. This shows what is possible with good management and careful investment.” Yes, except this is now the post-wanker crisis recession doom gloom and end of the world. No one lends money any more.
Elsewhere there are reports that Sheikh Mansour (I have to use his real name because I have used up all the Shake Rattle and Roll jokes, and the titles of those wonderful Frank Zappa albums like Sheikh Yerbooty, and Sheikh Yermoney) has sent club officials to hold talks with European football’s governing body to discuss how they can comply with new regulations.
Uefa’s head of licensing Andrea Traverso stated: “We are in talks with the club, they are aware of the rules and they probably have a strategy to raise their income.”
Michel Platini said: “Last year in Abu Dhabi I met up with the owner of Manchester City and he promised they would live with the rules and regulations.”
Roberto Mancini said the £27m-signing of Edin Dzeko was the end of his spending until next Tuesday when he had promised to take his wife out for a meal. He also said they need another two or three players in the summer (that bit is true).
Platini also said, “There will be no witch hunt,” which I think is a shame. I like witch hunts. Not that I have anything much against witches of course, but given that a witch hunt involves chasing people who don’t exist with powers that don’t exist who undertake tasks that don’t happen, witch hunts involve the rather futile passing of time for no particular benefit – which makes it an ideal activity for Uefa.
Just look at the figures: 655 top clubs in Europe reported a loss in 2009 and the combined deficit across Europe’s 53 football nations was £1bn. Spending on player wages is up almost 10%, with clubs spending 64% of their income on these and other staff expenses. 73 European clubs are spending more than 100% of their revenue on wages.
An analysis of the accounts of the EPL clubs last year for the Guardian showed that almost three-quarters of them would fall foul of the new Uefa regulations, if they were applied tomorrow.
So why no good friendly witch hunt? Why no action. Why is suddenly everything tickety boo and hunky dory (to quote David Bowie).
Because tucked away in the deepest of deep print in the smallest typeface ever conceived in the history of eyesight it says that 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 they are safe.
So even though costs are rising across Europe at around twice the rate of revenue, and only four leagues (Germany, Austria, Belgium and Sweden) broke even overall.
Yes, at the start of all this I did naively think that maybe we were onto something here, and that Uefa might just get it right for once. But now it seems that it is all for nothing – expect the fact that as Ireland, Portugal and Greece have found, eventually if you go on spending lots of money you don’t have something goes bang. The only interesting question now is, which big club goes bang first.
Barca were close last year when they failed to pay their players. Liverpool got right to the edge once their were owned by the bank. Everton are struggling on day by day but just can’t sell themselves even for 1p. Rangers have to find a new buyer and have to win their case against Revenue and Customs to survive (lose both and they vanish totally). Man U are dependent on the Emperor’s New Clothes act of the Glazers (look money, look no money). Even the astounding Tiny Totts who print their own money in their off-shore hideaways are talking about selling off players if they don’t get into the Champs League again.
In effect Uefa has made itself irrelevant. Our old capitalist chum Market Forces will run the show, and that means someone will get hurt. It always ends in tears.
The failures of Herbert Chapman. Was the great man really that great? Or just another Wenger. Time to find out.