By Paul Kelso, Nyon11:42PM GMT 25 Jan 2012
Speaking as Uefa revealed that total losses among European top-flight clubs had increased 30 per cent to €1.6 billion (£1.34 billion) in 2010, the governing body’s head of legal affairs warned that new “financial fair play” regulations would be backed by strong sanctions.
The FFP rules, which require clubs to live within their means and restrict them to losses of no more than €45 million (£37.7 million) over the next two years, could have a major impact on several English clubs including Manchester City and Chelsea, who sustain huge losses thanks to the indulgence of owners Sheikh Mansour bin Zayed Al Nahyan and Roman Abramovich respectively.
Last year Chelsea lost £78 million and City £197 million, and on Wednesday Uefa confirmed for the first time a list of sanctions that could apply should they breach the regulations, which start this season and will be acted upon in 2013.
The sanctions range from a reprimand to exclusion from European competition, and include potential restrictions on squad sizes for European competitions, and a ban on new signings taking part in the Champions League.
Uefa also announced that the level of penalties against clubs will be decided by an independent body, the Club Financial Control Body, separate to Uefa’s disciplinary wing.
Asked if the threat to clubs, such as City and Chelsea, who may not comply was real, Uefa’s director of legal affairs, Alasdair Bell, said he was confident Uefa would impose stiff sanctions, and that they would withstand legal challenge.
“This is a system in which Uefa has invested a huge amount of political capital and resources, and there is a big expectation of effective enforcement,” he said.
“The system is not going to have much credibility if a big club that is in serious breach of the rules is not punished in an effective way. The sanctions need to be effective enough that people come into compliance with the system otherwise clubs are going to become disillusioned rapidly.”
There is widespread expectation that clubs sanctioned under the FFP rules will challenge Uefa at the Court of Arbitration for Sport or even in the European Court of Justice, but Bell said he is confident the measures will withstand challenge.
In order to prepare for the new regulations, which kicked in this season, City and Chelsea have joined Tottenham Hotspur and Manchester United in a trial test phase using FFP software to monitor their costs.
Uefa’s general secretary, Gianni Infantino, said Premier League clubs were supportive. “From the Premier League there is no opposition now; they are working with us. It is very difficult in the current economic climate to say that you want to have unlimited spending.”
Uefa spelt out the nature of football’s unique financial challenge in stark terms in its annual review of the finances at 665 top-flight clubs in its 53 member states. It reveals a 30 per cent increase in losses to €1.6 billion (£1.34 billion), total debts of €8.4 billion (£7 billion) and that only four of the top 30 leagues in Europe broke even in the financial year 2010.
Infantino said: “This is the last wake-up call for European football. This red trend has to be inverted very, very quickly if we want to save European football.”
The figures revealed the possibly unique paradox of football economics. While losses have soared, so has income, with revenues up from €13.3 billion (£11.1 billion) to €14.4 billion (£12 billion) in 2010, in line with remarkable growth figures that show the resilience of football’s revenues in the face of the recession.
Top-flight European club football has grown its revenues by an average of 9.1 per cent in each of the last five years. Growth in the football business outstripped national economies in 48 out of the 53 Uefa member nations last year.
Costs have spiralled too, however, increasing by €1 billion (£837 million) in two years between 2008-10, and up €1.4 billion (£1.17 billion) from 2006 when they were just €216 million (£181 million). “If this is not enough to tell us that we need to act and act quickly then nothing will,” Infantino said.
The figures also revealed the financial disparity between those at the top and the rest. The top 10 clubs in Europe spent twice as much as the next 10, and an aggregate of €2.1 billion (£1.7 billion) on wages and transfers.
Paradoxically, Uefa attributes the rise in losses to a slow-down in the transfer market, with clubs having to bear the continuing costs of previous spending at a time when income from player sales has slowed down.
Uefa rejects the claim that FFP will crystallise the current power structure in the game, with smaller clubs no longer able to call on benefactors to fast-track them into contention for titles.
With investment in player training, infrastructure and stadiums exempt from the break-even calculations and losses capped, supporters of FFP believe they will make the game more attractive to investors.
“These rules are not excluding new investors,” said Jean-Marie Aulas, president and majority owner of French club Lyon. “But I believe that new investors can come into the market attracted by rules that mean there is a stop to losses and debts. It’s a very good condition for an investor to come to knowing he can’t lose more than a certain amount.”
Uefa believes the measures, which have the support of major European clubs, have become more relevant as the wider financial crisis has deepened.
Infantino said that recently he had met the European Union’s competition commissioner, Joaquin Almunia. “We ended with the common opinion that if financial fair play had been applied in the European economy rather than just football maybe the situation would have been different.”
Speaking as Uefa revealed that total losses among European top-flight clubs had increased 30 per cent to €1.6 billion (£1.34 billion) in 2010, the governing body’s head of legal affairs warned that new “financial fair play” regulations would be backed by strong sanctions.
The FFP rules, which require clubs to live within their means and restrict them to losses of no more than €45 million (£37.7 million) over the next two years, could have a major impact on several English clubs including Manchester City and Chelsea, who sustain huge losses thanks to the indulgence of owners Sheikh Mansour bin Zayed Al Nahyan and Roman Abramovich respectively.
Last year Chelsea lost £78 million and City £197 million, and on Wednesday Uefa confirmed for the first time a list of sanctions that could apply should they breach the regulations, which start this season and will be acted upon in 2013.
The sanctions range from a reprimand to exclusion from European competition, and include potential restrictions on squad sizes for European competitions, and a ban on new signings taking part in the Champions League.
Uefa also announced that the level of penalties against clubs will be decided by an independent body, the Club Financial Control Body, separate to Uefa’s disciplinary wing.
Asked if the threat to clubs, such as City and Chelsea, who may not comply was real, Uefa’s director of legal affairs, Alasdair Bell, said he was confident Uefa would impose stiff sanctions, and that they would withstand legal challenge.
“This is a system in which Uefa has invested a huge amount of political capital and resources, and there is a big expectation of effective enforcement,” he said.
“The system is not going to have much credibility if a big club that is in serious breach of the rules is not punished in an effective way. The sanctions need to be effective enough that people come into compliance with the system otherwise clubs are going to become disillusioned rapidly.”
There is widespread expectation that clubs sanctioned under the FFP rules will challenge Uefa at the Court of Arbitration for Sport or even in the European Court of Justice, but Bell said he is confident the measures will withstand challenge.
In order to prepare for the new regulations, which kicked in this season, City and Chelsea have joined Tottenham Hotspur and Manchester United in a trial test phase using FFP software to monitor their costs.
Uefa’s general secretary, Gianni Infantino, said Premier League clubs were supportive. “From the Premier League there is no opposition now; they are working with us. It is very difficult in the current economic climate to say that you want to have unlimited spending.”
Uefa spelt out the nature of football’s unique financial challenge in stark terms in its annual review of the finances at 665 top-flight clubs in its 53 member states. It reveals a 30 per cent increase in losses to €1.6 billion (£1.34 billion), total debts of €8.4 billion (£7 billion) and that only four of the top 30 leagues in Europe broke even in the financial year 2010.
Infantino said: “This is the last wake-up call for European football. This red trend has to be inverted very, very quickly if we want to save European football.”
The figures revealed the possibly unique paradox of football economics. While losses have soared, so has income, with revenues up from €13.3 billion (£11.1 billion) to €14.4 billion (£12 billion) in 2010, in line with remarkable growth figures that show the resilience of football’s revenues in the face of the recession.
Top-flight European club football has grown its revenues by an average of 9.1 per cent in each of the last five years. Growth in the football business outstripped national economies in 48 out of the 53 Uefa member nations last year.
Costs have spiralled too, however, increasing by €1 billion (£837 million) in two years between 2008-10, and up €1.4 billion (£1.17 billion) from 2006 when they were just €216 million (£181 million). “If this is not enough to tell us that we need to act and act quickly then nothing will,” Infantino said.
The figures also revealed the financial disparity between those at the top and the rest. The top 10 clubs in Europe spent twice as much as the next 10, and an aggregate of €2.1 billion (£1.7 billion) on wages and transfers.
Paradoxically, Uefa attributes the rise in losses to a slow-down in the transfer market, with clubs having to bear the continuing costs of previous spending at a time when income from player sales has slowed down.
Uefa rejects the claim that FFP will crystallise the current power structure in the game, with smaller clubs no longer able to call on benefactors to fast-track them into contention for titles.
With investment in player training, infrastructure and stadiums exempt from the break-even calculations and losses capped, supporters of FFP believe they will make the game more attractive to investors.
“These rules are not excluding new investors,” said Jean-Marie Aulas, president and majority owner of French club Lyon. “But I believe that new investors can come into the market attracted by rules that mean there is a stop to losses and debts. It’s a very good condition for an investor to come to knowing he can’t lose more than a certain amount.”
Uefa believes the measures, which have the support of major European clubs, have become more relevant as the wider financial crisis has deepened.
Infantino said that recently he had met the European Union’s competition commissioner, Joaquin Almunia. “We ended with the common opinion that if financial fair play had been applied in the European economy rather than just football maybe the situation would have been different.”
