Anfield and Stamford Bridge outfits could fall foul of new UEFA ruling.
Chelsea, Liverpool and Manchester City all face the extraordinary prospect of being excluded from the Champions League and Europa League in two years because of the huge financial losses they continue to suffer.
European football chiefs insist they will enforce a ban on those clubs unless they radically reduce their multi-million pound losses.
And though Manchester United will escape censure despite their £716million debt, because they are still making a profit at present, Liverpool’s precarious financial state means they face a huge crisis if they wish to meet UEFA’s tough new rules.
The regulations will be published this summer in a bid to prevent further clubs going into financial meltdown, as Portsmouth have done this week, and will outlaw the kind of support that owners Roman Abramovich and Sheik Mansour have provided Chelsea and City.
UEFA general secretary Gianni Infantino insists that the bodies set up to regulate the new rules will not baulk at throwing out clubs who cannot balance their books, whether they be Real Madrid or Liverpool.
Infantino said: ‘It is not our objective to exclude clubs, but if there are rules, it is our objective that those rules will be respected. For this reason we have established the club financial control panel, chaired by Jean Luc Dehaene, who is the former Prime Minister of Belgium. I don’t think somebody like him would be afraid of anything.
‘They are independent to oversee the rules and pass any potential sanction to the disciplinary committee, which is also independent and which will decide the sanction.
‘But the rules will be the same for everyone and of course they will be enforced the same for everyone.’
UEFA’s drive for what they call financial fair play is the biggest shake-up of elite football since the formation of the Champions League in 1992 and represents a direct challenge to the Premier League’s financial model, which has allowed excessive borrowing and rich benefactors to fund many clubs, factors which caused the demise of Portsmouth.
The renewed threat from UEFA, who will finalise their new rules this summer, will wholly undermine Manchester City’s plans to spend further millions this summer.
City recorded a loss of £92.6m last year and that figure is likely to balloon still further after the extraordinarily expensive signings of Gareth Barry, Emmanuel Adebayor, Carlos Tevez, Joleon Lescott and Kolo Toure.
UEFA are likely to demand that by the time the 2012 regulations come into force, City are on course to break even, which seems highly unlikely, unless they slash their wage bill and decline to enter the transfer market.
Liverpool, too, are at huge risk given that last year they posted losses of £42m and had to pay £36.5m interest on their debts, which the Anfield club claim have now been reduced from £350m to £237m.
UEFA will give clubs two years to put their accounts in order and will allow a transitional period in the first two years of the scheme, but they insist that clubs such as City and Liverpool cannot simply continue as they do now and expect to be cleared for competition.
Infantino added: ‘The rules come into force in 2012-13 and at the beginning there will be some sort of transitional period, which we are defining. But it doesn’t mean that a club cannot be excluded in 2012 if the situation is extremely bad and getting worse.
‘From this summer the clubs will know what the rules are going to be and if a club doesn’t do anything and think that rules will only apply after 2012-13, that’s a wrong calculation.’
Infantino confirmed that, at present, United would meet UEFA’s criteria because last year they made a profit, even though their enormous debts cost them £68.5m in interest payments.
‘United is, of course, very well managed by David Gill and as long as they can still make a profit at the end of the year, it’s fine. In the long term, though, the question is whether they can still afford this debt.’
Liverpool though have been warned that their financial model will have to change, putting owners George Gillett and Tom Hicks under further pressure to secure new funding.
‘They have to look at not making these £40m losses every year. And one of the ways of not making them is to reduce the debt, or to reduce the salary of the players, though that has sporting consequences.’
Chelsea have at least embarked on a campaign to wean themselves off the funding of Abramovich, having reduced their losses from a staggering £140m in 2006 to £44.4m last year and, if they can continue at a similar rate, would be likely to meet UEFA’s criteria.
Infantino said: ‘Chelsea is a good example as a few years ago they said that their objective was to break even and now it will be underlined by some rules. If everyone plays by the rules this inflation which raises higher salaries and transfer fees, will decrease. It will be a big change and I don’t think the owners will be unhappy. On the contrary, what they are saying to us is that they would be happy of they don’t spend their personal fortune on this.’
When the rules are applied, UEFA will assess a club’s accounts over a three-year period so that making a loss for a single season would not be punished. (Daily Mail)
I think that UEFA may have bitten off more than they can chew on this one. If they do intend on punishing clubs who go into huge levels of debt, and the idea of doing so is morally sound, where will they set the bar? What I am saying is that it is true that just about 99% of professional teams are in some sort of debt, that is very much the nature of the game, and business as a whole, at present so how will these new guidelines be put into action?
In the end such a ruling could lead to clubs simply circumventing the guidelines and moving debts around so they affect partner companies and maybe not the club itself. Levels of debt are also a tricky area to deal with. For instance the megabucks owners of Manchester City may well be pumping large sums of money into the club, perhaps wildly so, but even though the club is posting figures that appear to be massive debts clearly the owners are billionaires so in many ways are not too concerned by the idea of having to fork out money to pay these debts.
On the other hand you have clubs like Liverpool and Man United who are financed up to the hilt with bad debt and face spiraling costs just to keep up on interest payments accrued by loans that were originally taken out to buy the clubs in question, creating a very worrying state of affairs at both Premier League giants.
In many ways punishing clubs for going into ‘debt’ will only exacerbate an already problematic situation, a situation that has just led to the first Premier League club going into administration this week. Such a ban, which in a reality will surely never occur, would only serve to worsen any financial concerns and whilst something does need to be done once again UEFA hasn’t thought their guidelines through.
There is no doubt that something needs to be done to reign in expenditure but perhaps the best, and most realistic, way to do so is to impose a Europe wide wage cap. This way a culture of sufficiency can be bred and could help bring the game back into the real world.