Post by Macmoish on Jan 12, 2011 8:08:06 GMT
Guardian
Era of massive spending is over, say Manchester City
• City sign Edin Dzeko but promise to meet Uefa guidelines
• Michel Platini says new rules will help clubs reduce debt
Owen Gibson and Daniel Taylor
Uefa today warned that clubs that fail to live within their means would have to "face the consequences" under its new rules, as Manchester City insisted their lavish spending spree was finally coming to an end.
The Uefa president, Michel Platini, faced questions on how City would comply with the Financial Fair Play rules, which come into force next season and could lead to clubs being banned from Europe from 2014-15 if they overspend relative to their incomes.
Manchester City's recent £121m annual losses, following unprecedented spending in the wake of Sheikh Mansour's 2008 takeover, has left many observers questioning how they can reconcile the huge investment with the new landscape.
But the problem of spiraling losses and wage inflation is not confined to Eastlands. Uefa's 2009 benchmarking report, also published today, showed that more than half of the clubs in Europe's top divisions made a loss and contributed a record total of €1.2bn (£998m).
The Financial Fair Play criteria, outlined in detail for the first time, will require clubs to live on the income they generate or face a series of sanctions up to expulsion from Uefa competitions.
Over the first two seasons, clubs will be allowed to overspend by a total of €45m and that permitted buffer will be reduced on a sliding scale for each three-year reporting period that follows. Unlimited investment in stadium infrastructure and youth academies will be permitted.
Leading Italian clubs also face problems but Platini said whatever their stature, the European governing body would not hesitate to take action. "If a club doesn't fall in line and follow the same rules as everyone else then it will be time to face the music. Certainly it is not something we want to see," he said.
"Our objective is not to put clubs into financial difficulty. Financial fair play is to help them escape from this devilish spiral and have a viable economic strategy in the long term. This is not a witch-hunt, this is so they no longer continue blindly and mindlessly."
On the day that Roberto Mancini unveiled his latest £27m capture, Edin Dzeko, he vowed that it would mark the end of the first chapter of City's reinvention using the oil wealth of Abu Dhabi. Questioned on how the club would achieve the goal of complying with the new regulations, Mancini said there would be no major spree to match last summer's.
"This is my ideal squad at the moment. We don't need to buy another six or seven players next summer. Maybe two or three. We are building a great team at the moment. Every year we want to improve, but with another two or three players next season, no more," he said.
Manchester City executives have consistently maintained that they intend to comply with the rules, which will also take into account any sponsorship or marketing deals not deemed to be at market rates. But to do so they will have to continue to increase revenues while cutting a wage bill that has spiralled since Mansour's takeover and includes many players who no longer make the first team.
Andrea Traverso, Uefa's head of licensing, said: "We are in talks with the club – they are aware of the rules and they probably have a strategy to raise their income."
Platini added: "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."
And for all Uefa's tough talk and confidence that the impending rules were already having a deadening effect on transfer spending and wage inflation, there were signs today that clubs would be afforded some latitude as long as they could prove they were heading in the right direction. But Platini, who said the scheme was "very complex but vital for the future of football", was keen to press home the point that the credibility of Uefa rested on its ability to deliver the more secure financial landscape he had promised.
"We have no wish to see clubs that are part of the heritage of football disappear because of bad management," he said. "We want to protect a certain type of football that is fairer and more ethical. The majority of clubs also seem to want to act more ethically."
Platini claims the support of the majority of club owners and the European Club Association has backed the scheme after securing concessions.
www.guardian.co.uk/football/2011/jan/11/uefa-footballpolitics
GUARDIAN - Owen Gibson
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
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."
www.guardian.co.uk/football/blog/2011/jan/11/uefa-financial-fair-play-rules
Era of massive spending is over, say Manchester City
• City sign Edin Dzeko but promise to meet Uefa guidelines
• Michel Platini says new rules will help clubs reduce debt
Owen Gibson and Daniel Taylor
Uefa today warned that clubs that fail to live within their means would have to "face the consequences" under its new rules, as Manchester City insisted their lavish spending spree was finally coming to an end.
The Uefa president, Michel Platini, faced questions on how City would comply with the Financial Fair Play rules, which come into force next season and could lead to clubs being banned from Europe from 2014-15 if they overspend relative to their incomes.
Manchester City's recent £121m annual losses, following unprecedented spending in the wake of Sheikh Mansour's 2008 takeover, has left many observers questioning how they can reconcile the huge investment with the new landscape.
But the problem of spiraling losses and wage inflation is not confined to Eastlands. Uefa's 2009 benchmarking report, also published today, showed that more than half of the clubs in Europe's top divisions made a loss and contributed a record total of €1.2bn (£998m).
The Financial Fair Play criteria, outlined in detail for the first time, will require clubs to live on the income they generate or face a series of sanctions up to expulsion from Uefa competitions.
Over the first two seasons, clubs will be allowed to overspend by a total of €45m and that permitted buffer will be reduced on a sliding scale for each three-year reporting period that follows. Unlimited investment in stadium infrastructure and youth academies will be permitted.
Leading Italian clubs also face problems but Platini said whatever their stature, the European governing body would not hesitate to take action. "If a club doesn't fall in line and follow the same rules as everyone else then it will be time to face the music. Certainly it is not something we want to see," he said.
"Our objective is not to put clubs into financial difficulty. Financial fair play is to help them escape from this devilish spiral and have a viable economic strategy in the long term. This is not a witch-hunt, this is so they no longer continue blindly and mindlessly."
On the day that Roberto Mancini unveiled his latest £27m capture, Edin Dzeko, he vowed that it would mark the end of the first chapter of City's reinvention using the oil wealth of Abu Dhabi. Questioned on how the club would achieve the goal of complying with the new regulations, Mancini said there would be no major spree to match last summer's.
"This is my ideal squad at the moment. We don't need to buy another six or seven players next summer. Maybe two or three. We are building a great team at the moment. Every year we want to improve, but with another two or three players next season, no more," he said.
Manchester City executives have consistently maintained that they intend to comply with the rules, which will also take into account any sponsorship or marketing deals not deemed to be at market rates. But to do so they will have to continue to increase revenues while cutting a wage bill that has spiralled since Mansour's takeover and includes many players who no longer make the first team.
Andrea Traverso, Uefa's head of licensing, said: "We are in talks with the club – they are aware of the rules and they probably have a strategy to raise their income."
Platini added: "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."
And for all Uefa's tough talk and confidence that the impending rules were already having a deadening effect on transfer spending and wage inflation, there were signs today that clubs would be afforded some latitude as long as they could prove they were heading in the right direction. But Platini, who said the scheme was "very complex but vital for the future of football", was keen to press home the point that the credibility of Uefa rested on its ability to deliver the more secure financial landscape he had promised.
"We have no wish to see clubs that are part of the heritage of football disappear because of bad management," he said. "We want to protect a certain type of football that is fairer and more ethical. The majority of clubs also seem to want to act more ethically."
Platini claims the support of the majority of club owners and the European Club Association has backed the scheme after securing concessions.
www.guardian.co.uk/football/2011/jan/11/uefa-footballpolitics
GUARDIAN - Owen Gibson
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
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."
www.guardian.co.uk/football/blog/2011/jan/11/uefa-financial-fair-play-rules