Man City & Chelsea Poised to Fail UEFA Finance Rules
April 8, 2011
The English Premier League’s two biggest spenders, Chelsea and Manchester City soccer clubs, could be excluded from European competition in the future as they currently fail UEFA rules that are about to be introduced.
A new set of Financial Fair Play Regulations were announced to be rolled out by European soccer’s governing body in recent times and will come into force on June 1 of this year, though they will not really bite until 2013.
However, a BBC Sport study of recent accounts shows that both clubs currently placed in the top 4 of the Barclays Premier League would fall well short of the rules if they were being applied today.
City were £110m (US$180.1m) in the red while Chelsea showed a deficit of over £50m ($81.9m). UEFA’s rules allow clubs to run up losses of £65m ($106.4m) over the first five years.
The thinking behind the new financial fair play rules is to try and level the playing field between clubs funded by the super rich and those less fortunate. In simple terms, teams cannot spend more than they generate from the soccer side of their business.
Under the terms of the new rules, UEFA will have the power to ban any side that repeatedly flouts the rules, from European competition.
The guidelines aim to measure a club’s soccer business. Any revenue earned from side businesses such as property, hotels or media are excluded. So too are any costs not directly associated with the football club – such as huge interest payments like the ones incurred by Manchester United’s owners the Glazer family.
United made a pre-tax loss of £79m ($129.3m) in 2010 but, by UEFA’s measure, actually returned a positive break-even result of £42m ($68.8m). The remaining top 4 side Arsenal would also easily meet the guidelines, posting a surplus of £55m ($90m).
Soccer finance expert Andy Green carried out the analysis of the clubs’ accounts. He believes Chelsea and Manchester City in particular have a mountain to climb to meet the guidelines, stating: “For Chelsea, I think if they can get a bigger ground they can probably get there.
“For City, they’ve got a long way to go. They need to get into the Champions League, stay there year after year, probably put their ticket prices up and really turn around their commercial side – in fact they need to make it one of the best in the world – to even have a chance of meeting these rules.”
UEFA general secretary Gianni Infantino said he was optimistic that English clubs would be able to comply with the rules though, telling BBC Sport: “I don’t think it will be difficult for the English clubs to comply because they are very well managed and very well aware of what is coming.
“There is sufficient time in order to implement the regulations. 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.
“I’m sure the managers of the English clubs are thinking about this, because they know the regulations are coming into force.
“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.”