Financial Fair Play for Football

Currently in the news UEFA president Michel Platini has laid out plans to curb the excessive spending some clubs like Manchester City will be allowed to make by introducing rules to regulate football clubs finances. Under proposals that Platini has said has the support of most football clubs including Roman Abramovich, clubs will only be allowed to spend money on players equivalent to what they earn from their footballing revenue, or from sensible borrowing. This will put the focus for the clubs back on good cup runs, final league position and better sponsorship deals to generate money the old fashioned way rather than using large loans from the banks to finance huge transfer spending with little thought on how this will be repaid.

The rules are not going to be in place before 2012 and must go through a long and arduous formulation and consultation period before being implemented. But Platini insists that it is the huge cash gifts from very rich investors that are bad for the game. He says that if clubs can afford the bank loans then that is not a problem, but if they are still in a large deficit after two years then this affects the long term stability of the club and football itself and under new proposals tough sanctions will be in place for any club that breaches the rules. This will essentially end the era where billionaire investors come into clubs like Manchester City and Chelsea and go on huge spending sprees.

Manchester United were bought by the Glazer family taking on large debt in the process and despite winning the league cup, Premiership and having one of the highest profile brands in the world their parent company Red Football recorded losses of £21 million last year. The £80 million cash payment made for Cristiano Ronaldo by Real Madrid will help pay the interest on their large loans and may be why the reason that the club has not been in such a hurry to reinvest the world record transfer fee on a replacement player.

Platini proposes that sanctions will be placed upon clubs who break the rules and an independent panel would be set-up to assess the losses of the clubs parent companies. According to the UEFA General Secretary sanctions have been placed on 20 clubs whose finances are not in order.

From a sports betting perspective, it is going to be very difficult for a club outside of the elite teams to break into the top three or four in their respective league and shake up the betting market. We already see the top teams very carefully priced up by bookmakers often when at home the odds for the favourite team winning are as low as 1.50 and sometimes as low as 1.10. As the results for the top teams become more predictable this gives less opportunity for the football betting enthusiast to make value bets.

Although there appears to be widespread support for the move to regulate clubs spending (probably due to the fact that 95% of clubs do not have the means to excessively spend even if they wanted to), sanctioning clubs spending could see the withdrawal of the large foreign investors from the game as they are limited in what they can offer as investment. This will bring down the transfer fees of players as there is not the means for clubs to negotiate high debt with the banks. Lots of clubs are close to going broke with the credit crunch limiting their lines of credit, but surely it is preferable to have clubs operating in the black and in profit so a credit crunch need not be so debilitating to football.

It will be interesting to see if Platini can get these radical proposals through and in place because it would represent a major restrictive and controlling self policing in football. Perhaps that is what clubs want who feel that the massive spending of the richest club owners has put too much pressure on smaller clubs to take on too much debt. Perhaps even the rich investors are nervous at just how high their spending continues to be as a spending war breaks out between the top teams. It is now £100 million rather than £20 million that is considered a high transfer spend which puts a dent in any cash hoard. Football may just need an outside body to stop things getting out of hand.

By Malcolm Clarke