With UEFA’s new financial regulations coming into place next season, Paul Bergin looks at how well prepared Europe’s biggest clubs are to meet these guidelines
Football owners be warned – UEFA are on the prowl and the name of the game is fiscal responsibility. Clubs’ performances off the pitch will be measured in a bid to preventing what Michel Platini has dubbed “financial doping”.
In 2011/2012, UEFA expect clubs to make a loss no greater than of €45m over three years, which must be covered by the owners of clubs and not in the form of a loan. Otherwise, losses of €5m are the worst a club are permitted.
UEFA will stringently search all forms of income: sponsorship from various companies and will be measured on “market value”. What this ruling essentially entails is that owners like Sheikh Mansour will not be able to pump £200m into Manchester City through advertising one of his offshore companies. The detailed Financial Fair Play (FFP) document seems to have owners acknowledging a lack of loopholes. Most clubs seem to appreciate the battle on their hands.
Of the seven Premier League sides to qualify for European competition this season, only Arsenal drew a profit in their latest results.
So who is in trouble and who isn’t?
Statistically the best run club in England, Arsenal’s match-day revenue at £100m is the second best in Europe, behind Manchester United’s £108m. Arsenal is ready for UEFA’s new Europe.
The Catalonians have trebled their turnover in roughly eight years to a very impressive €409m, but have by far the highest salary of any club (€262m) in Europe. They recorded a large loss this year, but had been making profits for the six years previous and should improve in years to come.
High wages-to-turnover ratio (74 per cent compared to United and Arsenal who are both in the mid 40 per cent region) mean Chelsea face a real struggle. The last published results showed a €55m loss, though getting big earners like Ballack, Carvalho & Joe Cole off the wage bill should ease it. Will they make the cut? Probably, but the big-spending days are long gone.
Getting rid of Hicks and Gillett will save Liverpool roughly €40m a year in interest payments, but the club was reliant on the Champions League money that it will not be earning this season. They need the new Stanley Park stadium if they are going to rediscover their title-challenging credentials.
Both AC & Inter Milan have high wage bills that they simply cannot afford. Inter’s last report showed an operating loss of over €100m, but AC also annually record massive losses. Income from match revenue is less than a third of what Manchester United earn despite the San Siro being larger than Old Trafford. Both owners (Silvio Berlusconi and Massimo Morratti respectively) face a real battle to qualify under FFP.
Roberto Mancini’s men are in huge trouble. Wages were already higher than turnover before any new players were signed (including the £220,000-a-week-earning Yaya Toure). Furthermore, the City of Manchester Stadium takes income from no more than 34,000 spectators. They’ll ultimately be relying on UEFA’s allowance for “good improvement”.
Profits of £101m turned to an £83.6m loss in their last financial statement, but most losses were non-cash based or once-off payments due to the £500m bond share they took over. Despite their “loss,” money in the bank grew by £13m to £165m. The Glazers have the ability to take up to £95m of this out though. United will undoubtedly meet the UEFA guidelines, but the debt is going nowhere.
Despite the club being run like a circus; despite the vast sums spent on players, Real Madrid are surprisingly profitable. Under current FFP regulations they are likely to be fine.