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New break even rules for Premier League clubs for NEXT season!!!!!

By Tony Attwood

We’ve been debating the way the Premier League has allowed clubs to be run by benefactors for years – or so it seems.   And we’ve been debating what might be done about it.

The fact that something might be done, after all this time, seems almost too unlikely to be true.  For while it seems the majority of Arsenal supporters want to blame the manager, the board, the players and quite possibly Goonersaurus for the failure of the club to win anything other than a vast number of trophies for the Ladies team, while Untold has plugged away at the fact that if the financial rules changed, then so would the league table.

The Uefa approach has been with us for three or four years now, and has partly been introduced.  Now it seems that the Premier League clubs themselves might actually do something.

Odd though it seems, I think this might happen.

I first covered the notion of the League taking action this season about six months ago, and we’ve been through many of the pros and cons, including the issue of salary caps and the like, and all the legal implications within the EU.

But it really does seem to be true.  The league clubs are taking action. They even have a new watchword: “cost-control”.  They are speaking of “financial stability” and of “promoting competition”, and a “limit wage inflation to players”.

Now it pains me to say this but the first person I ever heard put forward the notion of  controlling salaries was Lord Sugar when chair at Tottenham.  But credit where it is due – it was Tottenham Hotspur that really started the discussion all those years ago, when his lordship proposed setting aside some of the Sky cash each year to help promote the clubs, rather than “piss it all up against the wall in players’ salaries” (as I recall his expression).

Today we need 14 of the 20 clubs to vote for change, and would you believe it, 15 just have voted for go ahead with detailed plans for a “break-even rule”, with a view to introducing it next season.  Detailed plans will be put to the clubs in February.

Uefa’s version requires that clubs break even.  The huge benefit the League has is that it has seen how clubs try to get around the rule – and so their own rules will be written with the benefit of the knowledge of the current manoeuvring.

The opposition to the rule is not quite as one might expect – they are:

Fulham, who object because they utterly rely on their benefactor.  Without him they would sink link the Thames that flows past and now underneath their ground.

Everton would benefit from the new move but do not want to do anything that might slow down the eternal desire of Bill Kenwright to sell the club.  Hmmm.

West Bromwich Albion’s objection is odd, and seems more like a fine point of philosophy about the rights of the individual than a concern for the game.

Manchester City object because they rely so utterly on a rich owner.  They would be the big losers.

Chelsea claim they support break-even rule but want to reserve the right for the owner to plough in funds as equity rather than loans.     Thus it was that when Chelsea announced a profit of £1.4 million, they managed to do it with  £166 million of loans transferred into equity.  With that sort of movement going on, their support is really opposition, in my view, so I count them in the five no votes.

Another suggestion is that a maximum salary bill increase will be introduced – it cannot go up more than 5% a year.   Another plan is that the wages bill can’t be greater than a set percentage of the club’s turnover.  Manchester City would have a problem with that one: they spent 114% of their income on salaries, followed by while Aston Villa with  90% and Chelsea 86%.
The next question is, what do you do with the rule breakers?  Fining them is pointless, but deducting points is a neat idea.  Warnings are useless but I would quite like to see relegation to the 4th division in the style of Rangers in Scotland for breaking the rules twice.
.
I never thought I would seriously say this, but it is just possible that the reform that we have been campaigning for, ever since Untold started, might actually be coming.

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37 comments to New break even rules for Premier League clubs for NEXT season!!!!!

  • jay

    The Big clubs financial people will find a loophole in the new laws ,such as huge sponorship deals from companies that the current directors are involved with .Money talks im afraid. If we wait till this law works before Arsenal can compete we will be in the funny farm.

  • Great news if it has teeth – i.e the rules are written to stop the bogus sponsorship deals and debt for equity swaps. We will see. In the same meeting a wage capping rule was rejected. Perhaps the clubs know they can easily get around ‘breakeven’ rules?

    As a further point you should stop blaming money on the teams lack of success. It IS the manager and players fault. If we start trying to say that the players are not responsible for results, what is the point of football?

  • Pete

    And not before time. The imbalance between clubs would finally end and we may be able to keep hold of our best players. we’ve lost so many targets and stars to the money bags clubs Chelski and Megabucks City.

  • Brickfields Gunners

    I do hope your optimism comes to fruition ,Tony ,but the powers that be are very capable of moving the posts again.Or find new loopholes .
    Deduction of points is a good penalty but will they carry it out ?
    I’m ,as usually in life, pessimistically optimistic ! A half glass of wine is better ingested than admired upon !

  • Gouresh

    looks promising….should happen.

  • Limpar

    If the clubs demand it , including the leagues own organiser sir Alex ferguson then I’m sure it has a good chance of coming in.
    The power comes from the majority of clubs not just lawyers.
    If , after this has been agreed by the premier league clubss via a vote, one of the the clubs for example city or Chelsea, decide to upset the apple cart & start getting threatening with lawyers etc , it really won’t put them in a good light.
    The power comes from the clubs standing together , this will also change public opinion on the matter , & make it very difficult for said billionaires who try not to comply with the rules to have any credidbity in the game.

  • Mandy Dodd

    I really hope this happens, but there are as you mention, a couple versions of breaking even, the Chelsea ver and the rest.
    Would all this money we have supposedly and maybe painfully accumulated count towards this…..or does it mean we cannot now spend it as it could count as going over a given years income?

  • Stuart

    If these measures are introduced, I think we will see some clubs in real trouble because they are not able to sell their players for high enough fees. The clubs in favour of owner funding could persuade (bribe) the other clubs to allow the current model to run through the fear or bankruptcy.

  • Limpar

    @ Stuart

    The bigger picture is that these clubs would be far better off in the long term,, and likely would not have to sell players to stay afloat if ffp is running in the premiership due to the fact that the wage bill would become manageable. The pressure on clubs is basically due to wages, this pressure comes from the top down . Man c , Chelsea , would have to halve their wage bill. This unbalanced market force would basically cease to exist and create a much better environment for 95 % of clubs

  • Stuart

    You are correct Limpar but I fear short term survival is on a knife edge for some.

  • It is inevitable that some kind of financial regulation has to be implemented in order for the league to survive.

  • Maverick

    i have to laugh at Manu, Mancity and Chelsea fans when this subject comes up and they say ‘you run your club like a business but it is a football club’ but then you mention to them ok if it is not run like a business how do you expect to survive without a sugar daddy…..they just can’t answer it without poking fun at how they can splurge 50m on one player but we are rubbish paying mediocre players for peanuts. As soon as you mention sugar daddies they are like ‘well if he wants to spend his money let him’ then i say but these people are BUSINESSMEN first and foremost how do you think they made their billions through fiddling benefits so it is obvious if money is their main concern it stands to reason they will want to see a return on their investment at some point even if they are doing it for ego.

    You know what makes me laugh most of the time their attitude is to laugh it off and say they will cross that bridge if they ever come to it and they never believe their clubs can collapse in the state they are in and they always turn it around saying our club is the stupid ones. It is almost like a person buying cars and equipment on credit cards turning around to a person that has saved up to pay for what he has and bought it outright that they are stupid and are mugs for not buying it right now and worrying about it later when they are close to bankruptcy…….i know what situation i would prefer to be in.

  • createstrain

    thats more like it, like somebody has said, what the golden boys of english football want they usually get. id be very surprised if the next manure manager wasn’t british. moyes for example would be a good shout given the situation in toffee land. so why would english football want foreigners to dominate it which would happen if it continues this way? manure with a supposedly weaker manager would still be a major force given their finances and official luck. they know that without something like this the hierarchy in football for would be, blue oil and chelski competing for top honors with arsenal gaining ground on manure every year fighting for a spot that might open up if the english version of farca/real mad happen to slip up which is rare.
    of course it might not happen, nothing is written in stone but if i was a betting man the way arsenal have behaved up to this point with players seems to make perfect sense now. even if theo goes.

  • Mike T

    The Clubs dont vote on this till Feb so its wrong to say 15 have already voted to introduce anything all they have done is agreed to keep the topic hot.

    From what has been said Man City, Everton, Fulham, West Brom arent likely to agree to the Man U & Liverpool proposal and its rumoured that QPR are also of like mind.
    Sunderland it seems will only agree to a cap on year on year salary increases and Chelsea feel that should you be able to fund any shortfall by donations from a benefactor if that isnt put into place they will probably vote against.
    I know many wont agree with what Chelsea are suggesting but if the true purpose of any FFP is to stop the build up of debt then what they are suggesting is valid

  • Mike T

    Mandy

    If Arsenal were not to qualify for CL for a couple of years or didnt make any monies in the transfer market and showed a loss over and above the allowable limits then even if you could support those matters from your own funds you would have trouble in complying to FFP
    As I said this shouldnt be about making lossed it should be about stopping the build up of debt

  • Andrei

    How is it supposed to benefit Arsenal? Becuase here are some possible consequences:

    – It may hurt EPL as a global brand potentially negatively impacting revenues for all EPL clubs

    – It may result in drop of overall quality of EPL teams and EPL loosing its 4th or even 3rd CL spot

    – It may result in dominance of ‘cheap’ British born players with overreliance on physical style of play

  • Mike T

    Andrei

    The trouble is that the likes of Liverpool and it seems many Arsenal supporters believe that by imposing sanctions that may impact on say Chelsea and Man City everything will return to the good ole days namely when it was between Man U and Aresnal or even further back when Liverpool were the only ones who would win the league. Those days are gone and will never return.

    We are one step away from a European Super League so forget about the impact on the CL places UEFA and probably the EPL may think they can clip teams wings but these super rich business men have both the means and I would suspect if pushed too far, the will, to abandon UEFA and their respective football associations and go their own way.
    Wont happen I hear you say but think back what Kerry Packer did to cricket and be under no illusions the very top players will go where the money is.

  • Shard

    Andrei,

    The quality of a league is not just about the quality of it’s strongest two teams. FFP should ensure that the league as a whole remains stronger. I don’t think the revenues will dry up with more teams having a chance of competing for the title. Especially if the teams who will be prevented from falling behind are the ones with the traditional fanbase in the world. (ManU, Arsenal, Liverpool)

    It may result in drop of quality in comparison to some other leagues, but I think the TV money for English clubs places it at a comfortable advantage as compared to other leagues. Although, yes, there might be SOME players who move to other leagues. Keep in mind though, that other leagues have problems of their own.

    I fail to see how British players will become ‘cheap’. British players have always been more expensive. With the homegrown rules in place, British, or at least HomeGrown, players will continue to be valued higher. In any case, I don’t see how FFP makes any difference to the value of the British player.

  • Limpar

    The preimier league is massively funded via television deals, blowing all cometition from other leagues out of the water.
    FFP wont weaken the position of the premier league, if anything it could strengthen it buy helping the majority of teams become more stable

  • Shard

    Mike T

    “We are one step away from a European Super League so forget about the impact on the CL places UEFA and probably the EPL may think they can clip teams wings but these super rich business men have both the means and I would suspect if pushed too far, the will, to abandon UEFA and their respective football associations and go their own way.”

    The point is that most clubs want these rules, or at least regulations of some sort. The ones who don’t aren’t really the ‘big’ clubs. Chelsea and ManCity, PSG, Zenit and Anzhi perhaps. These are not the clubs who people will pay big money to watch. Not without the likes of ManU, Arsenal, Milan, Barca, Real, Bayern etc. And these clubs want it to come in because otherwise they won’t be able to compete with the oil-rich clubs.

  • Andrei

    @Shard The problem is that FFP is just a theory and it is anybody’s guess how it is going to turn out in practice. It is based on Keynesian belief that you can monkey around with the economy to make it work better for common good. Not trying to stir a political debate here but Europe has practiced Keynesian economics for few decades and look where they are now.

    Anyway, you seem to be taking big TV rights revenues that English clubs enjoy for granted without realizing that this rather aberration than norm. It is even bigger bubble than influx of so called oil money into football. Guess what is going to happen should EPL lose its competitive edge and global audience flocks to other leagues. Do not forget that EPL is competing with increasing number of European leagues. Sooner than you think they will face a steep competition with emerging Asian and Latin American leagues.

  • Shard

    Andrei

    I don’t know about Keynsian or Ricardian economics etc. But industries have regulations. Often different regulations in different countries. And the US is proof, that despite being in the most industrialised economy, sports leagues can work well as regulated entities.

    The EPL is competing with other leagues, but it has certain advantages. It has an entrenched market with many English clubs having diehard fans all around the world. The language factor also helps. Moreover, the FFP should (in theory as you say) accentuate the advantage of having a strong league rather than one or two strong teams, which would count as another advantage. If the EPL is a bubble, it’s because it broke away from the old league system to form a new market driven, capitalist league. If anything, the FFP then represents an attempt to prevent the bubble from bursting.

  • Andrei

    @Shard Sports regulation works to a degree in the US because leagues there are closed and self-sustainable with US economy alone able to keep them profitable. And even then the system shows signs of cracks with the alarming increase in frequency of lockouts. EPL is a bubble because British or EU economies alone cannot sustain it. It has to cater to the global audience and as a result compete on the global scale. The competitive advantage that EPL is enjoying in the global market at the moment is not sustainable in the long run.

    This brings us to EPL having “entrenched market with many English Clubs having diehard fans all around the world”. Are you serious? I agree there are millions Arsenal fans across the globe but are they diehard? Will “diehard” fans in Bolivia or China stick with Arsenal should they fail to qualify to CL few years in the row? Arsenal have entrenched in the global market? Really? How many diehard fans did Arsenal have in outside GB 15-20 years ago? Who knows how many will they have 15-20 years from now? Especially with the most talented crop playing for the likes of Guizhou Renhe?

  • Adam

    http://www.financialfairplay.co.uk/
    Andrei it’s not just TV money that makes teams a success, it helps granted but the top prem teams don’t get as much as the top Italians and Spanish yet the Prem teams compete.
    What you are talking about is a mass exodus from European football which studies have shown is the strongest area in the world with regards to football. Everyone wants into the “Big Five” leagues with the Russian clubs catching up but that may not be sustainable as its influenced by corporate government.
    UEFA is just a competition organiser. They seem to want to protect their competitions as they may face competition from other continents (unlikely though) FIFA has no competitor and no regulator.
    Back to English football even in the worst case senario all that would happen is it contracts back within England (again unlikely). A lot of English would be happy for this to happen.
    Arsenal has a history of followers from the Scandinavian countries and has done for decades. We have supporters clubs set up in almost every European country. Good luck with the expansion of Russian football.

  • Bennydevito

    What worries me is that without selling our best players year on year we would be operating at a loss. It won’t be long before we have nobody to sell so where will we be then? We aren’t successful so I can’t see us getting new sponsorship deals anywhere near Man Utd’s so the winners of this will be Man Utd because their revenue exceeds ours by almost £100m a season. I really do fear that you all on here have failed to grasp that FFP is actually going to be the final nail in our coffin. God help me I’m wrong and I would like a good response from one of you older and wiser and much more financially astute than I am people to make me feel better please!

  • Adam

    Bennydevito
    http://www.football-league.co.uk/page/FLExplainedDetail/0,,10794~2748246,00.html
    Benny, we already have a form of FFP in the lower leagues its only the prem that has not initiated such regulatory measures, soon though, the biggest worry for the current premiership sides that don’t break-even is what happens to them if they get relegated then have to break-even under the new competition rules. It will be a big ask? Plus every club from now on that gets promoted in to the premiership has already conformed to a form of FFP. The clubs that do not break-even will soon be in the minority in England and out voted on any changes.

  • Brickfields Gunners

    As a 55 year old Malaysian on my 43 season as an Arsenal supporter ,I think I can call myself a die hard fan and am willing to put my money where my mouth is , if ever the Arsenal need it .
    So far it has been an emotional investment only , but if ever a time of need arises, I ‘ll be there .And I ‘m sure there are many out here who would do the same rather than give to political ,religious or other bodies.
    I’ve had much joy and enjoyment following the fortunes of this club and am willing to pay my full measure .

  • Shard

    Andrei

    The competitive advantage that EPL is enjoying in the global market at the moment is not sustainable in the long run.

    All the more reason for them to A) keep interest going by making it a more competitive league, and B)keeping their clubs profitable entities, which can survive any ‘bursting of the bubble’.

    If your argument is that trying to prevent clubs from going bust will lead to a decline in global viewership, then I don’t agree that’s what will necessarily happen. Especially because AT THE MOMENT the EPL has a huge advantage.

    Even if we agree that won’t last, then so be it. Nothing lasts forever. Clubs need to make the most of the current situation, rather than go bust while there is more money than ever before (and perhaps ever will be).

    You basically made my point for me Andrei. If EPL in an abnormal state of advantage (through unsustainable TV deals) still has clubs going close to bankruptcy, that is the best illustration that FFP is needed.

  • Mike T

    When I made my last post I did so expecting people to become defensive.
    The key to a breakaway Eureopean competion doesnt depend on Chelsea, Man City , Man U , Bayern or Arsenal. Quite simply it revolves around two clubs. Real Madrid & Barcelona.
    You will already be aware these two clubs take the lions share of Spanish football revenue and as such show demonstrate they have no loyalty to other Spanish clubs.If they sign up to a break away league others like Man U , Bayern and even Arsenal would have no choice but to follow
    Sky have shown they care not one jot about the existing order in darts for instance their support to a breakaway body.
    Lets face it the EPL was set up as a breakawy from the FL something that many did not believe would ever happen but the promise of greater Tv monies was too much for what was then the big 6 in English football to resisit. Likewise the CL was UEFAS response to pressure from the big european clubs threat to form a breakaway league
    I also was interested when people talk about how American sport regulates itself. OK lets go for that one introduce salary caps and regulate who has the first pick of players.

  • Mike T

    Tony

    Another flaw in your comments around the £161 million turned into equity being a factor in Chelsea declaring a profit.As RA does not charge interest on his loans this transaction does not have any impact in terms of P &L

  • Duduspace

    @Bennydevito

    Arsenal already operates within any FFP measure you can think of and has more than survived, we have actually thrived so cannot be in trouble due to FFP.
    Arsenal pay good wages (more than commesurate with where we finish yearly in the table) but can’t cope with high value purchases at the same time.
    FFP’s purpose is to reduce the upward inflation of wages and soaring costs of players which ultimately hits we the fans in the pockets and if it ends up serving that purpose, there is no way Arsenal will not profit from it seeing as it is that we already regulate ourselves without being forced to do so.
    FFP will help us to better keep our players and will help in reducing the costs of all levels of players that we buy (something we are well primed to exploit due to our famed scouting network and good history of honing exceptional young talent).

  • Duduspace

    @Mike T

    Quote: “Mandy

    If Arsenal were not to qualify for CL for a couple of years or didnt make any monies in the transfer market and showed a loss over and above the allowable limits then even if you could support those matters from your own funds you would have trouble in complying to FFP ”

    If I were to ever see Arsenal being run in such a way as to make this possible, I would be one of the leaders of a black scarf protest (Yes, even if we were winning trebles yearly.
    Ask Rangers fans if they wouldn’t gladly give back the 7 titles they won to be back in the SPL.

  • Mike T

    Look at the numbers.

    The excellent Swiss Rambler suggests that without transfer profits Arsenal would have declared losses over the last two years amounting to over £35.3 million. You need to disregard property profits as they are not allowable in FFP calculations.
    If Arsenal hadnt had CL income (to include £10 million each year minimum gate receipts) then the losses would have been another £60 million in total so averaged out the losses would be £50 million per season.
    The point in Arsenal have through fantastic money management accumulated significant recerves but the way FFP works is that even though Arsenal could fund any losses the fact is that as they only look at profit and loss over a set period you could be faced with having no problems in funding the loss of transfer and CL income but because the way FFP works you could be excluded for CL qualification.

  • Stevie E

    Mike T
    The point is Arsenal DID make the profit from the transfers and DID qualify for the champions league, therefore DIDN’T average £50m losses… You can’t make an argument based on what ifs and suppositions, the profit was made so the FFP regs were met. You also seem to ignore the fact that sponsorship deals are about to be renegotiated which means transfers etc wont be so necessary to break even, remember we have just funded a move to a brand new stadium in the most expensive city in the world and have still remained competative and in profit.

  • Mike T

    Stevie

    My earlier posts were to point out the past reliance on CL and transfer fees in your business model.It seems to me you suggest it will all be ok if Arsenal continue to qualify for the CL,if the renegotite vastly increased sponsorship deal,if the transfer fees keep coming in, if the club remain competitive, if they dont start spending increased monies on transfer fees.Football is a fickle business and who knows whats around the corner especially if many get their wish and AW walks.

    I am well aware the sponsorship deals are about to be re negoitaed and it seems everyone is expecting these deals to be a game changer. They may well be but at the same time they may not be.Similary I am well aware the Sky money will bring in more money to all clubs so the sort of player that you have purchased over the last few years will become affordable to some of the mid range teams so either they will go elsewhere or you will have to bid more .

    I read an interesetig article that points to the re namimg of your Stadium and that how it might not be as easy or as profitable due to the fact that people will still want to call the stadium by its orginal name.

    What is clear is I havent got over the point I was trying to make in that the way FFP works will ignore a significant chunk of your admirable finacial history and should you hit a few years of losses and have to dip ito your savings that will casuse problems with UEFAS version FFP but even worse if Man U get their way and get through their version you will get likes of clubs like Wigan and Stoke who will happy just to be in the EPL but Man U know that they will move even further into the box seat and probably win the league more often than they do at present.
    As they say be careful what you wish for

  • Limpar

    Mike T
    If a team has to sell players to meet the regs, any team not just the one we support,isn’t a situation like this the whole point of the rule? To even out the imbalances from teams that have overspent ?