The last time I wrote about the new Champions League anti-financial-doping regulations that are being voted on today, 27th May, a lot of people wrote in saying that they had already been watered down, and wouldn’t work because clubs would find a way round them.
I know it is bizarre for me, a person who has railed against both Uefa and Fifa in the past, to pin my hopes on Uefa, but that’s what I am doing. I’ll try to explain why, and why I think the “watering down” suggestions are wrong.
From the start, the EPL has been against the new regs, which in their simplest form say that the licence for clubs to play in European competitions (which is already in place – Portsmouth and WHU didn’t get it this year) will be a lot harder to come by. In essence participating clubs will have to make a profit.
I think the person who has done most to help this proposal come to the table, and (I believe) get through the voting procedure today is Richard Scudamore, the Premier League’s chief executive, who earns something like £1m a year representing the EPL’s interests.
Scudamore tried to stop the Uefa plan by rubbishing it. Indeed he treated Uefa like a bunch of little schoolboys making up their own rules in the gutter.
Now I know I might do that too, but I just write a blog and advertising copy and press releases for my companies clients. I don’t earn his kind of dosh and I am not doing PR for the EPL.
So, anyway, as part of his grand plan to sweep away these new regs in September 2007 Scudamore The Great waved a dismissive hand towards Platini and his comments about “rampant commercialism” and called the new plan “not much above the view of people in the corner of the pub”.
I took offence (I often pontificate in the corner of the pub.) Platini laughed at Scudamore, openly. He then said he rather liked pubs. (I warmed to the man). He talked (as Wenger has done) of watching football as a child in French bars. He went for Scudamore’s throat.
In one move, Platini turned Scudamore The Great’s rhetoric into one of the biggest errors in PR terms ever made by the EPL. Until that moment there was a serious chance that Spain, Italy and England (the three great offenders in debt terms) would combine with smaller nations to kick out the Uefa proposals.
Platini redoubled his efforts. He quoted Scudamore, and spoke of “rampant commercialism”, and “financial fair play”. He came out with his “bar room plans” and the nations outside of England, Spain and Italy, united and said as one, “about time too.”
From 2012-13, just two seasons’ time, the clubs that want to be in any Euro competition (Champs League, Europa League, Diddly Widdly Just Invented League etc) must not spend more than they earn in the season before.
In 2008-09 accounts, 14 of the 20 Premier League clubs lost money. They will have to change their ways in the next two years. In La Liga the percentage seems higher, but I will bow to expert opinion. In Italy I think it is worse again. Again, expert opinion would be welcome.
Benefactor donations of the Man City and Chelsea type will not be accepted. Debt is not outlawed – clubs can carry forward as much debt as they like, but the interest payments are counted when calculating the profit/loss. So if Man U make £50m profit before interest, but have £80m interest to pay on their debts, they are loss making, and cannot play in Europe the next season.
Indeed, by my estimation, Man U and Liverpool will not get a licence because it is virtually impossible for them to make a profit unless they sell a Ronaldo and a Gerrard every year. They now desperately need a very rich person to buy them out, a person who will expect no interest on the debt, and won’t ever expect it back.
So, what about the get out clauses that were regularly mentioned last time we debated this?
Yes they are there – for there is a committee that will decide if a club should lose its licence to play in Europe, rather than a straight absolute rule. And yes I would not be surprised if some technicality allows Juve, Inter, Barca and Real Mad in. But the English clubs? Thanks to Mr Scudamore, the Walking PR Disaster Man, I think not.
Clubs can still invest in training grounds, youth development and a new stadium (all part of the Arsenal model) and owners can put money into the club as shares. But owners can’t give money or lend money to the club (most of the donors are in fact lenders not givers) for players, wages, general upkeep, tax bills and the like.
So how will it affect English clubs?
As I have noted, Man U and Liverpool will have to sell and sell players to pay their loan interest – or else find a new owner who can pay the debt off (quite hard in a recession, and besides why not buy Everton – its a lot cheaper. Buy Everton, spend two years buying a big squad, get them into the top four, and then spend your money on a new ground.)
Chelsea and Man C can carry on with more and more money going into the club as shares, so they won’t be denied if they want another £40m player, but the owner must know that short of selling the shares, the money is dead and buried. It will never come back.
The Tinies claim to make a profit, so they might be ok, but we don’t yet have any Arry Accounts to look at. Their benefactor, Joe Lewis, is more removed from the club that Abramovich from Chelsea, but he is still a benefactor, and so will again only be able to put money in as shares and with Arry running the show there are bound to be big transfers, and so big losses.
In other words, as I read it, the benefactor can say “There’s £80m share capital, just gone into the club. Go and buy Bendtner from Arsenal” and they can do that. But on the balance sheet Bendtner’s salary and the £80m cost of the transfer will still show on the outgoings side, so will still count towards the loss. There’s no way around that.
Everton, Aston Hold Your Head Villa (over £40m losses a year), Birmingham Satan, Blackburn Rotational, Fulham, Stoke Evil, Sunderland, Bolton, Wigan, Wolves, West Porno Olympic, all loss making. Newcastle, WBA and Blackpool might be ok – I am not sure. Blackburn are typical – £3.5m profit, but a £5m further loan from the owners. That’s how they live.
Next, the delays in introducing the programme, that were mentioned by so many after my last article.
Between 2012-13 and 2015-16, owners can still be benefactors, to the tune of €45m (£38m) – but that is not per year, as some said, it is overall for that period. It is in fact €15m a year, but even then they have to put the money in, in shares, and when it is spent it counts towards the loss. Over the next three years it comes down to €30m total.
So even the Chelsea/Man C loophole gets closed. Maybe one player a year, providing the money goes in as shares, not a loan, not a gift.
Following Scudamore’s total misunderstanding of how to handle the situation, the EPL has gone dead quiet, and put a sticking plaster over his face. Now we only get comments from our old chum A. Spokesman.
“The vast majority of what is being proposed is common sense and has already, or is about to be, incorporated into Premier League rules,” a spokesman said. “If the regulations are introduced as reported, we envisage a difficult period of adjustment for our member clubs who play or aspire to play in European competition.”
That from the Guardian – and yes, I know I railed against them earlier this week, but it is the only EPL comment going.
And so, wither Arsenal?
We are fine – making a profit every year, thanks to Arsene Wenger’s financial know-how. Over the next few years not only will we have the benefit of the youth team with their three trophies in two years, but we will still be able to buy everyone we want, and we will see the other clubs (not only here, but in Europe generally) moving onto that level playing field. The cost of top players will decline.
Of course if the deal doesn’t go through today I will look a prat. But I look a prat anyway.
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