UEFA New financial rules

opr

RTE - New Financial Rules

Tuesday, 11 January 2011 15:43

Clubs could be banned from European competition from the 2014/15 season onwards if they do not comply with new financial rules.

The rules state clubs must break even over a three-year period.

Club owners will be allowed to put in up to €15million a year but only as equity, not a loan. This figure will then drop to €10million annually.

Clubs will be able to spend as much as they want on stadiums, training facilities and youth football.

UEFA will have a range of sanctions from warnings to a transfer ban to exclusion from European tournaments.

Across Europe, total club income in 2009 rose 4.8% to €11.7billion, but expenditure was a 9.3% increase to €12.9billion, making a €1.2billion deficit.

Most of the expenditure goes on player wages and one in three European clubs spent 70% or more of their income on salaries.

56% of European clubs ended 2009 in the red.

One in four clubs spent €6 for every €5 they earned.

A drop in transfer activity has reduced income by 5% to clubs in Scotland, France, Portugal and Holland.

English top-flight clubs are comfortably the richest in Europe with average revenue of €122million - five times higher than Holland and Russia.

Germany is second with average earnings of €86million.

Scottish top-flight clubs' average revenue in 2009 was €16m, the League of Ireland €1.3m, Northern Ireland 0.7m and Wales 0.3m .

Clubs will be monitored if there are warning signs such as: recording a loss in any year; spending more than 70% of revenue on wages; having overdue football-related payments or tax debts; high level of debts.

As with a tax declaration, the onus is on the clubs to provide the correct information to UEFA and they will be subject to spot-checks and face sanctions if they do not do so.

National associations will initially grant the licences but UEFA will have spot-checks to make sure that the rules are being applied correctly.

Will be interesting to see how this all plays out.

Opr

Seaneh

I can see the g14 group of clubs popping back into existance now...

GavRedKing

Clubs will have to manage their finances better, simple. I think that it is been mentioned and planned so far in advance that most clubs will be abe to cope with it but there will always be one surprise from a big club and I wonder if UEFA will "bend" the rules if a Barca, Real, Chelsea, Man Utd, AC, Inter, Bayern etc etc have a bit of trouble with their finances and the new rules.

OhNoYouDidn't

These rules have been in place in a number of leagues, including Ireland, for a couple of years in advance of them being made manditory.

Its not news, clubs have had plenty of opportunity to lobby against them and have not done so, so I assume its a done deal.

By and large, very positive, will enforce stability on clubs and lead to a levelling of the playing field. The fact that 56% of clubs are run at a loss is shocking.

OhNoYouDidn't

gavredking wrote: »

Clubs will have to manage their finances better, simple. I think that it is been mentioned and planned so far in advance that most clubs will be abe to cope with it but there will always be one surprise from a big club and I wonder if UEFA will "bend" the rules if a Barca, Real, Chelsea, Man Utd, AC, Inter, Bayern etc etc have a bit of trouble with their finances and the new rules.

Platini has stated that he is targetting the big clubs. There will be no bending of anything. I would say he wants a bigger club to test him on it so he can bounce them out of it.

The Italian giants might struggle initially, but its jokeshop outfits like Man City who will get pummelled by this. They will have to reduce their playing budget to 70% of turnover, and thats going to kill them.

flas

now we will see fraud of the highest order throughout european football!

PHB

The deal is done afaik. The clubs have no choice but to agree with them.

I think it's an extremely, extremely welcome development. It will hopefully result in a much fairer system. I think that long-term, if we could include a provision relating to debt ratios for takeovers, we could create a fair sustainable model for football. If we could ensure collective rights agreements for all European leagues, then we could really begin to get football to a fantastic competition.

goddevil

Its still unclear to me how UEFA will make this work in clubs like Manchester City or Chelsea where the money for signings and player's wages come from the Owners.

City are sponsored by Etihad which is controlled by ADUG. So in order to get around UEFA's restrictions, Etihad will just increase the amount it pays for sponsorship. How can UEFA stop this? Does this mean that if a club has a resolute owner who wishes it to succeed, then the fairplay rules don't apply to them?

Seaneh

OhNoYouDidn't wrote: »

Man City who will get pummelled by this. They will have to reduce their playing budget to 70% of turnover, and thats going to kill them.

Same could be said of Milan, Inter, Real, Barca to name just four...

Inter will actually be alright, their new stadium should be read by then i think, or atleast well under construction, but if Milan don't either buy the San Siro or build a new stadium, we will be screwed.

goddevil

Seaneh wrote: »

Same could be said of Milan, Inter, Real, Barca to name just four...

Barca don't play over the odds in wages and they don't spend over 50 mil on transfers every year which they can afford. They have debts yes but their turnover more than covers their payer's wages and transfer fees AFAIK...

Seaneh

goddevil wrote: »

Barca don't play over the odds in wages and they don't spend over 50 mil on transfers every year which they can afford. They have debts yes but their turnover more than covers their payer's wages and transfer fees AFAIK...

Which is why they had to take a massive loan earlier this season to cover wages?
Hmmm...

everdead.ie

The likes of Berlisoni and Abromavich have come out in favour of it because they are hemorrhaging so much money I think it's long over due to be honest some people think they will be able to get around the rules by spending mega bucks this year but then they have player amortization to deal with so it's unlikely to happen in the near future.(Huge transfers I mean)

goddevil

Seaneh wrote: »

Which is why they had to take a massive loan earlier this season to cover wages?
Hmmm...

It was a cash flow problem AFAIK.... I don't have the details on their finances but i'll be willing to wager that their wages are around 50% of their turnover...They have a sensible wage structure and not many clubs can say that

Lukker-

Barca and Real have some of the biggest debt in world football, gonna be interesting to see what happens.

OhNoYouDidn't

goddevil wrote: »

Its still unclear to me how UEFA will make this work in clubs like Manchester City or Chelsea where the money for signings and player's wages come from the Owners.

Not letting them into Europe, transfer embargos, points deductions. Possibilities are endless.

goddevil wrote: »

City are sponsored by Etihad which is controlled by ADUG. So in order to get around UEFA's restrictions, Etihad will just increase the amount it pays for sponsorship. How can UEFA stop this? Does this mean that if a club has a resolute owner who wishes it to succeed, then the fairplay rules don't apply to them?

They don't especially want to. If you can get an increase in sponsorship, good for you, thats encouraged. There will always be loopholes, like if your owner buys one million shirts, but the point being its much more of a level playing field if they can't directly pay money for players.

Its much more obvious that the owners will spend money on youth development and infrastructure, taking that off the clubs plate, which will free up more of the clubs revenue for players wages. But the investment is now from owner to grass roots, not the local Ferrari dealership.

OhNoYouDidn't

Lukker- wrote: »

Barca and Real have some of the biggest debt in world football, gonna be interesting to see what happens.

So long as the debt is being serviced, isn't to players or the tax man, its not an issue.

Borrowing is allowed under these rules, hence the equity piece for owners. Principal being it all has to go back, unlike sugardaddy money.

Lukker-

OhNoYouDidn't wrote: »

So long as the debt is being serviced, isn't to players or the tax man, its not an issue.

Borrowing is allowed under these rules, hence the equity piece for owners. Principal being it all has to go back, unlike sugardaddy money.

Yeah but in Barca's and Reals case it's growing and not not being serviced at all. IMO there shouldn't be a difference between a loan from a bank and an investment from the owner because they are both going to look for their money back in the long run. What happens if Sheikh Mansour, instead of putting his money directly into City takes a loan out in City's holding companies name and uses that to buy players. There shouldn't be a difference IMO.

goddevil

goddevil wrote: »

Its still unclear to me how UEFA will make this work in clubs like Manchester City or Chelsea where the money for signings and player's wages come from the Owners.

City are sponsored by Etihad which is controlled by ADUG. So in order to get around UEFA's restrictions, Etihad will just increase the amount it pays for sponsorship. How can UEFA stop this? Does this mean that if a club has a resolute owner who wishes it to succeed, then the fairplay rules don't apply to them?

Some guy on football weekly said a while ago its pretty iron clad and this exact thing was mentioned.He said they wont be able to get around it with ridiculous sponsorship deals from owners.

Lukker-

I just see it as an attempt by Uefa to mantain the status quo. This will keep the big clubs big and the small clubs small.

OhNoYouDidn't

Lukker- wrote: »

Yeah but in Barca's and Reals case it's growing and not not being serviced at all. IMO there shouldn't be a difference between a loan from a bank and an investment from the owner because they are both going to look for their money back in the long run. What happens if Sheikh Mansour, instead of putting his money directly into City takes a loan out in City's holding companies name and uses that to buy players. There shouldn't be a difference IMO.

I'm not sure if there is a limit to borrowing money to buy players, and that is a prospective loophole if it so long as its not a liquidity thing. Clubs don't tend to have millions in cash. But you cannot borrow to pay these players.

OhNoYouDidn't

Lukker- wrote: »

I just see it as an attempt by Uefa to mantain the status quo. This will keep the big clubs big and the small clubs small.

How does reducing large clubs budgets even almost do that?

Lukker-

OhNoYouDidn't wrote: »

How does reducing large clubs budgets even almost do that?

Because the big clubs are the clubs who make far far more then the smaller clubs already. It'll just keep them at the top.

#15

Lukker- wrote: »

I just see it as an attempt by Uefa to mantain the status quo. This will keep the big clubs big and the small clubs small.

I don't know about that.

It rewards good management, both on and off the pitch, and not the scattergun approach to spending favoured by some clubs.

The Muppet

From a selfish point of view I think it's great idea as the clubs with the highest turnover(cough) will have an advantage over other clubs.

On the other hand I'm not sure if thats really fair as City and Chelsea would have found it much harder to mount a challenege for the league if they operated under these rules.

It'll probably be good for football long term as clubs just won't be able to offer players obscene money.

Hazys

TBF its long over due.

For the past 20 or so years the way for a Chairman to run a club was pump as much money in as you can into buying and paying for players, making no profit, then eventually give up or go broke and sell the club, so another chairman can do the same.

Then in the last 10 years, billionaires starting buying football clubs as a hobby, like they were playing Football Manager with a money cheat, pouring money into clubs without caring if its going to make a profit. They ended up paying average players ridiculous wages pushing up the power players had over clubs.

In Soccer, success is rarely achieved by tactics, training and long term developments of first team players and youth players. Now it is all about transfers and spending money on players. There is no loyalty between players and clubs, and who could blame them. Why stay with a team if you can make double across the road? especially if the team you are with will sell you just as quick.

The Premiership was actually competitve over 20 years ago, but in the last 20 years the top 4 teams hasnt changed, no matter how much Sky hype up the Premiership, its a terrible sports league in terms of competition and excitment. Some teams will always have more money than others thats just economics but some teams dont care for economics and drive the club or the chairman into uncontrollable debt.

Hopefully this is a step in the right direction, itll nice to see a team win because they worked harder, trained harder, were smarter tactically and developed their players, rather than the team that bought half the Brazilian squad in the Janurary transfer window.


Thats why the world cup is so much more competitive than club competitions like the Premiership. Money for the most part is taken out of the equation. So teams that train the hardest and gel as a team (see Uruguay, USA, Paraguay) can suceed and go far while teams like England, France and Italy epically fail.

Hazys

Lukker- wrote: »

I just see it as an attempt by Uefa to mantain the status quo. This will keep the big clubs big and the small clubs small.

?

I dont understand, how will stopping teams from running into debt "keep the big clubs big and the small clubs small"?

I dont think there is any correllation between the two.

How was small teams running into debt making them bigger while big teams running into debt making them smaller?

everdead.ie

Hazys wrote: »

TBF its long over due.

For the past 20 or so years the way for a Chairman to run a club was pump as much money in as you can into buying and paying for players, making no profit, then eventually give up or go broke and sell the club, so another chairman can do the same.

Then in the last 10 years, billionaires starting buying football clubs as a hobby, like they were playing Football Manager with a money cheat, pouring money into clubs without caring if its going to make a profit. They ended up paying average players ridiculous wages pushing up the power players had over clubs.

In Soccer, success is rarely achieved by tactics, training and long term developments of first team players and youth players. Now it is all about transfers and spending money on players. There is no loyalty between players and clubs, and who could blame them. Why stay with a team if you can make double across the road? especially if the team you are with will sell you just as quick.

The Premiership was actually competitve over 20 years ago, but in the last 20 years the top 4 teams hasnt changed, no matter how much Sky hype up the Premiership, its a terrible sports league in terms of competition and excitment. Some teams will always have more money than others thats just economics but some teams dont care for economics and drive the club or the chairman into uncontrollable debt.

Hopefully this is a step in the right direction, itll nice to see a team win because they worked harder, trained harder, were smarter tactically and developed their players, rather than the team that bought half the Brazilian squad in the Janurary transfer window.


Thats why the world cup is so much more competitive than club competitions like the Premiership. Money for the most part is taken out of the equation. So teams that train the hardest and gel as a team (see Uruguay, USA, Paraguay) can suceed and go far while teams like England, France and Italy epically fail.

It goes back much further then 20 years look at the 70's and 80's dominated by a small clutch of clubs as well.

Lukker-

Hazys wrote: »

?

I dont understand, how will stopping teams from running into debt "keep the big clubs big and the small clubs small"?

I dont think there is any correllation between the two.

How was small teams running into debt making them bigger while big teams running into debt making them smaller?

It's called an investment, it's always going to be a risk. In the end football is business after all. It may help keep a few extra xclubs debt free, but it is also going to severely cripple their growth. There will be an even bigger talent vacuum then there is now, with only big clubs being able to make big investments which will help mantain their strength and financial muscle while the smaller clubs are bullied and stagnate.

ShoulderChip

Lukker- wrote: »

Because the big clubs are the clubs who make far far more then the smaller clubs already. It'll just keep them at the top.

I don't get how this new rule affects that?

Edit: ah someone go there before me, i see where you are coming from, but think its nonsense tbh.

Pepe LeFrits

As has been pointed out a number of clubs have been spending beyond their natural means to remain at the top long before City and Chelsea arrived on the scene so I don't think this necessarily maintains the status quo. It means that well managed clubs get their just rewards, while ones that are poorly run and overly reliant on spending mega money will suffer.

It should mean the end of teams like City going from 0-90 overnight but there are plenty of examples of clubs that have gradually increased their stature - Arsenal are a bigger club than they were 10 years ago, ditto Sevilla, Villarreal, Olympique Lyonnais and so on.

Hazys

Lukker- wrote: »

It's called an investment, it's always going to be a risk. In the end football is business after all. It may help keep a few extra xclubs debt free, but it is also going to severely cripple their growth. There will be an even bigger talent vacuum then there is now, with only big clubs being able to make big investments which will help mantain their strength and financial muscle while the smaller clubs are bullied and stagnate.

? im still confused.

How has stopping small teams from making a loss and making them turn a profit be crippling them? and allowing big teams to make a loss allowing them suceed?

If teams cant grow naturally and then make an "investment" then more than likely the investment will put them in massive debt and eventually bankrupt them.

Most teams are "growing" unnaturally at the moment, forced to because everybody else is growing unnaturally. A lot of teams will go bankrupt if they continue this way, so UEFA needs to do something sooner rather than later.

Hazys

everdead.ie wrote: »

It goes back much further then 20 years look at the 70's and 80's dominated by a small clutch of clubs as well.

Like i said its natural that certain teams will make more money and be better historically through time.

But the last 20 years its really only been 4 teams (now Man City) than can actually win. But look at some of the winners between the 20 year period of 1970-1990: Everton, Derby, Leeds, Nottm Forest Aston Villa all won the 1st Division

The new rules will help take some of the unnatural money out of the equation when it comes to club success.

Lukker-

Hazys wrote: »

? im still confused.

How has stopping small teams from making a loss and making them turn a profit be crippling them? and allowing big teams to make a loss allowing them suceed?

If teams cant grow naturally and then make an "investment" then more than likely the investment will put them in massive debt and eventually bankrupt them.

Most teams are "growing" unnaturally at the moment, forced to because everybody else is growing unnaturally. A lot of teams will go bankrupt if they continue this way, so UEFA needs to do something sooner rather than later.

You seem to think that with this new regulation that all clubs will be ran well. Poorly managed clubs will remain poorly managed. It's not automatically going to stop clubs from making a loss, many clubs don't spend much money and still have many financial troubles.

ShoulderChip

Lukker- wrote: »

You seem to think that with this new regulation that all clubs will be ran well. Poorly managed clubs will remain poorly managed. It's not automatically going to stop clubs from making a loss, many clubs don't spend much money and still have many financial troubles.

What you have made there is a fair point.


It is however unrelated to your initial claim,
and seems an attempt to get someone to argue over this point,
thus deflecting from your initial claim.

no one said it was going to do the above.

Hazys

Lukker- wrote: »

You seem to think that with this new regulation that all clubs will be ran well. Poorly managed clubs will remain poorly managed. It's not automatically going to stop clubs from making a loss, many clubs don't spend much money and still have many financial troubles.

Dont you think these rules will be a kick up the ass for some poorly run teams? (aka a good majority of teams) but still there will always be very well run teams and some badly run teams...but more laws may force the poorly run teams to operate a little better

"many clubs don't spend much money and still have many financial troubles" isn't that a contradiction? unless clubs are being robbed at gun point that makes no sense.

Isnt it obvious when teams are spending 70% of their money on player wages and they arent getting enough gate reciepts to make a profit and are running up a huge debt, that this "growth" and "investment" is unnatural?

Lukker-

ShoulderChip wrote: »

What you have made there is a fair point.


It is however unrelated to your initial claim,
and seems an attempt to get someone to argue over this point,
thus deflecting from your initial claim.

no one said it was going to do the above.

How so? I was responding to the point that it will stop small clubs going bankrupt. Teams will go bankrupt because they do not not have sufficient revenue streams. Adding a cap on transfers is only going to be the tip of the iceberg for many clubs in financial trouble.

everdead.ie

Hazys wrote: »

Like i said its natural that certain teams will make more money and be better historically through time.

But the last 20 years its really only been 4 teams (now Man City) than can actually win. But look at some of the winners between the 20 year period of 1970-1990: Everton, Derby, Leeds, Nottm Forest Aston Villa all won the 1st Division

The new rules will help take some of the unnatural money out of the equation when it comes to club success.

They we're/are all big teams

Hazys

everdead.ie wrote: »

They we're/are all big teams

Yes but Isn't that the point tho? They were big teams that grew within their means (local talent and good managment) but unnatural money either pushed them out or crippled them.

Just look at Leeds. The were always a medium sized club through the years, could challenge Man Utd, Liverpool and Arsenal the odd years when they had a good team (built without ridiculous debt).

Naturally they could never be a large sized club (didnt have the same fan base as the others, etc). But they gambled to grow into a large size club even tho they couldnt afford their wage structures and got into massive financial trouble and got relegated 2 divisions.

OhNoYouDidn't

Lukker- wrote: »

How so? I was responding to the point that it will stop small clubs going bankrupt. Teams will go bankrupt because they do not not have sufficient revenue streams. Adding a cap on transfers is only going to be the tip of the iceberg for many clubs in financial trouble.

But if teams CANNOT spend revenues they don't have, they can't spend it.

Think about it. If your club gets €10m in now, spends €12m on wages they are goosed, which 56% of clubs are now doing. If the club is forced to not spend more than €7m on wages, they are under less pressure. If ALL clubs in a league have the same constraint, the race to the bottom is obsolete. The €3m they now have left is to be spent on youth development and facilities.

cson

Imo UEFA have introduced the [albeit minor] threat of a breakaway a lá the Premiership. The likes of City, Chelsea, Barca, Real, Inter, Milan are huge clubs and but for them the Champions League is as big as it is. The G14 League mightn't be as remote a possibility thanks to these new rules.

Mister men

Terrible idea. Brought in to keep the big boys happy and the smaller teams without any chance of glory. Shameful but what else do you expect from UEFA.

cson

Mister men wrote: »

Terrible idea. Brought in to keep the big boys happy and the smaller teams without any chance of glory. Shameful but what else do you expect from UEFA.

???

How does it keep the big boys happy? They're the very clubs it hits hardest.

gosplan

cson wrote: »

???

How does it keep the big boys happy? They're the very clubs it hits hardest.

Well Chelsea and Man City will have spent fortunes and built their income base and now suddenly don't have to worry about someone else coming along and replicating what they did.

Helix

whats to city's stop owners pumping £1bn into club coffers the year before the rule comes in?

OhNoYouDidn't

Mister men wrote: »

Terrible idea. Brought in to keep the big boys happy and the smaller teams without any chance of glory. Shameful but what else do you expect from UEFA.

This has gone completely over your head, hasn;t it

Helix

OhNoYouDidn't wrote: »

But if teams CANNOT spend revenues they don't have, they can't spend it.

they can, they just wont be able to get into europe

spockety

cson wrote: »

Imo UEFA have introduced the [albeit minor] threat of a breakaway a lá the Premiership. The likes of City, Chelsea, Barca, Real, Inter, Milan are huge clubs and but for them the Champions League is as big as it is. The G14 League mightn't be as remote a possibility thanks to these new rules.

Easy way for UEFA to prevent that. They can simply say that for players to compete in UEFA internationals (European Champs and qualifiers) and/or to play for UEFA member countries they must be playing in a UEFA league and/or another FIFA sub association league etc. etc.

Besides which, a "G14 league" could only ever replace the Champions League and never the Premiership, and if the Premier League as an entity has signed up to these new rules then that's that.

Helix

spockety wrote: »

Besides which, a "G14 league" could only ever replace the Champions League and never the Premiership, and if the Premier League as an entity has signed up to these new rules then that's that.

no it couldnt

they could very easily go for a 20 team european league to replace domestic football for all those teams... although itd probably hammer attendances, the tv revenue would be astronomical

Helix

gosplan wrote: »

Well Chelsea and Man City will have spent fortunes and built their income base and now suddenly don't have to worry about someone else coming along and replicating what they did.

not with a premiership team no, but theres absolutely nothing in these rules to stop a foreign billonaire buying a league 2 side and taking them up to the premiership - its not like they'll be expecting to play in europe for a few years anyway, so if they got the big money spends out of the way quickly on a new stadium, youth set up etc, and then bought players a division better than the one they were in for a while they'd be able to position themselves rather nicely in the premiership, and again could opt to forsake european football for a few years and spend massively to establish them as big players domestically

Pepe LeFrits

Helix wrote: »

whats to city's stop owners pumping £1bn into club coffers the year before the rule comes in?

They'd still be operating a loss. The balance isn't a factor.

Helix

Pepe LeFrits wrote: »

They'd still be operating a loss. The balance isn't a factor.

gotcha, dunno how i didnt get that through my head initially lol