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Uefa approve financial rules

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Uefa have approved plans to force clubs in European competition to only spend what they earn.

The financial fair play rules will require clubs to break even over a rolling three-year period if they want to play in the Champions League or Europa League, with Uefa president Michel Platini insisting he wants to 'protect clubs not punish them'.

Clubs will also be assessed on a risk basis, taking into account 'debts and salary levels'.

Platini, speaking after Uefa's executive committee had approved the rules at a meeting in Nyon, Switzerland, said: "We have worked on the financial fair play concept hand-in-hand with the clubs, as our intention is not to punish them, but to protect them.

"We have an agreement with the clubs. The philosophy is that you cannot spend more money than you generate.

"This approval today is the start of an important journey for European football's club finances as we begin to put stability and economic common sense back into football. I thank all the stakeholders who have supported this along the way."

There will be some leeway granted for the six years after 2012 but some Premier League clubs, notably Manchester City, Chelsea and Aston Villa could still fall foul of the rule unless they change their spending habits.

Manchester United have carried out a 'dummy test' and believe they would pass the rules despite the handicap of paying out £45million to service their debts every year.

Arsenal and Tottenham would pass the test comfortably, while Liverpool, Celtic and Rangers would probably do so too.

A United spokesman said: "We support the financial fair play measures. We are confident that we pass them and that we will continue to do so."

If clubs breach the rules then they will not be granted a Uefa club licence to take part in European competitions.

The rules will also limit the amount of cash 'sugar daddies' will be able to pour into the clubs to fund transfers and high wages, though they will be allowed to finance capital projects such as stadiums and academies.

Attempts to bypass the rules by owners handing out huge sponsorship contracts to their clubs from other companies they own will also be checked by an independent watchdog panel appointed by Uefa to ensure they are not paying above the market rate.

The FA and Premier League - who will be the bodies that jointly provide the Uefa licences to English clubs - have given the new rules a cautious welcome.

A joint statement from the organisations read: "The FA and the Premier League are fully supportive of the principle of sustainability and of football clubs living within their means.

"The vast majority of what has been agreed by UEFA is in line with current domestic regulations and English football will respect any rules put in place for clubs competing in Europe.

"We recognise the difficult task undertaken by UEFA in this process and we have asked that certain issues be monitored so as to ensure these rules do not create unintended consequences such as preventing smaller clubs from having the opportunity to invest the resources required to compete at a higher level."

Uefa has approved plans to force clubs in European competition to spend only what they earn. Michel Platini, the president, is insistent that the rule change is intended to “protect clubs, not punish them”.

With the Barclays Premier League being Europe’s most indebted league, The Times examines how clubs in England’s top flight will fare under the new rules, using the most recent available accounts for each of the 20 teams.

Arsenal £46 million profit. With the highest profit margin of all Premier League clubs Arsenal will be the least concerned by the new fair play rules, the introduction of which will show how well the club are run financially.

Tottenham Hotspur £33 million profit. As with Arsenal, the new Uefa rules will not place immediate pressure on Spurs, who could boast a healthy balance sheet without the Champions League football that they may benefit from next season.

Manchester United £22 million profit. Do not be fooled by United’s profit, it includes the £80 million from the sale of Cristiano Ronaldo. Without it their transfer losses would have been the second highest in the division and they can ill afford to sell another star to keep their financial picture looking rosy.

Blackburn Rovers £3.6 million profit (including £5 million owed in loans). Blackburn run a tight ship, but even they will fall foul of the new Uefa rules unless they can reduce their loan debts.

Stoke City £0.5 million profit. It is testament to the sterling work of Peter Coates, the chairman, that Stoke would not fall foul of the new rules. All they need is a team good enough to qualify for European football.

Blackpool £0.5 million loss. Only slightly in the red in 2008-09 but are now operating in the altogether more rarefied financial atmosphere of the Premier League — promotion cost them £5 million in players bonuses, but will bring massive rewards.

Wolverhampton Wanderers £5 million loss. Steve Morgan must thank his stars he bought Wolves and not Liverpool. He runs a tighter financial ship than the owners at Anfield.

Wigan Athletic £6 million loss. Dave Whelan has been able to maintain Wigan’s status without putting them at undue financial risk and is sufficiently entrepreneurial to break even in time to meet Uefa’s standards.

West Bromwich Albion £6.6 million loss. Jeremy Peace, the chairman, has often been accused of a lack of ambition by the club’s supporters but their return to the Premier League offers the chance of cutting manageable losses and falling into line with Uefa’s rules.

Everton £7 million loss. The concern is that the club made a loss in 2008-09 when they reached the FA Cup Final, with all the lucrative spin-offs. At least David Moyes is a manager who is one of the best at living within his means.

Fulham £8 million loss. Fulham went all the way to the Europa League final this season but if continental excursions are to become a regular feature, they will have to perform the balancing act of reducing losses while maintaining ambition.

Bolton Wanderers £13 million loss. Bolton are not big spenders but they are still living beyond their means and the next task for Phil Garside, the chairman, will be to reduce the club’s losses while also attempting to ensure that they can stay in the division.

West Ham United £16 million loss. Under new ownership and with their top-flight status intact, West Ham’s next aim is to secure a better financial footing. If David Gold and David Sullivan did not have their work cut out, Platini has ensured that they have.

Birmingham City £20 million loss. Carson Yeung, the owner, has serious ambitions for the club, but his big-spending plans will force a rethink because bringing the club’s losses under control will be the priority.

Sunderland £26 million loss. Niall Quinn wants to bring European football to the Stadium of Light. Only if their substantial losses are brought under control will the chairman’s dream become a reality.

Newcastle United £37.6 million loss. Walking before they can run is the order of the day. European football is not high on their list of priorities, which is just as well, because their most recent balance sheet would be in accordance with the new rules.

Aston Villa £46 million loss. Martin O’Neill would like a greater transfer budget, but if increased spending on players added to the club’s present loss levels it would be pointless as Uefa’s new rules would prevent them from entering European competition anyway..

Chelsea £47 million loss. The biggest spenders of the Premier League era have yet to win the European Cup that Roman Abramovich craves. Unless they cut spending his European dream will become ever more distant.

Liverpool £55 million loss. Britain’s most successful club in Europe prohibited from entering European competition because of the state of their finances? It just may happen, particularly as their losses continue to mount.

Manchester City £93 million loss. Conspicuous consumption of top-class players has been the order of the day since Sheikh Mansour took over in August 2008. But City face a race against time for their recruitment drive to turn them into a Champions League club while improving their finances.

The total debt of Premier League clubs is greater than the rest of Europe's top sides put together, report Uefa.

The English top-flight does, however, account for almost half of club assets across the continent.

Uefa has released these figures in a new report carried out into the state of football's finances.

It shows that the total debt of Premier League clubs stands at €3.8billion (£3.4billion), which equates to 56 per cent of the total across Europe.

Premier League assets stand at €4.3billion (£3.8billion), accounting for a 48 per cent share of the assets among all European clubs.

What is worrying for English clubs is that the total value of the debt is so close to the value of the assets.

Takeovers

In Spain, which has the next highest debt of £858million, the assets are worth £2.5billion, three times the value of the debts.

In Italy, the debt is £442million and the assets worth £1.3billion.

Uefa's report, the European Club Footballing Landscape, has looked at the 2007-08 accounts from all 732 clubs licensed by football's European governing body.

The 80-page document's analysis of the Premier League reports that many clubs have used their stadiums and grounds as collateral to borrow money.

The report accepts much of the debt is linked to the leveraged takeovers by the Glazer family at Manchester United and the Hicks/Gillett buy-out of Liverpool.

"Some of the long-term debt is linked to new stadia such as Arsenal's, and in other cases already-built assets provide security for commercial lenders," says the report, adding that the leveraged buy-outs have been "so far acting principally as a burden rather than to support investment or spending".

System

The report did not include the debts of Portsmouth and West Ham because they had not been granted Uefa licences that year due to their financial problems.

The report comes after it was revealed that Manchester United's £716million debt is greater than the entire cumulative sum owed by all 36 clubs in the top two divisions in Germany.

The German Football League (DFL) clubs' debts total £544million.

Uefa president Michel Platini is pushing for a system where clubs in the UEFA Champions League and Europa League will only be allowed to spend what they earn.

Platini said recently: "The Financial Fair Play concept is very important for the well-being of clubs.

"We believe that for clubs to survive they can't spend more than they earn and the executive committee has agreed to introduce regulations to reach this aim."

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Every uprising starts with a show of defiance, and this morning UEFA gave notice to Europe’s top clubs that there is more to their demands for financial sustainability than words alone.

The announcement that 23 clubs have had their prize-money from last season’s European competitions withheld due to their financial issues will have drawn a mixed response from all four corners of the continent.

The likes of Atletico Madrid, Malaga, Fenerbahce and Sporting Lisbon have until September 30 to either settle their debts or explain to European football’s governing body exactly why they have not paid players, other clubs or the taxman.

It is the first blow in what is likely to be a long and bitter battle in which lawyers and accountants will have more impact on our game than centre-backs or second strikers.

That Atletico, the reigning Europa League champions, were included on the list will have drawn a sharp intake of breath from all clubs.

In Spain, where the financial crisis threatens to strangle everyone bar Barcelona and Real Madrid, there will be genuine fear of what may follow from Michel Platini’s baby, the UEFA Club Finance Control Body (CFCB), who have chosen this opportunity to flex their muscles.

In the blue half of Manchester and the townhouses of Chelsea, comes the acknowledgement that spending must be curbed.

In Paris and Russia, the shining beacons for players and agents seeking a healthy pay-day, there will be a large dose of trepidation.

And for Arsene Wenger, the man who has embraced Financial Fair Play (FFP) from the very beginning, there will be a quiet smile of satisfaction.

FFP is Platini’s grand plan, one in which European clubs must reduce their debts over an audited period of time. Between 2011 and 2014, no club is allowed to lose more than £39.5m. Between 2014 and 2017 that is reduced to £26.3m and then, hopefully, all clubs will break even.

If not, the punishment is simple; clubs that fall foul of the rules will be banned from the Champions League and Europa League.

And when Platini’s ideas come to fruition, this will be seen as an important moment in this well-advertised sea-change.

Yet the actions of some clubs suggest they do not take him seriously, not yet at least.

Qatari-backed Paris Saint-Germain are a gilded club with an impressive history, but it will be interesting to see how they reduce their losses by 2014, as UEFA require, having spent around £120m on the likes of Zlatan Ibrahmovic, Thiago Silva and Ezequiel Lavezzi this summer.

Similarly, Zenit St Petersburg – whose average attendance was 3,000 less than Reading last season – have just spent between £64 and £80m (depending on who you believe) on Hulk and Axel Witsel.

These are not the actions of clubs who feel financial Armageddon is coming.

Yet Platini has never deviated, never changed from his insistence that the day of reckoning was near.

"These rules were unanimously approved by all clubs, politicians, judges and the European Union. There's no going back from here on,” he told Gazzetta dello Sport at the end of August.

“FFP is a hard rule for any team, regardless of whether we're talking about PSG, Juventus, or any other team.

"I have spoken with directors from all clubs. They have all stressed that they would follow the new rules. It seems that some worry a bit more about FFP than others, though.

"Financial Fair Play does not stop clubs from buying players. Clubs can still spend as much as they want as long as their budget accounts for it."

The question now is how PSG, Zenit and the rest can justify it. Over-inflated sponsorship deals have been discussed, as have an increase of equity for their owners in exchange for greater finance.

But the example of Malaga is one that Platini is sure to refer to time and again.

The list announced today gives the clubs named until September 30 to settle their debts or explain why they had not paid either players, other clubs or the tax authorities money that was owed.

In the case of Malaga, the answer is simple; because the billionaire owner, Sheikh Abdullah bin Nasser al-Thani of the Qatari royal family, seemingly lost interest and the funds dried up.

Santi Cazorla was then sold at a knock-down price to Wenger and Arsenal, solely so that the players could be paid. Withholding prize money will only exacerbate the situation, but Platini had to make a stand.

Clubs such as Chelsea, Manchester City, Paris Saint Germain and Malaga are all indebted to owners that they could not cope without.

The Frenchman, a football politician who is surely destined for Sepp Blatter’s chair at FIFA, will not countenance that.

And, under the leadership of former Belgian Prime Minister Jean-Luc Dehaene, CFCB have been told to crack down.

No-one has been banned from European competitions – not yet, at least.

But Atletico Madrid could lose out on up to £7.9m in prize money, an eye-watering figure for any accountant.

And the message that is coming from UEFA’s HQ this morning is loud and clear; Platini is watching, and the day of judgement is coming.

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