Is an Iron Curtain About to Descend Upon European Football Clubs’ Finances? (UEFA Financial Compliance Rules)

Will an iron curtain descend upon the premier league finances as well as the European clubs? Will the new compliance rules impact the game more considerably than expected? Take the income of any football club...

 i      Gate money (including season tickets)
ii     TV money
iii    Sponsorship
iv    Advertising (including billboards, programs)
v     Transfers (including agent fees)
vi    League position and cup money (not including gate money)
vii   Hospitality  income (including match day experience, i.e. dinning, mascots, etc.)
viii  Merchandising (shirts,programs,kit,posters , flags etc)
ix    Food and drink (franchising at matches)
x    European matches
xi   European position

These are primarily the main incomes of football clubs.

Most money comes from competition prize money, TV money and openly announced sponsorship deals. Transfer fees announced (less so recently), position in the league ,TV money and others show up on the balance sheets that have to be made public in most cases (mandatory to the league). When the club accounts are partially made public, you will be able to estimate a club’s transfer kitty and the club’s wage structure. In the real world; some items are kept commercially sensitive. What can and will be kept out of public scrutiny under these proposals? And will this encourage or discourage poor financial practices?

Will Agents be banned from exposing wages demands and clauses in contracts,will it be the end of Sky sources tell us?

Will we see David Cameron style hospitality in the board room? 250k pre-match dinners?

For example, Fulham have a transfers kitty with wages of roughly 25m a year. Others clubs have reached, or are working at,close to their limit.When Messi becomes available  A club like Fulham cannot afford to buy players like Lionel Messi, even in the unlikely scenario that Messi wanted to go, because the budget limits of Fulham are far too low to pay the wages of all their players at the club as well as Messi. Remember that this is over three years so, even though they could not afford it, they could complete the signing of him whilst the real transfer takes place a year later and loan him to the real parent club immediately? taking a cut in the process and a new source of income started, this scenario could really happen for a lesser player than a Messi though. Will it mean more distribution of  quality players to lower clubs? This Example, shows the start of surrogate transfers,Similar to a certain point to the Adebayor, Wayne Bridge and De Bruyne situations. Players can be signed then loaned out. They are still your players but without the burden showing on the balance sheet. Will payments be spread over longer periods? So, in any one year, it keeps them in budget and one falls off the balance sheet as another goes on!

Therefore, by watching how many youngsters come through, how much a club spends and what a club’s priorities are on the pitch, you can measure how much to offer clubs for players. Whilst keeping a close watch on your opponent’s balance sheet might be as important as watching their star player on the pitch, selling clubs will find it harder to auction assets off. They may also know which clubs do and do not have the resources to meet their valuation and what the limits of the purchasing clubs will be in any given year. So, already we see the advantages and disadvantages of knowing a club’s limits; but what impact will this really have? Given the financial constraints now at clubs, we will see more fringe players going out on loan. Real Madrid, for instance, are letting Nuri Sahin and Kaka go out on loan due to them not being in Jose Mourinho’s plans for the next season.

Wages may be cut, although, Beckham-style% of merchandise sold might be a way around this. So will clubs try to find ways to hide their income and out goings wherever possible? Hiding income is quite difficult. A company buys hospitality for a few matches and counts heads, works out costs, estimates their income and then offers that information to opponents. They can bid for franchises, look at companies that win,or by buying shares in them and getting that information yearly, could help smaller companies or get more in house hospitality over larger companies. Large companies may be broken up so that different pricing policies can be implemented. Ground sharing where income is not affected but costs are halved.

So, whilst not knowing a club’s actual income, Uefa and Fifa must  know, otherwise, how will they implement their rules and stop them from being broken (and, therefore, their transfer budgets). This means clubs must be open to audits - another source which might leave clubs open to sensitive information being out in the open. Are we about see James Bond on Tottenham Hotspurs staff or will it still be Kevin Bond?

A club may wish to force the price and wages of a player up to weaken or disrupt opponents. This would enable clubs to obtain their real targets at a later date. Supposedly, Arsenal put in a fake bid for Olympique Lyonnais, goalkeeper, Hugo Llloris. Other dark tactics clubs could use would be to exaggerate the number of hospitality guests, franchising income and deflated wages. Increased merchandise sales will become very important. Clubs such as Liverpool and Manchester United are aggressively pursuing sponsors and selling club products in order to raise more income.

So, when will we see the first case of one club claiming that another has overspent it's quota so that the transfers of a particular player from one club to another is deemed illegal? And where will that leave the player involved?

And this is to be policed and judged by UEFA?