Time to pay for mistakes of the big spenders
Financial Fair Play regulations are making all English League clubs focus on how to balance the books between income and wage bills
Amid all the discussion last Wednesday and Thursday at the annual Stamford Bridge talking shop that is the Leaders in Football conference, what was most notable was the lack of any real disagreement on the main issues. If a single word could be said to characterise the summit it was “consensus”; a sense of broad agreement not only that Something Must Be Done to prevent the sport eating itself but that the Financial Fair Play regulations being introduced across Europe by Uefa provide the best starting point.
FFP demands that annual losses are kept to a certain level. English football’s favoured method, it is becoming clear, is the crucial link between a club’s income and their wage bill. As Arsenal’s chief executive, Ivan Gazidis, said: “The environment we are in has become somewhat irrational in terms of player spending but it’s becoming more rational. Some form of financial regulation has extremely broad support among the Premier League clubs.”
The Football League have led the way domestically with a two-tier system. The lowest two divisions are effectively bound by a maximum amount of turnover they are allowed to spend on wages.
League Two clubs have reduced the threshold from 60 per cent of income to 55 per cent and face a transfer embargo if they break it. League One clubs are currently operating a pilot scheme with a threshold reduced from 75 per cent to 65 per cent this season, when similar sanctions apply, and to 60 per cent next season.
The Championship will have a broader system based more closely on FFP which means, as Brighton’s chief executive, Paul Barber, says: “It’s basically not being able to spend more than you bring in. So in the next couple of years we are going to see changes here which will limit the amount you can spend on players to what you can earn off the field.”
None of these regulations goes as far as a salary cap. Wigan’s Dave Whelan is one of the few owners who believe such a system is practical, while West Ham’s David Gold finds the notion abhorrent: “I wouldn’t want my salary capped and I don’t suppose you would yours either. Wage-capping is almost Communism, the tea lady and the chairman earning the same money. What I’m in favour of is good business and governance. When clubs are spending more on wages than their income then there’s something desperately wrong. We have one of the most fantastic leagues the world has known and last year we lost £480 million. I’m an ex-bricklayer. I know that if I spend more money than is coming in, I will go bust.”
There are other options: at Sunderland, the owner, Ellis Short, is thought to favour limiting wage rises to a set percentage each year.
On the most recent figures (above), Queens Park Rangers, Manchester City and Aston Villa all spent more than their annual income on wages, the deficit being made up by rich owners in a way that Uefa wish to outlaw. QPR, whose figures were based on Championship income, have to build a stadium holding more than 19,000 people; Villa are drawing in their horns, which cost them the services of a manager, Martin O’Neill; City, like Chelsea, are seen as an example of why regulations are necessary at all because of the way they distorted the market with inflated transfer fees and wages.
But some believe that stopping benefactors such as Sheikh Mansour and Roman Abramovich pouring millions into a club in future will merely cement their position at the top, preventing, say, an Everton finding the sugar daddy they need to truly challenge them.
City insist they had to spend heavily in a short period to catch up, and their former chief executive, Garry Cook, says: “If you look at their transfer work in the last window [net spend £32.2m] it was significantly different from the first one when I was involved [£98.7m]. Financial Fair Play has to work because it’s the cornerstone of the future of the game. I think the execution of it and the penalties are still being worked through and there’ll probably be lots of trial and error. The irony is that it is Uefa saying you must have control, but the biggest prize, where all the risk is taken, is in a Uefa competition – the Champions’ League. It’s a bit like the fox guarding the hen house.”
Patrick Vieira, an ambassador for City and Western Union, says the way forward for the club is securing existing players on long contracts and developing youngsters through their academy: “The new philosophy is to get young players coming through the academy. We have the likes of Sergio Aguero, Samir Nasri and David Silva, who signed a five-year contract. We are into a cycle where these kind of players will stay at the club for the next five, six, seven years. That will give us the time to develop young players. We made a big investment in the first two or three years to challenge straight away because we could afford it. We’re not going to do it for the next 10 years because of Financial Fair Play.”
Having inherited a situation at West Ham with his co-owner, David Sullivan, that he says was “out of control”, Gold understands the temptations, if not the logic: “You chase a player, offering a million pounds a year, and your competitor offers £1.2m and you offer £1.3m and so it goes on. At West Ham arguably they were gambling by spending more than they were earning.
“We can protect clubs from gambling, borrowing, running up debts by for instance insisting on a certain percentage of wages against turnover. It’s not brain surgery.”
Football brains are at least, and at last, working on it.