Why Michel Platini and not a £92.6m loss is the cause for concern at City

The release of the official accounts for the year to 31 May 2009 showed Sheikh Mansour has invested £395m in the club with £305m of loans now turned into shares. The £92.6m loss was the talk of the papers, but the real concern for the City project lies in UEFA’s upcoming financial rules.

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Platini pushing ahead with ‘financial fair play’ rules

This week has seen Michel Platini’s plans for ‘financial fair play’ accepted in principle by Uefa. Exactly how this will work is yet to be agreed and negotiations are set to continue for the rest of the season. Only then can any new rules be ratified.

Platini hasn’t denied that plans to stop clubs from spending more than they make from revenues is intended to prevent ‘sugar daddies’ like Sheikh Mansour and Roman Abramovich coming into the game and transforming clubs with cash injections.

Michel Platini:

“If you buy a house, you have a debt but that doesn’t mean someone is going to stop you from working.

“If you depend only on a rich benefactor however, then the financial model is too volatile.”

The Uefa boss claims to have been asked by members of the ‘football family’ like Silvio Berlusconi to do something about the current situation. Platini is using the financial woes of the credit crunch to justify his plans, but by the time they come to fruition the 2008 banking crisis will be long gone. In any case the new regulations being adopted by the Premier League seem far more practical.

Let’s not forget that Berlusconi has been under pressure from supporters at Milan after the clubs relative demise in recent seasons. Their financial woes would hardly have been lessened by City bumping up the fee (circa 20m Euros)  and wages (circa 100k per week) they eventually had to pay for Ronaldinho. The failure of the Brazilian playboy to justify these sums is of little surprise to many, but probably irks the Italian leader.

Milan of course, still have very high revenues so would be a clear beneficiary of the possible new rules. They’d be able to out-muscle other Serie A clubs and not have to worry about upstarts like City when it comes to negotiating for the world’s top players.

Platini’s claim that Abramovich is in agreement looks to be exaggerated as the Russian will want to see more of the details before giving wholehearted support. As ever, self interest will reign as Abramovich looks to reduce his personal expenditure while still being able to make the marquee signing he missed out on this Summer.

Clubs failing to meet the criteria would not be able to play in the Uefa competitions, namely the Champions League and Europa League. This is Platini’s big stick, and while the carrots are there for the clubs currently with the biggest turnovers, it’s unclear what the benefits are to those who might want to challenge the elite.

Talk of smaller clubs growing by nurturing their own players is fantasy as we all know promising youngsters are snapped up by bigger clubs. The chances of a title challenging team coming through an Academy at the same time are also negligible in the extreme.

The Premier League’s Richard Scudamore recognises the dangers of tying expenditure on players to revenue. The lack of a level playing field in the Premier League has been bad enough. These plans threaten to lock-in the clubs with the biggest turnovers and remove the chance of other clubs challenging via a cash injection. This would make the Premier League even more predictable, less competitive, and fans would find it a turn-off. With less enthusiasm among supporters, future TV deals could be reduced, weakening the financial power of the League.

Would Platini mind? Or would he be quite happy to see this happen. How many European ties this week had the draw of City v Arsenal? Arguably, only Inter v Bareclona, and the appeal of this was reduced by being a group game with both teams happy to play out a draw.

Let’s remember, new chairmen arriving and putting cash into a club has been a part of football for years, particularly since the abolition of the maximum wage. Why else do fans welcome these people? There’s a thrill and excitement in the possibility of new players.

As Khaldoon al Mubarak said in his video interview at the start of the season, money is required.

Intriguingly, The Times Football Commentator, Patrick Barclay suggested a compromise between Platini and the Premier League may still be possible:

At length a compromise may be reached in which benefactors are allowed to give but not lend.

Platini hopes to have the plans in place by 2012, though there is talk of another three seasons grace for clubs to adjust before punishments are meted out. No doubt City will be looking closely at whatever is agreed to see how we can work with it, or round it, and continue ‘the project’. There could be a race for City to establish themselves in the Champions League and dramatically increase their revenues by this time. If matches at Eastlands continue to sell-out, then it may make sense to accelerate plans to expand the stadium. Increased crowds are the most obvious way to increase revenues.

Platini’s plans may pose another challenge to City, but I would bet against Garry Cook and Sheikh Mansour coming through once again.

FA chief executive Ian Watmore condemns possible Uefa restrictions

As speculation continues that Michel Platini and Uefa may seek to use the credit crunch and the high levels of debt at some clubs as a justification of bringing in salary caps, the new chief executive of the FA has given another negative reaction.

“Anything that makes the competition stronger and more deep, I think has got to be welcomed. We don’t want to see the Premier League becoming a top- four procession every year.

“If in the process of the new money coming into Manchester City — and some interesting, I think different, strategies that people like Aston Villa are adopting — we can get to seven or eight clubs that realistically have a chance of breaking into the top four, it can only strengthen the Premier League, which is to our mutual advantage.”

For City this is good news. Our spending on wages and transfers is undoubtedly going to be very high in relation to turnover for the next couple of years as our owners invest and seek to grow the club. The last thing we need is a salary cap linked to turnover, which would only consolidate the position of the established big clubs and make it nigh on impossible to challenge them.

Chief executive of the Premier League, Richard Scudamore also rejected calls for a salary cap earlier this year. Although not everyone in the Premier League is apparently against the idea. With their current financial constraints the Arsenal chief executive mentioned it recently in an interview with David Conn. Coincidentally the Gunners currently have the highest match day revenues in the country.

Interestingly I saw this article in The Telegraph in February which stated:

Ninety-five of the ECA’s 103 full members gathered in Geneva, ranging from F91 Dudelange of Luxembourg to Real Madrid, and there was remarkable unanimity in opposition to a wage cap.

Smaller clubs baulk at setting salaries at a percentage of revenue because they fear it would allow the richest clubs to continue to dominate. The larger clubs would welcome the chance to spend less on players’ wages, but will not countenance falling behind their rivals.

The political manoeuvring on this topic by Platini is something to keep a watchful eye on. If he was to get his way, it could cause more damage to Sheikh Mansour’s ambitions than any onfield opposition.