(WFI) UEFA president Michael Platini has used a major report into the finances of Europe’s top-flight clubs as further evidence for his case for “financial fair play”.
The European Club Footballing Landscape report covers financial results from more than 600 top-division clubs from UEFA’s 53 member national associations.
Platini said the report showed that while there are “many clubs across Europe that continue to operate on a sustainable basis, [they] are finding it increasingly hard to coexist and compete with clubs that incur costs and transfer fees beyond their means and report losses year-after-year.”
“For the health of European club football, those many clubs that operate with financial discipline and sustainable business plans must be encouraged and this is why the entire football family requested and expressed full and unanimous support for the principles of financial fair play,” Platini added.
Last September, the UEFA Executive Committee approved Platini’s financial fair play reforms designed to improve financial fairness in European competitions, as well as the long-term stability of European club football.
The measures, which are still to be finalized, will use the UEFA licensing system to oblige clubs to balance their books or break even. Those who fail to comply will be excluded from European competition.
Hard facts highlight economic problems
The report also reveals that long-term investment in football remains sporadic and the vast majority of revenue is flowing in and out of clubs.
“While clubs’ revenues have continued to rise, these have been entirely absorbed by the growth in costs undermining profitability and pushing many clubs to rely on debt or shareholder’s contributions to finance operating activities,” said Platini.
The annual reported income of Europe’s 732 top-flight clubs was €11.5billion ($15.5billion) – comparable to the annual GDP of Paraguay.
Wages rose over the last year at almost double clubs’ revenues. The 2008-9 increase in employee costs was 18% to more than €7bn, considerably outpacing the 10.6% increase in reported revenues.
A huge gap between the very wealthiest clubs and those in the next tier was also evident. The 10 highest-spending clubs in Europe reported employee and net transfer costs of €1,820m – almost double that of the next 10 clubs. According to the survey they had a 99% spending advantage over their next 10 rivals.
The largesse shown by the owners of Manchester City and Chelsea and the incompetence that has brought Portsmouth to the brink of extinction is shown not to be just an English disease. Last year 57 clubs across the continent spent more than their entire income just on wages.
The economic benefits of good youth systems were also laid bare.
While England and Spain had a combined net cost from transfer activity of €385 million, France and the Netherlands – which both have outstanding youth development programs – had an aggregate net income of €185 million.
The global economic recession has also hit clubs hard, with fans staying away. While nearly 200 European clubs reported average gates in excess of 10,000, 58 per cent of Europe’s top divisions reported falling gates in 2008/09.
UEFA also revealed the tough stance it had taken against clubs who failed to fulfill its increasingly strict criteria on auditory and financial regulations. Theoretically only those clubs who have qualified for European competition need licenses, but many leagues use the UEFA licensing system as the benchmark for domestic compatibility.
In total, UEFA refused licenses to 110 clubs mostly for incomplete financial statements and overdue employee and tax payables.
UEFA also banned 11 clubs, including Israel’s Beitar Jerusalem, from competing in European competition this season – a figure which will surely rise when Platini’s reforms see the light of day.
Written by James Corbett ([email protected])
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