West Ham co-chairman David Gold has told Sky Sports that Premier League clubs have voted "overwhelmingly" for UEFA's financial fair play controls to be enforced upon football, in order to prevent financial Armageddons, as seen in the past. The Premier League only need a majority of fourteen clubs voting yes for a vote to be carried through, and it sounds like they've got it. UEFA's proposals involve in principle the following: "a strict adoption of UEFA's Financial Fair Play Rules"; "breaking even over a three year rolling period" (relating to profit/loss columns, meaning that clubs minimise their debt); and to restrict the owner funding of operating losses (thus minimising the propensity for clubs to be constantly bailed out through the personal wealth of rich owners.)
The Hammers are ourselves in debt to a very serious reported tune of £80 million and would have been in dire straits had not Gold and his business partner David Sullivan bought the club from the previous Icelandic regime in January 2010.
According to financial consultancy firm Deloitte, the total Premier League revenue in the 2010/2011 season (at the end of which, West Ham were relegated) was £2.27 billion. Deloitte states that wages, at £1.6 billion, accounted for 70% of that revenue; thus confirming football's status as the only business in the whole of UK not having to take austerity measures. Premier League teams have now supposedly voted in favour of UEFA's plans to control their spending; with a majority of clubs in many European leagues believed to be in debt- even the most successful teams such as Manchester United are constantly reported to be struggling to break even financially.
Blowing Bubbles understands that two proposals were put forward at the meeting. The first proposal was a long term financial policy of all Premier League clubs breaking even, which would seem to relate to UEFA's second proposal. Secondly, a salary cap idea has been put forward- which would allow clubs to only raise wages yearly, not just when they want to, as they can at the moment. The spending cap, we understand, will in theory be placed at £52 million, so it does not affect newly-promoted sides' purchasing of players.
This all seems very fair and democratic; but there's a twist. Any money made from sponsorship can be used to top up the wage budget with no restrictions; which will obviously give the bigger and more illustrious clubs with higher annual revenue an advantage, so wage spending is hardly going to be completely reigned in if these proposals go through. Manchester United, for example, make £20 million a year from their four year sponsorship deal with the firm AON, and it seems inconceivable that they will not put the bulk of that back into their wage budget.
We'll hopefully have further news on this story soon and will update you as and when we know more...
By Alex Shilling
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