Soccer clubs line up to tackle costs

Premier League football clubs will gather next week for a fresh attempt to reach a compromise deal on cost controls, with opinion still sharply divided on how, or even whether, to force clubs to live within their means.

Ideas include allowing clubs a permitted level of losses per year or a limit on the amount salaries can be increased, or a combination of the two. “The devil is going to be in the detail,” said a senior executive at one leading club.

Nonetheless, change is in the air as football’s most lucrative and profligate league embraces financial realism.

Even Chelsea and Manchester City, the two big culprits in football’s spendthrift culture, profess to be disciples of this new doctrine of frugality. Both clubs completed the January transfer window by turning a net profit on their deals.

Manchester City’s sale of maverick striker Mario Balotelli to AC Milan for €30m was responsible for its surplus. It also represented a profit on a player it bought for €20m, a rarity for a club renowned for paying inflated prices for top players.

The Premier League champions, bought in 2008 by the Abu Dhabi royal family, spent hundreds of millions of pounds building a squad to compete for the title. But it argues its high-spending activity was always likely to last for only a limited period of time.

In the January transfer window two years ago, Roman Abramovich, Chelsea’s billionaire Russian owner, astonished the sporting world by paying Liverpool £50m for striker Fernando Torres. The talk now at Chelsea is not of spending vast sums on overseas players but of nurturing young talent through its academy.

Manchester City and Chelsea’s growing caution is driven by Uefa’s “financial fair play” regime, which requires clubs to live within their means.

Dan Jones, head of the sports business group at Deloitte, said clubs were now in a reporting period that counted towards the break-even rules of Uefa, the sports European governing body.

The relative restraint shown by clubs in this window might, he said, “reflect an increasing focus on clubs achieving more sustainable levels of expenditure”.

The Balotelli sale will help Manchester City, which reported a £97.9m loss for last season, comply with Uefa’s rules, albeit narrowly.

Almost all Premier League clubs agree a domestic version of financial fair play is also needed, though they differ on the component parts.

Manchester United and Arsenal want the wholesale adoption of Uefa rules and “meaningful measures to restrict the owner funding of operating losses”.

Not surprisingly, Chelsea and Manchester City are in opposition. West Bromwich Albion, which has for years been a well-run club, is said to oppose regulation altogether, arguing others should simply copy its approach.

Privately, several clubs suspect the bigger beasts want cost controls to reinforce their Premier League stranglehold.

According to Stefan Szymanski, professor of sport management at the University of Michigan, the smaller clubs are essentially being offered golden handcuffs – “an agreement to limit financial competition which almost guarantees that small clubs will never be competitive on the pitch”.

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