July 23 (Bloomberg) -- Liverpool and Chelsea executives say they aren’t confident that European soccer’s governing body can administer new cost-control regulations amid lavish spending by clubs backed by wealthy owners.
UEFA is looking at teams across Europe as part of its so-called financial fair-play rules. From next season, clubs that breach the regulations face sanctions that the Nyon, Switzerland-based body says will include fines, transfer embargoes and even suspension from the elite Champions League.
“We have to see the application by UEFA, we have to wait and see how fair they really play it,” Liverpool Managing Director Ian Ayre said in a telephone interview. “I have to say my level of confidence in it isn’t very high.”
Even amid the rules aimed at taming Europe-wide soccer losses of more than $2 billion, Manchester City and Paris Saint-Germain, both owned by Gulf royalty, and Monaco, backed by a Russian billionaire, have continued to spend while losing money. Monaco signed Radamel Falcao from Atletico Madrid for a reported 60 million euros ($79 million), while PSG spent 64 million euros on Edinson Cavani, and City paid 28 million pounds ($43 million) for Stevan Jovetic.
West London club Chelsea was one of the teams under the focus of regulators after Russian billionaire Roman Abramovich arrived in 2003. The 46-year-old has converted almost 1 billion pounds into equity in a decade that’s seen Chelsea win 11 major trophies, including three Premier League titles and the club’s first European Cup in 2012.
Level Playing Field
Chelsea Chief Executive Officer Ron Gourlay said the team, which announced its first profit in the Abramovich era last year, is focused on complying with the rules even though it was “among the clubs targeted” by UEFA when the changes were announced in 2009.
“It’s UEFA’S competition so we want to make sure that we comply,” Gourlay said in an interview. “All we’ve asked for is that UEFA police and manage the process with a clear, even playing field.”
Gourlay said he was concerned about teams boosting their balance sheets through “arm’s length” contracts with companies connected to their owners. City, which was bought by Abu Dhabi-based Sheikh Mansour bin Zayed Al Nahyan in 2008, has four sponsors related to the emirate including airline Etihad, which in 2011 agreed to pay 350 million pounds over 10 years to put its name on the team’s stadium, jerseys and new training campus.
PSG, owned by Qatar, will get as much as 200 million euros a year from Qatar Tourism Authority through 2016, according to Le Parisien. The French champion made just 97 million euros from television rights, sponsorships and ticket sales in the 2011-12 season, according to figures published by French soccer’s licensing authority, the DNCG. The figures also showed the team earned 125.4 million euros from “other products.”
Spokespeople for City and PSG didn’t respond to requests for comment.
“If we’re going to have a fair-play system, everyone’s going to have to play fair,” Ayre said, adding that failure to sanction rule-breakers “makes a mockery of the whole thing.”
UEFA’s Club Financial Control Body, responsible for administering the rules, will “benchmark” all deals and only the fair value will be taken into account for the purpose of the break-even reporting, the soccer body said in an e-mailed statement.
“If clubs do not abide by the rules, the CFCB will use the list of sanctions at its disposal, irrespective of which clubs are not in line with the regulations,” UEFA said.
Liverpool, an 18-time English champion and five-time European Cup winner, has had little success in recent years. It’s not qualified for the Champions League since 2009, and won’t appear in continental competition next season after finishing seventh in the Premier League. Owned by Major League Baseball’s Boston Red Sox proprietor Fenway Sports Group, the soccer team can’t turn to wealthy backers to return to glory, making financial fair play critical to the team’s future.
Russian magnate Dmitry Rybolovlev has been the biggest spender in anticipation of Monaco’s first season back in France’s top flight. After parting with 70 million euros for Porto duo Joao Moutinho and James Rodriguez in May, the team added Colombian striker Falcao last month.
“We can never compete with just writing huge checks for players here, there and everywhere,” Ayre said. With “the amount of time, money and effort that’s been put into this initiative, I think it would be an absolute tragedy if they don’t apply the rules strongly and firmly.”
Under UEFA’s break-even rule, clubs with a loss of more than 5 million euros last season or this campaign risk exclusion from the Champions League and Europa League, the continent’s top club competitions. Clubs can have a loss of up to 45 million euros a season if shareholders cover it. The UEFA sanctions don’t apply to domestic championships.
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