UEFA Says 46 Clubs Would Need Funds to Meet Financial ControlsTariq Panja
Forty-six European soccer teams would require equity infusions to meet incoming fiscal control regulations, according to a report from regional governing body UEFA, which said clubs’ losses widened by 2 percent to 1.68 billion euros ($2.28 billion) in 2011.
An analysis of the finances of about 700 clubs released today by Nyon, Switzerland-based UEFA showed sales of 13.2 billion euros in 2011 were eroded by 9.4 billion euros worth of spending on players and salaries, a 43 percent increase over five years.
Clubs are being assessed by a group led by a former Belgian prime minister as part of UEFA’s so-called financial fair play regulations, which aim to reduce debt and prevent teams from spending above their means. Those that fail to meet targets face sanctions including suspension from the continent’s Champions League and Europa League competitions.
“Numerous football clubs, including some prestigious ones, have experienced severe financial difficulties, leading to top division clubs’ aggregate losses increasing again,” UEFA President Michel Platini said in the forward to the 2011 Club Licensing Benchmarking Report. “Keeping costs under control and within sustainable limits is and will continue to be the clubs’ biggest challenge.”
The report said the trend of growing losses has affected clubs of varying sizes across Europe, with the 10 largest loss-makers increasing their combined deficits to 856 million euros from 596 million euros in 2007. The balance sheets of the next 20 leading loss-makers deteriorated by a combined 310 million euros over the same period.
UEFA’s rules allow teams to have a maximum loss of 5 million euros, or as much as 45 million euros as long as the deficit is covered by an equity contribution, over two years through 2013. The assessment period will be increased to three years for future seasons.
Using a simulation based on fiscal results from 2009, 2010 and 2011, 14 teams playing in European club competitions this season had losses over the 45 million-euro limit and another 32 clubs reported cumulative losses of between 5 million euros and 45 million euros.
Clubs at risk of failing to meet UEFA’s requirements include English champion Manchester City, three-time European Cup winner Inter Milan and Paris Saint-Germain, which has spent more money on players than any other team since it was acquired by an investment arm of the Qatari government in 2011.
PSG, which signed former England captain David Beckham four days ago, has spent more than $350 million in the transfer market in two years and intends to continue spending.
“It’s necessary to become one of the great European clubs,” PSG President Nasser Al-Khelaifi told France’s L’Equipe newspaper last month. “Other clubs have invested for 20 years. We have been there for a year and a half and now we must stop pouring money? It would be unfair.”
City, PSG and other teams have tried to mitigate losses by raising income through sponsorships and UEFA said it will look at the agreements to ensure they represent fair value.
City, owned by a member of the Abu Dhabi ruling family, has four sponsors based in the emirate including airline Etihad, which last year agreed to pay 350 million pounds ($551 million) to put its name on the team’s stadium, jerseys and new training campus. PSG will get as much as 200 million euros a year from Qatar Tourism Authority through 2016.