Michel Platini has set himself on course to become football’s Robin Hood, robbing the rich and giving to the poor. Days after his plan to adjust the Champions League revenue share to clubs, he is now seriously tackling the issue of the debt levels that plague the larger clubs across the continent.

Regular financial reviews from Deloitte & Touche and their ilk show that the challengers for the premier trophy in European club football are heavily in debt. The problem for Platini is how to deal with such an issue. The framework for any changes already exists with the UEFA Club Licencing process; the Frenchman wants to take it further and curb the excesses of the former G14.

The European Club Association (ECA) was formed as an umbrella organisation within UEFA’s ranks to compensate for the disbandment of the G14; Karl-Heinz Rummenigge has been appointed President, subject to confirmation at the ECA’s meeting in ten days time. An illustrious playing career was followed by a successful spell in the commercial confines of Bayern Munchen, giving the German some kudos within both circles, indicating that the thought processes of the Governing Body and the clubs are in tandem in some respects at least.

Problematically, that harmonious state is set to diverge once the details are scrutinised. Rummeneige believes that the financial stabilitly of the games top clubs is crucial to football’s long-term survival; the clubs have yet to show, en masse, the same sensibilities. Rummenigge and Platini want to curb the excesses shown in expenditure, particularly wages. The financial rewards for players have long been a root cause for the financial turmoil which exists at club level. Proposals that require this spend to be curbed, pegging the salaries to 55% of turnover has been mooted, representing an immediately large obstacle which Platini and Rummeneige will struggle to overcome.

In setting financial restrictions, the duo have to come forward with achievable solutions otherwise they risk alienating the supporters. The simplest option for the clubs to bring revenues and wages into line is to increase matchday ticket prices sharply. For some clubs, the practicalities of doing so are relatively straightforward, limited capacities at the stadia means that waiting lists for tickets become shorter as less affluent supporters drop out. However, there is a downside to this in that those supporters become lost to the game. Broadcasters have reached saturation point in some countries and the matches which have the ratings that advertisers care about are increasingly becoming more polarised toward the top clubs domestically. And what of their offspring? If parents are out of the habit of attending, the example which they set to the next generation is lost and so forth.

Collective Bargaining has long been the preferred method for Broadcast Rights but an era of stringent financial guardianship is likely to see an end to that. The bigger clubs recognise that they would be significantly better rewarded through individual negotiations but the wealth gap which already exists would only become wider under those circumstances. UEFA would need to put in place some financial support for the losers in this situation, something that they have been strongly opposed to doing in the past.

Another crucial area to be addressed is the level of borrowing in evidence at clubs. The English Premier League is regularly held as an example where the excesses of this are most evident. That might be the case now but it was not so long ago that Real Madrid were winning the Champions League, saved from insolvency by the fortuitous sale of land to the city council. The current trend is different, foreign investors funding the purchase of clubs via borrowing which is loaded onto the clubs Balance Sheet or to parent companies, the repayments for which are removed from the club via Management Fees.

An inherently risky strategy, there is nothing wrong with this methodology provided it is managed prudently. However, too many clubs are barely profitable without such charges leading to an accumulation of future financial issues, clubs excessively dependent on future revenues to survive.

Separating the issue of third party borrowing from loans by owners is a thornier issue. Roman Abramovich has funded Chelsea via such loans yet can UEFA treat them as equals to the debts incurred at Manchester United and Liverpool for example, arising from the purchase of the clubs? What of the mortgage that Arsenal have on The Emirates Stadium? Is that of equal standing to any of the three previous examples. Wherever the line is drawn, the losers will bemoan their misfortune. It will take all of Platini and Rummenigge’s political acumen to find a solution that is beneficial to the game as a whole.

Tags: Football, Michel Platini, Soccer, UEFA

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