A Cynic's Guide To Prem FFP Regulations

The Premier League have voted to bring in new financial fair play regulations, but how much will they help to safeguard clubs' futures? Daniel Storey isn't impressed...

Last Updated: 13/02/13 at 10:13 Post Comment

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Last week, Premier League clubs voted to introduce controls in a bid to curb the spending so synonymous with our league. This would help to prevent another Portsmouth, we were told, as if this club were a dim, sepia-tinted memory of yesteryear rather than simply drowning in the financial abyss less than three years after their relegation. Out of Premier League sight, out of mind.

Whilst the idea of regulation of multimillion pound companies is very admirable ("We can't be trusted, you see. We spend all our pocket money at once"), there will be very few who believe that football club owners would do anything that negatively impacts upon themselves. Still, if it stops those bloody foreigners like Peter Risdale and Peter Storrie from ruining things for the precious fans that clubs care so much about, perhaps we should all bow our heads in respect and thanks?

Firstly, it has been agreed that no club may be permitted to make losses of over £105million between 2013-16 without facing a points deduction for doing so. This figure has been deliberated over for nine months, and allows a club to make an average loss of £35million per year for the next three years. The Premier League's Chief Executive Richard Scudamore claimed that the rules would persuade clubs to eliminate losses, but that is simply untrue. Instead, certain clubs will restrict losses to around £30 million per year. If the rule had been in place between 2008 and 2011, only Chelsea, Manchester City, Liverpool and Aston Villa would have fallen foul.

UEFA's acceptable level of loss for entry into European competition being set at €45million over the same time period merely highlights the inadequacy of the clubs to stamp down effectively, perfectly portrayed by the fact that even Chelsea reported an annual profit of £1.4million in November 2012.

Furthermore, a week before the new regulations were announced, the Premier League sold its television rights to the 23-nation Middle East and North Africa region, adding to an already bulging pot for next season. The current TV deal stands at around £3.5billion, but this will reach around £5.2billion from next season, providing Premier League clubs with an extraordinary increase in revenue. The team that finishes bottom in 2013/14 will receive more than the champions receive this season. It is this income, rather than a shift in ethos or attitude, that will assist clubs in meeting their new 'budget'. Still, when a country such as Burma (where the average yearly wage is £819) is spending £25million to show Premier League games, it's heart-warming that clubs wish to marginally restrict their spunking of cash.

As Scudamore accepts, it may also prove the end for a repeat of Sheikh Mansour and Roman Abramovich's initial splurges at Manchester City and Chelsea, perhaps an attempt to stop a club 'buying' the Premier League title, but surely that was never stated to be the aim of the exercise? The madness is that Portsmouth's loss for 2008 and 2009 was £17m and £13m respectively, meaning that the wheels of decline were very firmly in motion before a ceiling of £35million per year was even close to being met. The aim is to clear collective consciences in the case of further decline, but prevention is far from being guaranteed. An owner can simply hold his hands up and claim that they 'stuck to the rules'.

However, it is the incoming wage regulation that should evoke the most cynicism. Clubs will only be able to increase their wage bills incrementally in a bid to provide a ceiling to player wages - £4million in 2013, £8million in 2014 and £12million in 2015. This only applies if they are currently spending more than £52million on wages.

There is no mention of spending wages in accordance with percentage of turnover, so a club that is already spending a dangerously high proportion of its income on salaries can not only continue to do so but actually increase this by £4million. So, if QPR stay up, their wage structure can be deemed not only acceptable to be added to (despite a wage/turnover ratio in the region of 170%) but also appropriate in avoiding a Portsmouth repeat.

More pertinently, such wage restrictions apply to the new TV money alone, and explicitly state that clubs can increase wages beyond the £4million level provided these funds are obtained through an increase in 'commercial revenue', the ultimate slap in the face to fans. To labour that point, commercial revenue means ticket prices and merchandise. Which dictates that if clubs do want to spend more on glamour signings beyond their economic station they can simply increase ticket prices, allowing the TV money to remain firmly in the owners' coffers. That's simply scandalous.

Any concept of Premier League clubs 'pulling together' was eradicated during the voting process. The motion required a 66.67% majority to be passed, and the 13 votes in favour (along with Reading's abstinence) secured a 68.4% figure - these introductions were in no way universally welcomed. Of those that voted for the proposals, Manchester United, Liverpool, Arsenal and Tottenham presumably wanted to avoid repetitions of the Chelsea and Manchester City model which have hampered their attempts at silverware. Clubs that could be affected by the cessation of the wealthy benefactor model (Fulham, Aston Villa, Southampton, Manchester City) all voted against.

The most damning evidence of the proposals comes in the form of reaction from both West Brom and Swansea. These are the two shining financial beacons within the league, able to ensure on-field achievement and improvement without the gamble of speculation beyond intelligence. Both rejected the plans, believing that if they can balance their books and avoid significant debt they should not face restriction. Premier League clubs, they presumably feel, should not need warnings regarding jumping from the financial precipice - owners should simply suffer the consequences for their foolish actions of they choose to do so.

And that's it. There have been no discussions with the Football Association on how best to redistribute the £1.7billion revenue increase to dramatically improve our grassroots game. No supporters have been consulted as to whether clubs should be asked to invest a percentage of this pot in the local community or youth development, in attracting the next generation of fan or providing for those cast adrift by the expense of the sport. Instead, the phrase 'for the good of the game' is simply laughed off, dismissed as an outdated concept.

Essentially, Premier League owners have been given a sizeable financial boost. They have colluded and decided that they would quite like to avoid passing on this bounty to players, those that create the entertainment deemed so valuable. Therefore, a wage ceiling is introduced to avoid such an inconvenience, allowing money to be retained. If a squad does need investment, ticket and merchandising prices can always be increased in order to squeeze more from a loyal customer base.

It's a shock headline, so brace yourselves - The Turkeys Are Not Voting For Christmas (but they will still get a festive bonus).

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