World Crisis Online

Europe’s leading football clubs face an era of relentless financial scrutiny from Uefa after the governing body revealed losses incurred by teams in the continent’s top divisions had nearly doubled in 2008-09 to €1.2bn ($1.5bn).

The parlous financial state of many clubs has led to Uefa introducing stringent rules aimed at compelling them to live within their means if they wish to enter Uefa competitions, such as the lucrative Champions League.

Uefa, on Tuesday, published its annual overview of the state of European club football alongside an 85-page rule book detailing the “financial fair play” measures that will begin to be adopted this summer.

The overview of 664 clubs, covering 90 per cent of all top division club revenues, showed that auditors in one out of eight clubs qualified their accounts for the 2008-09 season, compared with one in 11 the previous season.

While their global income was up 4.8 per cent to €11.7bn, costs had risen by 9.3 per cent to €12.9bn. The resulting €1.2bn loss is 85 per cent higher than the previous year.

Salaries accounted for nearly two-thirds of costs. Nearly 250 clubs reported a wages to turnover ratio of 70 per cent or more. At 73 clubs the ratio was more than 100 per cent. Manchester City, owned by Sheikh Mansour bin Zayed Al Nahyan of Abu Dhabi’s ruling family, announced £121m ($189m) of losses last season. The £133m wage bill at the club, which has just paid £27m for striker Edin Dzeko, surpassed income of £125m.

Michel Platini, Uefa president, said the credibility of the governing body and the future of the clubs themselves were at stake. He added there would be no “witch hunt” of clubs that overspent, but said they must no longer continue to spend “blindly and mindlessly”.

Mr Platini said while the regulations would take time to work, many clubs were already rethinking their strategies ahead of their introduction. “Rome was not built in a day, but we have embarked on this path and we will not retreat,” he said.

The regulations have been agreed by the 197 clubs represented by the European Clubs Association, whose chairman, Karl-Heinz Rummenigge, said that after several years of heavy spending, it was “time to step on the brake and introduce a little more rationale in football”.

He added the ECA had yet to agree with Uefa on sanctions to be imposed if clubs “repeatedly” failed their obligations. Uefa expects clubs with income above €5m to incur a loss no higher than €45m in the seasons 2013-14 and 2014-15 combined. The combined loss threshold for the following three seasons will be €30m. Clubs can escape sanctions if their owners use equity to wipe out unacceptably high losses.

Eleven of the clubs taking part in this season’s Uefa competitions would have fallen foul of the new regulations.

There are, however, a number of factors Uefa will take into account before deciding whether a sanction is appropriate, such as the size of the deficit, projections of better financial performance, the level of debt relative to earnings and events beyond a club’s control.