Clubs in European competition also have to comply with Uefa’s FFP rules which operate separately from the Premier League but are complementary. The biggest element is wanting to ensure that squad costs – including transfer fees and wages – are no more than 70 per cent of revenue. But this is being introduced gradually. This season it is 90 per cent, for example.
Spending that places a club in jeopardy clearly has to be stopped. The Premier League had a huge scare the year after Platini’s declaration when Portsmouth went into administration and it took years for them to be safe. No-one wants a repeat of that. It is embarrassing, at the very least, for the richest league in the world. But that also had a lot to do with confusion over the ownership and proof of funds. The Premier League’s rules were too lax at that time.
The EFL has been full of financial horror stories and the general way in which the clubs and leagues have behaved mean that they have brought upon themselves the need for a Government-appointed independent regulator. They can have no complaints over that and the regulator should therefore be welcomed.
But the balance is not right for properly funded inward investment into a club. They can make losses of £105 million over three years but that mechanism feels cumbersome. It feels quite an arbitrary, accountancy-driven number. It also feels too easy to fall foul of. Financial regulation has to be a good thing. Of course it is. But do we have the right kind of regulation at present and is it fair?
We surely do not want the rules to only effectively benefit the big clubs who have the established revenue? Organic growth is desired but it takes a long, long time and, also, clubs who try this route often end up having their assets – players and staff – picked off by the wealthier ones who try and shortcut the system. That is protectionist.
The answer, obviously, is not a free-for-all. Clubs cannot just spend what they want. But when there are owners with the financial means to pour significant investment into a club then this should not be so severely limited either.
For example, Everton’s greatest mistake under owner Farhad Moshiri, which has led to the 10-point deduction which they are fighting, was not just in breaking the current rules but in spending so badly in doing so.
That can always happen. But investment, in itself, should not be discouraged. One solution, surely, would be to have rules in place to guarantee owners can cover their investment. Not just over one year but several years. Money can be placed in an escrow account – money they cannot then divert elsewhere – to prove it is available for fees and wages and bills. Not just for players but for every member of staff and to cover money due to contractors and so on.
If an owner defaults – if the HMRC or salaries are not covered – then the punishment should be severe. Extremely severe. But if the money is guaranteed then surely it is less of a problem?
The flip side of this is also a worry because neither do we want all our clubs being state or oligarch or US hedge fund-owned. A personal view is they should be community assets and that should be enshrined in some way with an element of fan ownership. But that horse has bolted.
At present it feels like we are trying to do the right thing; trying to encourage steady and sustainable investment over a number of years; trying to ensure clubs are prudent and have a decent business plan. But by doing that we are also in danger of playing into the hands of the bigger clubs who already enjoy the competitive advantage of having the biggest income. It is why they were always in favour of FFP.
