Financial Fair Play

07Jan11

From next season UEFA’s financial fair play ruling comes into play for UEFA competitions, the official sanctioning of the idea comes into play for the 2013-2014 season but UEFA will look back over three seasons (two on 2013-2014) and average out the accounts to see if you meet the requirements. Each club will have to apply for a UEFA licence to compete in the Champions League and Europa League come 2013-2014.

The basic requirement is to break-even and to become self sufficient, not relying on the money of oil barons or sheikhs to exist and to even the playing field. While the full requirement to break-even does not come into play until the 2018-2019 season from next season clubs will have to start putting themselves into shape. Gone will be the massive transfer fees we are seeing the likes of Man City pay. In fact this January window is the last chance for the billionaire owned clubs to spend big and Man City are doing their best to build a team as quickly as possible because as soon as this window goes they will no longer be able to spend extortionate amounts of money on players and for Spurs this is a good thing.

For this post I’m going to be looking at how Spurs are setup for Financial Fair Play and how they will be able to compete against City despite the millions they have.

From the recent financial accounts Spurs have presented we can see that we made 119m during the 2009-2010 season.

This breakdowns as follows:

  • Match day revenue – 27m
  • TV Revenue – 52m
  • Commercial avenues (sponsorship etc) – 41m

With a match day revenue of 27m we make just under 10m more than Man City (18m) due to the fact we own our stadium however we are way behind the likes of Liverpool (43m), Chelsea (75m) and Arsenal (95m). The results posted do not include any European games due to not qualifying for Europe in the 2009-2010 season but working out 27m divided by the 23 home games we had last season it works out we make 1.17m per home game; a figure Spurs have already made this current season having a guaranteed 18 home games from the league plus the 4 CL home games and 1 home League Cup game leaving us with 28.1m for the season not including the upcoming FA cup game v Charlton or the CL leg v AC Milan which would take Spurs to 30.2m match day revenue for this season already.

I am going to skip over the TV revenue. The reason being is this fluctuates depending on how successful you are, while last years TV money was 52m next years could be around 85-90m (conservative figures but up to extra 10m from last years SKY money due to overseas deal plus 20-30m for CL participation dependent on success in the competition). An extra 30m is not to be scoffed at and could enable Spurs to take another step forward but that money cannot be relied upon as the fight for the top positions is more fierce with 6 teams fighting for 4 positions.

Commercially Spurs have struck some great deals although Man City currently earn more from their commerical endeavors earning 53m compared to our 41m. However Spurs have a new sponsorship deal in place which earns them 13m a season, 4m more than their current deal which takes us up to 45m, 1m more than Arsenal make although Arsenal do take a hit due to the upfront payments and long term deal offered to them by Emirates to complete their stadium.

Looking at next years accounts, just existing as a club Spurs will have roughly 75m (adding TV money normally would be 125m the same as Man City made last year but with CL money makes a massive 155m and that’s with conservative figures).

An important point to Financial Fair Play is being able to sustain yourself and this is where Spurs will thrive and City will be in real trouble. Spurs wage bill last year was 67m, roughly 56% of its earnings. Man City however are in massive trouble spending 133m on wages alone from earnings of 125m. To break even City will have to shed some players, get that wage bill down and will not be able to buy anyone, at least at the extravagant prices they are spending at now. Spurs on the other hand can continue to exist as we do now and will probably have less competition for transfer targets. With the 25 player squad rules and some teams already feeling the pinch to get in line with the new financial rules. Chelsea will suffer as they will not be able to spend big money to replace their current crop of stars and we are already seeing signs of this with their bench full of potential rather than proven quality. Teams like Man United, Arsenal and us should rise to the top as we are largely self sufficient, Liverpool could come back into the frame but without CL money their wage bill may be too big to compete and they will suffer especially if they do not make the CL this season or the next.

Having broken down the figures it’s clear to see that we can challenge Man City financially minus the shiekh money but also have more room to expand than Man City with City already in a stadium and Spurs pushing for a ground with more capacity with the new ruling not counting debts or loans for infrastructure improvements. Due to Levy’s tight hand on the purse strings, our investment in youth and potential starting to show fruit and a strict wage bill when the financial fair play rules kick in Spurs will be in a great place to take advantage of the situation and ultimately it will be the clubs that look after themselves that will prosper.

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20 Responses to “Financial Fair Play”

  1. nicely written and while I’m not sure how exact some of those figures are (I have no idea so I’ll take your word for it) it’s good to see something UEFA have put into place should and hopefully will help us. It does of course mean the end of any potential “Blackburn” happening again which is a real shame when you think about it and it’s likely the “big” clubs will get bigger.

    For example, a club like West Ham wouldn’t expect to be able to compete with us financially even if they got a new very rich owner which is great for us, but then the same can be said for us being able to compete with the likes of United.

    The only think I would say is it’s a pity they didn’t bring this in about 4-5 years ago because if they had, we’d be sitting very comfortably in 4th right now and wouldn’t have to worry about City. It’s a pity for us really that they got their cash when they did. Fingers crossed we can scrape our way into the top 4 again this season because the revenue from CL football is clear for all the see.

  2. 3 simmo

    Do you think our owners are brainless , and have not thought about this. Also looks like your happy with 3rd/ 4th place, by saying yourself you wouldn,t be able to compete with manu or arsenal, when these rules come in, and only concerned about city. Money has always won the premiership, end of.

    • Of course City have thought about this but my point is that we can’t compete with United or Arsenal because they make more money off their own backs, City do not.

      City can keep spending money and win the premiership if they wish but they wouldnt be allowed to compete in the Champions League if they did that, I expect they could cut a lot of money by getting rid of some of the players they don’t need or use for decent money, City of course will be doing what they can to be self sufficient but it’s going to be a massive chore for them to do so as the article linked in the comment below describes.

      • It’s a pleasure to find such raitlnaotiy in an answer. Welcome to the debate.

  3. 6 mcfc_chris

    An interesting article but not completely thorough about City. The link below is perhaps the most well rounded piece on City’s fair play aspirations (and is written by someone who is impartial). It gives an insight as to where we currently stand and how we may meet the rules that, in my opinion, will create an even less fair playing field with the rich getting richer and everyone else being left behind.

    http://swissramble.blogspot.com/2010/10/how-manchester-city-could-break-even.html

    • While I agree the rich will get richer my main point was that just existing as a club we are on equal footing with City, City will need to do something about their squad and wages if they want to compete in European competition and they have a massive chore ahead of them over the next 3 seasons to get in line, I’m sure they will do it especially with CL qualification looking likely for them this season.

      While I’m not impartial I just highlighted a few figures in numbers, it’s not like I’ve done a hatchet job on City and branded them evil for having billions to spend.

      Swiss Rambles articles are good and he has a lot of detail but note the article you posted suggests how they could, not how they will make the cut and there is a hell of a lot of ‘ifs’ in there.

      Good luck for the rest of the season

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