Debt Management
Michel Platini, the French footballing legend and head of UEFA has suggested that European football’s governing body may take a closer look at the clubs in the Champions League who operate with significant levels of debt.
Predictably this was taken by the British press as evidence of UEFA’s discontent with the Premier League’s domination. Both the finalists of the last Champions League, Manchester United and Chelsea find themselves operating in significant levels of debt, and any penalty against clubs who are in the red would almost certainly cost both clubs dear.
Except that unless the penalty was focussed on the percentage of turnover that goes into wages Chelsea wouldn’t struggle. Like United they have been bought by wealthy investors from abroad, but Abramovich’s pockets are infinitely deeper than the Glazers’ and this has been reflected in the way the club’s accounts look. The Glazers are said to have transferred the debt back onto the club, by securing the loans against the club’s assets; there is no indication that Abramovich has done similarly - the losses incurred by Chelsea are just absorbed into his enormous bank account. UEFA could penalise clubs in debt, but it simply wouldn’t be fair.
Taking other examples as comparisons, Real Madrid are apparently prepared to spend somewhere in the region of 70 or 80 million on bringing Christiano Ronaldo to the Bernabeu. If I was into football betting I would put money on there being simply no way that a club like Real, with the wage budget that they do, have managed to amass the kind of money that would enable them to purchase Ronaldo without going to debt. Real, however, are backed by the wealth of the King of Spain, on several occasions during the last few decades he has written off large amounts of debt from the clubs’ books. Would Real therefore escape punishment under any possible UEFA sanctions?
Ultimately, it seems like Platini was raising the issue of debt rather than seriously entertaining the idea of sanctions. UEFA does not want to get into a high profile disagreement with the clubs and any such penalties would certainly start a fight. In the past EU employment law has made things difficult for UEFA in regards to the idea of salary caps, and any penalty on the way the clubs run might well fall foul of similar legislation. The only way the clubs will sort themselves out is if they choose to do so, and it’s very difficult to run a top-level football club within acceptable levels of debt. These are enormous names: Real Madrid, Manchester United, Liverpool, they will always be attractive to the uber-rich, and as long as they attractive to individuals with such money they won’t stop chasing silverware in order to operate along sound financial lines.
As far as the odds of such penalties taking place? According to Blue Square, Manchester United are favourites to retain the Champions League, closely followed by Real. Debt doesn’t seem like an issue.
Sports Betting Odds provided by Blue Square.
