Premier League split over domestic financial fair play regulations
Arsenal, Liverpool, Spurs and Manchester United are calling for robust domestic laws against objections of Chelsea, Manchester City, Fulham, Aston Villa and West Bromwich
Owen Gibson
The Guardian, Monday 14 January 2013 15.46 GMT
The leaked letter signed by officials of Arsenal, Manchester United, Liverpool and Tottenham emanated from the Emirates Stadium.
It was hardly in the spirit of the season. But the fact that a robust pre-Christmas letter to Premier League headquarters arguing that a mooted domestic version of Uefa's Financial Fair Play should be as robust as possible emanated from the Emirates should not come as a surprise.
Of all top-flight clubs Arsenal are keenest on ensuring the concept, introduced by Uefa last season and limiting clubs to losses of €45m (£37.5m) over three seasons, sticks. Ivan Gazidis, the chief executive, sees the introduction of some sanity to football's overheated finances as crucial to its own "investment neutral" plan for success. The fact that very model is under scrutiny as never before from their own fans, paying the highest prices in the country and contemplating the prospect of another potentially trophy-less season, only raises the stakes.
The joint letter, co-signed by Liverpool, Manchester United and Tottenham Hotspur, was sent just before the latest meeting of all 20 clubs as they edge their way towards a compromise on an issue on which none hold exactly the same view.
The timing of the leak of the letter is also unlikely to be coincidental – the meeting at which clubs are expected to vote on the issue is due to be held next month. Nor is it a surprise that the quartet are four of the clubs who stand to gain most from any rules limiting them to only spending what they earn. Indeed, the introduction of FFP was cited by the overseas owners of Liverpool and Arsenal as a key reason for their investment and has been eagerly seized upon by the Glazers, given Manchester United's natural and growing revenue advantages. At White Hart Lane, meanwhile, the chairman, Daniel Levy, has long been convinced that his ability to run the club at break even would enable it to thrive in a FFP regulated landscape.
The argument is not a new one and has been debated at several successive meetings of the Premier League "shareholders". Twenty clubs, all with different agendas and different business models, have 20 self-interested views on how the rules should be brought in – if at all. But in light of the bumper TV deal brought in by the Premier League's executives, likely to top £5.5bn once overseas rights are taken into account, and given the top clubs will have to comply with Uefa's rules anyway, a broad majority view has emerged that a domestic version of FFP is desirable.
The leaked letter, and a strong speech made by the Manchester United chief executive, David Gill, at the meeting that followed, were designed to set out the position of the four clubs keenest on the introduction of tough rules. At the same meeting, it is understood that representatives of other clubs also made their positions abundantly clear amid the sound of sabres being rattled.
The broad principle is that – after 20 years in which the Premier League has in the eyes of its critics become a Wild West casino for global investors – they must no longer spend more than they earn. As with Uefa's version, there would be various caveats allowing for investment in youth development and facilities. And while Uefa will initially allow for losses of €45m over three seasons , a total that will decrease on a sliding scale after that, it is likely that the Premier League version will allow for more leeway – as long as losses are covered by an equity injection from a benefactor (as at Chelsea and Manchester City).
That would allow clubs who are not yet challenging for Europe time in which to invest to catch up with the rest, goes the argument. Where that level should be set is at the heart of the debate. The hardline quartet who wrote the letter to the Premier League chief executive, Richard Scudamore, want to ensure the rules stick to the letter of Uefa's law - a position that could see them accused of trying to pull up the drawbridge behind them.
Sixteen of the 20 clubs broadly agree that some form of Financial Fair Play-style regulation is a good thing. They are haunted by the prospect of their looming TV revenue windfall simply flowing into the pockets of players and agents and have come to agree that some sort of external brake on endless wage inflation is desirable For a club such as West Ham United, the rules would give them the ability to stand up to agents to control endless wage inflation. For a club such as Swansea City, they would validate their own careful financial husbandry. And even for Chelsea, who want a version of domestic FFP that allows a level of benefactor funding higher than Uefa allows, it provides a means to try and reign in wage increases and the club's reliance on Roman Abramovich's largesse.
Gang of Four once recorded a song called Don't Fix What Ain't Broke and that broadly sums up the position of the quartet of clubs who oppose the new rules. The reasons for Manchester City's dissent are pretty obvious, but at West Bromwich Albion they believe that they are perfectly capable of managing their own finances and fail to see why they should give, say, David Gold a helping hand in his battles with agents. At Fulham, Mohamed Al Fayed is ideologically convinced clubs should be allowed to spend their money as they see fit and owners should be allowed to "dare to dream" by pouring cash into their chosen project. Aston Villa are also opposed. Such is the depth of feeling at some of those clubs, sources claim legal action could be considered should they feel sufficiently disadvantaged by any new rule.
At the heart of their concern of the coalition of aligned interests who signed the letter to Scudamore is also a fear, most keenly felt by Arsenal, that Uefa will not be able to implement its own rules properly and that the promised land of FFP will turn out to be a mirage.
They fear that the recent deals signed by Etihad to sponsor Manchester City and, in particular, the €200m a season deal by the Qatar Tourism Authority to bankroll Paris St-Germain - which doesn't even include shirt sponsorship - suggest it will be unable to cope. Uefa, of course, insists that is not the case and that there is provision in its rules to deal with "related party" deals.
Some would even like to see the Premier League fund its own compliance unit to investigate its clubs and ensure they stick to any new rule, but that too is unlikely given the expense and regulatory contortions involved. Nor is it likely, given the historic battles between the two, that Uefa would be invited through the door to extend its monitoring of clubs in European competition to the domestic league – even if that was its ambition.
Meanwhile, there is also a second plan, originally floated by the Sunderland owner, Ellis Short, that seeks to limit inflation by agreeing a percentage cap on the amount wages could rise per season. Yet here too things are far from straightforward. Should the rule apply across the board or only if clubs are making a loss? If the mechanism used to enforce it was through the provision of centrally collected TV money, would that have an impact on ticket prices? The most likely outcome of all this is that the Premier League will end up with a version of Uefa's rules but will allow for more leeway and rely largely on a system of self-regulation. That will not satisfy Arsenal, Manchester United, Spurs and Liverpool. Nor will it appease the four clubs opposed. But as a sign that clubs are at least edging towards a collective solution to stemming the tide of red ink of recent years – albeit for reasons of self-interest – it may represent some progress
