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Transfers in Recession

Transfers in Recession

When Sky News in manufactured excitement describes Robbie Keane`s loan move to the footballing backwater of the SPL as the major transfer story of the day then you know just how subdued this window has been.

January transfers have been conducted in an atmosphere which reflects the tightening grip that financial reality is bringing to bear on the game. With a report in this week`s Financial Times that HMRC are taking an increasingly aggressive attitude to raising much needed revenue, issuing winding up petitions more readily than in the recent past, Crystal Palace has gone into administration with Portsmouth teetering on the brink. This 'get tough` policy, the report suggests, is forcing clubs to consider their cash position with ever greater caution. Though the club was successful in raising £500m of bond debt Manchester United supporters can see a threat to long term financial stability strongly enough to plan a protest at the Milan game in March. Liverpool supporters have been unhappy with the fragile state of their clubs finances for some time. West Hams new owners have publically declared the parlous state of their finances. For football it isn`t just a matter of clubs going to the wall but the extent to which this distorts competition. Playing Portsmouth isn`t exactly getting harder as this season progresses.

All just the tip of the iceberg according to a Uefa report due to be published next month. Despite the game generating record revenues half of all European professional football clubs are running at a loss, with more than 20 percent recording enormous deficits in the past year the study reveals. Uefa`s general secretary Gianni Infantino said the principal reason for the losses was inflationary wage and transfer costs driven by clubs relying on owner finance or debt. "Around one-third of the clubs are spending 70 per cent or more of their revenues on wages. Revenues across European football grew by 10 per cent last year, but the salaries of players and coaches have gone up by around 18 per cent."

As a pre-cursor to the planned Uefa 'financial fair play ' rules due to be introduced form the 2012/2013 season this background is beginning to shape the financial behaviour of clubs. Chelsea and City`s conversion of 'soft loans` into equity makes the proper adjustment to the balance sheet but still leaves them with the need to break even or turn a profit within the next 2 years if they are to compete in European competition. Wage costs will be capped by financial realism and the need to adhere to the planned rule changes.

Back in December Wenger predicted this reality would be hard to ignore in the transfer window indicating that when we loan players to clubs it isn`t always certain that we`ll be paid the wages agreed.

"January won`t be busy," he warned, "because people don`t realise there is no money in football, in Europe, in general. We still live in dreamland in football because if you look at how many clubs are struggling in the Premier League and the Championship in England, it is time for us to get a wakeup call and not think the situation will last as it has until now.

"What is so terrible about debts is that at some stage you have to pay it back. If it was just an intellectual problem it is not terrible but at some stage somebody will knock at your door and say 'Please, can you pay me back?` And that is what is going to happen in football.

"It is certainly the worst financial situation in football in my 13 years in England," said Wenger. "I can`t see the reason why the transfer market should be very busy because many clubs struggle financially.

"When you have players out on loan, they [clubs] struggle with the wages of the players.

"I don`t know if a club will disappear, I hope not. But what is happening at the moment, all the clubs live in debt and think a rich owner will come and buy. That is what happened to Chelsea and that is what we thought happened at Portsmouth but you will find out that not necessarily everybody has the amount of resources needed today in football."

The scale of resources needed seem to have dawned on a number of clubs as short term loan deals with little ongoing commitment have coloured the transfer picture in this window. A period which some are claiming could be the lowest spending since the introduction of the January transfer window seven years ago. If this is the first indication that football has to adjust to a new era of fiscal responsibility then the game will be better and fairer for it.



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Writer:Amos
Date:Tuesday February 2 2010
Time: 11:23AM

Comments

0
I think more and more we're beginning to see that our board have been close to exemplary in their running of the club and that picture is going to emerge even more in the next 2 years.
Little Dutch
02/02/2010 11:39:00
0
I still think wages need to be capped as players are taking too much money out of a club. No matter how good a player like Fabregas is i dont think he should be earning in a week 3 times more than what i earn in a year for doing what he loves. Our club pays 2 million pound a week on wages, ridiculous really.
paul_ownz
02/02/2010 11:56:00
0
Arsenals wages are around 50% or less of turnover - Chelsea's has been as high as 84%+. Uefa's financial fairplay rules, as long as they are implemented as planned, will make it much harder for that to happen in future.
Amos.
02/02/2010 12:03:00
0
LD, try to explain that to some of Arsenal's faithless.
G4L
02/02/2010 12:05:00
0
I totally agree that wages should not be allowed to constitute more than 50% of turnover. I don't really have a problem with players earning big money, fact is, they are worth it because of the money they generate themselves. If 60,000 people pay upwards of £35 for a ticket to a match to see the likes of Fabregas and van Persie, then those players deserve a fair wedge of the money they generate. It's certainly better than the money going out of the game. What I can't condone is teams spending money they don't earn on wages. It's practically cheating in one way. But in another, my attitude is, clubs are free to be run as the owners would like and they have to run the risks associated with their business model. All debts have to be paid eventually.
Little Dutch
02/02/2010 12:09:00
0
In the information age it's hard not to get drawn into these issues but I can't imagine supporters during the Chapman era being overly concerned about the financial background to building the new stands at Highbury. Sadly the game has changed dramatically to the extent that it is all about the money now. For once I think Uefa are on the right track with their 'fairplay' policy. I just wonder whether they really have the balls to see it through. The game does need it. Football needs to become a sporting competition again and not some billionaires poker game.
Amos.
02/02/2010 12:12:00
0
I too think it's fair enough that with the massive wealth pumped in by the supporters that players see a fair old wedge of that, but then you see the likes of Jay Emmanuel Thomas playing OJ Simpson in his 100,000 motor after only 1 or 2 first team performances and you have to ask WTF?
nikolaijns
02/02/2010 12:25:00
0
I agree to an extent that if the players make that much money for the club then they should take a nice wedge home, but i still think its too much. Ticket prices should be lowered, wages capped and clubs should have more cash in the bank to improve all aspect of the club (stadium, sorroundings, hospitality etc)
paul_ownz
02/02/2010 12:26:00
0
That too Niko. A mate of a mate is friends with Gibbs and said he was on 8k a week, and this before he had played for the first team. Id imagine his new contract is around the 20 mark
paul_ownz
02/02/2010 12:32:00
0
I guess it's all relative, if they didn't get it with us they'd get poached and paid it elsewhere.
nikolaijns
02/02/2010 12:47:00
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