In June 2010, RTG wrote a piece about UEFA’s impending Fair Play Rules. Further details have since come to light which have clarified some of the rules. Firstly, we bemoaned the fact that the ‘carpet baggers’ like the Glazers, Hicks and Gillettes of this world, would still be allowed to continue to undertake highly leveraged buy-outs of football clubs. We now understand that this is not the case.
The amount of debt allowed by any club will be limited to the annual turnover of the club. Currently, both Chelsea and Manchester United fail this test. This explains United’s reported effort to make shares available on the Singapore stock market - a move that will turn that debt into shareholder equity but without the business restrictions that a London placing of the shares would entail.
Secondly, the ‘sugar daddy’ element, which up to now has seen Roman Abramovich and Sheikh Mansour financially dope their teams over the last few years, will also have restrictions in place. At the time of our first article, it was widely reported that any extra investment could be made as long as that investment was turned into equity and not debt. Again, this is not the case. UEFA have clarified the rule and there will be a gradually reducing level allowed, thereby progressively curtailing the ability of such sugar daddies to influence unduly transfer markets.
The real test, though, will be in the ability of UEFA to control and monitor its own rules effectively. Given how British football authorities have failed so categorically to enforce simple tests of ownership rules, RTG is really not confident. The real indicator will be to see how this summer’s transfer dealings go. If half the rumours that abound are true, then both Chelsea and Manchester City will embark on yet another transfer splurge. If so, you can bet that they are not the slightest bit worried by Financial Fair Play despite both failing by miles to meet the terms of the new rules.
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