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Premier League clubs in talks over financial fair play


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http://www.telegraph.co.uk/sport/football/competitions/premier-league/9676312/Premier-League-clubs-in-talks-over-financial-fair-play-as-they-prepare-to-bank-5billion-TV-rights-bonanza.html

 

England’s 20 leading clubs will gather this week with a plea to the Premier League to save them from themselves, even as they tot up the latest financial bonanza.

 

The agenda for Thursday’s meetings sums up the financial paradox of the world’s most lucrative league. Top of the agenda will be discussion of a range of potential “cost control measures” which the clubs, one way or another, believe are necessary to try to keep a lid on escalating spending.

 

But the chairmen will also hear an update from Richard Scudamore on the current round of international broadcast deals. The chief executive has delivered again, and will tell the clubs that with several major regional deals still to conclude in Asia and Europe – a deal for Hong Kong was concluded yesterday – total revenues are expected to top £5 billion from home and abroad from 2013-2016.

 

The two points are fundamentally linked. Even as their eyes light up, the clubs fear the inevitable consequence will be ever larger wages to players and percentages to their advisers and agents.

 

It is a fact of Premier League life. Only once in 20 seasons during which collective revenue grew tenfold from £263 million to £2.9 billion, have wages fallen. That marginal decline came in 2004-05, when television revenues fell slightly, but every other year has seen double-digit inflation.

 

A 70 per cent increase in revenue next season will go the same way without action, and it is to address what Sir Alan Sugar memorably described as “prune juice economics” that the clubs have asked Scudamore and his colleagues to work on controls.

 

The barriers to a neat solution are both practical and ideological.

 

Practically, while almost all of the clubs believe “something must be done”, they cannot agree on what. As ever, self-interest drives the clubs. If it did not, spending might be governed through mutual restraint rather than inflationary competition.

 

Ideologically, the league is also wary of major intervention. Scudamore knows the growth of the last decade has been driven by the freedom new investors have to spend as they see fit. Owners drawn from Abu Dhabi to Tampa may have robbed the game of some of its soul, but the investment has undoubtedly helped bring in the international players that have made the league a global phenomenon.

 

For that reason it appears Scudamore and his advisers, scarred by the failure of ownership and regulation behind Portsmouth’s decline, favour promoting financial stability instead of overt cost controls.

 

Three main options will be under consideration tomorrow ahead of a final decision in February.

 

One option is to adopt a version of Uefa’s financial fair play rules, bringing the Premier League into line with both the Championship and the Champions League. The measure would see clubs required to break even and owners limited as to the size of the losses they could underwrite.

 

Manchester United chief executive David Gill is among those who support this option, but a number of clubs are wary of the proposal, notably those struggling to meet the Uefa demands, including Manchester City, and smaller clubs such as Wigan and Fulham, who are reliant on benefactor largesse.

 

A second option, proposed by Sunderland owner Ellis Short, is to limit annual increases to the wage bill, thus depressing player salaries. This would give clubs the excuse they crave to fend off the demands of players and agents, but would also constrain clubs hoping to break into the top four with an owner-funded splurge. Clubs that have cut their wage bill successfully, such as Newcastle, might also ask why their competitors cannot do likewise.

 

A third option, which appears to be favoured by the league executive, is not to limit how owners use the money, but require them to underwrite all spending for the length of any contract.

 

Currently owners only need to provide financial information for a year ahead. This proposal would mean they have to guarantee multiyear contracts that, were they to depart abruptly, might otherwise leave a club in financial trouble.

 

Any measure that promotes sustainability is politically attractive, and other areas of club spending and borrowing may also be addressed in time.

 

If the risks can be regulated while allowing those with the deepest pockets to continue to spend, Scudamore will consider it another small victory.

 

A fourth option would be for the owners to do it themselves and agree a regime of collective restraint that would restore both balance sheets and public esteem. No one is holding their breath.

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