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Platini's on the right track.


More evidence of policymaking on the hoof came on Monday when some poor soul in government was forced to announce that if re-elected, New Labour would seek to offer football fans the opportunity to acquire up to 25 per cent of their respective clubs.

Whether being given the chance to acquire a minority stake in a loss-mak-k ing business is the vote winner some people believe it to be just goes to show how out of touch Britain's political class has become.

Football fans would be better advised to support Michel Platini's detailed plans to introduce 'financial fair play' across European football via a regulatory system designed to curb the game's financial excesses.

Platini's Club Financial Control Panel (CFCP) intends targeting those clubs where debt is in excess of annual turnover, a depressingly long list outlined in UEFA's recently-published European Club Footballing Landscape report which showed that almost half (47%) of Europe's leading clubs announced losses in 2008.

Platini's initiative is neither anti-business nor anti-British.

Businesses routinely borrow money to expand or to acquire other enterprises, but the money is usually supplied by banks at rates of between 6 - 9 per cent.

Venture capitalists, business angels and football's sugar daddies require returns on their capital of at least twice this size.

This creates a heavy (and compounded) cost to football clubs who tend to use the cash injections to pay players' wages and to buy more players.

While some would argue that attract-t ing and paying the best players is akin to business expansion because it enables clubs to become more successful, the fact is ownership of Britain's leading clubs is now a very rich man's game.

Platini wants to put a stop to billionaires hoovering up the game's superstars by lending their own clubs hundreds of millions of pounds and create a more financially disciplined sphere within which all clubs operate on an equal footing.

It follows that if, following an audit by the CFCP, a football club is found to have breached UEFA's rules, it will be referred to the Orwellian-sounding Organs for Administrative Justice. This body will (assuming UEFA's executive committee approve the establishment of the financial control panel) be empowered to prevent a club from playing in UEFAsanctioned competitions.

Mindful that owners could agree to 'sponsor' their club beyond what is a fair market value in order to artificially inflate its income and so circumvent the prying eyes of the CFCP, Platini has already announced rules to prevent such a scenario.

However, he does appreciate that it will take time for clubs to wean themselves off the easy supply of their owners' cash.

UEFA's chief is proposing that the new financial rules come into effect from the 2013-14 season, though in the meantime, clubs will be allowed to lose an aggregate of EUR45 million over the three year period 2012-15, provided such losses are underwritten by its owners. Between 2015-18, the maximum allowable cumulative loss will be EUR30 million, though this must be paid off no later than 2019.

Ultimately, Platini seeks to have all clubs achieve at least a break-even point sometime within the coming decade; if there is no single football club owner, losses are restricted to EUR5 million over a three year period.

Where money is being put to good use, either to fund infrastructure projects or a youth academy, virtually unlimited sums can be spent, although eventually, Platini would like to introduce a maximum squad size for every club compet-t ing in Europe; the figure is unlikely to be higher than 30.

In the meantime, CFCP inspectors could start work as early as this summer.

They'll be searching initially for instances where debt exceeds income and will demand proof that debt is both sustainable and repayable.

In what will be a radical change of accounting procedure at some clubs, UEFA will insist that details of debt repayments are included as part of a club's expenditure schedule.

Platini has seen the damaging effect of football's ruinous inflation and the introduction of his Club Financial Control Panel will go some way to halting its corrosive progress.

UEFA's attempts to curb the game's worst financial excesses is to be applauded, though it's unlikely to be welcomed with open arms in parts of west London or east Manchester.

Here, billionaire owners have access to the sharpest legal minds, several of whom could find themselves retained with a brief to challenge the proposed regulations.

While they might succeed with delay-y ing tactics, possibly even for several years, some form of Europe-wide financial regulation must eventually be introduced to guarantee the integrity of UEFA competition.

Unlike Monday's flawed, politically opportunistic, proposals to allow fans to acquire a quarter of their football clubs, UEFA's plans have been a long time in the making. What is suggested may require some further tweaking, but essentially, Europe's football authority is on solid ground in trying to create financial fair play.


Michel Platini's Club Financial Control Panel wants to target clubs where debt is in excess of annual turnover
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Title Annotation:Business
Publication:The Birmingham Post (England)
Date:Apr 1, 2010
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