Uefa warns Chelsea and Manchester City over huge losses

Posted Thursday, January 07, 2010 by theguardian.com

Uefa warns Chelsea and Manchester City over huge losses
Roman Abramovich, the Chelsea owner, faces a threat over the club's losses from Uefa.
Photograph: PA

Manchester City and Chelsea face being excluded from the Champions League unless they can work the huge losses both have announced over the past seven days down to break-even levels within four seasons. Uefa is working up formal regulations that will entrench Michel Platini's plan to ensure that clubs operate without making significant long-term losses. "If a club gets a lot of money or subsidies from a big backer and is still in deficit in two years then it is a problem and we don't want that," Platini said in August.

Two days after those comments, the European Club Association (ECA) approved Platini's proposals and Uefa privately confirmed yesterday that it is adding the "financial fair play" rules to its statutes in time for the 2013-14 season. The delay in the implementation was yesterday described as an effort to provide clubs a "soft landing", but Uefa firmly envisages that clubs who fail to meet the regulations will be prevented from taking part in its competitions.

Since the biggest clubs generate interest and revenue for the Champions League, the suspension of those such as Chelsea and City would be a test of resolve. But Uefa has been emboldened by the broad ECA support, and insiders at Uefa are bullish.

"There needs to be a business model for breaking even within three and a half years," a source said. "The deadline is what it is and we will stick to it; we have tremendous support from the clubs."

Between them City and Chelsea have declared losses in the year to June 2009 of more than £130m. Chelsea's chief executive, Ron Gourlay, has abandoned a specific target date for break-even, reassessing it as an aspiration.

City playing catch-up

Profits, and so a sustainable place in the Champions League, seem a long way off for Manchester City, even though – as revealed in this column last July – Sheikh Mansour's £305m of loans have been converted into equity.

Turning Chelsea into regular title challengers has cost Roman Abramovich £500m in cumulative losses. City have not shrunk from that target, spending £117.5m on transfer fees last summer and an estimated £30m a year in wages for Emmanuel Adebayor, Carlos Tevez, Kolo Touré, Roque Santa Cruz and Joleon Lescott. But, crucially, Sheikh Mansour's club start from a weaker base.

When Abramovich bought Chelsea they were already in the Champions League and had a turnover of £153.6m, £66m – or 73% – more than City have. And City's prospects for raising extra revenues from ticket sales do not look great. Their attendances have risen more than 3,000 from their season average to 46,000, but, right up until its postponement, there were about 400 seats available on general sale for the Carling Cup semi-final against Manchester United: City's first last-four place since the 1981 FA Cup.

Arsenal can keep mum
There is one happy corollary for Arsenal to the postponement of last night's match against Bolton. Had it gone ahead, the club's policy of declaring attendances according to tickets sold rather than people in the ground would have been glaringly exposed. The crowd would have been announced at a level close to the Emirates Stadium's 60,000 capacity when the ground would conspicuously have been half-empty.

Meanwhile, Alisher Usmanov has clearly not given up on gaining an ongoing role despite the position of strength Stan Kroenke has engineered for himself on the board and on the shareholders' register. The Russian's Red & White investment firm has this week set a new 12-month-high share price of £9,250, valuing the club and its debt at a staggering £900m. And he will not stop there.

Racing under the weather
The weather has wreaked havoc to racing's fixtures calendar in recent days and now it is taking its toll on the sport's administrative plans. Racing for Change was due to hold a full-day strategy meeting today, with discussion on the agenda about resurrecting the disaster-dogged Sovereign Series in another guise. But that luckless project must wait before getting off the ground as travel difficulties led to a deferment of the meeting.