Spending cap will stop the accounting gymnastics at City
NO SURPRISE that Manchester City are one of only three clubs opposing the spending cap. It is, in part, the Premier League’s latest attempt to prevent Gulf sovereign wealth funds and the income from the expanded Champions League shredding any notion of financial parity between their competition’s haves and have-nots.
The great thing about having a Gulf state own you is that, as every Gulf-state owned club can attest, a phalanx of state-owned companies suddenly become frightfully interested in sponsoring you — and paying top dollar for the privilege.
In City’s case, there have been myriad other ways of bringing in extra cash to spend — like selling their own players’ image rights to a company they had an interest in, selling their ‘intellectual property’ to other clubs they owned, and similar acts of accounting gymnastics.
The complexities of what constitutes genuinely earned ‘turnover’ makes it a profound relief to those living in the real world that a new system of spending controls may, from the season after next, be rooted in the mundane, transparently calculable figure of the lowest club’s income from the Premier League’s broadcast and commercial deals.
The mathematics of this new system are not exactly radical. According to the football finance analyst Kieran Maguire, the decision to place a cap at five times the income of the bottom club, rather than mooted 4.5, means that by his figures only Chelsea would have broken this season’s limit of £518million, based on the £103.6m Southampton earned from TV and commercial revenue last season.
But this significant step towards a first Premier League cap would tackle the lunatic executive management of clubs like Everton and Nottingham Forest — at a time when the relentless rise in wage costs and weakening demand from broadcasters for live TV rights mean the cycle of overspending must come to an end.
UEFA led the way at the start of this season, by barring clubs competing in their tournaments from spending more than 90 per cent of their revenue on their squads. Next season, that figure will drop to 80 per cent and from 2025-26 it will be 70 per cent. The Premier League are examining something similar — ‘the squad cost rule’ as it is being called — from 2025-26. More proof that the years of vast losses will soon be history.
Crystal Palace chairman Steve Parish last year called on member clubs to be ‘bold’ in introducing a system to ensure competitiveness, observing there are ‘vagaries’ as to how ‘turnover comes about’.
Those clubs have, with the exception of only City, the revenue-generating juggernaut of Manchester United, and, oddly, Aston Villa, heeded his words.
The 115 charges for breaches of financial sustainability rules which City are facing — and strenuously deny — may seem part of a different era by the time they are brought and any appeal process, should it be needed, is exhausted.
That does not mean they should be allowed to melt away. They remain the asterisk against all that is unfolding in this current campaign.