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Sunday, October 25, 2009

KPMG issue warning on UEFA plans

Everton has once again managed to deliver a net financial gain of £1.6m from this summer's player transfers. Europe's largest accountancy firm, KPMG, has recently released their analysis of the premierships latest round of transfer dealings, which see Manchester City left with almost a £100m minus figure and, at the other end of the spectrum, Manchester United exhibiting a £65m gain.

As previously reported here on the KEIOC website KPMG has issued a warning to the premierships clubs on the proposed UEFA plans to control spending, they state….

Transfer spending to be limited to revenues?

It may only be a few years before Manchester City and other clubs backed by wealthy owners can no longer be so dominant in the transfer market. UEFA President, Michel Platini, was recently reported to have said that clubs should be restricted to spending what they earn in football revenues. Such restrictions could finally close the door on clubs aspiring to break into the Big Four.

Larger stadiums and the development of a worldwide fan base in regions such as the Far East would have to become more of a priority for clubs to maximize revenues and increase spending power if new rules were put in place.

This announcement may not just be a reaction to the disproportionate spending power that a wealthy new investor can bring to a club. The liabilities that some clubs are taking on do not in themselves raise concerns over sustainability, so long as teams are able to effectively service that debt. Football's governing bodies will be mindful, though, of clubs taking on debt that they cannot afford to maintain. Clubs, which face the possibility of relegation from the Premiership in any given season, would appear to be most at risk. Relegation would deny them the lucrative television and prize money on offer and they may have invested heavily, and taken on debt, to try and secure Premiership status.

In the short term this announcement may see spending in the next few years significantly exceed that in the most recent transfer window with clubs such as Manchester City looking to exploit their spending power before any restrictions are imposed.

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