Have European financial fair play rules gone out of the window?
EUROPEAN chiefs may want clubs to start breaking even, but that did not stop a huge Premier League spree yesterday. With so-called Financial Fair Play (FFP) rules on the horizon, City PM asked Dan Jones, of Deloitte’s Sport Business Group, to explain.
Q: Are clubs ignoring FFP rules?
A: Liverpool are shipping out a high-wage earner and bringing in a not-so-high-wage earner, so they’d be edging towards break even. And though Chelsea have brought in Torres you’d expect a high-wage earner to leave in due course. Clubs do have a couple of years to get their financial house in order and reach break-even. I think we’re starting to see some impact of FFP, but that impact will snowball as time goes on.
Q: With FFP rules taking effect from next season, are we seeing one of the last big spending windows?
A: The transfer window will always be a busy time but clubs will have to have one eye on breaking even. The whole transfer fee does not go through the profit/loss account in one go. And FFP is about the profit/loss account and paying creditors on time, it’s not about debts and balance sheets.
Q: If FFP rules don’t apply until 2012, will deals done yesterday have any impact?
A: If you’re signing a player now on a three-year contract then the depreciation of his transfer fee and his salary will still have an effect into next year’s account. Decisions made yesterday will be affecting accounts for two or three years down the line.