UEFA's Financial Fair Play Plan to Level Playing Field & Inhibit Teams Spending
James Milner, Fernando Torres, Gonzalo Higuain, Fernando Gago, Edin Dzeko, Zlatan Ibrahimovic, and Rafeal van der Vaart are just some of the names on the summer transfer list at Eastlands.
Manchester City inherited an endless supply of money when the club was taken over in August of 2008.
Since then the club has shown a disregard for funds in their pursuit of transfer targets.
The last minute snatch and grab of Robinho, for a British record fee of £32.5 million, in 2008 was followed by a summer spending spree which brought Kolo Toure, Carlos Tevez, and many more to the sky blue side of Manchester.
But despite their bottomless resources Manchester City may have been forced to halt their spending, that is if they want to partake in European football.
UEFA has passed new regulations that will force all teams performing in UEFA competitions—Champions League & Europa League—to break even from 2012 onwards.
The regulations include tight parameters to ensure that teams can't find ways around the financial restriction plan.
UEFA president Michel Platini said that teams should not be giving the unfair advantage of being able to spend more than they earn.
He also said that teams should not be allowed to obtain huge loans and induce mass amounts of debt in order to buy new players and further the club's interests.
The new rules will also limit the amount of money that can be invested into the club. It is said that the figure will be around £38 million over the space of three years.
The idea behind the move by UEFA is to ensure that teams live within their means and do not face financial meltdown—similar to what Portsmouth endured this year.
UEFA announced that there will be serious consequences for a club that fails to break even. Any club that is participating in a European competition operating at a loss could be banned from taking part.
Currently, it is estimated that 50 percent of clubs were operating at a loss, while 20 percent were enduring major losses.
Manchester City, like many other clubs, will have to restrain themselves from lavish spending if the want to remain part of the biggest European competitions after 2012.
UEFA's plan is to have the new "Financial Fair Play Plan" fully implemented by 2015. Under it, teams will be forced to ensure that they are breaking even over a three year rolling period.
Currently, only five teams in the Premiership are operating at a profit. Manchester United is one of them, but without the sale of Cristiano Ronaldo to Real Madrid last summer, the Red Devils would find themselves over £50 million in the red.
With a negative figure of £98 million, Manchester City is the team furthest in the red.
Arsenal is the most profitable team with a figure of £46 million profit.
Liverpool, Chelsea, and Aston Villa all have massive negative sums of £55, £47, and £46 million respectively.
None of the newly promoted teams are currently operating at a profit either.
UEFA has implemented the ruling to ensure that football teams have a greater sense of financial stability.
They also hope that the playing field will be leveled for lesser teams. However, this may not be the case, and the new ruling may actually hurt smaller clubs.
Teams like Liverpool, Arsenal, and United have massive fan-bases and can use that to their advantage to secure more revenue into the club, meaning that they would have more money to spend.
However, teams such as recently relegated Burnley, or newly promoted Blackpool do not have such a source to exploit and therefore will have their hands tied financially by UEFA's new rule.
The fairy-tale story of Fulham reaching the Europa League final will be a thing of the past as smaller clubs will be unable to have their team bankrolled in such a fashion anymore.
In trying to give lesser clubs a helping hand, UEFA may have just restricted them even further.
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