Money-mad football – where will it end?

Glyn Drath MorganContributor IJuly 15, 2010

BIRMINGHAM, UNITED KINGDOM - FEBRUARY 21:  Chelsea owner Roman Abramovich looks on during the Barclays Premier League match between Aston Villa and Chelsea at Villa Park on February 21, 2009 in Birmingham, England.  (Photo by Shaun Botterill/Getty Images)
Shaun Botterill/Getty Images

With first Chelsea, then Real Madrid and now Manchester City shelling out vast sums of money on big-name players, many fans have been asking where it will end.  It has seemed inevitable for a long time that these clubs, who receive huge subsidies, will sooner or later be unstoppable.

There's no question that Chelsea have already benefited enormously from Roman Abramovich's millions, with three league titles over the last 5 years.  Manchester City, too, have made great strides and, despite missing out on the Champions League, lucrative acquisitions this Summer stand them in good stead for next season.

On the face of it then, the rest will soon be trailing in their wake.  Except, from 2012, clubs will have to rely on their own revenues, not only to buy players, but to pay their wages too.

A report by Deloitte published in June outlined the disparity in clubs' revenues and the sum total of their wages.  Revenues more than halved in the 2008/09 season, falling from £185m in 2007/08 to just £79m, which Deloitte described as 'a decline that cannot continue indefinitely'.  At the same time, wages went up, with the amount of revenue spent on wages reaching 67%.

In order to put a halt to the trend of clubs being propped up by a wealthy owner and running at a loss, UEFA has sensibly introduced measures to ensure the sustainability of football clubs across Europe.

After consulting with sporting bodies such as the NFL and the NBA, UEFA concluded that wage caps would be difficult to implement due to European free market rules.  The solution they opted for was to ensure that clubs participating in UEFA competitions – namely the Europa and Champions Leagues – had to run at a profit.

This won't necessarily affect clubs in debt, such as Manchester United and Liverpool, as long as they can afford their interest payments without going into the red.  It will, however, affect clubs like Chelsea and Man City who currently operate at a loss.

Chelsea have already started to function in a more autonomous fashion to Abramovich's first few years in charge, with losses being drastically reduced year-on-year.  The Londoners will hope their growing fan base and commercial viability will stand them in good stead for the future.

Manchester City, on the other hand, have a long way to go to become self-sustainable.  With a massive – growing – wage bill and having not reached the commercial status of their neighbours yet, City may struggle to meet the requirements UEFA have set out.  In short, City need success and they need it now.  A Champions League spot is imperative for them next season.

The winners in all this would be the likes of Arsenal and Tottenham Hotspur.  The North London neighbours have always prided themselves on their meticulous bookkeeping and should meet the requirements comfortably.

For the mean time, expect more star signings from City, but don't expect it to last forever.