Christian Muller & Dr. John Beech of the DfL talk you through the issues.
We've now seen well in excess of 50 insolvencies at football clubs since 1992 compared to no insolvencies in the Bundasliga during this period, leading to most expert commentators on football finance now agreeing that ‘light-touch' regulation is at an end.
We heard from one of the most respected academics in his field, Dr John Beech of Coventry University, about what has failed and what he believes needs to change. and the DfL's Christian Muller on how they do it in Germany,
For Dr John Beech's presentation look on our main presentations section.
Just how broken is football's financial model (German Football Regulation)
1. Financial Stability is Financial Fair Play Supporters Direct Annual Meeting London, June 12th 2010
2. 07/05/10 Structure of this presentation 1. Bundesliga: very popular and economically sound 2. Two main reasons - strictly enforced licensing system - restricted ownership structure (fans = members = owners) 3. UEFA‘s Financial Fair play concept 4. Some learnings and implications for the English model
3. Structural Overview: Football in Germany 36 professional clubs constituting Bundesliga and Bundesliga 2 are members of the League Association Die Liga Fussballverband e.V. (league association) is the 27th ordinary member of the DFB Nearly 27,000 Clubs incorporated as associations (“Vereine”) are ordinary members of the respective regional and state associations 07/05/10 The Federation: German Football Association (DFB) 5 regional associations are ordinary members of the DFB 21 state associations are ordinary members of the DFB
8. Bundesliga‘ s well balanced Revenue Mix 07/05/10 Other, i.e. Merchandising Transfer fees Media rights Sponsorships Gate Receipts 594 29% 573 28% 425 21% 168 8% 276 14% 1,715 84% 321 16% Bundesliga Bundesliga 2 2,036 bn € come from
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12. How it works 07/05/10 Club DFL (First Instance Body) Licensing Committee ( Appeal Body) League Association Court of Arbitration of BL / BL 2 (Alternative to system of ordinary courts) Licensing Agreement Application Positive Positive Negative Refusal of License Negative Licensing Committee (Appeal Body) Positive Negative
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15. Sample liqidity calculation short form 07/05/10 - Negotiations ongoing - Empirical evidence of planning bias - Justification in doubt „Prudence“
16. Content of audit report i 07/05/10 Receivables aging report Balance sheet item Desription of receivable Total on 31 Dec 08 Of which due by 30 Jun 09 Cash inflow since 31 Dec 08 Of which due 1 Jul 09 – 30 Jun 10 Of which due after 30 Jun 10 Available Assigments/pledges/other restraints on disposal as at 31 Dec 08 Trade accounts receivable Transfer receivables Receivables from affiliated companies and other investors Receivables from legal and/or natural persons with a direct or indirect affiliation with members of the applicant‘s executive bodies Other receivables Securities Cash and bank balances Prepaid expenses Total 0 0 0 0 0 0
23. European Football Some key figures 07/05/10 Big five leagues dominating European Football Deloitte’s Football Money League exhibiting the turnover ranking 2008/09 with Real Madrid (401 mio €) ahead of Barcelona (366), ManU (327), Bayern (290)… 7 English, 5 German, 4 Italian, 2 Spanish, 2 French Clubs in Top 20 (Newcastle 101) … but Turnover doesn’t necessarily mean financial soundness UEFA’s Benchmarking Report findings Total Revenues of of 732 First League Clubs in 53 member associations 12 bn € but 47% of these clubs disclosing losses in their annual financial statements and, even worse, 22% of these clubs disclosing significant losses (>20% of total revenues) According to the most recent, 2008-09 accounts, 14 of the 20 Premier League clubs made substantial losses. In Spain, La Liga clubs have recently posted €3bn annual debts, and Italy's top clubs, have long been addicted to financial fixes from owners
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25. General Principles of Licensing and Monitoring 07/05/10 UEFA and licensors To observe the principle of subsidiarity between UEFA and assoc./leagues To ensure equal treatment of all licensees To guarantee full confidentiality of all information provided License Applicants/Licensees to meet deadlines to submit complete and correct information in coherence with previous doc. to promptly notify subsequent events that constitute significant changes
26. Club Licencing and Club Monitoring An integrated approach 07/05/10 Club monitoring Club licensing
27. Principles of Licensing and Monitoring 07/05/10 Since 2002, all participants in UEFA’s club competitions must undergo a national licensing procedure according to UEFA’s Licensing Regulations often extended voluntarily to all first league clubs and even more leagues Financial requirements - no concern about going concern - Financial statements for the interim period (half of current season) - no overdue payables towards employees and social/tax authorities as of 31 Dec on March 31 - no overdue payables towards football clubs as of 31 Dec on March 31 All licensees having qualified for UEFA’s club competitions now must comply with new monitoring requirements - break-even rule - enhanced overdue payables rules - Submission of Future Financial Information
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34. To Resume 07/05/10 Platini expressed alarm at the "danger to football" of debt, overspending and "rampant commercialism“ Approval of UEFA’s "financial fair play" regulations means there is an alternative to the game being just a plaything of the free market from 2014/15, clubs who wish to play in European competitions must not spend more than they earn ends clubs spending on players' wages beyond their income to chase the dream of success, An individual club must pay their players and other costs out of the money they earn, from TV, sponsorships – and incresasing ticket prices – not from "benefactor" owners.
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Notas del editor
Michel Platini expressed alarm at the "danger to football" of debt, overspending and "rampant commercialism“ Approval of UEFA’s "financial fair play" regulations means There is an alternative to the game being just a toy of the free market From 2014/15, clubs who wish to play in European competitions must not spend more than they earn. The idea is to stop clubs spending on players' wages beyond their income to chase the dream of success, since according to the most recent, 2008-09 accounts, 14 of the 20 Premier League clubs made substantial losses. In Spain, La Liga clubs have recently posted €3bn annual debts, and Italy's top clubs, have long been addicted to financial fixes from owners. An individual club must pay their players and other costs out of the money they earn, from TV, sponsorships – and incresasing ticket prices – not from "benefactor" owners.