European club losses grow before new rules bite

Reuters: European soccer clubs made record losses of 1.7 billion euros in 2011 before new rules designed to force them to clean up their finances took full effect. UEFA, European soccer’s governing body, said losses were felt at all levels of the game and had grown from 600 million euros in 2007.

UEFA agreed in 2010 to phase in measures known as Financial Fair Play to try to stop European clubs from getting into financial trouble. Clubs will eventually have to break even or risk exclusion from European club competitions.

The new rules are dominating the thoughts of executives at leading European clubs who must try to ensure their teams stay competitive on the field while mindful of budget constraints. Showing it was serious about enforcing the rules, UEFA said in December that it was banning Spanish club Malaga from future European competition for at least a season over unpaid bills. In its annual analysis of club finances, UEFA said there had been a 47 per cent fall in overdue transfer fees and unpaid wages in the year to June 2012. It welcomed the drop as a sign that the rules were starting to have a positive impact.

Financial results from 2012 are the first ones to be assessed as part of the break-even requirement. UEFA said owners of 46 clubs would have had to invest in more shares to cut debt had the rules been in force between 2009 and 2011.