EFFECTIVENESS OF UEFA FINANCIAL FAIR PLAY REGULATIONS ON CLUBS IN THE ENGLISH PREMIER LEAGUE

CHAPTER FOUR

DATA ANALYSIS AND RESULTS

The ‘UEFA financial fair play regulations (FFP)’ were implemented in the 2011/2012 football season (Amir and Livne, 2015). The regulations were meant to prevent football clubs from overspending (having more expenses than earnings). In English Premier League, Deloitte reported that in 2008/2009 season, the 20 Premier League clubs had a total debt amounting to £3.1 billion.  Teams like West Ham United had an aggregate £90.2 million between 2005 and 2010 where its equity was £13.063 in 2010 after the re-capitalization to prepare to adjust for FFP. In 2010 Everton FC had -£29.774 equity and it made a loss of £3.093 (Demil and Lecocq, 2013). The ensuing segments gives a financial analysis of six of 20 Premier League clubs, which are, Manchester United, Manchester City, Arsenal, Everton, West Ham United, and Aston Villa. The analysis looks at the financial performance, capital structure and spending habit of the identified clubs, which will help to show the effectiveness of the UEFA financial fair play regulations in the European clubs (Edmister, 2012). The analysis compares the financial and capital structure of the teams in two periods (the pre FFP period and post FFP period). the pre-FFP period is represented by the last three years before FFP implementation that is 2008, 2009, and 2010 and the post FFP period is represented by the first three years following FFP implementation that is 2011, 2012 and 2013,.

Clubs Analysis

1. Manchester United

Manchester United is listed in NYSE, registered in Cayman Islands tax haven and is owned by Glazer family through the Red Football LLC. In 2014 the club had a turn over £433 million up from £363 million in 2013. £136 million of the income came from TV and broadcasting, £108 million came from match and fate income, and £ 189 million came from commercial activities. The club has the highest wage bill (£215 million which is an increase from £181 in 2013) making the wage proportion of the turnover to 50%. The company had £275 million debt and made a £9 million loss in 2012 which increased to £41 million profit in 2012. The club is still trying to manage after the exit of Sir Alex Ferguson and the club has £342 million loan from Glazier family.

1. Manchester City

The club is wholly owned by Sheikh Mansour through the Abu Dhabi United Group. In 2014 the club had the second highest turnover (after Manchester United) of £347million which is an increase from £271 in 2013. The club generated £166 million from commercial activities, £133 million from TV and broadcasting and £47 from gate and match day. Manchester city FC has the second highest wage bill amounting to £205million down from £233 of the year 2013 making the wage proportion to turn to be 59% (Guzmán and Morrow, 2007). The club made a loss of £23 million in 2014 and £52 million in 2013, has a net debt amounting to £46 million with annual £1 million interest payment obligations. Manchester city deducted £151 million losses under fair play rules for the losses and it reduced its wage bill by £28 million by transferring the wage bill of the club to the parent company (Haas, 2013).

1. Arsenal

Arsenal Holdings PLC is owned 67% owned by Kroenke Sports Enterprises UK and 30% by White Securities Limited. The company has the fourth highest turnover where it generated £304 turnover over in 2014, from £203 in 2013 (Haas, 2013). The club generated £121 million from TV broadcasting, £59 million from commercial, and £0.5 million from player trading, £18 million from retail and £100 million from gate and match day income. Arsenal has the fourth largest wage bill amounting to £154 million with a proportion of 55% and a profit of £5million in 2014 down from £7million in 2013 and has a net debt amounting to £33milion (Hall, 2015).

1. Everton

Everton ownership comprise 25% ownership by Bill Kenwright 19% Jon Woods, and 23% by Robert Eral. The club generated £88miliion from TV and broadcasting, £19million from gate and programe sales, £88million from TV and broadcasting, £8 million from sponsorship and advertising and  £4mliion from catering and commercial. The club has the ninth highest wage bill amounting to £69 million making a wages proportion of turnover of 57%, net debt amounting to £28 million accruing £5mmilion interest payable (Slack and Shrives, 2015).

1. West Ham United

West Ham United is 51.1% owned by David Sullivan, 10% by CB Holding and 35.1% by David Gold. With 10th largest turnover the club generated £115 million in 2014 up from £90 million in 2013. £19 million was generated from match receipts and football, £14 million from commercial, and £6million from retail and merchandising. The wage bill amounts to £57million in 2013 increasing to £64 million in 2014, where wage proportion is 56% and a profit of £10 million in 2014 from £4 million loss in 2013 (Sáenz, 2011).

1. Aston Villa

Aston Villa is owned by Rabdy Lerner through Reform Acquisition. In 2014 the club had a turnover of £117 million up from £84 million in 2013, where income was generated from TV and broadcasting (£73 million), commercial (£22 million), and £9 million sponsorship.  The club’s wage amount to £69 million down from £72 million in 2013 making wage proportion of turnover to 59%. The club has a net debt of £102 million and £1 million interest payable.

The following table shows the table that break even in 2013 and those that did not

Manchester united revenue id largely boosted by obsessive sale of sponsorships huge stadium and TV, Everton boosts its income from hospitality other than……………………………