Could Fernando Torres and Andy Carroll mark the end of the bubble in football and can Chelsea now satisfy UEFA's new regulations?

In one incredible day, three Premiership clubs turned what had been a relatively quiet transfer window on its head. With over £130m spent on new players in the space of around two hours between 9pm and 11pm, it delivered a hammer blow to the argument that an era of austerity and financial management was beginning to edge into football in England.

With the upcoming implementation of the new UEFA Financial Fair Play regulations at the beginning of the 2011/12 season, it was believed that clubs were beginning to prepare for them by curbing their spending and cutting large earners from their wage bill. Instead, it seems to have served to create the most incredible and volatile transfer window in history.


The deal to bring Fernando Torres to Chelsea from Liverpool was in the region of £50m and makes him one of the most expensive footballers in history. Whether or not it can be argued that there is some value in that deal, it is an incredible amount of money. If we add in the signing of David Luiz from Benfica, Chelsea splashed out almost £75m in the space of about 30 minutes late on Monday night. All this came only hours after the club announced losses of £70.9m for the previous season.

And if the Torres deal seemed overly extravagant, the £35m deal to bring Andy Carroll to Liverpool from Newcastle is surely the most overpriced transfer in history. He cost well over twice what Newcastle paid to sign Alan Shearer fifteen years ago. Almost £10m more than Wayne Rooney cost. You could have signed arguably the best striker on the planet – David Villa – and had a couple of million left over.

It is crazy that the British record transfer is for a player with only 80 senior matches under his belt and with only one international appearance to his name. Indeed, he cost more millions than he has scored goals in his entire career since making his senior debut five years ago.


However, Liverpool are hardly a club to worry about in this situation. Despite spending over £58m on new strikers in one day, when you factor in the sales of Fernando Torres and Ryan Babel, they have a net spend of only £1m. Whilst the fees that they have been paying are over-inflated and simply obscene, financially they have spent almost nothing.

Chelsea are the club that are under most scrutiny today. £75m spent despite announcing huge losses seems almost unthinkable to the average person. Chairman Bruce Buck announced recently that the club were on course to meet the regulations once they are implemented.

The club slashed the wage bill by around £20m in the summer by selling and releasing the likes of Deco, Joe Cole, Ricardo Carvalho, Michael Ballack and Juliano Belletti, but given that Fernando Torres is on a reported £175k per week, that increases the wage bill by over £9m per year.


We can assume that David Luiz must be on fairly decent wages. If we conservatively assume that he is on around £60k per week, which is likely to be on the low side given that he is a Brazilian international signed for over £20m, we can add another £3m to the total.

That means that the two new signings have increased the wage bill by a minimum of £13m. If we include the wages from their only summer signing, Ramires, who is earning a reported £4m per year, this takes it to £17m. In other words, they have almost completely cancelled out the savings they made in the summer.

So, where is the savings likely to come from? Under the new regulations, injections of money from owners will be limited to €15m per year (around £12.8m). So we can write off that much from the deficit, making it a far more manageable £58.1m to cover.


Success naturally leads to more money – it is a general rule of not only football, but business in general. However, last season Chelsea won the double. So realistically, no further domestic success would be possible, and to budget on achieving that feat every year would be highly unrealistic.

They only reached the last 16 of the Champions League, which would have led to a large fall in revenue, given that they have become accustomed to reaching the semi-finals at least in recent seasons. The loss of two home games, plus the additional revenue that comes from success in this competition would potential help to cancel out some of the losses, but relying on continued success in this competition is a risky proposition.

Finishing in the top four of the Premiership is an absolute minimum for Chelsea to even think about meeting these new regulations. Without the Champions League and the money that comes with it, Chelsea would be in severe problems.

However, another problem they will now face is how the new regulations deal with player transfers. Chelsea cannot simply write off the spending from this transfer window as a simple lump sum payment now. Rather, they must amortise the fee over the course of the player’s contract.

Therefore, given that both Fernando Torres and David Luiz have signed five year contracts, the transfer fee would be split evenly over the period of the contract. In other words, they must mark down a cost of £15m per year for the next five years for these transfers.


This adds another £15m each year that Chelsea must try and cover in order to break even and fulfil UEFA’s new regulations.

Chelsea are hoping that they have cut the deficit by recent changes, including having increased ticket prices by over 10% over the summer, reduced bonus payments for the players, a new deal with Adidas that will increase sponsorship payments from around £10m per season to around £20m per season, and increased income from TV revenue.

However, the bright point for Chelsea is the question of whether UEFA will actually stringently enforce the regulations. Currently, the likes of Chelsea, Real Madrid, Liverpool and Barcelona would all fail under the regulations. Would UEFA really ban them from European competition? Would they have a Champions League without a number of the biggest names?


Even if they do enforce it, there are a number of caveats built in. For the 2011/12 and 2012/13 seasons combined, clubs can overspend by €45m so long as it is covered by an injection of equity from the club’s owner. For the next three year period, they can overspend by another combined €45m, then €30m for the next three years, then €15m, and only then must clubs actually break even.

In other words, clubs do not actually have to break even for another 14 years. They can continue to make losses, albeit steadily reducing losses all the way until 2025. And to add to this, if clubs can show that they are heading in the right direction and moving toward breaking even, UEFA would reduce the sanctions.

As far as I can tell, that is a major get-out-of-jail card. For example, if Manchester City replicate last year’s losses of £121m in the first year of the new regulations, but cut this to a mere £110m in the second year, they could avoid being banned from Europe because they have cut their losses and are moving in the right direction. No matter that they have lost a nine-figure amount – they are trying hard.


The new regulations are a good thing in so far as they look to curb the spending in football which have risen to even more unbelievable levels in an incredible couple of hours on deadline day. However, there are other problems with them that will be explored at a later date.

Chelsea face a major battle to meet these regulations and their long-term plan of breaking even by 2010 has clearly failed spectacularly. Whether they can continue to look to cut their costs without sacrificing success on the field is unknown, but they have to try to fulfil the new requirements or risk the wrath of UEFA and Michel Platini.

Again, whether he would follow through with his threats remains to be seen, but can the likes of Chelsea, Liverpool and Manchester City take that risk. Surely not, which means that the 31st January 2011 could be marked down as the final peak in the ridiculous bubble that has been seen in football over the past decade.

Could the Qatar World Cup be the beginning of the end for Blatter?

Ever since the decision to award the 2022 World Cup to Qatar on December 2nd, controversy has swirled around the details of the tournament. From arguments over moving it to the winter to expanding it to make it a Gulf World Cup, FIFA have proved once again that nothing is simple and straightforward when it comes to dealings within the governing body of world football.


When Qatar was announced as the hosts of the 2022 World Cup, people around the world were stunned. Having started the process as huge outsiders, they had launched the most extraordinary campaign to position themselves as serious contenders. In true Qatari fashion, the level of spending on the campaign dwarfed anything that has ever been seen before.

England’s 2018 campaign budget of £15m over the two year process was seen as being a huge amount of money, but the details of the Qatari spending are just being revealed. In 2010 alone, it budgeted an incredible £27m on communications alone. This one-year communications budget was greater than the entire budget of all the other bids, with the exception of Australia.

The bid proposed a number of investment opportunities in foreign countries. They offered to bail out the entire Argentine Football Association in 2009 following a financial crisis that had hit the organisation, including the option that Al Jazeera could buy the television rights for the league. A new football academy in Thailand was proposed and scouting opportunities in Nigeria were expanded.

A curious mix of countries until we look at what they all have in common. They are each home to a member of the FIFA Executive Committee.


They spent over $7m on recruiting ambassadors for their bid, including Gabriel Batistuta, Zinedine Zidane, Ronald de Boer and Roger Milla. They also offered a proposal to move the Asian Football Federation headquarters to Doha, including the free use of an entire tower block, residential property, diplomatic cars and the use of a private jet. They even sponsored the Conference for the Confederation of African Football last year to guarantee themselves exclusive rights to present their bid to delegates.

Whilst the Qatari bid did not break any of the regulations, the sheer scale of it is almost unbelievable.

Since winning the bid, Sepp Blatter has been proposing a radical shake-up by switching it to the winter to solve the issue of the summer heat. However, this has been met with a great deal of opposition from virtually all of the major European leagues, whose seasons would be hugely disrupted by the change.

The most interesting opposition to the switch comes from Qatar itself. Mohammed Bin Hammam, the Qatari President of the Asian Football Confederation, has refuted Blatter’s suggestion that it be moved to the winter. He has also come out strongly against Michel Platini’s suggestion that the matches should be spread out amongst the Gulf nations.


Indeed, there have been leaks suggesting that Blatter and Platini had already discussed the option of moving the World Cup to the winter even before the decision to award the tournament to Qatar had even been made, leading some people to suggest that the Qatar bid was based on a false prospectus.

Chuck Blazer, a member of the Executive Committee, explained that “there were comments about moving the event some weeks before the decision. Otherwise I really couldn’t understand how they voted for football in that level of temperatures, because I knew them (executive committee members) well enough, and their support for their own teams, so it seemed illogical.”

He also spoke out against the suggested move to a winter tournament claiming “it could get pretty bad. We can’t just say, ‘The hell with you guys. We’re going to change it all over again just because we’ve taken the decision that we’re gonna play in a climate that’s not hospitable.”

However, bowing to pressure from the major European leagues, Blatter has stepped back and admitted that FIFA do not have the power to shift it themselves – the move must be instigated by the Qataris themselves.

Not only this, but there are even reports that Blatter and Platini are working on a plan to try and permanent move major league football to the summer, with international tournaments and qualifying all being played over the winter period. Virtually all the major European leagues have already come against strongly against this and any attempt by FIFA to force it through could lead to a major split between domestic and international footballing bodies.

And the growing dispute between the side of Blatter and Platini, and Mohammed Bin Hammam will provide a fascinating backdrop to the FIFA Presidential elections next year. Sepp Blatter is running for a fifth term, whilst Bin Hammam is expected to be his most dangerous rival.


His statement clearly showed his views on Blatter and Platini’s suggestions. “I believe Qatar can stand alone and organise the competition by itself and I’m really not very impressed by these opinions to distribute the game over the Gulf or change the time from July to January.”

“We submitted a bid suggesting we are going to be ready in June, July. And we said we are going to face all the challenges and we are going to meet all the requirements. Our focus is June, July. It is never our interest to change one week beyond June, July.

“I know, from the bottom of my heart, there are a lot of stakeholders who should be consulted and their views brought to the table. It’s not up to one, two or three members of FIFA to talk about changing the time without getting the real stakeholders’ opinions.

“We will not change our minds. We are not interested. We are very happy and we are promising the world that we are going to organise an amazing World Cup in June and July. And even here in Qatar that is going to be a perfect welcome.”

It is clear that Bin Hammam is positioning himself for a serious campaign to oust Blatter. Statements on FIFA’s need to reform from within and how the leadership need to take a serious stance can clearly been seen as barely-veiled attacks on Blatter.

There is growing discontent within certain segments of FIFA over the virtual dictatorship of the Swiss septuagenarian, who has ruled FIFA for over twelve years. His announcement that FIFA were considering a winter switch came as a surprise to many within FIFA, including members of the executive committee themselves, raising concerns that he was developing his own personal strategy on the fly.

The corruption exposure in recent months has besmirched the name of FIFA and Blatter shows little interest in confronting the issue. A week ago, a senior member of FIFA’s own ethics committee resigned claiming that "FIFA has no real interest in playing an active role in the resolution, pursuance and prevention of violations of its ethics code.” Indeed, only days ago, Sepp Blatter claimed that there were no plans for an anti-corruption unit within the organisation.


Mohammed Bin Hammam’s opposition to a winter world cup has reportedly won him the support of the major European federations, and he is rumoured to have agreed an alliance with the powerful Michel Platini. With his Asian connections and the Middle Eastern contacts built up in Africa during the Qatar bid, he looks well set to provide a very dangerous challenge to Sepp Blatter in the coming elections.

Ironically, after all of Sepp Blatter’s ideals of pushing the World Cup to open up new areas, culminating in the shock decision to award the tournament to Qatar, it could be the backlash from this campaign and that decision that fatally undermines his position at the head of world football