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Mar 25, 2009

Saving football from itself

Fans of American sports have long argued that what the rest of the world calls football could do a lot worse than take a long hard look itself before adopting some of the rules and that govern North American sports.

Well, it finally it looks like someone has been listening to that sage counsel.

The Financial Times reports that a delegation of no doubt very serious looking, suit-wearing types from UEFA were recently in the US on a fact finding mission where they held talks with Major League Baseball on the advantages of their so-called ''luxury tax'' and how a similar scheme could be introduced in European football.

In short the premise would see European football's richest clubs effectively subsidising smaller, less affluent sides by having a tax levied against them for paying exorbitant wages to star players.

UEFA would hope that as well as seeing the riches of elite level football trickle down to smaller clubs, the idea would also encourage clubs to curb their spending, thus resisting the temptation to borrow beyond their means and become saddled with dangerous levels of debt.

As part of MLB's collective bargaining agreement between the players' union and the team owners, a pay threshold is set for total annual player salaries ($155m for 2008).

Under the terms of the CBA, if a franchise exceeds the agreed level they must pay a tax of 40% on what they spend over the threshold. The monies are then pooled and redistributed through the MLB's Industry Growth Fund, which helps support and promote the sport.

In a UEFA variant, any limit on wages would presumably be agreed between UEFA itself and the European Club Association (the body which represents 137 clubs, including giants like Manchester United and Real Madrid) and all pooled monies would be redistributed to smaller teams.

How a team would qualify for the subsidy and exactly how much each team would receive from the pool are just some of the problems the luxury tax could expect to face in any future consultation, and that's before considering such thorny matters as the total salary limit itself, or what the taxable percentage would be.

It cannot be argued that UEFA president Michel Platini has not tried to address the financial concerns threatening the game since taking office in 2006, and one can sympathise with the resistance he and Europe's governing body have come up against.

However, while the often suggested salary cap has never come close to introduction because of issues with the European Union (which would effectively render any cap illegal because it could be argued that it restricts free movement of trade), a luxury tax could circumvent legal pitfalls because, although it would see the introduction of a salary cap, the crucial caveat would be that clubs would be allowed to exceed it.

Another idea under discussion at UEFA headquarters, and similarly aimed at protecting the clubs from themselves, could see squads limited to a maximum of 25 players. The rationale being that by restricting the size of their squads, teams would be able to cut wage costs accordingly.

While no-one could take against UEFA's basic objective, which is to ensure the health and wealth of all football at all levels, the problems lie in both the governing body's methods, which thus far have all been open to criticism, and, just as importantly, reluctance amongst clubs to accept criticism or adopt change, all of which they regard as autocratic and overbearing interference on UEFA's behalf.


As many as 10 Football League clubs are facing an unenviable decision; either write off a season's work, or face the possibility of beginning the next campaign at a serious disadvantage.

After 5pm UK time on Thursday, March 26 any of the 72 clubs below the top flight Premier League who go into administration must accept the mandatory 10-point deduction from the start of next season.

Last month, League Two club Darlington were forced to go into administration, a decision which ended any hopes of earning promotion to League One, automatically or via the play-offs.

Darlington manager Dave Penney told the Daily Mirror: ''I know a lot of clubs that are close to administration. From talking to people, we might be the first but we won't be the last. I'd say five will go this year.''

More troubling is the estimate from Leyton Orient chairman Barry Hearn, who told the Mirror as many as 10 clubs are teetering on the brink and could slip into administration by the end of the season as a result of the economic downturn.

The risk for the credibility of the Championship and Leagues One and Two is that, so close to the end of the season, an entire year's work could be undone, promotion lost or relegation guaranteed because of matters off the pitch.

While the deadline rule my seem cruel it was introduced to guard against any clubs being tempted to copy Leeds United, who with relegation from the Championship all but assured in 2007, entered into administration and in-so-doing suffered no adverse affect from the automatic 10-point punishment, except confirming the inevitable relegation. Boston United also pulled the same stunt that season by filing for administration mid-way through the final match of the season.

At the start of the following season Leeds were hit with a 15-point penalty for their unscrupulous/canny acceptance of administration and the Football League introduced the 10-point deadline. Boston were demoted an additional division.

The question for Football League clubs is would it be better to take the 10-point penalty now, or next season? For a club safe in mid-table with nothing left to play for the answer will be simple, but for clubs chasing promotion or fighting the drop time is running out ahead of a painful decision.

Added to the mix, should a team go into administration after Thursday and a 10-point penalty would have a meaningful effect this season then the Football League still have the right to deduct from the 20080-09 tally. It could effectively relegate a team or remove them from the promotion picture.


While Liverpool's fortunes on the pitch have not looked brighter in 19 years, off it the future remains as uncertain as ever.

Co-owner George Gillett has refuted claims that he is considering selling his stake in the Premier League title contenders, along with all his other sporting assets, including an 80% stake in the NHL's Montreal Canadiens.

It had been thought that Gillett, under pressure because of the financial climate, and jaded after losing out in a power struggle with co-owner Tom Hicks, was ready to walk away from Anfield.

The final straw was thought to have been the decision by Gillett's main ally, chief executive Rick Parry, to announce his plans to leave and manager Rafa Benitez, with whom Gillett has an uncomfortable relationship, agreeing a new long-term contract.

However, Gillett has scotched claims he is preparing to sell his 50% stake in the club, insisting that the appointment of financial advisers BMO Capital Markets has been done to assess his family's investments.

Gillett told the Liverpool Echo: ''We have engaged professionals who are doing some asset planning. Any links between what we are doing and the situation at Liverpool is incorrect. We have made no decision to sell.''

Rather than preparing to sell his stake at Liverpool it could be that Gillett is preparing refinance, a decision which could require him to raise capital and pay off other debts, which could mean parting with valuable assets like his stake in the Canadiens.

In July, Hicks and Gillett must refinance the £350m debt they have amassed following their takeover, which given current economic climate would be entertained by few banking groups, and even then only if secured against hefty personal guarantees.

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