In an otherwise featureless meeting room, reminiscent of those blandly-lit examples found in large, branded hotels, a garishly-patterned carpet contrasted sharply with the uber-cool character more than 250 journalists and 40 camera crews had come to see, question and photograph.
The assembled media throng had waited with bated breath for what was billed with uninhibited glee as ‘the main event’ while staff attended to problems with overhead lighting, plied attendees with coffee and biscuits, or helpfully directed them towards the bathroom. Finally, as the Ron Harris Suite almost sank under the enormous weight of expectation, Jose Mourinho appeared in a blaze of flashbulbs, ready to sprinkle some much-needed stardust on an organisation widely disliked for the manner in which it has tried to assume the mantle of a ‘big club’ without necessarily appreciating the corresponding need for humility such status infers.
Mourinho, as everyone knows, is box office. Chelsea fans love him; women love him; the Premier League are delighted to see him back at Stamford Bridge to provide an element of competitiveness to their increasingly predictable league and Roman Abramovich, a shrewd operator, knows that with the Portuguese at the helm of his colossally expensive plaything, the relentless outward flow of his money could actually come to an end.
This latter point is important for a man who wasn’t born to riches. The Russian’s business career started not dealing in oil or by collecting former state corporations crucial to his nation’s economic infrastructure, but by selling cuddly toys. Abramovich knows that while some businesses require significant investment, they also need to eventually generate profits.
According to the most recent comparable figures, Premier League football clubs owe more than £2.4 billion; slightly more than £1.4 billion of this amount is in the form of soft loans made by seemingly munificent owners. Further delving into club accounts reveal that 90 per cent of this latter sum is owed by just three clubs. Now-relegated Queens Park Rangers owe £93 million; Newcastle are in hoc to Mike Ashley for £276 million and Abramovich has officially propped Chelsea up with a staggering £895 million of his own cash.
For several years after the Russian bought the club from Ken Bates, it was widely believed he had written his investment off, but a quick browse through the balance sheet proved such assertions were well wide of the mark. Even for a man with an estimated net worth of £7 billion, wrapping up more than 12 per cent of it in one unpredictable investment may appear a little too much like the heart ruling the head. Hence Mourinho’s return – designed primarily to turn Chelsea into league champions again, but also to ensure they’re afforded greater worldwide profile and generate more money. Jose guarantees that.
Reducing debt is hardly a national pastime and sporting entities have a ridiculously poor record for relying far too heavily upon it. By recruiting Mourinho for a second spell at Stamford Bridge, Abramovich is almost certainly signalling he is no longer prepared to pump huge amounts of cash, in the form of soft loans, into the club. The time has finally arrived for Chelsea to become self-sufficient.
Undoubtedly, the introduction of UEFA’s Financial Fair Play (FFP) rules have affected Abramovich’s decision.
The end of this month marks the cut-off point at which UEFA determines whether the extent of monies owed by individual European clubs is too high. Should they breach the rules, they could be excluded from European competition.
Last year, UEFA withheld 23 clubs’ share of European prize money due to their failure to settle their debts with other clubs or with the relevant tax authorities. Some of the continent’s most famous football clubs, including Atletico Madrid, Sporting Lisbon, Fenerbahce and Malaga were prevented from competing in European competition, though no British sides were excluded. The sanctions were a show of UEFA’s strength, designed to prove that its FFP rules possessed teeth.
The action was approved by UEFA’s Club Financial Control Body (CFCB), described, rather ominously, as “an investigatory chamber” and chaired by former Belgian Prime Minister Jean-Luc Dehaene.
Mr Dehaene is no stranger to financial controversy. He was on the board of a Belgian company, Lernout & Hauspie, which collapsed following one of the largest corporate scandals in European commercial history and last year was accused of failing to declare stock options, allegedly worth more than €5 million, he received from the giant brewing company, AB InBev, where he also served as a board member until October 2011.
In many respects, therefore, he is perfect to lead UEFA’s equivalent of a financial Star Chamber as it prepares to impose the FFP regulations.
From next month, clubs competing in European competition will be permitted to report losses no greater than €45 million over three years with sanctions for FFP transgressors scheduled to be imposed from the 2014-15 season. Among the penalties at Mr Dehaene’s disposal are the withholding of broadcast receipts, transfer bans and suspension from European club competition.
UEFA’s rules are intended to curb the excesses of sugar daddies at clubs like Chelsea, Manchester City, Malaga, PSG and now Monaco, each desperate to claim a place at football’s top table by shortcutting the route to success simply by buying it, ie paying the world’s best talent colossal sums of money to secure it.
No formal player wage cap has yet been suggested by UEFA, but such a rule, possibly introduced as an adjunct to FFP, is understood to be receiving “the closest attention” according to one UEFA source. I understand the CFCB has held meetings with tax authorities in countries in which Europe’s five biggest leagues are based to explore the possibility of introducing an effective, continent-wide wage cap in the event that clubs fail to create a voluntary structure of their own.
“UEFA would much rather not introduce a wage cap for football clubs as it would take several years of legal drafting, wrangling and appeals to become effective,” suggested the UEFA source, although he added that, “unless clubs create their own (cap), which is adhered to across Europe, then UEFA will act. If it doesn’t, it makes a mockery of their FFP regulations.”
The days of mortgaging season-ticket money or prospective broadcast receipts (a risky move effected by then relegation-threatened West Ham recently which netted them £60 million from a bank in the British Virgin Isles) appear to be drawing to a close.
Over the past couple of seasons, football clubs have started acting more like proper businesses instead of dodgy market stalls where cash is always king. Accepting any form of European imposition is anathema for the British, but UEFA’s financial regulations and proposed structures, while far from perfect, have prompted clubs to fall into line.
The need to generate profits and move away from the sugar daddy method of funding is recognised by everyone as being a sensible move. No-one understands this better than Roman Abramovich.
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