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Football Must Get its House in Order

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Top level football in this country is on the brink of diving into the financial abyss.

An alarming statement, you might say, but if someone told you 12 months ago that Glasgow Rangers, one of the biggest clubs in the world, was in desperate danger of being broken down and dismantled, you may have found that even more alarming.

The truth is the English Barclays Premier League, despite all of its riches, is spending far more than it earns.

In 2010-11, the Premier League's 20 clubs collectively made a loss of £361m. This meant they spent all of their record £2.3bn income, and then some.

A recent audit of all the English leagues by Deloitte and Touche showed only one league, League Two, was making a profit. The reason for that is they and they alone introduce wage control as a percentage of turnover. Division one has followed suit and the Championship have introduced their own governance. That leaves the mighty Barclays Premier League.

The over spending on players wages and agents in the PL is embarrassing - and it can't go on.

The Premier League clubs are currently spending approximately 70% of their turnover on player wages. Twenty years ago that figure was 40%. Revenues are increasing but costs are increasing even faster. Revenues from TV have soared. But this simply papers over a huge chasm of financial problems.

In business, profit is vital - but not in football, it seems, and it should be. I recall a comment made to me by my grandfather years ago after we'd spent a day together on his market stall, when I'd said "Wow Granddad, we've taken £20 today" he replied "Boy, turnover is vanity, profit is sanity"

Why is profit so important?

A profitable football club means a healthy football club. It means a football club that isn't in danger of going out of business, of crumbling into history. Profit could help freeze or even reduce ticket prices.

We need to regulate spending, reduce debt and ensure profit - and quickly.

We have to stop football clubs running up debt or we'll have an even more desperate situation. We can't have clubs running with large percentage of debt against their turnover.

The lower leagues have already implemented new regulation, and the Premier League must do the same.

I would propose that there is a robust and clear debt cap - enforced by a transfer ban on incoming players or a points deduction, which would have to be set with current levels in mind and then reduced, via a drip feed over the course of a structured year by year programme.

For example, if the worst offending club in the Premier League had a 300% level of debt against its turnover, this would have to become the base level for all clubs in the first year. Each year after that the base level could be reduced until there is no debt at all, with maybe an exception for capital projects which could be ring fenced.

As the only realistic way to achieve this would be for clubs to cut costs, I believe this would effectively reduce the money spent on wages and agents fees. At any football club, the biggest outgoing by some margin is the players' wages. It's not rent, it's not the tea lady and it's not heating and lighting.

But if a club, under a new scheme governing it's levels of expenditure on turnover, simply cannot afford the wage demands of a new transfer target and cannot borrow further to pay for him, then they will have to walk away and manage with who they have got or find a new target. But it will be the same for all clubs.

Sure, clubs without the players they want will be in danger of getting relegated. But ask any fan - would you take relegation over extinction? You can bounce back from one, but not the other. Of the bottom 12 clubs in the PL most will lose money and three will be relegated.

But with proper governance, those 12 clubs - including the three to be relegated - could make £100m. It's infinitely more desirable to get relegated having made £10m than having lost £10m. Could this ultimately lead to a freezing of ticket prices?

Market forces would then control wages and manage the expectations of their agents.

It would be helpful if UEFA and FIFA were involved but not critical. There would need to be independent, external auditors to police the process.

The system put forward under my proposal would be separate to UEFA's Financial Fair Play regulations. Financial Fair Play governs clubs which play in Europe and have to be signed up to. The rules in my proposal would be for all teams in the Premier League.

This all has to be done to protect the fans as well as their clubs. If a club goes into administration, as a rule, the owners and chairman disappear and leave behind tens of thousands of distraught supporters. It has to be remembered that although the real estate of a football club is owned by its shareholders, the heart and soul and the memories and the history belongs to the fans, their grandfathers and their great-grandfathers before them.

I've never seen a club chairman cry over football, I've never seen a manager do it either. Sure, the odd player has shed tears but I've seen millions of fans with tears streaming down their faces because of their love for their football club and that's why we need governance to protect football from itself.

Premier League rules state that 14 votes would be needed to pass new laws. I think there are 14 chairmen ready for change to protect the greatest football league the world has ever seen, to do the right thing in the best interest of football as a whole.

It is time to step up to the plate.