United confident of passing test

26 May 2010 05:11
Manchester United are confident they will pass the new UEFA 'financial fair play' test, but Manchester City, Chelsea and Aston Villa may not.[LNB] Under the regulations to be rubber-stamped by UEFA's executive committee on Thursday, clubs in European competition will only be allowed to spend what they earn - although some leeway will be given for the first six years of the scheme.[LNB]Clubs will also still be permitted to have large debts, but only if they can service the interest payments as part of their overall spending.[LNB]In the Premier League, the new rules would threaten the participation of Manchester City, who made a £93million loss last year, in European competition as well as Chelsea - who made a £47million loss - unless they change their spending habits.[LNB]Arsenal and Tottenham both made a profit and would pass the test, and Manchester United claim they would too - despite payments of £45million annually to service the interest on the owners' £507million bond scheme.[LNB]United officials have carried out a 'dummy test' of their finances and are sure they would pass.[LNB]A United spokesman said: "We support the financial fair play measures. We are confident that we pass them and that we will continue to do so."[LNB]United made a £22million profit last year after interest payments but much of that was due to the sale of Cristiano Ronaldo to Real Madrid for £80million.[LNB]Even had they made a loss, United say under the UEFA rules they would be able to write off around £38million a year for 'goodwill' payments - an accounting practice that reflects the amount overpaid by the Glazer family to buy the club compared to the paper value of the club's assets.[LNB]Furthermore, the interest on the Glazers' PIK (payment in kind) loans will not be taken into account because that is not paid out, but merely added to the debt - they now total £225million.[LNB]The new UEFA scheme will come into effect in 2012, although some flexibility is afforded for an introductory period.[LNB]Initially, clubs must not return losses of more then 45million euros (£38million) for the 2012-15 period. After 2015, clubs are given a leeway of 30million (£26million) for three-year losses after which the figure will be reduced still further.[LNB]If clubs breach the rules then they will not be granted a UEFA club licence to take part in European competitions.[LNB]Liverpool could also use the 'goodwill' accounting practice to argue they too should pass the test, and Everton's losses of £7million last season would see the Toffees within the leeway bracket, while in Scotland both Celtic and Rangers should also qualify.[LNB]Aston Villa, however, who returned £46million losses last season, would fail the test.[LNB]UEFA's intention is for the Football Association and Premier League to rule on which clubs pass the test - in the same way that they now issue UEFA club licences.[LNB]The independent Club Financial Control Panel appointed by UEFA would carry out spot checks to ensure that the rules were being implemented correctly.[LNB]The financial fair play rules would also prohibit 'sugar daddies' being allowed to pour money into clubs to buy players or fund high wages.[LNB]Benefactors would be allowed to make capital investments in their clubs, however, such as building stadiums or youth academies.[LNB]UEFA's executive committee meeting in Nyon will not just rule on the financial fair play proposals - on Friday they will vote on the host country of Euro 2016.[LNB]France is viewed as the favourite ahead of Turkey with Italy way behind in third.

Source: Team_Talk