The Wrath Of UEFA's Financial Fair Play

Manchester City face a much tougher fight than they expected if they are to avoid a ban from European football from 2013 onwards because of a £250m burden that must remain on their books for the next five years.

Uefa has indicated that this nine-figure sum, accrued from recent transfers, cannot be written off as a loss on next year's accounts alone, but must be spread over the length of the relevant players' contracts. As a result, the club must rethink its strategy as it hopes to meet the terms of UEFA's Financial Fair Play (FFP) regulations, which demand that, from 2013, clubs must lose no more than £13m per year or risk being shut out of all European competitions.

UEFA's calculations are made as an average over a rolling three-year period and, though this would allow some flexibility, City's recent spree means they will be starting each year until 2015 some £50m in the red, before they spend another penny. The club acknowledges privately that "a huge challenge" lies ahead to meet Uefa's break-even targets.

UEFA's head of club licensing, Andrea Traverso, the man in charge of monitoring, has said that any "wipeout" of historic spending would "be seen as a way to circumvent the rules, and that is not allowed". The FFP rules dictate that clubs must effectively break even from 2011-12 onwards, when monitoring begins. Two seasons of finances will be considered for entry into the Champions League or Europa League in the 2013-14 season. Initial losses averaging £19.6m per year will be allowed, but from 2012-13, losses will be capped at £13m per year (averaged over three-years), and from 2013-14, be capped at £8.7m per year.

The size of City's task is illustrated by the fact they made a loss of £121.3m in 2009-10, and expect losses of £130m-plus in 2010-11. The trend is hugely problematic and the transfer "backlog" is a damaging part. Because City will not be allowed to clear that in one go, the £250m will have to be amortised (spread out) over five years. In simple terms, City will start every season between now and 2014-15 with a red hole in the accounts averaging £50m per season – for players they already own – before a ball is kicked. If they sign anyone else from now on, the deficit will only get bigger.

But as one UEFA source said: "While many clubs have been moving actively towards compliance, it is clear others are still deciding to go the other way. The rules are clear, and when they apply, they will apply." Some of the European giants that are at risk are as follow.

Internazionale Milan

The reigning European champions are also the continental kings of spending, with losses of £132m to June 2009, £126m to June 2008 and £178m the year before, or £436m in three years, underwritten by the Moratti family. Gargantuan transfer fees and wages need slashing.

Red Bull Salzburg

Bought by the Red Bull drinks firm in 2006, which has subsidised multi-million pound seasonal losses ever since. Titles have been consistent since (three in five years), under coaches and with players previously out of financial reach. But Uefa will take a keen interest.

Schalke 04

The Bundesliga deserves its reputation for being well-run financially but Schalke's debt climbed to £121m in their last financial year after losses of £14m. The parent company debt is bigger still at £212m, although that is partly due to stadium funding.

Zenit St. Petersburg

Owned and bankrolled by Russia's largest company, the gas firm Gazprom, which has spent hundreds of millions of dollars on facilities, players and wages since 2005.The Uefa Cup win of 2008 was one result. The spending of £38m during the summer was typical, and unsustainable.

Source: UEFA

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