Expert: City will feel credit crunch

A football finance expert has warned that Manchester City must drastically cut costs to maintain their ambition of Champions League football.

Emmanuel Hembert, head of global sports and entertainment practice at Global Management Consultants AT Kearney, has warned that even if City reach the quarter-finals of the Champions League, they will have to make savings of 40 million pounds.

From 2012, clubs wishing to take part in European football must be close to breaking even under new UEFA Financial Fair Play regulations.

Broadly supportive of the regulations, Hembert believes they are necessary to bring the finances of Europe’s leading club sides under control.

But Hembert admits they may discourage competition because clubs like City will be unable to invest heavily in a bid to break domestic monopolies.

“The main role of the UEFA Financial Fair Play regulations is to request from the clubs participating in the European competitions to reduce their deficit,” Herbert said.

“For example, if you want to participate in the 2013/14 European cups, you need to have not exceeded an average of 20 million pounds loss for the previous two seasons.”

“Manchester City from next season onwards will have to reduce their deficits drastically. At the moment they have a wage bill that is higher than their revenue, without counting other operational expenses.”

“Even if they participate in the Champions League … they will still need to reduce their costs by another 40 million, so it means either reducing their wage bill by this amount, or offloading over 200 million pounds worth of players from their books. So that is a huge challenge ahead for them.”

Hembert also said that Chelsea’s recent run of poor form could be down to the London side’s attempts to meet the regulations.

Manager Carlo Ancelotti has been unable to invest heavily in the transfer market as Chelsea slash costs.

“There are two reasons for Chelsea cutting back this season,” he said.

“There is the new rule introduced by the Premier League, with 25-player squads including eight home-grown players. They had to offload some of their foreign players and then of course trying to comply with the UEFA rules.”

“Carlo Ancelotti this year does not have the depth on the bench he had in the previous year. You can see some players are out of form and there not people to replace them, at least temporarily, to keep the team going.”

Mon 10 January, 2011