Player wage bill will be cut at Ipswich Town, reveals chief executive Simon Clegg
UNLIKE others, Ipswich Town will be prepared for next season’s new Financial Fair Play rules.
That’s according to chief executive Simon Clegg who says he has spent his entire three years at the club getting ready for the changes which could completely alter the face of the game.
Rocketing broadcasting contracts – led by Sky television – has seen a growing trend of clubs gambling on the riches which come with promotion/survival/European qualification.
Since the turn of the century, 24 different clubs – Ipswich of course included – have gone into administration while in the top four tiers of English football. And European football’s governing body, UEFA, have decided that enough is enough.
Come the start of next season, clubs will have to show they are working towards balancing their books. The idea is that eventually all clubs will only spend what they earn.
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“It won’t be a wake-up call for this club because it’s something I’ve been incredibly conscious of ever since I arrived here,” said Clegg, in an exclusive interview with the EADT.
“People might not universally have liked all the decisions I’ve made since I’ve been here, but I hope they realise they’ve been made in the best interests of the club and within the financial constraints that we have to operate in.”
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Last June, Ipswich Town’s latest accounts showed that , as a percentage of turnover, staff costs were brought down from 109.4% (09/10) to 98.9% (10/11). The club made a pre-tax profit of �136,000 – largely thanks to the big money sale of Connor Wickham to Sunderland – while turnover increased 10%.
“We have made cost savings and we will need to make more cost savings,” said Clegg. “What’s important is we try to protect the product, i.e. what happens on the pitch. The bottom line is that the introduction of financial fair play will impact on players’ salaries and agents’ fees. Reducing the wage bill is certainly what we’re looking at.”
Clegg last week emphasised that the club’s decision over which level of academy to apply for under the new Elite Player Performance Plan – one, two, three or four – will be a tough decision. Although Blues fans are keen for the club to see their famed youth system be recognised as ‘Category One’, the costs involved will be significant.
And all this against a backdrop of rising business costs, a tough economic climate, frozen season ticket prices set against falling attendances at Portman Road and those aforementioned Financial Fair Play rules.
“It’s important to recognise though that we’re not operating in isolation here,” said Clegg. “There are clubs across the Championship who will be facing the same challenges.
“We will just have to make sure we work even harder to attract the right players here for the right reasons.
“You’ve seen (Glasgow) Rangers and Portsmouth going into administration recently and it wouldn’t surprise me if we see another Championship club go into administration before the end of the season. When you get to the back end of the season that’s when the finances tend to bite in because a lot of it is front loaded.”
Much of the fine detail of the Financial Fair Play rules are yet to be finalised, with representatives from Football League clubs set to vote on issues at their AGM in June.
There are still many grey areas, one of which being whether a wealthy owner can get around some of the issues by putting their money in via official routes such as shirt sponsorship – something Marcus Evans already does at Town.
When asked about that particular issue, Clegg – responding with a straight bat but with a hint of a wry smile – said: “Shirt sponsorship is up at the end of the season and that is something I am currently negotiating with my owner.”
Meanwhile, as the Blues wait to find out what the full effect of these rules will have, high-earning players such as Jason Scotland, Carlos Edwards, Grant Leadbitter and Lee Bowyer may just have to wait a little longer before discovering whether their contracts will be renewed at the end of June.
FINANCIAL FAIR PLAY
– Introduce more discipline and rationality in club football finances;
– Decrease pressure on salaries and transfer fees and limit inflationary effect;
– Encourage clubs to compete within their revenues;
– Encourage long-term investments in the youth sector and infrastucture;
– To protect the long-term viability of European club football;
– Ensure clubs settle their liabilities on a timely basis.
“In recent seasons many clubs have reported repeated, and worsening, financial losses. The wider economic situation has created difficult market conditions for clubs in Europe. Many clubs have experienced liquidity shortfalls, leading to delayed payments to other clubs, employees and social/tax authorities.
“Therefore, as requested by the football family, UEFA is introducing sensible and achievable measures. They include an obligation for clubs, over a period of time, to balance their books or break even.
“Under the concept, clubs cannot repeatedly spend more than their generated revenues and clubs will be obligated to meet all their transfer and employee payment commitments all times.”
What’s been said
“This is the last wake-up call. This trend has to change very quickly to safeguard European football. We must end this negative spiral of gambling for success. These losses cannot continue.”
– Gianni Infantino, general secretary of UEFA
– UEFA’s Executive Committee unanimously approved a financial fair play concept for the game’s well-being in September 2009.
– After consultation with the ‘football family’, regulations were approved in May 2010.
– Financial fair play measures will come into play at the start of next season (2012/13) and be subject to a multi-year assessment which allows clubs to ease themselves in.
– A ‘Club Financial Control Panel’ has been set up to make sure clubs adhere to the rules.
A UEFA survey of 665 clubs at the end of the 2010 financial year showed a 36% increase in losses on the previous year, with 56% of those questioned in the red. Thirteen clubs would have failed the break-even tests if applied at the time.