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Chelsea Won But Bayern Show Way Forward For Newcastle

8 years ago
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If Financial Fair Play (FFP) has any effect at all then just possibly we have seen the dramatic final curtain come down on the very extremes of how English clubs are allowed to operate financially. Whether by luck or design, Newcastle United are now heading into the FFP era with a financial framework which will allow them to operate within the new rules.

It is ironic that with FFP now upon us, that the two worst excesses of English football, Manchester City and Chelsea, have lifted the two biggest prizes available to English clubs. Especially with both doing so in such dramatic and largely undeserved circumstances – certainly in Chelsea’s case.

While Chelsea’s last successful youth product is John Terry, Bayern Munich have brought through the likes of Philipp Lahm, Holger Badstuber, Bastian Schweinsteiger and Thomas Muller in the last decade.

NUFC announced earlier this season the intention to invest £15m in youth development, however much is or isn’t actually spent, it is a no-brainer for a club like Newcastle to look to produce more Steven Taylors as part of their future player recruitment strategy.

Bayern are having a massive push to develop more Lahms and Schweinsteigers as part of Bayern’s wider aim of paying its own way in a world game increasingly dominated by clubs with massive debt burdens. While the likes of Manchester United, Real Madrid and Barcelona have huge levels of borrowing power, and Chelsea, Manchester City, Paris Saint-Germain and Inter are funded by sugar daddies, Bayern are reliant only on the money they generate as a club.

Bayern’s Chief Executive Karl-Heinz Rummenigge has rightly boasted of his side’s proud record on the balance sheet, and claimed recently that Chelsea will struggle to meet the criteria set in place by the first FFP deadline in 2013-14.

Under Abramovich, Chelsea’s commercial revenue has gone up 23% while in the same period Bayern’s has gone up by 69 % over the same period, with the club’s worst return (105.2 millions euros in 2003-04) dwarfing the Blues’ most profitable year (83.8 million euros in 2006-07).

In real terms, it means that Bayern, which reported revenues of 50.7 million euros less than Chelsea’s in 2003-04, boasted receipts 71.6 million euros greater than the London side last season. This has been the basis, but the attitude has been very different too.

Bayern’s wage bill also remains under 50% of the club’s business volume, while the likes of Inter and AC Milan pay up to 85% in salaries. This means that the Bavarians are succeeding in a climate which still has a window open to those organizations working at a significant loss. It also means the team is a great example that UEFA could hold up as a beacon to the rest.

One can only predict that Bayern will simply get stronger during a period in which the game’s other giants will need to adapt to the new era. And it’s Chelsea which is trailing behind in the battle to make clubs responsible financial entities.

The big task for Newcastle is to build on last season’s success and no matter how it is achieved (including whether it involves any headline players leaving), if United emerge in September with a stronger squad than last term then they could well be in pole position to challenge what people perceive as the ‘top six’ clubs who will all be grappling with their own local problems. Both Chelsea and Manchester City will struggle to deal with FFP issues, Manchester United undermined by the Glazers financially undermining them with interest payments, Spurs and Liverpool with Champions League wage bills and no…Champions League. Maybe Arsenal are best placed to move forward of that ‘top six’ if they can retain the likes of Van Persie.

Football is moving into a new era and none of the above makes it sure that Newcastle will compete but I believe Newcastle can definitely continue to move forward, if they back the decision making of Alan Pardew and Graham Carr.

Read here for more background information on Bayern Munich’s business model.

 

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