New Uefa rules to curb O'Neill spending

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Martin O'Neill, who will be presented as Sunderland's new manager today, inherits a club badly needing to reduce its wage bill to stem losses which have set it on course to fail Uefa's financial fair play rules and unable to play in Europe.

O'Neill (right) said at the weekend that he had been told by the club's owner and chairman Ellis Short that he will have funds to strengthen the squad in next month's transfer window, though the club's losses of £23.5m and £25.5m in the last two seasons must be radically reduced if the club has future aspirations to play in Europe. This season has brought the start of the three-year monitoring period of FFP, during which clubs may post no more than £45m aggregate losses, though Sunderland, whose wage bill was 72 per cent of turnover in their last financial year, are on course to record an aggregate loss of £73.5m unless they can begin to reduce that figure.

Short put £19m of equity into the club earlier this year and invested £48.5m in the last financial year but, because losses of over £5m a year are only acceptable under FFP rules if there is an injection of equity to cover that loss, he may have to plough in a further £40m.

Having invested £67.5m of his own money into the Wearside club over the past 18 months, he faces a major challenge in lifting revenues, as Manchester City have.

O'Neill, who will have no greater budget to work on than the one Steve Bruce was given over the last two years, is likely to have known what he was walking into at Sunderland, though it was his frustration when another American proprietor, Randy Lerner, failed to meet his spending expectations which caused him to walk out of the manager's job at Villa shortly before the start of last season.

Villa's wage bill for the last financial year before O'Neill's departure shot up to £71m, an increase of 42 per cent. Lerner's friend and non-executive Villa director, General Charles C Krulak, later insisted that O'Neill had known of the need to balance wages against revenue but had simply refused to buy into the idea of curbing spiralling costs. "No one person is bigger than our club. Not Randy, not [chief executive] Paul Faulkner, not Martin and not me," Krulak said.