Heavily indebted Premier League clubs Manchester United, Chelsea and Liverpool were accused by a British parliamentary committee of engaging in "financial doping" today.
Among 27 recommendations at the end of a yearlong inquiry, legislators urged England's football authorities to curb "ludicrous levels of borrowing" and the use of profits to service large debts.
The All Party Parliamentary Football Group, which has no power to push through any changes, is calling for a rule change to enforce heavy scrutiny of business plans ahead of any club takeovers, echoing the agenda of world governing body Fifa.
The group also backed Fifa's "six-plus-five rule" that would impose limits on foreign players, urging the British government to lobby the European Union to overlook its treaties on free movement.
The key warning in the report is that while football appears to be weathering the initial impact of the recession, the meltdown in the markets that has claimed major financial institutions operating risky business models should serve as a warning to the clubs.
"The financial world has learnt a serious lesson in the last year that living by the old adage, 'If it ain't broke, don't fix it' can lead to catastrophic results," said governing Labor Party legislator Alan Keen, who chaired the inquiry. "There is a real danger that English football could go the same way. Corrective action needs to be taken now to address serious weaknesses in the governance of the game as well as severe financial imbalances.
"Lack of proper governance and financial instability are the two fundamental vulnerabilities to the success that English football has enjoyed in recent times. Our report includes tough measures to improve the way the game is run and to combat 'financial doping' whereby short term success can be bought at the expense of long term financial stability."
The Premier League already applies a "fit and proper persons" test to rule on prospective English club owners, but the parliamentarians want this extended from judging character to ascertaining whether takeovers will burden clubs with large debts.
The report highlights concerns over the American takeovers of Manchester United and Liverpool.
United had no debts before being bought by Tampa Bay Buccaneers owner Malcolm Glazer in 2005, but now "healthy operating profits ... are more than eaten up by the servicing of its debt," the report said.
After winning the Champions League and Premier League last season, United posted pretax losses of £44.8m. The repayments on debts of £649.4m took £45.5m annually out of United's profits.
Likewise, the buyout of Liverpool by Tom Hicks and George Gillett Jr. in 2007 saw debts of £44.8m rise beyond £350m.
While Chelsea's debts are not to external financial institutions, the report said that loans by owners or directors like owner Roman Abramovich should be considered as debt leveraging.
"Owners should not be able to use the clubs' assets to leverage debt," Keen told The Associated Press. "We want sport to be looked upon as different to other businesses."
Keen said the report's concerns were realized Sunday when Manchester United lost in the FA Cup semifinals to Everton after fielding an under-strength team.
"That was a dreadful and very apt illustration of what worries the committee about resources gravitating towards the top clubs," Keen said. "Now there is more evidence of people coming in and loaning vast amounts of money to the clubs in order to try and win something.
"If that leads to reserve teams being put out in competitions that are not as important to them, that will damage the future of football."
Keen's committee believes the Premier League seems more focused on making money rather than helping leagues in developing football nations, whose best players are lured to England.
"We are leeching money from overseas countries," Keen said.Reuse content