How UEFA can fix Financial Fair Play

It has been five years since Michel Platini promised to save European football from financial ruin. The introduction of the Financial Fair Play (FFP) rules gave fans hope that success in football would no longer be decided by how much money a Russian oil tycoon or Middle Eastern sheikh could throw at a club.

But the rules in their current format are not stopping super rich clubs from spending eye watering amounts of money. Seven of the top ten transfers of all time have occurred in the last two years and financial experts warned against “reckless” wage spending last summer, four years after the introduction of FFP. The rule make no attempt to improve the chances of well run clubs who see no benefit from living within their means.

 

These provisions have the ability to create a footballing version of Game of Thrones. All the superpowers battling between themselves for superiority; the Northerners forever harping on about the past, the entitled Southerners constantly bickering between themselves, City are the newcomer Bolton’s and United can be Stannis’ army slightly unconvincing in their threat to take back what is rightfully theirs.

Even Real Madrid and Barcelona have their place as the powerful foreigners, stuck far away in exotic lands but with the ability to swoop in whenever they want. What does that leave for the rest of the teams? The wildlings, the unwanted folk stuck behind the gigantic wall labelled financial fair play.

The FFP rules boil down to the requirement that clubs “break even”. Clubs must not incur loses of more than £32 million in a given year or they risk punishment and owners are only allowed to invest a limited amount of their own money to cover costs.

This is soon to be relaxed and owners may invest as long as they can evidence the investment will result in future revenue growth. It is an interesting development but not the change that needs to be made.

The cycle of meagre punishment and large expenditure on players will continue as long as UEFA punish offenders as opposed to reward for clubs adhering to the rules.

Earlier this month both Manchester City and Paris Saint-Germain had their squad restriction lifted for the coming European season and their fines reduced from £49m to £16m. The Raheem Sterling transfer hints that City are not set to curb their spending just yet.

As long as clubs such as City or PSG can absorb sanctions and still qualify for the Champions League, benefiting from the resulting financial windfall, the current elite clubs will be locked in place with smaller teams unable to break through.

Compare Swansea and Manchester United, both are in no danger of breaking the rules, yet only one of them is close to £400m in debt. Which one has already spent over £80 this summer on new signings? Swansea are an extremely well run club, recently having the luxury of paying a dividend to shareholders.

However they are never going to threaten the top four places without change to this version of FFP where poor club management may be punished, unless you are a big club that can cover massive output or threaten legal action, but good administration is not rewarded.

If football has taught us one thing it is that investment brings success, maybe not overnight, but eventually throwing bags of cash at elite players will lead to trophies or at least participation in the Champions League.

 

The top spenders on wages in Europe for the 2013-2014 season were Manchester United, Manchester City, Chelsea, Arsenal, Liverpool, Bayern Munich, Juventus, Barcelona and Real Madrid. This list includes the champions of the top four leagues and seven of the last eight Champions League winners.

The only two clubs that are not in some form of debt are Bayern Munich and Chelsea. Yes, for the first financial year since Roman Abramovich took over Chelsea is not in debt, it only took 12 years and a ‘measly’ £1.041 billion pounds to get there. The combined debt of Real, Barca and United is over £1 billion alone.

So how is it that the clubs with dizzying amounts of debt can continue to splurge on wages and star players? This is where the break even requirement fails to adequately promote fair play as these teams have built up commercial and sponsorship revenue streams that will cover their mammoth expenditure.

For clubs like Southampton or Swansea to be rewarded due to competent ownership would mean much more than a £16m – one third of a Raheem Sterling – fine. Television money could be distributed in accordance to the financial position of each club meaning more money for more efficiently run clubs. An incentive to follow the rules.

Last season Man United made £16.17m more than Swansea from the distribution of TV rights. The Premier League’s system is broken down as follows; 50% is automatically distributed 20 ways among the teams, 25% is awarded as prize money for league position, and 25% distributed to teams according to how much their matches are shown on TV.

By taking the television money and allocating that 25% according to a financial performance table, smaller teams would be given a substantial boost. This could mean the difference between hanging on to a star player and losing them to one of the super-clubs.

Perhaps if Aston Villa could afford to pay Fabian Delph the same as City he would have remained their captain instead of getting to experience the subtle differences between various substitute benches next season.

The same goes for Southampton and the plethora of excellent players that have been plucked from their squad. The current system of distribution further widens the Grand Canyon sized gap between footballing royalty and footballing peasants.

If The Most Exciting League in the World™ becomes even more predictable then it is not unreasonable to expect ratings or stadium attendance figures to drop. The atmosphere at English grounds is often cited as adding significant appeal to global audiences, in turn increasing the TV rights’ value. As Owen Gibson of The Guardian said:

One of the key factors that helps make the Premier League the most sale-able commodity in world football is its noise, pageantry and atmosphere.

The FFP rules as they stand do not address the major problem of the top leagues in Europe being won by the same handful of teams every year, in fact they make it worse. That UEFA are being proactive in attempting to address a problem is commendable.

However the regulations are slightly wide of the mark, European football has an in-built sanction for poorly run football clubs, this is failure on the pitch and inevitable relegation.

Punishment is not needed for poorly run clubs; reward for well run clubs is desperately needed. Football clubs have faced financial crisis since the sport began and still survived, the problem of dominance of a few select clubs may manifest itself seriously in the near future.

Author Details

Liam Maguire

Trainee solicitor currently studying in Belfast with a Masters in Sports Law and former Northern Ireland Cup Under-11 Runner up. Man United fan and a relapsed Football Manager addict.

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