How UEFA’s Financial Fair Play Concept Is Severely Flawed
Despite being a fan of one of the “big” teams I was quite excited when I first heard about Financial Fair Play. A system that could help balance the increasingly top heavy world of financial football. As a resident of the US, I could see how baseball, US football and basketball teams can quickly become competitive due to the various salary caps, taxes and shared revenues. But the fact that the world’s biggest soccer teams were against it surely spoke that it was going to work for the masses and not just the elite. Imagining a system where Wigan could afford the same squad as Manchester City, and where anyone could win the league each year sounded fantastic. Boy was I fooled.
So what is Financial Fair Play (FFP), because it is surely completely misunderstood, even, as far as I can tell, by the very people who proposed it? In 2008 UEFA’s Executive Committee unanimously approved a financial fair play concept for the game’s well-being in September 2009. The concept has also been supported by the entire football family, with its principal objectives being to:
- introduce more discipline and rationality in club football finances,
- decrease pressure on salaries and transfer fees and limit inflationary effect,
- encourage clubs to compete with(in) their revenues,
- encourage long-term investments in the youth sector and infrastructure,
- protect the long-term viability of European club football, and
- ensure clubs settle their liabilities on a timely basis.
You must meet the criteria to be allowed to play in the Champions League.
As you can see this all sounds great. It is being introduced very gradually. Right now we are in the second season of it but its effects are hardly being felt. But what has happened is that the media has somehow translated this into a form of balancing / salary cap. It’s presented as a way of leveling the playing field for all. In truth it’s something quite different. It levels the playing field for the biggest teams, between each other, to some extent, while creating an even bigger gulf to the medium and smaller clubs. It’s bad for smaller clubs and it’s generally bad for British clubs for reasons I will explain below.
At it’s simplest level what FFP requires is that teams break even on football related finances. So this means that football revenue such as gate money, sponsorships and income from transfers must equal or exceed football expenses, primarily wages and transfer fees paid. A great concept with a huge flaw even before you consider the loopholes described later.
The biggest flaw is that “big” teams such as Manchester United, Barcelona and Real Madrid have huge incomes. FFP will allow these teams to spend all that money on wages and transfers. However small teams, for example Wigan and Bolton, have very low incomes and hence cannot be funded by external sources in order to compete with larger teams. It both disallows teams from competing now and creates a huge barrier to any team benefiting from an investment from a well funded source such as Manchester City and Paris St. Germain have recently received. So in the end the big teams will get bigger, while spending less than they do today, and the smaller teams will stay where they are. Additionally smaller teams will receive less windfalls of large transfer fees from larger teams who would be less willing to outlay that amount of money.
Then there are the loopholes. Loopholes such as huge sponsorship deals from companies, again for the larger teams, from parties with a vested interest. Or perhaps huge naming rights for stadiums from companies with close ties to the team’s owners. Then there is massive sales of “overseas rights” to consortiums without clearly identied investors. All this, again, allowing the bigger teams to get bigger.
Finally there is the unfairness of FFP. Tax rates across UEFA countries vary considerably. Using broad stroke numbers, if a player who resides in the UK wants to take home £100k per week then they must be paid around £200k. However in Spain to take home that amount the club only need pay around £130k. This means the football expenditure of a British team must vastly exceed that of a Spanish one even to present on the pitch the exact same team.
I suspect that FFP will quietly disappear. It was announced with great fanfare but many now seem to understand it’s problems. This is what I want you assume. Sadly no, I do think we need a system that can limit the ridiculous inflation of player wages, that can provide smaller teams a real chance to compete and that can stop some clubs second eleven’s being the fourth or fifth best teams in their country. In England I think there is, at best, six teams that will win the Premier League in the next 20 years. In Spain it’s probably two, with the odd year of exception only proving the rule. It creates a much better top tier, but a much weaker substance below it. I simply cannot imagine being a supporter of a solid Premier League team such as Stoke or Bolton starting the season simply knowing that you cannot win anything. I can’t see anyway that a salary cap can be made to work and revenue sharing seems to be a bolted horse also. I don’t have a solution for you.
Financial Fair Play had it’s heart in the right place I believe, but sadly it’s brain was placed elsewhere.