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How UEFA’s Financial Fair Play Concept Is Severely Flawed

uefa How UEFAs 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.

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11 Responses to How UEFA’s Financial Fair Play Concept Is Severely Flawed

  1. Jon says:

    I agree. Especially when you throw in how UEFA distributes funds between clubs involved in its competitions, the regulations put smaller clubs at an ever further disadvantage. The regulations do nothing to keep smaller clubs from going insolvent.

    Eventually, there will need to be a salary cap or similar measures if FAs really want to lower salaries and keep clubs solvent.

  2. JC says:

    Revenue sharing is more likely to be the solution than a salary cap. Unless all other leagues do it (or at least, Spain, Italy and Germany) stars will go elsewhere to play.

    A league-wide revenue sharing system that includes portions of gate receipts and merchandise sales could in fact level the playing field a little more. And I think that’s what we ultimately want. I don’t think total parity would be good for the league, but a minor closure in the gap of quality would help.

    Last year it seemed as if that gap had closed all on its own, but it ended up being an outlier (or an incentive for the top teams to spend more).

  3. Tony Butterworth says:

    But even revenue sharing would unbalance the UK against Spain, Italy etc. It would mean that the top teams would have less to spend.

    I also suspect there’s some EU law against it :)

    • JC says:

      I can’t speak to the EU law, but as for the top clubs having less, none of them (except Arsenal and Tottenham) have any sort of limit now. I can’t remember if they’ve ever been outbid for a player. Players choose to go to other teams, but it’s not a result of a limit. Revenue sharing would give them middle and bottom teams significantly more; it wouldn’t end up with the top clubs having less (because infinity minus anything is still infinity. And yes, that’s hyperbole, but it’s still mostly true. :) )

      • Tony Butterworth says:

        Numerous players have gone to (or stayed in) Spain or sometimes Italy (or PSG) because the wages net out better. That’s why there are so few top tier Spanish, Italians, Dutch or even Germans in the EPL.

  4. Pete says:

    I think the rule was introduced more to stop clubs going bankrupt rather than trying to be fair in terms of what clubs could spend. Basically, by only being allowed to spend what you earned it would stop clubs like Pompey from spending money they didn’t have and going bust.
    The wages and transfers have got out of control over the last 20 years and this was UEFA’s attempt at trying to stop the madness.
    Although anyone who thought the big clubs wouldn’t still be the big clubs was dreaming.

  5. AM says:

    It is inevitable that we will ultimately have a super European league. If there was more parity in the EPL, then the overall quality would decline. Just look at the French league which has a lot more parity but is not of the same quality.

    A super European league is simply what the fans will want soon enough. While, I am against it, I think it would be quite the spectacle to see the top 20 teams in Europe going at it.

  6. Dixon says:

    The only thing FFP is trying to do is keep clubs from spending money that they don’t have. It isn’t about leveling the playing field at all.

    Wigan could still spend $500 million on transfer fees and wages, the owner just has to invest this amount of money in his team through sponsorship deals, inflated shirt sales, etc. There is nothing to stop Dave Whelan from printing 10 million Wigan shirts, and buying them all, every year from now until perpetuity to artificially inflate his club’s earnings by 500 million per year.

    The difference is that that extra money is the club’s money, and the club is not being mortgaged to achieve European football/win the league/avoid relegation. Preventing a Leeds or Pompey is what the rule is being introduced for.

    • Kody says:

      No, you can’t do that. FFP has several rules against it.

    • Why? says:

      Leeds and pompey? They are still there, I don’t get your point are you saying they should be at the top? As once were Huddersfield, Forrest and many others it was never meant that the have are always the haves they have no right to be at the top always! Why are people so blind to this? This is how football should be and always was one season a team is right up the a few later relegated that’s how it always has been the only clubs that really go out of business are because all the money goes to the top few ,this is a recent thing because of new TV payments and lopsided UEFA and premier league prize money it‘s a money go round that doesn‘t stop, is that fair? Fans leave the smaller teams that aren’t glorified as they don’t have a chance ever to win anything so they go and follow Utd (glory hunting basically) etc. Its disgusting as is FFP (fair what a joke) I can’t believe the writer couldn’t see what is was clearly about from day one!!

  7. Geejay says:

    I think the principle of FFP may have been misrepresented in the US Tony. I agree with Dixons point – it was only meant to stop clubs spending money they haven’t earnt, and to encourage the self sustaining model that my own club, Arsenal, have pursued (and hopefully will continue to pursue). It was never supposed to create a level playing field (nor should it). 

     Dixons other point is incorrect though – there are rules intended to prevent exactly what he is suggesting Dave Whelan could do. The principle of “arms length” commercial transactions is at play here. I have doubts about how vigorously this will be policed (“Etihad Stadium” anyone?) but that’s another matter. It’s certainly not as easy as Dixon suggested!

    Another point is that the “break even” rules only apply to “football business”, ie normal revenue and expenditure relating to the everyday running of the club. This is meant to encourage clubs to invest in youth schemes, training facilities and the like without falling foul of the rules preventing the clubs incurring losses. 

    Man City have just announced their latest accounts, revealing a wage bill some £20m in excess of their turnover. That’s before incurring any other expenses. That’s what FFP is targeting. People say football is a business now not a game, but at clubs like Man City and Chelsea, it has gone beyond a business, because no business could sustain that kind of expenditure against income – its now become a game for the billionaire owners.

    I too believe FFP will fail – but the problem will be enforcement.

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