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Financial Fair Play

Financial fair play: how can Emirates Marketing Project still spend £130m in one window?
After initial success for Uefa in making clubs think seriously about their finances, a relaxation of restrictions and a glut of TV money has led to a new wave of lavish spending

It has been another transfer window with colossal sums of money changing hands. Emirates Marketing Project, for example, have achieved a net spend of more than £130m. Wasn’t Uefa’s financial fair play supposed to put the brakes on this sort of thing?
Yes. It is six years since Michel Platini revealed in Monaco that owners including Roman Abramovich wanted to put the brakes on what they saw as an unsustainable race (or pull the drawbridge up behind them, depending on your point of view). Uefa also believed the amount of money being haemorrhaged by clubs across Europe was putting many in danger. So it began to draw up rules that would force clubs to break even if they wanted to play in Europe and finally introduced them in 2012-13.

What happened next?
A convoluted and complex negotiation around how best to implement rules designed to ensure clubs eventually operated at breakeven (with certain caveats that allowed unlimited spending on youth development and infrastructure). The plan was to phase in the rules over time, allowing clubs a small amount of leeway that would gradually be reduced. The break-even principle did not necessarily deal with indebtedness and immediately led to fears it would simply accelerate the process of the clubs with the most revenues getting bigger and freezing out the rest.

Did it work?
Uefa points to figures showing the amount of red ink spilled by clubs across Europe reduced dramatically – from €1.7bn in 2011 to €400m in 2014 – and insists the FFP rules had a temporary cooling effect on inflation in transfer fees and wages. Chelsea, for example, broke even for the first time under Abramovich.

But at the very birth of the new rules, the European Clubs Association insisted on certain caveats and the overall impression was that, whatever the original intention, the process became subverted and ended up allowing the biggest clubs to get richer while choking off the ability for investors in smaller clubs to catch up. Uefa, for its part, argues it has worked so successfully that it is now possible to amend it to encourage some sustainable investment. Ironically, it was worried that investors in clubs were being put off by the fact they could not speculate to accumulate. Now it claims to have a happy balance.

Who got fined under the original rules?
Only one set of fines have been levied and Emirates Marketing Project and Paris Saint-Germain got clobbered with the largest, a verdict seen as profoundly unfair by both clubs – but particularly City, who believed the rules to be a blunt instrument and that an unfair example was being made of them. It also sharpened the perception that the rules were designed to punish the arrivistes and protect the established order. Both were fined £49m and had squad restrictions and a transfer cap imposed last season. But after complying with the requirements, both PSG and City were ultimately fined only £16m for the first year and saw the restrictions lifted, as long as they comply in future.

So why is everyone spending like it’s going out of fashion again?
Two reasons. One is that revenues have vastly increased, particularly in England with Premier League clubs eyeing another huge increase next season once the new £8bn-plus TV deal (including overseas rights) kicks in. That obviously gives them more cash to spend, even if they are aiming to break even, and fuels inflation.

And as transfer fees can be amortised over the length of a player’s contract, they can in effect start spending that cash now. The second is that Uefa earlier this year relaxed the FFP restrictions.

What happened?
Uefa argues the first phase of FFP had done its job in reining in spending and stopping clubs going heavily into debt, forcing them to think long-term rather than expecting an overnight transformation. It argued it was time to move from an iteration of the rules that choked off spending to one that encouraged responsible investment.

Others saw that as bunkum, interpreting the new rules as a U-turn that provided belated recognition that the rules were unfair and unworkable in their existing form. The truth is probably somewhere in between. Certainly, the rules in their original form were set out to be applied on a sliding scale to 2020 and beyond. So there was without doubt a shift in direction.


How do the rules now work?

After prospective club owners, particularly in Italy, complained to Platini that the FFP rules made it impossible to buy a club and then invest responsibly to grow it, Uefa introduced caveats allowing new owners to put in cash as long as they can offer a business plan that shows how they will reach breakeven. Under the new rules, clubs are encouraged to proactively approach Uefa to explain that they plan to invest and show how they will eventually reach break even.

As many critics pointed out from the start, it appeared to be belated acceptance that anomalies across Europe (for example the bumper new Premier League TV deal in England) made it impossible to impose a one-size-fits-all FFP rule across the continent.

In short, there are more shades of grey and more room for interpretation. Platini described them as an “expansion and strengthening of fair play – we are just moving from a period of austerity to one where we can offer more opportunities for sustainable growth and development”.

Do clubs still have to factor in FFP at all?
Yes. Under the rules the amount of leeway allowed goes down from €45m to €30m over three seasons from 2015-16 – albeit with the caveats above. The new rules still have to be adhered to, after all, while Premier League clubs also signed up to a more subtle form of spending controls that cap the amount by which they are able to increase their wage bill season on season. Combined with rules around squad sizes and the number of homegrown players required, it has meant clubs such as Chelsea manipulating the loan system and being more willing to shift players out to bring new ones in. Some clubs, such as the American owners at Arsenal and Liverpool, had set great store by FFP as a rationale for their investment in English football – hoping that their natural revenue-generating advantages would allow them to compete without additional investment – and they are now worried about the consequences of the relaxation.

http://www.theguardian.com/football/blog/2015/sep/02/financial-fair-play-manchester-city
 
on the guardian podcast a couple weeks ago, one of the journos said that ffp had received numerous challenges in court. and that the impending rulings looked unfavorable for ffp.
 
on the guardian podcast a couple weeks ago, one of the journos said that ffp had received numerous challenges in court. and that the impending rulings looked unfavorable for ffp.

I'm surprised that the court cases have not been covered in the media if that is the case
 
I think it might be that there are some legal challenges in process, but they haven't reached the courts yet. Everyone will be getting legal opinions and these might look unfavourable for FFP. There will also be consultations with the European Commission on what they would consider acceptable.
 
I'm surprised that the court cases have not been covered in the media if that is the case

i think they have, but not extensively. basically, it seems no-one truly knows whats going to happen, and i guess there have been other more significant news pieces in football.

http://www.theguardian.com/football/2015/aug/28/arsene-wenger-financial-fair-play-killed-Ar5ena1

“It has gone,” he said. “I have seen the signs coming from Uefa for a while. I thought it would happen but now it is not possible. What’s happened is the clubs threatened to go to civil court – not only through sport. That brought a lot of insecurity in the decision-making of Uefa so they started to soften the rules a little bit.”

thats a recent quote from wenger, who was one of the biggest proponents of ffp. and it seems like even he has given up on it being able to stick.

"Although the most high-profile cases punished Emirates Marketing Project and Paris Saint-Germain, who were fined, with squad size restrictions and spending limits also imposed in February 2014, the number of legal challenges by clubs in effect saw off the FFP concept. Uefa has backtracked to the point that it is no longer viable."
 
I think the fines on City and PSG need to be put into perspective. City had their ridiculous intellectual rights payments kicked out, but all their sponsorships from Abu Dhabi sources were accepted. They basically accepted that City and United are equally attractive to commercial sponsors.

If I was trying to get City's accounts in FFP compliance, I would deliberately put in some items to be rejected. I would assume UEFA would need to take some action so would give them an easy target. Otherwise they might challenge the important payments.
 
I find it a bit strange how accepted the financial inequality in the game is, or even how little it's talked about. For me personally, it's got to the point where the sport is a bit of a sickening farce, and difficult to enjoy because a) it's virtually impossible for any teams to disrupt the status quo, and b) I can't see this ever changing, because there seems to be no no determination to try - or even much of an appetite for change in the first place.

Why aren't there more protests from fans about the financial inequality? Some people say it's because football is a business and there's nothing you can do, but it's not (or at least it shouldn't be) - it's a sport first and foremost, with regulating bodies, and it's a pretty brick business because no-one makes any profit! All the increased revenue of the top teams goes into the huge wages of the best players, who by and large seem like undeserving and ungrateful dingdongheads (Raheem Sterling anyone?)

I'd love to see someone have the balls to even suggest, let alone push through, a redistibutive system along the lines of:

- More equal sharing of gate receipts between home and away teams
- Completely equal distribution of TV money (perhaps with a certain amount set aside as bonuses for clubs who move up a certain number of places, to reward clubs that achieve above their means)
- Limits on replica shirt prices
- Graded 'tax' on sponsorship money (or even anything above a certain cutoff point all having to go the club's foundation, not the club itself)

Until then we'll continue with something like this (from 2013-2014):

upload_2015-9-5_15-55-51.png

Where no team outside of the top 3 or 5 have a chance of winning the league, and no team from outside the top 5 or 6 has a chance of playing in the Champions League.

fudging *yawn*.

Except 99% of people don't seem to care, and instead continue to pour their money into the game whilst pouring themselves into pubs and online forums to moan about how brick their team is.
 
Why aren't there more protests from fans about the financial inequality? Some people say it's because football is a business and there's nothing you can do, but it's not (or at least it shouldn't be) - it's a sport first and foremost, with regulating bodies, and it's a pretty **** business because no-one makes any profit! All the increased revenue of the top teams goes into the huge wages of the best players, who by and large seem like undeserving and ungrateful dingdongheads (Raheem Sterling anyone?)

theres little protest against the financial inequality because most people are relatively happy with it imo. the people in power to change it, certainly seem to be happy anyway. the stauts quo makes them a lot of money, or keeps them in prestige positions, why would they want to distrupt that?

also, sport isnt a busness. thats why you've rightly pointed out that many of the top sides dont make money. and thats also why introducing financial limitations such as ffp is departed. the owners in favour of it are purely business men. if an owner is first and foremost a fan of football, they wouldnt be in favour of ffp imo. look at the epl chairmen who seem to be in favour of ffp. arsenal's, ours' , liverpool's, and utd's.

all these guys want to take money out of their clubs. and ffp would allow them to do so. chairmen who are football fans and want to actually put money into football, do not support ffp. ffp is simply about owners being able to profit from their clubs like they do in america.

football is about chasing glory, not generating profits. and if theres a chairman who is willing to financially subsidise football fans' chase for glory, we should welcome it imo.

I'd love to see someone have the balls to even suggest, let alone push through, a redistibutive system along the lines of:

- More equal sharing of gate receipts between home and away teams

would promote mediocrity imo. if someone is willing to invest in a new stadium with more seats, we should reward them as much as we can. splitting gate receipts would incentivise teams not to develop new stadiums.

- Completely equal distribution of TV money (perhaps with a certain amount set aside as bonuses for clubs who move up a certain number of places, to reward clubs that achieve above their means)

the current payout structure works fine imo. its the outside investment of the likes of abramovic that is really influencing title races and top 4 races.

- Limits on replica shirt prices

what effect would this have? seems to me like you want a cheap shirt, and have included this into a "bill" about financial inequality in football ;)
Until then we'll continue with something like this (from 2013-2014):

View attachment 2442

Where no team outside of the top 3 or 5 have a chance of winning the league, and no team from outside the top 5 or 6 has a chance of playing in the Champions League.

fudgeing *yawn*.

Except 99% of people don't seem to care, and instead continue to pour their money into the game whilst pouring themselves into pubs and online forums to moan about how **** their team is.

this is where is think you're wrong. 99% of epl fans are probably fans of one of the top 4 teams. thats basically why there is little desire to change the status quo imo.
 
wasn't the primary aim of FFP to stop rich people coming in, bankrolling clubs at unsustainable levels then leaving them in the brick when they didn't get instant success

it was never about a level playing field
 
this is where is think you're wrong. 99% of epl fans are probably fans of one of the top 4 teams. thats basically why there is little desire to change the status quo imo.

That would depend on how you define fan
 
A perspective shift is in order.
Once you understand that this is entertainment, then everything will be clear.
 
theres little protest against the financial inequality because most people are relatively happy with it imo. the people in power to change it, certainly seem to be happy anyway. the stauts quo makes them a lot of money, or keeps them in prestige positions, why would they want to distrupt that?

also, sport isnt a busness. thats why you've rightly pointed out that many of the top sides dont make money. and thats also why introducing financial limitations such as ffp is departed. the owners in favour of it are purely business men. if an owner is first and foremost a fan of football, they wouldnt be in favour of ffp imo. look at the epl chairmen who seem to be in favour of ffp. Ar5ena1's, ours' , liverpool's, and utd's.

all these guys want to take money out of their clubs. and ffp would allow them to do so. chairmen who are football fans and want to actually put money into football, do not support ffp. ffp is simply about owners being able to profit from their clubs like they do in america.

football is about chasing glory, not generating profits. and if theres a chairman who is willing to financially subsidise football fans' chase for glory, we should welcome it imo.



would promote mediocrity imo. if someone is willing to invest in a new stadium with more seats, we should reward them as much as we can. splitting gate receipts would incentivise teams not to develop new stadiums.

Fair point on disincentive for new stadiums - but a) I don't think stadium size has a huge impact on enjoyment of football matches (particularly on TV), b) I think that's a worthwhile tradeoff for more financial equality anyway, and c) it could still be benefical to build a new stadium, just less beneficial.

the current payout structure works fine imo. its the outside investment of the likes of abramovic that is really influencing title races and top 4 races.

No, that's just not true - look at the graph, which is based purely on revenue and doesn't include anything on owners investing additional money - the gulf is already gigantic.



what effect would this have? seems to me like you want a cheap shirt, and have included this into a "bill" about financial inequality in football ;)

:) I'm 31 and rarely buy a shirt anymore - it would just be a small change to reduce the difference in clubs merchandise revenues, as well as being a nice gesture to fans.

this is where is think you're wrong. 99% of epl fans are probably fans of one of the top 4 teams. thats basically why there is little desire to change the status quo imo.

Doubt it's 99% in England! Either way, there are still millions of fans outside of top 4 who don't seem to care or make their voices heard. Perhaps most of them are so far from the top 4 that it just doesn't feel relevant to them. As Spurs fans we are currently most affected. But even as a neutral it's boring always having the same teams competing at the top and hoovering up the rest of the league's best players.
 
remember Malaga was banned from european competition but of course they're a small club, UEFA wouldn't dream of extending that sort of penalty to any of the big boys, the only good thing I can say about UEFA is they aren't quite as corrupt as FIFA are
 
Even something like this would be an improvement, where the orange bars represent what revenues would be purely by giving a greater shares of TV money to the poorer teams:

upload_2015-9-8_14-22-22.png

Does anyone have good detailed info on who has what power when it comes to distributing PL TV money amongst the teams?
 
I know Swiss Ramble is for certain tastes; his blogs are often just graph porn. But he's done a bit on my club during the latest window, and essentially explains how we've been able to afford the enormous outlay of ~£150m on three players.

http://swissramble.blogspot.ch/2015/09/manchester-city-i-threw-brick-through.html

Worth a read if you're arsed/can be bothered.


Even something like this would be an improvement, where the orange bars represent what revenues would be purely by giving a greater shares of TV money to the poorer teams:

View attachment 2446

Does anyone have good detailed info on who has what power when it comes to distributing PL TV money amongst the teams?

Interesting graph, do you know what the parameters of it are?
 
People who spend money which the club receives? In which case I think that you are wrong.

surely the club's themselves should decide who their fans are. just like how jesus decides who his disciples are ;)
 
surely the club's themselves should decide who their fans are. just like how jesus decides who his disciples are ;)

Clubs would certainly define it as customers.

In domestic terms we are lucky in that there is widespread support for smaller teams and there is no way that the top four account for even a majority of football fans.

Overseas it is more difficult to gauge but I suspect that if you define it as someone picking a team and sticking with them, then again support for English teams is far more diverse.
 
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