“Our lawyers are very competent.” – PSG president Nasser al-Khelaifi
UEFA’s Financial Fair Play (FFP) rules promised the end of big spending, the end of clubs going bankrupt, and the rise of football as a self-sustaining enterprise. Their rules, along with the Football Association’s version of the same rule, were supposed to create a level playing field by punishing teams with ‘sugar daddy owners’ who spent beyond their means on transfers and salaries and who wracked up huge debts. But judging by the leaked news that UEFA is merely going to install a luxury tax and a sort of salary cap, along with the revelation that the Football Association is probably going to scrap their own version of FFP, and coupled with the unbridled spending of the last few years at all levels of football in England, it looks as if the lion of Financial Fair Play is simply a toothless old kitten.
UEFA have identified 76 teams who are under scrutiny this year but the two teams who are receiving the majority of the press are Man City and Paris St. Germain and for good reason. Man City lost £150m over the two year period where they were allowed a measly £37m in losses. Despite losing 4 times the allowed amount, nearly every reporter who has written about this topic seems to think that Man City are only due to receive a slap on the wrist from UEFA. From what I have read on The Times and Guardian Man City looks set to accept a fine and possibly some players will be excluded from competing next season.
Many fans, especially of the self-sustaining clubs like Arsenal, were hoping that UEFA would show some real courage and actually ban clubs like Man City from the Champions League but that looks highly unlikely since any club subject to such a ban would certainly sue in the Court of Arbitration for Sport. Instead of litigation, UEFA are keen to work with clubs on “settlements” and Man City are reportedly ok with the terms that UEFA are offering.
From what I gather, City will pay a “luxury tax” of sorts (it’s being called a fine in some reports) and then they will be asked to exclude a certain number of players from Champions League play next season. The number of players excluded will be based on salary, so for example we could see “£10m worth of City players” barred from the Champions League next season.
One of the places where many fans are curious to see how UEFA will react in in some of the sweetheart deals that wealthy owners and states are offering clubs in order to balance their books. Man City have had their sponsorship with Etihad examined and from what I gather UEFA looks set to rule that deal OK. Part of this is down to City’s willingness to work with UEFA on “coming in to compliance”.
PSG on the other hand is reportedly being “haughty” in negotiations with UEFA. PSG is a Qatari owned club and were awarded a backdated deal worth €200m a year with the Qatar Tourism Authority. The backdated deal wiped their debt of €130m last year, the equivalent of a teenager coming up short in his till one day and the very next day “finding” a backdated check from himself covering the cost. UEFA is investigatig the deal but PSG’s president is quoted at the start of this article with his basic response: “we have lawyers.”
Your team has to be in the one of the two UEFA competitions (Champions League and Europa League) in order to be subject to these penalties. Thus, Liverpool, who have made nearly £100m in losses in the last two years doesn’t even get investigated by UEFA, this year. However, if Liverpool finish in the top four, which seems very likely considering their position on the table, they will be eligible for European competitions next year and will then be subject to scrutiny.
Liverpool is a great example of how toothless these rules really are. The Scousers were on the verge of bankruptcy with £400m in debt when the Boston group stepped in and saved them from administration. Since then, much of the debt on the books has been retired (through inter-company, interest free loans) but the club continue to make huge losses season after season. This is precisely the kind of situation we were told that both UEFA’s FFP and the Football Association FFP rules would prevent: no team should be on the verge of bankruptcy only to receive a temporary reprieve and then start spending ludicrously again.
It will be interesting to see how UEFA deal with Liverpool’s books next year. They have lost money consistently year in and year out and only “retire” debt through inter-company loans. Chelsea have found similarly creative ways to cook their books. The so-called £2m in profits they made last year were actually £19m in losses if you don’t count their canceled shares in a joint venture with BSkyB, which Chelsea simply subsumed (e.g. Abramovich gifted). Chelsea has gone on to lose £50m again this season, but since the rules are structured so that losses are cumulative over two years, Chelsea once again avoid running into FFP’s toothless buzzsaw.
In the end, I would say that some of these revelations are disheartening except that what we are seeing leaked out of UEFA ahead of the actual decision at the end of the month is exactly what many feared. Financial Fair Play, whether it is the UEFA version or the Football Association version is not going to change the football landscape much. We’ve tried these sorts of soft caps in the USA and they simply don’t work. If you want to limit spending, if you want to control players costs, and if you want to make the playing field more level, European football needs to take an example from American Gridiron football and install a hard salary cap.
P.S. Tim Payton sent me a link to Oliver Kay’s piece on FFP in which Kay compares Man U to Man City: one club’s owners bought the team, loaded it with debt, and then took huge sums out and the other club’s owners transformed the club by pouring hundreds of millions of pounds in. The underlying argument of the Kay piece is that the Man U model is the real problem because they are taking money out of football, that Man U helped write FFP in order to protect their narrow self interests, and that billionaires should be allowed to spend recklessly.
It’s a variation on the “billionaire in every pot” argument that I have seen passed around for a while now. Basically, it is unfair to stop billionaires investing, that keeps small to middle teams small, and every team should get their own billionaire!
There is a pervasive notion that there are only two options: spend or do not spend. But the real answer is far more complex. There are many tiers to football and simply allowing billionaires to pick and choose which teams they are going to “invest” in is only going to benefit those few lucky teams who get chosen. Moreover, billionaires are going to pick teams with the kind of infrastructure ready for them to maximize their investments. The chances that some Oligharch is going to buy up Wigan and dump $1bn into the club are fairly small, I reckon.
Everyone else without a billionaire, regardless of history, and even perhaps in spite of hard work, will be relegated to the “have nots” pile. Manchester City is not blazing a trail for a new model, they are simply wanting to overthrow the old structure and put themselves at the top of a new one with new haves and new have nots. Along the way, the money that they have to spend in order to catch up, and catch up suddenly ruins the football market for everyone who doesn’t have a sugar daddy.
That last bit about catching up suddenly is a crucial component to this argument that no one wants to talk about. No one has a problem if Chelsea wanted to hire a manager who could, through prudent dealings in the transfer market and shrewd coaching, take their team from being a bus stop in Fulham to a Champions League club. What Chelsea, City, PSG, and Monaco have done is dump huge sums in to a sport that they know very little about in order to grow a business. These clubs’ early dealings prove that they don’t understand football, but rather just rely on huge sums of money to buy their way to glory.
Ironically, it’s the people who claim to be most traditionalist who support these billionaires. This despite the demonstrable fact that these billionaires know nothing about the sport and are merely dead set on overthrowing the very traditions that people claim to support.
No one wants their team to have all the money hoovered out of the coffers the way that Manchester United’s owners have over their time in charge. But the idea that FFP is the problem and that the billionaire model is the answer is risible. Chelsea and City could have become superpower clubs without insane investment, but it would have taken longer, it would have taken managers who knew how to spend wisely and not just buy the world’s most expensive players.
In short, they would have to have done it the Arsenal way.