UEFA’s new rules are admirable, but have holes for clubs to exploit
While the aims of UEFA and Michel Platini’s brainchild, the Financial Fair Play (FFP) rules, are certainly admirable, there appear to be a few gaping holes that ensure all they do is simply change the financial landscape with the end result – the richest clubs getting richer – the same yet simply achieved in a different way.
The rules aim to cut off Europe’s elite from a perceived over-reliance on their wealthy owners, providing a fairer system by which clubs all have to operate within the same strict confines in the process.
However, the flaw with this point is, that while you can directly influence the amount of money clubs receive from their owners, the very same clubs will be those that receive most money from elsewhere in the form sponsorship, merchandising and TV revenue.
Liverpool’s breakout move yesterday where the club’s Managing Director Ian Ayre pointed a future way to get around the FFP rules when he stated that Premier League clubs should be able to make their own individual foreign TV rights deals.
With one eye firmly on the future financial state of the game, Ayre stated: “The other European clubs just don’t follow that model. They will create much greater revenue to go and buy the best players. If we carry on sharing that international revenue equally, you are disadvantaging us. While we must be careful to maintain the integrity of the Premier League we have to maintain our position in Europe as well.”
Man City and Barcelona have already been two clubs to go outside the legislated structure. The Catalan giants signed an astronomical £125m 5-year shirt sponsorship deal with the Qatar Foundation to have their name emblazoned across the famous red and blue striped shirt.
In the case of Man City, they will bank £400m over the course of a 10-year deal with Etihad Airways for the naming rights to their stadium. UEFA is said to be investigating the deal as to whether the club has broken specifically, the condition that stipulates sponsors with close links to club owners pay a fair price.
Etihad are owned by the Abu Dhabi government and the airline are associated with the City owner, Sheikh Mansour, a member of the Abu Dhabi royal family. The deal dwarves that of Arsenal’s naming rights deal struck with Arab airline Emirates back in 2004 for £90m over 15 years. When you factor in that City’s deal includes a 10-year extension to their shirt sponsorship, then it’s clear that the club are preparing to be the financial powerhouse they are today, without the reliance on their owner, after the FFP rules come into place.
The deal looks decidedly dodgy at first viewing and it’s worth noting that City do not even own the Etihad Stadium. The council, in the midst of tough financial cuts to their services, allowed City to negotiate the naming rights as part of an improved rental agreement, which means the club will pay the authority £20m over the next 5 years.
In Spain, Real Madrid and Barcelona’s monopoly on the majority of money gleaned from TV revenues renders the league somewhat uncompetitive by its end conclusion.
To put it into perspective, Madrid and Barcelona each make £118m a year on domestic rights alone. Valencia get 42m, Atletico Madrid just over £40m and Sevilla £27m. The duo’s stranglehold is certainly a topic of debate with President’s all over Spain attempting to force the issue, but it’s clear, while both Madrid and Barca hold all the cards, the league will remain a two-horse race.
The duo protest that because 60% of the nation’s fans support either two of the club’s, then they are well within their rights to demand the lion’s share of the proceeds from TV revenues. The can of worms opened up by Ayre could lead to a slippery slope. In all honesty, how much could the likes of Wigan, Bolton and Blackburn hope to gain from striking their own individual rights deals? They’d receive a fraction of what they are currently obtain and this latest development threatens, with the assistance of the facilitating FFP rules, to make the football landscape even more segregated.
Of course, the rules with regards to owners, are a deliberate attempt to address the issue of the financial black hole that has threatened the futures and safety of football clubs all over Europe, particularly when wealthy owners quickly lose their fortunes – as happened with Portsmouth and Sacha Gaydamak, West Ham and their Icelandic owners and when former Man City owner Thaksin Shinawatra and Birmingham owner Carson Yeung’s assets were frozen by the authorities.
The latest furore with concerns to the TV rights here in England could have a devastating effect on the future of many clubs and the very fabric around which the game is based. The Premier League shares it’s money out fairly evenly at present, but if clubs are allowed to negotiate their own separate deals, it could lead to a two-tiered division both financially and out on the pitch.
The overall aim of the FFP rules is clear – it hopes to wean clubs from their over-reliance on their owners while simultaneously trying to address the issue of ballooning wages. Chelsea’s wages currently take up 82% of their turnover, a figure that is quite frankly unsustainable, while the Abu Dhabi Group have pumped in well over £500m since their takeover into Man City – an eye watering amount that few, if any, in the world can compete with.
The club’s with the 3 highest turnovers in the world at present are Real Madrid (382m), Barcelona (346m) and Man Utd (286m) – these are without question the three best footballing sides in the world too, is it a coincidence? I think not. Will the FFP rules have any affect on them any time soon? It’s difficult to say with any certainty but it looks somewhat unlikely at present.
While UEFA’s rules, though good intentioned as they are, mandate that clubs can now only lose up to a maximum of £39m in total between 2011-14 otherwise they will be banned from competing in Europe, in practice, it will make little difference to those already inside the winner’s circle.
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Sadly it is the chicken and egg ,yes the two top spanish teams can justifiably state 60% following but could that not be due to the unfair monetary advantage
The same here in England
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I think the article is missing the point. The FFP rules are not designed to make the league more competetive. They are designed to stop the league from becoming unfair.
If Wigan were bought out by the president of the galaxy and spent £500bn to win the prem, fa cup, league cup, champs league, and paid for entry to the world cup so they could win that aswell, would that be fair???
The FFP rules will stop teams like City (Although they have jumped the waters early enough to be relitivelly uneffected) from dwarfing teams of equal or superior support and turnover like Spurs and Villa.
It is not supposed to help Spurs or Villa find it easier to win the league through capping the actual income of the teams at the top, it simply stops owners from ‘Topping it Up’.
Where it will help, is that if a team like RM, Barca, Utd, Chelsea, City et all want a player, they HAVE TO BE ABLE TO AFFORD IT. If the asking price is set too high, or the players wage demands are the move wont happen. Hence it will bring more power back to the teams and not the players, especially to the selling club.
It will keep prices low for Mid table transfers, and keep them real world for the elite.
The impacts are not simply about fair play, but are much more considered regarding the evolvement of the game and investers as a whole.
I am personally concered that, while in Spain they will be able to bypass the rules to an extent by using third party owned players, or by selling players to third party owners to generate investment, in England we will not.
The TV rights argument is a rediculous one, and should and will be discounted by all authorities concered. Do we want a 2 horse league where all the other clubs face administration EVERY year??
Didnt think so……….
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It’s true that FFP does have major holes which the top clubs would look to exploit. I’ve written several articles on my blog about FFP and was not really that surprised with the comments from Mr Ayre, about allowing the clubs to negotiate their own tv rights. If this was ever to happen then the premiership will become another La Liga or Scottish League. I’m sure there are plenty of fans out there who pray this will never happen. But the way football is going nowdays it’s probably only a matter of time until this does happen in england.
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Just two or three points. First when you consider Barcelona are, along with Real Madrid, the two biggest clubs on the planet, £25m a year for shirt sponsorship was not unrealistic. Given their iconic status and there was no yardstick given they had previously paid Unicef for their logo.
In the case of Citeh they are clearly not on the same level in terms of national or global appeal- £400m is a joke on FFP.The real problem here is that FFP allows stadium and training ground development. However they had not banked on an outside investor putting up all the money. It was anticipated that developments would be funded by clubs eg Emirates, new WHL or Anfield. The loophole is that Citeh have a double whammy here. Not only does the money from Etihad potentially improve Citeh’s commercial prospects in the future, it also allows Citeh to increase their current turnover (last year £125m) by £40m as well. This therefore increases their potential football budget as well. Given the rolling three year period we are now in Citeh are able now to spend an additional £120m. You should only be allowed to benefit once- either with the capital project or the increase in turnover, not both. Therefore the capital part of this deal should be disallowed for turnover purposes.
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Learn to use an apostrophe
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