UEFA’s new rules are admirable, but have holes for clubs to exploit

UEFA President Michel PlatiniWhile 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.

You can follow me on Twitter @JamesMcManus1
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