The Good, The Bad & The Ugly of financial fair play
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In UEFA’s own words financial fair play is, “about improving the overall financial health of European club football.’’ This can be interpreted, as either making sure clubs who record continual losses each season do not end up with financial difficulties. Or, making sure the elite clubs remain elite and those who try to catch them might as well not bother.
How to bypass FFP
Manchester City and Paris Saint Germain are two clubs who have shown how to exploit UEFA’s confusing regulations. City who are owned by the Abu Dhabi United Group chaired by Sheikh Mansour. In 2011 they entered a huge £400m sponsorship deal with Etihad Airways who are chaired by Mansour’s brother Hamed bin Zayed Al Nahyan.
Similarly, PSG receive €120m a year from the Qatar Tourism Authority. Both City and PSG receive heavily inflated sponsorship deals as they are essentially sponsoring themselves whilst receiving financial support from a whole country, the UAE and Qatar. This has allowed both clubs to spend giant sums of money in recent years, most notably on Kevin De Bruyne and Neymar. Bruce Buck, chairman of Chelsea spoke about City’s inflated sponsorship deal back in 2013, he said: ‘’Uefa now has to wrestle with third party sponsorships. We are all hopeful Uefa will apply these rules in a fair and equitable manner.’’
A second way to squeeze past FFP involves signing players on long-term contracts. Signing a player on a 5 year contract means that for the clubs accounts, the transfer fee will be spread over the course of the players contract. As an example, signing a player for £15 million would only show up as around £3m on the clubs accounts for 2017/18.
Restricting Ambitious Clubs
Actually I agree with DYorke said, Championship isn't that difficult as lots ppl described, more as a good excuse. There's no retreat!#UTV— Dr. Tony Xia (@Dr_TonyXia) 25 June 2017
Aston Villa, the latest club to be thrown into financial turmoil are an example of Financial Fair Play and a risky owner going to battle. We have Twitter famous Dr Tony Xia who buys Aston Villa Football Club for £75m. He then spends nearly £90m on transfer fees over the next 24 months yet Aston Villa fail to gain promotion and remain in the Championship.
They now need to raise nearly £40m in order to comply with next years Financial Fair Play. Xia and Villa are being punished by FFP for spending too much and not gaining promotion, if these regulations weren’t in place then Villa could spend again next season with no hesitation yet they now need to reduce costs and may be required to sell key players such as Jack Grealish.
They will be a much weaker outfit next season with little money available for transfers even if they do manage to sell their core squad, which is full of 30+ year olds with very little resale value. In addition to this, with a serious cash flow problem at the minute, financial fair play has come at the wrong time for Aston Villa. The club have shown themselves to be poorly run and are now in turmoil, however in terms of financial fair play; they essentially will be punished for being too ambitious.
Following Aston Villa’s defeat in the Championship play-off final, I’ve taken a look at their Financial Fair Play (FFP) challenges. The conclusion is that they will be fine for 2017/18, but will need to take action to meet the 2018/19 target. Some thoughts follow #AVFC— Swiss Ramble (@SwissRamble) 29 May 2018
This is a key flaw in the way financial fair play works. If you gain promotion whilst breaking financial fair play rules, you are slapped with a fine, however that fine is usually a fraction of the money gained from promotion. If you do not achieve promotion, yet break financial fair play you can be given a fine, point’s deducted and be excluded from UEFA competitions.
A few Championship clubs in recent years have decided to chance their luck with financial fair play. Leicester and Bournemouth and have both been fined for breaching financial fair play rules during their promotion seasons.
Before 2013, championship clubs were permitted to make losses up to £8m per season however Leicester recorded losses of £34m in 2012/13. The club were fined a mere £3.1 million for breaking the rules which was nothing compared to what they received for winning promotion.
Bournemouth were also fined as they recorded losses of £38.3 million as they won the Championship title. The fine they were given, £7.6m. Again, hardly anything compared to what they won for getting promoted. Bournemouth received a lot of criticism, how could they spend so much with such low gates and ultimately get away with it.
Monaco owned by Russian billionaire Dimitry Ryboloblev are an example of a club that has adapted to financial fair play. During their first season after promotion, they spent over €160m on players such as Falcao, Joao Moutinho and James Rodriguez. However, during that season in 2013/14, UEFA added to the financial fair play regulations, requiring clubs to now show that they can break-even.
Ryboloblev knew that Monaco wouldn’t be able to keep spending as they only had a small income due to their low attendances. So they changed their approach to transfers and decided to buy young players, develop them and then sell them on for a huge profit.
Fans had to say goodbye to star players such as Rodriguez for €75m, Anthony Martial for €60m and Yannick Carrasco for €25m. The fans wanted answers but Ryboloblev said that there was no other way, speaking in 2015 to a group of around 1000 fans he said: ‘’Do you want to end up in Division 2, this is the road now.’’ There approach eventually paid off though as the following season they won Ligue 1 for the first time in 17 years.
Financial fair play has shown itself to be a ‘’tax on ambition’’. Clubs that have the talent, resources and knowledge are being punished. Clubs with owners who are prepared to leave their clubs with almost nothing causing financial ruin are allowed to get away with it whilst those that want to succeed get punished, albeit a small punishment if you get out of the division.
The Oyston Family, SISU group and Francesco Becchetti have all gotten away with dragging their clubs through financial ruin and have allowed them to slowly drift down the pyramid of English football. Have they been punished? No.
UEFA seemed to have good intentions when introducing financial fair play however they have created an ugly atmosphere around football where clubs have come up with various methods to bypass financial fair play, the elite will undoubtedly remain elite and ambitious clubs are being criticised by their rivals.
With some rare exceptions, clubs that have the financial capabilities to spend big will also have the capabilities to stop themselves from going under. So has financial fair play achieved its purpose of improving the health of European club football? Maybe, however its also forced clubs to sell players making leagues less competitive as clubs become weaker.
The list is ever growing, Porto, Inter, AC Milan and now Aston Villa. All clubs that have had to sell in order to conform to certain regulations that other clubs have broken and received a minor fine. The one thing it has achieved is making sure it’s even harder to catch Europe’s elite.
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