08 Jan FINANCIAL FAIR PLAY: What is it actually doing?
FINANCIAL FAIR PLAY: What is it actually doing?
Matt Whale
Financial Fair Play Regulations were brought in during 2010 by UEFA to moderate the financial integrity of European football. The premise of the rules is that it prevents clubs from spending more than €5 million over what they have earned in a three-year assessment period—keeping a club operating within their means and discouraging disproportionate investment.
There has been a degree of ambiguity surrounding FFP for some time—many view it as simply a way of preventing outrageous spending, but the half-decade since its inception have seen an inflation in transfer fees and wages—raising many questions about the effectiveness of FFP. Has it made any difference?
Firstly, we must look at what ‘compliance’ with the regulations actually entails. Losses of €45 million were permitted between 2013 and 2015, but that has now dropped to €30 million for the next three seasons. On the surface, that seems a reasonable way to regulate excessive spending—surely the likes of Paris Saint-Germain and Manchester City have struggled to comply?
Actually, yes, they have. The Paris and Manchester clubs were both fined £49 million during 2014 for losses over that of what FFP regulations allowed—but paid less than half of that after following the conditions imposed on them by the fine. This instance (in which several smaller clubs were hit with smaller fines) was the only time that FFP has been enforced.
Man City have still averaged over £60 million net spend per year during the last five years, and have paid just £16.3 million in fines for this. They spent over £150 million during the summer’s transfer window—is this fair play?
The reason clubs can continue to spend despite the regulations is the huge amounts of prize and broadcast money that is paid to them, particularly in this country. Last season five clubs earnt over £90 million from their season, whilst there were nine clubs taking over £80 million. Even the club that finished bottom of the Premier League—Queens Park Rangers—earnt a staggering £64.9 million for a solitary season in the top flight.
Next season is the first of a three year deal for the Premier League’s TV rights. Split between Sky and BT, the value of the deal–£5.14 billion—is 71% more than what the two jointly paid three years ago (£3.02 billion). This means that the club that finishes bottom of the Premier League this year will receive roughly £97 million for the season—just £2 million shy of what the league champions (Chelsea) received last year.
It suddenly becomes easier for these clubs to follow the rules set by FFP, and increases the gap between the Premier League and the Championship. Only clubs that earn big bucks can spend them, and those resting in the lower leagues are left to fight against the tide of Premier League money. If FFP set out to prevent outrageous spending, why is it, in essence, preserving the status quo and preventing smaller clubs from using investors to propel their club upwards?
Former World Soccer and current Vice writer James Cook wasn’t enamoured by FFP’s progress when I spoke to him:
“The thing about Financial Fair Play is that it’s been created to stop clubs doing what dozens of clubs have already done—spend ridiculous money. They don’t need to land themselves in debt now, they’ve already become European giants.”
When I asked Mr. Cook if he thought FFP regulations were too lenient, he suggested that it “wasn’t a case of leniency”.
“They could be a bit more lenient with the rules if they actually enforced them,” said Mr. Cook. “They’re not enforcing the £30, £40 million fines that they’re supposed to, and that’s to clubs who spend that much on single transfers consistently.”
The issues that the regime sought to correct were the gaps between the elite and the chasing pack, but in reality the only clubs that have run afoul of it have been smaller clubs whose owners have invested. Neither Man City nor PSG have been traditional juggernauts of their leagues—the latter having only been founded 45 years ago. And even then, the investment that they have received has pushed them into the fore of European and domestic football regardless. It begs the question: has Financial Fair Play failed? Was it always doomed to fail?
The Champions League reads the same every year—the same teams, the same pairings: the same three clubs dominating. If FFP wanted to stop excessive spending from teams that are already at the pinnacle of the European game, then it has certainly failed. Seven of the ten most expensive transfers in football have occurred in the last five years, since the introduction of FFP. Of those, one were made by Real Madrid, two by Barcelona, one by PSG, one by Manchester City and one by Manchester United—teams that can afford to do this because of the riches of their domestic leagues and European football.
The awful truth is that UEFA’s regulations were far too little, and much too late. The excessive spending that has defined the last ten years in football was not even dented by the introduction of FFP—clubs were already too wealthy. The gap between the elite and the chasing pack was already too vast. All FFP has done, thusly, is hindered any of the smaller clubs from bridging that gap.
If FFP had been introduced at the beginning of the Premier League era (1992), would things have been different? Possibly. The likes of Manchester City and Chelsea would not have been able to bankroll their title challenges with their overseas owners, as they have done. Sheikh Mansour and Roman Abramovich’s investment in the clubs was very soon rewarded with Premier League titles and cup trophies aplenty—but such investment would be nigh impossible under current regulations.
It is difficult to argue that FFP has levelled any kind of playing field—its introduction can’t hurt the teams at the top of the pyramid, only teams that aspire to be. It is also made somewhat redundant by the money involved in modern football.
Financial Fair Play is a guise. UEFA—proprietors of the Champions League—are reliant on the continued success of the elite. They need the best teams to be able to buy the best players, and show them off in their competition. They can’t afford to prevent Barcelona from buying Luiz Suarez or Real Madrid from buying Gareth Bale—and even if they could, they certainly don’t want to.
Clubs’ spending is controlled by the money that they receive based on their on the pitch performance. How do you improve your performance on the pitch? By buying the best players—normally cheaper foreign imports. Any attempts to regulate debt and spending by clubs are always going to be invalidated by the carrot on the end of the stick—what’s a £20 million fine if you secure Premier League football for the next few years?
Is there a reason to continue with FFP? Perhaps. Although it is true that it cannot alter the spending habits of the elite (not by much, anyway), it can protect smaller clubs from financial problems. Without spending limits, clubs in lower divisions could potentially invest too heavily, with hopes of attaining Premier League status. Failure, however, could leave them in difficult situations—administration, or worse.
UEFA describe the aim of FFP as “to encourage clubs to build for success rather than continually seeking a ‘quick fix’”. Although to teams in lower leagues this may sound patronising, it also rings true.
The climate of modern football demands some form of regulation—FFP may not be it, but with no rules, football could become a game played first with a cheque book and second with a ball. Every club is a business now, and sadly the governing bodies—FIFA, UEFA and the FA—hold less power over them than is commonly thought.
Financial Fair Play may have been created with the best intentions—to prevent debt and regulate spending. In theory, it was a good plan. Unfortunately, it came far too late. The amount of money that the Premier League and all top European leagues are worth renders the system of FFP virtually worthless. Clubs aren’t making losses anymore, because the years of limitless spending have reaped their own riches.
The best that can be hoped for is that, as more and more money floods into the game, it trickles down and expands the lower leagues also. Financial Fair Play, however, cannot be counted on to fix the state of modern football—neither can it be blamed for it.
