Categorized | Guest Writer, Opinion

Financial Fair Play won’t save football

Posted on 02 August 2012. Tags: , , ,

Written by: ClockEnd5 on August 2, 2012.
Last revised by: LadyArse

By guest writer @ClockEnd5

On February 1979 the entire football world turned its eyes to the City Ground in Nottingham where Brian Clough, nonchalantly announced the signing of Trevor Francis from Birmingham City for a fee of £1,150,000.  The first million pound footballer had arrived.

Most commentators at the time were of the opinion that this sounded the death knell for football as a sport; predictions were that by the year 2000 we would see the first billion pound player.  Of course we have yet to hit the 100 million mark for a single transfer fee, but what they did get right was the insane amount of money that would be bandied about in football, from the birth of the Premiership to the present day.  Cloughie predicted that, it wouldn’t be the million pound player that would change football but the, then impending, advent of Sky.  As usual the maestro was right.

Last season UEFA’s much lauded Financial Fair Play (FFP) rules kicked in, when they come to fruition in the 2014-15 season they will level the playing field for all clubs, by only allowing for a 45 million deficit over that 3 year period, or face sanctions including being banned from UEFA competition.  How ever noble their intentions may be UEFA are fighting a losing battle.  A 15 million pound loss over a season is chicken feed for a creative accountant to “hide”.  For example, Man Utd whose debt is projected to reach a staggering Billion dollars in four years time, have sponsorship deals with DHL (official logistics partner), Epson (official office equipment partner), Globul (official communications partner in Bulgaria) and Mister Potato (official snack partner).  You get the idea.  If you have a shortfall in your accounts, line up Andrex as “toilet hygiene partners” and Bobs your uncle!

Even more worrying are the sponsors of their nearest and “dearest” neighbours Man City.  This club, paragons of virtue, the peoples club, self proclaimed antithesis of foul Mammon, have as their main sponsors Etihad Airways, Abu Dhabi tourism, Etisalat (telecoms) and Aabar(oil investment company).  All are owned by the UAE government and are protected from financial problems by them, by law.  Who is the deputy prime minister of the UAE?  That’s right, Sheikh Mansour owner of Man City.  Depressing isn’t it?  Well bear with me because it gets worse.

In this world wide recession, with everyone being urged to tighten their belts, the new football TV deal was negotiated and contrary to expectations increased by a whopping 71% to 3.5 billion pounds over 3 years.  BT alone paid 728 million pounds for 38 games, to put it into perspective BT Vision has 707,000 subscribers compared to Sky’s 10 million!  Of course putting these figures up there in black and white gives us no idea of the true implications of them.  They are after all just ones followed by loads of zeros which mean nothing in these straitened times we live in.

Let’s put it this way, Man City for winning last season’s Premiership got 60 million pounds.  When the new deal kicks in next season, the team that finishes last, the bottom club, will get 61 million.  Contrast this with the team that wins the Championship, just one place below them, who will get a paltry 5.5 million, a massive difference not commensurate with the gulf in class.  In two seasons the worst team in the league will have earned more than the best.

Taking all this into account, the attraction is there for any speculators who have 5 million to spend can buy a mid table Championship team, invest 10 million on players, get them into the Premiership, quadruple their money and then just walk away, leaving them to be the next Portsmouth.  And then how long until the Premiership clubs decide to do away with relegation altogether?  After all it will be in their best interests to maintain a closed shop, a sterile Premiership with the big boys creaming off the profits, while the rest can go hang!

I buy an Arsenal shirt every season but this year I’m going for one of those 1970’s vintage jobs.  I want to be seen as a supporter of our great club.  I don’t want to be seen as a billboard.

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About ClockEnd5

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  • Alex

    Really enjoyed the article but I can’t help and feel it ended abruptly.

  • Pingback: Financial Fair Play won’t save football » Leanne Hurley

  • Mike

    Great Post!
    At last someone who clearly understands the FFP and “creative” accounting!! There has been a lot of stupid commentry and speculation by a lot of TV and radio so called “experts” announcing how FFP rules will hit big spenders like Man City, Chelsea etc., but as you quite rightly explain it, there are very simple ways (and also some very complax ways) to offset or nullify the effects and effectively mean that the spending will continue. I also think your summary of the dangers relating to the new alocation of money is spot on! Who ever dreamt of this has got to be either the most incredibly blinkered fool on the planet or, more sinisterly, be part of a hidden agenda whereby the EPL becomes a closed shop as you quite rightly alude to!
    I think the realisation of this has been pointed out to Arsene and that is the reason why we have seen him go out and buy the likes of Giroud, Podolski and now Cazorla (plus maybe the realisation that our squad really wasn’t good enough??) although I would dearly like us to buy a top quality left back. I like Gibbs and to a lesser degree Santos for their forward abilities, but defensively they are extremely sub-standard (a good example was seen in our recent match atgainst Kitchen, where Gibbs’ weakness was exposed time and again, leading to 1 goal and exposing us time and again, if Kitchen can do this what are top clubs going to do???
    Qwll done again and keep up with your intelligent / inciteful writing!

  • Charlie G

    What happen to the rule regarding dual or multiple ownership of clubs. I thought there is a rule that restrict person from controlling mre than one club. In the case of thesemiddle eastern guys,they are all fromthe same family or finance thru the same source. Wouldn’t that constitute cross ownership or control?

  • PositiveGunner

    Don’t agree with the article because it has a few mistakes.

    First, the shortfall allowed for the first accounting period is 45mil EUROS which in today’s exchange rate translates to a little over 35mil pounds total over 3 years. Also, this 45mil is only allowed if the debt amount is taken up by owners through equitable investments (money in exchange for shares) otherwise it is just 5mil euros of allowed loss for the 3 year period. And this isn’t really something you can “hide” since it covers all player, agent and wage transactions including signing fees and bonuses (losses from developing infrastructure like a new stadium are allowed).

    Secondly, the city deal that everyone keeps harping on about, well that deal is currently under investigation and has NOT been approved YET under UEFA’s fair value policy. So the outcome of that will be interesting to see.

    As for teams earning money from sponsorships and TV Revenues (the right way), that’s a fair way to earn money and teams like Madrid and United are profitable because of their excellent commercial revenue (and ours will go up from 2014 as well). FFP is designed to prevent sugar daddies from essentially doing financial doping (like Chelsea did where Roman wrote off the money)

    Lastly, UEFA has the backing of the European Commission on this and it also has the backing of the Spanish giants and most teams in Europe. The ones most affected by this will be people with new money making big losses, namely Chelsea and City. United, Madrid, Barca and most other big teams meet FFP regulations by spending what they earn.

    I still have plenty of hope for FFP to come through and work.

  • Walgoat

    Excellent reply from PositiveGunner. The article really does have a few mistakes and is lacking overall. It’s ending is very melodramatic as well and a scenario that is almost impossible to take place.

  • http://twitter.com/clockend5 John O Sullivan

    Thanks everybody for reading and taking the time to comment. It is a subject which certainly divides opinion.

    PositiveGunner is of course correct, it will be measured in Euros and not Pounds, and the minimum deviation will be five million Euros as stated here;

    The acceptable deviation is EUR 5 million. However it can exceed this level upto the following amounts only if such excess is entirely covered by contributionsfrom equity participants and/or related parties:a) EUR 45 million for the monitoring period assessed in the licence seasons2013/14 and 2014/15;b) EUR 30 million for the monitoring period assessed in the licence seasons2015/16, 2016/17 and 2017/18;c) a lower amount as decided in due course by the UEFA Executive Committeefor the monitoring periods assessed in the following years. UEFA FFP Article 61.

    While I have no objection in principle to FFP and would dearly love it to succeed, my main issue with it is precisely the point PositiveGunner makes, that the big clubs have all signed up to it. Why would they sign up to it if they think it would affect them in anyway? As we speak there are teams of accountants and lawyers eagerly beavering away, working out ducking and diving strategies. If you think there aren’t then you’re being extremely naive.

    Of course we have to remember that the people “policing” this will be UEFA! Yes UEFA, have I missed something have they suddenly become competent overnight? And who watches the watchmen? FIFA…oh thats okay then.

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