Financial Fair Play

[duffbeer]

Will it hurt Fulham and other clubs with small grounds/stadiums?  I'm not sure I'm seeing how this is going to change things, surely some type of cap would have a larger effect.  And what does he mean with the comments about the Champions league being a monster.  Wont financial fair play make UEFA tournaments an even bigger deal due to the increased revenue.  Are clubs going to turn into high priced whores?  Do prem clubs share broadcast revenue evenly, regardless of what matches are shown?  Sorry for all the questions.


http://www.football-italia.net/jan12d.html

lUEFA President Michel Platini has stood by his decision to bring financial fair play into effect and also made a joke at Juventus' expense.

The legendary former French footballer's system will come into vigor from next season with the core principle being that clubs can no longer spend any more than they earn.

However, until 2013 clubs will be allowed to run a deficit of €45m, which will then be reduced to €30 until 2017 when a new maximum will be decided.

"Everyone is happy about fair play," Platini told La Gazzetta dello Sport. "Above all the owners of the big clubs. Those who put in the money.

"I want to leave UEFA with a better financial situation than when I arrived. Everyone knew about the problems, but closed their eyes so as not to face it.

"The Champions League has become a monster if some players say that winning it is better than the World Cup. Perhaps we'll have to give something back to the national teams."

Asked if any deficit at all is immoral, he said: "But football has been like this for 70 years. Even the teams that won in my day were a little above the law, but in comparison with today the investments made by Gianni Agnelli or Massimo Moratti's father were small.

"We are trying to put morals and logic back in the game. I don't like the football where a team who buys a player without paying for him wins something. I come from a football where there wasn't all this money."

Platini then turned his attention to his former club Juventus who have lost their last two games in Serie A.

"I saw 20 minutes against Napoli. There is no shame in losing at the San Paolo. It doesn't seem that bad to me.

"Sure if you don't win against Poznan and Salzburg, I reckon that it will take for presidential mandates from me to give them the Champions League."
 

[AlFayedsChequebook]

Financial Fair Play is not really good news for anyone outside the top 6-7 clubs in each country.

This is just another attempt at homogenising the European game and will only benefit the big clubs because their 'natural advantage' has been built over the past 100 or so years. They are pulling up the ladder, effectively. The new rules will allow the top clubs to limit player power in terms of wages and prevent young pretenders such as man city from attacking the cabal of clubs at the top.

Funnily enough, I am not mad at UEFA for trying something like this, I genuinely believe that Platini et al are trying to tackle the financial issues in  the game but are just going about it wrong.

There are only a few things that can change things:

1) Wage Cap
2) Transfer Cap
3) Equal prize and TV money for all teams

The above will never happen because the big clubs wont let it. Will the new rules have much of an effect? The answer will come when Barca/Real/Inter/Man Utd have fiscal issues and register too much debt; I bet they will never be banned from European competition.

[ImperialWhite]

1) Wage Cap
2) Transfer Cap
3) Equal prize and TV money for all teams

The above will never happen because the big clubs wont let it. Will the new rules have much of an effect? The answer will come when Barca/Real/Inter/Man Utd have fiscal issues and register too much debt; I bet they will never be banned from European competition. 

I agree with 1 and 2, and I agree that TV money should be split evenly, but equal prize money? Seems to me that winning trophies is a fairly legitimate way to gain a financial advantage over other teams. Perhaps  it would be fairer to distribute more of the money through the FA Cup? That would increase the trickledown effect the cup has, whilst also encouraging teams to try and win it (rather than focus on the league, which at the moment is a much more lucrative strategy).

To your list I'd also add the abolishing of parachute payments, which means the gulf between the Premier League (plus the dozen or so 'yo-yo teams') and the Football League increases.

[AlFayedsChequebook]

1) Wage Cap
2) Transfer Cap
3) Equal prize and TV money for all teams

The above will never happen because the big clubs wont let it. Will the new rules have much of an effect? The answer will come when Barca/Real/Inter/Man Utd have fiscal issues and register too much debt; I bet they will never be banned from European competition. 

I agree with 1 and 2, and I agree that TV money should be split evenly, but equal prize money? Seems to me that winning trophies is a fairly legitimate way to gain a financial advantage over other teams. Perhaps  it would be fairer to distribute more of the money through the FA Cup? That would increase the trickledown effect the cup has, whilst also encouraging teams to try and win it (rather than focus on the league, which at the moment is a much more lucrative strategy).

To your list I'd also add the abolishing of parachute payments, which means the gulf between the Premier League (plus the dozen or so 'yo-yo teams') and the Football League increases.

I say prize money, because that is what the Champions League Clubs consider Champions League television money.

[finnster01]

Can you not see the forest for all the trees? It will have bugger all impact on any club not qualified for Europe, which rules out most Prem clubs outside the Big4-6 except the odd lucky ones through things like Fair Play league and even that will only allow participation in the Europa League which economically are most likely to have minimal impact compared to the debt reduction necessary to comply with UEFA.

It will have little or no impact on clubs like Fulham actually.

[AlFayedsChequebook]

Can you not see the forest for all the trees? It will have bugger all impact on any club not qualified for Europe, which rules out most Prem clubs outside the Big4-6 except the odd lucky ones through things like Fair Play league and even that will only allow participation in the Europa League which economically are most likely to have minimal impact compared to the debt reduction necessary to comply with UEFA.

It will have little or no impact on clubs like Fulham actually.

That depends though. Say Al Fayed invested a load more money and we made it to the Europa League (very possible) but where then denied because of debt issues, it would affect us then.

It might not effect us now, but it will as soon as we have any future successes.

[finnster01]

Can you not see the forest for all the trees? It will have bugger all impact on any club not qualified for Europe, which rules out most Prem clubs outside the Big4-6 except the odd lucky ones through things like Fair Play league and even that will only allow participation in the Europa League which economically are most likely to have minimal impact compared to the debt reduction necessary to comply with UEFA.

It will have little or no impact on clubs like Fulham actually.

That depends though. Say Al Fayed invested a load more money and we made it to the Europa League (very possible) but where then denied because of debt issues, it would affect us then.

It might not effect us now, but it will as soon as we have any future successes.

I agree. It would indeed affect us then ASSUMING Europa League would be a regular annual fixture for us. However, even if MAF invested unlimited money in Fulham and forgave us all debt,  we would still be in breach as the UEFA rules would prevent us to recognize those kind of "sugar daddy" contributions as it requires everything to be accounted at a fair market value (using GAAP).

All this UEFA nonsense means that small clubs are less likely to be able to play in Europe, and how often do that realistically affect Fulham?

[AlFayedsChequebook]

Can you not see the forest for all the trees? It will have bugger all impact on any club not qualified for Europe, which rules out most Prem clubs outside the Big4-6 except the odd lucky ones through things like Fair Play league and even that will only allow participation in the Europa League which economically are most likely to have minimal impact compared to the debt reduction necessary to comply with UEFA.

It will have little or no impact on clubs like Fulham actually.

That depends though. Say Al Fayed invested a load more money and we made it to the Europa League (very possible) but where then denied because of debt issues, it would affect us then.

It might not effect us now, but it will as soon as we have any future successes.

I agree. It would indeed affect us then ASSUMING Europa League would be a regular annual fixture for us. However, even if MAF invested unlimited money in Fulham and forgave us all debt,  we would still be in breach as the UEFA rules would prevent us to recognize those kind of "sugar daddy" contributions as it requires everything to be accounted at a fair market value (using GAAP).

All this UEFA nonsense means that small clubs are less likely to be able to play in Europe, and how often do that realistically affect Fulham?

That is true, but could effect teams that break into the usual suspects.

[White Noise]

http://www.guardian.co.uk/football/blog/2011/jan/11/uefa-financial-fair-play-rules?INTCMP=SRCH


Uefa outlines threat to ban European clubs who break rules on financeNew financial rules put the Uefa president Michel Platini on a collision course with many of the most powerful clubs in Europe



Comments (156)

 
Owen Gibson in Nyon guardian.co.uk,

Tuesday 11 January 2011 21.58 GMT


Looking out over the calm waters of Lake Geneva, Uefa executives today considered the far-reaching effects of new rules that they claim will irrevocably change the landscape of European football.

Their accountants outlined, in painstaking detail, the intricacies of the financial fair play rules and revealed the figures which they say make the new rules vital for the game's future. Clubs who do not comply with the central tenet of living within their means could be banned from Europe before the 2014-15 season.

Meanwhile, at their Carrington training ground Manchester City were unveiling their £27m striker Edin Dzeko, the latest addition to a playing squad assembled at huge expense by Sheikh Mansour since he bought the club in August 2008 and began a unprecedented spending spree that led to losses of £121m.

As City's manager, Roberto Mancini, again insisted that this was just one last splurge before the club would knuckle down to the business of meeting the new standards, Platini was unequivocal about the consequences for any club that did not ultimately comply.

"With power comes the responsibility to help and protect football," said Platini, who is virtually certain to be re-elected as Uefa president for another four-year period in April. The success or failure of that tenure will be defined by the effect of his bold initiative.

He said Mansour had personally assured him last year that City would comply, but Uefa insiders said the club faced a "big challenge".

Uefa's 2009 benchmarking report, published today and running to 111 pages of dense graphs and statistics, showed that this was far from an English disease. More than half (56%) of the European top division clubs reported net losses in 2009, compared to 47% in 2008.

An in-depth analysis of the accounts of the Premier League's own clubs for the same period carried out by the Guardian last year showed that almost three-quarters of them would fall foul of the new Uefa regulations, if they were applied tomorrow.

Under the new rules, clubs must pledge to break even on all football activities, subject to a sliding scale of acceptable losses that can be covered by a club's owner. In the first two years that will be analysed by Uefa's team of accountants – 2011-12 and 2012-13 – clubs will be permitted to overspend by a total of €45m (£37.4m) as long as that figure is cancelled out by an equity injection from the owner.

Over the following three seasons, the permitted losses will again be set at €45m over the entire period. That will then drop to €30m over three seasons, then €15m, then zero.

Once a club, which will be investigated in detail if it exhibits one of a number of warning signs, fails the test the case will pass to a new panel set up to decide on sanctions.

But there are crucial caveats. If clubs can show that they are travelling in the right direction, that their losses are reducing year on year and can point to them being a result of contracts signed before June 2010 when the rules were enshrined in Uefa's rulebook, that may reduce the sanction. An outright European ban is being described as a last resort – but an eminently plausible one.

As such, the process will be far from as straightforward as the basic "live within your means" premise suggests. But Manchester City aside, Platini claimed the new rules were already having an impact on the spending habits of Europe's major clubs.

Indeed, for very different reasons, they have been positively welcomed by Roman Abramovich at Chelsea (having already ploughed £700m into the club), by the Glazers at Manchester United (who hope to use their natural revenue-generating strengths to increase their competitiveness without spending more) and by Arsenal's chief executive, Ivan Gazidis (who believes it will reward his club's careful financial husbandry).

Gianni Infantino, Uefa's general secretary, today described the new rules as a de facto salary cap because they would stop clubs overspending on wages. He pointed to the 2009 figures as the reason why the status quo could not continue.

Uefa's figures showed that top-flight clubs across 53 countries increased their revenue by 4.8% to €11.7bn during the year despite the impact of the recession. But costs rose by twice that, 9.3%, to result in total losses of €1.2bn – more than twice the previous record. More than half of the 733 clubs audited [56%] reporting a net loss. Just four leagues broke even – Germany, Austria, Belgium and Sweden. At 249 clubs, more than 70% of turnover was spent on players' wages and at 73 of those more than 100% of all the club's income went on player wages.

The overall aim, said Infantino, was to curb wage inflation and break the cycle that has taken hold in the Premier League and elsewhere – of fans desperately hoping for a "white knight" on a steed: "What kind of healthy business model is it to wait for a white knight on a horse with a lot of money to throw around and then one day to jump on his horse and ride away?"

Platini is deeply committed to his quest but many practical questions remain. Uefa tried to meet some of those head on today, describing in detail how the analyses would be carried out and how factors such as sponsorship revenue from owners would be subject to market value tests.

Uefa still has trouble answering the charge that all this could merely result in preserving the existing order in aspic, enabling the big clubs to extend their advantage by virtue of their natural advantage. The Premier League has forcefully pointed out that investment of the kind that once took Blackburn Rovers to a title or Fulham to the Europa League final would be impossible under the new rules.

Instead, Infantino pointed to the advantages of long-term investment in stadium infrastructure and youth development. Owners can still plough unlimited sums into both, and goodwill costs will also be written off.

"A decade ago, Arsenal reported less income than Liverpool and Newcastle. In 2009, after a decade of investment, their income is more than double Newcastle and higher than Liverpool. It is possible for a club to come up with good management but it does it in a healthy way. That is what we want, long-term benefits."

Ultimately, the political trade-off between the European Clubs Association (ECA), the organisation that represents 197 of the biggest clubs, and Uefa will result in a new landscape in which there will be winners and losers – with the biggest clubs likely to be among the former.

Platini is confident it will help usher in a new era of responsible club ownership. Others are convinced that the most determined would find a way round the new rules, although Uefa warned it would come down twice as hard on those who tried to mask overspending.

But the climate of being under constant review by Uefa and at risk of what the ECA chairman, Karl-Heinz Rummenigge, described as the potential "meltdown" scenario of not being allowed to enter European competition would be more than enough to bring clubs into line, he said. "It's time to step on the brake and bring a bit of rationality to football."

[Edwatch_Winston_Malone]

Big clubs will find a way...

I expect that they can get around this by securing a 'sponsorship deal' for tens of million pounds each year

[ImperialWhite]

Big clubs will find a way...

I expect that they can get around this by securing a 'sponsorship deal' for tens of million pounds each year

That'll never happen.

http://www.mcfc.co.uk/the-club/sponsors

Etihad Airways, Etisalat, Abu Dhabi Tourism Authority (ADTA) and Aabar all sponsor Man City for legitimate business reasons!  :005:

[TonyGilroy]

I understand why governments had to step in to save banks to safeguard innocent investors savings and to stop a domino effect of one failure leading to others.

With football clubs though I really don't understand why it matters if some clubs are financially irresponsible and go bust. It happens all the time and invariably the club comes out of administration and carries on usually, initially, at a lower level. So what.

Of more concern to me is money laundering. As a solicitor I am highly regulated and responsible for checking the source of my clients funds. Hard to imagine that some of the mega money that's been used to buy and run clubs at a loss isn't dodgy but there doesn't appear to be any degree of responsibility or regulation.

Agents brown envelopes are of small consequence compared to the massive money used for some takeovers.

[AlFayedsChequebook]

I understand why governments had to step in to save banks to safeguard innocent investors savings and to stop a domino effect of one failure leading to others.

With football clubs though I really don't understand why it matters if some clubs are financially irresponsible and go bust. It happens all the time and invariably the club comes out of administration and carries on usually, initially, at a lower level. So what.

Of more concern to me is money laundering. As a solicitor I am highly regulated and responsible for checking the source of my clients funds. Hard to imagine that some of the mega money that's been used to buy and run clubs at a loss isn't dodgy but there doesn't appear to be any degree of responsibility or regulation.

Agents brown envelopes are of small consequence compared to the massive money used for some takeovers.

In the book 'Why England Lose' by Simon Kuper and Stefan Szymanski they have some excellent observations on football clubs as businesses. They point out that in this history of professional football in the UK, only (something like) 2 clubs have disappeared completely from existence whilst in that same period over 200 banks have gone bust.

[b+w geezer]

only (something like) 2 clubs have disappeared completely from existence whilst in that same period over 200 banks have gone bust.

But that's been at the expense of wriggling out of debts left, right and centre. Portsmouth never paid the St John's Ambulance brigade, to take a recent example. Admittedly we'd want FFC to similarly wriggle free if it came to it, but objectively the track history of football club survival stinks, and the new rules are to be applauded. Will be interesting to see whether they can get them to apply to the likes of Real Madrid.

Nb. hope my new avatar is working; thanks to LBNo11 for his advice.

[Oakeshott]

Football clubs, like banks, should be private sector bodies, wholly unregulated by governments (who would do well to put in order things that are their proper business, like making sure our troops are properly equipped before sending them out on ridiculous and highly dangerous missions like Afghanistan). If a bank or football club goes bust, so be it. The marvel of free markets is that there is always someone more capable around ready to pick up the pieces and make better use of the assets of the collapsed bank/football club/any other form of business enterprise.

Unfortunately all PM since Lady Thatcher have felt the need to intervene on sporting matters - NOT their business, they should keep their snouts out.

[AlFayedsChequebook]

Football clubs, like banks, should be private sector bodies, wholly unregulated by governments (who would do well to put in order things that are their proper business, like making sure our troops are properly equipped before sending them out on ridiculous and highly dangerous missions like Afghanistan). If a bank or football club goes bust, so be it. The marvel of free markets is that there is always someone more capable around ready to pick up the pieces and make better use of the assets of the collapsed bank/football club/any other form of business enterprise.

Unfortunately all PM since Lady Thatcher have felt the need to intervene on sporting matters - NOT their business, they should keep their snouts out.

Spot the Trade Unionist!  :011:

[ImperialWhite]

Football clubs, like banks, should be private sector bodies, wholly unregulated by governments (who would do well to put in order things that are their proper business, like making sure our troops are properly equipped before sending them out on ridiculous and highly dangerous missions like Afghanistan). If a bank or football club goes bust, so be it. The marvel of free markets is that there is always someone more capable around ready to pick up the pieces and make better use of the assets of the collapsed bank/football club/any other form of business enterprise.

Unfortunately all PM since Lady Thatcher have felt the need to intervene on sporting matters - NOT their business, they should keep their snouts out.

I'm a bit of a lefty I'll admit, but I disagree mate.

Some things are more than just businesses - if a bank goes, so be it, so long as people can find new jobs. But a football club is different, it means something to people. It's part of a community. If we're keeping theatres and art galleries afloat, then we should keep football clubs afloat too.

The problem with the free market model is that it puts business before people. It might be best way of running an economy (not convinced myself) but it isn't the best way of looking after people. What if the best business decision is shutting down a factory or shifting production to China/India? Good for the business, cutting costs (to crowbar another point in here, look to the Gulf Of Mexico to see what can happen when a company is allowed to cut costs) and all that, but not for the poor buggers who don't have a job anymore.

[TonyGilroy]

only (something like) 2 clubs have disappeared completely from existence whilst in that same period over 200 banks have gone bust.

But that's been at the expense of wriggling out of debts left, right and centre. Portsmouth never paid the St John's Ambulance brigade, to take a recent example. Admittedly we'd want FFC to similarly wriggle free if it came to it, but objectively the track history of football club survival stinks, and the new rules are to be applauded. Will be interesting to see whether they can get them to apply to the likes of Real Madrid.

Nb. hope my new avatar is working; thanks to LBNo11 for his advice.

The FA choose to protect football creditors on an administration. They could easily add charitable organisations, local traders, small creditors etc to that list. They should.

[AlFayedsChequebook]

Football clubs, like banks, should be private sector bodies, wholly unregulated by governments (who would do well to put in order things that are their proper business, like making sure our troops are properly equipped before sending them out on ridiculous and highly dangerous missions like Afghanistan). If a bank or football club goes bust, so be it. The marvel of free markets is that there is always someone more capable around ready to pick up the pieces and make better use of the assets of the collapsed bank/football club/any other form of business enterprise.

Unfortunately all PM since Lady Thatcher have felt the need to intervene on sporting matters - NOT their business, they should keep their snouts out.

I'm a bit of a lefty I'll admit, but I disagree mate.

Some things are more than just businesses - if a bank goes, so be it, so long as people can find new jobs. But a football club is different, it means something to people. It's part of a community. If we're keeping theatres and art galleries afloat, then we should keep football clubs afloat too.

The problem with the free market model is that it puts business before people. It might be best way of running an economy (not convinced myself) but it isn't the best way of looking after people. What if the best business decision is shutting down a factory or shifting production to China/India? Good for the business, cutting costs (to crowbar another point in here, look to the Gulf Of Mexico to see what can happen when a company is allowed to cut costs) and all that, but not for the poor buggers who don't have a job anymore.

Again, I think the pertinent point here is that the clubs rarely 'shut down' or cease to exist. There is a lot of hyperbole surrounding debt at clubs, take Portsmouth for example. Despite massively overspending, not paying players wages or transfer fees, not signing anyone, having a squad of 15 players, not being able to name a full substitutes bench etc etc etc, they are still very much alive and kicking in the championship.

Other examples include Leeds, Charlton and  Southampton. They had the pain of relegation but are still strong entities.

Clubs mean something to people, yes, but if dropping a few divisions tests your patience/love of your team then what kind of supporter are you anyway?

[Oakeshott]

"If we're keeping theatres and art galleries afloat, then we should keep football clubs afloat too."

Obviously from my view of the proper role of the state (essentially that of Adam Smith) I do not believe that the government should financially support the arts. What needs to be remembered is that support ALWAYS equals money, governments per se have no money, so support ALWAYS equals taxation in one form or another. I don't expect the taxpayer to subsidize my ticket at Fulham mathces and I certainly don't want to subsidize seats at the Royal Opera House or National Theatre.

Government should be about doing a few things very well - mainly safeguarding us from foreign threats (not the problem these days as it was in centuries past - hard to see the French, the Germans or even the Russians trying to invade us) and maintaining law and order on the streets.