The return of the Champions League sees Europe’s greatest sides pit their wits against one another in a battle for continental supremacy. Where once it was a competition that saw sides win by mere merit, and judicious and effective youth development, it is now one that requires serious financial muscle to even get a look in beyond December.
In response to the growing inequality and financial mismanagement throughout football, UEFA have stepped in with their much vaunted Financial Fair Play policy (FFP). As Manchester City and Paris Saint-Germain return to action, the discourse often turns to their new clout granted by their Middle-Eastern investors and the contrast offered by abandoned Malaga. FPP is intended to level the playing field and promote sustainability.
The plan originated from UEFA president Michel Platini and was passed by UEFA’s executive committee in September 2009. It hoped that clubs would enact greater financial discipline, decrease the upward pressure on salaries and transfer fees, whilst encouraging them to invest in youth development and infrastructure with the hope that it would offer greater stability.
FFP sees clubs compete within their means and negate the effect of wealthy owners, allowing clubs to compete on a more level playing field. The impetus for the new policy came from the gloomy forecasts offered by Deloitte’s annual ‘Football Money League’ reports, which showed vast numbers of clubs across Europe with serious debts.
From 2010, clubs had a three year lead-in period which would see them make steps toward breaking even or face expulsion from European competition. This is followed by a further six year leeway with losses capped from 2012-13, the threshold lowering in 2015-16 and gone by the start of the 2018-19 season.
This process is overseen and implemented by the newly created Club Financial Control Panel, with the ability to look into compliance and enforce FFP through fines or expulsion from European competitions. This power was used at the start of the season to withhold prize money from clubs over non-payment to other clubs, most notably to Atlético Madrid and Sporting Lisbon.
It all sounds rather rosy and lovely when laid out. Put simply, FFP essentially imposes some common sense upon clubs and doesn’t allow another case akin to that of Leeds United or Portsmouth to develop. It has seen many clubs change their strategies in response and breed a new financial culture.
Despite the apparent strictness, there are ways around these rules and these loopholes are the cause of much discussion. The main perpetrators are, of course, the very clubs that are highlighted as those that need to be constrained. Rather than make loans or donations to the clubs, the owners of Manchester City and PSG have used companies they own or have a financial interest in to sponsor the clubs and various investments.
The owners of Manchester City have exploited a loophole by having Etihad Airways, a company also owned by the Abu Dhabi Royal Family, sponsor the club’s shirts, stadium and new training complex. The owners of PSG are expected to also indirectly sponsor their own shirts once the current deal expires. This year, Ligue 1 saw a record-breaking TV deal from the Qatari-owned Al-Jazeera and a slew of minor deals with firms connected to their owners.
This problem was supposedly addressed by the ‘fair value test’, but Manchester City’s £400m deal from Etihad has not come under any scrutiny, much to the disgust of Arsène Wenger and many others. This advantage, whilst significant, still does not remove the necessity for clubs to re-evaluate their spending and seek to become more sustainable.
Liverpool indulged in a summer clear-out of expensive players in an effort to conform to the rules, as did the aforementioned Man City. Clubs are looking to increase their commercial revenues by selling naming rights and all other manner of opportunities, ranging from ‘official partners’ in all sectors to money spinning tours in the Far-East or USA to boost support and milk the financial opportunities that foreign markets offer.
This overt and necessary commercialisation of the game has been here for a long time, and whether or not it sits well with fans is no longer an issue considered by the owners as it is increasingly needed for clubs to dine at the top table.
So how does a small club benefit from the new rules? FFP regulations do not count debt accrued from investing in stadia, improved training facilities or youth programmes, opening up the possibility for more home-grown talent to come into the first team. While negating the need for expensive signings, it allows fans to see talent coming up through the club and invest in the future and creating sustainable success.
We are in a time of great economic uncertainty, and yet the flow of money into football shows no sign of stopping. Clubs continue to place huge sums of money on the table to lure players from every corner of the globe, but belts are being tightened and greater responsibility being practised.
The future of the game is far from certain, but the signs are more positive now than at any time in the last decade. Still, UEFA have yet to address concerns over patronage through companies connected to their owners, the biggest test for FPP. Will UEFA shirk their responsibility if a big club falls foul of its rules? We can only hope that Platini’s bite is as fierce as his bark.