Since UEFA approved plans to regulate the spending of clubs in 2009 with the unveiling of Financial Fair Play, the soccer world has waited to see whether it had the teeth to back up its bark. Nearly five years later that question was in large part answered with strong, meaningful punishments handed down to two of Europe’s big guns Manchester City and Paris Saint-Germain.
However, debate about FFP rages on. Is it a system that helps ensure financial stability? Or is its main impact to help preserve the status quo at the top of the European game?
The basic rules of FFP are fairly straightforward: clubs can spend €5 million more than they earn per three-year assessment period. This figure can then be increased if it is entirely covered by investment from the owners of the club to €45 million for the seasons 2013-14 and 2014-15 and €30 million for the following three seasons.
Nine clubs were found to have failed to comply with this legislation and were summarily handed a variety of punishments, ranging from small fines to large financial penalties in addition to sporting sanctions and future spending restrictions. It is the sporting sanctions that have given the regulations their bite.
Manchester City were the last club to reach a settlement and were also given the strongest punishment. The club, bankrolled by massive investment by member of Abu Dhabi’s ruling Al Nahyan family, Sheikh Mansour, since 2008, were found to have recorded losses of over €185 million for 2011-12 and 2012-13. Crucially, UEFA called into question several of City’s high-yielding sponsorship deals. Such agreements with Abu Dhabi companies, along with similar ones made by Qatari-Investment-Authority-owned Paris Saint-Germain, were seen as a potential way for clubs to get round the regulations. UEFA rejected this as they did City’s claim that their losses should be mitigated by their investment in youth development, community infrastructure and their argument that much of their losses were due to contracts with players signed before FFP came into effect.
City should garner little sympathy given that they knew the rules and breached them, but there is a broader question over whether what they have done is right to be punished. Sheikh Mansour has lifted a club that had struggled mostly down the wrong end of the Premier League table in recent years and was even in the third tier of English soccer just 15 years ago, to Premier League champions and contenders in the Champions League, not to mention reinvigorating one of the poorest areas of Manchester. They have shaken up the elite in England and are threatening to do the same on the continent.
The conditional fine handed to City of €60 million is a startling figure, and indeed represents a record fine, yet on its own it would hardly be likely to deter City’s multi-billionaire owner from continued investment. However, the fact that their European squad will be cut from the usual 25 players to just 21 next season means the club will be doing everything they can to ensure they do not fall foul of FFP again. Given that City were already struggling to fulfill the quota of home-grown players that must comprise part of that 25, manager Manuel Pellegrini and the club’s staff face a major headache and far less flexibility in their summer transfer activity.
On the face of it, it will hamper the chances of one of the clubs who are able to compete with an increasingly entrenched elite at the top of the European game. And that is the problem many people have with FFP. Because of the huge revenues they generate as a result of their strong brand built up from years of success, the likes of Manchester United, Real Madrid, Barcelona and Bayern Munich are able to spend lavish amounts on transfers and wages without falling foul of FFP. There is no equality in terms of income from sources such as television revenue, prize money and merchandizing -- as there are in sports in the United States -- so is it right therefore to try and bring equality to spending?
The issue of whether FFP is actually fulfilling its mission to improve the financial health of European football comes under particular scrutiny when dealing with the two big clubs from Manchester. While City have been punished for having an owner investing money into the club and the surrounding area at all levels, United were brought by the Glazer family with £525 million of borrowed money and since more than £600 million has been drained out of the club in interest payments and other fees. Yet, while City are punished, United’s business model sits within the rules.
Whatever the opinion on FFP, it is clear that it is not perfect. Still, more palatable than simply preserving the current elite, what FFP will do is reward those clubs that spend within their means. Manchester City’s punishment was good news for a number of teams, particularly in the Premier League. Many clubs have been picked apart by the lavish spending power of City and previously Chelsea, teams who will now be forced to take a much more considered approach to their financial commitments.
Here’s a look at three teams who could benefit:
Manager Arsene Wenger has been one of the biggest advocates for Financial Fair Play and the biggest critics of heavy spending, coining the term “financial doping.” The Frenchman with the economics degree has always ensured that Arsenal lived well within their means, and has arguably been overly cautious. He has watched as players like Samir Nasri, Gael Clichy, Emmanuel Adebayor and Kolo Toure have left Arsenal and gone onto receive far higher financial rewards at City. He could be set to do so again this summer, with right-back Bacary Sagna reported to be leaving Arsenal and signing a contract with City worth nearly twice what Arsenal were said to be offering. However, their recent punishment may mean City now think twice about that and future similar outlays. With a recent impressive new stadium, recent improved sponsorship deals, this should be Arsenal’s time to shine once more.
Arsenal’s north London rivals have also long had an approach of spending within their means. If it hadn’t have been for the huge investments in Chelsea and Manchester City in the past decade, there is a strong possibility that Tottenham would have been a regular in the Champions League. Much was made of the fact that Spurs spent over £100 million last summer, but they recouped even more than that, helped by the record £85 million received for selling Gareth Bale. With Tottenham hopeful of moving into a new stadium in 2017 to fully capitalize on their sizable fan base, there is reason to think that Tottenham will have the infrastructure in place to compete at the top end of the Premier League. Without inflated spending elsewhere, If they can get back into the Champions League, coupled with their London location, it will make Tottenham one of the most attractive clubs in England.
Everton have been a victim of City’s spending when losing Joleon Lescott and Jack Rodwell in recent years. Lescott was signed on what was frankly an absurd £90,000 a week, with Everton powerless to resist, while one of their most promising young players Rodwell was snapped up in a move that could be viewed as City simply stockpiling players, because they could. It is now hard to imagine City making such deals. Yet, although a more even financial playing field favors Everton, the fact that people are now unable to buy clubs and simply spend what they want to turn them into a force may make it even harder for the Merseyside club to attract the owner with deep pockets that they have long sought. A new stadium will be necessary if Everton are to fully capitalize on FFP.