A little over two years ago I made my opposition to Financial Fair Play clear in Financial Fair Prejudice. At the time the arguments against the system felt like the final futile attempts of resistance before football’s fair days of competiveness would be glazed over by a constant status quo. But this week Michel Platini proved that money’s more fluid than the previous positive counter-arguments. He announced that FFP would be eased this summer.
Victory at last? Not quite, well, not quite yet. It won’t be until the end of June we see exactly how much UEFA will ease the current rules. It also remains open to debate how they will do this and maintain a governable system. It is a step in the right direction. Or more accurately, a shuffle away from the wrong one.
Throughout various articles here I have attempted to demonstrate the reasons FFP is wholly unfair. That’s not to say I scoffed at Platini’s other remarks this week, namely the claim FFP was “working well.” To some degree, it is. If you recall, I have always been an advocate of a system that prevented a future Leeds or Portsmouth situation. My distaste for FFP has never meant I’ve overlooked this sentiment.
The figures themselves highlight the areas where FFP has been a positive force for change. But these should be used with caution, as other figures indicate an alternative version why FFP is being eased. Far be it from me to think ill of Platini or UEFA, or question their motives, but one could argue they aren’t acting out of benevolence at this point.
First, those good stats. The easiest demonstration is the net debt across all of Europe’s clubs. This has fallen from €1.7Bn to €400M over the three years from 2011 to 2014. Here in the Premier League transfer spending was the same in the recent January window as it was twelve months before, but notably less (by approximately £95M) than the 2011 January window. If we examine the club punished on our shores due to FFP, Manchester City, they have reduced their wage bill by £40M over this period.
Some will argue clubs, such as Manchester City, have shuffled some wages on their accounts (it’s reported support staff at Manchester City now are on the City Football Group’s payroll) but no one can deny a concerted effort has been made by England’s leading clubs to become more financially responsible. This is if we ignore the example set by Manchester United since their departure from the Champions League.
Newly crowned champions, Chelsea, did their business in the summer and reluctantly had to balance the books to bring in the signings they wanted. Arsenal have been doing this for years and continued to do so. The aforementioned City may not have spent as wisely but it was all within the tight confines their punishment afforded. Relegated Burnley resisted the urge to splash to survive and depart the top flight as a healthy model.
As a whole it appears that the majority are making the transition from potentially reckless to greener pastures.
This article now sets a record for the longest I’ve spoken about FFP without a criticism. Don’t worry, I have a few to hand. One last positive before we get there, and an example why we do need FFP to some (lesser) degree, the QPR model. They claim to be cutting costs but they are leaking money without any sign of on-field progression. Shareholders wrote off £60M worth of debt but they are still accountable to the Football League for financial irregularities. This alone could see them plummet through another division. Tony Fernandes isn’t fooling anyone when he says the club has learned from previous mistakes.
Fernandes is also the embodiment of the fair-weather rich chairman, fans of clubs without money threaten to those with new wealth. Manchester City fans have heard for the last few years, “What happens when they get bored and take their money with them?” It’s similar to what people levelled at Chelsea supporters when Roman Abramovich first appeared on the scene. He’s still going strong and so will Sheikh Monsour for years to come. It’s the QPR owner that has invested in a reckless, ill-advised, foolish manner, without an overarching plan or ways to improve club revenue streams, and he’s also the only one that has flirted with the idea of turning his back on football.
Roman and the Sheikh are successful business men. Most of these are rich because they are good with cash. They don’t consistently lose money. Rich football owners – those running the club with cash, not debt – are bound to apply similar rules. Losing cash isn’t in their DNA. The difference with Fernandes and his sporting ventures, QPR and the Caterham F1 team, have been treated like pet projects. Chelsea and Manchester City were extensions of successful business portfolios. As such they were examined and reshaped to flourish as a business. Success on the pitch was intertwined with eventual profits off it.
What irks me is the two-faced side emanating from Stamford Bridge in recent years. They should take applause for being an example of why FFP is bad for the game. The Chelsea model should be a term for how to achieve success. Instead they shade over their accelerated growth period and pretend they are on board with FFP for the good of the game. They’re on board to prevent new money clubs catching up with those in the elite party.
José Mourinho speaks as if he’s a crusader for FFP. That heavy spending – regardless of how it is sourced – should be stamped out. That this is Year One and the income you generate now is the only allowed money. No accelerated growth periods for anyone else. This is repulsive for more than one reason. Mourinho never mentions how Chelsea posted a £140M loss in 2005 in order to transform the club from also-rans into the outfit they are today.
During this heavy investment the model has seen Chelsea become the third largest generators of income in the Premier League. They only achieved this by spending in the first place. José also speaks as if they now comply because of the rules. This is a fallacy. In 2006, then Chelsea Chief Executive Peter Kenyon, claimed they would be self-sufficient within a year. His figures may have been out but the business model was clear: Roman didn’t want to run at a loss forever. Just like Sheikh Monsour, he knows to make a better business an initial loss has to be absorbed.
As usual Arsène Wenger sits in room complaining without many listening. This week’s snippet from Moan Corner was how UEFA lost FFP when it removed youth investment from the calculations. It seems Mr Wenger not only wanted to ensure the Have Nots never will have, but that the Always Haves also corner the youth market.
This encapsulates the reasons why the voices that at first appeared ignored, (I myself wrote: “There’s no point arguing against Financial Fair Play anymore,”) have suddenly found welcoming ears. The idea that clubs could never catch the big guns without being allowed to follow a well-implemented growth period, albeit running at a temporary loss, found traction. It did this slowly and with a dawning realisation across Europe.
The impending court cases levelled against UEFA have played their part. They highlight the moral hypocrisy of the current system but more worryingly for defence lawyers, the legal problems set off alarm bells. UEFA is tied to EU laws. And while the EU doesn’t want to see a sport in their lands defy current convention, they are accountable by their own mandates. Freedom of trade and competition laws being the major headaches.
Also, the money in football generates its own mini-economy. If the cash at the top is prevented from purchasing assets then smaller clubs find reduced revenue. Debts may reduce for those chasing the perfect model but ends can’t be met in smaller boardrooms. Blackburn Rovers are a solid example here. Their debt has increased by £24M in spite of reducing the wage bill. The secondary economy – but most important to me – is the impact on the fans. FFP, in its original form, will mean supporters pay the price as clubs try to balance the books.
Everything has a breaking strain. For the current FFP it came from European clubs struggling to stay on the top level without extra investment. They saw the Premier League sell its TV rights for £5.5Bn and realised the gap was about to become unbridgeable. Even Platini admits the Italians have asked for FFP to be eased even though it is other nations that currently benefit most from foreign investment. Monaco had already reacted by loaning out Falcao to remove his high wage from their books. Their loss was the gain of nineteen other clubs in the Premier League.
It’s possible big clubs like Manchester United – going through an accelerated growth period of their own – and Real Madrid lent on UEFA to lessen FFP because of the impending cases. They do operate with large debts; something that clubs like City and PSG have argued should be factored into calculations. Easing FFP takes the spot light away from those with big debt but large fan bases, reducing the microscopic moral investigation.
The most telling statement from Michel Platini was: “Any potential changes will look to encourage more growth, more competition and market stimulation while strengthening the emphasis on controlling spending and safeguarding financial stability.”
He’s summoned up perfectly the Manchester City model, the very ethos I championed before FFP was introduced. But don’t worry Michel, hindsight is 20/20.