The Pernicious Impact of Financial Fair Play

UEFA Financial Fair Play Regulations were initially put in place to stop soccer clubs, like Chelsea and Manchester City, backed by rich owners, such as Roman Abramovich and Sheikh Mansour, from spending vast amounts of money of superstar players. UEFA argued that these teams advantage was unfair, and they felt that smaller clubs were stuck in a cycle of continual mediocrity because their best players were always being bought from them and there was nothing they could do. So, quite reasonably, UEFA claimed that a club cannot be losing money year after year when they are spending tens of millions on lavish transfers, and if they do, then they will be punished by FFP (Financial Fair Play) sanctions. Principally, this policy seems great - however, when we look at the actual impact it has had, it has devastated small teams and not particularly influenced the giant clubs.

The reason for the failure of UEFA’s economic policy of sorts is because they didn’t account for the financial success many of the large clubs have. As the sport of soccer grows more and more popular worldwide, the big clubs, already riddled with superstars, gain more and more fans. More fans translates into more revenue - more revenue means it’s far less likely one of these clubs will have a deficit at the end of the year, and that means FFP regulations won’t have any effect on them. Most of England’s largest soccer teams, such as Chelsea, Arsenal, Manchester City, and Manchester United have revenues well in excess of $350 million. The two Spanish giants, Real Madrid and Barcelona, have revenues which near $700 million. As it turns out, these clubs don’t have to worry about FFP - as long as they don’t grossly mismanage funds elsewhere, all these teams will continue to be profitable.

So who then are the teams that bear the brunt of FFP? Well Birmingham City is reportedly facing a transfer embargo for their breach of FFP. Bolton, Leeds, Middlesbrough and Bournemouth are also facing sanctions from UEFA. Most of you probably haven’t heard of these teams, that’s because they’re all in the second division of English soccer. What financial fair play actually does is prevent small teams from rising up the ranks. In fact, the chairman of Bolton admits that their owner, Eddie Davies, can’t contribute to the club like before because of financial fair play. Often, the way teams become successful is through their ownership group spending, and losing, vast amounts of money over a short period of time, until the team qualifies for something like the UEFA Champions League. Then, once the team is popular, competitive, and profitable, the owner recoups their money and makes a steady profit of their ownership. This natural growth of clubs is being prevented, and only a seldom few, Southampton springs to mind, have been able to break this mould. In the vast majority of cases, financial fair play is anything but fair. Small clubs are punished, and the rich, elite, and supremely successful clubs don’t even notice that it exists. Financial fair play creates greater barriers to success and further establishes the existing hierarchy of club soccer.

By,

Peter Koczanski 

 

Citations: 

http://www.forbes.com/teams/

http://www.theguardian.com/football/2013/dec/31/bolton-wanderer-record-debts-163m-relegation