Financial Fair Play - flawed concept or a logical solution?

[Big Poppa]

Once again Arsène Wenger has voiced his support for financial fair play and it's raison d'etre.:

<a class="postlink" href="http://www1.skysports.com/football/news/11661/8057539/Wenger-in-favour-of-FFP" onclick="window.open(this.href);return false;">http://www1.skysports.com/football/news ... our-of-FFP</a>" onclick="window.open(this.href);return false;

It's not difficult to understand why from an Arsenal point of view, we would be so vociferously behind the proposals. In your opinion though, how likely are they to really bring positive and fair competition to Football?

Arsène's supporting claim is that clubs should only get what they generate. However, it is a commonly known fact that most PL clubs have foreign ownership and they, like a lot of businesses, rely heavily on shareholder capital to re-invest in their playing squad.

The only feasible grounds I can see these rules having an effect through segregation of shareholder equity and revenue altogether. That though would have serious enough implications on the competitiveness of the PL such that;

a) Players would prefer to play abroad where no such rules existed and they could get a better salary
b) TV revenues would slump due to the decline in quality of the league

These two factors would mean that we would be more on a par with Chelsea and Man City but even further away from Barcelona and Real Madrid. The PL would become like the Scottish league again in my view.

I'm extremely concerned that the club has put all its eggs in one basket by pinning its hopes on this rule. If the laws were enforced globally by Fifa (and I have no idea how they could do that)only then would there be a true benefit. Furthermore, many clubs will fight the ruling in courts of law as restraint of trade, and will probably win.

What are your thoughts, and how do you envisage these rules being applied successfully?

 

[USArsenal]

no... because i dont think it will ever get to the point of teams getting kicked out of competitions. it will come down to fines (like the luxury cap in the US).. teams like Citeh will overspend and then be fined 1 for ever 1 over their breakeven point, and their sugar daddy will just pay it..

FFP has been talked about for a long time now, and yet i still see teams like Chelsea and Citeh spending 100m in a transfer window without any regard for the bottom line..

i think teams like us are, in fact, putting their hopes on something that probably will not come off they way they hope

 

[a_fourteen]

Any rule that is impossible to enforce is useless.

 

[entropy13]

I like the discussion on the FFP here.

 

[evoh_1]

there is already a topic on this surely you can continue in that:

<a class="postlink-local" href="https://arsenal-mania.com/forum/viewtopic.php?f=3&t=126702" onclick="window.open(this.href);return false;">viewtopic.php?f=3&t=126702</a>

 

[Arsenal in Aus]

I'm extremely concerned that the club has put all its eggs in one basket by pinning its hopes on this rule.

How has the club done that? We have no sugar daddy, so it's not like we have another option other than being self-sufficient (and no, Usmanov is not an option because Kroenke owns the shares).

 

[lee1001]

It begins: <a class="postlink" href="http://sports.ndtv.com/football/news/item/196409-uefa-withholds-prize-money-for-23-clubs" onclick="window.open(this.href);return false;">http://sports.ndtv.com/football/news/it ... r-23-clubs</a>?

 

[DJ_Markstar]

Basically, my main concern is this:

If they do permanently withhold prize money from teams who are deemed to be in breach of their rules, where does the money go?

I certainly hope not into the champaign fund or Blatter/Platini's savings account.

 

[AnthonyG]

Seems like a soft target list to me. The notable exception is Malaga (Fener couldn't pay bills either I think) and if their sugardaddy was still in the picture, they wouldn't be there either. I have my doubts this is going to work at all (even if correctly applied) and that list of mostly nobodies confirms that it's all a bit of a PR sham.

 

[Vinci]

The consequences in excluding clubs from European cup competitions will obviously hurt the clubs that are excluded, but as much will it hurt the competitions itself.

What if a City and Chelsea are excluded, do their CL-spots go to the teams that finished just behind them.. so that could be Sp**s, Liverpool, Everton, Newcastle and a bunch of others. In all honesty, no matter how much you hate City, they add some quality to the CL.. the other clubs that could take their place are no more than Europa League contenders.

In Spain, Barca and Madrid have insane revenues that they will probably not be excluded, but hypothetically they could be and the Champions League would be nothing more than a Europa League for advanced.

 

[RUS arsenal]

The consequences in excluding clubs from European cup competitions will obviously hurt the clubs that are excluded, but as much will it hurt the competitions itself.

What if a City and Chelsea are excluded, do their CL-spots go to the teams that finished just behind them.. so that could be Sp**s, Liverpool, Everton, Newcastle and a bunch of others. In all honesty, no matter how much you hate City, they add some quality to the CL.. the other clubs that could take their place are no more than Europa League contenders.

In Spain, Barca and Madrid have insane revenues that they will probably not be excluded, but hypothetically they could be and the Champions League would be nothing more than a Europa League for advanced.

Only until the clubs get it and then it will be back to a high level, perhaps even better as more teams will have a chance to legitimately win. As it is now, only semis and finals are really worth watching due to only a few clubs having most of the world talent.

 

[AnthonyG]

I see what you're saying, Vinci, but in that event players will abandon ship ASAP and Chelsea and ManC, for example, would return to the nothings they've been for most of their history.

 

[Vinci]

Ye, many players would probably want to abandon ship. It's about whether they would want to take a huge pay-cut in order to play in Europe for another club. Will be some test for some of the mercenaries out there.

 

[Anzac]

We are told that if FFP was strictly applied then it is doubtful that ANY Italian club would comply,
and likewise that only Barca & Real from La Liga.
As such it could spell the end of both domestic comps if there were a mass player exodus looking for CL football.

Likewise if the outstanding taxes owed were to be recovered from La Liga clubs then again we are told that several high profile clubs would be in trouble to survive.

Consequently UEFA simply can not afford to potentially ruin the core of the Euro Elite & 2 of their top5 domestic leagues, particularly one that provides the dominant club in Europe and the best national team in the modern game.

 

[RUS arsenal]

In Italy they didn't mind putting Juventus in the lower division. The prospect of reprimanding a big club only sounds scary until it is actually done and then it is not. As long as they don't punish too many big clubs at the same time, I don't see any real problems popping up.

 

[Anzac]

In Italy they didn't mind putting Juventus in the lower division. The prospect of reprimanding a big club only sounds scary until it is actually done and then it is not. As long as they don't punish too many big clubs at the same time, I don't see any real problems popping up.

But therein lies part of the probelem - even the Italians don't think that any of their clubs will meet FFP for either CL or EUROPA,
and in La Liga only the Big 2 look likely to do so,
and even then I have further doubts if the clubs are required by UEFA to pay their outstanding taxes or their competition prizemoney will be withheld.

 

[scytheavatar]

In Italy they didn't mind putting Juventus in the lower division. The prospect of reprimanding a big club only sounds scary until it is actually done and then it is not. As long as they don't punish too many big clubs at the same time, I don't see any real problems popping up.

But therein lies part of the probelem - even the Italians don't think that any of their clubs will meet FFP for either CL or EUROPA,
and in La Liga only the Big 2 look likely to do so,
and even then I have further doubts if the clubs are required by UEFA to pay their outstanding taxes or their competition prizemoney will be withheld.

Napoli will definitely pass the FFP, they have never been in the red since they were in Serie C1 in 2005/06 and they are one of the shiny models of how clubs should be run. If I am not wrong Juve drifts in and out of being profitable/not profitable and isn't in that bad of a situation. The only one that's defo screwed badly is Inter which has been sugar daddied more than Chelsea and Citeh.

 

[Anzac]

<a class="postlink" href="http://en.wikipedia.org/wiki/UEFA_Financial_Fair_Play_Regulations" onclick="window.open(this.href);return false;">http://en.wikipedia.org/wiki/UEFA_Finan ... egulations</a>

Italian clubs 'unable to comply with FFP'

On 29 March 2012 FIGC announced the annual report for Italian football,[112] which showed that only six clubs produced a profit during the 2010–11 season with an aggregate net loss of €428 million and negative equity of €204 million[113] Among the Serie A clubs, the total value of production dropped to €2.0312 billion[114] with the cost of production increased to €2.306 billion;[115] net asset (net equity) decreased to €150 million,[116] with equity ratio dropped to a very low ratio of 5%. The financial total debt was also increased to €928 million, up from €619 million in 2009–10 season.[117]

The big Italian clubs continued to rely heavily on TV money from the Champions League, however one qualifying place had been lost to the German Bundesliga for the 2011-12 season due to the recent poor performances of their sides in the competition and there was now increasing concern at the stagnant growth of Serie A club's match-day income, sponsorship and merchandising.[118] Certainly the Italian league appeared to be falling way behind their major rivals; A decade previously, the total €0.9 billion revenue of Serie A had been not far behind the English Premier League’s €1.1 billion, with the income of the Bundesliga, La Liga and French Ligue 1 trailing a long way behind at around €500 million each. Now, while Premier League revenues had surged to €2.4 billion, the Bundesliga and La Liga's earnings had now both caught up with Serie A at €1.5 billion with Ligue 1 not far behind at €1.2 billion[119]

Particularly worrying was the state of Juventus', finances. Still recovering from the effects of the Italian match fixing scandal which saw the club relegated, Juventus published the largest loss in their history at €95 million.[120] President Andrea Agnelli, who's company Exor owned shares in the Italian motor company Fiat, and who's family had long underwitten the club's spending, called the losses "intolerable," but said that they were necessary to keep the club competitive. In 2005, Juventus’ earnings had been the third highest in Europe but since then their revenues had actually declined by 33% (€75 million)[121] Having failed to qualify for that year’s Champion’s League and with a €43 million drop in domestic TV income due to the new collective deal, wages over turnover had jumped from 67% to a massive 91%, way above UEFA’s recommended maximum of 70%. Despite launching a new share sale aimed at raising €120 million of new money and changes to their financial model in order to meet FFP, Juventus admitted that losses for the coming year were also likely to be high.[122]

Despite being the highest earning Italian club, AC Milan - also having a long tradition of big losses covered by their owner - generated a €67.3 million deficit on earnings of €220 million in the year ending 31 December 2011 (for the whole Milan Group, not just the football club) on top of a €69.8 loss for 2009/10.[123]

Elsewhere at high spending Internazionale, who during the previous five years had lost a massive €665 million, the club's management were now seriously considering how they were going to meet the new rules. Again, 20 years previously Inter's revenues had actually exceeded that of Real Madrid but now totalled only around half that of their huge Spanish rival. Having estimated losses of €60 million for the previous season the club actually went on to record an €87 million loss, raising concerns that management were unable to control expenditure, at least in the short term. Even during their "best" recent year, 2010, when they won the Champions League and sold players worth €72 million, Inter still made a €69 million loss.[121]) One club official compared the state of football’s finances to the sub-prime banking crisis but vowed, "We will be ready to meet all the standards set by UEFA and we are working on various fronts. That means cutting costs and increasing revenues." Inter had already made a number of changes, including a salary cap of €3 million for most first team players, a lower basic salary (with higher bonuses for success), lower contracts for older players extending their contracts and the sale of expensive fringe players. Inter’s sporting director Marco Branca admitted that the club could no longer afford the fees paid in the past, declaring, "We have to organise our finances for the financial fair play rules in the next two years. We are looking for younger players now with great talent who we can develop."

Despite their efforts to improve finances in the future, the ‘Big Three’ of Italian football accounted for 89% (€252 million) of the total Serie A loss of €285 million in 2010/11,[123] and Massimo Moratti warned, "We are not yet able to balance the books. I don’t know how Italian clubs will play in the Champions League in future, if UEFA’s fair play is confirmed."[122]

 

[scytheavatar]

On 29 March 2012 FIGC announced the annual report for Italian football,[112] which showed that only six clubs produced a profit during the 2010–11 season with an aggregate net loss of €428 million and negative equity of €204 million[113]

That's probably better than many other league, I am not sure if England has 6 clubs which are in the black. And like I said obviously not all clubs are run poorly, Napoli is one of the best examples of a club that everyone should emulate and aspire to be, read this:

<a class="postlink" href="http://swissramble.blogspot.sg/search/label/Napoli" onclick="window.open(this.href);return false;">http://swissramble.blogspot.sg/search/label/Napoli</a>

 

[a_fourteen]

anything that hurts city and chelsea is a positive in my opinion.