Financial Fair Play

Paully D

What are your thoughts on this incoming rule?

Personally, when I first heard of it I thought it's a measure from UEFA to make it look like they're doing something about spending when in reality it won't make much of a difference, and everything I've read and heard since reinforces my opinion.

I was reading the below article from Marcotti earlier, and he claims that FFP ''won't be rigid'':

http://sportsillustrated.cnn.com/2011/writers/gabriele_marcotti/05/05/ffp/index.html

UEFA's Financial Fair Play (FFP) rules are a bit like parenting. You can tell your eight year old that if he doesn't tidy his room by the end of the day you'll take his bike away. But if dinner rolls around and it's not quite neat, but still not the absolute mess it was that morning and you believe he made a genuine effort to clean things up, you may let him keep the bike. Especially if you were really looking forward to that father-son bike ride the next day.
UEFA-bashing is popular these days (especially from Special Ones) but, in fact, European soccer's governing body has approached the Herculean task of implementing FFP with two much needed ingredients: common sense and flexibility.

The basic concept behind FFP is that you can't make more than a certain amount of losses over several seasons or UEFA will punish you by not awarding a license to play in the Champions League or Europa League. This will kick in from the 2013-14 season, when the maximum "losses" (acceptable deviation) will be €45 million ($66.8M) over the first two "monitoring periods," 2011-12 and 2012-13. (If you have time on your hands and enjoy both legalese and accounting, you can download the regulations.)

Now, you may remember that Chelsea announced a loss of €83 million ($123.2M) for the 12 months ending May 2010 and, since then, splurged roughly the same amount on Fernando Torres and David Luiz, virtually assuring a comparable, if not greater, loss for the 2010-11. Or that Manchester City, was around €150 million ($222M) in the red for 2009-10 and that was before splashing out north of €200 million ($296M) over the past two transfer windows. So how on God's green earth can these two clubs hope to comply with FFP?

The answer is that FFP is, at once, stringent and fuzzy. For a start, bear in mind that a club's annual financial statement is not equivalent to what the UEFA Financial Control Panel will be considering in terms of FFP. A whole bunch of expenses and revenue streams get included in a club's accounts which are not included in assessing FFP compliance. For example, much of the investment in youth development or stadium/facility expenditure is not counted toward FFP. For some clubs that can mean as much €20 million ($29.6M) lopped off the annual expenses.

Oh, while we're at it, let's knock one widely held misconception on the head right now. UEFA will be vigilant when it comes to any kind of attempt to circumvent the rules. So, for example, Sheikh Mansour can't buy, say, a used football from Manchester City for €100 million $148M) and then book that as revenue for City. Or, rather, he can, but UEFA will only count what it considers the "benchmark fair value" of the ball as revenue ... probably €19.95 ($29) or so. By the same token, Roman Abramovich can't get one of his companies to sponsor Chelsea for €200M a year: UEFA would look at the "benchmark" sponsorship deals -- probably Barcelona's with the Qataris -- and only count, say, €25M ($37) toward FFP.

Another key factor which is often ignored is that if a club can prove that it's outside the FFP parameters because of contracts signed before FFP came into effect, then UEFA will look the other way. So basically any contract signed before June 2010 which causes an overspend won't be counted. The effect of this rule will, obviously, wane over time, but, initially should provide a decent cushion in reducing the wage expenditure.

Also, transfer spending does not automatically show up in a club's account as an expense. Or, rather, not a full whack, because clubs tend to amortize player acquisition costs. Take Torres, for example. It's not as if his arrival automatically added €60 million ($80M) expense to Chelsea's 2011-12 accounts. What clubs do is spread out the acquisition costs of a player over the life of his contract. In Torres' case, it was five and a half years so Chelsea "only" takes a hit of around €11M ($16.3M) in 2011-12 (plus, of course, his annual salary).

But perhaps the most important factor is hidden away in Annex XI of the FFP regulations. And this is where things get fuzzy. If a club can make a persuasive argument that it's losing money today, but that this is part of a long-term strategy that will lead to break-even or at least FFP compliance, then UEFA may decide to grant a license anyway. Now, obviously it can't be as simple as "We'll make a €500M loss this year but don't worry because we've signed Leo Messi, Cristiano Ronaldo, Xavi, Wayne Rooney and Manuel Neuer and our strategy is to win the Treble every year while selling out our stadium and charging fans a thousand euros a ticket while selling a billion jerseys around the world..." It has to be "credible." But, of course, "credible" can mean different things to different people. (Some of those subprime mortgages looked awfully "credible" to a lot of folks until they blew up in everyone's faces.)

The other factor is that UEFA will consider a club's "trend." (And this may be the saving grace for clubs like Chelsea, City, the two Milan teams,etc.). In other words, if you cut your losses year on year and show UEFA you're moving in the "right direction" then they may license you anyway, even if you don't meet the requirements. A bit like the dad and son bike examples above: show good will, stick to it and we'll be understanding.

Some of the more virtuous clubs will, no doubt, complain, if and when UEFA's Financial Control Panel applies the rules in Annex XI to give somebody a "pass" into the Champions' League. But, in fact, UEFA is using common sense. Make regulations too hard and inflexible and clubs who don't have a prayer in terms of compliance will simply give up (which, incidentally, would weaken the Champions' League appeal). The trick in applying this "common sense" of course will be to do it in a way that seems "fair." Because if you're a little too understanding then your daughter, who always keeps her room nice and neat, might get a little peeved when her brother suffers no consequences and gets to keep his bike when, in her opinion, his room is still a relative pigsty.

There's not a chance UEFA will have the balls to actually punish clubs such as Chelsea, Manchester United, Manchester City, Barcelona etc by enforcing their proposed rules which prevent them from entering their competitions such as the Champions League. Can anybody honestly say they think that UEFA will ban one of the above clubs from entering the Champions League?

IMO this will, over time, become a rule which, with the amount of loopholes available, allows the rich clubs to keep spending money without consequence, which is exactly the opposite of what it was created for. Jen Chang on Twitter seems to be thinking along the same lines.

Here's the full document if anyone's interested:

http://www.uefa.com/MultimediaFiles/Download/uefaorg/Clublicensing/01/50/09/12/1500912_DOWNLOAD.pdf

Zebra3

Here's hoping UEFA have more balls than Delaney and Co.

Ebbs

Ive read about it, and the official documents etc and they do seem very well worded. Even the sponsorship and money pushing bit is covered well.

The main and ultimately what actually makes this work is the punishment bit of the document. This is the least airtight bit of the document and all it does is ruin the rest. It basically states, clubs that break the rules will get punished...however the punishment is basically up to us and we can do what we want.

They will punish the first big club (Im guessing Man City) that breaks the rules severly, ie transfer embargo and no european football, just to set an example and make it look like they are doing their job. After that nothing will be done.

In truth we'll have to wait till Sports Interactive slap this rule into Football manager till we get a true sense of it :P

Paully D

Ebbs wrote: »

In truth we'll have to wait till Sports Interactive slap this rule into Football manager till we get a true sense of it :P

Very true :P

losthorizon

Zebra3 wrote: »

Here's hoping UEFA have more balls than Delaney and Co.

In fact "Delaney and Co" have far more balls than UEFA. Demoting Clubs like Cork and Derry is a big step to take. I couldnt imagine UEFA saying no to Man City if they qualified for the CL. And then we had the FA chickening out over the Liverpool/Everton in europe fiasco a few years ago - what do they do? Break the rules. It happens all over europe. Money is tight in Ireland but you are punished. Pity it does not happen elsewhere.

IRISHSPORTSGUY

Several years from now Arsenal and the German clubs will be laughing at the rest of Europe.

tommyhaas

I can just see Wenger in the role of the Daughter in Marcotti's article, burning up with anger as he complies and Citeh take a CL place while not complying, at Arsenal's expense. This will kill him

I don't know if it will work, but at worst it will encourage clubs to strive towards achieving a sustainable business model

While obviously expelling a number of big clubs from Europe for not complying is impractical, the possibility of a number of big clubs getting frustrated at seeing one or two (Chelsea/City) not comply may eventually lead to UEFA expelling them with the blessing of the other big European clubs

Paully D

tommyhaas wrote: »

I can just see Wenger in the role of the Daughter in Marcotti's article, burning up with anger as he complies and Citeh take a CL place while not complying, at Arsenal's expense. This will kill him

In all fairness though, if that exact situation happened Wenger would be well within his rights to complain.

The truth is that this ruling will be about as effective as an underwater hairdryer.

tommyhaas

Paully D wrote: »

In all fairness though, if that exact situation happened Wenger would be well within his rights to complain.

I'm not disputing that at all

I do think though that if enough of the big clubs backed it, it could make harsh penalty's viable. For instance if the Germans, Italians, Utd, Arsenal and Barca all backed it and were making serious efforts to comply, while City, Chelsea and Real ignored it, those complying could impose sufficient pressure on UEFA to come down strongly against those disregarding it

Paleface

tommyhaas wrote: »

I'm not disputing that at all

I do think though that if enough of the big clubs backed it, it could make harsh penalty's viable. For instance if the Germans, Italians, Utd, Arsenal and Barca all backed it and were making serious efforts to comply, while City, Chelsea and Real ignored it, those complying could impose sufficient pressure on UEFA to come down strongly against those disregarding it

I think what you have said here is the key. Its going to be up to the clubs who are making an effort to comply by the financial restrictions to pressurise UEFA into imposing sanctions on the clubs that don't. If it were just up to UEFA I wouldn't hold out much hope but I think pressure will come in particular from Germany to ensure clubs live within their own means.

PHB

Platini is elected by the member states, so they are the ones with the lever here. They want this financial fair play, as much as clubs like United and Arsenal do.

I do believe that this will be enforced and I think it's already constraining the actions of City and Chelsea. I think the rules are a fantastic development.

People are mentioning Madrid here but I don't know why, bar the old stuff the government used to do, they are a pretty well run financial wise club, their purchases of Ronaldo tend to work out business wise, not necessarily football wise though.

Beefy78

Paully D wrote: »

There's not a chance UEFA will have the balls to actually punish clubs such as Chelsea, Manchester United, Manchester City, Barcelona etc by enforcing their proposed rules which prevent them from entering their competitions such as the Champions League. Can anybody honestly say they think that UEFA will ban one of the above clubs from entering the Champions League?

Of course they won't and that isn't what the rule is about. Like every other significant change which UEFA have brought in in the last 20 years this is about protecting - not punishing - the Elite of European football by making it much more difficult for other Clubs to ever challenge them.

RoryMac

Beefy78 wrote: »

Of course they won't and that isn't what the rule is about. Like every other significant change which UEFA have brought in in the last 20 years this is about protecting - not punishing - the Elite of European football by making it much more difficult for other Clubs to ever challenge them.

Exactly these new rules are about stopping oil-rich Russian/Eastern European clubs from challenging the top clubs, they will be the teams punished under these rules.

The 'big' clubs will have their wrists slapped then be cleared on appeal. Same as it ever was.

everdead.ie

What they will hope for is a club like Manchester City to break the rules early on where City wouldn't really have the fanbase of United/Barca/Real in Europe and the world if they break the rules they can be punished without compromising the viability of the champions League and thus show they mean business so everyone else falls in line.

Pepe LeFrits

danroan Dan Roan
Manchester City have reported record losses totalling £194m for 2010-11 in their annual report.
8 minutes ago Favorite Retweet Reply

Complying with the FFP my ****ing hole!

That_Guy

How come Man City have announced the biggest ever loss in English football history? We don't play them until tomorrow.

Blatter

Pepe LeFrits wrote: »

Complying with the FFP my ****ing hole!

http://www.guardian.co.uk/football/2011/nov/18/manchester-city-biggest-ever-loss

Dempsey

Not including the new sponsorship deal or UCL money makes that figure look absolutely nuts. I've no doubt that will be significantly less come this time next season, dunno if they'll meet the FFP rules though. They need to offload that expensive reserve squad they've got to have any hope.

jester77

That's the cost of buying winning the Premier League

Dempsey

jester77 wrote: »

That's the cost of buying winning the Premier League

Man United did it for years

Blatter

Dempsey wrote: »

Man United did it for years

Difference being they earned their money through success, it wasn't handed to them on a golden plate.

Professey Chin

Dempsey wrote: »

Man United did it for years

How many losses have United posted? Theres a difference between building and buying success (which people like to casually ignore)

Dempsey

Blatter wrote: »

Difference being they earned their money through success, it wasn't handed to them on a golden plate.

The Great Chinholio wrote: »

How many losses have United posted? Theres a difference between building and buying success (which people like to casually ignore)

Professey Chin

.....well played

Blatter

Tesco Massacre

I think the optimum percentage of turnover to be used on wages is between 40-50%.

City's is 113%. Sweet Jesus.

everdead.ie

Does anyone know is that before or after Amortorization?

losthorizon

Zebra3 wrote: »

Here's hoping UEFA have more balls than Delaney and Co.

The FAI Is waaaay more strict than UEFA.

dsmythy

Blatter wrote: »

Difference being they earned their money through success, it wasn't handed to them on a golden plate.

They did it when it was still possible. The haves are so far ahead right now I don't hold out much hope of anyone outside it catching them up any time soon. Financial Fair Play guarantees their status.

K-9

everdead.ie wrote: »

Does anyone know is that before or after Amortorization?

Appears to be after from this part:

The net loss City made on their operations, £160.5m, was increased by £34.4m writing off the value of several players signed previously, including the Brazilian striker, Jô.

Zebra3

losthorizon wrote: »

The FAI Is waaaay more strict than UEFA.

Yeah, course they are. :rolleyes:

d22ontour

everdead.ie wrote: »

Does anyone know is that before or after Amortorization?

This only works with Pool fans, they got bored with nett spend irregularities...

That_Guy

That_Guy wrote: »

How come Man City have announced the biggest ever loss in English football history? We don't play them until tomorrow.

Fuuuuuuuuuuuuuuuu

everdead.ie

d22ontour wrote: »

This only works with Pool fans, they got bored with nett spend irregularities...

Well it's pretty important to be fair it's a difference between actual cash loss and balance sheet loss.

overshoot

losthorizon wrote: »

In fact "Delaney and Co" have far more balls than UEFA. Demoting Clubs like Cork and Derry is a big step to take. I couldnt imagine UEFA saying no to Man City if they qualified for the CL. And then we had the FA chickening out over the Liverpool/Everton in europe fiasco a few years ago - what do they do? Break the rules. It happens all over europe. Money is tight in Ireland but you are punished. Pity it does not happen elsewhere.

sorry but Derry were thrown out of the league for a serious breach of the rules (double contracts to hide expenses), then walked away from their debt and "reformed" and got skipped into D1 when a promotion system had been put in place from the A championship. their balls quickly dissappeared when it came down to crunch time. Cork also folded and got skipped into D1. The FAI should never have let either club assume their old recognition without their debts, punishment my ass

Beefy78

Blatter wrote: »

Difference being they earned their money through success, it wasn't handed to them on a golden plate.

Success and helping to shape the rules so that they, and a small number of other clubs, got so much money for that success that no one else would ever be able to challenge them.

Beefy78

overshoot wrote: »

sorry but Derry were thrown out of the league for a serious breach of the rules (double contracts to hide expenses), then walked away from their debt and "reformed" and got skipped into D1 when a promotion system had been put in place from the A championship. their balls quickly dissappeared when it came down to crunch time. Cork also folded and got skipped into D1. The FAI should never have let either club assume their old recognition without their debts, punishment my ass

Yep. Plus the comparison to Man City also doesn't work because Man City have got this money. They're not borrowing from the tax man. They're not building up ungodly levels of debt which will need to be paid back later. They're making huge operating losses which are being covered by their owner's loose change as they should be entitled to do.

homerjay2005

overshoot wrote: »

sorry but Derry were thrown out of the league for a serious breach of the rules (double contracts to hide expenses), then walked away from their debt and "reformed" and got skipped into D1 when a promotion system had been put in place from the A championship. their balls quickly dissappeared when it came down to crunch time. Cork also folded and got skipped into D1. The FAI should never have let either club assume their old recognition without their debts, punishment my ass

the loi needs the likes of shels, rovers, derry and cork in it. the fai did the right thing, the punished them according to the rules with relegation, but they couldnt do anymore.

Paully D

Sunderland today announced that all catering at the Stadium of Light will be moved to a subsidiary company outside of the club. Looking at the previous years accounts I'd estimate that this will take about £5m-£7m off the clubs expenses, which funnily enough is around about the deficit we need to make up to be up to scratch with these Financial Fair Play rules.

Now call me cynical, but I reckon the above has been done to get around the FFP. It's all above board of course but it just seems like another loophole to get around FFP. Every club is going to start doing, or have done things like the above.

This whole FFP thing really will be a massive waste of time, won't it?

Cantona's Collars

23 clubs have had prizemoney withheld as investigations take place under FFP rules,the breaches vary from tax irregularities to non payment of wages.

The clubs are:

FK Borac Banja Luka (Bosnia and Herzegovina) FK Sarajevo (Bosnia and Herzegovina) FK Zeljeznicar (Bosnia and Herzegovina) PFC CSKA Sofia (Bulgaria) HNK Hajduk Split (Croatia) NK Osijek (Croatia) Atletico Madrid (Spain) Malaga (Spain) Maccabi Netanya (Israel) FK Shkendija 79 (Macedonia) Floriana FC (Malta) FK Budunost Podgorica (Montenegro) FK Rudar Pjevlja (Montenegro) Ruch Chorzow (Poland) Sporting Clube de Portugal (Portugal) Dinamo Bucharest (Romania) FC Rapid Bucharest (Romania) FC Vaslui (Romania) Rubin Kazan (Russia) FK Partizan (Serbia) FK Vojvodina (Serbia) Eskisehirspor (Turkey) Fenerbahce (Turkey)

Read more at http://www.espn.co.uk/football/sport/story/169719.html?CMP=OTC-RSS#3rRLRY688exBa6YL.99

Not surprised to see Malaga on the list.

Roger Sterling

The litmus test of FFP wont be Uefa picking on the likes of Rapid Bucharest, itll be if they act on the finsncial doping City and Chelsea engage in.

Until they do that FFP is just empty posturing.

Beefy78

Roger Sterling wrote: »

The litmus test of FFP wont be Uefa picking on the likes of Rapid Bucharest, itll be if they act on the finsncial doping City and Chelsea engage in.

Until they do that FFP is just empty posturing.

I do agree with you on the posturing back again, however going after Chelsea and City for spending money which they've got shouldn't be the target of FFP or any other financial regulation in football. The target should be clubs spending money that they don't have.

If Roman Abramovich and Sheik Mansour want to put huge sums of money into the game then that shouldn't be discouraged and I don't see how any attempts to punish them for doing so can be legal.

Roger Sterling

Beefy78 wrote: »

Roger Sterling wrote: »

The litmus test of FFP wont be Uefa picking on the likes of Rapid Bucharest, itll be if they act on the finsncial doping City and Chelsea engage in.

Until they do that FFP is just empty posturing.

I do agree with you on the posturing back again, however going after Chelsea and City for spending money which they've got shouldn't be the target of FFP or any other financial regulation in football. The target should be clubs spending money that they don't have.

If Roman Abramovich and Sheik Mansour want to put huge sums of money into the game then that shouldn't be discouraged and I don't see how any attempts to punish them for doing so can be legal.

Isnt this already a part of the FFP regulations? Clubs can only spend money they earn? ( or a portion of it).

Not a hope they enforce it though.

28064212

Beefy78 wrote: »

If Roman Abramovich and Sheik Mansour want to put huge sums of money into the game then that shouldn't be discouraged and I don't see how any attempts to punish them for doing so can be legal.

And what happens if, one day, Roman or the Sheikh turns to their aides and says "I'm bored of this football now, build me a super-villain volcano hide-out"? The club is left with bills they can't possibly pay out of income they no longer have, and they collapse. The point of the FFP is to make clubs be self-sustaining.

Beefy78

28064212 wrote: »

And what happens if, one day, Roman or the Sheikh turns to their aides and says "I'm bored of this football now, build me a super-villain volcano hide-out"? The club is left with bills they can't possibly pay out of income they no longer have, and they collapse. The point of the FFP is to make clubs be self-sustaining.

The point of FFP is to lock clubs in place so that the elite clubs can never be challenged. The same as the point of expanding the Champions League was.

Roger Sterling

Beefy78 wrote: »

28064212 wrote: »

And what happens if, one day, Roman or the Sheikh turns to their aides and says "I'm bored of this football now, build me a super-villain volcano hide-out"? The club is left with bills they can't possibly pay out of income they no longer have, and they collapse. The point of the FFP is to make clubs be self-sustaining.

The point of FFP is to lock clubs in place so that the elite clubs can never be challenged. The same as the point of expanding the Champions League was.

Sounds good to me.

28064212

Beefy78 wrote: »

The point of FFP is to lock clubs in place so that the elite clubs can never be challenged

If the FFP is not put in place, the elite clubs will be more easily challenged then? :rolleyes:

Richard Hillman

28064212 wrote: »

If the FFP is not put in place, the elite clubs will be more easily challenged then? :rolleyes:

If it were put in place say 7-8 years ago then it would just be Man Utd winning the premier league every year. With this Financial "Fair" Play we wont see magnificent projects like what has been seen at Chelsea and Man City.

Beefy78

28064212 wrote: »

If the FFP is not put in place, the elite clubs will be more easily challenged then? :rolleyes:

Oh the rolleyes smilie. I'm done for,

Manchester City winning the Premier League and looking set to be a force in the Europe over the coming years is exactly the sort of thing that FFP is designed to stop. Paris St.Germain likewise. I'm sure Anzhi Makhachkala and Zenit won't be too far behind.

With FFP, the likes of Manchester United, AC Milan, Real Madrid and Barcelona can remain unchallenged and do it in a way which means that they don't even have to spend a huge amount of cash to stay at the top.

28064212

Richard Hillman wrote: »

If it were put in place say 7-8 years ago then it would just be Man Utd winning the premier league every year. With this Financial "Fair" Play we wont see magnificent projects like what has been seen at Chelsea and Man City.

The difference would have been that Chelsea and City would have had to build slowly and sustainably instead of splurging €100million+ in a single summer on massive contracts that will cripple the club if the sugar-daddies pull out.

Alternatively, clubs like Leeds, Portsmouth and Rangers would not have suffered the financial implosions that they did if they had reasonable guidelines to meet

ahnowbrowncow

28064212 wrote: »

The difference would have been that Chelsea and City would have had to build slowly and sustainably instead of splurging €100million+ in a single summer on massive contracts that will cripple the club if the sugar-daddies pull out.

Alternatively, clubs like Leeds, Portsmouth and Rangers would not have suffered the financial implosions that they did if they had reasonable guidelines to meet

So you think FFP is to protect clubs like Leeds, Portsmouth and Rangers from making bad decisions?

Somehow I don't think Platini gives a rats ass about those clubs