How Financial Fair Play (FFP) protects the “Big Clubs”
By: Sunil Sharma
Tags: Football, Europe, Finance, Sports, Soccer

“Fifty per cent of clubs are losing money and this is an increasing trend; we needed to stop this downward spiral. They have spent more than they have earned in the past and haven’t paid their debts. We don’t want to kill or hurt the clubs; on the contrary, we want to help them in the market.” — Former UEFA President, Michel Platini.

UEFA Financial Fair Play (FFP) regulations were created to stop football clubs spending more than they earn. FFP was agreed in 2009 and implementation began from the 2011–12 football season.

The outgoings for a club include:-

Transfers

Financial Costs

Amortisation of transfers

Finance costs

Dividends

The income counted:-

Gate receipts

Advertising

Disposal of tangible fixed assets

Finance

Sales of players

Prize money

TV revenue

Money spent towards youth development, training facilities and infrastructure are not included.

Penalties include withholding of prize money, transfer bans and disqualification from competitions. The reaction to FFP over the years has had widespread coverage and had very polarising views.

Big Club Status Quo

A major criticism of FFP is that the bigger clubs are able to solidify their positions and competition is discouraged. Bigger clubs which generate the largest amounts of revenue and profits are consequently able to spend a lot more money on transfers. Martin Samuel of the Daily Mail raised a great point about how the FFP is stifling competition as clubs like Manchester City registering a loss of £194 million in 2010–11 was justified. This was due to the club having to spend large sums to try attracting Champions League football. The Champions League offers clubs huge sums of money in prize money, television rights and

sponsorships. The Premier League has seen dominance from three clubs in Arsenal, Chelsea & Manchester United, more recently Man City. It could be argued that had FFP been in place earlier then there would be only Manchester United winning the league year on year. Even so, the lack of competition for Champions League places is evident as it has been occupied by mainly the old “Big 4” (Chelsea, Manchester United, Arsenal and Liverpool) and more recently Tottenham Hotspurs and Manchester City. The gap between the now top 6 is likely to grow and grow with clubs not able to spend the sums of money required to push on and close the gap. Apart from the freak year of Leicester City winning the league, the gap has been widening and there is little evidence to show any changes.

There is a reason why the biggest three clubs in Europe (Manchester United, Real Madrid & Bayern Munich) were the first clubs to fully agree with FFP. Clubs that have historically ruled Europe’s top league will arguably have the most power as they have built a huge support base. The regulations will simply increase the power of the traditionally bigger clubs and their dominance will no longer by challenged by “newer” clubs such as Paris Saint-Germain or Manchester City.

Suspect Sponsorship Deals

Concerns were expressed about how clubs are raising their revenue

The leaks from Der Spiegel state that Manchester City and their sponsors’ manipulated contracts to pass UEFA’s Financial Fair Play regulations. The German magazine claims that City held discussions about wiping out the £9.9 million shortfall back in 2013. Der Spiegel reported that the Manchester City owner Sheikh Mansour provided additional supplements to existing sponsorship deals in Abu Dhabi where he is part of the Royal Family to add more money into the club. There have been many suggestions like those from Der Spiegel about how clubs will operate on very questionable methods to improve their balance sheets which may not be ethically correct. Practices that involve sister companies or the parent company’s subsidiary are especially suspect, for example Manchester City’s deal with Abu Dhabi Investment Group or Paris Saint-Germain’s work with the Qatari Investment Group.

Manchester City has deals in place with Etihad Airlines worth £400 million over a ten year period. Furthermore Etisalat, Aabar and Abu Dhabi Tourism Authority are all sponsors for Man City and they are run by the United Arab Emirates Government. Sheikh Mansour is a minister and member of the ruling family of these sponsors.

Less Exciting

Recently, Manchester City won the Premier League title on the very last day of the season. It was one of the most spectacular finishes to a season the Premier League has ever seen. However, it was only a few years ago that Man City were finishing 14th in the league. Their method of how they achieved this may be questionable but it has made both English and European football a lot more exciting. Malaga received an FFP ban for unpaid bills; imagine if their owner Sheikh Abdullah Al Thani had the license to spend more money on the club. They could help break the stranglehold of the two elite clubs in Spain.

Football will always seem like an unfair sport to certain teams and fans but why take away the possibility of a club aspiring to become the best in the world?

As Jose Mourinho explains, “what happened really with the Financial Fair Play is a big protection to the historical, old, big clubs, which have a financial structure, a commercial structure, everything in place based on historical success for years and years and years.”