EKIP– Expert Club for Economics and Politics A Different Opinion
Miroslav Alexandrov
Financial Fair Play was created in 2013 with the aim of improving the financial situation of football clubs by preventing them from spending more than they earn (or more precisely, no more than €5 million in any 3-year period) in their pursuit of quick success. UEFA's good intention was to level the playing field on which teams compete in the player market by removing the clear advantage of teams with wealthy owners. Obliging these wealthy teams to be managed within real budget limits (breaking the practice of multi-million transfer fees financed directly from the owners' pockets, worth many times more than the declared annual profit of these clubs) would force them to reduce their spending, threatened with the threat of being disqualified from European club competitions. Here, as in all other cases of regulation of a given sector, UEFA focuses only on the visible side of things and guarantees a certain success in the promises made for equality, ignoring the invisible consequences that always arise in such situations. And like any other regulation, it will benefit some more than others.
Grouping
The biggest problem that financial fair play creates is the widening gap between poor and rich clubs. Since rich clubs generate more income from prize money, advertising and television rights, they have a greater opportunity to invest in new players. In this way, developed clubs increase their class compared to smaller ones, which currently have to sell first in order to be able to invest a significant amount in transfers. Against this background, the statements of UEFA President Michel Platini that all owners of big teams have agreed to financial fair play seem ridiculous, since it would directly benefit only them, by limiting competition. We can see this effect most clearly in the German Bundesliga with the Bayern Munich team, which managed to strengthen itself with the star of its direct competitor Borussia Dortmund by offering higher personal terms to Lewandowski. Also the bipolar model of the Spanish League where the teams of Barcelona (Luis Suarez 88 million euros) and Real Madrid (James Rodriguez 80 million euros) continued the trend of making record purchases, while at the same time adhering to the condition that their expenses do not exceed their revenues.
Circumventing the rules
As in any other industry, regulations encourage the disadvantaged to look for ways to circumvent the rules. This is evident in the recent acquisitions of Arab-owned teams Manchester City and Paris Saint-Germain, who are trying to pump money into their teams through dubious advertising deals. For example, in its report, the English club announced income from the sale of advertising rights to players for £ 24.5 million, as well as advertising through the purchase of the stadium name for a period of 10 years worth £ 100 million. These figures aroused skepticism at UEFA, from which they promised to investigate the case and make an 'expert assessment of the transactions' to see if the amount of these contracts was fair. Which in turn opens up the possibility of corruption by employees of the organization. And we continue to expect even more innovative ways to inject money into football clubs, such as selling an annual season ticket in the box for 100-200 million by the club owner.
Tax burden
European Union countries have different tax policies and therefore different tax rates. For example, the state takes almost half of the salaries of footballers in England, while in the Spanish championship each player keeps about 2/3 of his earnings. This obliges English clubs to offer higher gross salaries to their players, which puts them at a disadvantage in terms of compliance with financial fair play.
New investors
All these UEFA policies have a negative impact on the investment environment of European football. Given what investors have done so far, we can say that their idea is not gradual growth with the aim of long-term profit, but rather instant fame at the expense of short-term losses. By prohibiting the possibility of large initial investments, the acquisition of a football team suddenly loses its luster.
As it stands now, the only effect of financial fair play is to reduce competition in club football. If only a handful of teams have the right and the opportunity to acquire the best players, it will not take long before the major European championships become predictable and lose viewer interest. UEFA, in the person of President Michel Platini, must seriously think about the negative effects of this regulation if it wants to maintain football's top spot as the most popular sport worldwide.
