Financial Fair Play: why it had to happen

No-one said that Financial Fair Play (FFP) was perfect. Even Michel Platini, the UEFA President behind the long-touted new standards, accepts his brainchild has some serious flaws. But in these days of the paradoxical austerity boom, European football clubs are going to have to take responsibility for their collective bottom lines.  FFP had to happen.

A slight shift towards prudence by some clubs – for example Newcastle United or AC Milan – has been balanced by remarkable spending by others. Nothing prompts wasteful extravagance like owning a football club. According to UEFA, almost seventy percent of all European top-flight clubs are losing money. Platini's regulations resolve to save clubs from themselves.

At its simplest, FFP penalises clubs who spend more than they earn. Opponents to the plan suggest this will keep the big clubs powerful and the small ones insignificant; they may have a point. However, it will also minimise the wealthy benefactor model made so famous by Chelsea, Manchester City and now Paris Saint-Germain.

Clubs are already beginning to implement the necessary changes. Whether UEFA enforces their laws is still to be seen.

While even Platini should accept the FFP legislation is imperfect, the overall ramifications of the legistlation should somewhat control spiralling wage-bills. The percentage of overall revenue spent on player wages by top-tier European clubs is simply bad business practice.

Within the past two years, American sport has seen lockouts in the NFL and NBA. A similar impasse has been reached between NHL owners and players. In all three cases, the warring parties struggle(d) to agree on a collective bargaining agreement (CBA) which splits revenue fairly between players and owners.

The graphic below charts the revenue split between players and owners in each of the four major US sports and compares it to top-flight European football clubs. The contrast is stark. Baseballers receive about 57% of their pie – as do hockey players under the current CBA – while NFL and NBA players' shares decreased to around 50% with their last CBA. (Given the habit owners have of “winning” these negotiations, the figures below come from the owners' last offer rather than the current iteration of the CBA which will certainly change).

Sources: The National Football Post, New book dives into business of baseball, Breaking down changes in new CBA, Twitter and the Belfast Telegraph.

And this chart doesn't even take into account transfer fees that are paid on top of wages! Even accounting for cross-continental differences, the average 13-20% extra that top division European footballers earn makes them the obvious outlier. What makes this startling is that the player/owner revenue sharing scheme now in operation in Europe isn't codified but voluntary – owners don't pay this lofty percentage out of legal compulsion.

No matter how different the sports, American owners like the Glazers, Stan Kroenke and Fenway Sports Group operate teams on both sides of the Atlantic. This means that there is a basis for comparison, if not for drawing fully-fleshed-out conclusions.  It's obvious that running a business and not accumulating debt - let alone making a profit - when you pay 70% of your income to employees is hard to do.

Because of the continental ramifications of employing a salary cap, an system index-linked to revenue was the most feasible way that UEFA could harness undisciplined spending.  FFP is not perfect, has loopholes aplenty and it won't necessarily address the lack of competitive balance across Europe's top four leagues. Hopefully, these refinements will come.

AC Milan: Ch-ch-ch-changes

Silvio Berlusconi doesn't do anything by half measures.

Two seasons ago, his club was perhaps the oldest elite team in Europe.  Although football's Peter Pan, Paolo Maldini, had retired, the Rossoneri claimed the Serie A title featuring almost an entire XI of thirtysomethings (Alessandro Nesta,  Mark van Bommel, Massimo Ambrosini, Clarence Seedorf, Gianluca Zambrotta, Pippo Inzaghi, Massimo Oddo, Christian Abbiati, Andrea Pirlo and Gennaro Gattuso).  These decelerating stalwarts were supplemented by some elite "younger" talent like Zlatan Ibrahimovic, Robinho and Alexandre Pato.

2012 sees AC Milan looking forward to their next challenge: building a club around home-developed talent rather than big-money signings.

Strictures imposed by UEFA's Financial Fair Play, coupled with a perilous Italian economy means Berlusconi and co decided the club was best positioned to stare down their future without their gamut of fourth-decade, eight-figure signings.  Over the past two years, the club has sold or released a dozen of their most experienced players (Ibrahimovic, Thiago Silva, Nesta, Seedorf, Zambrotta, Inzaghi, Gattuso, Taye Taiwo, van Bommel, Oddo, Legrottaglie and Pirlo), players with a combined age of 402.  Furthermore, the club finally gave up on Ronaldinho, a player who aged much sooner than anyone would have thought possible.

Replacements have been younger and relatively inexpensive: Philippe Mexes, Kevin-Prince Boateng and perhaps  most excitingly of all, Stephan El Shaarawy.  Although Berlusconi and manager Massimiliano Allegri are likely to enter the transfer market, perhaps for red-half alumnus Kaka or Montpellier central defender Mpou Yang-Mbiwa, global buzzwords "austerity measures" seem to apply at Giuseppe Meazza.

In fact, to compare the anticipated AC Milan starting lineup for their first Serie A match to that of two years ago is almost - but not quite - pointless.  The fourteen  players used that day had an average age of 29.6 - incidentally, the exact same average age that of those players that started Milan's first Serie A match last year.  Only five of those players from two years ago remain at the club.  Should no further purchases be made this transfer window the average AC Milan player would be 26.2, a figure increased by goalkeeper Abbiati who at 35 years old is half a decade older than the next oldest starter.

The turnaround was needed and anticipated.  Even though it was expected, it was still brutal.  The new club, while boasting abundant pace and stamina, will rely heavily upon El Shaarawy, Robinho and Boateng for flair and goals.  Despite not appearing to have the same class as even last year, Berlusconi may have chosen the perfect time to rebuild from within: arch-rivals Inter Milan completed an awful season last term, while the whole of Serie A - particularly champions Juventus - are sweating the results of further match-fixing investigations

Only once these allegations play out will we be able to accurately forecast the Italian league.  Count on one thing though: a changed AC Milan means a changed league.

The next step for Financial Fair Play

It is fact that the gap between the "haves" and "have nots" in European football grows evermore larger. Last season in the English Premier League proved this adroitly when Manchester City midfielder Yaya Toure reportedly earned more per week than the entire Blackpool squad.

The same situation manifests itself in every league. Success breeds success: as results improve, sponsor and prize dollars (generally) increase. This allows clubs to spend more on improving their squad. Or it does so in theory. In practice, beneficiaries who see clubs as expensive playthings dump large amounts of money into teams according to their means: for some, a la Everton chairman Bill Kenwright. Others, like Man City owner Sheikh Mansour bin Zayed Al Nahyan, have deposited sums of money usually seen in the demands of Bond villains.

courtesy: guardian.co.uk

In order to make sure that all leagues don't go the way of Scotland - or Spain - UEFA instituted their Financial Fair Play policy, which over the next two seasons will be enforced. This is ostensibly to cut down on the amount of oligarchs seeing their clubs as desirable holes in their pocket and cap clubs spending at a percentage of their incomings.

But by having his airline Etihad Air sponsor City's ground, the City of Manchester Stadium, Sheikh Mansour seems to have successfully circumvented these guidelines. That the deal was struck isn't an issue but the figures involved - reportedly ₤400 million pounds - dwarf those spent on a similar sponsorship deal for Arsenal's home stadium seven years ago. That sum covers the transfer fees spent on Carlos Tevez, Sergio Aguero, Yaya Toure, Joleon Lescott, Gareth Barry, Nigel de Jong, Adam Johnson, Edin Dzeko, David Silva, Vincent Kompany, Mario Balotelli, Kolo Toure, James Milner and Alexander Kolarov - and have ₤125 million in change.

A salary cap has again been mooted but is obviously unworkable given the implications of a continent-wide application. Apparently Financial Fair Play is a step in the right direction, but a step in the right direction at best. If equalisation is a process the football world is serious about then further steps must be taken.

Means-testing billionaire team owners - there's a phrase you don't hear every day - would certainly equal out the proverbial playing field (say, cap owners' private means at ₤1 billion), but would be as, if not more, unworkable as any proposed salary cap. While it would mean clubs would rely on business and football sense rather than just their position in the established order and well-disposed billionaires, it would prove very difficult to enforce. More problematically, it would also raise questions of what to do clubs already in the hands of the megawealthy.

Thus, the only way to strengthen these laws would be to investigate every sponsorship deal over a certain limit - say €1 million, policed by the individual leagues and required for registration of a team. Such deals - where a benefactor or his/her family simply reach into their pocket again as in this instance - would be judged invalid and clubs would risk point deductions. This way clubs could leverage their business sense and connections without actually receiving what amounts to donations.

This process, though it would take advanced forensic accountancy, wouldn't undermine any established order and would force clubs to be more accountable for their money. As football has already gone the way of business, it makes sense to nudge it further along that road.

Charlie Adam: from Bottom to Top

Charlie Adam appears to have finally sealed a move to Liverpool, six months after it was first mooted during the January transfer window. Now, the questions that remain aren't so much when and how much (a mooted ₤7 million-plus-loanees), but how he and his magical left boot will fit into Liverpool's now increasingly crowded central midfield. While he indubitably has the skill, fire and vision, his greatest drawback may be his body shape as he hearkens back to the days of solid footballers, rather than lithe athletes.

Charlie Adam's Wikipedia page in January

Perhaps more interestingly, he becomes the first player to jump from a Premiership relegated club to one of the "big" clubs in quite some considerable time. He is certainly the first to go to an established , Old-School"Big Four" club for a sizeable fee (and thus expectation) since Peter Crouch moved from the south coast to the north-west. This indicates easily how reliant on him Blackpool became, and also how warmly fellow Scot Kenny Dalglish must think of his countryman.

Over the past few seasons, plenty of players have used the predicament of relegation to their advantage: in fact, raiding the relegated has become an annual pastime for those clubs chock-full of TV revenue. After season 2010-2011 alone, many players stand to improve their footballing and financial fortunes as their clubs slide back into the Championship. Adam's fellow Blackpool standouts David Vaughan, Matt Gilks and DJ Campbell look likely to depart - or have already. The entire Birmigham City defense looks liable to be for sale to the highest bid considering their English roots and 2009-10 efficacy, while Scott Parker, Rob Green, Carlton Cole, Thomas Hitzlsperger and Matthew Upson are all established Internationals with English roots and an eye for Premier League, rather than Championship, football.

That most (if not all) these players will be in the Premiership next term is testament to the wonderful season of English Premier League football we have just experienced - not vintage in terms of great play, but by recent standards surprising, combative and very, very even.

But very few players make the leap from the very bottom to the very top. Those who do often arrive as role players or depth and without significant expectation. In recent memory, those that stand out as being snaffled by top-six sides include Crouch, Michael Owen's fabulous Bosman from Newcastle to a new injury-list in the red half of Manchester and Ross Turnbull's astonishing free to Chelsea - surprising more for the Blues' desire than for any other reason; he's subsequently played two matches in two years. 

That clubs as small as Wigan and Blackpool have been able to make a good fist of staying up speaks volumes of the uniform nature of the Premier League when both could so easily have simply faded into gauche unadventurous football. Both clubs have in past had one player on whom they relied: the Tangerines on Adam, and the Latics last year on Charles N'Zogbia. They are almost featured players - soloists in otherwise pedestrian orchestras.

This reluctance for the big clubs to spend on the little guy could come for a couple of reasons - because the bigger fish may reason that the player isn't sufficiently talented or because there are better players available for a similar cost. Perhaps, amidst the ghastly sums thrown about for unproven and sulky forwards, the big clubs are seeking some semblance of Return on Investment; by opting for tried performers - albeit talent coming from performances in vastly different systems.

Of course such theories are debunked easily and painfully by the ₤50 million Manchester United has offloaded already, a rumoured ₤20 million bid for Downing from Liverpool and Chelsea's concerted - and potentially unrequited - chase for Neymar.  While Financial Fair Play apparently isn't restricting the big clubs' overall spending, it is having a more subtle impact - it requires them to hold out for fiscal, as well as footballing Return on Investment. Ferguson's willingness to sell one-club lieutenants seems to indicate the greatest contribution they can now make to the Red Devils could be evening United's balance sheet.

As clubs enter the Premiership with a plan - and do good jobs of sticking to that blueprint - prepare to witness more of this phenomenon. All of QPR, Norwich City and Swansea City play an unsophisticated method - and the Canaries and Swans are exciting to watch. This could result in the same occurring next year: with Scott Sinclair, Wes Hoolahan or even James McCarthy taking the role of featured soloist.